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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 8/04/22 Cincinnati Bell Inc. 10-Q 6/30/22 80:18M ActiveDisclosure/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 4.78M
2: EX-10.1 Material Contract HTML 1.40M
3: EX-10.2 Material Contract HTML 491K
4: EX-31.1 Certification -- §302 - SOA'02 HTML 31K
5: EX-31.2 Certification -- §302 - SOA'02 HTML 31K
6: EX-32.1 Certification -- §906 - SOA'02 HTML 26K
7: EX-32.2 Certification -- §906 - SOA'02 HTML 26K
13: R1 Document and Entity Information Document HTML 70K
14: R2 Condensed Consolidated Statements of Operations HTML 85K
15: R3 Condensed Consolidated Statements of Comprehensive HTML 67K
Income (Loss)
16: R4 Condensed Consolidated Statements of Comprehensive HTML 36K
Income (Loss) (Parenthetical)
17: R5 Condensed Consolidated Statements of Shareowners' HTML 75K
Equity (Deficit)
18: R6 Condensed Consolidated Balance Sheets HTML 137K
19: R7 Condensed Consolidated Balance Sheets HTML 26K
(Parenthetical)
20: R8 Condensed Consolidated Statements of Cash Flows HTML 117K
21: R9 Description of Business and Accounting Policies HTML 57K
22: R10 Mergers and Acquisitions HTML 159K
23: R11 Revenue HTML 419K
24: R12 Goodwill and Intangible Assets HTML 180K
25: R13 Debt and Other Financing Arrangements HTML 113K
26: R14 Leases HTML 110K
27: R15 Financial Instruments and Fair Value Measurements HTML 140K
28: R16 Pension and Postretirement Plans HTML 189K
29: R17 Shareowners' Equity (Deficit) HTML 255K
30: R18 Business Segment Information HTML 237K
31: R19 Description of Business and Accounting Policies HTML 87K
(Policies)
32: R20 Description of Business and Accounting Policies HTML 39K
(Tables)
33: R21 Mergers and Acquisitions (Tables) HTML 150K
34: R22 Revenue (Tables) HTML 402K
35: R23 Goodwill and Intangible Assets (Tables) HTML 185K
36: R24 Debt and Other Financing Arrangements (Tables) HTML 109K
37: R25 Leases (Tables) HTML 110K
38: R26 Financial Instruments and Fair Value Measurements HTML 138K
(Tables)
39: R27 Pension and Postretirement Plans (Tables) HTML 181K
40: R28 Shareowners' Equity (Deficit) (Tables) HTML 249K
41: R29 Business Segment Information (Tables) HTML 231K
42: R30 Description of Business and Accounting Policies - HTML 32K
Narrative (Details)
43: R31 Description of Business and Accounting Policies - HTML 34K
Schedule of Reconciliation of Cash, Cash
Equivalents and Restricted Cash (Details)
44: R32 Mergers and Acquisitions - Narratives (Details) HTML 66K
45: R33 Mergers and Acquisitions - Schedule of HTML 33K
Consideration (Details)
46: R34 Mergers and Acquisitions - Purchase Price HTML 105K
Allocation (Details)
47: R35 Mergers and Acquisitions - Preliminary Fair Values HTML 64K
of Identifiable Intangible Assets Acquired
(Details)
48: R36 Revenue - Narrative (Details) HTML 50K
49: R37 Revenue - Schedule of Expected Revenue to be HTML 44K
Recognized for Existing IRU Contracts (Details)
50: R38 Revenue - Schedule of Activity of Contract Assets HTML 53K
(Details)
51: R39 Revenue - Schedule of Revenues Disaggregation by HTML 59K
Product and Service Lines (Details)
52: R40 Revenue - Schedule of Revenues Disaggregation by HTML 53K
Contract Type (Details)
53: R41 Goodwill and Intangible Assets - Schedule of HTML 42K
Goodwill (Details)
54: R42 Goodwill and Intangible Assets - Narrative HTML 44K
(Details)
55: R43 Goodwill and Intangible Assets - Schedule of HTML 50K
Intangible Assets (Details)
56: R44 Goodwill and Intangible Assets - Schedule of HTML 35K
Estimated Useful Lives for Finite-lived Intangible
Assets (Details)
57: R45 Goodwill and Intangible Assets - Schedule of HTML 40K
Estimated Amortization Expense (Details)
58: R46 Debt and Other Financing Arrangements - Schedule HTML 72K
of Debt (Details)
59: R47 Debt and Other Financing Arrangements - Schedule HTML 34K
of Debt (Parenthetical) (Details)
60: R48 Debt and Other Financing Arrangements - Credit HTML 37K
Agreement - Narrative (Details)
61: R49 Debt and Other Financing Arrangements - Accounts HTML 39K
Receivable Securitization Facility - Narrative
(Details)
62: R50 Leases - Schedule of Supplemental Balance Sheet HTML 45K
Information Related to Leases (Details)
63: R51 Leases - Schedule of Supplemental Cash Flow HTML 38K
Information Related to Leases (Details)
64: R52 Financial Instruments and Fair Value Measurements HTML 59K
- Narrative (Details)
65: R53 Financial Instruments and Fair Value Measurements HTML 49K
- Schedule of Fair Value of Interest rate Swaps
and Interest Rate Caps are Recorded in Condensed
Consolidated Balance Sheets (Details)
66: R54 Financial Instruments and Fair Value Measurements HTML 33K
- Schedule of Summarizes the Location of Losses in
the Condensed Consolidated Statements of
Operations in Addition to the Derivative Contract
Type (Details)
67: R55 Financial Instruments and Fair Value Measurements HTML 28K
- Amount of Gains Recognized in Accumulated Other
Comprehensive Income ("AOCI") Net of
Reclassification into Earnings (Details)
68: R56 Financial Instruments and Fair Value Measurements HTML 29K
- Schedule of Cash Flow Hedges Included in
Accumulated Other Comprehensive Income (Loss)
(Details)
69: R57 Financial Instruments and Fair Value Measurements HTML 33K
- Schedule of Carrying and Fair Values by Balance
Sheet Grouping (Details)
70: R58 Pension and Postretirement Plans - Narrative HTML 48K
(Details)
71: R59 Pension and Postretirement Plans - Schedule of HTML 55K
Pension and Postretirement Costs (Benefits)
(Details)
72: R60 Shareowners' Equity (Deficit) - Narrative HTML 43K
(Details)
73: R61 Shareowners' Equity (Deficit) - Schedule of HTML 60K
Changes in Accumulated Other Comprehensive Income
(Loss) by Component (Details)
74: R62 Business Segment Information - Narrative (Details) HTML 26K
75: R63 Business Segment Information - Selected Financial HTML 72K
Data for the Company's Business Segment
Information (Details)
78: XML IDEA XML File -- Filing Summary XML 148K
76: XML XBRL Instance -- ck716133-10q_20220630_htm XML 4.67M
77: EXCEL IDEA Workbook of Financial Reports XLSX 149K
9: EX-101.CAL XBRL Calculations -- ck716133-20220630_cal XML 213K
10: EX-101.DEF XBRL Definitions -- ck716133-20220630_def XML 614K
11: EX-101.LAB XBRL Labels -- ck716133-20220630_lab XML 1.21M
12: EX-101.PRE XBRL Presentations -- ck716133-20220630_pre XML 991K
8: EX-101.SCH XBRL Schema -- ck716133-20220630 XSD 194K
79: JSON XBRL Instance as JSON Data -- MetaLinks 400± 648K
80: ZIP XBRL Zipped Folder -- 0001564590-22-028024-xbrl Zip 623K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM i 10-Q
|
i ☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended i June 30, i 2022 /
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i ☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number i 1-8519
i CINCINNATI BELL INC.
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i Ohio |
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i 31-1056105 |
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(State of Incorporation) |
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(I.R.S. Employer Identification No.) |
i 221 East Fourth Street, i Cincinnati, i Ohio i 45202
(Address of principal executive offices) (Zip Code)
( i 513) i 397-9900
(Registrant’s telephone number, including area code)
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. i Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ( § 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer |
☐ |
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Accelerated filer |
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i Non-accelerated filer |
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Smaller reporting company |
i ☐ |
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Emerging growth company |
i ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒
Securities Registered Pursuant to Section 12(b) of the Act:
PART I. Financial Information
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Description |
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Page |
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Item 1. |
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Financial Statements |
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1 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) |
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2 |
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Condensed Consolidated Statements of Shareowners' Equity (Deficit) (Unaudited) |
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3 |
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4 |
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5 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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6 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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27 |
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Item 3. |
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40 |
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Item 4. |
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40 |
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PART II. Other Information |
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Item 1. |
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41 |
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Item 1A. |
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41 |
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Item 2. |
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41 |
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Item 3. |
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41 |
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Item 4. |
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41 |
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Item 5. |
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41 |
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Item 6. |
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42 |
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43 |
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Cincinnati Bell Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
(Unaudited)
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Successor |
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Predecessor |
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Successor |
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Predecessor |
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Three Months Ended |
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Three Months Ended |
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Six Months Ended |
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Six Months Ended |
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Revenue |
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$ |
i 439.5 |
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$ |
i 414.2 |
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$ |
i 875.3 |
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$ |
i 824.1 |
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Costs and expenses |
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Cost of services and products, excluding items below |
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i 241.2 |
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i 224.8 |
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i 479.7 |
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i 444.9 |
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Selling, general and administrative, excluding items below |
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i 95.9 |
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i 85.4 |
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i 185.5 |
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i 169.2 |
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Depreciation and amortization |
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i 130.1 |
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i 71.8 |
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i 249.6 |
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i 142.8 |
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Restructuring and severance related charges |
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i 0.4 |
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i 0.4 |
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i 1.3 |
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i 0.9 |
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Transaction and integration costs |
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i 4.3 |
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i 1.4 |
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i 6.6 |
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i 3.3 |
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Total operating costs and expenses |
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i 471.9 |
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i 383.8 |
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i 922.7 |
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i 761.1 |
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Operating (loss) income |
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( i 32.4 |
) |
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i 30.4 |
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( i 47.4 |
) |
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i 63.0 |
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Interest expense |
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i 18.4 |
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i 33.5 |
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i 34.9 |
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i 65.9 |
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Other components of pension and postretirement benefit plans (benefit) expense |
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( i 2.6 |
) |
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i 1.7 |
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( i 5.2 |
) |
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i 4.3 |
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Other expense (income), net |
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i 11.8 |
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( i 0.2 |
) |
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i 11.4 |
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i — |
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Loss before income taxes |
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( i 60.0 |
) |
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( i 4.6 |
) |
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( i 88.5 |
) |
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( i 7.2 |
) |
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Income tax (benefit) expense |
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( i 14.0 |
) |
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i — |
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( i 20.5 |
) |
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i 0.4 |
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Net loss |
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( i 46.0 |
) |
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( i 4.6 |
) |
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( i 68.0 |
) |
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( i 7.6 |
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Preferred stock dividends |
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i — |
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i 2.6 |
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i — |
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i 5.2 |
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Net loss applicable to common shareowners |
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$ |
( i 46.0 |
) |
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$ |
( i 7.2 |
) |
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$ |
( i 68.0 |
) |
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$ |
( i 12.8 |
) |
The accompanying notes are an integral part of the condensed consolidated financial statements.
1
Cincinnati Bell Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
(Unaudited)
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Successor |
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Predecessor |
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Successor |
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Predecessor |
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Three Months Ended June 30, 2022 |
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Three Months Ended June 30, 2021 |
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Six Months Ended |
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Six Months Ended |
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Net loss |
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$ |
( i 46.0 |
) |
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$ |
( i 4.6 |
) |
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$ |
( i 68.0 |
) |
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$ |
( i 7.6 |
) |
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Other comprehensive income (loss), net of tax: |
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Foreign currency translation (loss) gain |
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( i 3.1 |
) |
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i 1.6 |
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( i 1.3 |
) |
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i 2.6 |
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Cash flow hedges: |
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Unrealized (loss) gain on cash flow hedges arising during the period, net of tax of $ i 0.0, $ i 0.2 |
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i — |
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( i 0.1 |
) |
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i — |
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i 0.5 |
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Reclassification adjustment for net losses included in net income, net of tax of $ i 0.6, $ i 1.1 |
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i — |
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i 1.7 |
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i — |
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i 3.5 |
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Defined benefit plans: |
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Net (loss) gain arising from remeasurement during the period, net of tax of ($ i 0.4), $ i 1.8, ($ i 0.4), $ i 1.8 |
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( i 1.3 |
) |
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i 6.0 |
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( i 1.3 |
) |
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i 6.0 |
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Amortization of prior service benefits included in net income, net of tax of ($ i 0.2), ($ i 0.3) |
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i — |
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( i 0.5 |
) |
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i — |
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( i 1.0 |
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Amortization of net actuarial loss included in net income, net of tax of $ i 1.2, $ i 2.6 |
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i — |
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i 4.0 |
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i — |
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i 8.9 |
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Total other comprehensive (loss) income |
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( i 4.4 |
) |
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i 12.7 |
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( i 2.6 |
) |
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i 20.5 |
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Total comprehensive (loss) income |
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$ |
( i 50.4 |
) |
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$ |
i 8.1 |
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$ |
( i 70.6 |
) |
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$ |
i 12.9 |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
2
Cincinnati Bell Inc.
(in millions)
(Unaudited)
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6 3/4 % Cumulative Convertible Preferred Shares |
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Common Shares |
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Additional Paid-in |
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Accumulated Other Comprehensive |
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Successor |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Accumulated Deficit |
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Income (Loss) |
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Total |
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Balance at March 31, 2022 |
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i — |
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$ |
i — |
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i — |
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$ |
i — |
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$ |
i 1,716.1 |
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$ |
( i 49.2 |
) |
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$ |
i 3.0 |
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$ |
i 1,669.9 |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( i 46.0 |
) |
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— |
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( i 46.0 |
) |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( i 4.4 |
) |
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( i 4.4 |
) |
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Balance at June 30, 2022 |
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i — |
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$ |
i — |
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i — |
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$ |
i — |
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$ |
i 1,716.1 |
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$ |
( i 95.2 |
) |
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$ |
( i 1.4 |
) |
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$ |
i 1,619.5 |
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Predecessor |
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Balance at March 31, 2021 |
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|
i 3.1 |
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$ |
i 129.4 |
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|
i 50.9 |
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$ |
i 0.5 |
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$ |
i 2,667.0 |
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$ |
( i 2,834.6 |
) |
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$ |
( i 151.9 |
) |
|
$ |
( i 189.6 |
) |
|
Net loss |
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— |
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— |
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— |
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— |
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— |
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( i 4.6 |
) |
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— |
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( i 4.6 |
) |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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i 12.7 |
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|
|
i 12.7 |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 0.9 |
|
|
|
— |
|
|
|
— |
|
|
|
i 0.9 |
|
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 2.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
( i 2.6 |
) |
|
Balance at June 30, 2021 |
|
|
i 3.1 |
|
|
$ |
i 129.4 |
|
|
|
i 50.9 |
|
|
$ |
i 0.5 |
|
|
$ |
i 2,665.3 |
|
|
$ |
( i 2,839.2 |
) |
|
$ |
( i 139.2 |
) |
|
$ |
( i 183.2 |
) |
|
|
|
6 3/4 % Cumulative Convertible Preferred Shares |
|
|
Common Shares |
|
|
Additional Paid-in |
|
|
|
|
|
|
Accumulated Other Comprehensive |
|
|
|
|
|
||||||||||||
|
Successor |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Accumulated Deficit |
|
|
Income (Loss) |
|
|
Total |
|
||||||||
|
Balance at December 31, 2021 |
|
|
i — |
|
|
$ |
i — |
|
|
|
i — |
|
|
$ |
i — |
|
|
$ |
i 1,716.1 |
|
|
$ |
( i 27.2 |
) |
|
$ |
i 1.2 |
|
|
$ |
i 1,690.1 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 68.0 |
) |
|
|
— |
|
|
|
( i 68.0 |
) |
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 2.6 |
) |
|
|
( i 2.6 |
) |
|
Balance at June 30, 2022 |
|
|
i — |
|
|
$ |
i — |
|
|
|
i — |
|
|
$ |
i — |
|
|
$ |
i 1,716.1 |
|
|
$ |
( i 95.2 |
) |
|
$ |
( i 1.4 |
) |
|
$ |
i 1,619.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
|
|
i 3.1 |
|
|
$ |
i 129.4 |
|
|
|
i 50.7 |
|
|
$ |
i 0.5 |
|
|
$ |
i 2,670.3 |
|
|
$ |
( i 2,831.6 |
) |
|
$ |
( i 159.7 |
) |
|
$ |
( i 191.1 |
) |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 7.6 |
) |
|
|
— |
|
|
|
( i 7.6 |
) |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 20.5 |
|
|
|
i 20.5 |
|
|
Shares issued under employee plans |
|
|
— |
|
|
|
— |
|
|
|
i 0.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Shares purchased under employee plans and other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 2.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
( i 2.0 |
) |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
i 2.2 |
|
|
|
— |
|
|
|
— |
|
|
|
i 2.2 |
|
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( i 5.2 |
) |
|
|
— |
|
|
|
— |
|
|
|
( i 5.2 |
) |
|
Balance at June 30, 2021 |
|
|
i 3.1 |
|
|
$ |
i 129.4 |
|
|
|
i 50.9 |
|
|
$ |
i 0.5 |
|
|
$ |
i 2,665.3 |
|
|
$ |
( i 2,839.2 |
) |
|
$ |
( i 139.2 |
) |
|
$ |
( i 183.2 |
) |
The accompanying notes are an integral part of the condensed consolidated financial statements.
