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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
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
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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
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At February 29, 1996, there were 66,923,079 common shares outstanding.
At February 29, 1996, the aggregate market value of the voting shares owned
by non-affiliates was $2,175,608,733.
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. [ ]
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's annual report to security holders for the
fiscal year ended December 31, 1995 (Parts I, II and IV)
(2) Portions of the registrant's definitive proxy statement dated March 14,
1996 issued in connection with the annual meeting of shareholders (Part
III)
TABLE OF CONTENTS
PART I
Item Page
---- ----
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Submission of Matters to a Vote of the Security Holders. . . . . . 12
PART II
5. Market for the Registrant's Common Equity
and Related Security Holder Matters. . . . . . . . . . . . . . . . 15
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . 15
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . . 15
8. Financial Statements and Supplementary Data. . . . . . . . . . . . 15
9. Disagreements on Accounting and Financial Disclosure . . . . . . . 15
PART III
10. Directors and Executive Officers of Registrant . . . . . . . . . . 15
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 15
12. Security Ownership of Certain Beneficial Owners and Management . . 15
13. Certain Relationships and Related Transactions . . . . . . . . . . 15
PART IV
14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K. . 16
See page 13 for "Executive Officers of the 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. Its principal subsidiaries are divided into three industry
segments. The telephone operations segment, Cincinnati Bell Telephone Company
("CBT"), provides telecommunications services and products, mainly local
service, network access and toll telephone services in the Greater Cincinnati
area. The information systems segment, Cincinnati Bell Information Systems Inc.
("CBIS"), provides data processing and software development services primarily
to the telecommunications industry in the United States. The marketing services
segment, MATRIXX Marketing Inc. ("MATRIXX"), provides telephone marketing,
research, fulfillment and database services. Other businesses 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.
TELEPHONE OPERATIONS
GENERAL. CBT is engaged principally in the business of furnishing
telecommunications services and products, mainly local service, network access
and toll telephone services, in four counties in southwestern Ohio, six counties
in northern Kentucky and parts of two counties in southeastern Indiana. On
December 31, 1995, CBT had approximately 906,000 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
calling 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 AT&T Corp. ("AT&T") and also sells products of other companies.
CBT's local exchange, network 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 access lines provided by CBT to customer premises can be interconnected
with the access 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
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Network Access Lines
906 877 848 827 808
Recurring charges for network access lines and other local services for the
year ended December 31, 1995 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 the Public Utilities Commission of Ohio (the "PUCO") and the Public Service
Commission of Kentucky (the "PSCK"). Approximately 77% of CBT's 1995 revenues
were derived from intrastate service. Approximately 82% of 1995 intrastate
revenues were derived from Ohio service, approximately 18% were derived from
Kentucky service and minor amounts were derived from Indiana and other states
service. Of the total 1995 intrastate revenues, local service accounted for
approximately 73%, intrastate long distance service and network access accounted
for approximately 11% and miscellaneous revenue accounted for approximately 16%
of such revenues.
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 alternate forms of regulation for
competitive services and basic service rates. CBT filed for a threshold increase
in rates together with an alternative regulation proposal in 1993. Thereafter,
CBT and the intervenors signed a settlement agreement which was approved by the
PUCO on May 5, 1994 approving an alternative regulation plan and increasing
revenues by $11.9 million annually or 3.75% on Ohio regulated services. The
alternative regulation provisions and new rates became effective May 6, 1994.
CBT's authorized rate of return on capital is 11.18%, but CBT can earn up to
11.93% in a monitoring period without any retargeting of rates. Earnings higher
than 11.93% will trigger a revenue retargeting formula. This formula will allow
for certain adjustments in the subsequent annual monitoring period. This
alternative regulation plan provides increased pricing flexibility in some
areas, which allows CBT to be more responsive to customers and the market.
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.
In October 1994, CBT filed a proposal with the PSCK for new regulated rates
for telephone services provided to its Kentucky customers. This proposal sought
to continue uniform rates for basic service in CBT's Kentucky and Ohio
metropolitan service areas and annually increase revenues by $3.4 million. By
an order dated May 23, 1995, the PSCK ordered reductions in certain rates for
vertical services such as touch tone, the establishment of extended area service
in the three southern counties in CBT's Kentucky operating territory and
maintained rate uniformity with CBT's Ohio rates.
2
INTERSTATE RATES. Approximately 23% of CBT's 1995 revenues were 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, revenues, 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 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 United States 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. On August 1,
1995 the United States Court of Appeals for the District of Columbia Circuit
issued an opinion upholding the FCC order awarding damages and reversing the
FCC's allowance of offsets between different monitoring categories. CBT and
other affected carriers have filed a petition with the United States Supreme
Court seeking review of the lower court's decision.
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 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). Residential and single line business Subscriber
Line Charges have a cap of $3.50 and multi-line customers' Subscriber Line
Charges have a $6.00 cap. The Carrier Common Line rate recovers the remaining
non-traffic sensitive costs.
