Cincinnati Bell Reports Second Quarter 2013 Results

  Cincinnati Bell Reports Second Quarter 2013 Results

  *Strong second quarter Adjusted EBITDA of $104 million
  *Fioptics revenue totaled $24 million, an increase of 50 percent from 2012
  *Fioptics entertainment subscribers up 36 percent over prior year

Business Wire

CINCINNATI -- August 8, 2013

Cincinnati Bell Inc. (NYSE:CBB) today announced second quarter results for
2013. The company’s Fioptics suite of products added a record high 5,600 new
entertainment subscribers and 6,100 high-speed internet subscribers in the
quarter and generated revenue of $24 million, up 50 percent compared to the
prior year. Cincinnati Bell passed an additional 33,000 addresses with
Fioptics during the first half of 2013, and was able to maintain a 28 percent
customer penetration rate. The company is now able to provide Fioptics service
to approximately 30 percent of Greater Cincinnati.

Total revenue for the second quarter of 2013 was $312 million, down $3 million
from the prior year after exclusion of CyrusOne, the company’s former data
center segment. Operating income totaled $47 million, and Adjusted EBITDA^1 of
$104 million was down $7 million from the prior year after excluding the
results of the former data center segment, as declines from postpaid wireless
subscriber losses and access line losses offset the growth from Fioptics. Net
income for the quarter was $1 million, and net income excluding special
items^2 was $10 million.

The company successfully completed the initial public offering (“IPO”) of
CyrusOne on January 24, 2013 and its consolidated results for the first half
of 2013 include the results of that business to this date. On this basis,
revenue for the first half of 2013 was $638 million, operating income was $66
million and Adjusted EBITDA totaled $222 million. Excluding the data center
segment results, Cincinnati Bell generated revenue of $622 million, down $4
million from $626 million in 2012. Adjusted EBITDA excluding the data center
business was $214 million, and includes a gain of $7 million associated with
mark-to-market adjustments on compensation plans indexed to the company’s
stock price.

“Our second quarter results closed the first half of 2013 on a very strong
note, highlighted by the record numbers put up by our Fioptics product team,”
said Ted Torbeck, president and chief executive officer. “We continue to have
confidence that our investments in fiber, combined with the eventual
monetization of CyrusOne, will create a fiber-based growth company with
significant, sustainable free cash flows.”

Quarterly Highlights

  *Fioptics revenue totaled $24 million in the quarter, a 50 percent increase
    compared to the second quarter of 2012. Year to date, the company has
    passed 33,000 additional homes and businesses with its Fioptics network,
    ending the quarter with a total of 238,000 units passed. The company ended
    the quarter with 67,000 Fioptics high-speed internet subscribers, up 42
    percent compared to the end of the second quarter of 2012. Fioptics
    entertainment subscribers were up 36 percent compared to the second
    quarter of 2012 and totaled 63,000 at June 30, 2013.
  *Total high-speed internet subscribers, which include both Fioptics and
    DSL, increased to 262,000 at the end of the quarter, up from 258,000 at
    the end of the second quarter in 2012. Net subscriber activations for the
    quarter were 2,000 as construction of the Fioptics network continues to
    mitigate the loss of legacy DSL customers and improve the overall quality
    and speed of our entire network.
  *The company effectively owns a 69 percent equity method investment in
    CyrusOne. For the second quarter of 2013, CyrusOne reported 18 percent
    year-over-year revenue growth to $64 million, and an 8 percent
    year-over-year Adjusted EBITDA increase to $31 million. Revenue for the
    first half of 2013 was $124 million and Adjusted EBITDA was $62 million.

Financial and Operations Review

“The impressive growth trends achieved to date from our Fioptics suite of
services continue to meet our expectations and speak to the superior quality
of the product,” said Kurt Freyberger, chief financial officer. “Fioptics
financial results have contributed to a strong performance by the company for
the first half of 2013, providing momentum into the second half of the year.”

Wireline Segment

Wireline revenue was $182 million for the quarter compared to $184 million in
the second quarter of 2012, as the growth from Fioptics and fiber-based
business solutions continues to partially mitigate the impact of access line
losses. For the quarter, operating income was $49 million, down from $55
million in the same period of 2012, and Adjusted EBITDA declined by $4 million
year-over-year to $84 million, primarily driven by the continued loss of
higher margin access lines. As a result, Adjusted EBITDA margin^3 in the
quarter was 46 percent compared to 48 percent in the second quarter of 2012.

The company’s Fioptics product suite now passes 238,000 residential and
business addresses. The segment ended the quarter with 67,000 Fioptics
high-speed internet subscribers and 63,000 entertainment subscribers, up 42
percent and 36 percent, respectively, compared to the second quarter in 2012.
Access line loss of 8.1 percent in the second quarter of 2013 was comparable
to 8.0 percent in the prior year.

Wireless Segment

Wireless revenue was $52 million for the quarter, a decrease of 16 percent
from the second quarter of 2012. The segment’s Adjusted EBITDA of $19 million
in the quarter resulted in an Adjusted EBITDA margin of 37 percent, down from
39 percent in the second quarter of 2012 and 38 percent in the first quarter
of 2013. The loss of postpaid subscribers continues to have a negative impact
on Wireless revenue and Adjusted EBITDA. Wireless operating income was $11
million in the second quarter compared to $16 million in the prior year.

At June 30, 2013, total wireless subscribers were 370,000 compared to 430,000
at the end of the second quarter in 2012.