3
Cincinnati Bell Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except share amounts)
(Unaudited)
|
|
|
|
|
|
||||
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
i 6.7 |
|
|
$ |
i 5.6 |
|
|
Receivables, less allowances of $ i 6.2 and $ i 3.6 |
|
|
i 377.5 |
|
|
|
i 450.2 |
|
|
Inventory, materials and supplies |
|
|
i 68.9 |
|
|
|
i 57.1 |
|
|
Prepaid expenses |
|
|
i 49.6 |
|
|
|
i 50.4 |
|
|
Other current assets |
|
|
i 14.0 |
|
|
|
i 9.1 |
|
|
Total current assets |
|
|
i 516.7 |
|
|
|
i 572.4 |
|
|
Property, plant and equipment, net |
|
|
i 2,002.0 |
|
|
|
i 1,966.6 |
|
|
Operating lease right-of-use assets |
|
|
i 68.8 |
|
|
|
i 44.3 |
|
|
Goodwill |
|
|
i 687.1 |
|
|
|
i 646.3 |
|
|
Intangible assets, net |
|
|
i 884.9 |
|
|
|
i 928.3 |
|
|
Deferred income tax assets |
|
|
i 5.6 |
|
|
|
i 5.3 |
|
|
Other noncurrent assets |
|
|
i 43.2 |
|
|
|
i 35.6 |
|
|
Total assets |
|
$ |
i 4,208.3 |
|
|
$ |
i 4,198.8 |
|
|
Liabilities and Shareowners’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
i 19.9 |
|
|
$ |
i 19.7 |
|
|
Accounts payable |
|
|
i 375.6 |
|
|
|
i 399.2 |
|
|
Unearned revenue and customer deposits |
|
|
i 81.0 |
|
|
|
i 83.2 |
|
|
Accrued taxes |
|
|
i 22.2 |
|
|
|
i 25.3 |
|
|
Accrued interest |
|
|
i 1.1 |
|
|
|
i 1.9 |
|
|
Accrued payroll and benefits |
|
|
i 45.9 |
|
|
|
i 41.9 |
|
|
Other current liabilities |
|
|
i 55.0 |
|
|
|
i 45.5 |
|
|
Total current liabilities |
|
|
i 600.7 |
|
|
|
i 616.7 |
|
|
Long-term debt, less current portion |
|
|
i 1,521.9 |
|
|
|
i 1,428.9 |
|
|
Operating lease liabilities |
|
|
i 62.5 |
|
|
|
i 40.2 |
|
|
Pension and postretirement benefit obligations |
|
|
i 133.5 |
|
|
|
i 141.1 |
|
|
Pole license agreement obligation |
|
|
i 45.2 |
|
|
|
i 46.2 |
|
|
Deferred income tax liability |
|
|
i 115.9 |
|
|
|
i 139.6 |
|
|
Other noncurrent liabilities |
|
|
i 109.1 |
|
|
|
i 96.0 |
|
|
Total liabilities |
|
|
i 2,588.8 |
|
|
|
i 2,508.7 |
|
|
Shareowners’ equity |
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
i 1,716.1 |
|
|
|
i 1,716.1 |
|
|
Accumulated deficit |
|
|
( i 95.2 |
) |
|
|
( i 27.2 |
) |
|
Accumulated other comprehensive (loss) income |
|
|
( i 1.4 |
) |
|
|
i 1.2 |
|
|
Total shareowners’ equity |
|
|
i 1,619.5 |
|
|
|
i 1,690.1 |
|
|
Total liabilities and shareowners’ equity |
|
$ |
i 4,208.3 |
|
|
$ |
i 4,198.8 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
4
Cincinnati Bell Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(Unaudited)
|
|
|
Successor |
|
|
|
Predecessor |
|
||
|
|
|
Six Months Ended |
|
|
|
Six Months Ended |
|
||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
( i 68.0 |
) |
|
|
$ |
( i 7.6 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
i 249.6 |
|
|
|
|
i 142.8 |
|
|
Provision for loss on receivables |
|
|
i 2.6 |
|
|
|
|
i 0.8 |
|
|
Unrealized loss on interest rate swaps |
|
|
i 11.4 |
|
|
|
|
i — |
|
|
Noncash portion of interest expense |
|
|
i 2.6 |
|
|
|
|
i 2.9 |
|
|
Deferred income taxes |
|
|
( i 23.7 |
) |
|
|
|
( i 2.3 |
) |
|
Pension and other postretirement payments in excess of expense |
|
|
( i 9.2 |
) |
|
|
|
( i 0.7 |
) |
|
Stock-based compensation |
|
|
i — |
|
|
|
|
i 2.2 |
|
|
Other, net |
|
|
( i 0.2 |
) |
|
|
|
( i 0.3 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Decrease in receivables |
|
|
i 69.3 |
|
|
|
|
i 75.2 |
|
|
Increase in inventory, materials, supplies, prepaid expenses and other current assets |
|
|
( i 6.5 |
) |
|
|
|
( i 20.2 |
) |
|
(Decrease) increase in accounts payable |
|
|
( i 45.5 |
) |
|
|
|
i 20.5 |
|
|
Increase (decrease) in accrued and other current liabilities |
|
|
i 4.5 |
|
|
|
|
( i 35.6 |
) |
|
(Increase) decrease in other noncurrent assets |
|
|
( i 6.2 |
) |
|
|
|
i 0.6 |
|
|
(Decrease) increase in other noncurrent liabilities |
|
|
( i 4.5 |
) |
|
|
|
i 1.8 |
|
|
Net cash provided by operating activities |
|
|
i 176.2 |
|
|
|
|
i 180.1 |
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
( i 200.9 |
) |
|
|
|
( i 119.7 |
) |
|
Acquisition of business, net of cash acquired |
|
|
( i 65.1 |
) |
|
|
|
i — |
|
|
Proceeds from sale of assets |
|
|
i 2.3 |
|
|
|
|
i — |
|
|
Other, net |
|
|
i 0.3 |
|
|
|
|
i 0.1 |
|
|
Net cash used in investing activities |
|
|
( i 263.4 |
) |
|
|
|
( i 119.6 |
) |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in corporate credit and receivables facilities with initial maturities less than 90 days |
|
|
i 100.0 |
|
|
|
|
( i 51.6 |
) |
|
Repayment of debt |
|
|
( i 10.7 |
) |
|
|
|
( i 9.6 |
) |
|
Debt issuance costs |
|
|
( i 0.7 |
) |
|
|
|
( i 0.8 |
) |
|
Dividends paid on preferred stock |
|
|
i — |
|
|
|
|
( i 5.2 |
) |
|
Other, net |
|
|
i — |
|
|
|
|
( i 2.0 |
) |
|
Net cash provided by (used in) financing activities |
|
|
i 88.6 |
|
|
|
|
( i 69.2 |
) |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
i — |
|
|
|
|
i — |
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
i 1.4 |
|
|
|
|
( i 8.7 |
) |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
i 6.1 |
|
|
|
|
i 17.2 |
|
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
i 7.5 |
|
|
|
$ |
i 8.5 |
|
|
Noncash investing and financing transactions: |
|
|
|
|
|
|
|
|
|
|
Acquisition of property by assuming debt and other noncurrent liabilities |
|
$ |
i 2.1 |
|
|
|
$ |
i 2.0 |
|
|
Acquisition of property on account |
|
$ |
i 65.6 |
|
|
|
$ |
i 42.7 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
i1. Description of Business and Accounting Policies
iOrganization — On March 13, 2020, the Company (as defined below), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Red Fiber Parent LLC, a Delaware limited liability company (“Parent”), and RF Merger Sub Inc., an Ohio corporation and directly wholly owned subsidiary of Parent (“Merger Sub”). On September 7, 2021 (the “Closing Date” or “Merger Date”), upon the terms and subject to the conditions set forth in the Merger Agreement, and in accordance with the applicable provisions of the Ohio General Corporation Law (the “OGCL”), Merger Sub merged with and into the Company, with the Company continuing as the surviving corporation (the “Merger”). At the effective time of the Merger (the “Effective Time”), the separate corporate existence of Merger Sub ceased, and the Company survived the Merger as a wholly owned private subsidiary of Parent. As of the date of this filing, the Company has ceased to be a registrant, however due to contractual terms in certain indentures, the Company is required to voluntarily file with the U.S. Securities and Exchange Commission (“SEC”).
As a result of the Merger, for accounting purposes, Parent is the acquirer and Cincinnati Bell Inc. is the acquiree and accounting predecessor. The financial statement presentation includes the financial statements of historical Cincinnati Bell Inc. as “Predecessor” for periods prior to the Closing Date and of the Company as “Successor” for the periods after the Closing Date. In connection with the Merger and the related accounting determination, the Company has elected to apply push-down accounting and reflect in its financial statements the fair value of its assets and liabilities. The Condensed Consolidated Financial Statements and footnotes include a black line division between the columns titled "Predecessor" and "Successor" to signify that the amounts shown for the periods prior to and following the Merger are not comparable. The Company has elected to record all expenses that were contingent on the closing of the Merger in the Predecessor period. See Note 2 for additional information on the Merger.
iDescription of Business — Cincinnati Bell Inc. and its consolidated subsidiaries ("Cincinnati Bell," "we," "our," "us" or the "Company") provide diversified telecommunications and technology services. For ease of reference, the terms “Cincinnati Bell,” “we,” “our Company,” “the Company,” “us,” or “our” as used in this report refer to both the Predecessor and the Successor and their respective subsidiaries. The Company generates a large portion of its revenue by serving customers in Cincinnati, Ohio, Dayton, Ohio and the islands of Hawaii. An economic downturn or natural disaster occurring in these, or a portion of these, limited operating territories could have a disproportionate effect on our business, financial condition, results of operations and cash flows compared to similar companies of a national scope and similar companies operating in different geographic areas.
The Company had receivables with i one customer, Verizon Communications Inc. (“Verizon”), which made up i 26% of the outstanding accounts receivable balance at December 31, 2021. i No customers exceeded 10% of outstanding accounts receivable at June 30, 2022. Revenue derived from foreign operations was approximately i i 7 / % of consolidated revenue for the three and six months ended June 30, 2022. Revenue derived from foreign operations was approximately i i 6 / % of consolidated revenue for the three and six months ended June 30, 2021.
/ iBasis of Presentation — The Condensed Consolidated Financial Statements of the Company have been prepared pursuant to the rules and regulations of the SEC and, in the opinion of management, include all adjustments necessary for a fair statement of the results of operations, other comprehensive income, financial position and cash flows for each period presented.
The adjustments referred to above are of a normal and recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations for interim reporting.
The Company’s Condensed Consolidated Balance Sheet as of December 31, 2021 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. These Condensed Consolidated Financial Statements should be read in conjunction with the Company’s 2021 Annual Report on Form 10-K.
iBusiness Combinations — In accounting for business combinations, we apply the accounting requirements of Accounting Standards Codification 805 (“ASC 805”), “Business Combinations,” which requires the recording of net assets of acquired businesses at fair value. In developing fair value estimates for acquired assets and assumed liabilities, management analyzes a variety of factors including market data, estimated future cash flows of the acquired operations, industry growth rates, current replacement cost for fixed assets, and market rate assumptions for contractual obligations. Such a valuation requires management to make significant estimates and assumptions, particularly with respect to the intangible assets. In addition, any contingent consideration is presented at fair value at the date of acquisition, and transaction costs are expensed as incurred. The Company reports in its Condensed Consolidated Financial Statements provisional amounts for the items for which accounting is incomplete. Goodwill is adjusted for any changes to provisional amounts made within the measurement period. See Note 2 for disclosures related to mergers and acquisitions.
6
i
Use of Estimates — Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates. In the normal course of business, the Company is subject to various regulatory and tax proceedings, lawsuits, claims and other matters. The Company believes adequate provision has been made for all such asserted and unasserted claims in accordance with U.S. GAAP. Such matters are subject to many uncertainties and outcomes that are not predictable with assurance.
i Accounting Policies — The complete summary of significant accounting policies is included in the notes to the consolidated financial statements as presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The Company’s accounting policies in the Successor Period are consistent with the accounting policies in the Predecessor Period.
iCash, Cash Equivalents and Restricted Cash — Cash consists of funds held in bank accounts. Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Restricted cash consists of funds held in an escrow account related to a cost method investment. Restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Condensed Consolidated Statements of Cash Flows. i A reconciliation of cash, cash equivalents and restricted cash to the Condensed Consolidated Balance Sheets follows:
|
(dollars in millions) |
|
|
|
||||
|
Cash and cash equivalents |
$ |
i 6.7 |
|
|
$ |
i 5.6 |
|
|
Restricted cash included in Other noncurrent assets |
|
i 0.8 |
|
|
|
i 0.5 |
|
|
Cash, cash equivalents and restricted cash per Condensed Consolidated Statements of Cash Flows |
$ |
i 7.5 |
|
|
$ |
i 6.1 |
|
/ i
Goodwill — Goodwill represents the excess of the purchase price consideration over the fair value of net assets acquired and recorded in connection with business acquisitions. Goodwill is allocated at the business segment level. Goodwill is tested for impairment on an annual basis or when events or changes in circumstances indicate that such assets may be impaired. If the net book value of the reporting unit exceeds its fair value, an impairment loss is recognized. An impairment loss is measured as the excess of the carrying value of goodwill of a reporting unit over its fair value.
i Indefinite-Lived Intangible Assets — Intangible assets represent purchased assets that lack physical substance but can be separately distinguished from goodwill because of contractual or legal rights, or because the asset is capable of being separately sold or exchanged. Federal Communications Commission ("FCC") licenses for wireless spectrum represent indefinite-lived intangible assets. The Company may renew the wireless licenses in a routine manner every ten years for a nominal fee, provided the Company continues to meet the service and geographic coverage provisions required by the FCC. Intangible assets not subject to amortization are tested for impairment annually, or when events or changes in circumstances indicate that the asset might be impaired.
i Long-Lived Assets — Management reviews the carrying value of property, plant and equipment and other long-lived assets, including intangible assets with definite lives, when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recognized when the estimated future undiscounted cash flows expected to result from the use of an asset (or group of assets) and its eventual disposition is less than its carrying amount. An impairment loss is measured as the amount by which the asset’s carrying value exceeds its estimated fair value. Long-lived intangible assets are amortized based on the estimated economic value generated by the asset in future years.
Income and Operating Taxes
iIncome taxes — In accordance with ASC 740-270, the Company’s income tax provision for interim periods is determined through the use of an estimated annual effective tax rate applied to year-to-date ordinary income/loss plus or minus the tax effects of discrete items. The Company’s estimated annual effective tax rate benefit is higher than the U.S. federal statutory rate due to state income taxes, offset in part by the effect of permanent items such as the GILTI inclusion and entertainment expenses that are not fully deductible for tax.
i Operating taxes — Certain operating taxes such as property, sales, use, and gross receipts taxes are reported as expenses in operating income primarily within cost of services. These taxes are not included in income tax expense because the amounts to be paid are not dependent on our level of income. Liabilities for audit exposures are established based on management's assessment of the probability of payment. The provision for such liabilities is recognized as either property, plant and equipment, operating tax expense, or depreciation expense depending on the nature of the audit exposure. Upon resolution of an audit, any remaining liability not paid is released against the account in which it was originally recorded. Certain telecommunication taxes and surcharges that are collected from customers are also recorded as revenue; however, in accordance with ASC 606, revenue associated with these charges is excluded from the transaction price.
i
Derivative Financial Instruments — The Company accounts for derivative financial instruments by recognizing derivative instruments as either assets or liabilities in the Condensed Consolidated Balance Sheets at fair value and recognizing the resulting gains or losses as adjustments to the Condensed Consolidated Statements of Operations or “Accumulated Other Comprehensive (Loss) Income.” The Company does not hold or issue derivative financial instruments for trading or speculative purposes.
7
For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is reported as a component of "Accumulated Other Comprehensive (Loss) Income" in stockholder's equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period. All cash flows associated with the Company’s derivative instruments are classified as operating activities in the Condensed Consolidated Statements of Cash Flows.
iRecently Issued Accounting Standards
Accounting standards that have been issued or proposed by the FASB or other standard-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements upon adoption.
i
2. Mergers and Acquisitions
Acquisition by Red Fiber Parent LLC
On September 7, 2021, pursuant to the Merger Agreement and in accordance with the applicable provisions of the OGCL, Parent completed the acquisition of Cincinnati Bell in an all cash transaction valued at approximately $ i 3.1 billion, including assumption of debt of $ i 1,357.1 million. Upon the Effective Time, the separate existence of Merger Sub ceased and the Company survived the Merger as a wholly owned subsidiary of Parent.
Pursuant to the Merger Agreement, each of Cincinnati Bell’s issued and outstanding Common Shares was converted into the right to receive $ i 15.50 per share in cash, without interest. Trading of the Company’s Common Shares was suspended on the New York Stock Exchange (“NYSE”) and the Common Shares were subsequently delisted from the NYSE. Additionally, the Company redeemed Depositary Shares simultaneously with the redemption of the 6 3/4% Preferred Shares, at a redemption price of $ i 50 per Depositary Share (equivalent to $ i 1,000 per 6 3/4% Preferred Stock), and the Depositary Shares were subsequently delisted from the NYSE.
The Company accounted for this transaction as a business combination in accordance with the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their estimated fair values, using primarily Level 3 inputs, as described in Note 7, as of the Merger Date. Transaction costs of the acquirer are not included as a component of consideration transferred but are accounted for as expenses in the period in which such costs are incurred, or, if related to the issuance of debt, capitalized as debt issuance costs. Acquisition-related transaction costs incurred as part of the Merger, primarily included advisory, legal and accounting fees. Transaction costs were expensed as incurred and recorded to “Transaction and integration costs” on the Condensed Consolidated Statements of Operations.
The valuation of the assets acquired and liabilities assumed was based on estimated fair values at the Merger Date. The preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed reflect various preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which are subject to change within the measurement period as valuations are finalized. The determination of the final purchase price allocation to specific assets acquired and liabilities assumed is incomplete at June 30, 2022. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair values of income and non-income based taxes and goodwill. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired as of the Merger Date during the measurement period.
Measurement period adjustments will be applied retrospectively to the Merger Date. We have not finalized the allocation of the purchase price as it requires extensive use of accounting estimates and valuation methodologies in the determination of such fair values. Any subsequent changes in the estimated fair values assumed upon the finalization of more detailed analysis within the measurement period will change the allocation of the purchase price and will be adjusted during the period in which the amounts are determined. The allocation of goodwill to our Network reporting unit and IT Services and Hardware reporting unit is preliminary as of the date of this filing.
iThe purchase price for Cincinnati Bell Inc. consisted of the following:
|
(dollars in millions) |
|
|
|
|
Cash consideration for Cincinnati Bell Inc. common stock |
$ |
i 807.3 |
|
|
Cash consideration for preferred stock |
|
i 155.2 |
|
|
Cash consideration for debt repayment |
|
i 658.2 |
|
|
Total purchase price |
$ |
i 1,620.7 |
|
8
i
Based on fair value estimates, the purchase price has been allocated on a preliminary basis to individual assets acquired and liabilities assumed as follows:
|
(dollars in millions) |
|
Cincinnati Bell Inc. |
|
|
|
Assets acquired |
|
|
|
|
|
Cash |
|
$ |
i 11.2 |
|
|
Receivables |
|
|
i 318.5 |
|
|
Inventory, materials and supplies |
|
|
i 56.4 |
|
|
Prepaid expenses |
|
|
i 5.6 |
|
|
Other current assets |
|
|
i 40.5 |
|
|
Property, plant and equipment |
|
|
i 1,950.8 |
|
|
Operating lease right-of-use assets |
|
|
i 42.3 |
|
|
Goodwill |
|
|
i 646.7 |
|
|
Intangible assets |
|
|
i 969.6 |
|
|
Deferred tax assets |
|
|
i 6.9 |
|
|
Other noncurrent assets |
|
|
i 20.2 |
|
|
Total assets acquired |
|
|
i 4,068.7 |
|
|
Liabilities assumed |
|
|
|
|
|
Current portion of long-term debt |
|
|
i 11.8 |
|
|
Accounts payable |
|
|
i 381.1 |
|
|
Unearned revenue and customer deposits |
|
|
i 51.2 |
|
|
Accrued taxes |
|
|
i 24.6 |
|
|
Accrued interest |
|
|
i 19.4 |
|
|
Accrued payroll and benefits |
|
|
i 49.3 |
|
|
Other current liabilities |
|
|
i 75.0 |
|
|
Long-term debt, less current portion |
|
|
i 1,378.0 |
|
|
Operating lease liabilities |
|
|
i 38.6 |
|
|
Pension and postretirement benefit obligations |
|
|
i 151.6 |
|
|
Pole license agreement obligation |
|
|
i 46.7 |
|
|
Deferred income tax liability |
|
|
i 149.3 |
|
|
Other noncurrent liabilities |
|
|
i 71.4 |
|
|
Total liabilities assumed |
|
|
i 2,448.0 |
|
|
Net assets acquired |
|
$ |
i 1,620.7 |
|
Given the size and complexity of the transaction, the entire purchase price allocation disclosed herein continues to be considered provisional at this time and subject to adjustment to reflect new information obtained about factors and circumstances that existed as of the Closing Date that if known would have affected the measurement of the amounts recognized as of that date, while the measurement period remains open. Measurement period adjustments recorded in the second quarter of 2022 are immaterial in nature and impact property, plant and equipment, goodwill and deferred income tax liability.
