<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECRITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-8519
CINCINNATI BELL INC.
An Ohio I.R.S. Employer
Corporation No. 31-1056105
201 East Fourth Street, Cincinnati, Ohio 45202
Telephone Number 513 397-9900
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Shares (par value $1.00 per share) New York Stock Exchange
Preferred Share Purchase Rights Cincinnati Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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At February 28, 1994, 65,094,358 common shares were outstanding.
At February 28, 1994, the aggregate market value of the voting shares owned
by non-affiliates was $1,058,203,575.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (SECTION 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's annual report to security holders for the
fiscal year ended December 31, 1993 (Parts I, II and IV)
(2) Portions of the registrant's definitive proxy statement dated March 14,
1994 issued in connection with the annual meeting of shareholders
(Part III)
<PAGE>
TABLE OF CONTENTS
PART I
Item Page
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1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Submission of Matters to a Vote of Security Holders . . . . . . . . 10
PART II
5. Market for the Registrant's Common Equity
and Related Security Holder Matters. . . . . . . . . . . . . . . . . 14
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . 14
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . . . 14
8. Consolidated Financial Statements. . . . . . . . . . . . . . . . . . 14
9. Disagreements on Accounting and Financial Disclosure . . . . . . . . 14
PART III
10. Directors and Executive Officers of Registrant . . . . . . . . . . . 14
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . 14
12. Security Ownership of Certain Beneficial Owners and Management . . . 14
13. Certain Relationships and Related Transactions . . . . . . . . . . . 14
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . 16
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See page 11 for "Executive Officers and Significant Employees ofthe Registrant".
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Cincinnati Bell Inc. (including its wholly owned subsidiaries, except as
the context may otherwise require, the "Company") is incorporated under the
laws of Ohio and has its principal executive offices at 201 East Fourth Street,
Cincinnati, Ohio 45202 (telephone number 513 397-9900).
The Company is a holding company engaged in operations through its
subsidiaries. The major subsidiaries are Cincinnati Bell Telephone Company
("CBT"), Cincinnati Bell Information Systems Inc. ("CBIS") and MATRIXX Marketing
Inc. ("MATRIXX"). CBT provides telecommunications network services, CBIS
designs, markets and manages information systems related to the
telecommunications industry, and MATRIXX provides telephone marketing and
research, fulfillment and data base services. Other subsidiaries include
Cincinnati Bell Long Distance Inc. ("CBLD") which provides resale of long
distance telecommunications services and products as well as voice mail and
paging services, Cincinnati Bell Directory Inc. ("CBD") which provides Yellow
Pages and other directory products and services and information and advertising
services, and companies having interests in cellular mobile telephone service,
the purchase, sale and reconditioning of telecommunications and computer
equipment, and the ownership of real estate used by the Company.
CINCINNATI BELL TELEPHONE COMPANY
CBT is engaged principally in the business of furnishing telecommunications
network services, mainly local exchange, access and toll telephone service, in
four counties in southwestern Ohio, six counties in northern Kentucky and parts
of two counties in southeastern Indiana. On December 31, 1993, CBT had
approximately 848,000 network access lines in service. The principal cities in
which CBT furnishes local service are Cincinnati, Norwood and Hamilton in Ohio
and Covington, Newport and Florence in Kentucky. Approximately 98% of CBT's
network access lines are in a single local service area. Other communications
services offered by CBT include voice, data and video transmission, custom
calling services and billing services. In addition, CBT is a sales agent for
certain products and services of American Telephone and Telegraph Company
("AT&T") and also sells products of other companies.
CBT's local exchange, access and toll telephone operations are subject to
regulation by the regulatory authorities of the states in which it operates with
respect to intrastate rates and services, issuance of securities and other
matters. CBT is also subject to the jurisdiction of the Federal Communications
Commission ("FCC") with respect to interstate rates, services and other matters.