IT Services and Hardware Segment

Revenue was $86 million for the quarter compared to $77 million in the second
quarter of 2012. Hardware sales were up 13 percent and managed and
professional services revenue was up 9 percent compared to a year ago. For the
quarter, Adjusted EBITDA of $4 million and Adjusted EBITDA margin of 4 percent
were comparable to the second quarter in 2012.

Investment in CyrusOne

Subsequent to January 24, 2013, the closing date of CyrusOne’s IPO, the
company no longer consolidates the results of its data center business, but
rather accounts for it as an equity method investment. The company continues
to effectively own 69 percent of CyrusOne and received the initial quarterly
cash dividend of $7 million in April 2013, while the second quarterly dividend
of $7 million was received in July 2013. As of June 30, 2013, the company’s
investment in CyrusOne was valued at approximately $922 million.

CyrusOne reported revenue of $64 million and Adjusted EBITDA of $31 million
for the second quarter of 2013, and had 970,000 square feet of total data
center colocation space which was 81 percent utilized at June 30, 2013.
CyrusOne reaffirmed its full year 2013 revenue guidance range of $260 million
to $270 million and its Adjusted EBITDA guidance range of $133 million to $137
million.

2013 Outlook

Cincinnati Bell reaffirms its financial guidance for 2013, which excludes the
results of its former data center segment:

Category           2013 Guidance
Revenue            $1.2 billion
Adjusted EBITDA    Approx. $390 million*

*Plus or minus 2 percent

Conference Call/Webcast

Cincinnati Bell will host a conference call on August 8 at 10:00 a.m. (ET) to
discuss its results for the second quarter of 2013. A live webcast of the call
will be available via the Investor Relations section of
www.cincinnatibell.com. The conference call dial-in number is (866) 863-7412.
Callers located outside of the U.S. and Canada may dial (816) 581-1570. A
taped replay of the conference call will be available one hour after the
conclusion of the call until 10:00 a.m. on Thursday August 22, 2013. For U.S.
callers, the replay will be available at (888) 203-1112. For callers outside
of the U.S. and Canada, the replay will be available at (719) 457-0820. The
replay reference number is 1910055. An archived version of the webcast will
also be available in the Investor Relations section of www.cincinnatibell.com.

Safe Harbor Note

This release and the documents incorporated by reference herein contain
forward-looking statements regarding future events and our future results that
are subject to the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. All statements, other than statements of
historical facts, are statements that could be deemed forward-looking
statements. These statements are based on current expectations, estimates,
forecasts, and projections about the industries in which we operate and the
beliefs and assumptions of our management. Words such as “expects,”
“anticipates,” “predicts,” “projects,” “intends,” “plans,” “believes,”
“seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” variations
of such words and similar expressions are intended to identify such
forward-looking statements. In addition, any statements that refer to
projections of our future financial performance, our anticipated growth and
trends in our businesses, and other characterizations of future events or
circumstances are forward-looking statements. Readers are cautioned these
forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties, which could cause our actual
results to differ materially and adversely from those reflected in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this release
and those discussed in other documents we file with the Securities and
Exchange Commission (SEC). More information on potential risks and
uncertainties is available in our recent filings with the SEC, including
Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports.
Actual results may differ materially and adversely from those expressed in any
forward-looking statements. We undertake no obligation to revise or update any
forward-looking statements for any reason.

Use of Non-GAAP Financial Measures

This press release contains information about adjusted earnings before
interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted
EBITDA margin, net debt, net income excluding special items, and free cash
flow. These are non-GAAP financial measures used by Cincinnati Bell management
when evaluating results of operations and cash flow. Management believes these
measures also provide users of the financial statements with additional and
useful comparisons of current results of operations and cash flows with past
and future periods. Non-GAAP financial measures should not be construed as
being more important than comparable GAAP measures. Detailed reconciliations
of these non-GAAP financial measures to comparable GAAP financial measures
have been included in the tables distributed with this release and are
available in the Investor Relations section of www.cincinnatibell.com.

^1Adjusted EBITDA provides a useful measure of operational performance. The
company defines Adjusted EBITDA as GAAP operating income plus depreciation,
amortization, transaction-related compensation, restructuring charges, loss
(gain) on sale or disposal of assets, transaction costs, curtailment gain,
asset impairments, components of pension and other retirement plan costs
(including interest costs, asset returns, and amortization of actuarial gains
and losses), and other special items. Adjusted EBITDA should not be considered
as an alternative to comparable GAAP measures of profitability and may not be
comparable with the measure as defined by other companies.

CyrusOne defines Adjusted EBITDA as net (loss) income as defined by U.S. GAAP
before noncontrolling interests plus interest expense, income tax (benefit)
expense, depreciation and amortization, non-cash compensation, transaction
costs and transaction-related compensation, including acquisition pursuit
costs, loss on sale of receivables to affiliate, restructuring costs, loss on
extinguishment of debt, asset impairments and excluding (gain) loss on sale of
real estate improvements. Other companies may not calculate Adjusted EBITDA in
the same manner as CyrusOne. Accordingly, CyrusOne’s Adjusted EBITDA as
presented may not be comparable to others. Detailed reconciliations of
CyrusOne’s Adjusted EBITDA to the comparable GAAP financial measure are
available in the Investor Relations section of www.cyrusone.com.

^2Net income excluding special items in total and per share provides a useful
measure of operating performance. Net income excluding special items should
not be considered as an alternative to comparable GAAP measures of
profitability and may not be comparable with net income excluding special
items as defined by other companies.

^3Adjusted EBITDA margin provides a useful measure of operational performance.
The company defines Adjusted EBITDA margin as Adjusted EBITDA divided by
revenue. Adjusted EBITDA margin should not be considered as an alternative to
comparable GAAP measures of profitability and may not be comparable with the
measure as defined by other companies.

