Back to GetFilings.com
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECRITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
------------- ------------------
Commission file number 1-8519
CINCINNATI BELL INC.
An Ohio I.R.S. Employer
Corporation No. 31-1056105
201 East Fourth Street, Cincinnati, Ohio 45202
Telephone Number 513 397-9900
-----------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Shares (par value $1.00 per share) New York Stock Exchange
Preferred Share Purchase Rights Cincinnati Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
-----------------------------------------------
At February 28, 1994, 65,094,358 common shares were outstanding.
At February 28, 1994, the aggregate market value of the voting shares owned
by non-affiliates was $1,058,203,575.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (SECTION 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
----------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's annual report to security holders for the
fiscal year ended December 31, 1993 (Parts I, II and IV)
(2) Portions of the registrant's definitive proxy statement dated March 14,
1994 issued in connection with the annual meeting of shareholders
(Part III)
TABLE OF CONTENTS
PART I
Item Page
- ---- ----
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Submission of Matters to a Vote of Security Holders . . . . . . . . 10
PART II
5. Market for the Registrant's Common Equity
and Related Security Holder Matters. . . . . . . . . . . . . . . . . 14
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . 14
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . . . 14
8. Consolidated Financial Statements. . . . . . . . . . . . . . . . . . 14
9. Disagreements on Accounting and Financial Disclosure . . . . . . . . 14
PART III
10. Directors and Executive Officers of Registrant . . . . . . . . . . . 14
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . 14
12. Security Ownership of Certain Beneficial Owners and Management . . . 14
13. Certain Relationships and Related Transactions . . . . . . . . . . . 14
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . 16
----------------------------------------
See page 11 for "Executive Officers and Significant Employees ofthe Registrant".
PART I
ITEM 1. BUSINESS
GENERAL
Cincinnati Bell Inc. (including its wholly owned subsidiaries, except as
the context may otherwise require, the "Company") is incorporated under the
laws of Ohio and has its principal executive offices at 201 East Fourth Street,
Cincinnati, Ohio 45202 (telephone number 513 397-9900).
The Company is a holding company engaged in operations through its
subsidiaries. The major subsidiaries are Cincinnati Bell Telephone Company
("CBT"), Cincinnati Bell Information Systems Inc. ("CBIS") and MATRIXX Marketing
Inc. ("MATRIXX"). CBT provides telecommunications network services, CBIS
designs, markets and manages information systems related to the
telecommunications industry, and MATRIXX provides telephone marketing and
research, fulfillment and data base services. Other subsidiaries include
Cincinnati Bell Long Distance Inc. ("CBLD") which provides resale of long
distance telecommunications services and products as well as voice mail and
paging services, Cincinnati Bell Directory Inc. ("CBD") which provides Yellow
Pages and other directory products and services and information and advertising
services, and companies having interests in cellular mobile telephone service,
the purchase, sale and reconditioning of telecommunications and computer
equipment, and the ownership of real estate used by the Company.
CINCINNATI BELL TELEPHONE COMPANY
CBT is engaged principally in the business of furnishing telecommunications
network services, mainly local exchange, access and toll telephone service, in
four counties in southwestern Ohio, six counties in northern Kentucky and parts
of two counties in southeastern Indiana. On December 31, 1993, CBT had
approximately 848,000 network access lines in service. The principal cities in
which CBT furnishes local service are Cincinnati, Norwood and Hamilton in Ohio
and Covington, Newport and Florence in Kentucky. Approximately 98% of CBT's
network access lines are in a single local service area. Other communications
services offered by CBT include voice, data and video transmission, custom
calling services and billing services. In addition, CBT is a sales agent for
certain products and services of American Telephone and Telegraph Company
("AT&T") and also sells products of other companies.
CBT's local exchange, access and toll telephone operations are subject to
regulation by the regulatory authorities of the states in which it operates with
respect to intrastate rates and services, issuance of securities and other
matters. CBT is also subject to the jurisdiction of the Federal Communications
Commission ("FCC") with respect to interstate rates, services and other matters.
The FCC prescribes a uniform system of accounts and the principles and standard
procedures used to separate CBT's investments, revenues, expenses, taxes and
reserves between those applicable to interstate services under the jurisdiction
of the FCC and to intrastate services under the jurisdiction of the state
regulatory authorities.
TELEPHONE OPERATIONS. The lines provided by CBT to customer premises can
be interconnected with the lines of other telephone companies in the United
States and with telephone systems in most other countries. Interconnection is
made through the facilities of interexchange carriers and local exchange
carriers.
The following table sets forth for CBT the number of network access lines
at December 31:
Thousands
-------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Network Access Lines 848 827 808 800 781
Recurring charges for network access lines and other local services for the
year ended December 31, 1993 accounted for approximately 45% of CBT revenues and
sales.
INTRASTATE RATES. Rates for intrastate services offered by CBT are either
non-regulated by state regulatory authorities in Ohio and Kentucky or regulated
by such state regulatory authorities which are The Public Utilities Commission
of Ohio (the "PUCO") and the Public Service Commission of Kentucky (the "PSCK").
Approximately 78% of CBT's 1993 revenues and sales was derived from intrastate
service. Approximately 83% of 1993 intrastate revenues was derived from Ohio
service, approximately 17% was derived from Kentucky service and minor amounts
were derived from Indiana and other states service. Of the total 1993 intrastate
revenues, local service accounted for approximately 68%, intrastate long
distance service and network access accounted for approximately 14% and
miscellaneous revenue accounted for approximately 18% of such revenues and
sales.
In 1984, the PUCO issued orders providing the format to be employed by
local exchange telephone companies in Ohio for setting charges for intrastate
access by interexchange carriers. The PUCO determined that the Ohio intrastate
access charges should mirror the interstate access charges set by the FCC (see
"Interstate Rates"), with the exception that the PUCO did not order mirroring of
subscriber line charges or carrier common line charges.
Pursuant to procedures established by the PUCO, local exchange companies
are permitted to file plans proposing alternative forms of regulation for
competitive services and basic service rates. On March 12, 1993, CBT filed a
notice of intent to file an application for approval of an alternative
regulation plan and for a threshold rate adjustment. Pursuant to CBT's
proposal, services would be categorized into various cells depending on the
nature of the services, with varying degrees of pricing flexibility. Also,
CBT's proposal requested an across-the-board (with a few noted exceptions)
increase of approximately 9% in its rates.
- 2 -
CBT filed its application on May 4, 1993. On November 25, CBT voluntarily
filed several modifications to its initial proposal in response to concerns
raised by various intervenors. The initial and modified plans sought a
threshold rate increase of $17.1 million, or approximately a 5.5% increase in
annual revenues. On January 31, 1994, the PUCO staff issued its evaluation of
CBT's filing and recommended an annual revenue increase in the range of $6.6
million to $11.1 million. Thereafter, CBT and the intervenors filed objections
to the staff's recommendation. The parties are involved in negotiations to
settle the case. In the event that a settlement is not reached, hearings are
expected to begin in April 1994.
In 1991, the PSCK issued an order amending its prior format to be used by
local exchange companies in Kentucky for setting charges for intrastate access
for interexchange carriers. In this order, the PSCK ordered that rates and
regulations should mirror those of the FCC with certain exceptions that may be
considered for future mirroring based on the merits of each situation.
INTERSTATE RATES. Approximately 22% of CBT's 1993 revenues and sales was
derived from interstate and foreign services under FCC tariffs. The FCC has
regulatory jurisdiction over services, rates and other matters relating to CBT's
interstate operations. The FCC prescribes a uniform system of accounts
applicable to telephone companies, separations procedures to be utilized in
separating investments, expenses, taxes and reserves between the federal and
state regulatory jurisdictions, and depreciation rates for interstate plant and
facilities.
