Cincinnati Bell 2013 Annual Report Download

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2013 Annual Report
Letter to
Shareholders
Notice of
2014 Annual Meeting
and Proxy Statement
Report on
Form 10-K

Table of contents

  • Page 1
    2013 Annual Report Letter to Shareholders Notice of 2014 Annual Meeting and Proxy Statement Report on Form 10-K

  • Page 2
    Contents Letter to Shareholders from the Chairman, the President & Chief Executive Officer and the Chief Financial Officer Financial Highlights Board of Directors and Company Officers Notice of Annual Meeting of Shareholders Proxy Statement Report on Form 10-K

  • Page 3
    ... the Company. Our 2013 results are powerful and confirm that we have started to change the trajectory of our business. Performance Highlights Strategic investments drove growth across many key areas as we focused on meeting consumer and business customers' demand for high-speed products and services...

  • Page 4
    ...Even so, our Wireless team continues to do a fantastic job managing this business for cash flow. In 2013, our Wireless business generated operating income of $18 million for the year. Wireless revenue was $202, down 17%, compared to 2012 and consistent with the decrease in our subscriber base. As we...

  • Page 5
    ... and our Cincinnati Bell Business Markets operations by combining the sales forces of these companies. This resulted in more than $3 million of savings in 2013. We continue taking steps to consolidate product offerings, systems and back office support and believe total cost savings from integrating...

  • Page 6
    ...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 related to interest costs, asset returns...

  • Page 7
    ... Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K included in this document. (a) Results for 2013 include revenues and expenses for CyrusOne, our former data center business, for...

  • Page 8
    ... Cincinnati Bell Inc. Company Officers Theodore H. Torbeck President and Chief Executive Officer David L. Heimbach Chief Operating Officer Leigh R. Fox Chief Financial Officer Christopher J. Wilson Vice President, General Counsel and Secretary Joshua T. Duckworth Vice President, Investor Relations...

  • Page 9
    ... internet. By Order of the Board of Directors Christopher J. Wilson Vice President, General Counsel and Secretary March 24, 2014 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 6, 2014: The Proxy Statement and Annual Report are available...

  • Page 10
    ... Proxy Materials and the Annual Meeting ...Board Structure and Corporate Governance ...Director Compensation ...Compensation Committee Interlocks and Insider Participation ...Code of Business Conduct and Codes of Ethics ...Certain Relationships and Related Party Transactions ...Election of Directors...

  • Page 11
    ... 11:00 a.m., Eastern Time, at the Queen City Club, 331 East Fourth Street, Cincinnati, Ohio 45202. The Notice of Annual Meeting of Shareholders, the Proxy Statement, the Company's Annual Report on Form 10-K for the year ended December 31, 2013, and the Company's Summary 2013 Annual Report are being...

  • Page 12
    ... communications services over wireline and wireless networks, a provider of managed and professional information technology services, and a reseller of information technology ("IT") and telephony equipment. In addition, enterprise customers across the United States rely on Cincinnati Bell Technology...

  • Page 13
    ... the close of business on the Record Date. This includes: (i) shares held directly in your name as the shareholder of record, including common shares purchased through the Cincinnati Bell Employee Stock Purchase Plan; (ii) shares that are held by a trust used in connection with a Company employee or...

  • Page 14
    ... and then you will be presented a proxy card. Beneficial shares, held either in street name or credited to your account under a Company employee or director plan, cannot be voted at the Annual Meeting unless you obtain a signed proxy from the shareholder of record authorizing you to vote these...

  • Page 15
    ...nominated by the Board. Q: What classes of shares are entitled to be voted? A: Each common share and each 6 3/4% Cumulative Convertible Preferred Share outstanding as of the close of business on the Record Date is entitled to vote on all items being voted upon at the Annual Meeting. You are entitled...

  • Page 16
    ... any internet access charges you may incur. In addition to the costs of mailing the proxy materials, the Company may also incur costs to provide additional copies of these proxy materials (if requested) and for its directors, officers and employees to solicit proxies or votes in person, by telephone...

  • Page 17
    ... of the IPO, Mr. Cassidy retired from his position as President and Chief Executive Officer of Cincinnati Bell effective January 31, 2013 and assumed the role of Vice Chairman of the Board to facilitate an appropriate transition of the President and Chief Executive Officer responsibilities to...

  • Page 18
    ...scheduled meeting of the Board. Mr. Cox presides at the meetings of the non-employee directors. Committees of the Board The following table sets forth the membership of the committees of the Board at the end of 2013: Name of Director Audit and Finance Compensation Governance and Nominating Executive...

  • Page 19
    ... was named President and Chief Executive Officer of the Company. (d) Effective January 31, 2013, Mr. Cassidy retired from his position as President and Chief Executive Officer and was appointed Vice Chairman of the Board. Mr. Cassidy retired from the Board effective December 31, 2013, following the...

  • Page 20
    ...Committee consists of five persons, one of whom is the President and Chief Executive Officer of the Company. The Committee held no meetings during 2013. The Executive Committee acts on behalf of the Board in certain matters, when necessary, between Board meetings. Director Nominations The Governance...

  • Page 21
    ...000 for his service as Vice Chairman of the Board. Mr. Cassidy retired from the Board effective December 31, 2013, following Mr. Torbeck's successful transition as the Company's President and Chief Executive Officer. Non-Employee Directors Deferred Compensation Plan The Cincinnati Bell Inc. Deferred...

  • Page 22
    ...shares shortly (generally within two weeks) after he or she receives them. The Directors Deferred Compensation Plan provides three exceptions to the rules regarding the timing of distributions of a non-employee director's account under the plan: (i) in the event of a change in control of the Company...

  • Page 23
    ... to purchase common shares under the Cincinnati Bell Inc. 2007 Stock Option Plan for Non-Employee Directors, as amended (the "2007 Directors Plan"). Pursuant to the current terms of such plan, each non-employee director of the Company, at the discretion of the Board, may be granted a number of...

  • Page 24
    ... table shows the compensation paid to our non-employee directors and Mr. Cassidy, for his service as Vice Chairman of the Board after his retirement from the Company, for the 2013 fiscal year: Director Compensation for Fiscal 2013 Fees Earned or Paid in Cash ($) (a) Stock Awards ($) (b) (c) Option...

  • Page 25
    ... - - 48,422 48,422 48,422 36,000 3,624,053 36,000 84,400 Proxy Statement (1) All of Mr. Cassidy's awards and options were earned while he served as an officer of the Company. No such awards were granted to Mr. Cassidy in connection solely with his service on the Board after his retirement. 15

  • Page 26
    ... member of the board of directors or compensation committee of any entity that has one or more executive officers serving on the Company's Board or Compensation Committee. CODE OF BUSINESS CONDUCT AND CODES OF ETHICS The Company has a Code of Business Conduct applicable to all officers and employees...

  • Page 27
    ... and SEC rules. The Company believed that the transactions entered into between the Company and GE were on terms that are reasonable and in the best interests of the Company. The Board has determined that Mr. Mayer received no material benefit as a result of such transactions. Proxy Statement 17

  • Page 28
    ...more than 17 persons, with the exact number to be fixed and determined by resolution of the Board or by resolution of the shareholders at any annual or special meeting of shareholders. The Board has determined that the Board shall consist of nine members. The Board presently has nine members, one of...

  • Page 29
    ... are brief biographies of each person nominated for election as a director of the Company. NOMINEES FOR DIRECTORS (Terms Expire in 2015) Proxy Statement Mr. Cox has been President and Chief Executive Officer of Cox Financial Corporation (a financial planning services company) since 1972. He is...

  • Page 30
    Russel P. Mayer Mr. Mayer is retired. Prior to joining the Board, Mr. Mayer held several, executivelevel information technology and business process improvement positions at General Electric. Most recently, he was Executive Vice President, CIO, and Quality Leader at GE Healthcare from 2009 to 2012....

  • Page 31
    ... Manager of Cincinnati Bell Communications Group. Prior to joining Cincinnati Bell, Mr. Torbeck was Chief Executive Officer of the Freedom Group and also worked more than 25 years for the General Electric Co. ("GE"), where he served as the Vice President of Operations for GE Industrial Business...

  • Page 32
    ...the Securities Exchange Act of 1934, as amended, the Company is submitting to its shareholders a vote for the advisory approval of the Company's executive compensation ("say-on-pay vote"). The Board of Directors determined that it would submit a say-onpay vote to our shareholders annually. This year...

  • Page 33
    ... registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2014. One or more members of the firm of Deloitte & Touche LLP will attend the Annual Meeting, will have an opportunity to make a statement and will be available to answer...

  • Page 34
    ... Committee recommended to the Board that the audited financial statements for the Company's fiscal year ended December 31, 2013 be included in the Company's Annual Report on Form 10-K for the Company's fiscal year ended December 31, 2013. The Board has determined that each member of the Audit and...

  • Page 35
    ... statements included in the Company's reports filed with the SEC and services related to requirements established by the Sarbanes-Oxley Act of 2002. Audit related fees The audit related fees for the year ended December 31, 2013 were for various accounting consultations. The audit related fees...

  • Page 36
    ... of Common Shares Name and Address of Beneficial Owner GAMCO Investors, Inc. and affiliates ...One Corporate Center Rye, NY 10580 BlackRock, Inc...40 East 52nd Street New York, NY 10022 The Vanguard Group ...100 Vanguard Blvd. Malvern, PA 19355 Wells Fargo & Company ...420 Montgomery Street San...