Free cash flow provides a useful measure of operational performance, liquidity
and financial health. The company defines free cash flow as cash provided by
(used in) operating, financing and investing activities, adjusted for the
issuance and repayment of debt, debt issuance costs, the repurchase of common
stock, and the proceeds from the sale or the use of funds from the purchase of
business operations, including transaction costs. Free cash flow should not be
considered as an alternative to net income (loss), operating income (loss),
cash flow from operating activities, or the change in cash on the balance
sheet and may not be comparable with free cash flow as defined by other
companies. Although the company feels that there is no comparable GAAP measure
for free cash flow, the attached financial information reconciles free cash
flow to the net increase (decrease) in cash and cash equivalents.

Net debt provides a useful measure of liquidity and financial health. The
company defines net debt as the sum of the face amount of short-term and
long-term debt and unamortized premium and/or discount, offset by cash and
cash equivalents. Net debt should not be considered as an alternative to
comparable GAAP measures of liquidity and may not be comparable with the
measure as defined by other companies.

About Cincinnati Bell Inc.

With headquarters in Cincinnati, Ohio, Cincinnati Bell (NYSE: CBB) provides
integrated communications solutions - including local and long distance voice,
data, high-speed internet, entertainment and wireless services - that keep
residential and business customers in Greater Cincinnati and Dayton connected
with each other and with the world. In addition, enterprise customers across
the United States rely on Cincinnati Bell for efficient, scalable office
communications systems and end-to-end IT solutions. Cincinnati Bell also is
the majority owner of CyrusOne (NASDAQ: CONE), which provides best-in-class
data center colocation services to enterprise customers through its facilities
with fully redundant power and cooling solutions that are currently located in
the Midwest, Texas, Arizona, London and Singapore. For more information,
please visit www.cincinnatibell.com.

                                                                                              
Cincinnati Bell Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions, except per share amounts)
  
                          Three Months Ended                         Six Months Ended
                          June 30,              Change               June 30,              Change
                          2013        2012      $           %        2013        2012      $           %
                                                                                                       
  Revenue                 $ 312.0     $ 368.2   $ (56.2 )   (15 )%   $ 637.7     $ 731.0   $ (93.3 )   (13 )%
                                                                                                       
  Costs and expenses
    Cost of services        157.6       171.7     (14.1 )   (8  )%     319.4       337.5     (18.1 )   (5  )%
    and products
    Selling, general        54.7        63.4      (8.7  )   (14 )%     107.8       127.4     (19.6 )   (15 )%
    and administrative
    Depreciation and        37.2        53.7      (16.5 )   (31 )%     87.8        104.8     (17.0 )   (16 )%
    amortization
    Transaction-related     7.1         -         7.1       n/m        42.6        -         42.6      n/m
    compensation
    Restructuring           8.2         1.2       7.0       n/m        10.8        2.1       8.7       n/m
    charges
    Curtailment gain        (0.6  )     -         (0.6  )   n/m        (0.6  )   -           (0.6  )   n/m
    Loss on sale or
    disposal of assets,     0.3         -         0.3       n/m        2.8         -         2.8       n/m
    net
    Transaction costs       0.7         -         0.7       n/m        1.1         -         1.1       n/m
    Asset impairments      -         13.0     (13.0 )   n/m      -         13.0     (13.0 )   n/m 
                                                                                                       
          Operating         46.8        65.2      (18.4 )   (28 )%     66.0        146.2     (80.2 )   (55 )%
          income
                                                                                                       
  Interest                  45.4        53.7      (8.3  )   (15 )%     93.3        108.1     (14.8 )   (14 )%
  expense
  Loss from CyrusOne
  equity method             4.7         -         4.7       n/m        6.6         -         6.6       n/m
  investment
  Other expense            0.1       -        0.1      n/m      (0.2  )    1.5      (1.7  )   n/m 
  (income), net
                                                                                                       
  (Loss) income before      (3.4  )     11.5      (14.9 )   n/m        (33.7 )     36.6      (70.3 )   n/m
  income taxes
  Income tax (benefit)     (4.2  )    7.0      (11.2 )   n/m      2.2       19.5     (17.3 )   (89 )%
  expense
                                                                                                       
  Net income (loss)         0.8         4.5       (3.7  )   (82 )%     (35.9 )     17.1      (53.0 )   n/m
                                                                                                       
  Preferred stock          2.6       2.6      -        0   %     5.2       5.2      -        0   %
  dividends
                                                                                                       
  Net (loss) income
  applicable to common    $ (1.8  )   $ 1.9     $ (3.7  )   n/m     $ (41.1 )   $ 11.9    $ (53.0 )   n/m 
  shareowners
                                                                                                       
                                                                                                       
  Basic and diluted
  (loss) earnings per     $ (0.01 )   $ 0.01                         $ (0.20 )   $ 0.06
  common share
                                                                                                       
  Weighted average
  common shares
  outstanding
    (in millions)
    - Basic                 206.9       195.8                          204.8       195.5
    - Diluted               206.9       201.7                          204.8       201.7
                                                                                                       

                                                                   
Cincinnati Bell Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions, except per share amounts)
    
                                                                        
                                    Three Months Ended
                                    June 30,    March 31,   Change
                                    2013        2013        $           %
                                                                        
