Cincinnati Bell 2015 Annual Report Download - page 36

Executive Summary
Financial Results
Consolidated revenue totaling $1,167.8 million for the year ended December 31, 2015 increased
compared to the prior year as strategic revenue growth more than offset the impact of no longer
providing backhaul service to our discontinued wireless operations and declines from legacy and
integration products. Revenue from our strategic products totaled $536.6 million in 2015, up 21%
compared to 2014. Operating income in 2015 was $128.0 million, down from the prior year due in large
part to increased costs associated with accelerating the construction of our fiber network and costs
absorbed as a result of winding down wireless operations.
Income from continuing operations totaled $290.8 million for the year ended December 31, 2015,
primarily due to the $449.2 million gain on the sale of a portion of our CyrusOne investment. Income
from discontinued operations, net of tax, for the year ended December 31, 2015 was $62.9 million. As
of March 31, 2015, there were no subscribers remaining on the wireless network, and we no longer
required the use of the wireless spectrum being leased. Therefore, the $112.6 million gain on the sale
of the wireless spectrum licenses, which had been previously deferred, was recognized in our financial
results during the first quarter of 2015. In addition, on April 1, 2015, we transferred certain other assets
related to our wireless business to the purchaser, including leases to certain wireless towers and
related equipment and other assets, which resulted in a gain of $15.9 million in the second quarter of
2015.
The Company sold a combined 21.7 million CyrusOne partnership units and common shares for
cash totaling $643.9 million during 2015. The cash generated from these transactions was primarily
used to manage our debt. During 2015, debt repayments totaled $531.7 million reducing interest
payments by approximately $42 million annually. As a result, our consolidated debt leverage as
defined by our Corporate Credit Agreement was 4.3x as of December 31, 2015. If our leverage was
further adjusted for our remaining 9.5% ownership in CyrusOne, which was valued at $257.9 million, as
of December 31, 2015, our leverage would be 3.4x.
We ceased operations of our wireless business in March 2015. As a result, wireless financial
results are now presented as discontinued operations. Therefore, we have recast the financial
information for all periods presented. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for further details
on the Company’s 2015 financial results.
Executive Compensation Program
The Company’s executive compensation program ties a significant portion of an executive’s
realized annual compensation to the Company’s achievement of financial and strategic goals. For
2015, the key financial measures utilized to assess annual performance are revenue and Adjusted
EBITDA and the key financial measures utilized to assess long-term performance are strategic
revenue, Adjusted EBITDA, and unlevered cash return on assets. See pages 26 - 29 for a detailed
discussion of the payments made under the annual and long-term incentive plans for 2015
performance.
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