  • Page 37
    ...January 31, 2013, the Company updated its Insider Trading Policy to expressly bar ownership of financial instruments or participation in investment strategies that hedge the economic risk of owning the Company's common shares and to prohibit officers and directors from pledging Company securities as...

  • Page 38
    ... with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in Cincinnati Bell Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2013. COMPENSATION COMMITTEE...

  • Page 39
    ... this new strategy, the Company decided to use the positive cash flow generated by the Cincinnati-based communications businesses to significantly increase its investment in the data center business while also maintaining a steady investment in in the Company's growing local fiber network to support...

  • Page 40
    ... significant shareholder value well into the future. As the Company has continued to execute its emerging business strategy, its incentive plans have also evolved. In 2012, the Company's long term incentive performance plan's metric was changed from free cash flow to unlevered cash return on...

  • Page 41
    .... The mix of base pay (the "fixed cost" of the program) and both annual and long-term incentive plans promote achievement of current-year goals and longer-term business strategies and drive appropriate business behavior without inducing executives to take undue business risks. Proxy Statement 31

  • Page 42
    ...Executive Officer Former Chief Financial Officer Current Chief Executive Officer, Former President and General Manager, Cincinnati Bell Communications Group Chief Operating Officer Chief Financial Officer Vice President, General Counsel and Secretary Vice President, Investor Relations and Controller...

  • Page 43
    ...to legacy access lines, our lower speed DSL subscriber base and lower-bandwidth data transport services provided to business customers. Specifically, we continued to execute on our multi-year plan to expand our strategic growth products, which include our Fioptics, strategic enterprise data and VoIP...

  • Page 44
    ... by individual performance and by market positioning Used to calculate other components of compensation annual cash incentive compensation Bonus target set as a percentage of base salary • Except in connection with promotions, NEO salary levels were not increased as adjustments were made mid...

  • Page 45
    ... to address changes in the Company's short- and long-term business objectives and strategies, new regulatory standards and to implement evolving best practices. Listed below are compensation practices that the Company has adopted in support of its pay-for-performance philosophy: Proxy Statement...

  • Page 46
    ...2013, the Company updated its Insider Trading Policy to expressly prohibit ownership of derivative financial instruments or participation in investment strategies that hedge the economic risk of owning the Company's common stock and to prohibit officers and directors from pledging Company securities...

  • Page 47
    ... of financial and strategic goals, both short-term and long-term, thereby increasing the Company's value while at the same time discouraging unnecessary or excessive risk-taking; and • To align the interests of the executives and the shareholders by attributing a significant portion of total...

  • Page 48
    ... 20, 2013, Mr. Heimbach was named Chief Operating Officer but did not receive an increase in base salary. Mr. Duckworth was given 33% increase in base salary effective with his promotion to Vice President, Investor Relations and Controller, effective July 9, 2013. Annual Incentives Annual incentives...

  • Page 49
    ... 50% 100% 125% 150% 0% 10% 20% 25% 30% The 2013 target annual incentives for each of the NEOs at year-end are set forth below: Named Executive Officer Target Annual Incentive as a % of Base Salary Theodore H. Torbeck ...David L. Heimbach (a) ...Leigh R. Fox (a) ...Christopher J. Wilson ...Joshua...

  • Page 50
    ... per year in connection with long-term incentive awards under the 2007 Long Term Incentive Plan. Stock Options/SARs Stock options/SARs granted to NEOs for 2013 are subject to the same performance vesting conditions as performance share unit awards. Stock options/SARs directly align the executive...

  • Page 51
    ... for special items not contemplated when the cumulative three-year target was approved by the Compensation Committee. Data Center Performance Plan The Data Center Performance Plan was designed to drive accelerated growth in the data center business segment. Payments to participants were conditioned...

  • Page 52
    ... set of other benefit plans and programs, including medical, dental, vision, life insurance, short- and long-term disability plans and home telephone service price discount programs, on the same basis as all other salaried employees. The Company believes that the various benefit plans and programs...

  • Page 53
    ...each executive officer position whose compensation is assessed and set by the Compensation Committee (or the full Board, in the case of the Chief Executive Officer), Towers Watson produces a predicted level for each pay component at the 50th percentile of companies based on Cincinnati Bell's revenue...

  • Page 54
    ... Dex One Dollar Thrifty Automotive Group Donaldson Education Management Endo Health Solutions Energy Solutions EnPro Industries Equifax Equity Office Properties Esterline Technologies Exterran Federal Reserve Bank of St. Louis GATX General Atomics Green Mountain H.B. Fuller Harland Clarke Herman...

  • Page 55
    ... Executive Officer* Other NEOs* * In 2013, the Company granted Mr. Torbeck restricted shares with a grant date value of $900,000 that vest over a three-year period. This was the final installment of awards made in consideration of the compensation he forfeited when he left his previous employer...

  • Page 56
    ... price of the Company's stock may vary due to the general condition of the economy and the stock market. Therefore, the Compensation Committee may measure an executive's progress more on the basis of the yearover-year increase in the number of shares owned than the overall market value of the shares...

  • Page 57
    ... securities as collateral for loans. Employment Agreements, Severance and Change in Control Payments and Benefits The Company generally enters into employment agreements with the named executive officers for several reasons. Employment agreements give the Company flexibility to make changes in key...

  • Page 58
    ...any accounting error due to material noncompliance with any financial reporting requirement under federal securities laws and such restatement results in a lower payment or award. Compensation Limitation Section 162(m) of the Code generally limits to $1,000,000 the available deduction to the Company...

  • Page 59
    ... Officer, Former 2011 724,850 President and General Manager, Cincinnati Bell Communications Group David L. Heimbach (j) ...2013 342,665 Chief Operating Officer Leigh R. Fox (k) ...2013 303,846 Chief Financial Officer Christopher J. Wilson ...2013 353,600 Vice President, General 2012 345,662 Counsel...

  • Page 60
    ... Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013. The amounts shown in the Summary Compensation Table above reflect payout at target. The table below shows these amounts if the maximum payout is earned: Stock Options/Stock Appreciation Rights ($) 2013...

  • Page 61
    ... to an increase in the applicable discount rate and improved market performance of pension assets. The Company froze its qualified pension plan for management employees in 2009; therefore, Mr. Torbeck and Mr. Duckworth are not entitled to any benefits under this plan. None of the executives receive...

  • Page 62
    ... share grant for Mr. Torbeck is based on the Company's closing stock price on the date of grant of $5.57. For further discussion of assumptions and valuation, refer to Note 14 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013...

  • Page 63
    ... retirement plan benefit under his previous employment agreement vested and is equal to the portion of his accrued pension under the Cincinnati Bell Management Pension Plan (the "Management Pension Plan") that is attributable to his first 10 years of service. Mr. Freyberger's employment agreement...

  • Page 64
    ..., 2013. The Management Pension Plan is described in further detail on pages 57-58. Each of the employment agreements also provide for severance payments upon termination of employment as a result of death or disability, termination by the Company without cause or termination upon a change in control...

  • Page 65
    ... plan awards not yet vested. The value is based on the closing price of the Company's common shares as of December 31, 2013 ($3.56). (f) Effective January 31, 2013, Mr. Cassidy retired from his position as Chief Executive Officer and was appointed Vice Chairman of the Board. Mr. Cassidy retired...

  • Page 66
    Option Exercises and Stock Vested The following table sets forth information concerning the exercise of options and the vesting of stock held by the NEOs during the year ended December 31, 2013: Option Exercises and Stock Vested in 2013 Option Awards Number of Shares Value Realized Acquired on ...

  • Page 67
    ... our Annual Report on Form 10-K for the year ended December 31, 2013. (c) If any of the executive officers had retired on December 31, 2013, they would have been entitled to a benefit equal to the balance then credited to them, without any reduction, under the Cincinnati Bell Management Pension Plan...

  • Page 68
    ..., 2013 and service for any pay period ended after June 29, 2013. A participant's account under the Management Pension Plan is also generally credited with assumed interest for each calendar year at a certain interest rate. Such interest rate for 2013 was 4.0% per annum. Effective July 1, 2013 annual...

  • Page 69
    ... contracts, agreements, plans or arrangements, whether written or unwritten, for various scenarios involving a change in control or termination of employment, assuming a December 31, 2013 termination or change in control date and, where applicable, using the closing price of our common shares...

  • Page 70
    ... shares of stock they own outright, vested options which may be exercisable for a period of 90 days following termination, deferred compensation amounts and vested amounts under the Company's long-term incentive, pension and savings plans. In addition to any applicable "vested amounts," an executive...

  • Page 71
    ... in the Company's Management Pension Plan, if applicable, as though the executive had remained employed at the same base rate of pay and target bonus; Continued medical, dental, vision and life insurance benefits during the two-year period following the executive's termination of employment on the...

  • Page 72
    ...; thus, Mr. Cassidy will continue to vest in his unvested stock options, SARs and other long-term incentive awards on the same conditions and terms as active employees. Mr. Freyberger was not "retirement eligible" at the time of his resignation and his awards were not subject to such continued...

  • Page 73
    ..., 2013, all such persons complied on a timely basis with the filing requirements of Section 16(a). Shareholder Proposals for Next Year's Annual Meeting Shareholder proposals intended for inclusion in next year's Proxy Statement should be sent to Christopher J. Wilson, Vice President, General Counsel...

