Cincinnati Bell Reports Fourth Quarter and Full Year 2013 Results

  Cincinnati Bell Reports Fourth Quarter and Full Year 2013 Results

Highlights

  *Strong Adjusted EBITDA of $407 million in line with revised guidance range
  *Achieved full year revenue guidance of $1.2 billion
  *Revenue from strategic products totaled $359 million, up 17 percent
    year-over-year
  *Fioptics annual revenue exceeded $100 million, up 48 percent over prior
    year
  *Record high 23,100 Fioptics high-speed internet and 19,100 entertainment
    net activations

Business Wire

CINCINNATI -- February 20, 2014

Cincinnati Bell Inc. (NYSE:CBB) today announced financial results for the full
year and fourth quarter of 2013, highlighted by impressive full-year Adjusted
EBITDA^1 totaling $407 million, after excluding CyrusOne, and the continued
strong demand and growth in our strategic products.

“2013 was a transformational year for Cincinnati Bell on many levels,” said
Ted Torbeck, president and chief executive officer. “Our year started with the
successful IPO of CyrusOne and concluded with Fioptics, one of our key
strategic products, generating more than $100 million in annual revenues.”

CONSOLIDATED RESULTS

On January 24, 2013, the company successfully completed the initial public
offering (“IPO”) of CyrusOne, and its consolidated year-to-date results for
2013 include the results of that business up to the IPO date. Year-to-date
revenue for 2013 was $1.3 billion, operating income was $164 million, and net
income excluding special items^2 totaled $14 million. Excluding the data
center segment results, Cincinnati Bell generated revenue of $1.2 billion,
down 1 percent from the prior year and operating income of $181 million.
Adjusted EBITDA excluding the data center business was $407 million, and
includes a gain of $6 million associated with mark-to-market adjustments on
compensation plans indexed to the company’s stock price.

Total revenue for the fourth quarter of 2013 was $308 million, down $10
million from the prior year after excluding the data center segment results.
Operating income totaled $40 million, down $10 million from the prior year
after excluding CyrusOne. The fourth quarter net loss of $28 million includes
a $30 million loss on the early extinguishment of the 8.25 percent Senior
Notes due 2017, repaid with proceeds from the issuance of a $540 million
Tranche B term loan facility.

SEGMENT RESULTS

Wireline Segment

Revenue growth from strategic fiber based products continues to increasingly
mitigate access line loss. Fioptics revenue totaled $29 million in the
quarter, up 49 percent from the same period in 2012. Strategic revenue for
business customers totaled $40 million, up 12 percent compared to the prior
year. Adjusted EBITDA margin^3 was 44 percent in the quarter, down from prior
year due to the loss of higher margin access lines.

  *Wireline revenue was $182 million for the quarter, flat compared to the
    fourth quarter of 2012. Full year Wireline revenue totaled $725 million,
    down 1 percent from a year ago.
  *Operating income for the quarter was $43 million, down from $50 million in
    the same period of 2012, and full year 2013 operating income was $190
    million, down 11 percent compared to 2012.
  *Adjusted EBITDA was $80 million in the fourth quarter of 2013 and $331
    million for the full year, down 5 percent and 4 percent, respectively,
    from the same periods in 2012.
  *Fioptics entertainment subscribers increased by 4,500 in the quarter and
    19,100 for the year. Fioptics entertainment subscribers totaled 74,200 at
    the end of the year, up 35 percent compared to the end of 2012.
  *Fioptics internet subscribers now total 79,900, up more than 40 percent
    from a year ago. The company added 5,600 new Fioptics high-speed internet
    subscribers in the quarter, and 23,100 for the year.
  *In 2013, we passed 71,000 units with Fioptics and achieved 29 percent
    penetration. The Fiopitcs suite of products is now available to 276,000
    residential and business customers, approximately 35 percent of Greater
    Cincinnati.

IT Services and Hardware Segment

Strong demand for managed and professional services resulted in revenue of $33
million, up 20 percent over the prior year. Hardware sales totaled $53 million
for the quarter.

  *Revenue for the quarter was $86 million, down $1 million from the fourth
    quarter of 2012. Full year revenue was $344 million, up 9 percent compared
    to the prior year.
  *Operating income totaled $2 million for the quarter and $9 million for the
    full year.
  *Adjusted EBITDA for the quarter was $5 million, up $1 million from a year
    ago. Full year Adjusted EBITDA totaled $20 million, up 11 percent from the
    prior year.

Wireless Segment

We continue to manage our Wireless segment for cash flow and profitability as
the business is challenged by revenue declines due to the loss of postpaid
subscribers.