For interstate services, CBT began to operate under an Optional Incentive
Regulation ("OIR") plan in January 1994. This is an alternative form of
regulation (i.e. departure from traditional rate of return regulation) for small
and mid-sized companies. Under OIR more emphasis is placed on price regulation
similar to price caps. Every two years CBT compares actual return with
authorized rate of return, currently 11.25%. In addition, CBT has some pricing
flexibility. Rate changes can become effective on a 14-day notice without cost
support if the rate changes do not increase "aggregate service basket" rates.
New services can be offered on a 14-day notice without cost support if CBT sets
rates no higher than a geographically adjacent price cap local exchange carrier.
This allows CBT to be more responsive to customers and the market.
In January 1994, CBT completed a successful triennial depreciation
represcription with regulators from the FCC, the PUCO and the PSCK. The new
depreciation rates were effective January 1, 1994 in the interstate and Kentucky
jurisdictions, and were effective July 1, 1994 in the Ohio jurisdiction.
3
COMPETITION. Customer demands, technology, the preferences of policy
makers and the convergence of other industries with the telecommunications
industry are causes for increasing competition in the telecommunications
industry for CBT. 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. Moreover, recent federal and state initiatives
to accelerate the development of competition in all segments of the
telecommunications industry are likely to heighten the competitive pressures
facing CBT.
At the federal level, Congress recently passed the Telecommunications Act
of 1996 (the "Act") which mandates the development of competitive markets.
Under the Act, incumbent local exchange carriers like CBT are required to
interconnect with the networks of other service providers, unbundle certain
network components and make them available to competing providers at wholesale
rates, and remove other perceived barriers to competitive entry by alternative
providers of local exchange service. While the Act clearly mandates these and
other requirements, it does so in very general terms and leaves it to the FCC
and the states to implement them. Thus, the full impact of the Act on CBT will
not be known until the FCC and the states complete the numerous rulemakings
mandated by the Act. The Act contains a provision that allows local exchange
carriers serving fewer than 2% of the nation's access lines to petition their
state commissions to delay certain requirements of the Act. CBT falls within
this 2% threshold and is currently evaluating this option. CBT plans to
participate actively in any FCC proceeding that will have an impact on its
rights or obligations under the Act.
At the state level, the PUCO has initiated a generic rulemaking proceeding
to establish rules to govern the introduction of local exchange competition. On
September 27, 1995, the PUCO issued an entry inviting interested parties to file
comments on a set of proposed rules developed by the staff of the PUCO. CBT has
filed comments on those proposed rules. It is expected that the PUCO will issue
its rules during the second quarter of this year. The PSCK has initiated a
similar proceeding in Kentucky. CBT is actively participating in that
proceeding.
In addition to initiating the above-mentioned generic rulemaking
proceeding, the PUCO, on August 24, 1995, issued an order granting Time Warner
Communications of Ohio, L.P. ("TWCO") a certificate of public convenience and
necessity to provide basic local exchange service in CBT's operating territory.
TWCO's ability to begin operations pursuant to that certificate has been
postponed until the PUCO approves TWCO's tariffs. Such tariff approval is
vaguely tied to issues under consideration in a separate proceeding being
conducted by the PUCO to establish rules to govern the implementation of local
exchange competition. CBT believes the PUCO exceeded its statutory authority by
granting TWCO a certificate and has filed an appeal of the PUCO's order with the
Ohio Supreme Court. MCI Metro Access Transmission Services, Inc. and MFS
Intelenet of Ohio, Inc. have also been granted certificates to provide basic
local exchange service in Ohio, although not in CBT's operating territory.
Other entities requesting similar authority in Ohio include: AT&T Communications
of Ohio, Inc., ICG Access Services, Inc., and CableVision Lightpath, Inc.
Other means of communications that permit bypass of CBT's local exchange
facilities either completely or partially are available and are increasing,
although CBT is unable to determine precisely to what extent CBT's facilities
are being bypassed. Alternative access providers, cable companies and wireless
providers have all made clear their intent to compete for segments of the local
exchange business. 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 include small service bureaus, large interexchange
carriers and multi-state cellular companies, joint ventures and other
combinations of telecommunications and other companies.
The effect of this competition on CBT will ultimately be determined by
federal and state regulatory, legislative, and court actions and the type,
quality and cost of CBT's services. CBT continues to adjust its position in
this rapidly changing and convergent environment. For example, CBT is
redesigning and streamlining its processes and work activities to improve
responsiveness to
4
customer needs, permit more rapid introduction of new products and services,
improve the quality of products and service offerings, and reduce costs. In
addition, 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 Dialing and Number Privacy.
If regulatory agencies require new competitors to follow long-held
principles such as universal service, CBT believes that it will be well
positioned to meet the demand of the changing market. If regulatory agencies
allow competitors to skim the market, taking only the most profitable customers,
CBT believes that it will be more difficult for it to maintain current revenue
and profit objectives.