  • Page 74
    ...and Corporate Governance Documents Available The Company has elected to provide access to its Proxy Statement, Annual Report on Form 10-K and Summary Annual Report over the internet. We sent the Notice of Internet Availability to our shareholders and beneficial owners, which provides information and...

  • Page 75
    ..., Vice President, General Counsel and Secretary, Cincinnati Bell Inc., 221 East Fourth Street, Cincinnati, Ohio 45202, and identify the intended recipient or recipients. All communications addressed to the Board or any identified director or directors will be forwarded to the identified person or...

  • Page 76
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  • Page 77
    ... ...Operating Income (GAAP) ...Add: Depreciation and amortization ...Transaction-related compensation ...Restructuring charges ...Loss (gain) on sale or disposal of assets ...Transaction costs ...Asset impairments ...Legal claim costs ...Curtailment gain ...Pension and other retirement plan expenses...

  • Page 78
    ... 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...

  • Page 79
    ... 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...

  • Page 80
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 81
    ... THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-8519 CINCINNATI BELL INC. Ohio (State of Incorporation) 31-1056105 (I.R.S. Employer Identification No.) 221 East Fourth Street, Cincinnati, Ohio 45202 (Address of principal executive offices) (Zip Code...

  • Page 82
    ..., Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accountant Fees and Services ...127...

  • Page 83
    ... communications services over wireline and wireless networks, a provider of managed and professional information technology services, and a reseller of information technology ("IT") and telephony equipment. In addition, enterprise customers across the United States rely on Cincinnati Bell Technology...

  • Page 84
    ... to the home. Our goal remains to pass between 60% and 70% of Greater Cincinnati with this product. • We will increase fiber-based product offerings to enterprise customers and finalize the integration of our Wireline business market with the IT Services and Hardware team. Evaluate opportunities...

  • Page 85
    ...) Metro-Ethernet Dedicated Internet VoIP (3) Private Line MPLS (4) Audio Conferencing Fioptics Video Switched Access Digital Trunking DSL (< 10 meg) Dial up Internet TDM (5) DSO (6), DS1, DS3 Maintenance Information Services Data Long Distance Long Distance/VoIP Entertainment Managed Services...

  • Page 86
    ...products to business customers (reported under the caption Long Distance and VoIP). Data Services The Company's data service products include high-speed internet access, data transport, and interconnection services. As customers migrate from legacy products and network technology, our metro-ethernet...

  • Page 87
    ... I Cincinnati Bell Inc. for these services. We are also expanding our metro-ethernet platform to deliver services across a wider geography to target business customers beyond our ILEC footprint. The Company's regional network connects the greater Cincinnati, Columbus, and Dayton areas in Ohio, as...

  • Page 88
    ... Bell Wireless LLC ("CBW") provides digital wireless voice and data communications services through the operation of a Global System for Mobile Communications/General Packet Radio Service ("GSM") network with a 3G Universal Mobile Telecommunications System ("UMTS") and 4G High Speed Packet Access...

  • Page 89
    ...-K Part I Cincinnati Bell Inc. CyrusOne specializes in highly reliable enterprise-class, carrier-neutral data center properties. The company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for more than 600 customers, including...

  • Page 90
    ... on towers used in its wireless network operations. In addition, we have long-term commitments to outsource various services, such as certain information technology functions, cash remittance and accounts payable functions, call center operations, and maintenance services. Similar to the purchase of...

  • Page 91
    ...revenue 2013 2012 2011 2013 vs 2012 Change 2012 vs 2011 Change Form 10-K Voice - local service ...Data ...Long distance and VoIP ...Entertainment ...Other Wireline ...Total Wireline ...Managed and professional services ...Telecom and IT equipment sales ...Total IT Services and Hardware ...Wireless...

  • Page 92
    ... statements and other information, free of charge, at the Investor Relations section of its website. Executive Officers During 2013, the Company experienced relatively significant changes within the executive leadership team. Refer to Part III, Item 10. "Directors, Executive Officers and Corporate...

  • Page 93
    ...I Risks Related to our Indebtedness Cincinnati Bell Inc. The Company's substantial debt could limit its ability to fund operations, raise additional capital, and fulfill its obligations, which, in turn, would have a material adverse effect on its businesses and prospects generally. The Company has...

  • Page 94
    ... I Cincinnati Bell Inc. sell assets; guarantee indebtedness; declare or pay dividends or other distributions to shareholders; repurchase equity interests; redeem debt that is junior in right of payment to such indebtedness; enter into agreements that restrict dividends or other payments from...

  • Page 95
    ...and data services over access lines. The Company's local telecommunications subsidiary, CBT, has experienced substantial access line losses over the past several years due to a number of factors, including increased competition and wireless and broadband substitution. The Company expects access line...

  • Page 96
    ... on hand and funds available under our Corporate Credit Agreement and Receivables Facility, will be sufficient to service our debt, fund our capital expenditures, pay our taxes, fund our pension and other employee benefit obligations and pay preferred dividends pursuant to our dividend policy. We...

  • Page 97
    ..., wireless service providers, inter-exchange carriers, and cable, broadband, and internet service providers. Wireless providers, particularly those that provide unlimited wireless service plans with no additional fees for long distance, offer customers a substitution service for the Company's access...

  • Page 98
    ... market share and ability to generate revenue. Over the past several years, the Company has improved its wireline network through increased capital expenditures for fiber optic cable in limited areas of its operating network and has also upgraded a portion of its wireless network to 4G, using HSPA...

  • Page 99
    ... and peer-to-peer file sharing applications use significantly more bandwidth than traditional Internet activity such as web browsing and email. As utilization rates and availability of these services continue to grow, our high-speed Internet customers may use much more bandwidth than in the past...

  • Page 100
    ... of operations and financial condition. Maintenance of CBW's wireless network and growth in data usage may require CBW to obtain additional spectrum and transmitting sites which may not be available or be available only on less than favorable terms. CBW uses spectrum licensed to the Company for...

  • Page 101
    ... providers to supply products and services. For example, many of the Company's information technology and call center functions are performed by third-party providers, and network equipment is purchased from and maintained by vendors. In addition, almost half of the wireless towers used by CBW are...

  • Page 102
    ... sets the strategies, selects the management team, or controls the operations of CyrusOne. CyrusOne may choose to pursue strategies which conflict with our business strategies, and, if this were to occur, the CyrusOne Board is required to act for the benefit of its shareholders. The Company executed...

  • Page 103
    ... plans. The accounting for employee benefit plans is complex, as is the process of calculating the benefit obligations under the plans. Adverse changes in interest rates or market conditions, among other assumptions and factors, could cause a significant increase in the Company's benefit obligations...

  • Page 104
    ..., wage and hour class actions, personal injury claims and lawsuits relating to our advertising, sales, billing and collection processes. In addition, our wireless business also faces personal injury and consumer class action lawsuits relating to alleged health effects of wireless phones or radio...

  • Page 105
    ...and administrative offices are located in rented facilities, some of which are recorded as capital leases. The Company's out-of-territory Wireline network assets include a fiber network plant, internet protocol and circuit switches and integrated access terminal equipment. In its wireless operations...

  • Page 106
    ... II Cincinnati Bell Inc. Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Market Information The Company's common shares (symbol: CBB) are listed on the New York Stock Exchange. The high and low closing sale prices during...

  • Page 107
    ...in millions)* Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) 10/1/2013 - 12/31/2013 ...* - $- - $129.2 In February 2010, the Board of Directors approved an additional plan for the repurchase of the Company's outstanding common stock in an amount up...

  • Page 108
    ... financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this document. (dollars in millions, except per share amounts) 2013 (a) 2012 2011 2010 (b) 2009 Operating Data Revenue ...Cost of services and products, selling, general and...

  • Page 109
    ...-service regional provider of entertainment, data and voice communications services over wireline and wireless networks, a provider of managed and professional information technology services, and a reseller of information technology ("IT") and telephony equipment. In addition, enterprise customers...

  • Page 110
    ... Wireline and Wireless. Lease abandonment charges were $0.9 million in 2012. In 2010, the Company's Board of Directors approved long-term incentive programs for certain members of management. Payment was contingent upon the completion of a qualifying transaction and attainment of an increase in the...

  • Page 111
    ... related to a loss recorded on the termination of a lease financing arrangement. An income tax benefit of $2.5 million in 2013 was the result of pre-tax losses. The Company has certain non-deductible expenses, including interest on securities originally issued to acquire its broadband business...

  • Page 112
    ...was up $1.5 million over the prior year as a result of accelerated growth in VoIP and audio conferencing services. Growth in Fioptics and other business fiber-based products was more than offset by declines in legacy local voice, long distance and DSL revenue. Wireless service revenues were down $27...

  • Page 113
    Form 10-K Part II Cincinnati Bell Inc. In 2011, the Company ratified a new labor agreement which curtails future pension service credits for certain employees. As a result of this event, the bargained employees' pension plan was remeasured and a curtailment loss of $4.2 million was recognized in ...

  • Page 114
    ...years. Voice and data services beyond its ILEC territory, particularly in Dayton and Mason, Ohio, are provided through the operations of Cincinnati Bell Extended Territories LLC ("CBET"), a competitive local exchange carrier ("CLEC") and subsidiary of CBT. The Company provides long distance and VoIP...

  • Page 115
    ... II 2013 Compared to 2012 Revenues Cincinnati Bell Inc. Voice local service revenue includes local service, digital trunking, switched access, information services, and other value-added services such as caller identification, voicemail, call waiting, and call return. Voice local service revenue...