The FCC prescribes a uniform system of accounts and the principles and standard
procedures used to separate CBT's investments, revenues, expenses, taxes and
reserves between those applicable to interstate services under the jurisdiction
of the FCC and to intrastate services under the jurisdiction of the state
regulatory authorities.
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TELEPHONE OPERATIONS. The lines provided by CBT to customer premises can
be interconnected with the lines of other telephone companies in the United
States and with telephone systems in most other countries. Interconnection is
made through the facilities of interexchange carriers and local exchange
carriers.
The following table sets forth for CBT the number of network access lines
at December 31:
Thousands
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1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Network Access Lines 848 827 808 800 781
Recurring charges for network access lines and other local services for the
year ended December 31, 1993 accounted for approximately 45% of CBT revenues and
sales.
INTRASTATE RATES. Rates for intrastate services offered by CBT are either
non-regulated by state regulatory authorities in Ohio and Kentucky or regulated
by such state regulatory authorities which are The Public Utilities Commission
of Ohio (the "PUCO") and the Public Service Commission of Kentucky (the "PSCK").
Approximately 78% of CBT's 1993 revenues and sales was derived from intrastate
service. Approximately 83% of 1993 intrastate revenues was derived from Ohio
service, approximately 17% was derived from Kentucky service and minor amounts
were derived from Indiana and other states service. Of the total 1993 intrastate
revenues, local service accounted for approximately 68%, intrastate long
distance service and network access accounted for approximately 14% and
miscellaneous revenue accounted for approximately 18% of such revenues and
sales.
In 1984, the PUCO issued orders providing the format to be employed by
local exchange telephone companies in Ohio for setting charges for intrastate
access by interexchange carriers. The PUCO determined that the Ohio intrastate
access charges should mirror the interstate access charges set by the FCC (see
"Interstate Rates"), with the exception that the PUCO did not order mirroring of
subscriber line charges or carrier common line charges.
Pursuant to procedures established by the PUCO, local exchange companies
are permitted to file plans proposing alternative forms of regulation for
competitive services and basic service rates. On March 12, 1993, CBT filed a
notice of intent to file an application for approval of an alternative
regulation plan and for a threshold rate adjustment. Pursuant to CBT's
proposal, services would be categorized into various cells depending on the
nature of the services, with varying degrees of pricing flexibility. Also,
CBT's proposal requested an across-the-board (with a few noted exceptions)
increase of approximately 9% in its rates.
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CBT filed its application on May 4, 1993. On November 25, CBT voluntarily
filed several modifications to its initial proposal in response to concerns
raised by various intervenors. The initial and modified plans sought a
threshold rate increase of $17.1 million, or approximately a 5.5% increase in
annual revenues. On January 31, 1994, the PUCO staff issued its evaluation of
CBT's filing and recommended an annual revenue increase in the range of $6.6
million to $11.1 million. Thereafter, CBT and the intervenors filed objections
to the staff's recommendation. The parties are involved in negotiations to
settle the case. In the event that a settlement is not reached, hearings are
expected to begin in April 1994.
In 1991, the PSCK issued an order amending its prior format to be used by
local exchange companies in Kentucky for setting charges for intrastate access
for interexchange carriers. In this order, the PSCK ordered that rates and
regulations should mirror those of the FCC with certain exceptions that may be
considered for future mirroring based on the merits of each situation.
INTERSTATE RATES. Approximately 22% of CBT's 1993 revenues and sales was
derived from interstate and foreign services under FCC tariffs. The FCC has
regulatory jurisdiction over services, rates and other matters relating to CBT's
interstate operations. The FCC prescribes a uniform system of accounts
applicable to telephone companies, separations procedures to be utilized in
separating investments, expenses, taxes and reserves between the federal and
state regulatory jurisdictions, and depreciation rates for interstate plant and
facilities.