The FCC's cost allocation rules specify requirements relative to the
allocation of costs between regulated and non-regulated activities, as well as
transactions between affiliated entities. CBT's cost allocation manual, setting
forth its method for separating regulated and non-regulated activities
consistent with the FCC's cost allocation rules, was approved, as modified by
the FCC. CBT continues to review its cost allocation manual and to modify it as
appropriate to reflect CBT's circumstances.
The FCC also prescribes the rate of return which regulated carriers are
authorized to earn on their regulated interstate business. The currently
effective authorized rate of return is 11.25%. The FCC has yet to design a
valid refund mechanism to replace its automatic refund rule to address instances
where earnings exceed authorized levels for any monitoring period. The U.S.
Court of Appeals for the District of Columbia Circuit previously found the FCC's
automatic refund rule to be arbitrary and capricious. In the absence of FCC
action, several complaints were filed pursuant to Section 208 of the
Communications Act seeking refunds related to prior access periods in which CBT
had allegedly exceeded the authorized rate of return. The FCC has awarded
damages in these cases, thereby attempting to achieve the same results that were
found improper in the previously overturned FCC rule. Cincinnati Bell has filed
appeals to those FCC orders.
CBT receives its principal interstate compensation from access charges paid
by interexchange carriers and end users. Specifically, traffic sensitive
switched access charges apply on a usage sensitive basis to recover costs
associated with the use of CBT's switching and transmission
- 3 -
facilities. Special access charges recover costs of private line connections.
CBT's non-traffic sensitive costs are recovered from subscribers on a flat rate
basis (Subscriber Line Charges) and from interexchange carriers on a usage
sensitive basis (Carrier Common Line Charges). Effective April 1, 1989, with the
final step increase in the Subscriber Line Charges, the cap on residential and
single line business Subscriber Line Charges increased to $3.50. Multi-line
customers' Subscriber Line Charges have a $6.00 cap. The Carrier Common Line
rate recovers the remaining non-traffic sensitive costs.
The Regional Bell Operating Companies and certain Tier 1 local exchange
carriers have converted to price cap regulation. During 1993, CBT elected to
remain under traditional rate of return regulation. However, CBT has filed, and
the FCC has approved effective January 15, 1994, CBT's Optional Incentive
Regulation tariff which allows CBT to move from traditional rate of return
regulation.
COMPETITION. Regulatory, legislative and judicial decisions, new
technologies and the convergence of other industries with the telecommunications
industry are causes of increasing competition in the telecommunications
industry. The range of communications services, the equipment available to
provide and access such services and the number of competitors offering such
services continue to increase. Federal and state regulators are encouraging
changes that promote competition in the industry in the belief that increased
competition will drive technological innovation, lower prices and improve
service levels.
Other means of communications that permit bypass of CBT's local exchange
facilities either completely or partially are available and are growing,
although CBT is unable to determine precisely to what extent such bypass may
occur. Alternative Access Providers (AAPs), cable companies and wireless
providers have all made clear their intent to compete for segments of the local
exchange business. AAPs, who initially focused only on interstate private lines,
are now gaining credibility and are offering an ever-expanding range of
telecommunications services to large business customers, including switched
services. Cable companies are upgrading and using their broadband networks to
experiment with new video, data and voice services for both residential and
business customers, as well as transport for intermediary customers. Wireless
providers are testing new technologies, like Personal Communications Service
(PCS), to provide an alternative to traditional local service lines. In
addition, interexchange carriers are creating new value-added services based on
Signaling System 7 and Advanced Intelligent Network technologies, similar to
those under development by the local exchange companies. CBT's competitors range
from small service bureaus to large interexchange carriers and multi-state
cellular companies to joint ventures and other combinations of
telecommunications and other companies.
To stay competitive, CBT has upgraded and will continue to upgrade its
telephone plant and network and to explore new services and technologies as
sound business judgment dictates. It has constructed several optical fiber
rings in and around the metropolitan Cincinnati area to permit it to offer
redundancy in telecommunications services for business customers. CBT offers
custom calling features that include Caller ID, Call Return, Call
Block, Priority Forward, Repeat
- 4 -
Dialing and Number Privacy. In addition, CBT is attempting to determine the
most effective means for it to participate in the PCS technology, the spectrums
for which will be auctioned by the FCC in the fall of 1994.
The effect of this competition on CBT will ultimately be determined by
federal and state regulatory and legislative actions and the type, quality and
cost of CBT's services. CBT continues to position itself in this rapidly
changing and convergent environment in order to remain competitive.
CINCINNATI BELL INFORMATION SYSTEMS INC.
CBIS designs, markets and manages information systems and provides software
products, consulting services, customer-care systems, billing systems and
technical assistance for the global telecommunications industry. CBIS sells the
majority of its products and services domestically but also serves clients in
Australia, Canada, Japan, Mexico, Switzerland, The Netherlands and the United
Kingdom.
Its principal clients are telecommunications carriers, cellular
communications providers and their resellers, and owners and operators of
private communications networks. CBIS is the leading supplier of billing and
customer-care systems for the rapidly growing U.S. cellular telephone industry.
CBIS continues to develop open-systems, client-server architecture for
customer-care and billing applications that could serve wireline, wireless and
interexchange companies. These new systems form a foundation for more advanced
solutions that CBIS expects to deliver to current and future clients. CBIS's
new system for the cellular telephone industry is expected to be ready for
initial client testing in mid-1994.
The telecommunications information systems and services market is highly
competitive. Such competition has increased in recent years and is likely to
increase in the future. Some of CBIS's competitors have substantially greater
financial and other resources more readily available than CBIS. Competition is
based mainly on product quality, performance, price and the quality of customer
service. Except for the U.S. cellular telephone market (where CBIS serves
cellular companies that have a significant portion of the market), CBIS has
small market shares in the other areas of its business and faces vigorous
competition.
In late 1993, the Company determined the need to reorganize CBIS. This
reorganization focused on two phases. The first phase was the elimination of
non-strategic and underperforming operations. This resulted in CBIS taking
action to divest its holdings in its federal operation (CBIS Federal),
consolidating its foreign data center's operations, and eliminating unprofitable
domestic and international activities. The second phase of the plan was to
reorganize the remaining operations into strategic business units. These
actions began in 1993 and are expected to be completed in 1994.
- 5 -
MATRIXX MARKETING INC.
MATRIXX concentrates on servicing business needs in the telephone marketing
and related marketing service areas by offering an integrated package of
services to its customers including, without limitation, inbound and outbound
telephone marketing, marketing research, fulfillment, customer service centers,
direct mail, database management and facilities management. MATRIXX has seven
divisions: Custom Services, Business, Inbound Mountain, Inbound Central,
Outbound, International and Research. The Custom Services Division designs
customized client solutions for consumer markets with a dedicated staff and
services uniquely tailored to the needs of each client. The Inbound Mountain,
Inbound Central and Outbound Divisions enable clients to manage high volumes of
inbound and outbound customer contacts in an environment of shared resources.
The Inbound Mountain, Inbound Central and Outbound Divisions increase market
awareness with rapid response to consumer requests for information or service.
These divisions handle the needs of packaged goods manufacturers, financial
services institutions and telecommunications companies. The Business Division
provides sales and customer service personnel who act as the sales arm and/or
marketing service representatives for the client. They take orders, sell by
telephone and provide information about the client's promotion plans, quantity
discounts and new products, both to retailers and distributors. The
International Division operates in Europe from its headquarters in Paris and an
office in the United Kingdom, offering business-to-business and business-to-
customer telephone marketing, including toll-free services, direct response
services and facilities management. The Research Division assists MATRIXX's
clients to find and qualify customers before they offer a new product or service
to the market. By offering full-service marketing research, MATRIXX can support
its clients in their strategic planning and tactical decision-making process.