  • Page 116
    ...the continued demand from consumers and business customers for increased bandwidth and faster data speeds, the Company expects to continue to build out Fioptics and expand its fiber network over the next few years. 2012 Compared to 2011 Revenues Voice local service revenue was $255.4 million in 2012...

  • Page 117
    ... in service in connection with the expansion of our Fioptics network drove the higher depreciation expense. Restructuring charges were $3.5 million in 2012 compared to $7.7 million in the prior year. The Company continues to manage and reduce the legacy cost structure of this business. Employee...

  • Page 118
    ... and data communications services through the operation of a regional wireless network in the Company's licensed service territory, which surrounds Cincinnati and Dayton, Ohio and includes areas of northern Kentucky and southeastern Indiana. Although Wireless does not market to customers outside...

  • Page 119
    ... and upgrades in 2013. Costs and Expenses Cost of services and products consists largely of network operation costs, interconnection expenses with other telecommunications providers, roaming expense (which is incurred for subscribers to use their handsets in the territories of other wireless service...

  • Page 120
    ... Part II Cincinnati Bell Inc. combined with a decrease in voice minutes of use, partially offset by higher data usage. The subscriber losses are attributed to competitive pressure resulting from, among other factors, competitors' premium handsets and competitors' service on new LTE networks. Total...

  • Page 121
    ... represents the sale, installation, and maintenance of major, branded IT and telephony equipment. Strategic managed and professional services revenue totaled $118.1 million in 2013, up 8% from the prior year due largely to increased customer demand for virtual data center products and staff...

  • Page 122
    ... to support the growth in managed and professional services revenue. SG&A expenses were $42.3 million in 2012, an increase of $4.9 million, or 13%, from the prior year. This increase was largely attributable to the integration of certain functions associated with the Cincinnati-based data center...

  • Page 123
    Form 10-K Part II Data Center Colocation Cincinnati Bell Inc. The Data Center Colocation segment provided enterprise customers with outsourced data center operations, including necessary redundancy, security, power, cooling, and interconnection. For the year ended December 31, 2013, revenues and ...

  • Page 124
    ...Corporate costs increased by $21.6 million compared to the prior year, driven largely by the $42.6 million of transaction related compensation payments as a result of the successful IPO of CyrusOne. Transaction costs were down $4.7 million in 2013 as the costs in 2012 related to legal and consulting...

  • Page 125
    ... is also used to fund our pension obligations, to pay preferred stock dividends, and also to repurchase shares of common stock when the stock price offers an attractive valuation. Cash contributions to our qualified pension plans were $42.1 million, $23.9 million and $18.1 million in 2013, 2012 and...

  • Page 126
    ... the scheduled maturities. On January 24, 2013, we completed the IPO of CyrusOne, our former data center colocation business. As of December 31, 2013, the fair value of our ownership interest in CyrusOne was $993.2 million. We intend to sell down the Company's ownership interest in CyrusOne and use...

  • Page 127
    ... ability to make regularly scheduled dividend payments on its 6 3⁄ 4% Cumulative Convertible Preferred Stock. Furthermore, the Company may make restricted payments in the form of share repurchases or dividends up to 15% of CyrusOne sale proceeds, subject to a $35 million annual cap with carryovers...

  • Page 128
    ... data center operations and our Fioptics network. As a result of the IPO of CyrusOne, we received dividends of $21.3 million from CyrusOne in 2013. In 2012, we deposited $11.1 million of cash into an escrow account and released $4.9 million from this account to fund construction of a data center...

  • Page 129
    ...businesses, or approximately 35% of Greater Cincinnati, and had 74,200 entertainment, 79,900 high-speed internet, and 53,300 voice Fioptics customers. The penetration rate of this product is approximately 29% of the customer locations that have been passed with the Fioptics network. Management plans...

  • Page 130
    ... and customer services, and drive back-office efficiencies. Data Center Colocation On January 24, 2013, we completed the IPO of CyrusOne, which owns and operates our former Data Center Colocation business. We currently own approximately 1.9 million shares, or 8.6%, of CyrusOne's common stock and...

  • Page 131
    ... federal and state court actions, were that the director defendants breached their duty of loyalty in connection with 2010 executive compensation decisions and the officer defendants were unjustly enriched. On March 1, 2012, the parties to the case captioned: NECA-IBEW Pension Fund (The Decatur Plan...

  • Page 132
    ... Cincinnati Bell Inc. During the normal course of business, the Company makes certain indemnities, commitments, and guarantees under which it may be required to make payments in relation to certain transactions. These include (a) intellectual property indemnities to customers in connection...

  • Page 133
    ... from local telephone, special access, internet product and entertainment services, which are billed monthly prior to performance of service, are not recognized upon billing or cash receipt but rather are deferred until the service is provided. Long distance, switched access and video usage pay-per...

  • Page 134
    ... and Hardware - Professional services, including product installations, are recognized as the service is provided. Maintenance services on telephony equipment are deferred and recognized ratably over the term of the underlying customer contract, generally one to four years. Equipment revenue is...

  • Page 135
    ... our outstanding accounts receivable balances are with companies located within our geographic operating areas. As of December 31, 2013 and 2012, receivables with one large customer exceeded 10% of the Company's total accounts receivable. Our Wireline, Wireless and IT Services and Hardware segments...

  • Page 136
    ... rates, operating margins, capital expenditures, terminal values, and discount rate selection. These assumptions are subject to change as the Company's long-term plans and strategies are updated each year. Reviewing the Carrying Values of Long-Lived Assets - Depreciation of our Wireline telephone...

  • Page 137
    ...asset group by less than 10%. In 2011, the Wireless segment recognized an impairment loss of $1.1 million on abandoned assets with no resale value. During the first quarter of 2013, we changed the estimated useful lives assigned to network software which resulted in a one-time depreciation charge of...

  • Page 138
    .... Cost of services associated with these taxes was $19.2 million, $24.4 million, and $22.7 million in 2013, 2012, and 2011, respectively. All other federal taxes collected from customers are presented in the consolidated financial statements on a net basis. Accounting for Pension and Postretirement...

  • Page 139
    ...the pension plans was 4.20% and 3.30%, respectively, while the discount rate used to value the postretirement plans was 4.10% and 3.10%. Higher rates of interest available on high-quality corporate bonds drove the increase in the discount rates in 2013. Expected rate of return The expected long-term...

  • Page 140
    ..., cash flow, costs of services and products, and selling, general and administrative expenses. The following table represents the sensitivity of changes in certain assumptions related to the pension and postretirement plans as of December 31, 2013: Pension Benefits Increase/ Increase/ (Decrease) in...

  • Page 141
    ... in one-time support to accelerate the deployment of mobile broadband infrastructure. In addition, $500 million will be allocated annually under the Phase II Mobility Fund for ongoing operating support for broadband and voice services in high-cost areas. The price cap carrier changes adopted in...

  • Page 142
    ... for use of their networks. The end point of the reforms is a bill-and-keep system under which all per-minute intercarrier charges are eliminated. Beginning in 2012, terminating switched access and reciprocal compensation rates are being phased out over a six-year period for CBT and other price cap...

  • Page 143
    ... near-term, however, it does open the door for companies to explore innovative new pricing arrangements in the future, assuming that the FCC does not reclassify broadband Internet access as a Title II common carrier service. FCC Safeguards to Protect Customer Proprietary Network Information ("CPNI...

  • Page 144
    ... other retail services. The caps on basic local exchange service prices expired in July 2011 providing CBT with flexibility to increase rates for basic local exchange service. Ohio and Kentucky Cable Franchises The states of Ohio and Indiana permit statewide video service authorization. The Company...

  • Page 145
    ... adverse long-term impact on the Company's business; • the Company operates in highly competitive industries, and customers may not continue to purchase services, which could result in reduced revenue and loss of market share; • maintaining the Company's telecommunications networks requires...

  • Page 146
    ...statements, whether as a result of new information, future events or otherwise. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk The Company has exposure to interest rate risk, primarily in the form of variable-rate borrowings from its Corporate Credit Agreement...

  • Page 147
    ...Cincinnati Bell Inc. At December 31, 2012, the carrying value and fair value of fixed-rate debt was $2,508.4 million and $2,646.1 million, respectively. Foreign Currency Risk Substantially all of our revenue and expenses are denominated in U.S. dollars. We do not currently employ forward contracts...

  • Page 148
    ... Financial Statements: Cincinnati Bell Inc. Page Management's Report on Internal Control over Financial Reporting ...Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets ...Consolidated Statements of Operations ...Consolidated Statements of Comprehensive Income...

  • Page 149
    ... reliable financial statements in conformity with accounting principles generally accepted in the United States. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth...

  • Page 150
    ... Bell Inc. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareowners of Cincinnati Bell Inc. Cincinnati, Ohio We have audited the internal control over financial reporting of Cincinnati Bell Inc. and subsidiaries (the "Company") as of December 31, 2013...

  • Page 151
    ... sheets of Cincinnati Bell Inc. and subsidiaries (the "Company") as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income (loss), shareowners' deficit and cash flows for each of the three years in the period ended December 31, 2013. Our audits...

  • Page 152
    ..., except share amounts) Cincinnati Bell Inc. December 31, 2013 December 31, 2012 Assets Current assets Cash and cash equivalents ...Receivables, less allowances of $12.2 and $13.3 ...Receivable from CyrusOne ...Inventory, materials and supplies ...Deferred income taxes ...Prepaid expenses...