The FCC's cost allocation rules specify requirements relative to the
allocation of costs between regulated and non-regulated activities, as well as
transactions between affiliated entities. CBT's cost allocation manual, setting
forth its method for separating regulated and non-regulated activities
consistent with the FCC's cost allocation rules, was approved, as modified by
the FCC. CBT continues to review its cost allocation manual and to modify it as
appropriate to reflect CBT's circumstances.
The FCC also prescribes the rate of return which regulated carriers are
authorized to earn on their regulated interstate business. The currently
effective authorized rate of return is 11.25%. The FCC has yet to design a
valid refund mechanism to replace its automatic refund rule to address instances
where earnings exceed authorized levels for any monitoring period. The U.S.
Court of Appeals for the District of Columbia Circuit previously found the FCC's
automatic refund rule to be arbitrary and capricious. In the absence of FCC
action, several complaints were filed pursuant to Section 208 of the
Communications Act seeking refunds related to prior access periods in which CBT
had allegedly exceeded the authorized rate of return. The FCC has awarded
damages in these cases, thereby attempting to achieve the same results that were
found improper in the previously overturned FCC rule. Cincinnati Bell has filed
appeals to those FCC orders.
CBT receives its principal interstate compensation from access charges paid
by interexchange carriers and end users. Specifically, traffic sensitive
switched access charges apply on a usage sensitive basis to recover costs
associated with the use of CBT's switching and transmission
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facilities. Special access charges recover costs of private line connections.
CBT's non-traffic sensitive costs are recovered from subscribers on a flat rate
basis (Subscriber Line Charges) and from interexchange carriers on a usage
sensitive basis (Carrier Common Line Charges). Effective April 1, 1989, with the
final step increase in the Subscriber Line Charges, the cap on residential and
single line business Subscriber Line Charges increased to $3.50. Multi-line
customers' Subscriber Line Charges have a $6.00 cap. The Carrier Common Line
rate recovers the remaining non-traffic sensitive costs.
The Regional Bell Operating Companies and certain Tier 1 local exchange
carriers have converted to price cap regulation. During 1993, CBT elected to
remain under traditional rate of return regulation. However, CBT has filed, and
the FCC has approved effective January 15, 1994, CBT's Optional Incentive
Regulation tariff which allows CBT to move from traditional rate of return
regulation.
COMPETITION. Regulatory, legislative and judicial decisions, new
technologies and the convergence of other industries with the telecommunications
industry are causes of increasing competition in the telecommunications
industry. The range of communications services, the equipment available to
provide and access such services and the number of competitors offering such
services continue to increase. Federal and state regulators are encouraging
changes that promote competition in the industry in the belief that increased
competition will drive technological innovation, lower prices and improve
service levels.
Other means of communications that permit bypass of CBT's local exchange
facilities either completely or partially are available and are growing,
although CBT is unable to determine precisely to what extent such bypass may
occur. Alternative Access Providers (AAPs), cable companies and wireless
providers have all made clear their intent to compete for segments of the local
exchange business. AAPs, who initially focused only on interstate private lines,
are now gaining credibility and are offering an ever-expanding range of
telecommunications services to large business customers, including switched
services. Cable companies are upgrading and using their broadband networks to
experiment with new video, data and voice services for both residential and
business customers, as well as transport for intermediary customers. Wireless
providers are testing new technologies, like Personal Communications Service
(PCS), to provide an alternative to traditional local service lines. In
addition, interexchange carriers are creating new value-added services based on
Signaling System 7 and Advanced Intelligent Network technologies, similar to
those under development by the local exchange companies. CBT's competitors range
from small service bureaus to large interexchange carriers and multi-state
cellular companies to joint ventures and other combinations of
telecommunications and other companies.
To stay competitive, CBT has upgraded and will continue to upgrade its
telephone plant and network and to explore new services and technologies as
sound business judgment dictates. It has constructed several optical fiber
rings in and around the metropolitan Cincinnati area to permit it to offer
redundancy in telecommunications services for business customers. CBT offers
custom calling features that include Caller ID, Call Return, Call
Block, Priority Forward, Repeat
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<PAGE>
Dialing and Number Privacy. In addition, CBT is attempting to determine the
most effective means for it to participate in the PCS technology, the spectrums
for which will be auctioned by the FCC in the fall of 1994.