The telephone marketing agency business in the United States is highly
competitive, with MATRIXX's competitors ranging in size from very small firms
offering special applications or short term projects to large independent firms
and "in-house" divisions of potential client companies with size and
capabilities equal to those of MATRIXX. The telephone marketing agency business
in Europe is in the early stages of development. The business is very
competitive and overcapacity exists in a market that has not developed very
rapidly during the past several years. MATRIXX is one of several companies that
have a leading position in Europe.
OTHER BUSINESSES
Most of the Company's business other than CBT, CBIS and MATRIXX is
conducted by other subsidiaries of the Company or by partnerships in which the
Company owns an interest.
CBD provides printed Yellow Pages directories and other directory services.
In addition, CBD publishes and provides the White Pages directories for CBT.
CBD continually evaluates new product offerings in both the print and emerging
electronic categories of distribution.
CBLD is a reseller of long distance telecommunications services. CBLD
sells high-quality, competitively-priced long distance services to residence
customers and small to medium-sized businesses in Ohio, Indiana, Kentucky,
Western Pennsylvania and Michigan.
- 6 -
Cincinnati Bell Supply Company engages in the purchase, sale and
reconditioning of telecommunications and computer equipment to customers
nationwide.
CBD, CBLD and Cincinnati Bell Supply Company are faced with fierce
competition from businesses offering similar products and services. Their
success will be determined by how well they meet the changing market needs of
their customers.
Cincinnati Bell Properties Inc. owns certain real estate used by the
Company.
The Company (through its wholly owned subsidiary, Cincinnati Bell Cellular
Systems Company) is a limited partner with a 45% interest in a limited
partnership (of which Ameritech Mobile Phone Service of Cincinnati, Inc. is the
general partner) in the cellular mobile telephone service business in the
Greater Cincinnati, Columbus and Dayton areas. Cincinnati Bell Cellular Systems
Company has commenced a lawsuit against Ameritech Mobile Phone Service of
Cincinnati, Inc. asking that the partnership be dissolved. See "Legal
Proceedings."
Until January 1, 1994, the Company was a joint venturer with Anixter Bros.,
Inc. (a materials management firm) in the supply and distribution of
telecommunications and electrical equipment and material in Ohio and Kentucky.
The term of the joint venture expired as of December 31, 1993, and the joint
venture was dissolved as of that date. Anixter Bros., Inc. has continued the
business of the joint venture for its benefit, and the Company has commenced a
lawsuit against Anixter Bros., Inc. See "Legal Proceedings."
RELATIONSHIP WITH AT&T
The Company and its subsidiaries are parties to several agreements with
AT&T and its affiliates pursuant to which the Company and its subsidiaries
either purchase equipment, materials, services and advice from AT&T and its
affiliates or provide the same to AT&T and its affiliates. As a result of these
agreements, during 1993 the Company and its subsidiaries together sold to AT&T
and its affiliates approximately $127,925,000 of goods and services (excluding
access line charges) and purchased from AT&T and its affiliates approximately
$64,495,000 of goods and services.
CAPITAL ADDITIONS
The Company has been making large expenditures for construction of
telephone plant and investments in its existing subsidiaries and new businesses.
By reinvesting in its telephone plant, the Company expects to be able to
introduce new products and services, respond to competitive challanges and
increase the operating efficiency and productivity of its network. The
following is a summary of capital additions for the years 1989 through 1993:
- 7 -
(Dollars In Thousands)
---------------------
Investments in
Telephone Plant Existing Subsidiaries Total Capital
Construction and New Businesses Additions
--------------- --------------------- -------------
1993 $ 111,595 $ 123,816 $ 235,411
1992 $ 94,956 $ 45,100 $ 140,056
1991 $ 115,931 $ 77,417 $ 193,348
1990 $ 127,690 $ 156,645 $ 284,335
1989 $ 142,871 $ 59,661 $ 202,532
The total investment in telephone plant increased from approximately
$1,229,539,000 at December 31, 1988 to approximately $1,430,822,000 at December
31, 1993, after giving effect to retirements but before deducting accumulated
depreciation at either date.
Anticipated capital additions in 1994 for the Company including all
subsidiaries are approximately $160,000,000, of which $95,000,000 is for
telephone plant.
EMPLOYEES
At December 31, 1993 the Company and its subsidiaries had approximately
14,700 employees, of whom approximately 18% are covered under collective
bargaining agreements with the Communications Workers of America ("CWA"), which
is affiliated with the AFL-CIO. Those agreements expire in May 1996 for CBT and
September 1996 for CBIS.
The number of employees at December 31, 1993 increased over December 31,
1992. The increase is due to the acquisition of WATS Marketing of America in
November 1993.
The Company expects to reduce the number of employees at CBIS as part of
its reorganization plan that is expected to be completed in 1994. As part of
the reorganization plan, CBIS plans to sell its federal operations which has
approximately 1,000 employees.
BUSINESS SEGMENT INFORMATION
The amounts of revenues and sales, operating income, assets, capital
additions and depreciation and amortization attributable to each of the business
segments of the Company for the year ended December 31, 1993 is set forth in the
table relating to business segment information in note (r) of the Notes to the
Financial Statements in the Company's annual report to security holders, and
such table is incorporated herein by reference.
ITEM 2. PROPERTIES
The property of the Company is principally the telephone plant of CBT,
which does not lend itself to description by character and location of principal
units. Central office equipment represents 40% of CBT's investment in telephone
plant in service; land and buildings (occupied principally by central offices),
including capitalized leases, represent 13%; telephone instruments and related
wiring and equipment (including private branch exchanges), substantially all of
which
- 8 -
are on the premises of customers, represent 2%; and connecting lines not on
customers' premises, the majority of which are on or under public roads,
highways or streets and the remainder on or under private property, represent
39%. Other property of the Company is principally computer equipment, computer
software, furniture and fixtures.
Substantially all of the installations of central office equipment and
garages are located in buildings owned by CBT situated on land which it owns.
Some CBT business and administrative offices are in rented quarters, most of
which are included in capitalized leases.
The Company owns and occupies a 120,000 square foot building in Erlanger,
Kentucky, which is a training and education facility.
CBIS, MATRIXX and other Company subsidiaries lease office space in various
cities on commercially reasonable terms. Upon the expiration or termination of
any such leases, these companies could obtain comparable office space. CBIS
also leases some of the computer hardware, computer software and office
equipment necessary to conduct its business pursuant to short term leases, some
of which are capitalized leases.
ITEM 3. LEGAL PROCEEDINGS
None, except as described below.
Cincinnati Bell Cellular Systems Company ("CBCSC") is a limited partner in
a partnership (of which Ameritech Mobile Phone Service of Cincinnati, Inc. is
the general partner) which provides cellular mobile telephone service in the
Greater Cincinnati, Dayton and Columbus areas. The partnership operates in a
9,500 square mile area that contains a population of approximately four million
people. On February 23, 1994, CBCSC filed an action in the Court of Chancery of
the State of Delaware for New Castle County in which CBCSC seeks a dissolution
of the limited partnership, the appointment of a liquidating trustee and damages
against the general partner. CINCINNATI BELL CELLULAR SYSTEMS COMPANY V.
AMERITECH MOBILE PHONE SERVICE OF CINCINNATI, INC., ET AL.
On April 20, 1983, the Company and Anixter Bros., Inc. ("Anixter") formed a
joint venture (the "Joint Venture") for the purpose of engaging in the
distribution of electrical wire and cable, cable television products and
telephone and communications products. The Joint Venture was to continue for
approximately ten years, terminating on December 31, 1993. In 1993, several
issues arose relating to the operation and the winding up of the Joint Venture.