  • Page 153
    ...OF OPERATIONS (Dollars in millions, except per share amounts) Cincinnati Bell Inc. Year Ended December 31, 2013 2012 2011 Revenue Services ...Products ...Total revenue ...Costs and expenses Cost of services, excluding items below ...Cost of products sold, excluding items below ...Selling, general...

  • Page 154
    ...Part II Cincinnati Bell Inc. Cincinnati Bell Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Dollars in millions) Year Ended December 31, 2013 2012 2011 Net (loss) income ...Other comprehensive income (loss), net of tax: Foreign currency translation loss ...Defined benefit plans: Net...

  • Page 155
    ...Shares purchased under employee plans and other ...Stock-based compensation ...Repurchase and retirement of shares ...Dividends on preferred stock ...Balance at December 31, 2011 ...Net income ...Other comprehensive loss ...Shares issued under employee plans ...Shares purchased under employee plans...

  • Page 156
    ... in excess of expense ...Stock-based compensation ...Excess tax benefit for share based payments ...Other, net ...Changes in operating assets and liabilities, net of effects of divestitures: Decrease (increase) in receivables ...Increase in inventory, materials, supplies, prepaid expenses and other...

  • Page 157
    ... services. The Company generates a large portion of its revenue by serving customers in the Greater Cincinnati and Dayton, Ohio areas. An economic downturn or natural disaster occurring in this, or a portion of this, limited operating territory could have a disproportionate effect on our business...

  • Page 158
    ...useful life or increase its functionality are capitalized and depreciated over the asset's remaining life. The majority of the Wireline network property, plant and equipment used to generate its voice and data revenue is depreciated using the group method, which develops a depreciation rate annually...

  • Page 159
    ... local telephone, special access, internet product and entertainment services, which are billed monthly prior to performance of service, are not recognized upon billing or cash receipt but rather are deferred until the service is provided. Long distance, switched access and other usage based charges...

  • Page 160
    ... offset to cost of products sold. Data Center Colocation - During the period of time in which we included the accounts of CyrusOne in our consolidated financial statements, data center colocation rentals were generally billed monthly in advance and some contracts had escalating payments over the non...

  • Page 161
    ... provision for income taxes over the estimated useful lives of the related property, plant and equipment. Deferred income taxes are provided for temporary differences between financial statement and income tax assets and liabilities. Deferred income taxes are recalculated annually at rates then in...

  • Page 162
    ..., risk-free interest rate, holding period and dividends. The fair value of stock awards is based on the Company's closing share price on the date of grant. For all share-based payments, an assumption is also made for the estimated forfeiture rate based on the historical behavior of employees...

  • Page 163
    ... that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including our own data. Foreign Currency Translation and Transactions - The financial position of foreign subsidiaries is translated at the exchange rates in...

  • Page 164
    Form 10-K Part II 3. Investment in CyrusOne Cincinnati Bell Inc. On January 24, 2013, we completed the initial public offering of CyrusOne, our former Data Center Colocation segment. As of this date, we no longer control CyrusOne's operations and we removed the following assets and liabilities of ...

  • Page 165
    ... of this compensation plan. We lease data center and office space from CyrusOne at certain locations in the Cincinnati area under operating leases and are also billed for other services provided by CyrusOne under contractual service arrangements. In the normal course of business, the Company also...

  • Page 166
    ...amounts) Year Ended December 31, 2013 2012 2011 Numerator: Net (loss) income ...Preferred stock dividends ...Net (loss) income applicable to common shareowners - basic and diluted ...Denominator: Weighted-average common shares outstanding - basic ...Warrants ...Stock-based compensation arrangements...

  • Page 167
    ... estimated useful lives assigned to wireless network software to three years. This change resulted from smartphone-driven technology upgrades, enhancements and projected retirements. As a result of this change in estimate, we recorded depreciation expense of $8.5 million in the first quarter of 2013...

  • Page 168
    ... in Years December 31, 2013 Gross Carrying Accumulated Amount Amortization December 31, 2012 Gross Carrying Accumulated Amount Amortization (dollars in millions) Customer relationships Wireline ...Wireless ...IT Services and Hardware ...Data Center Colocation ...Trademarks Wireless ...Data Center...

  • Page 169
    ... was terminated. Availability under the new revolving credit facility is subject to customary borrowing conditions. Borrowings under the Corporate Credit Agreement bear interest, at the Company's election, at a rate per annum equal to (i) LIBOR plus the applicable margin or (ii) the base rate plus...

  • Page 170
    ... Preferred Stock. Furthermore, the Company may make restricted payments in the form of share repurchases or dividends up to 15% of CyrusOne sale proceeds, subject to a $35 million annual cap with carryovers. The Corporate Credit Agreement was also modified to provide that the Tranche B Term...

  • Page 171
    ... Cincinnati Bell Inc. As of December 31, 2013, the Company had $40.0 million of outstanding borrowings under the Corporate Credit Agreement, leaving $160.0 million available. There were no borrowings under the Corporate Credit Agreement as of December 31, 2012. The Company pays commitment fees...

  • Page 172
    ... the Company's subsidiaries such that the subsidiaries are generally not permitted to enter into an agreement that would limit their ability to make dividend payments to the parent; issuance of indebtedness; asset dispositions; transactions with affiliates; liens; investments; issuances and sales of...

  • Page 173
    ... wireless towers and various equipment. These leases generally contain renewal or buyout options. During the period of time in which we included the accounts of CyrusOne in our consolidated financial statements, capital lease obligations also included liabilities for leased data center facilities...

  • Page 174
    ... 10-K Part II Deferred Financing Costs Cincinnati Bell Inc. Deferred financing costs are costs incurred in connection with obtaining long-term financing. In 2013, deferred financing costs of $6.7 million were incurred related to amending the Corporate Credit Agreement for the issuance of the $540...

  • Page 175
    Form 10-K Part II Cincinnati Bell Inc. specified permitted baskets, including a credit agreement basket providing full access to the $200 million Corporate Credit Agreement plus an additional $161.4 million of secured debt. Also, the Company's ability to make Restricted Payments (as defined by the...

  • Page 176
    ...business, the Company makes certain indemnities, commitments, and guarantees under which it may be required to make payments in relation to certain transactions. These include (a) intellectual property indemnities to customers in connection with the use, sale, and/or license of products and services...

  • Page 177
    .... Contingent Compensation Plan In 2010, the Company's Board of Directors approved long-term incentive programs for certain members of management. Payment was contingent upon the completion of a qualifying transaction and attainment of an increase in the equity value of the data center business, as...

  • Page 178
    Form 10-K Part II Cincinnati Bell Inc. On January 24, 2013, CyrusOne completed its IPO. This is a qualifying transaction and as such triggered payments under this contingent compensation plan. For the year ended December 31, 2013, compensation expense of $42.6 million was recognized for these ...

  • Page 179
    ... certain management contracts. In 2013, employee separation costs also included consulting fees related to a workforce optimization initiative. In 2012, a voluntary termination program was offered to certain Wireline call center employees and included in employee separation costs. Severance payments...

  • Page 180
    ... agreements and to telecommunication carriers to cancel circuits. Contract terminations are expected to be paid in 2014. A summary of restructuring activity by business segment is presented below: IT Services and Hardware Data Center Colocation (dollars in millions) Wireline Wireless Corporate...

  • Page 181
    ... following information relates to noncontributory defined benefit pension plans, postretirement healthcare plans, and life insurance benefit plans. Approximately 10% in 2013, 11% in 2012, and 7% in 2011 of these costs were capitalized to property, plant and equipment related to network construction...

  • Page 182
    ... weighted-average assumptions used in accounting for and measuring the projected benefit obligations: Pension Benefits December 31, 2013 2012 Postretirement and Other Benefits December 31, 2013 2012 Discount rate ...Expected long-term rate of return ...Future compensation growth rate ... 4.20% 3.30...

  • Page 183
    ... II Cincinnati Bell Inc. A one-percentage point change in assumed healthcare cost trend rates would have the following effect on the postretirement benefit costs and obligation: (dollars in millions) 1% Increase 1% Decrease Service and interest costs for 2013 ...Postretirement benefit obligation...

  • Page 184
    ... pension plans at December 31, 2013 as well as stock of international companies located in both developed and emerging markets around the world. Fixed income securities primarily include holdings of funds, which generally invest in a variety of intermediate and long-term investment grade corporate...

  • Page 185
    ... Management expects to make cash payments of approximately $13 million related to its postretirement health plans in 2014. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten years: Pension...

  • Page 186
    ... preferred stock dividends in 2013, 2012, and 2011. Warrants In March 2003, the Company entered into a series of recapitalization transactions which included the issuance of 17.5 million warrants that expired on March 26, 2013. Each warrant allowed the holder to purchase one share of Cincinnati Bell...

  • Page 187
    ... statutory federal income tax rate with the effective tax rate for each year: Year Ended December 31, 2013 2012 2011 Form 10-K U.S. federal statutory rate ...State and local income taxes, net of federal income tax ...Change in valuation allowance, net of federal income tax ...State net operating...

  • Page 188
    ... tax assets and liabilities are as follows: (dollars in millions) Cincinnati Bell Inc. December 31, 2013 2012 Deferred tax assets: Net operating loss carryforwards ...Pension and postretirement benefits ...Equity method investment in CyrusOne ...Other ...Total deferred tax assets ...Valuation...