In connection with this acquisition, the Company recorded goodwill attributable to increased access to a diversified customer base, acquired workforce in the United States, Canada, United Kingdom and India with industry expertise and expected synergies. The goodwill related to this acquisition is not deductible for tax purposes.
9
The Company recorded definite-lived intangible assets related to the customer relationships, trade names and technology and an indefinite-lived intangible asset related to FCC licenses. The preliminary fair value of the most significant identified intangible assets, customer relationships and trade names, were valued using the multi-period excess earnings method and relief from royalty method, under the income approach. The Company applied judgment which involved the use of significant assumptions with respect to revenue growth rates, customer attrition rate, discount rate and terminal growth rate in relation to the customer relationships and royalty rates and discount rate in relation to the trade names. i The preliminary fair values of the identifiable intangible assets acquired on the Merger Date were as follows:
|
(dollars in millions) |
|
Fair Value |
|
|
Useful Lives |
|
|
Customer relationships |
|
$ |
i 850.0 |
|
|
i 15 years |
|
Trade names |
|
|
i 108.0 |
|
|
3 to 10 years |
|
Technology |
|
|
i 5.0 |
|
|
i 7 years |
|
FCC licenses and spectrum usage rights |
|
|
i 6.6 |
|
|
Indefinite |
|
Total identifiable intangible assets |
|
$ |
i 969.6 |
|
|
|
Acquisition of Paniolo Fiber Assets
On August 31, 2021, the Company acquired substantially all of the operating assets of Paniolo Cable Company, LLC (the “Paniolo Acquisition”), previously held by the bankruptcy estate of Paniolo, which include inter-island submarine and middle-mile terrestrial fiber infrastructure assets in Hawaii as well as central offices and landing stations for the submarine fiber. The Company accounted for the Paniolo Acquisition as an asset acquisition under ASC 805-10-55 “Business Combinations” because the assets acquired from Paniolo do not include an assembled workforce, and the gross value of the assets acquired meets the screen test in ASC 805-10-55-5A related to substantially all of the fair value being concentrated in a single asset or group of assets (i.e., the fiber infrastructure assets) and, thus, the assets are not considered a business. The acquisition of Paniolo’s assets augments the Company’s existing backbone network and increases the Company’s total submarine and terrestrial fiber footprint by more than i 400 miles.
The aggregate purchase price paid upon closing of the Paniolo Acquisition after transactional costs was $ i 52.3 million, consisting of $ i 29.3 million in cash and $ i 23.0 million in committed purchase money financing. The assets are recorded as network equipment and buildings in “Property, plant and equipment, net” on the Condensed Consolidated Balance Sheets. As of June 30, 2022, $ i 0.5 million and $ i 22.0 million of the committed purchase money financing was recorded in “Current portion of long-term debt” and “Long-term debt, less current portion,” respectively, on the Condensed Consolidated Balance Sheets. As of December 31, 2021, $ i 0.5 million and $ i 22.3 million of the committed purchase money financing was recorded in “Current portion of long-term debt” and “Long-term debt, less current portion,” respectively, on the Condensed Consolidated Balance Sheets.
Acquisition of Agile IWG Holdings, LLC
On May 2, 2022 (“Agile Acquisition Date”), the Company acquired Agile IWG Holdings, LLC (“Agile”), based in Canton, Ohio for total cash consideration of $ i 65.1 million. Agile delivers customers, primarily located in Ohio and Pennsylvania, with middle mile, last mile and campus connectivity services through hybrid fiber wireless networks that are designed, built and managed by Agile.
The cash portion of the purchase price was funded through borrowings under the Receivables Facility and the Revolving Credit Facility (see Note 5).
Measurement period adjustments related to the acquisition of Agile will be applied retrospectively to the Agile Acquisition Date. However, given the circumstances of this acquisition which closed during the second quarter of 2022, the entire purchase price allocation disclosed herein is considered provisional at this time and subject to adjustment to reflect new information obtained about factors and circumstances that existed as of the Agile Acquisition Date that if known would have affected the measurement of the amounts recognized as of that date, while the measurement period remains open.
The valuation of the assets acquired and liabilities assumed is based on estimated fair values at the Agile Acquisition Date. The allocation disclosed below is considered preliminary in nature due to the ongoing work by management, with the assistance of third party experts, to refine the fair value estimates as well as the timing of the acquisition close date occurring mid-quarter. The Company considers the allocation and fair value estimates of property, plant and equipment, ROU Assets and Liabilities, Intangible Assets and Goodwill to be preliminary in nature as of June 30, 2022. The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired as of the Agile Acquisition Date during the measurement period.
The Company incurred $ i 1.7 million in acquisition expenses related to the Agile acquisition, of which $ i 0.1 million and $ i 1.6 million was recorded in the three and six months ended June 30, 2022, respectively. i i No / expenses were recorded in the prior year comparable periods related to the Agile acquisition. These expenses are recorded in "Transaction and integration costs" on the Condensed Consolidated Statements of Operations.
10
i
Based on fair value estimates, the purchase price has been allocated on a preliminary basis to individual assets acquired and liabilities assumed as follows:
|
(dollars in millions) |
|
Agile |
|
|
|
Assets acquired |
|
|
|
|
|
Receivables and other current assets |
|
$ |
i 1.5 |
|
|
Property, plant and equipment |
|
|
i 10.0 |
|
|
Operating lease right-of-use assets |
|
|
i 22.0 |
|
|
Intangible assets |
|
|
i 17.5 |
|
|
Goodwill |
|
|
i 40.9 |
|
|
Total assets acquired |
|
|
i 91.9 |
|
|
Liabilities assumed |
|
|
|
|
|
Accrued expenses and other current liabilities |
|
|
i 2.2 |
|
|
Operating lease liabilities |
|
|
i 20.4 |
|
|
Other noncurrent liabilities |
|
|
i 4.2 |
|
|
Total liabilities assumed |
|
|
i 26.8 |
|
|
Net assets acquired |
|
$ |
i 65.1 |
|
The entire purchase price allocation disclosed herein continues to be considered provisional at this time and subject to adjustment to reflect new information obtained about factors and circumstances that existed as of the Agile Acquisition Date that if known would have affected the measurement of the amounts recognized as of that date, while the measurement period remains open.
iBased on fair value estimates, the identifiable intangible assets acquired are as follows:
|
(dollars in millions) |
|
Fair Value |
|
|
|
Customer relationships |
|
$ |
i 14.0 |
|
|
Trade names |
|
|
i 2.5 |
|
|
Technology |
|
|
i 1.0 |
|
|
Total identifiable intangible assets |
|
$ |
i 17.5 |
|
11
i
3. Revenue
The Network segment provides products and services to both residential and commercial customers that can be categorized as Fioptics, previously referred to as “Consumer/SMB Fiber” in Hawaii and collectively with Fioptics in Cincinnati, Enterprise Fiber or Legacy. The products and services within these three categories can be further categorized as either Data, Voice, Video or Other. Fioptics and Legacy revenue include both residential and commercial customers. Enterprise Fiber revenue includes ethernet and dedicated internet access services that are provided to enterprise customers, as well as revenue associated with the Southeast Asia to United States ("SEA-US") trans-Pacific submarine cable system. Subsequent to the Company’s acquisition of Agile, services provided by Agile are also included in Enterprise Fiber.
Residential customers have implied month-to-month contracts. Commercial customers, with the exception of contracts associated with the SEA-US cable system, typically have contracts with a duration of i one to i five years and automatically renew on a month-to-month basis. Customers are invoiced on a monthly basis for services rendered. Contracts for projects that are included within the Other revenue stream are typically short in duration and less than one year. Contracts associated with the SEA-US cable system typically range from i 15 to i 25 years and payment is prepaid.
The IT Services and Hardware segment provides a full range of Information Technology ("IT") solutions, including Communications, Cloud and Consulting services. IT Services and Hardware customers enter into contracts that have a typical duration of one to five years, with varied renewal options at the end of the term. Customers are invoiced on a monthly basis for services rendered. The IT Services and Hardware segment also provides enterprise customers with Infrastructure Solutions, which includes the sale of hardware and maintenance contracts. These contracts are typically satisfied in less than twelve months and revenue is recognized at a point in time.
The Company has elected the practical expedient described in ASC 606-10-32-18 that allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects that the period of time between the transfer of a promised good or service to the customer and when the customer pays for such good or service will be one year or less. Customers are typically billed immediately upon the rendering of services or the delivery of products. Payment terms for customers are between 30 and i 120 days. Subsequent to the acquisition of Hawaiian Telcom Holdco., Inc. ("Hawaiian Telcom"), the Company began recognizing a financing component associated with the up-front payments for services to be delivered under indefeasible right of use ("IRU") contracts for fiber circuit capacity. The IRU contracts typically have a duration ranging from i 15 to i 25 years.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, or a series of distinct goods or services, and is the unit of account defined in ASC Topic 606. The transaction price identified in the contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contract modifications for changes to services provided are routine throughout the term of our contracts. In most instances, contract modifications are for the addition or reduction of services that are distinct, and price changes are based on the stand-alone selling price of the service and, as such, are accounted for on a prospective basis as a new contract.
Goods and services are sold individually, or a contract may include multiple goods or services. For contracts with multiple goods and services, the transaction price identified in the contract is allocated to each performance obligation using the stand-alone selling price of each distinct good or service in the contract.
Certain customers of the Company may receive cash-based rebates based on volume of sales, which are accounted for as variable consideration. Potential rebates are considered at contract inception in our estimate of transaction price based on the estimated projection of sales volume. Estimates are reassessed quarterly.
Performance obligations are satisfied either over time as services are performed or at a point in time. Substantially all of our service revenue is recognized over time. For services transferred over time, the Company has elected the practical expedient to recognize revenue based on amounts invoiced to the customer as the Company has concluded that the invoice amount directly corresponds with the value of services provided to the customer. Management considers this a faithful depiction of the transfer of control as services are provided evenly over the month and are substantially the same over the life of the contract. As the Company has elected the practical expedients detailed at ASC 606-10-50-13, revenue for these unsatisfied performance obligations that will be billed in future periods has not been disclosed.
As of June 30, 2022, our estimated revenue, including a financing component, expected to be recognized in the future related to performance obligations associated with customer contracts that are unsatisfied (or partially unsatisfied) is $ i 186.8 million. Certain IRU contracts extend for periods of up to i 30 years and are invoiced at the beginning of the contract term. The revenue from such contracts is recognized over time as services are provided over the contract term. i The expected revenue to be recognized for existing customer contracts is as follows:
/12
|
(dollars in millions) |
|
|
|
|
|
Six months ended December 31, 2022 |
|
$ |
i 6.9 |
|
|
2023 |
|
|
i 15.2 |
|
|
2024 |
|
|
i 16.9 |
|
|
2025 |
|
|
i 16.9 |
|
|
2026 |
|
|
i 17.0 |
|
|
Thereafter |
|
|
i 113.9 |
|
Network
The Company has identified four distinct performance obligations in the Network segment, namely Data, Voice, Video and Other. For each of the Data, Voice and Video services, service is delivered to the customer continuously and in a substantially similar manner for each period of the agreement, the customer takes full control over the services as the service is delivered, and as such, Data, Voice and Video are identified to be a series of distinct services. Services provided by the Network segment can be categorized into three main categories that include Fioptics, Enterprise Fiber and Legacy, each of which may include one or more of the aforementioned performance obligations. Data services include high-speed internet access, digital subscriber lines, ethernet, routed network services, SONET (Synchronous Optical Network), dedicated internet access, wavelength, digital signal and IRU revenue. Voice services include traditional and fiber voice lines, switched access, digital trunking and consumer long distance calling. Video services are offered through our fiber network to residential and commercial customers based on various standard plans with the opportunity to add premium channels. To receive video services, customers are required to use the Company's set top boxes that are billed as part of the monthly recurring service. Set top boxes are not considered a separate performance obligation from video because the equipment is necessary for the service to operate and the customer has no alternative use for the equipment.
Services and products not included in Data, Voice or Video are included in Other revenue and are comprised of wire care, time and materials projects, subsidized fiber build projects and advertising. Transfer of control of these services and products is evaluated on an individual project basis and can occur over time or at a point in time.
The Company uses multiple methods to determine stand-alone selling prices in the Network segment. For Data, Video and Voice products in Fioptics, market rate is the primary method used to determine stand-alone selling prices. For Data performance obligations under the Enterprise Fiber category, and Voice, Data and Other performance obligations under the Legacy category, stand-alone selling prices are determined based on a list price, discount off of list price, a tariff rate, a margin percentage range, or a minimum margin percentage.
IT Services and Hardware
The Company has identified four distinct performance obligations in the IT Services and Hardware segment. These performance obligations are Communications, Cloud, Consulting and Infrastructure Solutions. Communications services are monthly services that include data and VoIP services, tailored solutions that include converged IP communications of data, voice, video and mobility applications, enterprise long distance, MPLS (Multi-Protocol Label Switching) and conferencing services. Cloud services include storage, backup, disaster recovery, SLA-based monitoring and management, cloud computing and cloud consulting. Consulting services provide customers with IT staffing, consulting and emerging technology solutions. Infrastructure Solutions includes the sale of hardware and maintenance contracts as well as installation projects.
For the sale of hardware, the Company evaluated whether it is the principal or the agent. The Company has concluded it acts as an agent because it does not control the inventory before it is transferred to customers, it does not have the ability to direct the product to anyone besides the purchasing customer, and it does not integrate the hardware with any of its own goods or services. Based on this assessment, the performance obligation is to arrange a sale of hardware between the vendor and the customer. In the instance where there is an issue with the hardware, the Company coordinates with the manufacturer to facilitate a return in accordance with the standard manufacturer warranty. Hardware returns are not significant to the Company.
Within the IT Services and Hardware segment, stand-alone selling prices for the four performance obligations are determined based on either a margin percentage range, minimum margin percentage or discount from standard price list if it is determined to be representative of stand-alone selling price.
For hardware sales, revenue is recognized net of the cost of product and is recognized when the hardware is either shipped or delivered in accordance with the terms of the contract. For certain projects within Communications and Consulting, revenue is recognized when the customer communicates acceptance of the services performed. For contracts with freight on board shipping terms, management has elected to account for shipping and handling as activities to fulfill the promise to transfer the good, and, therefore, has not evaluated whether shipping and handling activities are promised services to its customers.
13
Contract Balances
The Company recognizes incremental fulfillment costs as an asset when installation expenses are incurred as part of performing the agreement for Voice, Video and Data product offerings in the Network segment in which the contract life is longer than one year. These fulfillment costs are amortized ratably over the expected life of the customer, which is representative of the expected period of benefit of the asset capitalized. The expected life of the customer is determined utilizing the average churn rate for each product. The Company calculates average churn based on the historical average customer life. We also recognize an asset for incremental fulfillment costs for certain Communications services in the IT Services and Hardware segment that require us to incur installation and provisioning expenses. The asset recognized for Communication services is amortized over the average contract life. Churn rates and average contract life are reviewed on an annual basis. Fulfillment costs are capitalized to “Other noncurrent assets.” The related amortization expense is recorded to “Cost of services and products.”
The Company recognizes an asset for the incremental costs of acquiring a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs related to Voice, Video, Data and certain Communications and Cloud services meet the requirements to be capitalized. The contract asset established for the costs of acquiring a contract is recorded to “Other noncurrent assets.” Sales incentives are amortized ratably over the period that services are delivered using either an average churn rate or average contract term, both representative of the expected period of benefit of the asset capitalized. Customer churn rates and average contract term assumptions are reviewed on an annual basis. The related amortization expense is recorded to “Selling, general and administrative.”
Management has elected to use the practical expedient detailed in ASC 340-40-25-4 to expense any costs to fulfill a contract and costs to obtain a contract as they are incurred when the amortization period would have been one year or less. This practical expedient has been applied to fulfillment costs that include installation costs associated with wiring projects and certain Cloud services. In addition, this practical expedient has been applied to acquisition costs associated with revenue from certain Communications projects.
iThe following table presents the activity for the Company’s contract assets:
|
|
|
Fulfillment Costs |
|
|
Cost of Acquisition |
|
|
Total Contract Assets |
|
|||||||||||||||||||||||||||
|
(dollars in millions) |
|
Network |
|
|
IT Services and Hardware |
|
|
Total Company |
|
|
Network |
|
|
IT Services and Hardware |
|
|
Total Company |
|
|
Network |
|
|
IT Services and Hardware |
|
|
Total Company |
|
|||||||||
|
Balance as of December 31, 2021 |
|
$ |
i 0.7 |
|
|
$ |
i 0.7 |
|
|
$ |
i 1.4 |
|
|
$ |
i 3.3 |
|
|
$ |
i 0.3 |
|
|
$ |
i 3.6 |
|
|
$ |
i 4.0 |
|
|
$ |
i 1.0 |
|
|
$ |
i 5.0 |
|
|
Additions |
|
|
i 0.5 |
|
|
|
i 0.5 |
|
|
|
i 1.0 |
|
|
|
i 2.6 |
|
|
|
i 0.7 |
|
|
|
i 3.3 |
|
|
|
i 3.1 |
|
|
|
i 1.2 |
|
|
|
i 4.3 |
|
|
Amortization |
|
|
( i 0.1 |
) |
|
|
( i 0.1 |
) |
|
|
( i 0.2 |
) |
|
|
( i 0.4 |
) |
|
|
( i 0.1 |
) |
|
|
( i 0.5 |
) |
|
|
( i 0.5 |
) |
|
|
( i 0.2 |
) |
|
|
( i 0.7 |
) |
|
Balance as of March 31, 2022 |
|
|
i 1.1 |
|
|
|
i 1.1 |
|
|
|
i 2.2 |
|
|
|
i 5.5 |
|
|
|
i 0.9 |
|
|
|
i 6.4 |
|
|
|
i 6.6 |
|
|
|
i 2.0 |
|
|
|
i 8.6 |
|
|
Additions |
|
|
i 0.6 |
|
|
|
i 0.9 |
|
|
|
i 1.5 |
|
|
|
i 2.4 |
|
|
|
i 0.3 |
|
|
|
i 2.7 |
|
|
|
i 3.0 |
|
|
|
i 1.2 |
|
|
|
i 4.2 |
|
|
Amortization |
|
|
( i 0.1 |
) |
|
|
( i 0.1 |
) |
|
|
( i 0.2 |
) |
|
|
( i 0.4 |
) |
|
|
( i 0.4 |
) |
|
|
( i 0.8 |
) |
|
|
( i 0.5 |
) |
|
|
( i 0.5 |
) |
|
|
( i 1.0 |
) |
|
Balance as of June 30, 2022 |
|
$ |
i 1.6 |
|
|
$ |
i 1.9 |
|
|
$ |
i 3.5 |
|
|
$ |
i 7.5 |
|
|
$ |
i 0.8 |
|
|
$ |
i 8.3 |
|
|
$ |
i 9.1 |
|
|
$ |
i 2.7 |
|
|
$ |
i 11.8 |
|
The Company recognizes a liability for cash received up-front for IRU contracts. At June 30, 2022 and December 31, 2021, $ i 2.6 million and $ i 2.2 million, respectively, of contract liabilities were included in "Other current liabilities." At June 30, 2022 and December 31, 2021, $ i 55.8 million and $ i 57.2 million, respectively, of contract liabilities were included in "Other noncurrent liabilities."