On November 11, 1993, the Company filed a Complaint against Anixter and the
Joint Venture in the Court of Common Pleas for Hamilton County, Ohio. In its
Complaint, the Company contends that (1) Anixter has refused to compensate the
Company for the going concern value of the Joint Venture which Anixter had
converted and/or will retain; and (2) Anixter, as the managing partner of the
Joint Venture, has failed to account properly for the revenues and expenses of
the Joint Venture. On December 14, 1993, Anixter removed the case to the
federal district court for the Southern District of Ohio. On December 16, 1993,
Anixter filed its Answer and Counterclaim. In its Counterclaim, Anixter alleges
that the Company wrongfully
- 9 -
competed with the Joint Venture. CINCINNATI BELL INC. V. ANIXTER BROS., INC.,
ET AL.
The Federal Communications Commission has issued orders that require CBT to
refund to interexchange carriers certain amounts based on CBT's having exceeded
targeted earning levels for interstate access services for the 1987-1988 access
period. CBT has appealed the FCC orders, and its appeals have been consolidated
with numerous other appeals involving similar issues pending in the U.S. Circuit
Court of Appeals for the District of Columbia. MCI TELECOMMUNICATIONS CORP., ET
AL. V. FCC AND USA.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders in the fourth quarter
of the fiscal year covered by this report.
- --------------------------------------------
- 10 -
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES OF THE REGISTRANT (DURING 1993).
The names, ages and positions of the executive officers and significant
employees of the Company are as follows:
Name Age Title
- ---- --- -----
as of 3/31/94)
Dwight H. Hibbard (a,b,c) 70 Chairman of the Board
John T. LaMacchia (a,b,c) 52 President and Chief Executive Officer
Raymond R. Clark (a) 56 Executive Vice President
President and Chief Executive Officer
of Cincinnati Bell Telephone Company
Brian C. Henry 37 Executive Vice President and Chief
Financial Officer
Sheldon Horing (d) 57 Executive Vice President
President and Chief Executive Officer
of CBIS
David J. Lahey (e) 55 Executive Vice President
Chairman of MATRIXX Marketing Inc.
William H. Zimmer III 40 Secretary and Treasurer
Donald E. Hoffman 55 Senior Vice President-Administration
of Cincinnati Bell Telephone Company
Scott Aiken 58 Vice President - Public Relations
of Cincinnati Bell Telephone Company
James F. Orr (f) 48 President and Chief Executive Officer
of MATRIXX Marketing Inc.
William D. Baskett III (g) 54 General Counsel and Chief Legal
Officer
- ----------------------------------------
- 11 -
(a) Member of Board of Directors.
(b) Member of Executive Committee of Board of Directors.
(c) Mr. Hibbard also served as the Chief Executive Officer ("CEO") until
October 1, 1993. Mr. LaMacchia was elected CEO on October 1, 1993. Since
October 1, 1993 Mr. Hibbard has continued to serve as Chairman.
(d) Effective February 4, 1994, Mr. Horing resigned as an executive officer of
the Company and as President and Chief Executive Officer of CBIS.
(e) Effective February 4, 1994, Mr. Lahey was appointed President and
Chief Executive Officer of CBIS.
(f) Effective February 4, 1994, Mr. Orr was appointed Chief Operating
Officer of CBIS.
(g) Mr. Baskett is a significant employee as defined by Item 401(c) of
Regulation S-K.
Officers are elected annually but are removable at the discretion of the
Board of Directors.
DWIGHT H. HIBBARD, Chairman of the Company since January 1, 1985; Chief
Executive Officer of the Company, 1985-September 30, 1993; President of the
Company, 1983-1987; Chairman of Cincinnati Bell Telephone Company, 1985-October
31, 1993. Director of The Ohio National Life Insurance Company and Teradyne,
Inc.
JOHN T. LAMACCHIA, President and Chief Executive Officer of the Company
since October 1, 1993; President of the Company since January 1, 1988; Chief
Operating Officer of the Company, 1988-September 30, 1993; Chairman of
Cincinnati Bell Telephone Company since November 1, 1993; Chairman of Cincinnati
Bell Information Systems Inc. since October 1988 and President, 1983-1987.
Director of Multimedia, Inc. and The Kroger Co.
RAYMOND R. CLARK, Executive Vice President of the Company since January 1,
1987; Chief Executive Officer of Cincinnati Bell Telephone Company since January
1, 1988; President since January 1, 1987. Director of Star Banc Corporation and
Xtek, Inc.
BRIAN C. HENRY, Executive Vice President and Chief Financial Officer of the
Company since March 29, 1993; Vice President and Chief Financial Officer of
Mentor Graphics, February 1986 to March 28, 1993.
SHELDON HORING, President and Chief Executive Officer of CBIS, January 1,
1991-February 4, 1994; Executive Vice President of the Company, January 1,
1993-February 4, 1994; President of CBIS Federal from January 1, 1990 to
December 31, 1990; AT&T Network Systems Data Networking Vice President from
January 1, 1989 to December 30, 1989.
- 12 -
DAVID J. LAHEY, President and Chief Executive Officer of CBIS since
February 4, 1994; Executive Vice President of the Company since January 1, 1993;
Chairman of MATRIXX Marketing Inc. since January 1, 1993; President and Chief
Executive Officer of MATRIXX Marketing Inc., February 2, 1989 to December 31,
1992; Senior Vice President - Market Development of Cincinnati Bell Enterprises
Inc., April 1, 1988 to February 1, 1989.
WILLIAM H. ZIMMER III, Secretary and Treasurer of the Company since
August 1, 1991; Secretary and Assistant Treasurer of the Company, December 1,
1988 to July 31, 1991. Assistant Secretary and Assistant Treasurer of the
Company, April 20, 1987 to November 30, 1988.
DONALD E. HOFFMAN, Senior Vice President-Administration of Cincinnati Bell
Telephone Company since January 1, 1990; Vice President-Administration of
Cincinnati Bell Telephone Company, February 1, 1988 to December 31, 1989;
President of Cincinnati Bell Cellular Systems Inc., January 1, 1987 to
January 31, 1988.
SCOTT AIKEN, Vice President-Public Relations of Cincinnati Bell Telephone
Company since May 13, 1985.
JAMES F. ORR, Chief Operating Officer of CBIS since February 4, 1994;
President and Chief Executive Officer of MATRIXX Marketing Inc. since January 1,
1993; Vice President Market Development January 1, 1989 to December 31, 1992;
Vice President of Crush International Inc. January 1, 1986 to December 31, 1988.
WILLIAM D. BASKETT III, General Counsel and Chief Legal Officer of the
Company since July 1993; partner of Frost & Jacobs since 1970.
- 13 -
PART II
ITEMS 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS.
Cincinnati Bell Inc. (symbol: CSN) common shares are listed on the New York
Stock Exchange and on the Cincinnati Stock Exchange. As of February 28, 1994
there were approximately 22,391 holders of record of the 65,094,358 outstanding
Common Shares of the Company. The high and low sales prices and dividends
declared per common share each quarter for the last two fiscal years are listed
below.
Quarter 1st 2nd 3rd 4th
- ------------------------------------------------------------------------------
1993 High $23 $24 3/8 $23 1/2 $24
Low $16 1/8 $21 $19 1/8 $17 7/8
Dividend Declared $ .20 $ .20 $ .20 $ .20
- ------------------------------------------------------------------------------
1992 High $20 7/8 $18 3/4 $17 5/8 $17 5/8
Low $17 3/8 $16 1/2 $16 $15 3/8
Dividend Declared $ .20 $ .20 $ .20 $ .20
ITEMS 6 THROUGH 8.
The information required by these items is included in the registrant's
annual report to security holders for the fiscal year ended December 31, 1993
included in Exhibit 13 and is incorporated herein by reference pursuant to
General Instruction G(2).
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
No disagreements with accountants on any accounting or financial disclosure
occurred during the period covered by this report.