The effect of this competition on CBT will ultimately be determined by
federal and state regulatory and legislative actions and the type, quality and
cost of CBT's services. CBT continues to position itself in this rapidly
changing and convergent environment in order to remain competitive.
CINCINNATI BELL INFORMATION SYSTEMS INC.
CBIS designs, markets and manages information systems and provides software
products, consulting services, customer-care systems, billing systems and
technical assistance for the global telecommunications industry. CBIS sells the
majority of its products and services domestically but also serves clients in
Australia, Canada, Japan, Mexico, Switzerland, The Netherlands and the United
Kingdom.
Its principal clients are telecommunications carriers, cellular
communications providers and their resellers, and owners and operators of
private communications networks. CBIS is the leading supplier of billing and
customer-care systems for the rapidly growing U.S. cellular telephone industry.
CBIS continues to develop open-systems, client-server architecture for
customer-care and billing applications that could serve wireline, wireless and
interexchange companies. These new systems form a foundation for more advanced
solutions that CBIS expects to deliver to current and future clients. CBIS's
new system for the cellular telephone industry is expected to be ready for
initial client testing in mid-1994.
The telecommunications information systems and services market is highly
competitive. Such competition has increased in recent years and is likely to
increase in the future. Some of CBIS's competitors have substantially greater
financial and other resources more readily available than CBIS. Competition is
based mainly on product quality, performance, price and the quality of customer
service. Except for the U.S. cellular telephone market (where CBIS serves
cellular companies that have a significant portion of the market), CBIS has
small market shares in the other areas of its business and faces vigorous
competition.
In late 1993, the Company determined the need to reorganize CBIS. This
reorganization focused on two phases. The first phase was the elimination of
non-strategic and underperforming operations. This resulted in CBIS taking
action to divest its holdings in its federal operation (CBIS Federal),
consolidating its foreign data center's operations, and eliminating unprofitable
domestic and international activities. The second phase of the plan was to
reorganize the remaining operations into strategic business units. These
actions began in 1993 and are expected to be completed in 1994.
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MATRIXX MARKETING INC.
MATRIXX concentrates on servicing business needs in the telephone marketing
and related marketing service areas by offering an integrated package of
services to its customers including, without limitation, inbound and outbound
telephone marketing, marketing research, fulfillment, customer service centers,
direct mail, database management and facilities management. MATRIXX has seven
divisions: Custom Services, Business, Inbound Mountain, Inbound Central,
Outbound, International and Research. The Custom Services Division designs
customized client solutions for consumer markets with a dedicated staff and
services uniquely tailored to the needs of each client. The Inbound Mountain,
Inbound Central and Outbound Divisions enable clients to manage high volumes of
inbound and outbound customer contacts in an environment of shared resources.
The Inbound Mountain, Inbound Central and Outbound Divisions increase market
awareness with rapid response to consumer requests for information or service.
These divisions handle the needs of packaged goods manufacturers, financial
services institutions and telecommunications companies. The Business Division
provides sales and customer service personnel who act as the sales arm and/or
marketing service representatives for the client. They take orders, sell by
telephone and provide information about the client's promotion plans, quantity
discounts and new products, both to retailers and distributors. The
International Division operates in Europe from its headquarters in Paris and an
office in the United Kingdom, offering business-to-business and business-to-
customer telephone marketing, including toll-free services, direct response
services and facilities management. The Research Division assists MATRIXX's
clients to find and qualify customers before they offer a new product or service
to the market. By offering full-service marketing research, MATRIXX can support
its clients in their strategic planning and tactical decision-making process.