14
Disaggregated Revenue
iThe following table presents revenues disaggregated by product and service lines:
|
|
|
Successor |
|
|
|
Predecessor |
|
|
Successor |
|
|
|
Predecessor |
|
||||
|
(dollars in millions) |
|
Three Months Ended |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
Six Months Ended |
|
||||
|
Data |
|
$ |
i 129.5 |
|
|
|
$ |
i 121.6 |
|
|
$ |
i 255.6 |
|
|
|
$ |
i 242.9 |
|
|
Video |
|
|
i 48.4 |
|
|
|
|
i 47.9 |
|
|
|
i 97.0 |
|
|
|
|
i 96.5 |
|
|
Voice |
|
|
i 57.7 |
|
|
|
|
i 64.6 |
|
|
|
i 117.0 |
|
|
|
|
i 130.5 |
|
|
Other |
|
|
i 11.4 |
|
|
|
|
i 6.9 |
|
|
|
i 20.9 |
|
|
|
|
i 13.9 |
|
|
Total Network |
|
|
i 247.0 |
|
|
|
|
i 241.0 |
|
|
|
i 490.5 |
|
|
|
|
i 483.8 |
|
|
Consulting |
|
|
i 83.5 |
|
|
|
|
i 71.6 |
|
|
|
i 166.9 |
|
|
|
|
i 137.1 |
|
|
Cloud |
|
|
i 25.1 |
|
|
|
|
i 24.3 |
|
|
|
i 49.7 |
|
|
|
|
i 47.7 |
|
|
Communications |
|
|
i 54.3 |
|
|
|
|
i 55.0 |
|
|
|
i 109.2 |
|
|
|
|
i 109.0 |
|
|
Infrastructure Solutions |
|
|
i 36.1 |
|
|
|
|
i 29.0 |
|
|
|
i 72.0 |
|
|
|
|
i 59.9 |
|
|
Total IT Services and Hardware |
|
|
i 199.0 |
|
|
|
|
i 179.9 |
|
|
|
i 397.8 |
|
|
|
|
i 353.7 |
|
|
Intersegment revenue |
|
|
( i 6.5 |
) |
|
|
|
( i 6.7 |
) |
|
|
( i 13.0 |
) |
|
|
|
( i 13.4 |
) |
|
Total revenue |
|
$ |
i 439.5 |
|
|
|
$ |
i 414.2 |
|
|
$ |
i 875.3 |
|
|
|
$ |
i 824.1 |
|
The following table presents revenues disaggregated by contract type:
|
|
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||||||||||
|
|
|
Three Months Ended June 30, 2022 |
|
|
|
Three Months Ended June 30, 2021 |
|
||||||||||||||||||||||||||
|
(dollars in millions) |
|
Network |
|
|
IT Services and Hardware |
|
|
Intersegment revenue elimination |
|
|
Total |
|
|
|
Network |
|
|
IT Services and Hardware |
|
|
Intersegment revenue elimination |
|
|
Total |
|
||||||||
|
Products and Services transferred at a point in time |
|
$ |
i 6.1 |
|
|
$ |
i 38.1 |
|
|
$ |
i — |
|
|
$ |
i 44.2 |
|
|
|
$ |
i 5.8 |
|
|
$ |
i 31.6 |
|
|
$ |
i — |
|
|
$ |
i 37.4 |
|
|
Products and Services transferred over time |
|
|
i 236.1 |
|
|
|
i 159.2 |
|
|
|
i — |
|
|
|
i 395.3 |
|
|
|
|
i 230.3 |
|
|
|
i 146.5 |
|
|
|
i — |
|
|
|
i 376.8 |
|
|
Intersegment revenue |
|
|
i 4.8 |
|
|
|
i 1.7 |
|
|
|
( i 6.5 |
) |
|
|
— |
|
|
|
|
i 4.9 |
|
|
|
i 1.8 |
|
|
|
( i 6.7 |
) |
|
|
— |
|
|
Total revenue |
|
$ |
i 247.0 |
|
|
$ |
i 199.0 |
|
|
$ |
( i 6.5 |
) |
|
$ |
i 439.5 |
|
|
|
$ |
i 241.0 |
|
|
$ |
i 179.9 |
|
|
$ |
( i 6.7 |
) |
|
$ |
i 414.2 |
|
|
|
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||||||||||
|
|
|
Six Months Ended June 30, 2022 |
|
|
|
Six Months Ended June 30, 2021 |
|
||||||||||||||||||||||||||
|
(dollars in millions) |
|
Network |
|
|
IT Services and Hardware |
|
|
Intersegment revenue elimination |
|
|
Total |
|
|
|
Network |
|
|
IT Services and Hardware |
|
|
Intersegment revenue elimination |
|
|
Total |
|
||||||||
|
Products and Services transferred at a point in time |
|
$ |
i 13.5 |
|
|
$ |
i 76.6 |
|
|
$ |
i — |
|
|
$ |
i 90.1 |
|
|
|
$ |
i 11.7 |
|
|
$ |
i 65.0 |
|
|
$ |
i — |
|
|
$ |
i 76.7 |
|
|
Products and Services transferred over time |
|
|
i 467.3 |
|
|
|
i 317.9 |
|
|
|
i — |
|
|
|
i 785.2 |
|
|
|
|
i 462.4 |
|
|
|
i 285.0 |
|
|
|
i — |
|
|
|
i 747.4 |
|
|
Intersegment revenue |
|
|
i 9.7 |
|
|
|
i 3.3 |
|
|
|
( i 13.0 |
) |
|
|
— |
|
|
|
|
i 9.7 |
|
|
|
i 3.7 |
|
|
|
( i 13.4 |
) |
|
|
— |
|
|
Total revenue |
|
$ |
i 490.5 |
|
|
$ |
i 397.8 |
|
|
$ |
( i 13.0 |
) |
|
$ |
i 875.3 |
|
|
|
$ |
i 483.8 |
|
|
$ |
i 353.7 |
|
|
$ |
( i 13.4 |
) |
|
$ |
i 824.1 |
|
15
i
4. Goodwill and Intangible Assets
Goodwill
iThe changes in the Company's goodwill consisted of the following:
|
(dollars in millions) |
|
IT Services and Hardware |
|
|
Network |
|
|
Total Company |
|
|||
|
Goodwill, balance as of December 31, 2021 |
|
$ |
i 157.4 |
|
|
$ |
i 488.9 |
|
|
$ |
i 646.3 |
|
|
Activity during the year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to prior year Merger |
|
|
( i 0.4 |
) |
|
|
i 0.8 |
|
|
|
i 0.4 |
|
|
Acquisition of Agile |
|
|
i — |
|
|
|
i 40.9 |
|
|
|
i 40.9 |
|
|
Currency translations |
|
|
( i 0.5 |
) |
|
|
i — |
|
|
|
( i 0.5 |
) |
|
Goodwill, balance as of June 30, 2022 |
|
$ |
i 156.5 |
|
|
$ |
i 530.6 |
|
|
$ |
i 687.1 |
|
As mentioned in Note 2, in connection with the Merger, the Company’s assets and liabilities were measured at fair value as of the date of the Merger. The allocation of goodwill to our Network reporting unit and IT Services and Hardware reporting unit continues to be preliminary as of the date of this filing. In addition, goodwill in the Network segment increased by $ i 40.9 million due to the acquisition of Agile. See Note 2 for further information related to the Agile acquisition.
i i i i No / / / impairment losses were recognized in goodwill for the three and six months ended June 30, 2022 and 2021.
16
Intangible Assets
iThe Company’s intangible assets consisted of the following:
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net |
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Net |
|
||||||
|
(dollars in millions) |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amount |
|
|
Amortization |
|
|
Amount |
|
||||||
|
Intangible assets subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships |
|
$ |
i 863.1 |
|
|
$ |
( i 88.0 |
) |
|
$ |
i 775.1 |
|
|
$ |
i 850.0 |
|
|
$ |
( i 36.2 |
) |
|
$ |
i 813.8 |
|
|
Trade names |
|
|
i 110.3 |
|
|
|
( i 12.7 |
) |
|
|
i 97.6 |
|
|
|
i 108.0 |
|
|
|
( i 5.0 |
) |
|
|
i 103.0 |
|
|
Technology |
|
|
i 6.0 |
|
|
|
( i 0.6 |
) |
|
|
i 5.4 |
|
|
|
i 5.0 |
|
|
|
( i 0.2 |
) |
|
|
i 4.8 |
|
|
Total |
|
|
i 979.4 |
|
|
|
( i 101.3 |
) |
|
|
i 878.1 |
|
|
|
i 963.0 |
|
|
|
( i 41.4 |
) |
|
|
i 921.6 |
|
|
Intangible assets not subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FCC licenses and spectrum usage rights |
|
|
i 6.8 |
|
|
|
— |
|
|
|
i 6.8 |
|
|
|
i 6.7 |
|
|
|
— |
|
|
|
i 6.7 |
|
|
Total intangible assets |
|
$ |
i 986.2 |
|
|
$ |
( i 101.3 |
) |
|
$ |
i 884.9 |
|
|
$ |
i 969.7 |
|
|
$ |
( i 41.4 |
) |
|
$ |
i 928.3 |
|
/
In connection with the Merger, the company recorded $ i 963.0 million of finite-lived intangible assets and $ i 6.6 million of indefinite-lived intangible assets representing the fair values at the Merger Date. As a result of the acquisition of Agile, the Company recorded $ i 17.5 million of finite-lived intangible assets representing the preliminary fair value at the Agile Acquisition date. See Note 2 for additional information regarding the Merger and acquisition of Agile. The change in gross carrying amounts for finite-lived intangible assets is also due to foreign currency translation on finite-lived intangible assets denominated in foreign currency. The finite-lived intangible assets are amortized over their useful lives based on a number of assumptions including the estimated period of economic benefit and utilization.
Amortization expense for finite-lived intangible assets was $ i 29.9 million and $ i 60.0 million for the three and six months ended June 30, 2022, respectively. Amortization expense for finite-lived intangible assets was $ i 3.6 million and $ i 7.2 million for the three and six months ended June 30, 2021, respectively. In addition to amortization expense, the changes in finite-lived intangible assets from December 31, 2021 to June 30, 2022 are due to foreign currency translation. i i i i No / / / impairment losses were recognized on intangible assets for the three and six months ended June 30, 2022 and 2021.
iThe estimated useful lives for each finite-lived intangible asset class are as follows:
|
Customer relationships |
|
i 15 years |
|
Trade names |
|
i 3 to i 10 years |
|
Technology |
|
i 7 years |
i
The annual estimated amortization expense for future years is as follows:
|
(dollars in millions) |
|
|
|
|
|
Six months ended December 31, 2022 |
|
$ |
i 61.8 |
|
|
2023 |
|
|
i 115.5 |
|
|
2024 |
|
|
i 106.2 |
|
|
2025 |
|
|
i 93.9 |
|
|
2026 |
|
|
i 86.3 |
|
|
Thereafter |
|
|
i 414.4 |
|
|
Total |
|
$ |
i 878.1 |
|
/
17
i
5. Debt and Other Financing Arrangements
iThe Company’s debt consists of the following:
|
(dollars in millions) |
|
|
|
|
||||
|
Current portion of long-term debt: |
|
|
|
|
|
|
|
|
|
Credit Agreement - Term B-1 Loans |
|
$ |
i 5.0 |
|
|
$ |
i 5.0 |
|
|
Credit Agreement - Term B-2 Loans |
|
|
i 6.5 |
|
|
|
i 6.5 |
|
|
Paniolo Fiber Assets Financing Arrangement |
|
|
i 0.5 |
|
|
|
i 0.5 |
|
|
Other financing arrangements |
|
|
i 0.4 |
|
|
|
i 0.5 |
|
|
Finance lease liabilities |
|
|
i 7.5 |
|
|
|
i 7.2 |
|
|
Current portion of long-term debt |
|
|
i 19.9 |
|
|
|
i 19.7 |
|
|
Long-term debt, less current portion: |
|
|
|
|
|
|
|
|
|
Receivables Facility |
|
|
i 176.4 |
|
|
|
i 153.6 |
|
|
Credit Agreement - Revolving Credit Facility |
|
|
i 77.0 |
|
|
|
i — |
|
|
Credit Agreement - Term B-1 Loans |
|
|
i 492.5 |
|
|
|
i 495.0 |
|
|
Credit Agreement - Term B-2 Loans |
|
|
i 640.3 |
|
|
|
i 643.5 |
|
|
7 1/4% Senior Notes due 2023 (1) |
|
|
i 23.4 |
|
|
|
i 24.0 |
|
|
Various Cincinnati Bell Telephone notes (1) |
|
|
i 96.9 |
|
|
|
i 97.5 |
|
|
Paniolo Fiber Assets Financing Arrangement |
|
|
i 22.0 |
|
|
|
i 22.3 |
|
|
Other financing arrangements |
|
|
i — |
|
|
|
i 0.4 |
|
|
Finance lease liabilities |
|
|
i 39.6 |
|
|
|
i 42.3 |
|
|
|
|
|
i 1,568.1 |
|
|
|
i 1,478.6 |
|
|
Net unamortized discount |
|
|
( i 4.6 |
) |
|
|
( i 4.9 |
) |
|
Unamortized note issuance costs |
|
|
( i 41.6 |
) |
|
|
( i 44.8 |
) |
|
Long-term debt, less current portion |
|
|
i 1,521.9 |
|
|
|
i 1,428.9 |
|
|
Total debt |
|
$ |
i 1,541.8 |
|
|
$ |
i 1,448.6 |
|
|
|
(1) |
As of June 30, 2022, the net carrying amounts of the 7 ¼% Senior Notes due 2023 and Various Cincinnati Bell Telephone notes included unamortized fair value adjustments related to the Merger of $ i 1.1 million and $ i 9.0 million, respectively. As of December 31, 2021, the net carrying amounts of the 7 ¼% Senior Notes due 2023 and Various Cincinnati Bell Telephone notes included unamortized fair value adjustments related to the Merger of $ i 1.7 million and $ i 9.6 million, respectively. Each adjustment is being amortized over the life of the respective notes and is recorded as a reduction of interest expense. |
/
Credit Agreement
The Company had $ i 77.0 million of outstanding borrowings on the Credit Agreement’s revolving credit facility, leaving $ i 323.0 million available for borrowings as of June 30, 2022. The revolving credit facility matures in i September 2026, and the Term B-1 Loans and Term B-2 loans under the Credit Agreement mature in i i November 2028 / .
Accounts Receivable Securitization Facility
As of June 30, 2022, the Company had $ i 176.4 million in borrowings and $ i 20.7 million of letters of credit outstanding under the accounts receivable securitization facility ("Receivables Facility”), leaving $ i 17.9 million remaining availability on the total borrowing capacity of $ i 215.0 million. The maximum borrowing limit for loans and letters of credit under the Receivables Facility is $ i 215.0 million in the aggregate. The available borrowing capacity is calculated monthly based on the quantity and quality of outstanding accounts receivable, and thus may be lower than the maximum borrowing limit. The Receivables Facility is subject to renewal in i June 2023 and has a termination date in i June 2024. In the second quarter of 2022, the Company executed amendments to its Receivables Facility, which replaced, amended and added certain provisions and definitions including the replacement of LIBOR with SOFR, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York.
Under the Receivables Facility, certain U.S. and Canadian subsidiaries, as originators, sell their respective trade receivables on a continuous basis to Cincinnati Bell Funding LLC (“CBF”) or Cincinnati Bell Funding Canada Ltd. ("CBFC"), wholly-owned consolidated subsidiaries of the Company. Although CBF and CBFC are wholly-owned consolidated subsidiaries of the Company, CBF and CBFC are legally separate from the Company and each of the Company’s other subsidiaries. Upon and after the sale or contribution of the accounts receivable to CBF or CBFC, such accounts receivable are legally assets of CBF and CBFC and, as such, are not available to creditors of other subsidiaries or the parent company. The Receivables Facility includes an option for CBF to sell, rather than borrow against, certain receivables on a non-recourse basis. As of June 30, 2022, the outstanding balance of certain accounts receivable sold, rather than borrowed against, was $ i 32.3 million.
/18
i
6. Leases
Lessee Disclosures
The Company primarily leases real estate for offices, retail stores and central offices, as well as equipment, cell towers and fleet vehicles. Upon adoption of ASC 842, the Company elected not to recognize leases with terms of one-year or less on the balance sheet.
iSupplemental balance sheet information related to the Company's leases is as follows:
|
(dollars in millions) |
|
Balance Sheet Location |
|
|
|
|
||||
|
Operating lease assets, net of amortization |
|
Operating lease right-of-use assets |
|
$ |
i 68.8 |
|
|
$ |
i 44.3 |
|
|
Finance lease assets, net of amortization |
|
Property, plant and equipment, net |
|
|
i 9.3 |
|
|
|
i 10.7 |
|
|
Operating lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Current operating lease liabilities |
|
Other current liabilities |
|
|
i 11.7 |
|
|
|
i 9.6 |
|
|
Noncurrent operating lease liabilities |
|
Operating lease liabilities |
|
|
i 62.5 |
|
|
|
i 40.2 |
|
|
Total operating lease liabilities |
|
|
|
|
i 74.2 |
|
|
|
i 49.8 |
|
|
Finance lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Current finance lease liabilities |
|
Current portion of long-term debt |
|
|
i 7.5 |
|
|
|
i 7.2 |
|
|
Noncurrent finance lease liabilities |
|
Long-term debt, less current portion |
|
|
i 39.6 |
|
|
|
i 42.3 |
|
|
Total finance lease liabilities |
|
|
|
$ |
i 47.1 |
|
|
$ |
i 49.5 |
|
.
iSupplemental cash flow information related to leases is as follows:
|
|
|
Successor |
|
|
|
Predecessor |
|
||
|
(dollars in millions) |
|
Six Months Ended June 30, 2022 |
|
|
|
Six Months Ended June 30, 2021 |
|
||
|
Supplemental Cash Flows Information |
|
|
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
Operating cash flows from finance leases |
|
$ |
i 1.6 |
|
|
|
$ |
i 2.1 |
|
|
Operating cash flows from operating leases |
|
$ |
i 5.8 |
|
|
|
$ |
i 5.5 |
|
|
Financing cash flows from finance leases |
|
$ |
i 4.6 |
|
|
|
$ |
i 6.4 |
|
|
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
|
|
|
|
New operating leases |
|
$ |
i 7.9 |
|
|
|
$ |
i 2.9 |
|
|
New finance leases |
|
$ |
i 2.1 |
|
|
|
$ |
i 2.0 |
|
/ i
7. Financial Instruments and Fair Value Measurements
Fair Value Measurements
The Company defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. To increase consistency and comparability in fair value measurements, the Company uses a three-level hierarchy that prioritizes the use of observable inputs. The three levels are:
Level 1 — Quoted market prices for identical instruments in an active market;
Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs); and
Level 3 — Unobservable inputs that reflect management's determination of assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including our own data.
The determination of where an asset or liability falls in the hierarchy requires significant judgment.
19
Cash Flow Hedging
Cash Flow Hedges Not Designated as Hedging Instruments
The Company uses non-designated cash flow hedges including interest rate swap agreements and interest rate cap agreements to minimize its exposure to interest rate fluctuations on variable rate debt borrowings. Interest rate swaps involve the exchange of fixed and variable rate interest payments and do not represent an actual exchange of the underlying notional amounts between parties. Interest rate caps provide that the counterparty will pay the purchaser at the end of each contractual period in which the index interest rate exceeds the contractually agreed upon cap rate.