INFORMATION SYSTEMS
GENERAL. CBIS provides customer care and billing services to the
communications industry, and is the leading supplier of billing systems to the
cellular telecommunications industry. CBIS also provides network systems
services primarily to international markets. CBIS's headquarters are in
Cincinnati, Ohio. Domestically, CBIS also has offices in Orlando, Florida;
Chicago, Illinois; Fairfax, Virginia; Coral Springs, Florida; and Atlanta,
Georgia. Internationally, CBIS maintains offices in both Slough and Bristol,
England; Bern, Switzerland; and Utrecht, The Netherlands.
During 1995 CBIS made two acquisitions. In December, CBIS acquired
Information Systems Development ("ISD"), a developer of advanced billing systems
for the cable television industry. This acquisition strengthened and broadened
CBIS's position in customer care and billing for the communications industry to
include cable television. As a result, CBIS now owns CableMaster 2000-TM-, a
multi-service billing system in the cable industry, and services clients that
include some of the larger cable systems operated by Cox Communications, Comcast
and Time Warner. In March, CBIS acquired X International ("XI"), an established
information technology company located in Bristol, England, that provides
customer care and billing software for a wide range of telecommunications
companies.
CBIS serves clients principally by processing data and creating bills using
proprietary software. CBIS provides and manages billing systems in a service
bureau environment where its extensive experience can result in demonstrable
advantages to clients. These advantages include the freedom to concentrate on
core competencies, predictable costs, information management expertise and
access to advanced technology without capital expense. CBIS provides these
services primarily through long-term contracts ranging in length from three to
ten years.
CBIS provides data processing services from data centers located in
Cincinnati, Ohio and Orlando, Florida. CBIS computers process over 140 million
transactions and over 12 million bills per month. CBIS's goal is to provide
state-of-the-art facilities that will provide reliability and responsiveness.
CBIS expects to complete construction of a new, state-of-the-art facility in
Orlando, Florida, housing both a hardened data center and an office complex by
July 1996. This will give CBIS the ability for each data center to backup the
other with on-line and disaster recovery coldsite capabilities. This project
will result in a major expansion of capacity -- sharply increasing the
processing power of CBIS's mainframe computers and nearly doubling the data
center's information storage capacity. The combined processing power will
exceed 1.6 billion instructions per second, and storage capacity contained in
additional disk access storage devices will be nearly 9 trillion bytes of data.
5
In addition, CBIS has improved fault tolerance through the installation of
redundant uninterruptable power supplies and through the development of
detailed, company-wide disaster recovery plans, including enhanced backup and
recovery processes.
MARKETS. CBIS's largest market is cellular telecommunications, which has
been growing in excess of 30 percent per year. CBIS has been the market leader
of billing systems to the cellular industry for more than 10 years and has
gained experience with many of the top cellular carriers. CBIS systems generate
bills for cellular telephone customers in 23 of the 25 largest United States
metropolitan areas. CBIS's service bureaus handled approximately 30 percent of
the United States cellular market in 1995 and, overall, CBIS systems supported
nearly 50 percent of the United States cellular market. CBIS's revenue from
cellular clients has increased from $144 million in 1993 to $198 million in 1994
and to $257 million in 1995.
CBIS's domestic clients are primarily cellular telephone providers and
their resellers, cable television operators, interexchange carriers, independent
telephone companies and regional Bell operating companies. Internationally,
CBIS's clients primarily include Post, Telegraph and Telephone organizations,
mobile telecommunications providers and their resellers, and new competing
networks. In the United Kingdom, CBIS Ltd. is an ISO-9001 certified supplier
with TickIT accreditation.
CBIS expects that increased competition and the introduction of new
services will contribute to continuing growth in telecommunications. Carriers
will need billing and customer care systems that address customer loyalty,
customer care, and marketing. Deregulation and convergence will further drive
the need for complex, but flexible marketing-oriented billing services and
systems.
The primary business needs of the carriers across market segments will
focus on acquiring and retaining customers, decreasing time-to-market for
services, increasing revenues through new services, and improving cost
efficiencies. As a result, carriers will need to provide individual and
consolidated billing and address the diversity of billing and customer care
needs by service and market.
The United States communications industry alone represents a sizable
opportunity. The domestic market for billing and customer care systems in 1995
for services like those offered by CBIS is estimated to be over $5 billion. The
international market for these billing and customer care services in 1995 is
estimated to be nearly $6 billion.
COMPETITION. The telecommunications information systems and services
market is becoming increasingly competitive. Competition is based mainly on
product quality, performance, price and the quality of client service. CBIS's
competitors include Alltel Information Services, AMDOCS, AMS, Andersen
Consulting, CSC and EDS, as well as, near-market players, and niche vendors. In
addition, CBIS's clients and potential clients are generally large companies
with substantial resources and are capable of providing such services for
themselves.