PART III
ITEMS 10 THROUGH 13.
Information regarding executive officers required by Item 401 of Regulation
S-K is furnished in a separate disclosure in Part I of this report under the
caption "Executive Officers and Significant Employees of the Registrant" since
the registrant did not furnish such information in its definitive proxy
statement prepared in accordance with Schedule 14A.
- 14 -
The other information required by these items is included in the
registrant's definitive proxy statement dated March 14, 1994 in the last
paragraph on page 1, the accompanying notes on page 2 and the last paragraph on
page 2, the information under "Election of Directors" on pages 5 through 7, the
information under "Share Ownership of Directors and Officers" on pages 4 and 5,
the information under, "Compensation Committee Report on Executive
Compensation," "Executive Compensation" and "Performance Graphs" on pages 7
through 17, and the information under "Compensation Committee Interlocks and
Insider Participation" on page 4. The foregoing is incorporated herein by
reference pursuant to General Instruction G(3).
- 15 -
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as a part of the report:
(1) Consolidated Financial Statements: Page
----
Report of Management. . . . . . . . . . . . . . . . . . . . *
Report of Independent Accountants . . . . . . . . . . . . . *
Statements:
Consolidated Statements of Income. . . . . . . . . . *
Consolidated Statements of Common Shareowners'
Equity . . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Balance Sheets. . . . . . . . . . . . . *
Consolidated Statements of Cash Flows. . . . . . . . *
Notes to Financial Statements. . . . . . . . . . . . *
(2) Financial Statement Schedules:
Report of Independent Accountants . . . . . . . . . . . . . 25
V - Telephone Plant and Other Property. . . . . . . . . 26
VI - Accumulated Depreciation. . . . . . . . . . . . . . 30
VIII - Valuation and Qualifying Accounts . . . . . . . . . 32
Financial statements and financial statement schedules other than
those listed above have been omitted because the required
information is contained in the financial statements and notes
thereto, or because such schedules are not required or applicable.
- -------------------------
*Incorporated herein by reference to the appropriate portions of the
registrant's annual report to security holders for the fiscal year ended
December 31, 1993. (See Part II.)
- 16 -
(3) Exhibits:
Exhibits identified in parentheses below, on file with the
Securities and Exchange Commission ("SEC"), are incorporated herein by reference
as exhibits hereto.
Exhibit
Number
- -------
(3)(a) Amended Articles of Incorporation effective November 9,
1989. (Exhibit (3)(a) to Form 10-K for 1989, File No.
1-8519).
(3)(b) Amended Regulations of the Registrant. (Exhibit 3.2 to
Registration Statement No. 2-96054).
(4)(a) Provisions of the Amended Articles of Incorporation and
the Amended Regulations of the registrant which define
the rights of holders of Common Shares and the Preferred
Shares are incorporated by reference to such Amended
Articles filed as Exhibit (3)(a) hereto and such Amended
Regulations filed as Exhibit (3)(b) hereto.
(4)(b)(i) Rights Agreement dated as of October 27, 1986 between
the Company and Morgan Shareholder Services Trust
Company, Rights Agent. (Exhibit (1) to Form 8-A, File
No. 1-8519).
(4)(b)(ii) First Amendment to Rights Agreement, dated as of October
3, 1988, between the Company and Morgan Shareholder
Services Trust Company, Rights Agent. (Exhibit
(4)(b)(ii) to Form 10-K for 1988, File No. 1-8519).
(4)(c)(i) Indenture dated June 15, 1990 between Cincinnati Bell
Inc. and The Bank of New York, Trustee, in connection
with $75,000,000 of Cincinnati Bell Inc. Ten Year 9.10%
Notes Due June 15, 2000. (Exhibit (4)(c)(ii) to Form
10-K for 1990, File No. 1-8519).
Indenture dated December 15, 1992 between Cincinnati
Bell Inc., Issuer, and The Bank of New York, Trustee, in
connection with $100,000,000 of Cincinnati Bell Inc.
6.70% Notes Due December 15, 1997. A copy of this
Indenture is not being filed because it is similar in
all material respects to the Indenture filed as Exhibit
(4)(c)(i) above.
Indenture dated July 1, 1993 between Cincinnati Bell
Inc., Issuer, and The Bank of New York,Trustee, in
connection with $50,000,000 of Cincinnati Bell, Inc.
7 1/4% Notes Due June 15, 2023. Exhibit 4-A to Form 8-K,
date of report July 12, 1993, File No. 1-8519.
- 17 -
(4)(c)(ii) Indenture dated December 27, 1989 among Cincinnati Bell
Telephone Company, Issuer, Cincinnati Bell Inc.,
Guarantor, and The Bank of New York (Delaware), Trustee,
in connection with $40,000,000 of Cincinnati Bell
Telephone Company Guaranteed Ten Year 8 5/8% Notes, Due
December 15, 1999. (Exhibit 4(c)(ii) to Form 10-K for
1992, File No. 1-8519).
Indenture dated April 30, 1986 among Cincinnati Bell
Telephone Company, Issuer, Cincinnati Bell Inc.,
Guarantor, and The Bank of New York (Delaware), Trustee,
in connection with $40,000,000 of Cincinnati Bell
Telephone Company Guaranteed Ten Year 7.30% Notes, Due
April 30, 1996. A copy of this Indenture is not being
filed because it is similar in all material respects to
the Indenture filed as Exhibit (4)(c)(ii) above.
(4)(c)(iii) Indenture dated August 1, 1962 between Cincinnati Bell
Telephone Company and Bank of New York, Trustee
(formerly, The Central Trust Company was trustee), in
connection with $20,000,000 of Cincinnati Bell Telephone
Company Forty Year 4 3/8% Debentures, Due August 1,
2002. (Exhibit 4(c)(iii) to Form 10-K for 1992, File No.
1-8519).
Indenture dated October 1, 1958 between Cincinnati Bell
Telephone Company and Bank of New York, Trustee
(formerly, The Central Trust Company was trustee), in
connection with $25,000,000 of Cincinnati Bell Telephone
Company Thirty-Five Year 4 l/2% Debentures, Due October
1, 1993. A copy of this Indenture is not being filed
because it is similar in all material respects to the
Indenture filed as Exhibit (4)(c)(iii) above.
Indenture dated August 1, 1971 between Cincinnati Bell
Telephone Company and Bank of New York, Trustee
(formerly The Fifth Third Bank was trustee), in
connection with $50,000,000 of Cincinnati Bell Telephone
Company Forty Year 7 3/8% Debentures, Due August 1,
2011. A copy of this Indenture is not being filed
because it is similar in all material respects to the
Indenture filed as Exhibit (4)(c)(iii) above.
(4)(c)(iv) Indenture dated as of October 27, 1993 among Cincinnati
Bell Telephone Company, as Issuer, Cincinnati Bell Inc.,
as Guarantor, and The Bank of New York, as Trustee.
(Exhibit 4-A to Form 8-K, date of report October 27,
1993, File No. 1-8519).
(4)(c)(v) No other instrument which defines the rights of holders
of long term debt of the registrant is filed herewith
pursuant to Regulation S-K, Item 601(b)(4)(iii)(A).
Pursuant to this regulation, the registrant hereby
agrees to furnish a copy of any such instrument to the
SEC upon request.
- 18 -
(10)(ii)(B) Agreement Establishing Cincinnati SMSA Limited
Partnership between Advanced Mobile Phone Service, Inc.
and Cincinnati Bell Inc. executed on December 9, 1982.
(Exhibit (10)(k) to Registration Statement No. 2-82253).
(10)(iii)(A)(1)(i)* Short Term Incentive Plan of Cincinnati Bell Inc., as
amended February 3, 1986. (Exhibit (10)(iii)(A)1 to Form
10-K for 1986, File No. 1-8519).