In the second quarter of 2022, the Company entered into three forward starting non-amortizing interest rate swaps to convert variable rate debt to fixed rate debt. The interest rate swaps have notional amounts of $ i 175.0 million, $ i 115.0 million and $ i 85.0 million resulting in interest payments based on an average fixed rate per swap of i 2.9185%, i 2.8520% and i 2.8605%, respectively, plus the applicable margin per the requirements in the Credit Agreement. The interest rate swaps expire in i i i May 2026 / / .
In the second quarter of 2022, the Company entered into two interest rate cap agreements to limit exposure to interest rate risk on variable rate debt. The interest rate caps each have a cap rate of i i 3.0 / % with notional amounts of $ i 200.0 million and $ i 175.0 million and deferred premiums of $6.7 million and $5.3 million, respectively. The deferred premiums will be paid on a monthly basis over the term of the respective interest rate cap. The interest rate caps expire in i i May 2026 / .
The fair value of the Company's interest rate swaps and interest rate caps are impacted by the credit risk of both the Company and its counterparties. The Company has agreements with its derivative financial instrument counterparties that contain provisions providing that if the Company defaults on the indebtedness associated with its derivative financial instruments, then the Company could also be declared in default on its derivative financial instruments obligations. In addition, the Company minimizes nonperformance risk on its derivative instruments by evaluating the creditworthiness of its counterparties, which are limited to major banks and financial institutions.
The Company does not apply hedge accounting to the interest rate swaps and interest rate caps and records all mark-to-market adjustments directly to “Other expense (income), net” in the Condensed Consolidated Statements of Operations. The fair values of the interest rate swaps and interest rate caps are categorized as Level 2 in the fair value hierarchy as they are based on well-recognized financial principles and available market data.
iAs of June 30, 2022, the fair values of the interest rate swaps and interest rate caps are recorded in the Condensed Consolidated Balance Sheets as follows:
|
(dollars in millions) |
|
Balance Sheet Location |
|
|
|
Quoted Prices in active markets Level 1 |
|
|
Significant observable inputs Level 2 |
|
|
Significant unobservable inputs Level 3 |
|
|||||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Swap |
|
Other current assets |
|
$ |
i 0.3 |
|
|
$ |
i — |
|
|
$ |
i 0.3 |
|
|
$ |
i — |
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Swap |
|
Other noncurrent liabilities |
|
$ |
i 1.7 |
|
|
$ |
i — |
|
|
$ |
i 1.7 |
|
|
$ |
i — |
|
|
Interest Rate Cap |
|
Other current liabilities |
|
$ |
i 2.1 |
|
|
$ |
i — |
|
|
$ |
i 2.1 |
|
|
$ |
i — |
|
|
Interest Rate Cap |
|
Other noncurrent liabilities |
|
$ |
i 7.9 |
|
|
$ |
i — |
|
|
$ |
i 7.9 |
|
|
$ |
i — |
|
The following table summarizes the location of losses in the Condensed Consolidated Statements of Operations that were recognized during the three and six months ended June 30, 2022, in addition to the derivative contract type:
|
(dollars in millions) |
|
Statement of Operations Location |
|
Three Months Ended June 30, 2022 |
|
|
Six Months Ended June 30, 2022 |
|
||
|
Interest Rate Swap |
|
Other expense (income), net |
|
$ |
i 1.9 |
|
|
$ |
i 1.9 |
|
|
Interest Rate Cap |
|
Other expense (income), net |
|
$ |
i 10.3 |
|
|
$ |
i 10.3 |
|
Interest Rate Hedges
In the second quarter of 2018, the Company entered into one forward starting non-amortizing interest rate swap with a notional amount of $ i 300.0 million to convert variable rate debt to fixed rate debt. The interest rate swap became effective in June 2018 with an expiration date in i June 2023. The interest rate swap resulted in interest payments based on an average fixed rate of i 2.938% plus the applicable margin per the requirements in the Company’s former Corporate Credit Agreement.
In the first quarter of 2019, the Company entered into three forward starting non-amortizing interest rate swaps, with a notional amount of $ i i i 89.0 / / million each, to convert variable rate debt to fixed rate debt. The interest rate swaps became effective in March 2019 with expiration dates in i i i March 2024 / / . The interest rate swaps resulted in interest payments based on an average fixed rate per swap of i 2.275%, i 2.244% and i 2.328% plus the applicable margin per the requirements in the Company’s former Corporate Credit Agreement.
20
Upon inception, the interest rate swaps were designated as cash flow hedges under ASC 815, with gains and losses, net of tax, measured on an ongoing basis recorded in accumulated other comprehensive loss. The fair value of the interest rate swaps was categorized as Level 2 in the fair value hierarchy as they were based on well-recognized financial principles and available market data.
The Company terminated four interest rate swaps in the Predecessor period of the third quarter of 2021 in connection with the repayment in full of the Term Loan B under the Company’s former Corporate Credit Agreement that occurred as part of the Merger Agreement.
iThe amount of gains recognized in Accumulated Other Comprehensive Income ("AOCI") net of reclassifications into earnings is as follows:
|
|
|
Predecessor |
|
|||||
|
(dollars in millions) |
|
Three Months Ended June 30, 2021 |
|
|
Six Months Ended June 30, 2021 |
|
||
|
Interest Rate Swap |
|
$ |
i 2.2 |
|
|
$ |
i 5.3 |
|
The amount of losses reclassified from AOCI into earnings is as follows:
|
|
|
|
|
Predecessor |
|
|||||
|
(dollars in millions) |
|
Statement of Operations Location |
|
Three Months Ended June 30, 2021 |
|
|
Six Months Ended June 30, 2021 |
|
||
|
Interest Rate Swap |
|
Interest Expense |
|
$ |
( i 2.3 |
) |
|
$ |
( i 4.6 |
) |
Disclosure on Financial Instruments
The carrying values of the Company's financial instruments approximate the estimated fair values as of June 30, 2022 and December 31, 2021, except for the Company's long-term debt and other financing arrangements. i The carrying and fair values of these items are as follows:
|
|
|
|
|
|
||||||||||||
|
(dollars in millions) |
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
||||
|
Long-term debt, including current portion* |
|
$ |
i 1,535.9 |
|
|
$ |
i 1,482.5 |
|
|
$ |
i 1,443.0 |
|
|
$ |
i 1,443.0 |
|
|
Other financing arrangements |
|
|
i 51.6 |
|
|
|
i 45.3 |
|
|
|
i 53.1 |
|
|
|
i 51.7 |
|
*Excludes finance leases, other financing arrangements and note issuance costs.
In connection with the Merger, the carrying values of the Company’s long-term debt and other financing arrangements include fair value adjustments as of the Merger Date. The fair value of our long-term debt was based on closing or estimated market prices of the Company’s debt at June 30, 2022 and December 31, 2021, which is considered Level 2 of the fair value hierarchy. The fair value of the other financing arrangements was calculated using a discounted cash flow model that incorporates current borrowing rates for obligations of similar duration, which is considered Level 3 of the fair value hierarchy. As of June 30, 2022, the current borrowing rate was estimated by applying the Company's credit spread to the risk-free rate for a similar duration borrowing.
i8. Pension and Postretirement Plans
As of June 30, 2022, the Company sponsors i three noncontributory defined benefit plans and a postretirement health and life insurance plan in Cincinnati (collectively the "Cincinnati Plans"), and one noncontributory defined benefit plan for union employees, one cash balance pension plan for nonunion employees, and two postretirement health and life insurance plans for Hawaiian Telcom employees (collectively the "Hawaii Plans").
In the six months ended June 30, 2022, the Hawaii defined benefit plan for union employees made lump sum payments of $ i 5.4 million resulting in a reduction of the benefit obligation of $ i 5.4 million. The lump sum payments to the plan participants exceeded the sum of the service cost and the interest cost component of the net pension cost resulting in a nominal pension settlement cost for the three months ended June 30, 2022. In the six months ended June 30, 2021, the Hawaii defined benefit plan for union employees made lump sum payments of $ i 6.7 million resulting in a reduction of the benefit obligation of $ i 6.7 million. The lump sum payments to the plan participants exceeded the sum of the service cost and the interest cost component of the net pension cost resulting in a nominal pension settlement cost for the three months ended June 30, 2021.
In accordance with ASC 715, only the service cost component of net benefit cost is eligible for capitalization, which was immaterial for the six months ended June 30, 2022 and 2021.
i
21
Pension and postretirement (benefits) costs are as follows:
|
|
|
Pension Benefits |
|
|
|
Postretirement and Other Benefits |
|
||||||||||||
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Successor |
|
|
|
Predecessor |
|
||||
|
(dollars in millions) |
|
Three Months Ended June 30, 2022 |
|
|
|
Three Months Ended June 30, 2021 |
|
|
|
Three Months Ended June 30, 2022 |
|
|
|
Three Months Ended June 30, 2021 |
|
||||
|
Service cost |
|
$ |
i — |
|
|
|
$ |
i — |
|
|
|
$ |
i 0.1 |
|
|
|
$ |
i 0.1 |
|
|
Other components of pension and postretirement benefit plans expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest cost on projected benefit obligation |
|
|
i 3.8 |
|
|
|
|
i 3.7 |
|
|
|
|
i 0.7 |
|
|
|
|
i 0.7 |
|
|
Expected return on plan assets |
|
|
( i 7.1 |
) |
|
|
|
( i 7.2 |
) |
|
|
|
i — |
|
|
|
|
i — |
|
|
Amortization of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service benefit |
|
|
i — |
|
|
|
|
i — |
|
|
|
|
i — |
|
|
|
|
( i 0.7 |
) |
|
Actuarial loss |
|
|
i — |
|
|
|
|
i 5.2 |
|
|
|
|
i — |
|
|
|
|
i — |
|
|
Pension / postretirement (benefit) cost |
|
$ |
( i 3.3 |
) |
|
|
$ |
i 1.7 |
|
|
|
$ |
i 0.8 |
|
|
|
$ |
i 0.1 |
|
|
|
|
Pension Benefits |
|
|
|
Postretirement and Other Benefits |
|
||||||||||||
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Successor |
|
|
|
Predecessor |
|
||||
|
(dollars in millions) |
|
Six Months Ended June 30, 2022 |
|
|
|
Six Months Ended June 30, 2021 |
|
|
|
Six Months Ended June 30, 2022 |
|
|
|
Six Months Ended June 30, 2021 |
|
||||
|
Service cost |
|
$ |
i — |
|
|
|
$ |
i — |
|
|
|
$ |
i 0.2 |
|
|
|
$ |
i 0.2 |
|
|
Other components of pension and postretirement benefit plans expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest cost on projected benefit obligation |
|
|
i 7.7 |
|
|
|
|
i 7.5 |
|
|
|
|
i 1.4 |
|
|
|
|
i 1.3 |
|
|
Expected return on plan assets |
|
|
( i 14.3 |
) |
|
|
|
( i 14.7 |
) |
|
|
|
i — |
|
|
|
|
i — |
|
|
Amortization of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service benefit |
|
|
i — |
|
|
|
|
i — |
|
|
|
|
i — |
|
|
|
|
( i 1.3 |
) |
|
Actuarial loss |
|
|
i — |
|
|
|
|
i 11.5 |
|
|
|
|
i — |
|
|
|
|
i — |
|
|
Pension / postretirement (benefit) cost |
|
$ |
( i 6.6 |
) |
|
|
$ |
i 4.3 |
|
|
|
$ |
i 1.6 |
|
|
|
$ |
i 0.2 |
|
Amortizations of prior service benefit and actuarial loss in the three and six months ended June 30, 2021 represent reclassifications from accumulated other comprehensive income.
For the six months ended June 30, 2022, there were i no contributions to the qualified pension plans, and contributions to the non-qualified pension plans were $ i 1.0 million. For the six months ended June 30, 2021, contributions to the qualified and non-qualified pension plans were $ i 0.8 million and $ i 1.2 million, respectively. Based on current assumptions, i no contributions are expected to be made to the qualified pension plans in 2022. Contributions to the non-qualified pension plans in 2022 are expected to be approximately $ i 3 million.
For the six months ended June 30, 2022 and 2021, contributions to our postretirement plans were $ i 3.2 million and $ i 3.1 million, respectively. Management expects to make total cash payments of approximately $ i 7 million related to its postretirement health plans in 2022.
22
i
9. Shareowners' Equity (Deficit)
Pursuant to the Merger Agreement, Parent acquired all of the equity interests in the Company. In connection with the consummation of the Merger Agreement, each of our issued and outstanding Common Shares was converted to $ i 15.50 in cash per Common Share and paid to the shareholders.
Additionally, the Company redeemed each of our issued and outstanding Depositary Shares simultaneously with the redemption of the 6 ¾% Preferred Shares at a redemption price of $ i 50 per Depositary Share (equivalent to $ i 1,000 per 6 ¾% Preferred Share).
Effective October 18, 2021, Parent amended and restated the Articles of Incorporation of Cincinnati Bell to reduce the number of authorized shares from i 96,000,000 Common Shares to i 100 Common Shares, each with $ i i 0.01 / par value. As of both June 30, 2022 and December 31, 2021, Parent is the sole shareholder of the Company’s i i 100 / Common Shares.
Accumulated Other Comprehensive Income (Loss)
iThe changes in accumulated other comprehensive income (loss) by component were as follows:
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
Unrecognized Net Periodic Pension and Postretirement Benefit (Cost) |
|
|
|
Unrealized Loss on Cash Flow Hedges, Net |
|
|
|
Foreign Currency Translation Gain (Loss) |
|
|
Total |
|
||||
|
Balance as of March 31, 2022 |
|
$ |
i 2.6 |
|
|
|
$ |
i — |
|
|
|
$ |
i 0.4 |
|
|
$ |
i 3.0 |
|
|
Remeasurement of benefit obligations |
|
|
( i 1.3 |
) |
|
|
|
i — |
|
|
|
|
i — |
|
|
|
( i 1.3 |
) |
|
Foreign currency loss |
|
|
i — |
|
|
|
|
i — |
|
|
|
|
( i 3.1 |
) |
|
|
( i 3.1 |
) |
|
Balance as of June 30, 2022 |
|
$ |
i 1.3 |
|
|
|
$ |
i — |
|
|
|
$ |
( i 2.7 |
) |
|
$ |
( i 1.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021 |
|
$ |
( i 134.4 |
) |
|
|
$ |
( i 17.3 |
) |
|
|
$ |
( i 0.2 |
) |
|
$ |
( i 151.9 |
) |
|
Remeasurement of benefit obligations |
|
|
i 6.0 |
|
|
|
|
i — |
|
|
|
|
i — |
|
|
|
i 6.0 |
|
|
Reclassifications, net |
|
|
i 3.5 |
|
(a) |
|
|
i 1.7 |
|
(b) |
|
|
i — |
|
|
|
i 5.2 |
|
|
Unrealized loss on cash flow hedges arising during the period, net |
|
|
i — |
|
|
|
|
( i 0.1 |
) |
(c) |
|
|
i — |
|
|
|
( i 0.1 |
) |
|
Foreign currency gain |
|
|
i — |
|
|
|
|
i — |
|
|
|
|
i 1.6 |
|
|
|
i 1.6 |
|
|
Balance as of June 30, 2021 |
|
$ |
( i 124.9 |
) |
|
|
$ |
( i 15.7 |
) |
|
|
$ |
i 1.4 |
|
|
$ |
( i 139.2 |
) |
23
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
Unrecognized Net Periodic Pension and Postretirement Benefit (Cost) |
|
|
|
Unrealized Loss on Cash Flow Hedges, Net |
|
|
|
Foreign Currency Translation Gain (Loss) |
|
|
Total |
|
||||
|
Balance as of December 31, 2021 |
|
$ |
i 2.6 |
|
|
|
$ |
i — |
|
|
|
$ |
( i 1.4 |
) |
|
$ |
i 1.2 |
|
|
Remeasurement of benefit obligations |
|
|
( i 1.3 |
) |
|
|
|
i — |
|
|
|
|
i — |
|
|
|
( i 1.3 |
) |
|
Foreign currency loss |
|
|
i — |
|
|
|
|
i — |
|
|
|
|
( i 1.3 |
) |
|
|
( i 1.3 |
) |
|
Balance as of June 30, 2022 |
|
$ |
i 1.3 |
|
|
|
$ |
i — |
|
|
|
$ |
( i 2.7 |
) |
|
$ |
( i 1.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2020 |
|
$ |
( i 138.8 |
) |
|
|
$ |
( i 19.7 |
) |
|
|
$ |
( i 1.2 |
) |
|
$ |
( i 159.7 |
) |
|
Remeasurement of benefit obligations |
|
|
i 6.0 |
|
|
|
|
i — |
|
|
|
|
i — |
|
|
|
i 6.0 |
|
|
Reclassifications, net |
|
|
i 7.9 |
|
(a) |
|
|
i 3.5 |
|
(b) |
|
|
i — |
|
|
|
i 11.4 |
|
|
Unrealized gain on cash flow hedges arising during the period, net |
|
|
i — |
|
|
|
|
i 0.5 |
|
(c) |
|
|
i — |
|
|
|
i 0.5 |
|
|
Foreign currency gain |
|
|
i — |
|
|
|
|
i — |
|
|
|
|
i 2.6 |
|
|
|
i 2.6 |
|
|
Balance as of June 30, 2021 |
|
$ |
( i 124.9 |
) |
|
|
$ |
( i 15.7 |
) |
|
|
$ |
i 1.4 |
|
|
$ |
( i 139.2 |
) |
|
|
(a) |
These reclassifications are included in the other components of net periodic pension and postretirement benefit plans expense and represent amortization of prior service benefit and actuarial loss, net of tax. The other components of net periodic pension and postretirement benefit plans expense are recorded in "Other components of pension and postretirement benefit plans (benefit) expense" on the Condensed Consolidated Statements of Operations. See Note 8 for further disclosures. |
|
|
(b) |
These reclassifications are reported within "Interest expense" on the Condensed Consolidated Statements of Operations when the hedged transactions impact earnings. |
|
|
(c) |
The unrealized (loss) gain, net on cash flow hedges represents the change in the fair value of the derivative instruments that occurred during the period, net of tax. |
24
i
10. Business Segment Information
The Company’s segments are strategic business units that offer distinct products and services and are aligned with the Company's internal management structure and reporting. The Company operates i two business segments identified as Network and IT Services and Hardware.
The Network segment provides products and services that can be categorized as Data, Video, Voice or Other. Data products include high-speed internet access, digital subscriber lines, ethernet, SONET, dedicated internet access, wavelength, digital signal and IRU. Video services provide our customers access to over 400 entertainment channels, over 150 high-definition channels, parental controls, HD DVR, Video On-Demand and access to a live TV streaming application. Voice represents traditional voice lines as well as fiber voice lines, consumer long distance, switched access and digital trunking. Other services consist of revenue generated from wiring projects for enterprise customers, advertising, directory assistance, maintenance, information services and subsidized fiber build project revenue related to extending the Company’s fiber network in the Greater Cincinnati territory subsidized through our UniCity program. In May 2022, the Company acquired Agile and includes Agile’s financial results in the Network segment.