  *Revenue was $47 million for the quarter and $202 million for 2013, a
    decrease of 17 percent for both periods compared to 2012.
  *Wireless reported full year operating income of $18 million, including a
    $1 million operating loss for the fourth quarter of 2013.
  *Adjusted EBITDA was $10 million in the fourth quarter of 2013 and $63
    million for the full year, down from $17 million and $85 million,
    respectively, from the same periods in 2012.
  *Wireless subscribers totaled 340,000 at the end of the year compared to
    398,000 a year ago.

Investment in CyrusOne

Cincinnati Bell continues to effectively own 69 percent of CyrusOne, which is
accounted for as an equity method investment. As of year-end, the company’s
investment in CyrusOne was valued at approximately $1 billion.

  *CyrusOne reported revenue of $72 million and Adjusted EBITDA of $40
    million for the fourth quarter of 2013. For the full year, CyrusOne
    reported revenue of $264 million and Adjusted EBITDA of $139 million, in
    line with its established financial guidance range.
  *CyrusOne provided 2014 financial guidance targets for Revenue and Adjusted
    EBITDA, indicating expected growth of 18 percent and 17 percent at the
    mid-point of the range.

“Looking ahead, we are very excited about the opportunity to turn Cincinnati
Bell into a growing fiber based company capable of producing significant
sustainable free cash flows,” Torbeck said. “The momentum created in 2013 and
the continued demand for our strategic products gives us great confidence that
we will grow Wireline revenue and generate positive free cash flow in 2014.”

2014 Outlook

Cincinnati Bell is providing the following guidance for 2014:

Category               2014 Guidance
Revenue                       $1.2 billion
Adjusted EBITDA               $383 million*
*Plus or minus 2 percent

Conference Call/Webcast

Cincinnati Bell will host a conference call on February 20 at 10:00 a.m. (ET)
to discuss its results for the fourth quarter and full year 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 March 6, 2014. 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 8619702. 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, (gain)
loss 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, (gain) loss on sale of real estate
improvements,and other special items. 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 CBTS, a wholly-owned subsidiary, 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                           Twelve Months Ended
                          December 31,            Change               December 31,                Change
                          2013        2012        $           %        2013          2012          $            %
                                                                                                                
  Revenue                 $ 308.4     $ 374.7     $ (66.3 )   (18 )%   $ 1,256.9     $ 1,473.9     $ (217.0 )   (15 )%
                                                                                                                
  Costs and expenses
    Cost of services        164.2       184.8       (20.6 )   (11 )%     643.0         694.6         (51.6  )   (7  )%
    and products
    Selling, general        59.4        69.9        (10.5 )   (15 )%     220.8         269.5         (48.7  )   (18 )%
    and administrative
    Depreciation and        42.0        57.2        (15.2 )   (27 )%     169.6         217.4         (47.8  )   (22 )%
    amortization
    Restructuring           2.9         0.4         2.5       n/m        13.7          3.4           10.3       n/m
    charges
    Transaction-related     —           —           —         n/m        42.6          —             42.6       n/m
    compensation
    Curtailment gain        —           —           —         n/m        (0.6    )     —             (0.6   )   n/m
    (Gain) loss on sale
    or disposal of          (0.2  )     (1.0  )     0.8       80  %      2.4           (1.6    )     4.0        n/m
    assets
    Asset impairments       —           0.9         (0.9  )   n/m        —             14.2          (14.2  )   n/m
    Transaction costs      —         4.6       (4.6  )   n/m       1.6         6.3         (4.7   )   (75 )%
                                                                                                                
           Operating        40.1        57.9        (17.8 )   (31 )%     163.8         270.1         (106.3 )   (39 )%
           income
                                                                                                                
  Interest expense          42.0        55.6        (13.6 )   (24 )%     182.0         218.9         (36.9  )   (17 )%
  Loss on
  extinguishment of         29.6        13.6        16.0      n/m        29.6          13.6          16.0       n/m
  debt
  Loss from CyrusOne
  equity method             2.6         —           2.6       n/m        10.7          —             10.7       n/m
  investment
  Other expense            0.1       0.1       —        0   %     (1.3    )    1.7         (3.0   )   n/m
  (income), net
                                                                                                                
  (Loss) income before      (34.2 )     (11.4 )     (22.8 )   n/m        (57.2   )     35.9          (93.1  )   n/m
  income taxes
  Income tax (benefit)     (6.1  )    (1.6  )    (4.5  )   n/m       (2.5    )    24.7        (27.2  )   n/m
  expense
                                                                                                                
  Net (loss) income         (28.1 )     (9.8  )     (18.3 )   n/m        (54.7   )     11.2          (65.9  )   n/m
                                                                                                                