  Revenue                           $ 312.0     $ 325.7     $ (13.7 )   (4  )%
                                                                        
  Costs and expenses
      Cost of services and            157.6       161.8       (4.2  )   (3  )%
      products
      Selling, general and            54.7        53.1        1.6       3   %
      administrative
      Depreciation and                37.2        50.6        (13.4 )   (26 )%
      amortization
      Transaction-related             7.1         35.5        (28.4 )   (80 )%
      compensation
      Restructuring charges           8.2         2.6         5.6       n/m
      Curtailment gain                (0.6  )     -           (0.6  )   n/m
      Loss on sale or disposal of     0.3         2.5         (2.2  )   (88 )%
      assets, net
      Transaction costs              0.7       0.4       0.3      75  %
                                                                        
            Operating income          46.8        19.2        27.6      n/m
                                                                        
  Interest expense                    45.4        47.9        (2.5  )   (5  )%
  Loss from CyrusOne equity           4.7         1.9         2.8       n/m
  method investment
  Other expense (income), net        0.1       (0.3  )    0.4      n/m 
                                                                        
  Loss before income taxes            (3.4  )     (30.3 )     26.9      89  %
  Income tax (benefit) expense       (4.2  )    6.4       (10.6 )   n/m 
                                                                        
  Net income (loss)                   0.8         (36.7 )     37.5      n/m
                                                                        
  Preferred stock dividends          2.6       2.6       -        0   %
                                                                        
  Net loss applicable to common     $ (1.8  )   $ (39.3 )   $ 37.5     95  %
  shareowners
                                                                        
                                                                        
  Basic and diluted loss per        $ (0.01 )   $ (0.19 )
  common share
                                                                        
  Weighted average common shares
  outstanding
      (in millions)
      - Basic and diluted             206.9       202.8
                                                                        

                                                                                         
Cincinnati Bell Inc.
Income Statements by Segment
(Unaudited)
(Dollars in millions)
 
                       Three Months Ended                         Six Months Ended
                       June 30,              Change               June 30,            Change
                       2013      2012        $           %        2013      2012      $          %
  Wireline
  Revenue
    Data               $ 79.2    $ 76.2      $ 3.0       4   %    $ 157.3   $ 152.2   $ 5.1       3   %
    Voice - local        58.3      64.7        (6.4  )   (10 )%     117.8     130.7     (12.9 )   (10 )%
    service
    Long distance        26.8      29.1        (2.3  )   (8  )%     53.7      58.0      (4.3  )   (7  )%
    and VoIP
    Entertainment        13.0      8.4         4.6       55  %      25.0      16.1      8.9       55  %
    Other               4.3      5.3       (1.0  )   (19 )%    7.5      9.1      (1.6  )   (18 )%
                                                                                                  
    Total revenue       181.6    183.7     (2.1  )   (1  )%    361.3    366.1    (4.8  )   (1  )%
                                                                                                  
  Operating costs
  and expenses
    Cost of
    services and         69.8      71.2        (1.4  )   (2  )%     141.0     140.0     1.0       1   %
    products
    Selling,
    general and          31.7      30.7        1.0       3   %      62.7      61.2      1.5       2   %
    administrative
    Depreciation
    and                  27.3      26.4        0.9       3   %      54.1      52.3      1.8       3   %
    amortization
    Other*              3.9      0.7       3.2      n/m      4.5      0.7      3.8      n/m 
                                                                                                  
    Total operating
    costs and           132.7    129.0     3.7      3   %     262.3    254.2    8.1      3   %
    expenses
                                                                                                  
  Operating income     $ 48.9    $ 54.7     $ (5.8  )   (11 )%   $ 99.0    $ 111.9   $ (12.9 )   (12 )%
                                                                                                  
  Wireless
  Revenue
    Service            $ 47.5    $ 57.6      $ (10.1 )   (18 )%   $ 96.8    $ 116.7   $ (19.9 )   (17 )%
    Equipment           4.2      4.2       -        0   %     8.2      8.8      (0.6  )   (7  )%
                                                                                                  
    Total revenue       51.7     61.8      (10.1 )   (16 )%    105.0    125.5    (20.5 )   (16 )%
                                                                                                  
  Operating costs
  and expenses
    Cost of
    services and         23.8      27.4        (3.6  )   (13 )%     47.3      56.9      (9.6  )   (17 )%
    products
    Selling,
    general and          9.0       10.6        (1.6  )   (15 )%     18.8      21.3      (2.5  )   (12 )%
    administrative
    Depreciation
    and                  7.3       8.0         (0.7  )   (9  )%     23.3      15.9      7.4       47  %
    amortization
    Other*              0.2      -         0.2      n/m      3.5      0.5      3.0      n/m 
                                                                                                  
    Total operating
    costs and           40.3     46.0      (5.7  )   (12 )%    92.9     94.6     (1.7  )   (2  )%
    expenses
                                                                                                  
  Operating income     $ 11.4    $ 15.8     $ (4.4  )   (28 )%   $ 12.1    $ 30.9    $ (18.8 )   (61 )%
                                                                                                  
  IT Services and
  Hardware
  Revenue
    Telecom and IT
    equipment          $ 56.1    $ 49.8      $ 6.3       13  %    $ 113.0   $ 95.5    $ 17.5      18  %
    distribution
    Managed and
    professional        29.9     27.5      2.4      9   %     57.5     55.0     2.5      5   %
    services
                                                                                                  
    Total revenue       86.0     77.3      8.7      11  %     170.5    150.5    20.0     13  %
                                                                                                  