The IT Services and Hardware segment provides end-to-end solutions from consulting to implementation to ongoing optimization. These solutions include Cloud, Communications and Consulting services along with the sale, installation and maintenance of major branded Telecom and IT hardware reported as Infrastructure Solutions.
Certain corporate administrative expenses have been allocated to the segments based upon the nature of the expense and the relative size of the segment. Intercompany transactions between segments have been eliminated.
i
Selected financial data for the Company’s business segment information is as follows:
|
|
|
Successor |
|
|
|
Predecessor |
|
|
Successor |
|
|
|
Predecessor |
|
||||
|
(dollars in millions) |
|
Three Months Ended June 30, 2022 |
|
|
|
Three Months Ended June 30, 2021 |
|
|
Six Months Ended |
|
|
|
Six Months Ended |
|
||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network |
|
$ |
i 247.0 |
|
|
|
$ |
i 241.0 |
|
|
$ |
i 490.5 |
|
|
|
$ |
i 483.8 |
|
|
IT Services and Hardware |
|
|
i 199.0 |
|
|
|
|
i 179.9 |
|
|
|
i 397.8 |
|
|
|
|
i 353.7 |
|
|
Intersegment |
|
|
( i 6.5 |
) |
|
|
|
( i 6.7 |
) |
|
|
( i 13.0 |
) |
|
|
|
( i 13.4 |
) |
|
Total revenue |
|
$ |
i 439.5 |
|
|
|
$ |
i 414.2 |
|
|
$ |
i 875.3 |
|
|
|
$ |
i 824.1 |
|
|
Intersegment revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network |
|
$ |
i 4.8 |
|
|
|
$ |
i 4.9 |
|
|
$ |
i 9.7 |
|
|
|
$ |
i 9.7 |
|
|
IT Services and Hardware |
|
|
i 1.7 |
|
|
|
|
i 1.8 |
|
|
|
i 3.3 |
|
|
|
|
i 3.7 |
|
|
Total intersegment revenue |
|
$ |
i 6.5 |
|
|
|
$ |
i 6.7 |
|
|
$ |
i 13.0 |
|
|
|
$ |
i 13.4 |
|
|
Operating (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network |
|
$ |
( i 18.9 |
) |
|
|
$ |
i 28.1 |
|
|
$ |
( i 22.0 |
) |
|
|
$ |
i 59.4 |
|
|
IT Services and Hardware |
|
|
( i 5.1 |
) |
|
|
|
i 7.6 |
|
|
|
( i 10.0 |
) |
|
|
|
i 16.2 |
|
|
Corporate |
|
|
( i 8.4 |
) |
|
|
|
( i 5.3 |
) |
|
|
( i 15.4 |
) |
|
|
|
( i 12.6 |
) |
|
Total operating (loss) income |
|
$ |
( i 32.4 |
) |
|
|
$ |
i 30.4 |
|
|
$ |
( i 47.4 |
) |
|
|
$ |
i 63.0 |
|
|
Expenditures for long-lived assets* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network |
|
$ |
i 171.1 |
|
|
|
$ |
i 52.8 |
|
|
$ |
i 252.6 |
|
|
|
$ |
i 107.8 |
|
|
IT Services and Hardware |
|
|
i 7.1 |
|
|
|
|
i 6.2 |
|
|
|
i 13.4 |
|
|
|
|
i 11.9 |
|
|
Total expenditures for long-lived assets |
|
$ |
i 178.2 |
|
|
|
$ |
i 59.0 |
|
|
$ |
i 266.0 |
|
|
|
$ |
i 119.7 |
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network |
|
$ |
i 103.4 |
|
|
|
$ |
i 61.6 |
|
|
$ |
i 196.8 |
|
|
|
$ |
i 122.4 |
|
|
IT Services and Hardware |
|
|
i 26.6 |
|
|
|
|
i 10.2 |
|
|
|
i 52.6 |
|
|
|
|
i 20.3 |
|
|
Corporate |
|
|
i 0.1 |
|
|
|
|
i — |
|
|
|
i 0.2 |
|
|
|
|
i 0.1 |
|
|
Total depreciation and amortization |
|
$ |
i 130.1 |
|
|
|
$ |
i 71.8 |
|
|
$ |
i 249.6 |
|
|
|
$ |
i 142.8 |
|
*Includes cost of Agile acquisition
/ /
25
|
(dollars in millions) |
|
|
|
|
||||
|
Assets |
|
|
|
|
|
|
|
|
|
Network |
|
$ |
i 3,073.2 |
|
|
$ |
i 2,949.2 |
|
|
IT Services and Hardware |
|
|
i 794.4 |
|
|
|
i 842.0 |
|
|
Corporate and eliminations |
|
|
i 340.7 |
|
|
|
i 407.6 |
|
|
Total assets |
|
$ |
i 4,208.3 |
|
|
$ |
i 4,198.8 |
|
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain forward-looking statements regarding future events and results that are subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “predicts,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” “will,” “proposes,” “potential,” “could,” “should,” “outlook” or variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, anticipated growth and trends in businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q and, in particular, the risks discussed under the caption “Risk Factors” in Part II, Item 1A, and those discussed in other documents the Company filed with the Securities and Exchange Commission (“SEC”). Actual results may differ materially and adversely from those expressed in any forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements for any reason.
Introduction
This Management’s Discussion and Analysis section provides an overview of Cincinnati Bell Inc.’s financial condition as of June 30, 2022 and the results of operations for the three and six months ended June 30, 2022 and 2021. References in this Quarterly Report to “Successor” refer to the Company on or after September 8, 2021 and references to “Predecessor” refer to the results prior to September 8, 2021. This discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and accompanying notes as well as the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Results for interim periods may not be indicative of results for the full year or any other interim period.
altafiber Brand
In March 2022, the Company announced that we will begin doing business as “altafiber” in Ohio, Kentucky and Indiana as we continue to expand our geographic reach and invest in our fiber network that delivers broadband connectivity. The branding change will not impact our Hawaiian Telcom business or IT Services business, which is branded as CBTS.
Acquisition by Red Fiber Parent LLC
On March 13, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Red Fiber Parent LLC, a Delaware limited liability company (“Parent”), and RF Merger Sub Inc., an Ohio corporation and directly wholly owned subsidiary of Parent (“Merger Sub”). On September 7, 2021 (the “Closing Date” or “Merger Date”), upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the applicable provisions of the Ohio General Corporation Law (the “OGCL”), Merger Sub merged with and into the Company, with the Company continuing as the surviving corporation (the “Merger”). At the effective time of the Merger (the “Effective Time”), the separate corporate existence of Merger Sub ceased, and the Company survived the Merger as a wholly owned subsidiary of Parent.
Upon completion of the Merger, Parent was deemed the accounting acquirer and Cincinnati Bell Inc. the accounting acquiree. Under the acquisition method of accounting, the assets and liabilities associated with Cincinnati Bell Inc. were recorded at their fair values measured as of the acquisition date. The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill.
Executive Summary
Segment results described in the Executive Summary are net of intercompany eliminations.
Cincinnati Bell Inc. and its consolidated subsidiaries ("altafiber," "Cincinnati Bell," "we," "our," "us" or the "Company") provide integrated communications and IT solutions that keep consumer and enterprise customers connected with each other and with the world. Through our Network segment, previously referred to as Entertainment and Communications, the Company provides Data, Video, and Voice solutions to consumer and enterprise customers over an expanding fiber network and a legacy copper network. In addition, enterprise customers across the United States, Canada and Europe rely on the IT Services and Hardware segment for the sale and service of efficient, end-to-end communications and IT systems and solutions.
27
Consolidated revenue totaling $439.5 million and $875.3 million for the three and six months ended June 30, 2022 increased $25.3 million and $51.2 million, respectively, compared to the same periods in the prior year due to strategic revenue growth in both segments offsetting declines in Legacy revenue. For the three and six months ended June 30, 2022, Fioptics revenue increased $13.4 million and $23.4 million, respectively, compared to the same periods in 2021 as the Company continues to focus on high-speed internet activations while Legacy revenue decreased $10.6 million and $21.5 million, respectively, compared to the comparable periods in the prior year. IT Services and Hardware revenue growth was impacted most significantly in the Consulting practice in which revenue increased 17% and 22% for the three and six months ended June 30, 2022, respectively, compared to the same periods in the prior year. In addition, for the three and six months ended June 30, 2022, Infrastructure Solutions revenue increased $7.1 million and $12.1 million, respectively, compared to the same periods in 2021.
Operating loss for the three and six months ended June 30, 2022 was $32.4 million and $47.4 million, respectively, compared to operating income of $30.4 million and $63.0 million in the three and six months ended June 30, 2021, respectively. Revenue growth in both segments was more than offset due most significantly to higher depreciation and amortization expenses related to the increased value of property, plant and equipment and intangibles as a result of fair value adjustments recorded as of the Merger Date in addition to increases in cost of services and products and SG&A expenses to support revenue growth as well as increased transaction and integration costs.
Interest expense decreased $15.1 million and $31.0 million for the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 primarily due to the extinguishment of the 7% Senior Notes due 2024 and 8% Senior Notes due 2025 in the fourth quarter of 2021 and the termination of interest rate swaps in the Predecessor period of 2021. These decreases were partially offset by interest expense incurred related to the $350 million incremental increase to the Term B-1 Loans and issuance of the Term B-2 Loans in the fourth quarter of 2021.
Other components of pension and postretirement benefit plans expense decreased for the three and six months ended June 30, 2022 compared to the comparable periods in the prior year due to remeasuring the pension and postretirement projected benefit obligations, actuarial gains (losses) and prior service costs (benefits) as of the Merger Date as well as favorable asset returns in 2021 also favorably impacting the annual remeasurement performed in December and the Merger Date remeasurement.
Other expense (income), net totaled expense of $11.8 million and $11.4 million for the three and six months ended June 30, 2022, respectively, due to entering into interest rate swap agreements and interest rate cap agreements in the second quarter of 2022. In the three months ended June 30, 2022, the Company recorded losses of $1.9 million and $10.3 million associated with the interest rate swaps and interest rate caps, respectively.
Loss before income taxes totaled $60.0 million and $88.5 million for the three and six months ended June 30, 2022 resulting in increases in the loss of $55.4 million and $81.3 million, respectively, compared to the same periods in 2021. Lower interest expense and pension and postretirement benefit plans expense in the three and six months ended June 30, 2022 compared to the same periods in the prior year was more than offset by the decrease in operating income.
The income tax provision for the three and six months ended June 30, 2022 was a benefit of $14.0 million and $20.5 million, respectively, which is slightly higher than the period’s income at the statutory rate, due primarily to state tax benefit. The income tax provision for the three months ended June 30, 2021 was a nominal expense, and for the six months ended June 30, 2021, the income tax provision was an expense of $0.4 million. The expense recorded in each of the comparable periods in 2021 was lower than the current periods due to a smaller loss before income taxes in the comparable periods and a low estimated annual effective tax rate applied to that loss as the result of a valuation allowance on deferred tax assets related to disallowed interest expense.
Impact of COVID-19 on Our Business - Update
Beginning in March 2020 and continuing through the first quarter of 2021, our business experienced the effects of the COVID-19 pandemic most significantly due to increased bad debt expense and reduced revenue in certain of our revenue streams. Subsequent to the first quarter of 2021, bad debt expense has returned to pre-pandemic levels and strategic revenue trends are normalized and improving. Starting in 2021, we began to experience logistics challenges in obtaining inventory in a timely manner due to demand exceeding the supply of certain inventory products. Logistics challenges continue to impact operations in the six months ended June 30, 2022. Additionally, access to skilled employees and contractors may create delays or increased costs in the planned build-out of the fiber network in both geographies.
28
Network
The Network segment provides products and services that are categorized as Fioptics, previously referred to as “Consumer/SMB Fiber” in Hawaii and collectively with Fioptics in Cincinnati, Enterprise Fiber or Legacy. Cincinnati Bell Telephone Company LLC ("CBT"), a subsidiary of the Company, is the incumbent local exchange carrier ("ILEC") for a geography that covers a radius of approximately 25 miles around Cincinnati, Ohio, and includes parts of northern Kentucky and southeastern Indiana. CBT has operated in this territory for approximately 150 years. Voice and data services in the Enterprise Fiber and Legacy categories that are delivered beyond the Company's ILEC territory, particularly in Dayton and Mason, Ohio, are provided through the operations of Cincinnati Bell Extended Territories LLC ("CBET"), a subsidiary of CBT. In March 2022, both CBT and CBET began doing business as “altafiber” as we continue to expand our geographic reach. On July 2, 2018, the Company acquired Hawaiian Telcom. Hawaiian Telcom is the ILEC for the State of Hawaii and the largest full-service provider of communications services and products in the state. Originally incorporated in Hawaii in 1883 as Mutual Telephone Company, Hawaiian Telcom has a strong heritage of over 135 years as Hawaii’s communications carrier. Its services are offered on all of Hawaii’s major islands, except its video service, which currently is only available on the island of Oahu. On May 2, 2022, the Company acquired Agile IWG Holdings, LLC (“Agile”), based in Canton, Ohio. Agile leases wireless infrastructure assets to third parties and provides connectivity through hybrid fiber wireless data networks primarily to customers in Ohio and Pennsylvania.
Fioptics products include high-speed internet access, categorized below as data, voice lines and video as well as subsidized fiber build project revenue included in Other related to extending the Company’s fiber network in the Greater Cincinnati territory subsidized through our UniCity program. The Company is able to deliver speeds of up to 30 megabits or more to more than 80% of Greater Cincinnati and up to 20 megabits or more to approximately 60% of Hawaii's total addressable market.
Enterprise Fiber products include metro-ethernet, dedicated internet access, wavelength, IRU contracts, and wireless backhaul to macro-towers and small cell. Hawaiian Telcom Enterprise Fiber revenue also includes revenue from the SEA-US cable. As enterprise customers migrate from legacy products and copper-based technology, our metro-ethernet product becomes the preferred method of transport due to its ability to support multiple applications on a single physical connection. Subsequent to the Company’s acquisition, Enterprise Fiber revenue also includes revenue from Agile.
Legacy products include traditional voice lines, consumer long distance, switched access, digital trunking, DSL, DS0, DS1, DS3 and other value-added services such as caller identification, voicemail, call waiting and call return.
