ITEM 2. PROPERTIES
The property of the Company is principally telephone plant which does not lend itself to description by character and location of principal units. Other property of the Company is principally computer equipment and associated operating system software, furniture and fixtures, and assets acquired as part of the Company's investment in the wireless venture with AT&T PCS (most of the Company's property is located in southwestern Ohio and northern Kentucky).
The gross investment in telephone plant and other property, in millions of dollars, at December 31, 1998 was as follows:
Substantially all of the central office switching stations are located in buildings owned by CBT situated on land which it owns. Some CBT business and administrative offices are located in rented facilities, some of which are treated as capitalized leases and included in the "Furniture, fixtures, vehicles and other" caption above. Facilities leased as part of an operating lease arrangement are expensed as incurred and are not included in the above totals.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
No matter was submitted to a vote of security holders in the fourth quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE REGISTRANT (DURING 1998)
The names, ages and positions of the executive officers of the Company are as follows:
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(a) Member of the Board of Directors
(b) Member of the Executive Committee
(c) Following the initial public offering of approximately 10% of the outstanding shares of Convergys Corporation, effective September 1, 1998, Mr. Orr became President and Chief Executive Officer of Convergys and ceased to be the Chief Operating Officer of the Company, Mr. Baskett became General Counsel and Secretary of Convergys and ceased to be General Counsel and Secretary of the Company, Mr. Henry became Chief Operating Officer of Convergys Information Management Group Inc. and ceased to be Executive Vice President and Chief Financial Officer of the Company. Also effective September 1, 1998, Mr. Mooney became Chief Financial Officer of
the Company and Mr. Taylor became General Counsel and Secretary of the Company. In conjunction with the completion of the spin-off of Convergys on December 31, 1998, Mr. Mechem became Chairman of the Board of Convergys and ceased to be Chairman of the Board of the Company, and Mr. Kiggen was elected Chairman of the Board replacing Mr. Mechem.
(d) Effective February 28, 1999, Mr. LaMacchia resigned as President and Chief Executive Officer of the Company but will continue to serve as a Director of the Company.
(e) Effective September 1, 1998, Mr. Ellenberger became Chief Operating Officer of the Company and, effective March 1, 1999, upon Mr. LaMacchia's resignation, Mr. Ellenberger became President and Chief Executive Officer of the Company.
Officers are elected annually but are removable at the discretion of the Board of Directors.
CHARLES S. MECHEM, JR., Chairman of the Board of the Company, 1996; Commissioner Emeritus, Ladies Professional Golf Association ("LPGA"); Commissioner of the LPGA, 1991-1995; Chairman of The United States Shoe Corporation, 1993-1995; Director of AGCO, Mead Corporation, Ohio National Life Insurance Company, J.M. Smucker Company, Firstar Corporation and its subsidiary, Firstar Bank, N.A.
JAMES D. KIGGEN, Chairman of the Board of the Company since January 1, 1999; Chairman of the Board of Xtek, Inc. since 1985; Chief Executive Officer of Xtek, Inc., 1985-1988; President of Xtek, Inc., 1985-1995. Director of Fifth Third Bancorp and its subsidiary, The Fifth Third Bank and The United States Playing Card Company.
JOHN T. LAMACCHIA, President and Chief Executive Officer of the Company, 1993 - February 28, 1999; President of the Company, 1988 - 1998; Chairman of CBT, 1993 - - 1998; Chief Operating Officer of the Company, 1988-1993; Chairman of CBIS, 1988-1996. Director of The Kroger Company and Burlington Resources Inc.
JAMES F. ORR, Chief Operating Officer of the Company and Chairman of CBIS, 1996 - - August 31, 1998; Chairman of MATRIXX, 1997 - August 31, 1998; Executive Vice President of the Company and President and Chief Executive Officer of CBIS, 1995-1996; Chief Operating Officer of CBIS, 1994; President and Chief Executive Officer of MATRIXX 1993-1994.