  Operating costs
  and expenses
    Cost of
    services and         70.7      63.3        7.4       12  %      140.1     122.0     18.1      15  %
    products
    Selling,
    general and          11.8      10.9        0.9       8   %      22.5      21.2      1.3       6   %
    administrative
    Depreciation
    and                  2.5       2.3         0.2       9   %      5.0       3.9       1.1       28  %
    amortization
    Other*              0.7      -         0.7      n/m      0.7      -        0.7      n/m 
                                                                                                  
    Total operating
    costs and           85.7     76.5      9.2      12  %     168.3    147.1    21.2     14  %
    expenses
                                                                                                  
  Operating income     $ 0.3     $ 0.8      $ (0.5  )   (63 )%   $ 2.2     $ 3.4     $ (1.2  )   (35 )%
                                                                                                  
  Data Center
  Colocation**
  Revenue              $ -       $ 54.0     $ (54.0 )   n/m     $ 15.6    $ 106.6   $ (91.0 )   n/m 
                                                                                                  
  Operating costs
  and expenses
    Cost of              -         17.8        (17.8 )   n/m        4.8       35.1      (30.3 )   n/m
    services
    Selling,
    general and          -         7.6         (7.6  )   n/m        2.4       14.1      (11.7 )   n/m
    administrative
    Depreciation
    and                  -         17.0        (17.0 )   n/m        5.2       32.6      (27.4 )   n/m
    amortization
    Other*              -        13.5      (13.5 )   n/m      -        13.5     (13.5 )   n/m 
                                                                                                  
    Total operating
    costs and           -        55.9      (55.9 )   n/m      12.4     95.3     (82.9 )   n/m 
    expenses
                                                                                                  
  Operating (loss)     $ -       $ (1.9  )   $ 1.9      n/m     $ 3.2     $ 11.3    $ (8.1  )   n/m 
  income
                                                                                                  

*Other includes restructuring charges, loss (gain) on sale or disposal of
assets, asset impairment, and a curtailment gain.

**Results for 2013 only include CyrusOne’s results through January 23, 2013.
Effective January 24, 2013, the date of completion of CyrusOne’s IPO, the
Company owns 69% of CyrusOne as an equity method investment, and therefore
does not consolidate the CyrusOne results of operations in the total company
or segment results.


                                                                  
Cincinnati Bell Inc.
Income Statements by Segment
(Unaudited)
(Dollars in millions)
 
                                     Three Months Ended
                                     June 30,   March 31,   Change
                                     2013       2013        $           %
  Wireline
  Revenue
     Data                            $  79.2    $  78.1     $ 1.1       1   %
     Voice - local service              58.3       59.5       (1.2  )   (2  )%
     Long distance and VoIP             26.8       26.9       (0.1  )   0   %
     Entertainment                      13.0       12.0       1.0       8   %
     Other                             4.3       3.2       1.1      34  %
                                                                        
     Total revenue                     181.6     179.7     1.9      1   %
                                                                        
  Operating costs and expenses
     Cost of services and               69.8       71.2       (1.4  )   (2  )%
     products
     Selling, general and               31.7       31.0       0.7       2   %
     administrative
     Depreciation and                   27.3       26.8       0.5       2   %
     amortization
     Other*                            3.9       0.6       3.3      n/m 
                                                                        
     Total operating costs and         132.7     129.6     3.1      2   %
     expenses
                                                                        
  Operating income                   $  48.9    $  50.1     $ (1.2  )   (2  )%
                                                                        
  Wireless
  Revenue
     Service                         $  47.5    $  49.3     $ (1.8  )   (4  )%
     Equipment                         4.2       4.0       0.2      5   %
                                                                        
     Total revenue                     51.7      53.3      (1.6  )   (3  )%
                                                                        
  Operating costs and expenses
     Cost of services and               23.8       23.5       0.3       1   %
     products
     Selling, general and               9.0        9.8        (0.8  )   (8  )%
     administrative
     Depreciation and                   7.3        16.0       (8.7  )   (54 )%
     amortization
     Other*                            0.2       3.3       (3.1  )   (94 )%
                                                                        
     Total operating costs and         40.3      52.6      (12.3 )   (23 )%
     expenses
                                                                        
  Operating income                   $  11.4    $  0.7      $ 10.7     n/m 
                                                                        
  IT Services and Hardware
  Revenue
     Telecom and IT equipment        $  56.1    $  56.9     $ (0.8  )   (1  )%
     distribution
     Managed and professional          29.9      27.6      2.3      8   %
     services
                                                                        
     Total revenue                     86.0      84.5      1.5      2   %
                                                                        
  Operating costs and expenses
     Cost of services and               70.7       69.4       1.3       2   %
     products
     Selling, general and               11.8       10.7       1.1       10  %
     administrative
     Depreciation and                   2.5        2.5        -         0   %
     amortization
     Other*                            0.7       -         0.7      n/m 
                                                                        
     Total operating costs and         85.7      82.6      3.1      4   %
     expenses
                                                                        
  Operating income                   $  0.3     $  1.9      $ (1.6  )   (84 )%
                                                                        
  Data Center Colocation**
  Revenue                            $  -       $  15.6     $ (15.6 )   n/m 
                                                                        
  Operating costs and expenses
     Cost of services                   -          4.8        (4.8  )   n/m
     Selling, general and               -          2.4        (2.4  )   n/m
     administrative
     Depreciation and                   -          5.2        (5.2  )   n/m
     amortization
     Other*                            -         -         -        n/m 
                                                                        
     Total operating costs and         -         12.4      (12.4 )   n/m 
     expenses
                                                                        
  Operating income                   $  -       $  3.2      $ (3.2  )   n/m 
                                                                            

*Other includes restructuring charges, loss (gain) on sale or disposal of
assets, and a curtailment gain.