(10)(iii)(A)(1)(ii)* Amendment to Short Term Incentive Plan of Cincinnati
Bell Inc. (effective December 5, 1988). (Exhibit
(10)(iii)(A)(1)(ii) to Form 10-K for 1988, File No.
1-8519).
(10)(iii)(A)(2)(i)* Cincinnati Bell Inc. Senior Management Long Term
Incentive Plan, as amended January 1, 1984. (Exhibit
(10)(iii)(A)2 to Form 10-K for 1986, File No. 1-8519).
(10)(iii)(A)(2)(ii)* Amendment to Cincinnati Bell Senior Management Long
Term Incentive Plan (effective December 5, 1988).
(Exhibit (10)(iii)(A) (2)(ii) to Form 10-K for 1988,
File No. 1-8519).
(10)(iii)(A)(3)* Cincinnati Bell Inc. Deferred Compensation Plan for
Non-Employee Directors, as amended July 1, 1983.
(Exhibit (10)(iii)(A)3 to Form 10-K for 1986, File
No. 1-8519).
(10)(iii)(A)(4)* Cincinnati Bell Inc. Pension Program, as amended
effective June 5, 1989. (Exhibit (10)(iii)(A)4 to
Form 10-K for 1989, File No. 1-8519).
(10)(iii)(A)5* Cincinnati Bell Inc. 1988 Incentive Award Deferral
Plan, as amended (effective November 11, 1988).
(Exhibit (10)(iii)(A)5 to Form 10-K for 1988, File
No. 1-8519).
(10)(iii)(A)(6)(i)* Cincinnati Bell Inc. Senior Management Incentive
Award Deferral Plan, as amended January 1, 1984.
(Exhibit (10)(iii)(A)6 to Form 10-K for 1986, File
No. 1-8519).
(10)(iii)(A)(6)(ii)* Amendment to Cincinnati Bell Senior Management Incentive
Award Deferral Plan (effective December 5, 1988).
(Exhibit (10)(iii)(A)(6)(ii) to Form 10-K for 1988, File
No. 1-8519).
(10)(iii)(A)(7)(i)* Cincinnati Bell Inc. 1984 Stock Option Plan, as amended
January 7, 1987. (Exhibit (10) (iii)(A)7 to Form 10-K
for 1986, File No. 1-8519).
- ---------------------------------------
* Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
- 19 -
(10)(iii)(A)(7)(ii)* Amendment to Cincinnati Bell 1984 Stock Option Plan
(effective December 5, 1988). (Exhibit
(10)(iii)(A)(7)(ii) to Form 10-K for 1988, File No.
1-8519).
(10)(iii)(A)(8)(i)* Executive Employment Agreement dated December 1, 1987
between the Company and Dwight H. Hibbard. (Exhibit
(10)(iii)(A)8 to Form 10-K for 1987, File No. 1-8519).
(10)(iii)(A)(8)(ii)* Amendment to Executive Employment Agreement dated
November 4, 1991 between the Company and Dwight H.
Hibbard. (Exhibit (10)(iii) (A)(8)(ii) to Form 10-K for
1991, File No. 1-8519).
(10)(iii)(A)(8)(iii)* Amendment to Executive Employment Agreement dated
February 4, 1994 between the Company and Dwight H.
Hibbard.
(10)(iii)(A)(9)* Executive Employment Agreement dated December 1, 1987
between the Company and John T. LaMacchia. (Exhibit
(10)(iii)(A)(10) to Form 10-K for 1987, File No.
1-8519).
(10)(iii)(A)(10)* Executive Employment Agreement dated December 1, 1987
between the Company and Raymond R. Clark. (Exhibit
(10)(iii)(A)11 to Form 10-K for 1987, File No. 1-8519).
(10)(iii)(A)(11)* Compensation Agreement between the Company and Sheldon
Horing, effective January 1, 1991. (Exhibit
(10)(iii)(A)12 to Form 10-K for 1991, File No. 1-8519).
(10)(iii)(A)(12)* Employment Agreement dated as of April 1, 1988 between
the Company and David J. Lahey. (Exhibit (10)(iii)(A)16
to Form 10-K for 1991, as amended, File No. 1-8519).
(10)(iii)(A)(13)* Employment Agreement dated as of February 7, 1994
between the Company and David J. Lahey.
10(iii)(A)(14)* Executive Employment Agreement dated as of March 29,
1993 between the Company and Brian C. Henry.
10(iii)(A)(15)(i)* Employment Agreement dated as of January 1, 1989 between
the Company and James F. Orr.
(10)(iii)(A)(15)(ii)* Amendment to Employment Agreement dated as of June 30,
1993 between the Company and James F. Orr.
- ------------------------------------
* Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
- 20 -
10(iii)(A)(16)* Employment Agreement dated as of December 31, 1993
between the Company and James F. Orr.
10(iii)(A)(17)* Cincinnati Bell Inc. Executive Deferred Compensation
Plan
(10)(iii)(A)(18)(i)* Cincinnati Bell Inc. 1988 Long Term Incentive Plan.
(Exhibit (10)(iii)(A)(12) (i) to Form 10-K for 1988,
File No. 1-8519).
(10)(iii)(A)(18)(ii)* Amendment to Cincinnati Bell Inc. 1988 Long Term
Incentive Plan (effective December 5, 1988). (Exhibit
(10)(iii)(A)(12)(ii) to Form 10-K for 1988, File No.
1-8519).
(10)(iii)(A)(19)* Cincinnati Bell Inc. 1988 Stock Option Plan for
Non-Employee Directors. (Exhibit (10)(iii)(A)13 to Form
10-K for 1988, File No. 1-8519).
(10)(iii)(A)(20)* Cincinnati Bell Inc. 1989 Stock Option Plan. (Exhibit
(10)(iii)(A)14 to Form 10-K for 1989, File No. 1-8519).
(10)(iii)(A)(21)* Cincinnati Bell Inc. Retirement Plan for Outside
Directors.
(11) Computation of Earnings per Common Share.
(12) Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Dividends.
(13) Portions of the Cincinnati Bell Inc. annual report to
security holders for the fiscal year ended December 31,
1993 as incorporated by reference including the Selected
Financial Data, Management's Discussion and Analysis and
Consolidated Financial Statements.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(28)(a) Annual Report on Form 11-K for the Cincinnati Bell Inc.
Retirement Savings Plan (formerly the Cincinnati Bell
Inc. Savings Plan for Salaried Employees) for the year
1993 will be filed by amendment on or before April 30,
1994.
- -------------------------------------
*Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
- 21 -
(28)(b) Annual Report on Form 11-K for the Cincinnati Bell Inc.
Savings and Security Plan for the year 1993 will be
filed by amendment on or before April 30, 1994.
(28)(c) Annual Report on Form 11-K for the MATRIXX Marketing
Inc. Profit Sharing/401(k) Plan for the year 1993 will
be filed by amendment on or before April 30, 1994.
The Company will furnish, without charge, to a security holder upon
request, a copy of the documents, portions of which are incorporated by
reference (Annual Report to security holders and proxy statement), and will
furnish any other exhibit at cost.
(b) Reports on Form 8-K.
(1) Form 8-K, dated October 26, 1993, reporting that Cincinnati Bell Inc.
announced its earnings for the third quarter of 1993.
(2) Form 8-K, dated October 27, 1993, reporting that Cincinnati Bell
Telephone Company had set up its Medium-Term Note program with Morgan
Stanley & Co., Incorporated, Merrill Lynch & Co., and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
- 22 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CINCINNATI BELL INC.