  Preferred stock          2.6       2.6       —        0   %     10.4        10.4        —         0   %
  dividends
                                                                                                                
  Net (loss) income
  applicable to common    $ (30.7 )   $ (12.4 )   $ (18.3 )   n/m      $ (65.1   )   $ 0.8        $ (65.9  )   n/m
  shareowners
                                                                                                                
                                                                                                                
  Basic and diluted
  (loss) earnings per     $ (0.15 )   $ (0.06 )                        $ (0.32   )   $ 0.00    
  common share
                                                                                                                
  Weighted average
  common shares
  outstanding
    (in millions)
    - Basic                 207.1       199.9                            205.9         197.0
    - Diluted               207.1       199.9                            205.9         204.7
                                                                                                                


Cincinnati Bell Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions, except per share amounts)
                                                                
                                                                        
                              Three Months Ended
                              December 31,   September      Change
                                             30,
                              2013           2013           $           %
                                                                        
  Revenue                     $  308.4       $  310.8       $ (2.4  )   (1  )%
                                                                        
  Costs and expenses
      Cost of services and       164.2          159.4         4.8       3   %
      products
      Selling, general and       59.4           53.6          5.8       11  %
      administrative
      Depreciation and           42.0           39.8          2.2       6   %
      amortization
      Restructuring charges      2.9            —             2.9       n/m
      Gain on sale or            (0.2   )       (0.2   )      —         0   %
      disposal of assets
      Transaction costs         —            0.5         (0.5  )   n/m
                                                                        
              Operating          40.1           57.7          (17.6 )   (31 )%
              income
                                                                        
  Interest expense               42.0           46.7          (4.7  )   (10 )%
  Loss on extinguishment of      29.6           —             29.6      n/m
  debt
  Loss from CyrusOne equity      2.6            1.5           1.1       73  %
  method investment
  Other expense (income),       0.1          (1.2   )     1.3      n/m
  net
                                                                        
  (Loss) income before           (34.2  )       10.7          (44.9 )   n/m
  income taxes
  Income tax (benefit)          (6.1   )      1.4         (7.5  )   n/m
  expense
                                                                        
  Net (loss) income              (28.1  )       9.3           (37.4 )   n/m
                                                                        
  Preferred stock dividends     2.6          2.6         —        0   %
                                                                        
  Net (loss) income
  applicable to common        $  (30.7  )    $  6.7        $ (37.4 )   n/m
  shareowners
                                                                        
                                                                        
  Basic and diluted (loss)    $  (0.15  )    $  0.03   
  earnings per common share
                                                                        
  Weighted average common
  shares outstanding
      (in millions)
      - Basic                    207.1          207.0
      - Diluted                  207.1          208.5
                                                                        


Cincinnati Bell Inc.
Income Statements by Segment
(Unaudited)
(Dollars in millions)
                                                                                          
                     Three Months Ended                           Twelve Months Ended
                     December 31,            Change               December 31,          Change
                     2013        2012        $           %        2013      2012        $            %
  Wireline
  Revenue
    Voice - local    $ 54.7      $ 61.7      $ (7.0  )   (11 )%   $ 229.1   $ 255.4     $ (26.3  )   (10 )%
    service
    Data               80.9        77.5        3.4       4   %      317.8     306.9       10.9       4   %
    Long distance      26.7        27.8        (1.1  )   (4  )%     107.2     113.9       (6.7   )   (6  )%
    and VoIP
    Entertainment      15.8        9.8         6.0       61  %      55.2      35.4        19.8       56  %
    Other             4.0       5.3       (1.3  )   (25 )%    15.5     18.9      (3.4   )   (18 )%
                                                                                                     
    Total revenue     182.1     182.1     —        0   %     724.8    730.5     (5.7   )   (1  )%
                                                                                                     
  Operating costs
  and expenses
    Cost of
    services and       73.8        72.3        1.5       2   %      287.2     283.8       3.4        1   %
    products
    Selling,
    general and        33.4        31.6        1.8       6   %      127.8     125.6       2.2        2   %
    administrative
    Depreciation
    and                28.4        27.1        1.3       5   %      112.2     106.0       6.2        6   %
    amortization
    Other*            3.1       1.0       2.1      n/m       7.4      2.2       5.2       n/m
                                                                                                     
    Total
    operating         138.7     132.0     6.7      5   %     534.6    517.6     17.0      3   %
    costs and
    expenses
                                                                                                     
  Operating income   $ 43.4     $ 50.1     $ (6.7  )   (13 )%   $ 190.2   $ 212.9    $ (22.7  )   (11 )%
                                                                                                     