The telephone marketing agency business in the United States is highly
competitive, with MATRIXX's competitors ranging in size from very small firms
offering special applications or short term projects to large independent firms
and "in-house" divisions of potential client companies with size and
capabilities equal to those of MATRIXX. The telephone marketing agency business
in Europe is in the early stages of development. The business is very
competitive and overcapacity exists in a market that has not developed very
rapidly during the past several years. MATRIXX is one of several companies that
have a leading position in Europe.
OTHER BUSINESSES
Most of the Company's business other than CBT, CBIS and MATRIXX is
conducted by other subsidiaries of the Company or by partnerships in which the
Company owns an interest.
CBD provides printed Yellow Pages directories and other directory services.
In addition, CBD publishes and provides the White Pages directories for CBT.
CBD continually evaluates new product offerings in both the print and emerging
electronic categories of distribution.
CBLD is a reseller of long distance telecommunications services. CBLD
sells high-quality, competitively-priced long distance services to residence
customers and small to medium-sized businesses in Ohio, Indiana, Kentucky,
Western Pennsylvania and Michigan.
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Cincinnati Bell Supply Company engages in the purchase, sale and
reconditioning of telecommunications and computer equipment to customers
nationwide.
CBD, CBLD and Cincinnati Bell Supply Company are faced with fierce
competition from businesses offering similar products and services. Their
success will be determined by how well they meet the changing market needs of
their customers.
Cincinnati Bell Properties Inc. owns certain real estate used by the
Company.
The Company (through its wholly owned subsidiary, Cincinnati Bell Cellular
Systems Company) is a limited partner with a 45% interest in a limited
partnership (of which Ameritech Mobile Phone Service of Cincinnati, Inc. is the
general partner) in the cellular mobile telephone service business in the
Greater Cincinnati, Columbus and Dayton areas. Cincinnati Bell Cellular Systems
Company has commenced a lawsuit against Ameritech Mobile Phone Service of
Cincinnati, Inc. asking that the partnership be dissolved. See "Legal
Proceedings."
Until January 1, 1994, the Company was a joint venturer with Anixter Bros.,
Inc. (a materials management firm) in the supply and distribution of
telecommunications and electrical equipment and material in Ohio and Kentucky.
The term of the joint venture expired as of December 31, 1993, and the joint
venture was dissolved as of that date. Anixter Bros., Inc. has continued the
business of the joint venture for its benefit, and the Company has commenced a
lawsuit against Anixter Bros., Inc. See "Legal Proceedings."
RELATIONSHIP WITH AT&T
The Company and its subsidiaries are parties to several agreements with
AT&T and its affiliates pursuant to which the Company and its subsidiaries
either purchase equipment, materials, services and advice from AT&T and its
affiliates or provide the same to AT&T and its affiliates. As a result of these
agreements, during 1993 the Company and its subsidiaries together sold to AT&T
and its affiliates approximately $127,925,000 of goods and services (excluding
access line charges) and purchased from AT&T and its affiliates approximately
$64,495,000 of goods and services.
CAPITAL ADDITIONS
The Company has been making large expenditures for construction of
telephone plant and investments in its existing subsidiaries and new businesses.
By reinvesting in its telephone plant, the Company expects to be able to
introduce new products and services, respond to competitive challanges and
increase the operating efficiency and productivity of its network. The
following is a summary of capital additions for the years 1989 through 1993:
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<TABLE>
<CAPTION>
(Dollars In Thousands)
---------------------
Investments in
Telephone Plant Existing Subsidiaries Total Capital
Construction and New Businesses Additions
--------------- --------------------- -------------
<S> <C> <C> <C>
1993 $ 111,595 $ 123,816 $ 235,411
1992 $ 94,956 $ 45,100 $ 140,056
1991 $ 115,931 $ 77,417 $ 193,348
1990 $ 127,690 $ 156,645 $ 284,335
1989 $ 142,871 $ 59,661 $ 202,532
</TABLE>
The total investment in telephone plant increased from approximately
$1,229,539,000 at December 31, 1988 to approximately $1,430,822,000 at December
31, 1993, after giving effect to retirements but before deducting accumulated
depreciation at either date.