  • Page 189
    ... and Deferred Compensation Plans Cincinnati Bell Inc. The Company may grant stock options, stock appreciation rights, performance-based awards, and timebased restricted shares to officers and key employees under the 2007 Long Term Incentive Plan and stock options and restricted shares to directors...

  • Page 190
    ...84 $1.32 $- The Company did not grant any stock options or stock-settled appreciation rights in the year ended December 31, 2011. The expected volatility assumption used in the Black-Scholes pricing model was based on historical volatility. The risk-free interest rate is based on the U.S. Treasury...

  • Page 191
    ... and 2012, there were 0.7 million common shares deferred in these plans. As these awards can be settled in cash, we record compensation costs each period based on the change in the Company's stock price. We recognized a compensation benefit of $1.4 million in 2013, and expenses of $1.8 million and...

  • Page 192
    ... were held for sale. The Wireless segment provides digital wireless voice and data communications services and sales of related handset equipment to customers in the Greater Cincinnati and Dayton, Ohio operating areas. Wireless incurred restructuring charges of $0.2 million in 2013 and $1.6 million...

  • Page 193
    ... with management contracts, and a $0.2 million gain on the sale of assets. No asset impairment, restructuring charges, or gain on the sale of assets were incurred in 2011. Corporate operating results include compensation expense of $42.6 million associated with awards and other transaction-related...

  • Page 194
    Form 10-K Part II Our business segment information is as follows: (dollars in millions) Cincinnati Bell Inc. Year Ended December 31, 2013 2012 2011 Revenue Wireline ...Wireless ...IT Services and Hardware ...Data Center Colocation ...Intersegment ...Total revenue ...Intersegment revenue Wireline ...

  • Page 195
    ... in millions) Cincinnati Bell Inc. Year Ended December 31, 2013 2012 2011 Service revenue Wireline ...Wireless ...IT Services and Hardware ...Data Center Colocation ...Total service revenue ...Product revenue Handsets and accessories ...IT, telephony and other equipment ...Total product revenue...

  • Page 196
    ...Statements of Operations and Comprehensive Income (Loss) Parent (Guarantor) Cincinnati Bell Inc. (dollars in millions) Year Ended December 31, 2013 CBT Other (Issuer) Non-guarantors Eliminations Total Revenue ...Operating costs and expenses ...Operating (loss) income ...Interest expense (income...

  • Page 197
    ... Consolidating Statements of Operations and Comprehensive Income (Loss) Parent (Guarantor) Cincinnati Bell Inc. (dollars in millions) Year Ended December 31, 2011 CBT Other (Issuer) Non-guarantors Eliminations Total Revenue ...Operating costs and expenses ...Operating (loss) income ...Interest...

  • Page 198
    ....5 $919.8 Condensed Consolidating Statements of Cash Flows (dollars in millions) Year Ended December 31, 2013 Parent CBT Other (Guarantor) (Issuer) Non-guarantors Eliminations Total Cash flows (used in) provided by operating activities ...Capital expenditures ...Dividends received from CyrusOne...

  • Page 199
    ......Cash flows used in investing activities ...Issuance of long-term debt ...Funding between Parent and subsidiaries, net ...Net increase in corporate credit and receivables facilities with initial maturities less than 90 days ...Repayment of debt ...Debt issuance costs ...Common stock issuance costs...

  • Page 200
    ...Cincinnati Bell Entertainment Inc., Cincinnati Bell Any Distance Inc., Cincinnati Bell Telecommunications Services LLC, Cincinnati Bell Wireless LLC, CBTS Software LLC, Cincinnati Bell Technology Solutions Inc., Cincinnati Bell Any Distance of Virginia LLC, eVolve Business Solutions LLC, Data Center...

  • Page 201
    ... II Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) Cincinnati Bell Inc. Year Ended December 31, 2013 (dollars in millions) Parent (Issuer) Guarantors Non-guarantors Eliminations Total Revenue ...Operating costs and expenses ...Operating (loss) income ...Interest...

  • Page 202
    ... II Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) Cincinnati Bell Inc. Year Ended December 31, 2011 (dollars in millions) Parent (Issuer) Guarantors Non-guarantors Eliminations Total Revenue ...Operating costs and expenses ...Operating (loss) income ...Interest...

  • Page 203
    ... Consolidating Statements of Cash Flows $(2,312.3) $2,872.4 (dollars in millions) Year Ended December 31, 2013 Parent (Issuer) Guarantors Non-guarantors Eliminations Total Cash flows (used in) provided by operating activities ...$(218.1) $ 26.2 Capital expenditures ...Dividends received...

  • Page 204
    ......Cash flows used in investing activities ...Issuance of long-term debt ...Funding between Parent and subsidiaries, net ...Net increase in corporate credit and receivables facilities with initial maturities less than 90 days ...Repayment of debt ...Debt issuance costs ...Common stock issuance costs...

  • Page 205
    ...will not necessarily equal the per share results for the full year. Form 10-K On January 24, 2013, we completed the IPO of CyrusOne, which owns and operates our former data center colocation business. Effective January 24, 2013, we no longer consolidate the accounts of CyrusOne in our consolidated...

  • Page 206
    ... changes to Cincinnati Bell Inc.'s internal control over financial reporting during the fourth quarter of 2013 that materially affect, or are reasonably likely to materially affect, Cincinnati Bell Inc.'s internal control over financial reporting. Item 9B. Other Information No reportable information...

  • Page 207
    ..., Chief Operating Officer since November 2013; Chief Operations Officer of Cincinnati Bell Telephone from March 2013 to November 2013; Vice President and General Manager of the Business & Carrier Markets division from November 2010 to March 2013; Vice President of eVolve Business Solutions from...

  • Page 208
    ...-K Part III Cincinnati Bell Inc. JOSHUA T. DUCKWORTH, Vice President, Investor Relations and Controller of the Company since July 2013; Assistant Treasurer and Director of Investor Relations for Cincinnati Bell Inc. from August 2012 to July 2013; Assistant Controller for Cincinnati Bell Inc. from...

  • Page 209
    ...Cincinnati Bell Inc. Financial Statement Schedule II - Valuation and Qualifying Accounts is included on page 135. All other schedules are not required under the related instructions or are not applicable. Exhibits 2 Exhibits identified in parenthesis below, on file with the Securities and Exchange...

  • Page 210
    ... and Bank of America, N.A. (Exhibit 10.1 to Current Report on Form 8-K, date of Report November 20, 2012, File No. 1-8519). First Amendment to Credit Agreement dated as of September 10, 2013, among Cincinnati Bell Inc., an Ohio corporation, the subsidiary guarantors party thereto, the Lenders party...

  • Page 211
    ... and Data Centers South Inc., a Delaware corporation (Exhibit 10.4 to Current Report on Form 8-K, date of Report November 20, 2012, File No. 1-8519). Amended and Restated Purchase and Sale Agreement dated as of June 6, 2011, among the Originators identified therein, Cincinnati Bell Funding LLC...

  • Page 212
    ....14 to Annual Report on Form 10-K for the year ended December 31, 2011, File No. 1-8519). Amendment to Cincinnati Bell Management Pension Plan executed December 20, 2013. Amendment to Cincinnati Bell Management Pension Plan executed May 16, 2013. Amendment to Cincinnati Bell Management Pension Plan...

  • Page 213
    ... to Annual Report on Form 10-K for the year ended December 31, 2008, File No. 1-8519). Cincinnati Bell Inc. 2007 Stock Option Plan for Non-Employee Directors (Appendix B to the Company's 2007 Proxy Statement on Schedule 14A filed on March 14, 2007, File No. 1-8519). Executive Compensation Recoupment...

  • Page 214
    ... Employment Agreement between Cincinnati Bell Inc. and David L. Heimbach dated as of November 20, 2013 (Exhibit 10.1 to Current Report on Form 8-K, date of earliest event reported November 20, 2013, File No. 1-8519). Calculation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends...

  • Page 215
    Schedule II VALUATION AND QUALIFYING ACCOUNTS Beginning of Period Additions Charge (Benefit) To (from) Other to Expenses Accounts Cincinnati Bell Inc. (dollars in millions) Deductions End of Period Allowance for Doubtful Accounts Year 2013 ...Year 2012 ...Year 2011 ...Deferred Tax Valuation ...

  • Page 216
    ... IV SIGNATURES Cincinnati Bell Inc. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: February 27, 2014 /s/ Leigh R. Fox Leigh R. Fox Chief Financial Officer...

  • Page 217
    ...Cincinnati Bell Inc. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons... John M. Zrno* John M. Zrno President, Chief Executive Officer and Director Chairman of the Board and Director February 27, 2014 February 27...

  • Page 218
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 219
    ... THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-8519 CINCINNATI BELL INC. Ohio (State of Incorporation) 31-1056105 (I.R.S. Employer Identification No.) 221 East Fourth Street, Cincinnati, Ohio 45202 (Address of principal executive offices) (Zip Code...

  • Page 220
    ...Item 15 Exhibits and Financial Statement Schedules. In addition to the audited financial statements, new Exhibits 23.1, 23.2, ...operations, cash flows, disclosures or other information in Cincinnati Bell Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 and does not reflect events...