  Wireless
  Revenue
    Service          $ 43.1      $ 52.8      $ (9.7  )   (18 )%   $ 184.9   $ 224.5     $ (39.6  )   (18 )%
    Equipment         4.3       4.0       0.3      8   %     16.6     17.3      (0.7   )   (4  )%
                                                                                                     
    Total revenue     47.4      56.8      (9.4  )   (17 )%    201.5    241.8     (40.3  )   (17 )%
                                                                                                     
  Operating costs
  and expenses
    Cost of
    services and       26.6        28.3        (1.7  )   (6  )%     98.1      113.0       (14.9  )   (13 )%
    products
    Selling,
    general and        11.0        11.4        (0.4  )   (4  )%     40.3      43.7        (3.4   )   (8  )%
    administrative
    Depreciation
    and                10.5        7.9         2.6       33  %      41.2      31.9        9.3        29  %
    amortization
    Other*            0.2       1.5       (1.3  )   (87 )%    3.7      2.0       1.7       85  %
                                                                                                     
    Total
    operating         48.3      49.1      (0.8  )   (2  )%    183.3    190.6     (7.3   )   (4  )%
    costs and
    expenses
                                                                                                     
  Operating (loss)   $ (0.9  )   $ 7.7      $ (8.6  )   n/m      $ 18.2    $ 51.2     $ (33.0  )   (64 )%
  income
                                                                                                     
  IT Services and
  Hardware
  Revenue
    Telecom and IT
    equipment        $ 53.4      $ 59.6      $ (6.2  )   (10 )%   $ 222.6   $ 204.6     $ 18.0       9   %
    distribution
    Managed and
    professional      32.7      27.3      5.4      20  %     121.5    111.1     10.4      9   %
    services
                                                                                                     
    Total revenue     86.1      86.9      (0.8  )   (1  )%    344.1    315.7     28.4      9   %
                                                                                                     
  Operating costs
  and expenses
    Cost of
    services and       70.3        72.4        (2.1  )   (3  )%     279.8     255.7       24.1       9   %
    products
    Selling,
    general and        10.9        10.3        0.6       6   %      44.6      42.3        2.3        5   %
    administrative
    Depreciation
    and                3.0         2.3         0.7       30  %      10.5      8.6         1.9        22  %
    amortization
    Other*            —         (1.2  )    1.2      n/m       0.7      (1.2  )    1.9       n/m
                                                                                                     
    Total
    operating         84.2      83.8      0.4      0   %     335.6    305.4     30.2      10  %
    costs and
    expenses
                                                                                                     
  Operating income   $ 1.9      $ 3.1      $ (1.2  )   (39 )%   $ 8.5     $ 10.3     $ (1.8   )   (17 )%
                                                                                                     
  Data Center
  Colocation**
  Revenue            $ —        $ 58.0     $ (58.0 )   n/m      $ 15.6    $ 221.3    $ (205.7 )   n/m
                                                                                                     
  Operating costs
  and expenses
    Cost of            —           20.6        (20.6 )   n/m        4.8       75.7        (70.9  )   n/m
    services
    Selling,
    general and        —           9.8         (9.8  )   n/m        2.4       31.0        (28.6  )   n/m
    administrative
    Depreciation
    and                —           19.7        (19.7 )   n/m        5.2       70.6        (65.4  )   n/m
    amortization
    Other*            —         —         —        n/m       —        13.6      (13.6  )   n/m
                                                                                                     
    Total
    operating         —         50.1      (50.1 )   n/m       12.4     190.9     (178.5 )   n/m
    costs and
    expenses
                                                                                                     
  Operating income   $ —        $ 7.9      $ (7.9  )   n/m      $ 3.2     $ 30.4     $ (27.2  )   n/m
                                                                                                         

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

**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
                              December 31,   September 30,   Change
                              2013           2013            $          %
  Wireline
  Revenue
    Voice - local service     $  54.7        $   56.6        $ (1.9 )   (3  )%
    Data                         80.9            79.6          1.3      2   %
    Long distance and VoIP       26.7            26.8          (0.1 )   (0  )%
    Entertainment                15.8            14.4          1.4      10  %
    Other                       4.0           4.0         —       0   %
                                                                        
    Total revenue               182.1         181.4       0.7     0   %
                                                                        
  Operating costs and
  expenses
    Cost of services and         73.8            72.4          1.4      2   %
    products
    Selling, general and         33.4            31.7          1.7      5   %
    administrative
    Depreciation and             28.4            29.7          (1.3 )   (4  )%
    amortization
    Other*                      3.1           (0.2   )     3.3     n/m
                                                                        
    Total operating costs       138.7         133.6       5.1     4   %
    and expenses
                                                                        