RICHARD G. ELLENBERGER, President and Chief Executive Officer of the Company since March 1, 1999; Chief Operating Officer of the Company since September 1, 1998; President and Chief Executive Officer of CBT since June, 1997; Chief Executive Officer of XLConnect, 1996-1997; President, Business Services of MCI Telecommunications, 1995-1996; Senior Vice President, Worldwide Sales of MCI Telecommunications, 1994-1995; Senior Vice President, Branch Operations of MCI Telecommunications, 1993-1994; Vice President, Southeast Region of MCI Telecommunications, 1992-1993; Chief Operating Officer of Entrade Corporation, 1990-1992.
WILLIAM D. BASKETT III, General Counsel and Chief Legal Officer of the Company, 1993 - August 31, 1998; Secretary of the Company, 1997 - August 31, 1998; Partner of Frost & Jacobs LLP, 1970-1997.
BRIAN C. HENRY, Executive Vice President and Chief Financial Officer of the Company, 1993 - August 31, 1998; Chief Operating Officer of CBIS, 1998 - August 31, 1998. Vice President and Chief Financial Officer of Mentor Graphics, 1986-1992.
ROBERT J. MARINO, President and Chief Executive Officer of CBIS, 1996 - August 31, 1998; Chief Operating Officer of CBIS, 1995 - 1996; President - Northeast Region of Nextel, 1993 - 1995; President of Houston Cellular Telephone Company, 1990 - 1993.
DAVID F. DOUGHERTY, President and Chief Executive Officer of MATRIXX, 1995 - August 31, 1999; Senior Vice President and Chief Operating Officer U.S. Operations, 1993-1994; President of the Consumer Division, 1991-1992.
KEVIN W. MOONEY, Chief Financial Officer of the Company since September 1, 1998; Senior Vice President and Chief Financial Officer of CBT since January 1998; Vice President and Controller of the Company, September, 1996 to January, 1998; Vice President of Financial Planning and Analysis of the Company, January, 1994 to September, 1996; Director of Financial Planning and Analysis of the Company, 1990-1994.
THOMAS E. TAYLOR, General Counsel and Secretary of the Company since September 1, 1998; Senior Vice President and General Counsel of CBT since August 1, 1996; prior to August 1, 1996, partner of Frost & Jacobs LLP.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS.
Cincinnati Bell Inc. (symbol: CSN) common shares are listed on the New York Stock Exchange and on the Cincinnati Stock Exchange. As of February 26, 1999, there were approximately 24,156 holders of record of the 137,357,138 outstanding common shares of the Company. The high and low sales prices* and dividends declared per common share each quarter for the last two fiscal years are listed below:
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*Prices are before the spin-off of Convergys Corporation. Company shares began trading on a post-spin-off basis on January 4, 1999.
ITEMS 6 THROUGH 8.
The Selected Financial Data, Management's Discussion and Analysis of Financial Condition and Results of Operations, Quantitative and Qualitative Disclosures about Market Risk and Financial Statements and Supplementary Data required by these items are included in the registrant's annual report to security holders for the fiscal year ended December 31, 1998, included in Exhibit 13 and are incorporated herein by reference pursuant to General Instruction G(2).
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No disagreements with accountants on any accounting or financial disclosure or auditing scope or procedure occurred during the period covered by this report.
PART III
ITEMS 10 THROUGH 13.
Information regarding executive officers required by Item 401 of Regulation S-K is furnished in a separate disclosure in Part I of this report under the caption "Executive Officers of the Registrant" since the registrant did not furnish such information in its definitive proxy statement prepared in accordance with Schedule 14A.
The other information required by these items is included in the registrant's definitive proxy statement dated March 24, 1999 [in the first paragraph on page 2, the accompanying notes on page 2 and the Section 16 (a) paragraph on page 2, the information under "Election of Directors" on pages 6 and 7, the information under "Share Ownership of Directors and Officers" on page 5, the information under "Executive Compensation" on page 12 through 17.] The foregoing is incorporated herein by reference pursuant to General Instruction G(3).