Anticipated capital additions in 1994 for the Company including all
subsidiaries are approximately $160,000,000, of which $95,000,000 is for
telephone plant.
EMPLOYEES
At December 31, 1993 the Company and its subsidiaries had approximately
14,700 employees, of whom approximately 18% are covered under collective
bargaining agreements with the Communications Workers of America ("CWA"), which
is affiliated with the AFL-CIO. Those agreements expire in May 1996 for CBT and
September 1996 for CBIS.
The number of employees at December 31, 1993 increased over December 31,
1992. The increase is due to the acquisition of WATS Marketing of America in
November 1993.
The Company expects to reduce the number of employees at CBIS as part of
its reorganization plan that is expected to be completed in 1994. As part of
the reorganization plan, CBIS plans to sell its federal operations which has
approximately 1,000 employees.
BUSINESS SEGMENT INFORMATION
The amounts of revenues and sales, operating income, assets, capital
additions and depreciation and amortization attributable to each of the business
segments of the Company for the year ended December 31, 1993 is set forth in the
table relating to business segment information in note (r) of the Notes to the
Financial Statements in the Company's annual report to security holders, and
such table is incorporated herein by reference.
ITEM 2. PROPERTIES
The property of the Company is principally the telephone plant of CBT,
which does not lend itself to description by character and location of principal
units. Central office equipment represents 40% of CBT's investment in telephone
plant in service; land and buildings (occupied principally by central offices),
including capitalized leases, represent 13%; telephone instruments and related
wiring and equipment (including private branch exchanges), substantially all of
which
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are on the premises of customers, represent 2%; and connecting lines not on
customers' premises, the majority of which are on or under public roads,
highways or streets and the remainder on or under private property, represent
39%. Other property of the Company is principally computer equipment, computer
software, furniture and fixtures.
Substantially all of the installations of central office equipment and
garages are located in buildings owned by CBT situated on land which it owns.
Some CBT business and administrative offices are in rented quarters, most of
which are included in capitalized leases.
The Company owns and occupies a 120,000 square foot building in Erlanger,
Kentucky, which is a training and education facility.
CBIS, MATRIXX and other Company subsidiaries lease office space in various
cities on commercially reasonable terms. Upon the expiration or termination of
any such leases, these companies could obtain comparable office space. CBIS
also leases some of the computer hardware, computer software and office
equipment necessary to conduct its business pursuant to short term leases, some
of which are capitalized leases.
ITEM 3. LEGAL PROCEEDINGS
None, except as described below.
Cincinnati Bell Cellular Systems Company ("CBCSC") is a limited partner in
a partnership (of which Ameritech Mobile Phone Service of Cincinnati, Inc. is
the general partner) which provides cellular mobile telephone service in the
Greater Cincinnati, Dayton and Columbus areas. The partnership operates in a
9,500 square mile area that contains a population of approximately four million
people. On February 23, 1994, CBCSC filed an action in the Court of Chancery of
the State of Delaware for New Castle County in which CBCSC seeks a dissolution
of the limited partnership, the appointment of a liquidating trustee and damages
against the general partner. CINCINNATI BELL CELLULAR SYSTEMS COMPANY V.
AMERITECH MOBILE PHONE SERVICE OF CINCINNATI, INC., ET AL.
On April 20, 1983, the Company and Anixter Bros., Inc. ("Anixter") formed a
joint venture (the "Joint Venture") for the purpose of engaging in the
distribution of electrical wire and cable, cable television products and
telephone and communications products. The Joint Venture was to continue for
approximately ten years, terminating on December 31, 1993. In 1993, several
issues arose relating to the operation and the winding up of the Joint Venture.
