Cincinnati Bell Reports 3Q Results.(Financial report)

Cincinnati Bell has announced third quarter 2009 net income of $28 million, or 12 cents diluted earnings per share, which is a per share increase of 18 percent compared to the third quarter of 2008 and 7 percent versus the second quarter of 2009.

In a release dated November 4, the company stated:

- Total revenues for the third quarter 2009 of $338 million decreased 3 percent from the third quarter of 2008 but increased 3 percent sequentially. Operating income of $73 million, which includes a $5 million loss on sale of wireless spectrum, decreased $7 million or 8 percent compared to the third quarter 2008, and decreased $2 million or 3 percent compared to the second quarter 2009. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) of $120 million was comparable to last year and up $2 million or 2 percent sequentially.

"Despite the continuing difficult economic climate, we are pleased that our revenue increased compared to the second quarter, driven by growth in our Technology Solutions and Wireless businesses. This enabled us to deliver the same level of Adjusted EBITDA that we generated last year," said Jack Cassidy, president and chief executive officer. "Now that we have refinanced our 2013 debt, we have a significant amount of operating and financial flexibility. This flexibility will allow us to focus our efforts on investing and growing our data center business, which over the last few years has performed extremely well and was recently recognized as a service provider partner to the newly formed Virtual Computing Environment Coalition. This joint venture includes Cisco, EMC and VMware and will provide private virtualized cloud services. We believe this partnership will continue to help transform and further grow our data center business."

-Quarterly revenue from Technology Solutions totaled $78 million, reflecting a year-over-year increase in data center and managed services revenue of $3 million or 10 percent and an increase in revenue from telecom and IT equipment of $2 million or 5 percent. The growth in the data center business was the primary contributor to the 16 percent increase in Adjusted EBITDA for Technology Solutions. On a sequential quarterly basis, revenue and Adjusted EBITDA increased 18 percent and 21 percent, respectively, due to increased equipment sales.

-Wireless service revenue in the third quarter 2009 was $72 million compared to $74 million in the prior year quarter. Higher data revenue, driven by smartphone subscriber growth, was more than offset by lower voice revenue resulting from a year-over-year decline in postpaid voice minutes of use per subscriber. Cincinnati Bell's focus on smartphone subscriber growth resulted in an additional 6,000 smartphone subscribers in the third quarter of 2009.

-Cincinnati Bell continued to repurchase common stock under the program authorized by its Board of Directors in February 2008. In the third quarter of 2009, common stock repurchases totaled 7 million shares for $25 million. Since the program's inception, the company has purchased 44 million shares for $136 million, representing 18 percent of shares outstanding at the end of 2007 and leaving $14 million to be spent in the fourth quarter to complete the program.

-The company's net debt decreased by $86 million from the third quarter of 2008 to $1.89 billion, dropping below $1.9 billion for the first time in 10 years. Free cash flow3 of $35 million for the third quarter of 2009 increased $12 million from the prior year period.

"This quarter's profitability clearly shows the results of the aggressive expense reductions we took in the first half of the year, which enabled us to improve our Adjusted EBITDA margin by almost a full percentage point and deliver the same Adjusted EBITDA versus the prior year on lower revenue," said Gary Wojtaszek, chief financial officer. "We also continued to focus on managing our balance sheet by completing an additional $25 million of share repurchases, opportunistically purchasing $33 million of debt at a 24 percent discount, and, in October 2009, refinancing $440 million of debt with a very attractive $500 million 8 1/4 percent senior notes offering that doesn't mature until 2017."

With headquarters in Cincinnati, Ohio, Cincinnati Bell provides integrated communications solutions, including local, long distance, data, Internet, and wireless services.

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