  Operating income            $  43.4       $   47.8       $ (4.4 )   (9  )%
                                                                        
  Wireless
  Revenue
    Service                   $  43.1        $   45.0        $ (1.9 )   (4  )%
    Equipment                   4.3           4.1         0.2     5   %
                                                                        
    Total revenue               47.4          49.1        (1.7 )   (3  )%
                                                                        
  Operating costs and
  expenses
    Cost of services and         26.6            24.2          2.4      10  %
    products
    Selling, general and         11.0            10.5          0.5      5   %
    administrative
    Depreciation and             10.5            7.4           3.1      42  %
    amortization
    Other*                      0.2           —           0.2     n/m
                                                                        
    Total operating costs       48.3          42.1        6.2     15  %
    and expenses
                                                                        
  Operating (loss) income     $  (0.9   )    $   7.0        $ (7.9 )   n/m
                                                                        
  IT Services and Hardware
  Revenue
    Telecom and IT equipment  $  53.4        $   56.2        $ (2.8 )   (5  )%
    distribution
    Managed and professional    32.7          31.3        1.4     4   %
    services
                                                                        
    Total revenue               86.1          87.5        (1.4 )   (2  )%
                                                                        
  Operating costs and
  expenses
    Cost of services and         70.3            69.4          0.9      1   %
    products
    Selling, general and         10.9            11.2          (0.3 )   (3  )%
    administrative
    Depreciation and            3.0           2.5         0.5     20  %
    amortization
                                                                        
    Total operating costs       84.2          83.1        1.1     1   %
    and expenses
                                                                        
  Operating income            $  1.9        $   4.4        $ (2.5 )   (57 )%
                                                                        

*Other includes restructuring charges and gain on sale or disposal of assets.


                                                                                                 
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)
 
                   Three Months Ended                           Twelve Months Ended
                   December 31,            Change               December 31,                Change
                   2013        2012        $           %        2013          2012          $            %
  Revenue
    Wireline       $ 182.1     $ 182.1     $ —         0   %    $ 724.8       $ 730.5       $ (5.7   )   (1  )%
    Wireless         47.4        56.8        (9.4  )   (17 )%     201.5         241.8         (40.3  )   (17 )%
    IT Services      86.1        86.9        (0.8  )   (1  )%     344.1         315.7         28.4       9   %
    and Hardware
    Data Center      —           58.0        (58.0 )   n/m        15.6          221.3         (205.7 )   n/m
    Colocation**
    Eliminations    (7.2  )    (9.1  )    1.9      21  %     (29.1   )    (35.4   )    6.3       18  %
                                                                                                         
    Total revenue  $ 308.4    $ 374.7    $ (66.3 )   (18 )%   $ 1,256.9    $ 1,473.9    $ (217.0 )   (15 )%
                                                                                                         
  Cost of
  Services and
  Products
    Wireline       $ 73.8      $ 72.3      $ 1.5       2   %    $ 287.2       $ 283.8       $ 3.4        1   %
    Wireless         26.6        28.3        (1.7  )   (6  )%     98.1          113.0         (14.9  )   (13 )%
    IT Services      70.3        72.4        (2.1  )   (3  )%     279.8         255.7         24.1       9   %
    and Hardware
    Data Center      —           20.6        (20.6 )   n/m        4.8           75.7          (70.9  )   n/m
    Colocation**
    Eliminations    (6.5  )    (8.8  )    2.3      26  %     (26.9   )    (33.6   )    6.7       20  %
                                                                                                         
    Total cost of
    services and   $ 164.2    $ 184.8    $ (20.6 )   (11 )%   $ 643.0      $ 694.6      $ (51.6  )   (7  )%
    products
                                                                                                         
  Selling, General
  and
  Administrative
    Wireline       $ 33.4      $ 31.6      $ 1.8       6   %    $ 127.8       $ 125.6       $ 2.2        2   %
    Wireless         11.0        11.4        (0.4  )   (4  )%     40.3          43.7          (3.4   )   (8  )%
    IT Services      10.9        10.3        0.6       6   %      44.6          42.3          2.3        5   %
    and Hardware
    Data Center      —           9.8         (9.8  )   n/m        2.4           31.0          (28.6  )   n/m
    Colocation**
    Corporate and   4.1       6.8       (2.7  )   (40 )%    5.7         26.9        (21.2  )   (79 )%
    eliminations
                                                                                                         
    Total selling,
    general and    $ 59.4     $ 69.9     $ (10.5 )   (15 )%   $ 220.8      $ 269.5      $ (48.7  )   (18 )%
    administrative
                                                                                                         
