Cincinnati Bell 2005 Annual Report Download - page 8

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Solid outlook
The accomplishments of 2005 provide a solid
foundation for 2006. Our financial condition continues
to improve with the refinancing of our high-cost 16%
Notes. At the same time we have demonstrated our
ability to generate sustained and stable cash flow needed
to reduce debt and invest for future growth in our
wireless, DSL and data center businesses. Looking
forward, I believe the future of Cincinnati Bell is bright
and I am excited to be a part of it.
Brian A. Ross
Chief Financial Officer
Use of Non-GAAP Financial Measures
The report contains information about Net Debt, Net
income excluding special items, Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization (Adjusted
EBITDA) 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 Net Debt, Net income
excluding special items, Adjusted EBITDA and Free Cash
Flow to comparable GAAP financial measures are available in
the Investor Relations section of the company’s Web site,
www.cincinnatibell.com.
1Net 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.
2Net income excluding special items provides a useful
measure of operating performance. The amounts of the
special items are detailed and reconciled to GAAP net
income in the Investor Relations section of the company’s
Web site, www.cincinnatibell.com.
3Adjusted EBITDA provides a useful measure of operational
performance. The company defines Adjusted EBITDA as
GAAP operating income plus depreciation, amortization,
restructuring charges, asset impairments 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 Adjusted EBITDA as
defined by other companies.
4Free Cash Flow provides a useful measure of operational
performance, liquidity and financial health. The company
defines Free Cash Flow as SFAS 95 cash provided by (used
in) operating, financing and investing activities, adjusted for
the issuance and repayment of debt and for the proceeds
from the sale or the use of funds from the purchase of
business operations. 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.
6