March 29, 1994 By /s/JOHN T. LAMACCHIA
---------------------------
John T. LaMacchia, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Principal Executive Officer;
President, Chief Executive
JOHN T. LAMACCHIA* Officer and Director
- ------------------------------
Principal Accounting and
Financial Officer; Executive
Vice President and
BRIAN C. HENRY* Chief Financial Officer
- ------------------------------
Brian C. Henry
JOHN F. BARRETT* Director
- ------------------------------
John F. Barrett
PAUL W. CHRISTENSEN, JR.* Director
- ------------------------------
Paul W. Christensen, Jr.
RAYMOND R. CLARK* Director
- ------------------------------
Raymond R. Clark
PHILLIP R. COX* Director
- ------------------------------
Phillip R. Cox
- 23 -
SIGNATURE TITLE
--------- -----
WILLIAM A. FRIEDLANDER* Director
- ------------------------------
William A. Friedlander
Chairman of the Board
DWIGHT H. HIBBARD* and Director
- ------------------------------
Dwight D. Hibbard
ROBERT P. HUMMEL, M.D.* Director
- ------------------------------
Robert P. Hummel, M.D.
JAMES D. KIGGEN* Director
- ------------------------------
James D. Kiggen
DAVID B. SHARROCK* Director
- ------------------------------
David B. Sharrock
*By /s/JOHN T. LAMACCHIA March 29, 1994
---------------------------
John T. LaMacchia
as attorney-in-fact and on
his own behalf as President
and Chief Executive Officer
and Director
- 24 -
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareowners of
Cincinnati Bell Inc.
Our report on the consolidated financial statements of Cincinnati Bell Inc. has
been incorporated by reference in this Form 10-K from page 39 of the 1993 annual
report of Cincinnati Bell Inc. In connection with our audits of such
consolidated financial statements, we have also audited the related financial
statement schedules listed in the index on page 16 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information required to be
included therein.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Cincinnati, Ohio
February 11, 1994
- 25 -
Schedule V - Sheet 1
CINCINNATI BELL INC.
SCHEDULE V - TELEPHONE PLANT AND OTHER PROPERTY
(Thousands of Dollars)
- ----------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ----------------------------------------------------------------------------------------------------------
Balance at Additions Retire- Balance
Classification Beginning at Cost ments Other at End
of Period -Note (a) -Note (b) Changes ofPeriod
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Year 1993
Land . . . . . . . . . . . . . . . . . $ 4,379 $ (21) $ - $ (20) $ 4,338
Buildings. . . . . . . . . . . . . . . 140,203 8,496 2,026 (883) (c) 145,790
Central Office Equipment . . . . . . . 557,923 63,176 53,124 (57) (c) 567,918
Station Apparatus. . . . . . . . . . . 28,386 (401) 25,978 - 2,007
Large Private Branch Exchanges (PBX) and
Other PBX Terminating Equipment. . . 4,992 589 1,612 - 3,969
Pole Lines . . . . . . . . . . . . . . 40,172 3,534 470 - 43,236
Aerial and Intrabuilding Cable . . . . 191,740 12,068 1,129 - 202,679
Underground Cable. . . . . . . . . . . 130,615 5,561 666 - 135,510
Buried Cable . . . . . . . . . . . . . 91,497 7,358 266 - 98,589
Submarine Cable. . . . . . . . . . . . - - - - -
Aerial Wire. . . . . . . . . . . . . . 3,014 211 78 - 3,147
Conduit Systems. . . . . . . . . . . . 67,203 2,799 42 - 69,960
Furniture, Computers and Office Equipment 54,652 7,665 1,398 (3) (c) 60,916
Vehicles and Work Equipment. . . . . . 27,875 919 1,748 - 27,046
Other Terminating Equipment. . . . . . 106 994 (93) - 1,193
Public Telephone Equipment . . . . . . 5,497 976 343 - 6,130
Other Communications Equipment . . . . 15,304 1,690 922 - 16,072
Capitalized Leases . . . . . . . . . . 21,905 5,816 23 (182) 27,516
--------- ------- ------ ------- ---------
Total Telephone Plant
in Service (d) . . . . . . . . . 1,385,463 121,430 89,732 (1,145) (c) 1,416,016
Telephone Plant Under Construction . . 23,418 (8,612) - - 14,806
--------- -------- -------- ------- ----------
Total Telephone Plant. . . . . . . $1,408,881 $112,818 $ 89,732 $(1,145) (c) $1,430,822
---------- -------- -------- --------- ----------
---------- -------- -------- --------- ----------
Information Systems Property (d) . $ 175,627 $ 40,053 $ 5,763 $(1,208) (e) $ 208,709
---------- -------- -------- --------- ----------
---------- -------- -------- --------- ----------
Other Property (d) . . . . . . . . $ 78,361 $ 8,597 $ 1,309 $ 9,559 (c)(e) $ 95,208
---------- -------- -------- --------- ----------
---------- -------- -------- --------- ----------
The notes on Sheet 4 are an integral part of this Schedule.
- 26 -
Schedule V - Sheet 2
CINCINNATI BELL INC.
SCHEDULE V - TELEPHONE PLANT AND OTHER PROPERTY
(Thousands of Dollars)
- -----------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- -----------------------------------------------------------------------------------------------------
Balance at Additions Retire- Balance
Classification Beginning at Cost ments Other at End
of Period -Note (a) -Note (b) Changes of Period
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Year 1992
Land . . . . . . . . . . . . . . . . . $ 4,355 $ 24 $ - $ - $ 4,379
Buildings. . . . . . . . . . . . . . . 130,952 10,937 1,665 (21)(c) 140,203
Central Office Equipment . . . . . . . 529,902 51,924 23,170 (733)(c) 557,923
Station Apparatus. . . . . . . . . . . 34,823 1,364 5,400 (2,401)(c) 28,386
Large Private Branch Exchanges (PBX) and
Other PBX Terminating Equipment. . . 5,810 808 1,626 - 4,992
Pole Lines . . . . . . . . . . . . . . 38,629 2,127 584 - 40,172
Aerial and Intrabuilding Cable . . . . 183,125 11,216 2,601 - 191,740
Underground Cable. . . . . . . . . . . 127,643 3,693 721 - 130,615
Buried Cable . . . . . . . . . . . . . 85,832 6,096 431 - 91,497
Submarine Cable. . . . . . . . . . . . - - - - -
Aerial Wire. . . . . . . . . . . . . . 2,869 216 71 - 3,014
Conduit Systems. . . . . . . . . . . . 65,121 2,177 95 - 67,203
Furniture, Computers and Office Equipment 55,847 5,566 6,311 (450)(c) 54,652
Vehicles and Work Equipment. . . . . . 26,801 2,688 1,614 - 27,875
Other Terminating Equipment. . . . . . 2,494 214 170 (2,432)(c) 106
Public Telephone Equipment . . . . . . 5,724 250 477 - 5,497
Other Communications Equipment . . . . 16,105 (9) 792 - 15,304
Capitalized Leases . . . . . . . . . . 21,938 - - (33) 21,905
---------- ------- ------ ------- ---------
Total Telephone Plant
in Service (d) . . . . . . . . . 1,337,970 99,291 45,728 (6,070)(c) 1,385,463
Telephone Plant Under Construction . . 27,576 (4,158) - - 23,418
---------- ------- ------ ------- ----------
Total Telephone Plant. . . . . . . $1,365,546 $ 95,133 $ 45,728 $(6,070)(c) $1,408,881
---------- -------- -------- -------- ----------
---------- -------- -------- -------- ----------
Information Systems Property (d) . $ 160,073 $ 32,286 $ 7,407 $(9,325)(e)(h) $ 175,627
---------- -------- -------- -------- ----------
---------- -------- -------- -------- ----------
Other Property (d) . . . . . . . . $ 66,640 $ 10,618 $ 4,143 $ 5,246(c)(e) $ 78,361
---------- -------- -------- -------- ----------
---------- -------- -------- -------- ----------
The notes on Sheet 4 are an integral part of this Schedule.