PRODUCT DEVELOPMENT AND SUPPORT. CBIS designs and develops both mainframe
and client server software. Changes in client requirements, increasing
competition and the development of new products and markets create the need to
continually update and modify existing software and systems offered to clients.
CBIS intends to continue to maintain, improve and expand the functions and
capabilities of its software products over the next several years.
CBIS's new flagship product is its Precedent 2000-TM- system, which is a
third-generation family of business management systems for the wireless
industry. It features an open system distributed processing approach to
computing, and employs graphical user interfaces, real-time processing, and
relational database technologies. CBIS is generating billing information for
cellular customers under a beta trial of Precedent 2000. CBIS will continue to
develop this system through 1996.
6
OTHER. CBIS primarily conducts its business under long-term contracts
(three to ten years) and has generally been successful in retaining its clients.
Due to the nature of its business, CBIS must stay competitive to receive new
bids. Through new contracts and extensions of existing relationships, CBIS has
over 86% of its revenues coming from long-term customer relationships. In 1995
CBIS signed a five-year extension of its billing agreement with AT&T for
business calling card services. In 1994 CBIS signed a 5 1/2 year contract with
McCaw Cellular Communications Inc. (now known as AT&T Wireless Services). In
addition, CBIS had several smaller contracts renewed in both 1994 and 1995.
CBIS's business with AT&T for residence card services was phased down in the
latter part of 1995. Also, one of CBIS's clients, representing about 5% of its
business, indicated that it may transition to another provider of billing
services no sooner than early 1997. The impact of these phase-outs, if fully
implemented and not offset by new contracts, might be to slow future growth.
The ISD acquisition allows CBIS to enter the large, growing market of billing
for cable television and broadband services. While pursuing new opportunities,
CBIS must continue to focus on the needs of its existing client base. A
contract non-renewal from a significant client could have a material impact on
the future earnings of CBIS.
MARKETING SERVICES
GENERAL. MATRIXX is a provider of telephone marketing and related
marketing services. MATRIXX's headquarters are in Cincinnati, Ohio. MATRIXX
operates domestically in Salt Lake City, Ogden and Cedar City in Utah; Colorado
Springs and Pueblo in Colorado; Tucson, Arizona; Neenah, Wisconsin; and also in
Omaha, Nebraska. MATRIXX also has offices in Paris, France and Newcastle,
England. MATRIXX's clients include large companies with growing needs for
outsourcing and cost effective means of contacting and servicing current and
prospective customers. The majority of MATRIXX's customers come from the
telecommunications, financial services, consumer products, high technology and
direct marketing industries. 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, business-to-business telephone
marketing, marketing research, fulfillment, database management, and facilities
management. MATRIXX operates over 6,000 computerized workstations in its 16
call centers located in the United States and Europe.
MATRIXX's inbound and outbound telephone marketing services enable clients
to manage high volumes of inbound and outbound customer contacts in an
environment of shared resources and also increases market awareness with rapid
response to consumer requests for information or services. MATRIXX also designs
customized client systems for consumer markets with dedicated staff and services
uniquely tailored to the needs of each client. Its business-to-business
telephone marketing provides sales and customer service personnel who act as the
sales arm and/or marketing service representatives for their clients. They take
orders, sell by telephone and provide information about clients' promotion
plans, quantity discounts and new products, both to retailers and distributors.
MATRIXX's marketing research services assist clients in finding and qualifying
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 processes.
MATRIXX's international operations offer business-to-business and business-
to-consumer telephone marketing, including toll-free services, direct response
services and facilities management.
7
COMPETITION. The telephone marketing agency business in the United States
is highly competitive and highly fragmented, 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" operations of potential
client companies with size and capabilities equal to or greater than those of
MATRIXX. The continued trend in the outsourcing of telephone marketing is
important for MATRIXX's continued growth. 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 believes the principal
competitive factors in the telephone marketing and related marketing services
industry are reputation for quality, sales and marketing results, price,
technological expertise, and the ability to promptly provide clients with
customized systems for their customer service, sales and marketing needs.
OTHER BUSINESSES
GENERAL. 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.
CBLD is a reseller of long distance telecommunications services. CBLD
sells high-quality, competitively-priced long distance services and products to
residential customers and small to medium-sized businesses in Ohio, Indiana,
Kentucky, Western Pennsylvania and Michigan. CBLD also provides paging, voice
messaging, enhanced fax services and conference calling.
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.
Cincinnati Bell Supply Company engages in the purchase, sale and
reconditioning of telecommunications and computer equipment to customers
nationwide.
The Company (through its wholly owned subsidiary, Cincinnati Bell Cellular
Systems Company) is a limited partner with a 45% interest in a limited
partnership, Cincinnati SMSA Limited Partnership ("CSLP") (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".