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report: Page ----
(1) Consolidated Financial Statements:
Report of Management *
Report of Independent Accountants *
Consolidated Statements of Income and Comprehensive Income *
Consolidated Balance Sheets *
Consolidated Statements of Cash Flows *
Consolidated Statements of Common Shareowners' Equity *
Notes to Financial Statements *
(2) Financial Statement Schedules:
Report of Independent Accountants on Financial Statement Schedule 23
II - Valuation and Qualifying Accounts 24
Financial statements and financial statement schedules other than that listed above have been omitted because the required information is contained in the financial statements and notes thereto, or because such schedules are not required or applicable.
* Incorporated herein by reference to the appropriate portions of the registrant's annual report to security holders for the fiscal year ended December 31, 1998. (See Part II)
(3) Exhibits
Exhibits identified in parenthesis below, on file with the Securities and Exchange Commission ("SEC"), are incorporated herein by reference as exhibits hereto.
Exhibit Number - ------
(3)(a) Amended Articles of Incorporation effective November 9, 1989. (Exhibit (3)(a) to Form 10-K for 1989, File No. 1-8519).
(3)(b) Amended Regulations of the registrant. (Exhibit 3.2 to Registration Statement No. 2-96054).
(4)(a) Provisions of the Amended Articles of Incorporation and the Amended Regulations of the registrant which define the rights of holders of Common Shares and the Preferred Shares are incorporated by reference to such Amended Articles filed as Exhibit (3)(a) hereto and such Amended Regulations filed as Exhibit (3)(b) hereto.
(4)(b) Rights Agreement dated April 29, 1997 between the Company and The Fifth Third Bank, Rights Agent.
4(c)(i) Indenture dated July 1, 1993, between Cincinnati Bell Inc., Issuer, and The Bank of New York, Trustee, in connection with $50,000,000 of Cincinnati Bell, Inc. 71/4% Notes Due June 15, 2023. Exhibit 4-A to Form 8-K, date of report July 12, 1993, File No. 1-8519.
(4)(c)(ii) Indenture dated August 1, 1962, between Cincinnati Bell Telephone Company and Bank of New York, Trustee (formerly, The Central Trust Company was trustee), in connection with $20,000,000 of Cincinnati Bell Telephone Company Forty Year 4-3/8% Debentures, Due August 1, 2002. (Exhibit 4(c)(iii) to Form 10-K for 1992, File No. 1-8519).
(4)(c)(iii) Indenture dated as of October 27, 1993, among Cincinnati Bell Telephone Company, as Issuer, Cincinnati Bell Inc., as Guarantor, and The Bank of New York, as Trustee. (Exhibit 4-A to Form 8-K, date of report October 27, 1993, File No. 1-8519).
4(c)(iv) Indenture dated as of November 30, 1998 among Cincinnati Bell Telephone Company, as Issuer, Cincinnati Bell Inc., as Guarantor, and The Bank of New York, as Trustee (Exhibit 4-A to Form 8-K, date of report November 30, 1998, File No. 1-8519).
(4)(c)(v) No other instrument which defines the rights of holders of long term debt of the registrant is filed herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this regulation, the registrant hereby agrees to furnish a copy of any such instrument to the SEC upon request.
(10)(i)(1) Plan of Reorganization and Distribution Agreement by and between the Company and Convergys Corporation, dated as of July 20, 1998.
(10)(i)(2) Services Agreement by and between the Company and Convergys Corporation, dated as of July 20, 1998.
(10)(i)(3) Tax Separation and Allocation Agreement between the Company and Convergys Corporation, dated as of July 20, 1998.
(10)(i)(4) Benefits Agreement between the Company and Convergys Corporation, dated October 14, 1998.
(10)(iii)(A)(1)* Short Term Incentive Plan of Cincinnati Bell Inc., as amended January 1, 1995. (Exhibit (10)(iii)(A)(1)(i) to Form 10-K for 1995, File No. 1-8519).
(10)(iii)(A)(2)* Cincinnati Bell Inc. Deferred Compensation Plan for Outside Directors, as amended and restated effective February 1, 1999.
(10)(iii)(A)(3)(i)* Cincinnati Bell Inc. Pension Program, as amended effective November 4, 1991. (Exhibit (10)(iii)(A)(4)(ii) to Form 10-K for 1994, File No. 1-8519).