On November 11, 1993, the Company filed a Complaint against Anixter and the
Joint Venture in the Court of Common Pleas for Hamilton County, Ohio. In its
Complaint, the Company contends that (1) Anixter has refused to compensate the
Company for the going concern value of the Joint Venture which Anixter had
converted and/or will retain; and (2) Anixter, as the managing partner of the
Joint Venture, has failed to account properly for the revenues and expenses of
the Joint Venture. On December 14, 1993, Anixter removed the case to the
federal district court for the Southern District of Ohio. On December 16, 1993,
Anixter filed its Answer and Counterclaim. In its Counterclaim, Anixter alleges
that the Company wrongfully
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competed with the Joint Venture. CINCINNATI BELL INC. V. ANIXTER BROS., INC.,
ET AL.
The Federal Communications Commission has issued orders that require CBT to
refund to interexchange carriers certain amounts based on CBT's having exceeded
targeted earning levels for interstate access services for the 1987-1988 access
period. CBT has appealed the FCC orders, and its appeals have been consolidated
with numerous other appeals involving similar issues pending in the U.S. Circuit
Court of Appeals for the District of Columbia. MCI TELECOMMUNICATIONS CORP., ET
AL. V. FCC AND USA.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders in the fourth quarter
of the fiscal year covered by this report.
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EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES OF THE REGISTRANT (DURING 1993).
The names, ages and positions of the executive officers and significant
employees of the Company are as follows:
Name Age Title
- ---- --- -----
as of 3/31/94)
Dwight H. Hibbard (a,b,c) 70 Chairman of the Board
John T. LaMacchia (a,b,c) 52 President and Chief Executive Officer
Raymond R. Clark (a) 56 Executive Vice President
President and Chief Executive Officer
of Cincinnati Bell Telephone Company
Brian C. Henry 37 Executive Vice President and Chief
Financial Officer
Sheldon Horing (d) 57 Executive Vice President
President and Chief Executive Officer
of CBIS
David J. Lahey (e) 55 Executive Vice President
Chairman of MATRIXX Marketing Inc.
William H. Zimmer III 40 Secretary and Treasurer
Donald E. Hoffman 55 Senior Vice President-Administration
of Cincinnati Bell Telephone Company
Scott Aiken 58 Vice President - Public Relations
of Cincinnati Bell Telephone Company
James F. Orr (f) 48 President and Chief Executive Officer
of MATRIXX Marketing Inc.
William D. Baskett III (g) 54 General Counsel and Chief Legal
Officer
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(a) Member of Board of Directors.
(b) Member of Executive Committee of Board of Directors.
(c) Mr. Hibbard also served as the Chief Executive Officer ("CEO") until
October 1, 1993. Mr. LaMacchia was elected CEO on October 1, 1993. Since
October 1, 1993 Mr. Hibbard has continued to serve as Chairman.
(d) Effective February 4, 1994, Mr. Horing resigned as an executive officer of
the Company and as President and Chief Executive Officer of CBIS.
(e) Effective February 4, 1994, Mr. Lahey was appointed President and
Chief Executive Officer of CBIS.
(f) Effective February 4, 1994, Mr. Orr was appointed Chief Operating
Officer of CBIS.
(g) Mr. Baskett is a significant employee as defined by Item 401(c) of
Regulation S-K.
Officers are elected annually but are removable at the discretion of the
Board of Directors.
DWIGHT H. HIBBARD, Chairman of the Company since January 1, 1985; Chief
Executive Officer of the Company, 1985-September 30, 1993; President of the
Company, 1983-1987; Chairman of Cincinnati Bell Telephone Company, 1985-October
31, 1993. Director of The Ohio National Life Insurance Company and Teradyne,
Inc.
JOHN T. LAMACCHIA, President and Chief Executive Officer of the Company
since October 1, 1993; President of the Company since January 1, 1988; Chief
Operating Officer of the Company, 1988-September 30, 1993; Chairman of
Cincinnati Bell Telephone Company since November 1, 1993; Chairman of Cincinnati
Bell Information Systems Inc. since October 1988 and President, 1983-1987.