COMPETITION. CBLD, CBD 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 needs of
their customers.
CSLP presently competes with a single wireless service provider, Airtouch,
doing business as Cellular One-Registered Trademark-. However, the FCC has
initiated auctions of wireless spectrum which can be used for competitive
services. Two licenses have been awarded to AT&T and GTE, and four additional
licenses will be awarded soon. The new businesses will provide a service known
as PCS which may be superior in capacity and transmission quality to that
offered by CSLP, using digital instead of analog technology. It's anticipated
that the new competitors will begin service by reselling existing cellular
services until their facilities have been constructed.
8
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 and services from AT&T and its affiliates
or derive significant revenues from AT&T and its affiliates by providing to them
network, data processing, software development, and marketing services. During
1995, the Company's revenues from AT&T and its affiliates were approximately
$345 million or 26% of the Company's consolidated revenues. Excluding network
access revenues, revenues from AT&T and its affiliates were approximately $294
million or 22% of the Company's consolidated revenues. The Company purchased
approximately $69 million of goods and services from AT&T and its affiliates.
CBT and AT&T are discussing whether to revise portions of the companies'
agreement governing their joint provision of certain telecommunications
services. Revenues subject to discussion represent substantially less than 10%
of CBT's revenues, but portions of the contract provide above-average profit
contribution. The discussions are in a preliminary stage and their outcome
cannot be predicted. The worst case scenario, which is not expected, could have
a significant impact on CBT's earnings beginning in mid-1996. The discussions
do not involve AT&T's relationships with other Company subsidiaries.
CAPITAL ADDITIONS
The Company has been making large expenditures for construction of
telephone plant and investments in its existing subsidiaries and new businesses.
As a result of these expenditures, the Company expects to be able to introduce
new products and services, respond to competitive challenges and increase its
operating efficiency and productivity.
The following is a summary of capital additions for the years 1991
through 1995:
DOLLARS IN MILLIONS
- -------------------------------------------------------------------------------
Investments in
Telephone Plant Existing Subsidiaries Total Capital
Construction and New Businesses Additions
------------ ------------------ ---------
1995 $ 90.3 $ 76.5 $ 166.8
1994 $ 112.8 $ 43.4 $ 156.2
1993 $ 111.6 $ 123.8 $ 235.4
1992 $ 95.0 $ 45.1 $ 140.1
1991 $ 115.9 $ 77.4 $ 193.3
The total investment in telephone plant increased from approximately
$1,296 million at December 31, 1990 to approximately $1,503 million at December
31, 1995, after giving effect to retirements but before deducting accumulated
depreciation at either date.
Capital additions in 1996 by the Company and its subsidiaries are
anticipated to be approximately $145 million, with approximately $90 million
designated for telephone plant.
EMPLOYEES
At December 31, 1995 the Company and its subsidiaries had approximately
15,100 employees. CBT and CBIS had approximately 2,200 employees 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. Negotiations with representatives of
the CWA began in March 1996, and the outcome cannot be determined at this time.
9
In the first quarter of 1995, the Company approved a restructuring plan
for CBT and the Company. The restructuring plan results in the need for fewer
people to operate the businesses. The reduction in CBT's work force is the
result of the offer of early retirement incentives to eligible employees. More
than 1,300 employees accepted the early retirement offer, including 1,000 hourly
employees. At the end of 1995, approximately 250 management and 450 hourly
employees had retired. The Company has the option to delay the retirement date
of the hourly employees until March 31, 1997.
BUSINESS SEGMENT INFORMATION
The amounts of revenues, operating income, assets, capital additions,
depreciation and amortization attributable to each of the business segments of
the Company for the year ended December 31, 1995 are set forth in the table
relating to business segment information in Note 18 of the Notes to 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 telephone plant which does not
lend itself to description by character and location of principal units. Other
property of the Company is principally computer equipment, computer software,
furniture and fixtures.
The gross investment in telephone plant and other property, in millions
of dollars, at December 31, 1995 was as follows:
Telephone Plant
Land, buildings and leasehold improvements $ 192.0
Central office equipment 573.6
Connecting lines (not on customer premises) 560.9
Station equipment 75.2
Furniture, fixtures, vehicles and other 93.4
Telephone plant under construction 8.3
-------
Total telephone plant 1,503.4
-------
Other Property
Information systems 182.2
Marketing services 62.0
Other 38.3
-------
Total other property 282.5
-------
Total $1,785.9
-------
-------
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, some of
which are included in capitalized leases.
On March 20, 1996, the Company sold to a third party a 112,000 square
foot building in Erlanger, Kentucky, which was a training and education
facility.
10
In March 1995, CBIS entered into a build-to-suit lease agreement for a
new office building and data center in Orlando, Florida. Under the terms of the
agreement, the lease is a 15 year lease term with four 5-year renewal options.