(10)(iii)(A)(3)(ii)* Cincinnati Bell Pension Program, as amended and restated effective March 3, 1997. (Exhibit (10)(iii)(A)(3)(ii) to Form 10-K for 1997 File No. 1-8519).
(10)(iii)(A)(4)(i)* Executive Employment Agreement dated December 1, 1987, between the Company and John T. LaMacchia. (Exhibit (10)(iii)(A)(10) to Form 10-K for 1987, File No. 1-8519).
10(iii)(A)(4)(ii)* Employment Agreement dated January 1, 1999 between the Company and John T. LaMacchia.
(10)(iii)(A)(5)(i)* Employment Agreement dated October 1, 1995, between Cincinnati Bell Information Systems Inc. and Robert J. Marino. (Exhibit (10)(iii)(A)(7) to Form 10-K for 1996, File No. 1-8519).
(10)(iii)(A)(5)(ii)* Employment Agreement between Convergys Corporation and Robert J. Marino and December 16, 1998 Amendment to Employment Agreement.
(10)(iii)(A)(6)(i)* Employment Agreement dated as of January 1, 1995, between the Company and David F. Dougherty. (Exhibit (10)(iii)(A)(11) to Form 10-K for 1995, File No. 1-8519).
(10)(iii)(A)(6)(ii)* Amendment to Employment Agreement dated as of January 1, 1995, between the Company and David F. Dougherty. (Exhibit (10)(iii)(A)(12) to Form 10-K for 1995, File No. 1-8519).
(10)(iii)(A)(6)(iii)* Employment Agreement between Convergys Corporation and David F. Dougherty and December 16, 1998 Amendment to Employment Agreement.
(10)(iii)(A)(7)* Executive Employment Agreement dated as of March 29, 1993, between the Company and Brian C. Henry. (Exhibit (10)(iii)(A)(14) to Form 10-K for 1993, File No. 1-8519).
(10)(iii)(A)(8)(i)* Employment Agreement dated as of August 19, 1994, between the Company and James F. Orr. (Exhibit (10)(iii)(A)(17)(i) to Form 10-K for 1994, File No. 1-8519).
(10)(iii)(A)(8)(ii)* Amendment to Employment Agreement dated as of October 31, 1994, between the Company and James F. Orr. (Exhibit (10)(iii)(A)(17)(ii) to Form 10-K for 1994, File No. 1-8519).
(10)(iii)(A)(8)(iii)* Employment Agreement between Convergys Corporation and James F. Orr and December 16, 1998 Amendment to Employment Agreement.
(10)(iii)(A)(9)* Employment Agreement dated January 1, 1999 between the Company and Richard G. Ellenberger.
(10)(iii)(A)(10)(i)* Employment Agreement, dated January 1, 1998, between the Company and William D. Baskett III. (Exhibit (10)(iii)(A)(12) to Form 10-K for 1997, File No. 1-8519).
(10)(iii)(A)(10)(ii)* Employment Agreement between Convergys Corporation and William D. Baskett III. and December 16, 1998 Amendment to Employment Agreement.
(10)(iii)(A)(11)* Employment Agreement effective January 1, 1999 between the Company and Kevin W. Mooney.
(10)(iii)(A)(12)* Employment Agreement dated January 1, 1999 between the Company and Thomas E. Taylor.
(10)(iii)(A)(13)* Cincinnati Bell Inc. Executive Deferred Compensation Plan, as amended and restated effective October 25, 1998.
(10)(iii)(A)(14)* Cincinnati Bell Inc. 1997 Long Term Incentive Plan. (Exhibit (10)(iii)(A)(14)(iii) to Form 10-K for 1997, file No. 1-8519).
(10)(iii)(A)(15)* Cincinnati Bell Inc. 1997 Stock Option Plan for Non-Employee Directors, as revised and restated effective February 1, 1999.
(10)(iii)(A)(16)* Cincinnati Bell Inc. 1989 Stock Option Plan. (Exhibit (10)(iii)(A)(14) to Form 10-K for 1989, File No. 1-8519).