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
||||
|
(dollars in millions) |
|
Three Months Ended June 30, 2022 |
|
|
|
Three Months Ended June 30, 2021 |
|
|
Change |
|
|
% Change |
|
|
|
Six Months Ended June 30, 2022 |
|
|
|
Six Months Ended June 30, 2021 |
|
|
Change |
|
|
% Change |
|
||||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
$ |
129.5 |
|
|
|
$ |
121.6 |
|
|
$ |
7.9 |
|
|
|
6 |
% |
|
|
$ |
255.6 |
|
|
|
$ |
242.9 |
|
|
$ |
12.7 |
|
|
|
5 |
% |
|
Video |
|
|
48.4 |
|
|
|
|
47.9 |
|
|
|
0.5 |
|
|
|
1 |
% |
|
|
|
97.0 |
|
|
|
|
96.5 |
|
|
|
0.5 |
|
|
|
1 |
% |
|
Voice |
|
|
57.7 |
|
|
|
|
64.6 |
|
|
|
(6.9 |
) |
|
|
(11 |
)% |
|
|
|
117.0 |
|
|
|
|
130.5 |
|
|
|
(13.5 |
) |
|
|
(10 |
)% |
|
Other |
|
|
11.4 |
|
|
|
|
6.9 |
|
|
|
4.5 |
|
|
|
65 |
% |
|
|
|
20.9 |
|
|
|
|
13.9 |
|
|
|
7.0 |
|
|
|
50 |
% |
|
Total Revenue |
|
|
247.0 |
|
|
|
|
241.0 |
|
|
|
6.0 |
|
|
|
2 |
% |
|
|
|
490.5 |
|
|
|
|
483.8 |
|
|
|
6.7 |
|
|
|
1 |
% |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products |
|
|
111.1 |
|
|
|
|
108.0 |
|
|
|
3.1 |
|
|
|
3 |
% |
|
|
|
219.1 |
|
|
|
|
218.1 |
|
|
|
1.0 |
|
|
|
0 |
% |
|
Selling, general and administrative |
|
|
51.4 |
|
|
|
|
43.8 |
|
|
|
7.6 |
|
|
|
17 |
% |
|
|
|
96.6 |
|
|
|
|
84.4 |
|
|
|
12.2 |
|
|
|
14 |
% |
|
Depreciation and amortization |
|
|
103.4 |
|
|
|
|
61.6 |
|
|
|
41.8 |
|
|
|
68 |
% |
|
|
|
196.8 |
|
|
|
|
122.4 |
|
|
|
74.4 |
|
|
|
61 |
% |
|
Restructuring and severance charges |
|
|
— |
|
|
|
|
(0.5 |
) |
|
|
0.5 |
|
|
n/m |
|
|
|
|
— |
|
|
|
|
(0.5 |
) |
|
|
0.5 |
|
|
n/m |
|
||
|
Total operating costs and expenses |
|
|
265.9 |
|
|
|
|
212.9 |
|
|
|
52.5 |
|
|
|
25 |
% |
|
|
|
512.5 |
|
|
|
|
424.4 |
|
|
|
87.6 |
|
|
|
21 |
% |
|
Operating (loss) income |
|
$ |
(18.9 |
) |
|
|
$ |
28.1 |
|
|
$ |
(46.5 |
) |
|
n/m |
|
|
|
$ |
(22.0 |
) |
|
|
$ |
59.4 |
|
|
$ |
(80.9 |
) |
|
n/m |
|
||
|
Operating margin |
|
|
(7.7 |
)% |
|
|
|
11.7 |
% |
|
|
|
|
|
(19.4) pts |
|
|
|
|
(4.5 |
)% |
|
|
|
12.3 |
% |
|
|
|
|
|
(16.8) pts |
|
||
|
Capital expenditures |
|
$ |
106.0 |
|
|
|
$ |
52.8 |
|
|
$ |
53.2 |
|
|
n/m |
|
|
|
$ |
187.5 |
|
|
|
$ |
107.8 |
|
|
$ |
79.7 |
|
|
|
74 |
% |
|
29
Network, continued
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
||
|
Metrics information (in thousands): |
|
|
|
|
|
|
Change |
|
|
% Change |
|
||||||
|
Cincinnati |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fioptics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet FTTP* |
|
|
274.3 |
|
|
|
|
249.7 |
|
|
|
24.6 |
|
|
|
10 |
% |
|
Internet FTTN* |
|
|
17.4 |
|
|
|
|
24.6 |
|
|
|
(7.2 |
) |
|
|
(29 |
)% |
|
Total Fioptics Internet |
|
|
291.7 |
|
|
|
|
274.3 |
|
|
|
17.4 |
|
|
|
6 |
% |
|
Video |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video FTTP* |
|
|
107.3 |
|
|
|
|
106.1 |
|
|
|
1.2 |
|
|
|
1 |
% |
|
Video FTTN* |
|
|
14.4 |
|
|
|
|
19.3 |
|
|
|
(4.9 |
) |
|
|
(25 |
)% |
|
Total Fioptics Video |
|
|
121.7 |
|
|
|
|
125.4 |
|
|
|
(3.7 |
) |
|
|
(3 |
)% |
|
Voice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fioptics Voice Lines |
|
|
100.9 |
|
|
|
|
102.4 |
|
|
|
(1.5 |
) |
|
|
(1 |
)% |
|
Fioptics Units Passed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units passed FTTP* |
|
|
590.0 |
|
|
|
|
502.7 |
|
|
|
87.3 |
|
|
|
17 |
% |
|
Units passed FTTN* |
|
|
109.5 |
|
|
|
|
135.4 |
|
|
|
(25.9 |
) |
|
|
(19 |
)% |
|
Total Fioptics units passed |
|
|
699.5 |
|
|
|
|
638.1 |
|
|
|
61.4 |
|
|
|
10 |
% |
|
Enterprise Fiber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ethernet Bandwidth (Gb) |
|
|
7,480 |
|
|
|
|
7,075 |
|
|
|
405 |
|
|
|
6 |
% |
|
Legacy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSL |
|
|
45.8 |
|
|
|
|
58.0 |
|
|
|
(12.2 |
) |
|
|
(21 |
)% |
|
Voice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Voice Lines |
|
|
145.9 |
|
|
|
|
165.2 |
|
|
|
(19.3 |
) |
|
|
(12 |
)% |
|
* |
Fiber-to-the-Premise (FTTP), Fiber-to-the-Node (FTTN) |
30
Network, continued
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
||
|
Metrics information (in thousands): |
|
|
|
|
|
|
Change |
|
|
% Change |
|
||||||
|
Hawaii |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fioptics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet FTTP* |
|
|
67.3 |
|
|
|
|
62.6 |
|
|
|
4.7 |
|
|
|
8 |
% |
|
Internet FTTN* |
|
|
7.8 |
|
|
|
|
9.6 |
|
|
|
(1.8 |
) |
|
|
(19 |
)% |
|
Total Fioptics Internet |
|
|
75.1 |
|
|
|
|
72.2 |
|
|
|
2.9 |
|
|
|
4 |
% |
|
Video |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video FTTP* |
|
|
28.5 |
|
|
|
|
29.5 |
|
|
|
(1.0 |
) |
|
|
(3 |
)% |
|
Video FTTN* |
|
|
7.6 |
|
|
|
|
8.9 |
|
|
|
(1.3 |
) |
|
|
(15 |
)% |
|
Total Fioptics Video |
|
|
36.1 |
|
|
|
|
38.4 |
|
|
|
(2.3 |
) |
|
|
(6 |
)% |
|
Voice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fioptics Voice Lines |
|
|
28.6 |
|
|
|
|
28.7 |
|
|
|
(0.1 |
) |
|
|
0 |
% |
|
Fioptics Units Passed ** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units passed FTTP* |
|
|
237.3 |
|
|
|
|
195.0 |
|
|
|
42.3 |
|
|
|
22 |
% |
|
Units passed FTTN* |
|
|
62.4 |
|
|
|
|
68.3 |
|
|
|
(5.9 |
) |
|
|
(9 |
)% |
|
Total Fioptics units passed |
|
|
299.7 |
|
|
|
|
263.3 |
|
|
|
36.4 |
|
|
|
14 |
% |
|
Enterprise Fiber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ethernet Bandwidth (Gb) |
|
|
3,874 |
|
|
|
|
4,027 |
|
|
|
(153 |
) |
|
|
(4 |
)% |
|
Legacy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSL |
|
|
27.4 |
|
|
|
|
33.3 |
|
|
|
(5.9 |
) |
|
|
(18 |
)% |
|
Voice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Voice Lines |
|
|
129.2 |
|
|
|
|
150.4 |
|
|
|
(21.2 |
) |
|
|
(14 |
)% |
|
* |
Fiber-to-the-Premise (FTTP), Fiber-to-the-Node (FTTN) |
|
** |
Includes units passed for both consumer and business on Oahu and neighboring islands. |
31
Network, continued
Revenue
|
|
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||
|
|
|
Three Months Ended June 30, 2022 |
|
|
|
Three Months Ended June 30, 2021 |
|
||||||||||||||||||
|
|
|
Cincinnati |
|
|
Hawaii |
|
|
Total |
|
|
|
Cincinnati |
|
|
Hawaii |
|
|
Total |
|
||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fioptics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
$ |
53.3 |
|
|
$ |
10.8 |
|
|
$ |
64.1 |
|
|
|
$ |
46.6 |
|
|
$ |
10.2 |
|
|
$ |
56.8 |
|
|
Video |
|
|
39.3 |
|
|
|
9.1 |
|
|
|
48.4 |
|
|
|
|
38.8 |
|
|
|
9.1 |
|
|
|
47.9 |
|
|
Voice |
|
|
8.5 |
|
|
|
2.9 |
|
|
|
11.4 |
|
|
|
|
8.6 |
|
|
|
2.9 |
|
|
|
11.5 |
|
|
Other |
|
|
6.0 |
|
|
|
— |
|
|
|
6.0 |
|
|
|
|
0.3 |
|
|
|
— |
|
|
|
0.3 |
|
|
|
|
|
107.1 |
|
|
|
22.8 |
|
|
|
129.9 |
|
|
|
|
94.3 |
|
|
|
22.2 |
|
|
|
116.5 |
|
|
Enterprise Fiber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
23.1 |
|
|
|
11.9 |
|
|
|
35.0 |
|
|
|
|
21.1 |
|
|
|
10.7 |
|
|
|
31.8 |
|
|
Legacy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
18.7 |
|
|
|
11.7 |
|
|
|
30.4 |
|
|
|
|
21.3 |
|
|
|
11.7 |
|
|
|
33.0 |
|
|
Voice |
|
|
22.5 |
|
|
|
23.8 |
|
|
|
46.3 |
|
|
|
|
26.5 |
|
|
|
26.6 |
|
|
|
53.1 |
|
|
Other |
|
|
2.7 |
|
|
|
2.7 |
|
|
|
5.4 |
|
|
|
|
3.3 |
|
|
|
3.3 |
|
|
|
6.6 |
|
|
|
|
|
43.9 |
|
|
|
38.2 |
|
|
|
82.1 |
|
|
|
|
51.1 |
|
|
|
41.6 |
|
|
|
92.7 |
|
|
Total Network revenue |
|
$ |
174.1 |
|
|
$ |
72.9 |
|
|
$ |
247.0 |
|
|
|
$ |
166.5 |
|
|
$ |
74.5 |
|
|
$ |
241.0 |
|
|
|
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||
|
|
|
Six Months Ended June 30, 2022 |
|
|
|
Six Months Ended June 30, 2021 |
|
||||||||||||||||||
|
|
|
Cincinnati |
|
|
Hawaii |
|
|
Total |
|
|
|
Cincinnati |
|
|
Hawaii |
|
|
Total |
|
||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fioptics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
$ |
104.6 |
|
|
$ |
21.6 |
|
|
$ |
126.2 |
|
|
|
$ |
91.6 |
|
|
$ |
20.4 |
|
|
$ |
112.0 |
|
|
Video |
|
|
78.8 |
|
|
|
18.2 |
|
|
|
97.0 |
|
|
|
|
78.2 |
|
|
|
18.3 |
|
|
|
96.5 |
|
|
Voice |
|
|
17.0 |
|
|
|
5.7 |
|
|
|
22.7 |
|
|
|
|
17.2 |
|
|
|
5.8 |
|
|
|
23.0 |
|
|
Other |
|
|
9.5 |
|
|
|
— |
|
|
|
9.5 |
|
|
|
|
0.5 |
|
|
|
— |
|
|
|
0.5 |
|
|
|
|
|
209.9 |
|
|
|
45.5 |
|
|
|
255.4 |
|
|
|
|
187.5 |
|
|
|
44.5 |
|
|
|
232.0 |
|
|
Enterprise Fiber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
44.6 |
|
|
|
23.6 |
|
|
|
68.2 |
|
|
|
|
42.2 |
|
|
|
21.2 |
|
|
|
63.4 |
|
|
Legacy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
38.0 |
|
|
|
23.2 |
|
|
|
61.2 |
|
|
|
|
43.8 |
|
|
|
23.7 |
|
|
|
67.5 |
|
|
Voice |
|
|
46.2 |
|
|
|
48.1 |
|
|
|
94.3 |
|
|
|
|
53.9 |
|
|
|
53.6 |
|
|
|
107.5 |
|
|
Other |
|
|
6.5 |
|
|
|
4.9 |
|
|
|
11.4 |
|
|
|
|
6.9 |
|
|
|
6.5 |
|
|
|
13.4 |
|
|
|
|
|
90.7 |
|
|
|
76.2 |
|
|
|
166.9 |
|
|
|
|
104.6 |
|
|
|
83.8 |
|
|
|
188.4 |
|
|
Total Network revenue |
|
$ |
345.2 |
|
|
$ |
145.3 |
|
|
$ |
490.5 |
|
|
|
$ |
334.3 |
|
|
$ |
149.5 |
|
|
$ |
483.8 |
|
Fioptics
Fioptics revenue for the three and six months ended June 30, 2022 increased $13.4 million and $23.4 million, respectively, compared to the same periods in the prior year as the increase in the subscriber base for internet more than offset the decline in video and voice subscribers. The internet subscriber base continues to increase as we focus our attention on growing the internet FTTP subscriber base. In addition, the Average Revenue Per User (“ARPU”) for the three and six months ended June 30, 2022 increased for internet in Cincinnati by 7% in each period and in Hawaii by 3% and 1%, respectively, compared to the comparable periods in 2021 primarily due to price increases and more customers subscribing to higher broadband tiers. Video ARPU also increased in the three and six months ended June 30, 2022 in Cincinnati by 5% in each period and in Hawaii by 7% and 6%, respectively, compared to the same periods in the prior year which offset the decline in video subscribers. Video ARPU increases are related to price increases as well as the change in the mix of subscribers. Other revenue increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to revenue associated with fiber build projects in Cincinnati.
32
Network, continued
Enterprise Fiber
Enterprise Fiber revenue for the three and six months ended June 30, 2022 increased $3.2 million and $4.8 million, respectively, compared to the comparable periods in the prior year. Increased revenue as a result of customers migrating from legacy product offerings to higher bandwidth fiber solutions more than offset pricing pressures to provide higher speeds at a lower cost. Ethernet Bandwidth increased in Cincinnati by 6% while Ethernet Bandwidth decreased in Hawaii by 4% as compared to the prior year. The decrease in Ethernet Bandwidth in Hawaii is due to circuit activations in the six months ended June 30, 2022 only partially offsetting circuit disconnects. In addition, Agile contributed revenue of $2.1 million in the three months ended June 30, 2022.
Legacy
Legacy revenue decreased $10.6 million and $21.5 million for the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 due to the decline in voice lines and DSL subscribers. Voice lines declined 12% and 14% in Cincinnati and Hawaii, respectively, as the traditional voice lines become less relevant. DSL subscribers decreased by 21% and 18% in Cincinnati and Hawaii, respectively, as subscribers demand the higher speeds that can be provided by fiber.
Operating Costs and Expenses
Cost of services and products for the three months ended June 30, 2022 increased $3.1 million compared to the comparable period in 2021. Operating and facilities expenses increased $1.8 million due to increased energy costs. Increased contract services costs of $1.7 million are due to higher utilization of outside contractors on certain specialized projects including the expansion of our fiber network. Payroll related costs increased $1.2 million primarily due to additional headcount. Higher software development costs of $0.7 million were incurred related to increased product support and call center costs. Operating materials increased $0.7 million primarily as a result of increased purchases associated with the expansion of our fiber network. These costs were offset by a decrease in operating taxes of $2.0 million for the three months ended June 30, 2022 compared to the same period in the prior year due to lower regulatory fees. In addition, costs deferred in accordance with ASC 606 during the Predecessor period were remeasured as of the Merger Date resulting in a decrease to expense of $1.5 million in the three months ended June 30, 2022 compared to the same period in 2021.
Cost of services and products increased $1.0 million for the six months ended June 30, 2022 compared to the same period in 2021 primarily due to increased operating and facilities expenses of $2.8 million, operating materials costs of $2.6 million, software development costs of $1.1 million and contract services costs of $0.9 million partially offset by decreases in operating taxes of $3.4 million and ASC 606 related costs of $3.1 million. Cost of services and products were impacted by similar trends that impacted the three months ended June 30, 2022 in addition to increased operating materials purchases associated with a significant wiring project completed in the first quarter of 2022.
SG&A expenses increased $7.6 million and $12.2 million for the three and six months ended June 30, 2022 compared to the same periods in 2021 due to increases in contract services costs, payroll related costs, advertising, bad debt expense and software development. Contract services costs increased $3.4 million and $5.0 million for the three and six months ended June 30, 2022, respectively, compared to the comparable periods in the prior year primarily due to higher utilization of outside contractors on certain specialized projects and legal expense incurred associated with a legal dispute in Hawaii. For the three and six months ended June 30, 2022, payroll related costs increased $1.6 million and $1.9 million, respectively, due to additional headcount including headcount associated with the Company’s acquisition of Agile. Advertising expenses increased $1.1 million and $2.2 million for the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 due to increased marketing campaigns, including rebranding the business as altafiber, and promotional events. Bad debt expense increased $0.7 million and $1.5 million for the three and six months ended June 30, 2022, respectively, compared to the comparable periods in 2021 primarily due to lower expense incurred in the three and six months ended June 30, 2021 as a result of focus on collection efforts for aged receivables of customers who did not pay their bills timely due to an inability to pay caused by the COVID-19 pandemic and favorable resolution in the first quarter of 2021 of reserved balances associated with a customer that filed for bankruptcy in a prior period. For the three and six months ended June 30, 2022, software development costs increased $0.5 million and $1.0 million, respectively, compared to the same periods in the prior year primarily due to internal projects.
Depreciation and amortization expense increased $41.8 million and $74.4 million for the three and six months ended June 30, 2022, respectively, compared to the comparable periods in the prior year due to additional expense incurred subsequent to the Merger Date related to the increased value of property, plant and equipment and intangibles as a result of recording amounts at fair value.
Restructuring and severance charge reversals recorded in the three months ended June 30, 2021 are due to employees that transitioned to new positions in the Company and were previously included in the VSP offered in the first quarter of 2020.
33
Network, continued
Capital Expenditures
|
|
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||
|
|
|
Three Months Ended June 30, 2022 |
|
|
|
Three Months Ended June 30, 2021 |
|
||||||||||||||||||
|
|
|
Cincinnati |
|
|
Hawaii |
|
|
Total |
|
|
|
Cincinnati |
|
|
Hawaii |
|
|
Total |
|
||||||
|
Fioptics capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
$ |
30.4 |
|
|
$ |
10.4 |
|
|
$ |
40.8 |
|
|
|
$ |
7.2 |
|
|
$ |
6.3 |
|
|
$ |
13.5 |
|
|
Installation |
|
|
17.6 |
|
|
|
5.2 |
|
|
|
22.8 |
|
|
|
|
12.1 |
|
|
|
3.5 |
|
|
|
15.6 |
|
|
Other |
|
|
1.7 |
|
|
|
0.3 |
|
|
|
2.0 |
|
|
|
|
0.8 |
|
|
|
0.3 |
|
|
|
1.1 |
|
|
Total Fioptics |
|
|
49.7 |
|
|
|
15.9 |
|
|
|
65.6 |
|
|
|
|
20.1 |
|
|
|
10.1 |
|
|
|
30.2 |
|
|
Enterprise Fiber |
|
|
4.5 |
|
|
|
4.6 |
|
|
|
9.1 |
|
|
|
|
4.0 |
|
|
|
3.8 |
|
|
|
7.8 |
|
|
Other |
|
|
9.8 |
|
|
|
21.5 |
|
|
|
31.3 |
|
|
|
|
6.7 |
|
|
|
8.1 |
|
|
|
14.8 |
|
|
Total Network capital expenditures |
|
$ |
64.0 |
|
|
$ |
42.0 |
|
|
$ |
106.0 |
|
|
|
$ |
30.8 |
|
|
$ |
22.0 |
|
|
$ |
52.8 |
|
|
|
|
Successor |
|
|
|
Predecessor |
|
||||||||||||||||||
|
|
|
Six Months Ended June 30, 2022 |
|
|
|
Six Months Ended June 30, 2021 |
|
||||||||||||||||||
|
|
|
Cincinnati |
|
|
Hawaii |
|
|
Total |
|
|
|
Cincinnati |
|
|
Hawaii |
|
|
Total |
|
||||||
|
Fioptics capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
$ |
55.5 |
|
|
$ |
19.9 |
|
|
$ |
75.4 |
|
|
|
$ |
13.7 |
|
|
$ |
11.1 |
|
|
$ |
24.8 |
|
|
Installation |
|
|
28.5 |
|
|
|
10.3 |
|
|
|
38.8 |
|
|
|
|
23.3 |
|
|
|
6.6 |
|
|
|
29.9 |
|
|
Other |
|
|
3.7 |
|
|
|
0.6 |
|
|
|
4.3 |
|
|
|
|
2.5 |
|
|
|
0.4 |
|
|
|
2.9 |
|
|
Total Fioptics |
|
|
87.7 |
|
|
|
30.8 |
|
|
|
118.5 |
|
|
|
|
39.5 |
|
|
|
18.1 |
|
|
|
57.6 |
|
|
Enterprise Fiber |
|
|
7.2 |
|
|
|
8.2 |
|
|
|
15.4 |
|
|
|
|
12.9 |
|
|
|
7.5 |
|
|
|
20.4 |
|
|
Other |
|
|
19.3 |
|
|
|
34.3 |
|
|
|
53.6 |
|
|
|
|
13.1 |
|
|
|
16.7 |
|
|
|
29.8 |
|
|
Total Network capital expenditures |
|
$ |
114.2 |
|
|
$ |
73.3 |
|
|
$ |
187.5 |
|
|
|
$ |
65.5 |
|
|
$ |
42.3 |
|
|
$ |
107.8 |
|
Capital expenditures in Cincinnati are incurred to expand our Fioptics product suite, upgrade and increase capacity for our networks, and to extend the life of our fiber and copper networks. The Company is focused on expanding our FTTP footprint, and in the second quarter of 2022, we passed an additional 35,700 FTTP sellable addresses in Cincinnati. As of June 30, 2022, the Company is able to deliver its Fioptics services with speeds up to 30 megabits or more to approximately 699,500 residential and commercial addresses, or more than 80% of our operating territory in Cincinnati. Cincinnati construction capital expenditures for the three and six months ended June 30, 2022 increased $23.2 million and $41.8 million, respectively, compared to the same periods in 2021 due to passing more addresses in 2022 and the timing of capital expenditures, which does not necessarily coincide with the timing of when addresses become available. In the three and six months ended June 30, 2022, Cincinnati installation capital expenditures increased $5.5 million and $5.2 million, respectively, compared to the comparable periods in 2021 primarily due to increased labor and purchases of materials associated with the expansion of our fiber network. Cincinnati installation capital expenditures were also impacted by the timing of expenditures for customer premise equipment (“CPE”) utilized for installations.
Enterprise Fiber capital expenditures in Cincinnati are related to success-based fiber builds, including associated equipment, for enterprise and carrier projects to provide ethernet services as well as network refresh projects that ensure we continue to grow our capacity and services within the network core. Cincinnati Enterprise Fiber capital expenditures increased $0.5 million in the three months ended June 30, 2022 compared to the comparable period in the prior year due to capital expenditures contributed by Agile of $0.5 million. Cincinnati Enterprise Fiber capital expenditures decreased $5.7 million in the six months ended June 30, 2022 compared to the same period in the prior year primarily due to expenditures incurred in the six months ended June 30, 2021 associated with a scheduled network refresh project. Other capital expenditures are related to IT projects, cable and equipment maintenance and capacity additions, real estate upgrades and maintenance, plus other minor capital purchases.