The office building will contain 125,000 square feet and the data center will be
in a separate building of 60,000 square feet. The annual base rent will be
approximately $3.7 million for an initial total commitment of $55.5 million over
the 15 year term.
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 five 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 because of poor performance. On October 20, 1995,
CBCSC filed a motion for summary judgment on certain counts and Ameritech filed
a Motion for Summary Judgment on another count. The Court has not yet decided
these motions, but the Court did issue an Order requesting that the parties
brief certain additional issues. CINCINNATI BELL CELLULAR SYSTEMS COMPANY V.
AMERITECH MOBILE PHONE SERVICE OF CINCINNATI, INC., ET AL.
In connection with the above-described litigation, recent changes in the
structure of the telecommunications industry, including the enactment of the
Telecommunications Act of 1996, have positioned the partnership in direct
competition with its two major partners, including the Company, creating
irreconcilable conflicts of interest among them. The Company has pursued this
litigation to maximize the value of this asset for the benefit of the
shareholders. There are many possible outcomes of the litigation. The
potential impact of a settlement from the lawsuit is an extremely broad range
depending upon the form of distribution and the amount of damages awarded. At
this time, the Company believes that it will recover its approximately $50
million investment in the partnership as of February 29, 1996.
On October 4, 1995, the Department of Agriculture filed a claim for
approximately $4 million allegedly representing damages incurred as a result of
a latent defect in the work that CBIS performed under Task 1A of a Task Order
Contract with the Department of Agriculture. The Company is in the process of
appealing this claim to the Court of Federal Claims. Related to this claim, on
January 16, 1996, DynCorp pursuant to the provisions of a Stock Purchase
Agreement dated October 31, 1994, and as amended May 30, 1995, in which DynCorp
purchased 100% of the outstanding capital stock of CBIS Federal Inc., filed
demand for arbitration under the procedures of the American Arbitration
Association. DynCorp's demand for arbitration seeks damages and other relief as
follows: $2.5 million for monies withheld by the United States Government on
certain Department of Agriculture task order contracts, a declaration that CBIS
must indemnify DynCorp for additional claims or losses on certain government
contracts, an award of $5 million in punitive damages, and fees and expenses
relating to the arbitration proceedings.
11
AT&T Corp. filed a collection action in the United States District Court,
Southern District of Ohio, Western Division, to collect damages awarded by the
Federal Communications Commission requiring 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 moved
to dismiss this action on the grounds that AT&T may be barred from collecting
such amounts due to the expiration of the statute of limitations. AT&T CORP. V.
CINCINNATI BELL TELEPHONE CO.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
No matter was submitted to a vote of security holders in the fourth
quarter of the fiscal year covered by this report.
12
EXECUTIVE OFFICERS OF THE REGISTRANT (DURING 1995).
The names, ages and positions of the executive officers of the Company are as
follows:
Name Age Title
- ---- --- -----
(as of
3/31/96)
Dwight H. Hibbard (a,b) 72 Chairman of the Board
John T. LaMacchia (a,b) 54 President and Chief Executive
Officer
Raymond R. Clark (c) 58 Former Executive Vice President of
the Company and President and
Chief Executive Officer of CBT
Brian C. Henry 39 Executive Vice President and
Chief Financial Officer
David S. Gergacz (d) 47 Executive Vice President of the
Company and President and
Chief Executive Officer of CBT
James F. Orr 50 Executive Vice President of the
Company and President and Chief
Executive Officer of CBIS
William H. Zimmer III 42 Secretary and Treasurer
William D. Baskett III 56 General Counsel and Chief
Legal Officer
David F. Dougherty 41 President and Chief Executive
Officer of MATRIXX
Barbara J. Stonebraker 51 Senior Vice President of
CBT
Barry L. Nelson 49 President and Chief Executive
Officer of CBLD
(a) Member of the Board of Directors
(b) Member of the Executive Committee
(c) Served as Executive Vice President of the Company and President and Chief
Executive Officer of CBT until July 31, 1995.
(d) Mr. Gergacz was elected President and Chief Executive Officer of CBT
effective August 1, 1995.
Officers are elected annually but are removable at the discretion of the Board
of Directors.
13
DWIGHT H. HIBBARD, Chairman of the Board since January 1, 1985; Chief Executive
Officer of the Company, 1985-September 30, 1993; Chairman of Cincinnati Bell
Telephone Company, 1985-October 31, 1993. Director of 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
Information Systems Inc. since October 1988. Director of The Kroger Company.
RAYMOND R. CLARK, Executive Vice President of the Company, January 1, 1987 -
July 31, 1995; Chief Executive Officer of Cincinnati Bell Telephone Company,
January 1, 1988 - July 31, 1995; President of Cincinnati Bell Telephone Company,
January 1, 1987 - July 31, 1992. Director of Star Banc Corporation, Ohio
National Life Insurance Company 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.