  • Page 221
    Form 10-K/A Part IV PART IV Cincinnati Bell Inc. Page Item 15. Exhibits and Financial Statement Schedules ...Signatures ... 4 71 Form 10-K/A 3

  • Page 222
    ... Schedules (a) 1. Financial Statements Cincinnati Bell Inc. The consolidated financial statements, as indexed on page 68 of the 2013 Form 10-K, were filed on February 27, 2014. 2. Financial Statement Schedules Financial Statement Schedule II - Valuation and Qualifying Accounts was included on page...

  • Page 223
    ... set forth therein. As discussed in Note 3, the financial statements of the Company as of December 31, 2012 and for the period from January 1, 2013 to January 23, 2013 and for the years ended December 31, 2012 and 2011 include allocation of certain corporate overhead costs from Cincinnati Bell...

  • Page 224
    ... set forth therein. As discussed in Note 3, the financial statements of the Partnership as of December 31, 2012 and for the period from January 1, 2013 to January 23, 2013 and for the years ended December 31, 2012 and 2011 include allocation of certain corporate overhead costs from Cincinnati Bell...

  • Page 225
    ...December 31, 2013, and December 31, 2012 ...Due from affiliates ...Other assets ...Total assets ...Liabilities and equity Accounts payable and accrued expenses ...Deferred revenue ...Due to affiliates ...Capital lease obligations ...Long-term debt ...Other financing arrangements ...Total liabilities...

  • Page 226
    ...: Property operating expenses ...Sales and marketing ...General and administrative ...Depreciation and amortization ...Restructuring charges ...Transaction costs ...Transaction-related compensation ...Management fees charged by CBI ...Loss on sale of receivables to an affiliate ...Asset impairments...

  • Page 227
    ... financing arrangements ...Assets transferred by parent ...Divisional control contribution funded by settlement of intercompany balances due to Parent ...Contribution receivable from Parent related to transaction-related compensation ...Dividend payable ...Deferred IPO costs ...Deferred IPO costs...

  • Page 228
    ... Inc. CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY (in millions) Common Stock Issued Cincinnati Bell Inc. Total Shareholder's Equity/ Non Accumulated Paid-In Partnership Divisional Parent's Net Controlling Total Shares Amount Deficit Capital Capital Control Investment Interest Equity Balance as...

  • Page 229
    ... 31, 2013, and December 31, 2012 ...Due from affiliates ...Other assets ...Total assets ...Liabilities and parent's net investment Accounts payable and accrued expenses ...Deferred revenue ...Due to affiliates ...Capital lease obligations ...Long-term debt ...Other financing arrangements ...Total...

  • Page 230
    ...: Property operating expenses ...Sales and marketing ...General and administrative ...Depreciation and amortization ...Restructuring charges ...Transaction costs ...Transaction-related compensation ...Management fees charged by CBI ...Loss on sale of receivables to an affiliate ...Asset impairments...

  • Page 231
    ... transaction-related compensation ...Distribution payable ...Other contributions from Parent ...Non-cash distribution to CyrusOne Inc...Assets transferred to Parent ...Divisional control contribution funded by settlement of intercompany balances due to Parent ...Reclass of equipment to held for sale...

  • Page 232
    ... loss-January 1, 2013, to January 23, 2013 ...Contributions from Parent-transaction-compensation expense reimbursement ...Other contributions from Parent ...Distribution to CyrusOne Inc...Partnership reverse unit split 2.8 to 1 ...Partnership units exchanged by CBI for common stock in CyrusOne Inc...

  • Page 233
    ... the "Company") is an owner, operator and developer of enterprise-class, carrier neutral data centers. Our customers operate in a number of industries, including energy, oil and gas, mining, medical, technology, finance and consumer goods and services. We currently operate 25 data centers located in...

  • Page 234
    ...In these instances, we bear substantially all the construction period risk, including managing or funding construction. These transactions generally do not qualify for sale-leaseback accounting due to our continued involvement in these data center operations. At inception, the fair value of the real...

  • Page 235
    ... efforts of our data centers. Construction in progress includes costs incurred under construction contracts including project management services, engineering and schematic design services, design development, construction services and other construction-related fees and services. Interest, property...

  • Page 236
    ...in these data center operations. Revenue Recognition-Colocation rentals are generally billed monthly in advance, and some contracts have escalating payments over the term of the contract. If rents escalate without the lessee gaining access to or control over additional leased space or power, and the...

  • Page 237
    ... revenue when an event occurs that gives rise to such credits. Customer credits were insignificant for the year ended December 31, 2013. Property Operating Expenses-Property operating expenses generally consist of electricity, salaries and benefits of data center operations personnel, real estate...

  • Page 238
    ... Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Restructuring Charges-Restructuring charges are a result of programs planned and controlled by management that materially changes either the scope of business undertaken...

  • Page 239
    ... using assumptions such as volatility, risk-free interest rate, holding period and expected dividends. The fair value of stock awards was based upon the closing market price of CBI's common stock on the date of grant. For all sharebased awards, a forfeiture rate was estimated based upon historical...

  • Page 240
    ... shares to its employees, officers and members of the Company's board of directors in conjunction with CyrusOne's IPO. These restricted shares will generally vest at the end of three years with a per share grant price of $19. Performance and Market Based Awards-On April 17, 2013, the Company...

  • Page 241
    ... IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) 6. Investment in Real Estate A schedule of our gross investment in real estate follows: Successor December 31, 2013 Building and Improvements Equipment Predecessor December...

  • Page 242
    ...groups. Management engaged a third-party valuation specialist to assist with our estimation of the fair value of these assets. Management estimated the fair value of the customer relationship using the income approach, which discounted the expected earnings attributable to current customer contracts...

  • Page 243
    ... Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Management also estimated the fair value of other long-lived assets, primarily leasehold improvements, using an income approach based on projected discounted future cash...

  • Page 244
    ...on a consolidated basis. Notwithstanding the limitations set forth above, we will be permitted, subject to the terms and conditions of the Credit Agreement, to distribute to our shareholders cash dividends in an amount not to exceed 95% of our adjusted funds from operations (as defined in the Credit...

  • Page 245
    ... Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Capital lease obligations-We use leasing as a source of financing for certain of our data center facilities and related equipment. We currently operate four data center...

  • Page 246
    ... our balance sheet. These transactions generally do not qualify for saleleaseback accounting due to our continued involvement in these data center operations. On June 18, 2013, we extinguished our Metropolis Drive, Austin, TX (Austin 2) data center facility related financing lease obligation for $12...

  • Page 247
    ... of the Company; make certain investments or other restricted payments; enter into transactions with affiliates; enter into agreements limiting the ability of the operating partnership's subsidiaries to pay dividends or make certain transfers and other payments to the operating partnership or...

  • Page 248
    ... the assistance of a third-party valuation specialist. Management estimated the fair value using the income approach, which discounted the expected future earnings attributable to current customer contracts, and includes estimates of future expenses and capital expenditures, and a discount rate of...

  • Page 249
    ... units. On January 24, 2013, CBI exchanged 1,500,000 operating partnership units for common shares of CyrusOne Inc. 12. Stockholders' Equity and Partnership Capital On January 24, 2013, CyrusOne Inc. closed its initial public offering of 18,975,000 shares of common stock at a price of $19.00 per...

  • Page 250
    ...-cancelable operating leases, excluding month-to-month arrangements and submetered power, for the next five years are shown below: (Dollars in millions) 2014 2015 2016 2017 2018 ... $145.4 98.7 69.1 44.3 29.7 14. Employee Benefit Plans Prior to the IPO, some of our shared employees and retirees...

  • Page 251
    ...LTIP Plan. The payment of dividend equivalents in cash in conjunction with any outstanding awards will not be counted against the shares available for issuance under the LTIP Plan. The related stock compensation expense incurred by CyrusOne Inc. will be allocated to the Operating Partnership. Shares...

  • Page 252
    Form 10-K/A Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Restricted Stock CyrusOne Inc. issued approximately 1 million restricted shares to its employees, officers and board of director members in conjunction with ...

  • Page 253
    ...six years for the expected term of the stock options, 35% for the expected volatility, 0.92% for the risk-free rate of return and 3.4% for the expected dividend yield. CyrusOne Inc. recognized stock-based compensation expense of approximately $0.1 million for the period ended December 31, 2013, with...

  • Page 254
    ... 3 years, volatility factor of 35%, risk free rate of 0.35% and dividend yield of 3.4%. Market Based-Restricted Stock Weighted average grant date fair value per share (in thousands, expect per share amounts) Shares Granted ...Forfeited ...Vested ...Shares outstanding at December 31, 2013 ... 125...

  • Page 255
    ...Cincinnati Bell Technology Solutions ("CBTS"): Revenues-The Company records revenues from CBI under contractual service arrangements. These services include leasing of data center space, power and cooling in certain of our data center facilities network interface services and office space. Operating...

  • Page 256
    ...: Transition services agreement by CBTS ...Charges for services provided by CBT (connectivity) ...209 West 7th Street rent provided by CBT ...Management Fees with CBI ...Allocated employee benefit plans by CBI ...Allocated centralized insurance costs by CBI ...Selling and Marketing services provided...

  • Page 257
    Form 10-K/A Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Other Related Party Transactions Prior to joining CyrusOne in March 2013, our internal counsel, was principal in the Law Offices of Thomas W. Bosse, PLLC, ("...

  • Page 258
    ... for early termination or require minimum payments for the remaining term. As of December 31, 2013, the minimum commitments for these arrangements were $16.1 million. We also have purchase orders and contracts related to construction of data center facilities and equipment. We generally have the...