**Results for 2013 only include CyrusOne’s results through January 23, 2013.
Effective January 24, 2013, the date of completion of CyrusOne’s IPO, the
Company owns 69% of CyrusOne as an equity method investment, and therefore
does not consolidate the CyrusOne results of operations in the total company
or segment results.


                                                                                               
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)
  
                                                                                                          
                         Three Months Ended                           Six Months Ended
                         June 30,                Change               June 30,                Change
                         2013        2012        $           %        2013        2012        $           %
  Revenue
    Wireline             $ 181.6     $ 183.7     $ (2.1  )   (1  )%   $ 361.3     $ 366.1     $ (4.8  )   (1  )%
    Wireless               51.7        61.8        (10.1 )   (16 )%     105.0       125.5       (20.5 )   (16 )%
    IT Services            86.0        77.3        8.7       11  %      170.5       150.5       20.0      13  %
    and Hardware
    Data Center            -           54.0        (54.0 )   n/m        15.6        106.6       (91.0 )   n/m 
    Colocation**
    Eliminations          (7.3  )    (8.6  )    1.3      15  %     (14.7 )    (17.7 )    3.0      17  %
                                                                                                          
    Total revenue        $ 312.0    $ 368.2    $ (56.2 )   (15 )%   $ 637.7    $ 731.0    $ (93.3 )   (13 )%
                                                                                                          
  Cost of Services
  and Products
    Wireline             $ 69.8      $ 71.2      $ (1.4  )   (2  )%   $ 141.0     $ 140.0     $ 1.0       1   %
    Wireless               23.8        27.4        (3.6  )   (13 )%     47.3        56.9        (9.6  )   (17 )%
    IT Services            70.7        63.3        7.4       12  %      140.1       122.0       18.1      15  %
    and Hardware
    Data Center            -           17.8        (17.8 )   n/m        4.8         35.1        (30.3 )   n/m 
    Colocation**
    Eliminations          (6.7  )    (8.0  )    1.3      16  %     (13.8 )    (16.5 )    2.7      16  %
                                                                                                          
    Total cost of
    services and         $ 157.6    $ 171.7    $ (14.1 )   (8  )%   $ 319.4    $ 337.5    $ (18.1 )   (5  )%
    products
                                                                                                          
  Selling, General
  and
  Administrative
    Wireline             $ 31.7      $ 30.7      $ 1.0       3   %    $ 62.7      $ 61.2      $ 1.5       2   %
    Wireless               9.0         10.6        (1.6  )   (15 )%     18.8        21.3        (2.5  )   (12 )%
    IT Services            11.8        10.9        0.9       8   %      22.5        21.2        1.3       6   %
    and Hardware
    Data Center            -           7.6         (7.6  )   n/m        2.4         14.1        (11.7 )   n/m 
    Colocation**
    Corporate and         2.2       3.6       (1.4  )   (39 )%    1.4       9.6       (8.2  )   (85 )%
    eliminations
                                                                                                          
    Total selling,
    general and          $ 54.7     $ 63.4     $ (8.7  )   (14 )%   $ 107.8    $ 127.4    $ (19.6 )   (15 )%
    administrative
                                                                                                          
  Depreciation and
  Amortization
    Wireline             $ 27.3      $ 26.4      $ 0.9       3   %    $ 54.1      $ 52.3      $ 1.8       3   %
    Wireless               7.3         8.0         (0.7  )   (9  )%     23.3        15.9        7.4       47  %
    IT Services            2.5         2.3         0.2       9   %      5.0         3.9         1.1       28  %
    and Hardware
    Data Center            -           17.0        (17.0 )   n/m        5.2         32.6        (27.4 )   n/m 
    Colocation**
    Corporate             0.1       -         0.1      n/m      0.2       0.1       0.1      100 %
                                                                                                          
    Total
    depreciation         $ 37.2     $ 53.7     $ (16.5 )   (31 )%   $ 87.8     $ 104.8    $ (17.0 )   (16 )%
    and
    amortization
                                                                                                          
  Other*
    Wireline             $ 3.9       $ 0.7       $ 3.2       n/m      $ 4.5       $ 0.7       $ 3.8       n/m
    Wireless               0.2         -           0.2       n/m        3.5         0.5         3.0       n/m
    IT Services            0.7         -           0.7       n/m        0.7         -           0.7       n/m
    and Hardware
    Data Center            -           13.5        (13.5 )   n/m        -           13.5        (13.5 )   n/m
    Colocation**
    Corporate             10.9      -         10.9     n/m      48.0      0.4       47.6     n/m 
                                                                                                          
    Total other          $ 15.7     $ 14.2     $ 1.5      11  %    $ 56.7     $ 15.1     $ 41.6     n/m 
                                                                                                          
  Operating Income
    Wireline             $ 48.9      $ 54.7      $ (5.8  )   (11 )%   $ 99.0      $ 111.9     $ (12.9 )   (12 )%
    Wireless               11.4        15.8        (4.4  )   (28 )%     12.1        30.9        (18.8 )   (61 )%
    IT Services            0.3         0.8         (0.5  )   (63 )%     2.2         3.4         (1.2  )   (35 )%
    and Hardware
    Data Center            -           (1.9  )     1.9       n/m        3.2         11.3        (8.1  )   n/m 
    Colocation**
    Corporate             (13.8 )    (4.2  )    (9.6  )   n/m      (50.5 )    (11.3 )    (39.2 )   n/m 
                                                                                                          
    Total
    operating            $ 46.8     $ 65.2     $ (18.4 )   (28 )%   $ 66.0     $ 146.2    $ (80.2 )   (55 )%
    income
                                                                                                              

*Other includes restructuring charges, loss (gain) on sale or disposal of
assets, asset impairments, transaction-related compensation, transaction
costs, and a curtailment gain.