DAVID S. GERGACZ, Executive Vice President of the Company since August 1, 1995;
President and Chief Executive Officer of Cincinnati Bell Telephone Company since
August 1, 1995. President and Chief Executive Officer of Rogers
Communications/Cantel, 1993-1995; President and Chief Executive Officer of
Boston Technology 1991-1993; President and Chief Operating Officer of Network
Systems Division of U.S. Sprint, 1988-1991.
WILLIAM H. ZIMMER III, Secretary and Treasurer of the Company since August 1,
1991; Secretary and Assistant Treasurer of the Company, December 1, 1988-July
31, 1991.
JAMES F. ORR, Executive Vice President of the Company since June 1, 1995;
President and Chief Executive Officer of Cincinnati Bell Information Systems
Inc. since January 1, 1995; Chief Operating Officer of CBIS, February 4, 1994-
December 31, 1994; President and Chief Executive Officer of MATRIXX Marketing
Inc., January 1, 1993-December 31, 1994; Vice President-Market Development,
January 1, 1989-December 31, 1992.
DAVID F. DOUGHERTY, President and Chief Executive Officer of MATRIXX Marketing
Inc. since January 1, 1995; Senior Vice President and Chief Operating Officer
U.S. Operations, January 1, 1993 - December 31, 1994; President of the Consumer
Division, January 1, 1991 - December 31, 1992.
BARRY L. NELSON, Chief Executive Officer of Cincinnati Bell Long Distance Inc.
since January 1, 1995; President since May 1, 1987.
WILLIAM D. BASKETT III, General Counsel and Chief Legal Officer of the Company
since July 1993; Partner of Frost & Jacobs since 1970.
BARBARA J. STONEBRAKER, Senior Vice President of Cincinnati Bell Telephone
Company since 1990.
14
PART II
ITEM 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 29,
1996 there were approximately 19,664 holders of record of the 66,923,079
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
- ------------------------------------------------------------------------------
1995 High $22 1/8 $26 1/4 $28 1/8 $35 1/4
Low $16 7/8 $20 7/8 $24 3/4 $26 1/8
Dividend Declared $ .20 $ .20 $ .20 $ .20
1994 High $18 7/8 $17 1/2 $20 1/8 $19 1/2
Low $15 1/2 $15 3/8 $16 $16 3/4
Dividend Declared $ .20 $ .20 $ .20 $ .20
ITEMS 6 THROUGH 8.
The Selected Financial Data, Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Financial Statements and
Supplementary Data required by these items are included in the registrant's
annual report to security holders for the fiscal year ended December 31, 1995
included in Exhibit 13 and are 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 of the Registrant" since the registrant
did not furnish such information in its definitive proxy statement prepared in
accordance with Schedule 14A.
The other information required by these items is included in the
registrant's definitive proxy statement dated March 14, 1996 in the first
paragraph on page 2, the accompanying notes on page 2 and the last paragraph on
page 2, the information under "Election of Directors" on pages 6 and 7, the
information under "Share Ownership of Directors and Officers" on page 5, the
information under "Executive Compensation" on page 11 through 16, 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 SCHEDULE, AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report:
(1) Consolidated Financial Statements: Page
----
Report of Management *
Report of Independent Accountants *
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 Schedule:
Report of Independent Accountants 24
II - Valuation and Qualifying Accounts 25
Financial statements and financial statement schedules other than that
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, 1995. (See Part II)
16
(3) Exhibits
Exhibits identified in parenthesis 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 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)(ii) to Form 10-K for 1992, File No. 1-8519.
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.
(4)(c)(ii) 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 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)(ii) above.
17
(4)(c)(iii) 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)(iv) 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.
(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 January 1, 1995.
(10)(iii)(A)(2)* 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)(3)* Cincinnati Bell Inc. Pension Program, as amended
effective (November 4, 1991). (Exhibit
(10)(iii)(A)(4)(ii) to Form 10-K for 1994, File No. 1-
8519).
(10)(iii)(A)(4)* 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)(5)(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)(5)(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)(6)* Agreement dated February 1, 1994 between the Company
and Dwight H. Hibbard. (Exhibit (10)(iii)(A)(8)(iii)
to Form 10-K for 1993, File No. 1-8519).
(10)(iii)(A)(7)* 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)(8)* 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)(9)* Employment Agreement dated as of July 17, 1995 between
the Company and David S. Gergacz.
18
(10)(iii)(A)(10)* Employment Agreement dated as of January 1, 1995
between the Company and Barry L. Nelson.
(10)(iii)(A)(11)* Employment Agreement dated as of January 1, 1995
between the Company and David F. Dougherty.
(10)(iii)(A)(12)* Amendment to Employment Agreement dated as of January
1, 1995 between the Company and David F. Dougherty.
(10)(iii)(A)(13)* Executive Employment Agreement dated as of March 29,
1993 between the Company and Brian C. Henry. (Exhibit
(10)(iii)(A)(14) to Form 10-K for 1993, File No. 1-
8519).
