Cincinnati Bell 2012 Annual Report Download - page 188

service. No phantom shares were granted to non-employee directors in 2012. Distributions to the directors are
generally in the form of cash. The executive deferred compensation plan allows for certain executives to defer a
portion of their annual base pay, bonus, or stock awards. Under the executive deferred compensation plan,
participants can elect to receive distributions in the form of either cash or common shares.
At December 31, 2012 and 2011, 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 compensation expense of $1.8 million in 2012, $0.3 million in 2011, and a benefit of
$0.2 million in 2010.
15. Business Segment Information
During 2012, the Company operated in four business segments: Wireline, Wireless, Data Center Colocation,
and IT Services and Hardware, as described below. The Company’s segments are strategic business units that
offer distinct products and services and are aligned with its internal management structure and reporting. On
January 24, 2013, we completed the IPO of CyrusOne, which owns and operates our former data center
colocation business. For further details of this transaction, see Note 20 of Notes to Consolidated Financial
Statements.
The Wireline segment provides local voice, data, long distance, entertainment, voice over internet protocol
(“VoIP”), and other services over its owned and other wireline networks. Local voice services include local
telephone service, switched access, and value-added services such as caller identification, voicemail, call waiting,
and call return. Data services include high-speed internet using digital subscriber line technology and over fiber
using its gigabit passive optical network. Data services also provide data transport for businesses, including local
area network services, dedicated network access, and metro ethernet and dense wavelength division multiplexing
(“DWDM”)/optical wave data transport, which principally are used to transport large amounts of data over
private networks. Long distance and VoIP services include long distance voice, audio conferencing, VoIP and
other broadband services including private line and multi-protocol label switching, a technology that enables a
business customer to privately interconnect voice and data services at its locations. Entertainment services are
comprised of television media through our Fioptics product suite and DirecTV®. Other services primarily include
inside wire installation for business enterprises and rental revenue. These services are primarily provided to
customers in southwestern Ohio, northern Kentucky, and southeastern Indiana. In 2011, the Company sold
substantially all of the assets associated with its home security monitoring business and recognized a pretax gain
of $8.4 million. Wireline recognized restructuring charges of $3.5 million, $7.7 million, and $8.2 million in 2012,
2011 and 2010, respectively, for costs associated with employee separation, lease abandonments and contract
termination costs.
The Wireless segment provides advanced digital wireless voice and data communications services and sales
of related handset equipment to customers in the Greater Cincinnati and Dayton, Ohio operating areas. In 2011,
the Wireless segment recognized a goodwill impairment loss of $50.3 million. In 2012 and 2011, other asset
impairments were $0.4 million and $1.1 million, respectively, related to the write-off of canceled or abandoned
capital projects. Wireless incurred restructuring charges of $1.6 million in 2012 and $1.0 million in 2010, with no
such charges in 2011.
The Data Center Colocation segment provided data center colocation services to primarily large businesses.
As of December 31, 2012, we owned or maintained 24 data centers in Texas, Ohio, Kentucky, Indiana, Illinois,
Arizona, England, and Singapore. In 2012, the Data Center Colocation segment recognized impairment losses of
$13.3 million on long-lived assets and a customer relationship intangible primarily related to our GramTel
acquisition. In 2012, the Data Center Colocation segment recognized restructuring charges of $0.5 million for
severance associated with management contracts. In 2010, a restructuring charge of $1.4 million was incurred to
conform the Cincinnati-based operation’s commission incentive program to the Cyrus Networks program. No
restructuring charges were incurred in 2011. On June 11, 2010, the Company purchased Cyrus Networks, a data
center operator based in Texas, for approximately $526 million, net of cash acquired.
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Form 10-K Part II Cincinnati Bell Inc.