**Results for 2013 only include CyrusOne’s results through January 23, 2013.
Effective January 24, 2013, the date of completion of CyrusOne’s IPO, the
Company owns 69% of CyrusOne as an equity method investment, and therefore
does not consolidate the CyrusOne results of operations in the total company
or segment results.


                                                                 
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)
  
                                                                        
                                    Three Months Ended
                                    June 30,    March 31,   Change
                                    2013        2013        $           %
  Revenue
    Wireline                        $ 181.6     $ 179.7     $ 1.9       1   %
    Wireless                          51.7        53.3        (1.6  )   (3  )%
    IT Services and Hardware          86.0        84.5        1.5       2   %
    Data Center Colocation**          -           15.6        (15.6 )   n/m
    Eliminations                     (7.3  )    (7.4  )    0.1      1   %
                                                                        
    Total revenue                   $ 312.0    $ 325.7    $ (13.7 )   (4  )%
                                                                        
  Cost of Services and
  Products
    Wireline                        $ 69.8      $ 71.2      $ (1.4  )   (2  )%
    Wireless                          23.8        23.5        0.3       1   %
    IT Services and Hardware          70.7        69.4        1.3       2   %
    Data Center Colocation**          -           4.8         (4.8  )   n/m
    Eliminations                     (6.7  )    (7.1  )    0.4      6   %
                                                                        
    Total cost of services          $ 157.6    $ 161.8    $ (4.2  )   (3  )%
    and products
                                                                        
  Selling, General and
  Administrative
    Wireline                        $ 31.7      $ 31.0      $ 0.7       2   %
    Wireless                          9.0         9.8         (0.8  )   (8  )%
    IT Services and Hardware          11.8        10.7        1.1       10  %
    Data Center Colocation**          -           2.4         (2.4  )   n/m
    Corporate and                    2.2       (0.8  )    3.0      n/m 
    eliminations
                                                                        
    Total selling, general          $ 54.7     $ 53.1     $ 1.6      3   %
    and administrative
                                                                        
  Depreciation and
  Amortization
    Wireline                        $ 27.3      $ 26.8      $ 0.5       2   %
    Wireless                          7.3         16.0        (8.7  )   (54 )%
    IT Services and Hardware          2.5         2.5         -         0   %
    Data Center Colocation**          -           5.2         (5.2  )   n/m
    Corporate                        0.1       0.1       -        0   %
                                                                        
    Total depreciation and          $ 37.2     $ 50.6     $ (13.4 )   (26 )%
    amortization
                                                                        
  Other*
    Wireline                        $ 3.9       $ 0.6       $ 3.3       n/m
    Wireless                          0.2         3.3         (3.1  )   (94 )%
    IT Services and Hardware          0.7         -           0.7       n/m
    Data Center Colocation**          -           -           -         n/m
    Corporate                        10.9      37.1      (26.2 )   (71 %)
                                                                        
    Total other                     $ 15.7     $ 41.0     $ (25.3 )   (62 )%
                                                                        
  Operating Income
    Wireline                        $ 48.9      $ 50.1      $ (1.2  )   (2  )%
    Wireless                          11.4        0.7         10.7      n/m
    IT Services and Hardware          0.3         1.9         (1.6  )   (84 )%
    Data Center Colocation**          -           3.2         (3.2  )   n/m
    Corporate                        (13.8 )    (36.7 )    22.9     62  %
                                                                        
    Total operating income          $ 46.8     $ 19.2     $ 27.6     n/m 
                                                                            

*Other includes restructuring charges, loss (gain) on sale or disposal of
assets, transaction-related compensation, transaction costs, and a curtailment
gain.

**Results for 2013 only include CyrusOne's results through January 23,
2013.Effective January 24, 2013, the date of completion of CyrusOne's IPO,
the Company owns 69% of CyrusOne as an equity method investment, and therefore
does not consolidate the CyrusOne results of operations in the total company
or segment results.


                                                            
Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)
(In thousands)
 
                                       June 30,     March 31,     June 30,
                                       2013         2013          2012
                                                                  
  Local access lines                   550.0        561.4         598.5
                                                                  
  Long distance lines                  406.5        410.4         433.6
                                                                  
  High-speed internet subscribers
      DSL subscribers                  194.9        199.5         210.5
      Fioptics subscribers             66.8         60.7          47.1
                                                                  
                                       261.7        260.2         257.6
                                                                  
  Fioptics units passed                238.0        220.0         168.8
                                                                  
  Fioptics entertainment subscribers   63.2         57.6          46.4
                                                                  
  Wireless
      Postpaid wireless subscribers    223.1        236.6         284.9
      Prepaid wireless subscribers     146.9        148.7         145.2
                                                                  
                                       370.0        385.3         430.1
                                                                  

                                                                                   
Cincinnati Bell Inc.
Local Access Line Detail
(Unaudited)
(In thousands)

                                                                                
                    2011                              2012                              2013
                    1Q      2Q      3Q      4Q        1Q      2Q      3Q      4Q        1Q      2Q
Local Access
Lines
                                                                                                