(10)(iii)(A)(14)(i)* Employment Agreement dated as of August 19, 1994
between the Company and James F. Orr. (Exhibit
(10)(iii)(A)(17)(i) to Form 10-K for 1994, File No. 1-
8519).
(10)(iii)(A)(14)(ii)* Amendment to Employment Agreement dated as of October
31, 1994 between the Company and James F. Orr.
(Exhibit (10)(iii)(A)(17)(ii) to Form 10-K for 1994,
File No. 1-8519).
(10)(iii)(A)(15)* Employment Agreement dated as of December 30, 1994
between Cincinnati Bell Telephone Company and Barbara
J. Stonebraker. (Exhibit (10)(iii)(A)(18) to Form 10-K
for 1994, File No. 1-8519).
(10)(iii)(A)(16)(i)* Cincinnati Bell Inc. Executive Deferred Compensation
Plan. (Exhibit (10)(iii)(A)(17) to Form 10-K for 1993,
File No. 1-8519).
(10)(iii)(A)(16)(ii)* Amendment to Cincinnati Bell Inc. Executive Deferred
Compensation Plan effective January 1, 1994. (Exhibit
(10)(iii)(A)(20)(ii) to Form 10-K for 1994, File No. 1-
8519).
(10)(iii)(A)(17)(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)(17)(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)(18)* 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)(19)* 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)(20)* Cincinnati Bell Inc. Retirement Plan for Outside
Directors. (Exhibit (10)(iii)(A)(21) to Form 10-K for
1993, File No. 1-8519).
(11) Computation of Earnings (Loss) per Common Share.
(12) Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Dividends.
19
(13) Portions of the Cincinnati Bell Inc. annual report to
security holders for the fiscal year ended December 31,
1995 as incorporated by reference including the
Selected Financial Data, Report of Management, Report
of Independent Accountants, Management's Discussion and
Analysis and Consolidated Financial Statements.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(27) Financial Data Schedules.
(99)(a) Annual Report on Form 11-K for the Cincinnati Bell Inc.
Retirement Savings Plan for the year 1995 will be filed
by amendment on or before June 30, 1996.
(99)(b) Annual Report on Form 11-K for the Cincinnati Bell Inc.
Savings and Security Plan for the year 1995 will be
filed by amendment on or before June 30, 1996.
(99)(c) Annual Report on Form 11-K for the MATRIXX Marketing
Inc. Profit Sharing/401(k) Plan for the year 1995 will
be filed by amendment on or before June 30, 1996.
(99)(d) Annual Report on Form 11-K for the CBIS Retirement and
Savings Plan for the year 1995 will be filed by
amendment on or before June 30, 1996.
........................
* Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
20
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.
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
21
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 28, 1996 By /S/ JAMES M. DAHMUS
------------------------
James M. Dahmus,
Vice President and
Controller
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
- ------------------
John T. LaMacchia
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
PHILLIP R. COX* Director
- ---------------
Phillip R. Cox
WILLIAM A. FRIEDLANDER* Director
- -----------------------
William A. Friedlander
Chairman of the Board and
DWIGHT H. HIBBARD* Director
- ------------------
Dwight H. Hibbard
ROBERT P. HUMMEL, M.D.* Director
- -----------------------
Robert P. Hummel, M.D.
JAMES D. KIGGEN* Director
- ----------------
James D. Kiggen
22
SIGNATURE TITLE DATE
CHARLES S. MECHEM, JR.* Director
- -------------------------
Charles S. Mechem, Jr.
MARY D. NELSON* Director
- ----------------
Mary D. Nelson
DAVID B. SHARROCK* Director
- -------------------
David B. Sharrock
*By /s/ BRIAN C. HENRY March 28, 1996
-------------------
Brian C. Henry
as attorney-in-fact and on his behalf
as Executive Vice President and
Chief Financial Officer
23
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 25 of the 1995 annual
report of Cincinnati Bell Inc. In connection with our audits of such
consolidated financial statements, we have also audited the related financial
statement schedule on page 25 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
February 14, 1996
24
Schedule II
CINCINNATI BELL INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Millions of Dollars)
- ------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ------------------------------------------------------------------------------------------------------------
ADDITIONS DEDUCTIONS
--------------------- ----------
(1) (2)
BALANCE AT CHARGED BALANCE
BEGINNING CHARGED TO TO OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS OF PERIOD
- ------------------------------------------------------------------------------------------------------------
Year 1995
Allowance for doubtful accounts . . . . $14.1 $8.5 $5.3(a) $13.2(b) $14.7
Year 1994
Allowance for doubtful accounts . . . . $14.0 $11.1 $3.0(a) $14.0(b) $14.1
Year 1993
Allowance for doubtful accounts . . . . $6.7 $14.6 $4.1(a) $11.4(b) $14.0
(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.
25