Hawaii construction capital expenditures for the three and six months ended June 30, 2022 increased $4.1 million and $8.8 million, respectively, compared to the same periods in the prior year due to building out 12,800 new sellable addresses in the second quarter of 2022, primarily in rural areas and on the neighbor islands, and 20,400 new sellable addresses in the six months ended June 30, 2022. Hawaii installation capital expenditures increased $1.7 million and $3.7 million in the three and six months ended June 30, 2022, respectively, compared to the comparable periods in 2021 primarily due to increased internet installations on the neighbor islands. Enterprise fiber capital in Hawaii is primarily driven by new ethernet customers. Hawaii capital expenditures classified as Other include IT projects, real estate projects, road jobs or plant damage projects, and network upgrades or optimization projects.
34
IT Services and Hardware
The IT Services and Hardware segment provides end-to-end solutions ranging from consulting to implementation to ongoing optimization. These solutions include Cloud, Communications and Consulting services along with the sale and maintenance of major branded Telecom and IT hardware reported as Infrastructure Solutions. These services and products are provided through the Company's subsidiaries in various geographic areas throughout the United States, Canada and Europe. By offering a full range of equipment and strategic services in conjunction with the Company’s fiber and copper networks, the IT Services and Hardware segment provides our customers personalized solutions designed to meet their business objectives.
Cloud services include the design, implementation and on-going management of the customer’s infrastructure. This includes on-premise, public cloud and private cloud solutions. The Company assists customers with the risk assessment phase through an in-depth understanding of the customer’s business as well as designing and building a solution, using either the customer's existing infrastructure or new cloud based options that transform the way that the customer does business.
Communications solutions help to transform the way our customers do business by connecting employees, customers, and business partners. By upgrading legacy technologies through customized build projects and reducing customer costs, the Company helps to transform the customer’s business. These services include Unified Communications as a Service ("UCaaS"), Software-Defined Wide Area Network ("SD-WAN"), Network as a Service ("NaaS"), Contact Center and Collaboration.
Using our experience and expertise, Infrastructure Solutions are tailored to our customers’ organizational goals. We offer a complete portfolio of services that provide customers with efficient and optimized IT solutions that are agile and responsive to their business and are integrated, simplified and manageable. Through consulting with customers, the Company will build a solution using standard manufacturer equipment to meet our customers’ specific requirements.
Consulting services help customers assess their business and technology needs and provide the talent needed to ensure success. The Company is a premier provider of application services and IT staffing.
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
||||
|
(dollars in millions) |
|
Three Months Ended June 30, 2022 |
|
|
|
Three Months Ended June 30, 2021 |
|
|
Change |
|
|
% Change |
|
|
|
Six Months Ended June 30, 2022 |
|
|
|
Six Months Ended June 30, 2021 |
|
|
Change |
|
|
% Change |
|
||||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting |
|
$ |
83.5 |
|
|
|
$ |
71.6 |
|
|
$ |
11.9 |
|
|
|
17 |
% |
|
|
$ |
166.9 |
|
|
|
$ |
137.1 |
|
|
$ |
29.8 |
|
|
|
22 |
% |
|
Cloud |
|
|
25.1 |
|
|
|
|
24.3 |
|
|
|
0.8 |
|
|
|
3 |
% |
|
|
|
49.7 |
|
|
|
|
47.7 |
|
|
|
2.0 |
|
|
|
4 |
% |
|
Communications |
|
|
54.3 |
|
|
|
|
55.0 |
|
|
|
(0.7 |
) |
|
|
(1 |
)% |
|
|
|
109.2 |
|
|
|
|
109.0 |
|
|
|
0.2 |
|
|
|
0 |
% |
|
Infrastructure Solutions |
|
|
36.1 |
|
|
|
|
29.0 |
|
|
|
7.1 |
|
|
|
24 |
% |
|
|
|
72.0 |
|
|
|
|
59.9 |
|
|
|
12.1 |
|
|
|
20 |
% |
|
Total revenue |
|
|
199.0 |
|
|
|
|
179.9 |
|
|
|
19.1 |
|
|
|
11 |
% |
|
|
|
397.8 |
|
|
|
|
353.7 |
|
|
|
44.1 |
|
|
|
12 |
% |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products |
|
|
136.4 |
|
|
|
|
123.3 |
|
|
|
13.1 |
|
|
|
11 |
% |
|
|
|
273.2 |
|
|
|
|
239.8 |
|
|
|
33.4 |
|
|
|
14 |
% |
|
Selling, general and administrative |
|
|
40.7 |
|
|
|
|
37.9 |
|
|
|
2.8 |
|
|
|
7 |
% |
|
|
|
80.7 |
|
|
|
|
76.0 |
|
|
|
4.7 |
|
|
|
6 |
% |
|
Depreciation and amortization |
|
|
26.6 |
|
|
|
|
10.2 |
|
|
|
16.4 |
|
|
n/m |
|
|
|
|
52.6 |
|
|
|
|
20.3 |
|
|
|
32.3 |
|
|
n/m |
|
||
|
Restructuring and severance related charges |
|
|
0.4 |
|
|
|
|
0.9 |
|
|
|
(0.5 |
) |
|
|
(56 |
)% |
|
|
|
1.3 |
|
|
|
|
1.4 |
|
|
|
(0.1 |
) |
|
|
(7 |
)% |
|
Total operating costs and expenses |
|
|
204.1 |
|
|
|
|
172.3 |
|
|
|
31.8 |
|
|
|
18 |
% |
|
|
|
407.8 |
|
|
|
|
337.5 |
|
|
|
70.3 |
|
|
|
21 |
% |
|
Operating loss (income) |
|
$ |
(5.1 |
) |
|
|
$ |
7.6 |
|
|
$ |
(12.7 |
) |
|
n/m |
|
|
|
$ |
(10.0 |
) |
|
|
$ |
16.2 |
|
|
$ |
(26.2 |
) |
|
n/m |
|
||
|
Operating margin |
|
|
(2.6 |
)% |
|
|
|
4.2 |
% |
|
|
|
|
|
(6.8) pts |
|
|
|
|
(2.5 |
)% |
|
|
|
4.6 |
% |
|
|
|
|
|
(7.1) pts |
|
||
|
Capital expenditures |
|
$ |
7.1 |
|
|
|
$ |
6.2 |
|
|
$ |
0.9 |
|
|
|
15 |
% |
|
|
$ |
13.4 |
|
|
|
$ |
11.9 |
|
|
$ |
1.5 |
|
|
|
13 |
% |
35
IT Services and Hardware, continued
|
|
|
Successor |
|
|
|
Predecessor |
|
|
|
|
|
|
|
|
|
||
|
Metrics information: |
|
|
|
|
|
|
Change |
|
|
% Change |
|
||||||
|
Consulting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable Resources |
|
|
2,325 |
|
|
|
|
2,028 |
|
|
|
297 |
|
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NaaS Locations |
|
|
11,354 |
|
|
|
|
7,024 |
|
|
|
4,330 |
|
|
|
62 |
% |
|
SD - WAN Locations |
|
|
8,188 |
|
|
|
|
4,650 |
|
|
|
3,538 |
|
|
|
76 |
% |
|
Hosted UCaaS Profiles* |
|
|
310,309 |
|
|
|
|
292,266 |
|
|
|
18,043 |
|
|
|
6 |
% |
* Includes Hawaii Hosted UCaaS Profiles
36
IT Services and Hardware, continued
Revenue
IT Services and Hardware segment revenue increased $19.1 million and $44.1 million for the three and six months ended June 30, 2022, respectively, compared to the same periods in the prior year. Consulting revenue is the most significant contributor in which revenue increased $11.9 million and $29.8 million in the three and six months ended June 30, 2022, respectively, compared to the comparable periods in 2021 primarily due to existing customer projects which continue to bill and grow in 2022. Cloud revenue increased $0.8 million and $2.0 million for the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 primarily due to providing ongoing public cloud services to new customers obtained in 2021 that continue to bill in 2022 in addition to an increase in professional services projects in the six months ended June 30, 2022. These increases were partially offset by Cloud virtual data center revenue decreases of $0.7 million and $1.4 million in the three and six months ended June 30, 2022, respectively, compared to the same periods in the prior year as a result of a customer’s insourcing initiatives. Infrastructure Solutions revenue increased $7.1 million and $12.1 million for the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 primarily due to revenue associated with professional services projects and the sale of hardware. An increase in the sale of maintenance services also contributed to the increased revenue in the six months ended June 30, 2022.
Operating Costs and Expenses
IT Services and Hardware cost of services and products increased $13.1 million and $33.4 million for the three and six months ended June 30, 2022, respectively, compared to the same periods in the prior year due to increases in payroll related costs and contractor costs due to additional headcount to support revenue growth in the segment, most significantly in the Consulting practice. Payroll related costs increased by $3.4 million and $7.0 million in the three and six months ended June 30, 2022, respectively, and contractor costs increased by $11.7 million and $29.8 million in the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021. Billable resources increased by 297 persons compared to June 30, 2021 primarily as result of existing consulting projects that continue to grow. These increases were partially offset by lower regulatory fees for the three and six months ended June 30, 2022 compared to each of the comparable periods in the prior year.
SG&A expenses increased $2.8 million for the three months ended June 30, 2022 compared to the same period in the prior year primarily due to increases in contract services costs, payroll related costs and bad debt expense. Contract services costs increased $0.9 million due to increased contractors used for special projects in addition to higher insurance expenses. Increased payroll related costs of $0.8 million are due primarily to higher employee commissions. The increase in bad debt expense of $0.5 million for the three months ended June 30, 2022 compared to the same period in the prior year is primarily due to lower expense recorded in the second quarter of 2021 as a result of favorable resolution of reserved balances.
SG&A expenses increased $4.7 million for the six months ended June 30, 2022 compared to the comparable period in the prior year primarily due to similar trends that impacted the three months ended June 30, 2022 in addition to an increase in employee related costs as travel and entertainment activity continued to be low in the six months ended June 30, 2021 as a result of the pandemic.
Depreciation and amortization expense increased $16.4 million and $32.3 million for the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 due to additional expense incurred subsequent to the Merger Date related to the increased value of property, plant and equipment and intangibles as a result of recording amounts at fair value.
Restructuring and severance related charges recorded in the three and six months ended June 30, 2022 and 2021 are associated with initiatives to reduce and contain costs.
Capital Expenditures
Capital expenditures are dependent on the timing of success-based projects. Capital expenditures for the six months ended June 30, 2022 were primarily related to projects supporting the Cloud and Communications practices. In addition to success-based projects, the Company incurred $2.4 million for implementation work associated with internal software projects in the six months ended June 30, 2022.
37
Financial Condition, Liquidity, and Capital Resources
As of June 30, 2022, the Company had an accumulated deficit of $95.2 million and $1,541.8 million of outstanding indebtedness.
The Company’s primary source of cash is generated by operations. The Company generated $176.2 million and $180.1 million of cash flows from operations during the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, the Company had $347.6 million of short-term liquidity, comprised of $6.7 million of cash and cash equivalents, $323.0 million of undrawn capacity on our Revolving Credit Facility, and $17.9 million available under the Receivables Facility.
The Receivables Facility permits maximum borrowings of up to $215.0 million. As of June 30, 2022, the Company had borrowings of $176.4 million and $20.7 million of letters of credit outstanding under the Receivables Facility on a borrowing capacity of $215.0 million. While we expect to continue to renew this facility, we would be required to use cash, our Revolving Credit Facility, or other sources to repay any outstanding balance on the Receivables Facility if it was not renewed.
The Company’s primary uses of cash are for capital expenditures and debt service and, to a lesser extent, to fund pension and retiree medical obligations. The Company believes that its cash on hand, cash generated from operations, and available funding under its credit facilities will be adequate to meet its cash requirements for the next twelve months.
In the second quarter of 2022, the Company executed amendments to its Receivables Facility, which replaced, amended and added certain provisions and definitions including the replacement of LIBOR with SOFR, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York. Capacity on the Receivables Facility is calculated and will continue to be calculated based on the quantity and quality of outstanding accounts receivables. Therefore if the Company experiences declines in revenue or extends discounts to customers, the capacity could be negatively impacted and reduce our short term liquidity.
As of June 30, 2022, the Company was in compliance with the Credit Agreement covenants and ratios.
Cash Flows
Cash provided by operating activities during the six months ended June 30, 2022 totaled $176.2 million, a decrease of $3.9 million compared to the same period in the prior year. The decrease is due primarily to increased cash outflow due to working capital which more than offset lower interest payments of $29.3 million for the six months ended June 30, 2022 compared to the comparable period in 2021 primarily due to the extinguishment of the 7% Senior Notes due 2024 and 8% Senior Notes due 2025 in the fourth quarter of 2021 and the termination of the designated interest rate swaps in the Predecessor period of 2021. Increased cash outflow due to working capital is partially due to the timing of vendor payments.
Cash flows used in investing activities during the six months ended June 30, 2022 totaled $263.4 million, an increase of $143.8 million compared to the same period in the prior year due to the increase in capital expenditures as a result of increasing the number of addresses passed with a fiber-to-the-premise product. In addition, cash payments for the acquisition of Agile totaled $65.1 million in the second quarter of 2022.
Cash flows provided by financing activities during the six months ended June 30, 2022 totaled $88.6 million as compared to cash used in financing activities of $69.2 million during the six months ended June 30, 2021. During the six months ended June 30, 2022, the Company borrowed $23.0 million and $77.0 million on the Receivables Facility and Revolving Credit Facility, respectively. During the six months ended June 30, 2021, the Company utilized cash for payments of $8.6 million and $43.0 million on the Receivables Facility and the Company’s former Revolving Credit Facility, respectively, in addition to paying dividends on preferred stock of $5.2 million.
Regulatory Matters
Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for a complete description of regulatory matters.
Contingencies
In the normal course of business, the Company is subject to various regulatory and tax proceedings, lawsuits, claims and other matters. The Company believes adequate provision has been made for all such asserted and unasserted claims in accordance with accounting principles generally accepted in the United States. Such matters are subject to many uncertainties and outcomes that are not predictable with assurance.
38
Critical Accounting Policies
The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Application of these principles requires management to make estimates or judgments that affect the amounts reported in the accompanying Condensed Consolidated Financial Statements and information available as of the date of the financial statements. As this information changes, the financial statements could reflect different estimates or judgments.
The Company’s most critical accounting policies and estimates are described in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recently Issued Accounting Standards
Refer to Note 1 of the Condensed Consolidated Financial Statements for further information on recently issued accounting standards. The adoption of new accounting standards did not have a material impact on the Company’s financial results for the six months ended June 30, 2022.
39
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for a description of the Company's market risks.
Item 4. Controls and Procedures
|
|
(a) |
Evaluation of disclosure controls and procedures. |
Cincinnati Bell Inc.’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in SEC Rule 13a-15(e)) as of the end of the period covered by this report. Based on this evaluation, Cincinnati Bell Inc.’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, such controls and procedures were effective.
|
|
(b) |
Changes in internal control over financial reporting. |
Cincinnati Bell Inc.’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated any changes in the Company’s internal control over financial reporting that occurred during the second quarter of 2022 and have concluded that there were no changes to Cincinnati Bell Inc.’s internal control over financial reporting during the second quarter of 2022 that materially affect, or are reasonably likely to materially affect, Cincinnati Bell Inc.’s internal control over financial reporting.
40
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Cincinnati Bell and its subsidiaries are involved in a number of legal proceedings. Liabilities are established for legal claims when losses associated with the claims are judged to be probable and the loss can be reasonably estimated. In many lawsuits and arbitrations, including most class action lawsuits, it is not possible to determine whether a liability has been incurred or to estimate the amount of the liability until the case is close to resolution, in which case a liability will not be recognized until that time. Based on information currently available, consultation with counsel, available insurance coverage and recognized liabilities, the Company believes that the eventual outcome of all claims will not, individually or in the aggregate, have a material effect on the Company’s financial position or results of operations.
Item 1A. Risk Factors
Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for a comprehensive listing of the Company’s risk factors. There are no material changes for the six months ended June 30, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosure
None.
Item 5. Other Information
No reportable items.
41
Item 6. Exhibits
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Exhibit Number |
Exhibit Description |
Form |
Filing Date |
Exhibit No. |
SEC File No. |
Filed Herewith |
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Second Amended Articles of Incorporation of Cincinnati Bell Inc.
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10-K |
5/19/2022 |
3.1 |
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Second Amended and Restated Regulations of Cincinnati Bell Inc.
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8-K |
9/7/2021 |
3.1 |
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Sixth Amendment to the Receivables Financing Agreement, dated as of June 3, 2022, by and among Cincinnati Bell Funding LLC, and Cincinnati Bell Funding Canada Ltd., as Borrowers, Cincinnati Bell Inc. and OnX Enterprise Solutions Ltd., as Servicers, the Lenders, Letter of Credit Participants and Group Agents from time to time party thereto, PNC Bank Canada Branch, as issuer of Letters of Credit and Lender, PNC Bank, National Association, as Administrator and issuer of Letters of Credit, and PNC Capital Markets, as Structuring Agent.
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+ |
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Fifth Amendment to Receivables Purchase Agreement, dated as of June 3, 2022, by and among Cincinnati Bell Funding LLC, as Seller, Cincinnati Bell Inc., as Servicer, and PNC Bank, National Association, as Buyer.
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+ |
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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+ |
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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+ |
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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+ |
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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+ |
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101 |
The following financial statements from Cincinnati Bell Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 were formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Shareholders’ Equity (Deficit), (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
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104 |
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
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The Company's historical reports on Form 10-K, 10-Q, and 8-K are available free of charge in the Investor Relations section of the Company's website: http://www.cincinnatibell.com. The Company has ceased to be a registrant subsequent to September 7, 2021 but continues to voluntarily file annual, quarterly and certain other information with the SEC due to contractual provisions included in certain indentures.
42
SIGNATURES
Pursuant to the requirements 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.
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Cincinnati Bell Inc. |
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Date: |
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Chief Financial Officer |
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Date: |
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Chief Accounting Officer |
43
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 12/31/22 | ||||
| Filed on: | 8/4/22 | |||
| For Period end: | 6/30/22 | |||
| 6/3/22 | ||||
| 5/2/22 | ||||
| 3/31/22 | 10-Q, NT 10-Q | |||
| 12/31/21 | 10-K, NT 10-K | |||
| 10/18/21 | 8-K | |||
| 9/8/21 | ||||
| 9/7/21 | 25-NSE, 4, 8-K, S-8 POS | |||
| 8/31/21 | ||||
| 6/30/21 | 10-Q | |||
| 3/31/21 | 10-Q | |||
| 12/31/20 | 10-K, 11-K | |||
| 3/13/20 | 8-K, DEFA14A, SC 13D/A | |||
| 7/2/18 | 3, 4, 4/A, 8-K, 8-K/A, S-8 | |||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/25/24 Cincinnati Bell Inc. 10-K 12/31/23 136:29M Donnelley … Solutions/FA 3/22/23 Cincinnati Bell Inc. 10-K 12/31/22 128:38M Donnelley … Solutions/FA |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 5/19/22 Cincinnati Bell Inc. 10-K 12/31/21 131:36M ActiveDisclosure/FA 9/07/21 Cincinnati Bell Inc. 8-K:2,3,5,8 9/07/21 13:307K Cravath Swaine & … 01/FA |