  • Page 259
    ... loss can be reasonably estimated. Based on information currently available and consultation with legal counsel, we believe that the outcome of all claims will not, individually or in the aggregate, have a material effect on our financial statements. Affiliate Guarantees of Lease Obligations CBI has...

  • Page 260
    ... including the businesses that composed the Predecessor operations. CyrusOne LLC, together with CyrusOne Foreign Holdings LLC, directly or indirectly owns 100% of the Non-Guarantors. As of December 31, 2013, CyrusOne TRS Inc. had not incurred any obligations or recorded any material transactions for...

  • Page 261
    ..., present the financial information after the effective date of the IPO. The consolidating schedules are provided in accordance with the reporting requirements for guarantor subsidiaries. Consolidating Balance Sheets As of December 31, 2013 Parent General LP Finance NonGuarantor Partner Co-issuer Co...

  • Page 262
    Form 10-K/A Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) As of December 31, 2012 Parent General LP Finance NonGuarantor Partner Co-issuer Co-issuer Guarantors Guarantors Eliminations (dollars in millions) Total ...

  • Page 263
    Form 10-K/A Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Consolidating Statements of Operations Period Ended December 31, 2013 Parent General LP Finance NonGuarantor Partner Co-issuer Co-issuer Guarantors Guarantors ...

  • Page 264
    ... January 23, 2013 Parent General LP Finance NonGuarantor Partner Co-issuer Co-issuer Guarantors Guarantors Eliminations Total (dollars in millions) Revenue ...Costs and expenses: Property operating expenses ...Sales and marketing ...General and administrative ...Transaction-related compensation...

  • Page 265
    ... and expenses: Property operating expenses ...Sales and marketing ...General and administrative ...Depreciation and amortization ...Transaction costs ...Management fees charged by CBI ...Loss on sale of receivables to an affiliate ...Total costs and expenses ...Operating income (loss) ...Interest...

  • Page 266
    Form 10-K/A Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Consolidating Statements of Cash Flows Period Ended December 31, 2013 Parent General LP Finance NonGuarantor Partner Co-issuer Co-issuer Guarantors Guarantors ...

  • Page 267
    ...Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Period Ended January 23, 2013 Parent General LP Finance NonGuarantor Partner Co-issuer Co-issuer Guarantors Guarantors Eliminations Total (dollars in millions) Net (loss) income...

  • Page 268
    ...Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Year Ended December 31, 2012 Parent General LP Finance NonGuarantor Partner Co-issuer Co-issuer Guarantors Guarantors Eliminations (dollars in millions) Total Net (loss) income...

  • Page 269
    ... IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) Year Ended December 31, 2011 Parent General LP Finance NonGuarantor Partner Co-issuer Co-issuer Guarantors Guarantors Eliminations (dollars in millions) Total Net income...

  • Page 270
    .... as of January 23, 2013. Effective upon completion of CyrusOne Inc.'s IPO, this entity became the general partner and 1% owner of CyrusOne LP and has no other assets or operations. Prior to the IPO, this entity did not incur any obligations or record any transactions. Issuers - The Issuers include...

  • Page 271
    Form 10-K/A Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) The following schedules present the financial information for the periods ended December 31, 2013, and January 23, 2013, and the years ended December 31, 2012 ...

  • Page 272
    ...022.4 $525.2 Accounts payable and accrued expenses ...$ 4.4 $ 4.4 Deferred revenue ...- - Intercompany payable ...- - Due to affiliates ...- - Capital lease obligations ...- - Long-term debt ...525.0 525.0 Other financing arrangements ...- - Total liabilities ...Total parent's net investment ...529...

  • Page 273
    ...and expenses: Property operating expenses ...Sales and marketing ...General and administrative ...Transaction-related compensation ...Depreciation and amortization ...Transaction costs ...Total costs and expenses ...Operating loss ...Interest expense ...Loss before income taxes ...Income tax expense...

  • Page 274
    ... and expenses: Property operating expenses ...Sales and marketing ...General and administrative ...Depreciation and amortization ...Transaction costs ...Management fees charged by CBI ...Loss on sale of receivables to an affiliate ...Total costs and expenses ...Operating income (loss) ...Interest...

  • Page 275
    ...in receivables and other assets ...- - Increase (decrease) in accounts payable and accrued expenses ...4.8 (2.3) Increase (decrease) in payables to related parties ...6.8 - Other changes in assets and liabilities ...- - Net cash provided by (used in) operating activities ...Cash flows from investing...

  • Page 276
    ... (loss) income to net cash provided by operating activities ...0.2 Changes in operating assets and liabilities, net of effects of acquisitions: Increase in receivables and other assets ...- (Decrease) increase in accounts payable and accrued expenses ...2.1 Increase (decrease) in payables to related...

  • Page 277
    ... (loss) income to net cash provided by operating activities ...Changes in operating assets and liabilities, net of effects of acquisitions: Increase in receivables and other assets ...(Decrease) increase in accounts payable and accrued expenses ...Increase (decrease) in payables to related parties...

  • Page 278
    ... (loss) income to net cash provided by operating activities ...Changes in operating assets and liabilities, net of effects of acquisitions: Increase in receivables and other assets ...(Decrease) increase in accounts payable and accrued expenses ...Increase (decrease) in payables to related parties...

  • Page 279
    ...10-K/A Part IV Cincinnati Bell Inc. CyrusOne Inc. and CyrusOne LP NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS-(continued) 22. Quarterly Financial Information (Unaudited) The table below reflects the unaudited selected quarterly information for the years ended December 31, 2013 and 2012...

  • Page 280
    Form 10-K/A Part IV Schedule II. Valuation and Qualifying Accounts (dollars in millions) Beginning of Period Charge to Expenses Cincinnati Bell Inc. Deductions/ (Additions) End of Period Allowance for Doubtful Accounts 2013 ...2012 ...2011 ...Deferred Tax Valuation Allowance 2013 ...2012 ...2011...

  • Page 281
    ... 31, 2013 (dollars in millions) Description Initial Costs Cost Capitalized Subsequent to Acquisition Cincinnati Bell Inc. Gross Carrying Amount Building and Building and Building and Accumulated Land Improvements Equipment Land Improvements Equipment Land Improvements Equipment Depreciation...

  • Page 282
    ... Cost and Accumulated Depreciation and Amortization Cincinnati Bell Inc. The following table reconciles the historical cost and accumulated depreciation for the years ended December 31, 2013, 2012 and 2011. (dollars in millions) Years Ended December 31, 2013 2012 2011 Property Balance - beginning...

  • Page 283
    ...of November 30, 1998, among Cincinnati Bell Telephone Company LLC (as successor entity to Cincinnati Bell Telephone Company), as Issuer, Cincinnati Bell Inc., as Guarantor, and The Bank of New York, as Trustee (Exhibit (4)(c)(iii)(3) to Annual Report on Form 10-K for the year ended December 31, 2004...

  • Page 284
    ... and Data Centers South Inc., a Delaware corporation (Exhibit 10.4 to Current Report on Form 8-K, date of Report November 20, 2012, File No. 1-8519). Amended and Restated Purchase and Sale Agreement dated as of June 6, 2011, among the Originators identified therein, Cincinnati Bell Funding LLC...

  • Page 285
    ....14 to Annual Report on Form 10-K for the year ended December 31, 2011, File No. 1-8519). Amendment to Cincinnati Bell Management Pension Plan executed December 20, 2013. Amendment to Cincinnati Bell Management Pension Plan executed May 16, 2013. Amendment to Cincinnati Bell Management Pension Plan...

  • Page 286
    ... to Annual Report on Form 10-K for the year ended December 31, 2008, File No. 1-8519). Cincinnati Bell Inc. 2007 Stock Option Plan for Non-Employee Directors (Appendix B to the Company's 2007 Proxy Statement on Schedule 14A filed on March 14, 2007, File No. 1-8519). Executive Compensation Recoupment...

  • Page 287
    ... Employment Agreement between Cincinnati Bell Inc. and David L. Heimbach dated as of November 20, 2013 (Exhibit 10.1 to Current Report on Form 8-K, date of earliest event reported November 20, 2013, File No. 1-8519). Calculation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends...

  • Page 288
    ...in 2013 Form 10-K filed on February 27, 2014. The Company's reports on Form 10-K, 10-Q, 8-K, proxy and other information are available free of charge at the following website: http://www.cincinnatibell.com. Upon request, the Company will furnish a copy of the Proxy Statement to its security holders...

  • Page 289
    ... Cincinnati Bell Inc. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: March 7, 2014 /s/ Leigh R. Fox Leigh R. Fox Chief Financial Officer /s/ Joshua...

  • Page 290
    ... Cincinnati Bell Inc. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons ... Zrno *By: /s/ Theodore H. Torbeck President, Chief Executive Officer and Director Chairman of the Board and Director March 7, 2014 March 7, 2014...

  • Page 291
    ...Cincinnati Bell Inc., Investor Relations, 221 East 4th Street, Cincinnati, Ohio 45202 Investor Relations Contact Josh Duckworth Vice President, Investor Relations and Controller (513) 397-2292 Transfer Agent and Registrar Questions regarding registered shareholder accounts or the Stock Purchase Plan...

  • Page 292
    221 East Fourth Street P.O. Box 2301 Cincinnati, Ohio 45202 513.397.9900 www.cincinnatibell.com