- 27 -
Schedule V - Sheet 3
CINCINNATI BELL INC.
SCHEDULE V - TELEPHONE PLANT AND OTHER PROPERTY
(Thousands of Dollars)
- --------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL.F
- --------------------------------------------------------------------------------------------------------------------
Balance at Additions Retire- Balance
Classification Beginning at Cost ments Other at End
of Period -Note (a) -Note (b) Changes of Period
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Year 1991
Land . . . . . . . . . . . . . . . . . $ 4,307 $ 48 $ - $ - $ 4,355
Buildings. . . . . . . . . . . . . . . 129,533 3,940 2,521 - 130,952
Central Office Equipment . . . . . . . 496,964 54,159 21,221 - 529,902
Station Apparatus. . . . . . . . . . . 39,967 (570) 4,574 - 34,823
Large Private Branch Exchanges (PBX) and
Other PBX Terminating Equipment. . . 8,003 513 2,706 - 5,810
Pole Lines . . . . . . . . . . . . . . 37,123 1,986 480 - 38,629
Aerial and Intrabuilding Cable . . . . 174,170 11,430 2,475 - 183,125
Underground Cable. . . . . . . . . . . 122,724 5,795 876 - 127,643
Buried Cable . . . . . . . . . . . . . 79,938 6,167 273 - 85,832
Submarine Cable. . . . . . . . . . . . - - - - -
Aerial Wire. . . . . . . . . . . . . . 2,750 224 105 - 2,869
Conduit Systems. . . . . . . . . . . . 63,289 1,927 95 - 65,121
Furniture, Computers and Office Equipment 52,275 6,285 2,713 - 55,847
Vehicles and Work Equipment. . . . . . 25,819 2,848 1,866 - 26,801
Other Terminating Equipment. . . . . . 2,093 435 34 - 2,494
Public Telephone Equipment . . . . . . 5,583 270 129 - 5,724
Other Communications Equipment . . . . 16,533 1,034 1,462 - 16,105
Capitalized Leases . . . . . . . . . . 19,485 2,874 - (421)(f) 21,938
---------- ------- ------ ------- ---------
Total Telephone Plant
in Service (d) . . . . . . . . . . 1,280,556 99,365 41,530 (421)(f) 1,337,970
Telephone Plant Under Construction . . 15,008 12,568 - - 27,576
---------- ------- ------ ----- ---------
Total Telephone Plant. . . . . . . . $1,295,564 $ 111,933 $ 41,530 $ (421)(f) $1,365,546
---------- ------- ------ ----- ----------
---------- ------- ------ ----- ----------
Information Systems Property (d) . . $ 116,164 $ 57,391 $ 9,277 $(4,205)(c)(e)(g) $ 160,073
---------- ------- ------ ------ ----------
---------- ------- ------ ------ ----------
Other Property (d) . . . . . . . . . $ 54,621 $ 10,143 $ 2,344 $ 4,220(c)(e) $ 66,640
---------- ------- ------ ----- ----------
---------- ------- ------ ----- ----------
The notes on Sheet 4 are an integral part of this Schedule.
- 28 -
Schedule V - Sheet 4
(a) Additions shown include (1) the original cost (estimated if not known) of
reused material, which is concurrently credited to Material and supplies,
and (2) Interest charged construction. Transfers between the
classifications listed are included in this column, except as indicated in
note (c).
(b) Items of telephone plant when retired or sold are deducted from the
property accounts at the amounts at which they are included therein,
estimated if not known.
(c) Transferred (to) from non-telephone company operations.
(d) The Company's provision for depreciation is based on the remaining life
method of depreciation and straight-line composite rates. The remaining
life method provides for the full recovery of the investment in
telephone plant. The provision for depreciation of information systems
property and other property is based on the straight-line method over the
estimated useful life.
(e) Other changes include the following: 1) Reclassification of property and
2) Revaluation of assets acquired during the year as part of a business
acquisition in order to record them at their fair value in accordance with
APB 16 "Business Combinations".
(f) Capitalized lease balances were adjusted to remove executory costs that
were originally capitalized.
(g) Includes certain capitalized software costs which were written-down as the
result of the information systems segment determination of the need to re-
direct the development of some of its software products.
(h) Includes amounts removed from property accounts related to the
reserve set up the prior year for the write down of certain capitalized
software costs. The primary product that was reserved for in 1991 was
NS/90, a cellular customer billing support system.
- 29 -
Schedule VI - Sheet 1
CINCINNATI BELL INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION
(Thousands of Dollars)
- -----------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- -----------------------------------------------------------------------------------------------------------------
Balance at Additions Retire- Other Balance
Description Beginning Charged to ments Changes at End
of Period Expenses -Note (a) of Period
- -----------------------------------------------------------------------------------------------------------------
Year 1993
Telephone Plant. . . . . . $ 525,215 $ 98,575 $ 89,709 $ 7,609 $ 541,690
Information Systems and
Other Property . . . . . $ 100,846 $ 50,328(c) $ 5,665 $ (29)(b) $ 145,480
Year 1992
Telephone Plant. . . . . . $ 475,783 $ 99,807 $ 46,987 $ (3,388) $ 525,215
Information Systems and
Other Property . . . . . $ 85,817 $ 26,825 $ 6,034 $ (5,762)(d) $ 100,846
Year 1991
Telephone Plant. . . . . . $ 426,291 $ 88,100 $ 41,456 $ 2,848 $ 475,783
Information Systems and
Other Property . . . . . . $ 56,566 $ 34,653(c) $ 6,983 $ 1,581 $ 85,817
- 30 -
Schedule VI - Sheet 2
(a) Comprised principally of (1) proceeds from sales of telephone plant
accounted for as required by the FCC and (2) depreciation provision for
vehicles and other work equipment charged initially to clearing accounts
and apportioned to Maintenance, Telephone Plant and other accounts on the
basis of the usage of such equipment. Other, also includes recoveries from
retired property.
(b) Includes accumulated depreciation on assets which were acquired during
the year as part of a business acquisition. In accordance with APB 16,
the assets have been recorded at their fair value by recording original
cost less accumulated depreciation.
(c) Includes $17 million and $10.5 million recorded in 1993 and 1991,
respectively to reduce the carrying value of certain capitalized
software costs to net realizable value.
(d) Includes amounts removed from the reserve recorded in the prior year
related to the write down of certain capitalized software costs to net
realizable value.
- 31 -
Schedule VIII
CINCINNATI BELL INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
- ------------------------------------------------------------------------------------------------------------------------
COL. B COL. C COL. D COL. E
- ------------------------------------------------------------------------------------------------------------------------
Additions Deductions
-----------------------
(1) (2)
Charged
Balance at to Other Balance
Description Beginning Charged to Accounts at End
of Period Expenses -Note (a) of Period
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Year 1993
Allowance for doubtful accounts. . . . . . $ 6,705 $ 14,614 $ 4,121 $ 11,409(b) $ 14,031
Accrual for disposal and restructuring . . $ 10,545 $ 35,385 $ 0 $ 10,545 $ 35,385
Year 1992
Allowance for doubtful accounts. . . . . . $ 4,959 $ 8,225 $ 5,140 $ 11,619(b) $ 6,705
Accrual for disposal and restructuring . . $ 9,991 $ 10,545 $ 0 $ 9,991 $ 10,545
Year 1991
Allowance for doubtful accounts. . . . . . $ 4,570 $ 9,772 $ 4,306 $ 13,689(b) $ 4,959
Accrual for disposal and restructuring . . $ 0 $ 9,991 $ 0 $ 0 $ 9,991
(a) Primarily includes amounts previously written off which were
credited directly to this account when recovered and an allocation of
the purchase price for receivables purchased from Interexchange Carriers.
(b) Primarily includes amounts written off as uncollectible.
- 32 -