  Depreciation
  and
  Amortization
    Wireline       $ 28.4      $ 27.1      $ 1.3       5   %    $ 112.2       $ 106.0       $ 6.2        6   %
    Wireless         10.5        7.9         2.6       33  %      41.2          31.9          9.3        29  %
    IT Services      3.0         2.3         0.7       30  %      10.5          8.6           1.9        22  %
    and Hardware
    Data Center      —           19.7        (19.7 )   n/m        5.2           70.6          (65.4  )   n/m
    Colocation**
    Corporate       0.1       0.2       (0.1  )   (50 )%    0.5         0.3         0.2       67  %
                                                                                                         
    Total
    depreciation   $ 42.0     $ 57.2     $ (15.2 )   (27 )%   $ 169.6      $ 217.4      $ (47.8  )   (22 )%
    and
    amortization
                                                                                                         
  Other*
    Wireline       $ 3.1       $ 1.0       $ 2.1       n/m      $ 7.4         $ 2.2         $ 5.2        n/m
    Wireless         0.2         1.5         (1.3  )   (87 )%     3.7           2.0           1.7        85  %
    IT Services      —           (1.2  )     1.2       n/m        0.7           (1.2    )     1.9        n/m
    and Hardware
    Data Center      —           —           —         n/m        —             13.6          (13.6  )   n/m
    Colocation**
    Corporate       (0.6  )    3.6       (4.2  )   n/m       47.9        5.7         42.2      n/m
                                                                                                         
    Total other    $ 2.7      $ 4.9      $ (2.2  )   (45 )%   $ 59.7       $ 22.3       $ 37.4      n/m
                                                                                                         
  Operating
  Income (Loss)
    Wireline       $ 43.4      $ 50.1      $ (6.7  )   (13 )%   $ 190.2       $ 212.9       $ (22.7  )   (11 )%
    Wireless         (0.9  )     7.7         (8.6  )   n/m        18.2          51.2          (33.0  )   (64 )%
    IT Services      1.9         3.1         (1.2  )   (39 )%     8.5           10.3          (1.8   )   (17 )%
    and Hardware
    Data Center      —           7.9         (7.9  )   n/m        3.2           30.4          (27.2  )   n/m
    Colocation**
    Corporate       (4.3  )    (10.9 )    6.6      61  %     (56.3   )    (34.7   )    (21.6  )   (62 )%
                                                                                                         
    Total
    operating      $ 40.1     $ 57.9     $ (17.8 )   (31 )%   $ 163.8      $ 270.1      $ (106.3 )   (39 )%
    income
                                                                                                             

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

**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
                             December 31,   September 30,   Change
                             2013           2013            $           %
  Revenue
      Wireline               $  182.1       $   181.4       $ 0.7       0   %
      Wireless                  47.4            49.1          (1.7  )   (3  )%
      IT Services and           86.1            87.5          (1.4  )   (2  )%
      Hardware
      Eliminations             (7.2   )       (7.2   )     —        0   %
                                                                        
      Total revenue          $  308.4      $   310.8      $ (2.4  )   (1  )%
                                                                        
  Cost of Services and
  Products
      Wireline               $  73.8        $   72.4        $ 1.4       2   %
      Wireless                  26.6            24.2          2.4       10  %
      IT Services and           70.3            69.4          0.9       1   %
      Hardware
      Eliminations             (6.5   )       (6.6   )     0.1      2   %
                                                                        
      Total cost of services $  164.2      $   159.4      $ 4.8      3   %
      and products
                                                                        
  Selling, General and Administrative
      Wireline               $  33.4        $   31.7        $ 1.7       5   %
      Wireless                  11.0            10.5          0.5       5   %
      IT Services and           10.9            11.2          (0.3  )   (3  )%
      Hardware
      Corporate and            4.1           0.2         3.9      n/m
      eliminations
                                                                        
      Total selling, general $  59.4       $   53.6       $ 5.8      11  %
      and administrative
                                                                        
  Depreciation and
  Amortization
      Wireline               $  28.4        $   29.7        $ (1.3  )   (4  )%
      Wireless                  10.5            7.4           3.1       42  %
      IT Services and           3.0             2.5           0.5       20  %
      Hardware
      Corporate                0.1           0.2         (0.1  )   (50 )%
                                                                        
      Total depreciation and $  42.0       $   39.8       $ 2.2      6   %
      amortization
                                                                        
  Other*
      Wireline               $  3.1         $   (0.2   )    $ 3.3       n/m
      Wireless                  0.2             —             0.2       n/m
      IT Services and           —               —             —         n/m
      Hardware
      Corporate                (0.6   )       0.5         (1.1  )   n/m
                                                                        
      Total other            $  2.7        $   0.3        $ 2.4      n/m
                                                                        
  Operating Income (Loss)
      Wireline               $  43.4        $   47.8        $ (4.4  )   (9  )%
      Wireless                  (0.9   )        7.0           (7.9  )   n/m
      IT Services and           1.9             4.4           (2.5  )   (57 )%
      Hardware
      Corporate                (4.3   )       (1.5   )     (2.8  )   n/m
                                                                        
      Total operating        $  40.1       $   57.7       $ (17.6 )   (31 )%
      income
                                                                        

*Other includes restructuring charges, gain on sale or disposal of assets and
transaction costs.



Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)
(In thousands)
                                                             
                                   December 31,   September 30,   December 31,
                                   2013           2013            2012
                                                                  
                                                                  
  Local access lines               530.7          541.2           573.9
                                                                  
  Long distance lines              394.1          400.8           417.9
                                                                  
  High-speed internet subscribers
      DSL subscribers              188.5          191.3           202.6
      Fioptics subscribers         79.9           74.3            56.8
                                   268.4          265.6           259.4
                                                                  
  Fioptics units passed            276.0          258.0           205.0
                                                                  
  Fioptics entertainment           74.2           69.7            55.1
  subscribers
                                                                  
  Wireless
      Postpaid wireless            197.4          209.4           251.3
      subscribers
      Prepaid wireless subscribers 142.3          145.8           146.5
                                   339.7          355.2           397.8
                                                                  

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

                                                                                                            
                          2011                                      2012                                      2013
                          1Q        2Q        3Q        4Q          1Q        2Q        3Q        4Q          1Q        2Q        3Q        4Q
  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     247.7     242.2
  Residential
  Secondary               18.3      16.3      15.6      14.9        14.2      13.6      13.1      12.5        12.0      11.4      10.9      10.5
  Residential
  Business/ Other         250.7   248.7   244.4   240.8    238.5   237.5   234.4   232.1    229.7   228.2   226.7   223.3
  Total                   590.8     578.8     564.8     552.4       541.6     532.8     521.8     511.0       500.8     492.7     485.3     476.0
  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      18.9      18.2
  Residential
  Secondary               0.9       0.9       0.9       0.8         0.8       0.8       0.7       0.7         0.6       0.6       0.6       0.5
  Residential
  Business/ Other         41.5    41.6    41.8    41.4     41.0    40.6    40.0    39.8     39.2    36.9    36.4    36.0
  Total                   72.8      71.8      70.5      68.9        67.0      65.7      64.0      62.9        60.6      57.3      55.9      54.7
  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   541.2   530.7
  Lines
                                                                                                                                            

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

                                   December 31,   September 30,   December 31,
                                   2013           2013            2012
                                                                  
Corporate Credit Agreement***      $  40.0        $  —            $  —
Receivables Facility***               106.2          —               52.0
8 1/4% Senior Notes due 2017***       —              500.0           500.0
8 3/4% Senior Subordinated Notes      625.0          625.0           625.0
due 2018
Corporate Credit Agreement -          538.6          540.0           —
Tranche B Term Loan
8 3/8% Senior Notes due 2020          683.9          683.9           683.9
CyrusOne 6 3/8% Senior Notes due      —              —               525.0
2022*
7 1/4% Senior Notes due 2023          40.0           40.0            40.0
Various Cincinnati Bell Telephone     134.5          134.5           134.5
notes
Capital leases and other debt*        103.3          104.1           136.5
Net unamortized discount             (6.3    )     (10.4    )     (7.5    )
                                                                  
        Total debt                    2,265.2        2,617.1         2,689.4
                                                                  
Less: Cash and cash equivalents***   (4.6    )     (413.7   )     (23.6   )
                                                                  
        Net debt (as defined by    $  2,260.6    $  2,203.4     $  2,665.8 
        the company)
                                                                  
Credit facility availability:
        Corporate                     160.0          200.0           200.0
        CyrusOne**                   —            —             225.0   
                                                                  
                                   $  160.0      $  200.0       $  425.0   
                                                                  
Common shares outstanding            208.2        208.0         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.

*** On October 15, 2013, the company used the proceeds from the Tranche B Term
Loan to fully repay the 8 1/4% Senior Notes due 2017. In September 2013, prior
to the October 15, 2013 call date, the proceeds temporarily increased cash and
were used to temporarily pay down the Corporate Credit Agreement and
Receivables Facility.