(10)(iii)(A)(17)(i)* MATRIXX Marketing Inc. Executive Deferred Compensation Plan. (Exhibit (10)(iii)(A)(21) to Form 10-K for 1996, File No. 1-8519).
(10(iii)(A)(17)(ii)* Amendment to MATRIXX Marketing Inc. Executive Deferred Compensation Plan (effective May 1, 1994). (Exhibit (10)(iii)(A)(21)(i) to Form 10-K for 1996, File No. 1-8519).
(10)(iii)(A)(17)(iii)*Amendment to MATRIXX Marketing Inc. Executive Deferred Compensation Plan (effective May 4, 1996). (Exhibit (10)(iii)(A)(21)(ii) to Form 10-K for 1996, File No. 1-8519).
(12) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends.
(13) Portions of the Cincinnati Bell Inc. annual report to security holders for the fiscal year ended December 31, 1998, as incorporated by reference including the Selected Financial Data, Report of Management, Report of Independent Accountants, Management's Discussion and Analysis and Consolidated Financial Statements.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(27.1, 27.2, 27.3) Financial Data Schedules.
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* Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
The Company will furnish, without charge, to a security holder upon request, a copy of the documents, portions of which are incorporated by reference (Annual Report to security holders and proxy statement), and will furnish any other exhibit at cost.
(b) Reports on Form 8-K.
(1) Form 8-K, date of report October 13, 1998, concerning certain information about the Company and Cincinnati Bell Telephone Company.
(2) Form 8-K, date of report November 19, 1998, reporting matters related to the Convergys Spin-Off and Mr. Ellenberger's election as a director of the Company.
(3) Form 8-K, date of report November 30, 1998, reporting that Cincinnati Bell Telephone Company consummated the sale of $150,000,000 of its Guaranteed 6.30% Debentures due 2028.
(4) Form 8-K, date of report December 31, 1998, reporting that the Company had completed the spin-off of Convergys Corporation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CINCINNATI BELL INC.
March 29, 1999 By: /s/ Kevin W. Mooney -------------------------- Kevin W. Mooney Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Signature Title Date - --------- ----- ----
Principal Executive Officer; RICHARD G. ELLENBERGER* President, Chief Executive - ------------------------------ Officer and Director Richard G. Ellenberger
Principal Accounting and Financial Officer; KEVIN W. MOONEY* Chief Financial Officer - ------------------------------ Kevin W. Mooney
PHILLIP R. COX* Director - ------------------------------ Phillip R. Cox
WILLIAM A. FRIEDLANDER* Director - ------------------------------ William A. Friedlander
KAREN M. HOGUET* Director - ------------------------------ Karen M. Hoguet
ROBERT P. HUMMEL, M.D.* Director - ------------------------------ Robert P. Hummel, M.D.
JAMES D. KIGGEN* Chairman of the Board and Director - ------------------------------ James D. Kiggen
JOHN T. LAMACCHIA* Director - ------------------------------ John t. LaMacchia
MARY D. NELSON* Director - ------------------------------ Mary D. Nelson
DAVID B. SHARROCK* Director - ------------------------------ David B. Sharrock
*By: /s/ Kevin W. Mooney March 29, 1999 ------------------ Kevin W. Mooney as attorney-in-fact and on his behalf as Chief Financial Officer
REPORT OF INDEPENDENT ACCOUNTS
To the Shareowners of Cincinnati Bell Inc.
Our report on the consolidated financial statements of Cincinnati Bell Inc. has been incorporated by reference in this Form 10-K from page 29 of the 1998 annual report of Cincinnati Bell Inc. In connection with our audits of such consolidated financial statements, we have also audited the related financial statement schedule on page 24 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
/s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP
Cincinnati, Ohio March 29, 1999
Schedule II CINCINNATI BELL INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Millions of Dollars)
(a) Primarily includes amounts previously written off which were credited directly to this account when recovered and an allocation of the purchase price for receivables purchased from Interexchange Carriers.
(b) Primarily includes amounts written off as uncollectible.
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