In-Territory:
   Primary          321.8   313.8   304.8   296.7     288.9   281.7   274.3   266.4     259.1   253.1
   Residential
   Secondary        18.3    16.3    15.6    14.9      14.2    13.6    13.1    12.5      12.0    11.4
   Residential
   Business/Other   250.7  248.7  244.4  240.8     238.5  237.5  234.4  232.1     229.7  228.2
Total               590.8   578.8   564.8   552.4     541.6   532.8   521.8   511.0     500.8   492.7
In-Territory
                                                                                                
Out-of-Territory:
   Primary          30.4    29.3    27.8    26.7      25.2    24.3    23.3    22.4      20.8    19.8
   Residential
   Secondary        0.9     0.9     0.9     0.8       0.8     0.8     0.7     0.7       0.6     0.6
   Residential
   Business/Other   41.5   41.6   41.8   41.4      41.0   40.6   40.0   39.8      39.2   36.9
Total               72.8    71.8    70.5    68.9      67.0    65.7    64.0    62.9      60.6    57.3
Out-of-Territory
                                                                                
Total Access        663.6  650.6  635.3  621.3     608.6  598.5  585.8  573.9     561.4  550.0
Lines
                                                                                                

                                                           
Cincinnati Bell Inc.
Net Debt and Common Shares Outstanding
(Unaudited)
(Dollars and shares in millions)

                                                                  
                                  June 30,        March 31,       December 31,
                                  2013            2013            2012
                                                                  
                                                                  
Corporate Credit Agreement        $ 8.0           $ -             $  -
Receivables Facility                100.8           54.0             52.0
8 1/4% Senior Notes due 2017        500.0           500.0            500.0
8 3/4% Senior Subordinated          625.0           625.0            625.0
Notes due 2018
8 3/8% Senior Notes due 2020        683.9           683.9            683.9
CyrusOne 6 3/8% Senior Notes        -               -                525.0
due 2022*
7 1/4% Senior Notes due 2023        40.0            40.0             40.0
Various Cincinnati Bell             134.5           134.5            134.5
Telephone notes
Capital leases and other            104.7           103.7            136.5
debt*
Net unamortized discount           (6.7    )      (7.1    )       (7.5    )
                                                                  
     Total debt                     2,190.2         2,134.0          2,689.4
                                                                  
Less: Cash and cash                (5.5    )      (5.1    )       (23.6   )
equivalents
                                                                  
     Net debt (as defined by      $ 2,184.7      $ 2,128.9      $  2,665.8 
     the company)
                                                                  
Credit facility availability:
     Corporate                    $ 192.0         $ 200.0         $  200.0
     CyrusOne**                    -             -              225.0   
                                                                  
                                  $ 192.0        $ 200.0        $  425.0   
                                                                  
Common shares outstanding          208.0         207.9          202.5   
                                                                             

*On January 24, 2013, CyrusOne completed its IPO. As of this date, Cincinnati
Bell Inc. no longer has any obligations related to CyrusOne's 6 3/8% Senior
Notes due 2022 or capital lease obligations.

** On January 24, 2013, CyrusOne completed its IPO. As of this date,
Cincinnati Bell Inc. no longer has access to the CyrusOne credit facility.


*Story too large*
                                                                              
Cincinnati Bell Inc.
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP)
(Unaudited)
(Dollars in millions)
                                                                         
                          Three Months Ended June 30, 2013
                                                IT
                          Wireline   Wireless   Services   Data Center   Corporate   Total
                                                &          Colocation*               Company
                                                Hardware
                                                                                     
  Net Income (GAAP)                                                                  $ 0.8
  Add:
    Income tax benefit                                                                 (4.2  )
    Interest expense                                                                   45.4
    Loss from CyrusOne
    equity method                                                                      4.7
    investment
    Other expense, net                                                                0.1   
                                                                                     
  Operating Income        $ 48.9     $ 11.4     $  0.3     $   -         $ (13.8 )   $ 46.8
  (GAAP)
  Add:
    Depreciation and        27.3       7.3         2.5         -           0.1         37.2
    amortization
    Transaction-related     -          -           -           -           7.1         7.1
    compensation
    Restructuring           4.4        -           0.7         -           3.1         8.2
    charges
    Loss on sale or         0.1        0.2         -           -           -           0.3
    disposal of assets
    Transaction costs       -          -           -           -           0.7         0.7
    Curtailment gain        (0.6 )     -           -           -           -           (0.6  )
    Pension and other
    retirement plan        4.2      -         -         -         0.3       4.5   
    expenses
                                                                                     
  Adjusted EBITDA         $ 84.3    $ 18.9    $  3.5    $   -        $ (2.5  )   $ 104.2 
  (Non-GAAP)
                                                                                     
  Adjusted EBITDA           46   %     37   %      4   %       -          -           33    %
  Margin
                                                                           
                          Three Months Ended March 31, 2013
                                                IT
                          Wireline   Wireless   Services   Data Center   Corporate   Total
                                                &          Colocation*               Company
                                                Hardware
                                                                                     
  Net Loss (GAAP)                                                                    $ (36.7 )
  Add:
    Income tax expense                                                                 6.4   
    Interest expense                                                                   47.9
    Loss from CyrusOne
    equity method                                                                      1.9
    investment
    Other income, net                                                                 (0.3  )
                                                                                     
  Operating Income        $ 50.1     $ 0.7      $  1.9     $   3.2       $ (36.7 )   $ 19.2
  (GAAP)
  Add:
    Depreciation and        26.8       16.0        2.5         5.2         0.1         50.6
    amortization
    Transaction-related     -          -           -           -           35.5        35.5
    compensation
    Restructuring           1.4        -           -           -           1.2         2.6
    charges
    Gain (loss) on sale
    or disposal of          (0.8 )     3.3
    assets

[TRUNCATED]
 
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