<td cl*Story too large*
                                                                            
Cincinnati Bell Inc.
Reconciliation of Net (Loss) Income (GAAP) to Adjusted EBITDA (Non-GAAP)
(Unaudited)
(Dollars in millions)
                                                                        
                   Three Months Ended December 31, 2013
                                             IT
                     Wireline    Wireless    Services    Data Center   Corporate   Total
                                             &           Colocation*               Company
                                             Hardware
  Net Loss (GAAP)                                                                  $ (28.1 )
  Add:
    Income tax                                                                       (6.1  )
    benefit
    Interest                                                                         42.0
    expense
    Loss on
    extinguishment                                                                   29.6
    of debt
    Loss from
    CyrusOne                                                                         2.6
    equity method
    investment
    Other expense,                                                                  0.1   
    net
                                                                                   
  Operating Income   $ 43.4      $ (0.9 )    $ 1.9       $  —          $ (4.3  )   $ 40.1
  (GAAP)
  Add:
    Depreciation
    and                28.4        10.5        3.0          —            0.1         42.0
    amortization
    Restructuring
    charges            3.3         0.2         —            —            (0.6  )     2.9
    (reversals)
    (Gain) loss on
    sale or            (0.2 )      —           —            —            —           (0.2  )
    disposal of
    assets
    Pension and
    other             4.8       —         —          —          0.4       5.2   
    retirement
    plan expenses
                                                                                   
  Adjusted EBITDA    $ 79.7     $ 9.8      $ 4.9      $  —         $ (4.4  )   $ 90.0  
  (Non-GAAP)
                                                                                   
  Adjusted EBITDA      44   %      21   %      6    %       —            —           29    %
  Margin
                                                                         
                     Three Months Ended September 30, 2013
                                             IT
                     Wireline    Wireless    Services    Data Center   Corporate   Total
                                             &           Colocation*               Company
                                             Hardware
  Net Income                                                                       $ 9.3
  (GAAP)
  Add:
    Income tax                                                                       1.4
    expense
    Interest                                                                         46.7
    expense
    Loss from
    CyrusOne                                                                         1.5
    equity method
    investment
    Other income,                                                                   (1.2  )
    net
                                                                                   
  Operating Income   $ 47.8      $ 7.0       $ 4.4       $  —          $ (1.5  )   $ 57.7
  (GAAP)
  Add:
    Depreciation
    and                29.7        7.4         2.5          —            0.2         39.8
    amortization
    Gain on sale
    or disposal of     (0.2 )      —           —            —            —           (0.2  )
    assets
    Transaction        —           —           —            —            0.5         0.5
    costs
    Pension and
    other             5.2       —         —          —          0.3       5.5   
    retirement
    plan expenses
                                                                                   
  Adjusted EBITDA    $ 82.5     $ 14.4     $ 6.9      $  —         $ (0.5  )   $ 103.3 
  (Non-GAAP)
                                                                                   
  Adjusted EBITDA      45   %      29   %      8    %       —            —           33    %
  Margin
                                                                                   
  Sequential
  dollar change in   $ (2.8 )    $ (4.6 )    $ (2.0 )    $  —          $ (3.9  )   $ (13.3 )
  Adjusted EBITDA
                                                                                   
  Sequential
  percentage           (3   )%     (32  )%     (29  )%      n/m          n/m         (13   )%
  change in
  Adjusted EBITDA
                                                                         
                     Three Months Ended December 31, 2012
                                             IT
                     Wireline    Wireless    Services    Data Center   Corporate   Total
                                             &           Colocation                Company
                                             Hardware
  Net Loss (GAAP)                                                                  $ (9.8  )
  Add:
    Income tax                                                                       (1.6  )
    benefit
    Interest                                                                         55.6
    expense
    Loss on
    extinguisment                                                                    13.6
    of debt
    Other expense,                                                                  0.1   
    net
                                                                                   
  Operating Income   $ 50.1      $ 7.7       $ 3.1       $  7.9        $ (10.9 )   $ 57.9
  (GAAP)
  Add:
    Depreciation
    and                27.1        7.9         2.3          19.7         0.2         57.2
    amortization
    Restructuring
    charges            1.9         1.1         (1.2 )       —            (1.4  )     0.4
    (reversals)
    Loss (gain) on
    sale or            (1.4 )      —           —            —            0.4         (1.0  )
    disposal of
    assets
    Transaction        —           —           —            —            4.6         4.6
    costs
    Asset              0.5         0.4         —            —            —           0.9
    impairments
    Legal claim        —           —           —            0.2          —           0.2
    costs
    Pension and
    other             5.8       —         —          —          0.3       6.1   
    retirement
    plan expenses
                                                                                   
  Adjusted EBITDA    $ 84.0     $ 17.1     $ 4.2      $  27.8  
  (Non-GAAP)

[TRUNCATED]
 
Press spacebar to pause and continue. Press esc to stop.