Director of Multimedia, Inc. and The Kroger Co.
RAYMOND R. CLARK, Executive Vice President of the Company since January 1,
1987; Chief Executive Officer of Cincinnati Bell Telephone Company since January
1, 1988; President since January 1, 1987. Director of Star Banc Corporation and
Xtek, Inc.
BRIAN C. HENRY, Executive Vice President and Chief Financial Officer of the
Company since March 29, 1993; Vice President and Chief Financial Officer of
Mentor Graphics, February 1986 to March 28, 1993.
SHELDON HORING, President and Chief Executive Officer of CBIS, January 1,
1991-February 4, 1994; Executive Vice President of the Company, January 1,
1993-February 4, 1994; President of CBIS Federal from January 1, 1990 to
December 31, 1990; AT&T Network Systems Data Networking Vice President from
January 1, 1989 to December 30, 1989.
- 12 -
<PAGE>
DAVID J. LAHEY, President and Chief Executive Officer of CBIS since
February 4, 1994; Executive Vice President of the Company since January 1, 1993;
Chairman of MATRIXX Marketing Inc. since January 1, 1993; President and Chief
Executive Officer of MATRIXX Marketing Inc., February 2, 1989 to December 31,
1992; Senior Vice President - Market Development of Cincinnati Bell Enterprises
Inc., April 1, 1988 to February 1, 1989.
WILLIAM H. ZIMMER III, Secretary and Treasurer of the Company since
August 1, 1991; Secretary and Assistant Treasurer of the Company, December 1,
1988 to July 31, 1991. Assistant Secretary and Assistant Treasurer of the
Company, April 20, 1987 to November 30, 1988.
DONALD E. HOFFMAN, Senior Vice President-Administration of Cincinnati Bell
Telephone Company since January 1, 1990; Vice President-Administration of
Cincinnati Bell Telephone Company, February 1, 1988 to December 31, 1989;
President of Cincinnati Bell Cellular Systems Inc., January 1, 1987 to
January 31, 1988.
SCOTT AIKEN, Vice President-Public Relations of Cincinnati Bell Telephone
Company since May 13, 1985.
JAMES F. ORR, Chief Operating Officer of CBIS since February 4, 1994;
President and Chief Executive Officer of MATRIXX Marketing Inc. since January 1,
1993; Vice President Market Development January 1, 1989 to December 31, 1992;
Vice President of Crush International Inc. January 1, 1986 to December 31, 1988.
WILLIAM D. BASKETT III, General Counsel and Chief Legal Officer of the
Company since July 1993; partner of Frost & Jacobs since 1970.
- 13 -
<PAGE>
PART II
ITEMS 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS.
Cincinnati Bell Inc. (symbol: CSN) common shares are listed on the New York
Stock Exchange and on the Cincinnati Stock Exchange. As of February 28, 1994
there were approximately 22,391 holders of record of the 65,094,358 outstanding
Common Shares of the Company. The high and low sales prices and dividends
declared per common share each quarter for the last two fiscal years are listed
below.
<TABLE>
<CAPTION>
Quarter 1st 2nd 3rd 4th
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 High $23 $24 3/8 $23 1/2 $24
Low $16 1/8 $21 $19 1/8 $17 7/8
Dividend Declared $ .20 $ .20 $ .20 $ .20
- ------------------------------------------------------------------------------
1992 High $20 7/8 $18 3/4 $17 5/8 $17 5/8
Low $17 3/8 $16 1/2 $16 $15 3/8
Dividend Declared $ .20 $ .20 $ .20 $ .20
</TABLE>
ITEMS 6 THROUGH 8.
The information required by these items is included in the registrant's
annual report to security holders for the fiscal year ended December 31, 1993
included in Exhibit 13 and is incorporated herein by reference pursuant to
General Instruction G(2).
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
No disagreements with accountants on any accounting or financial disclosure
occurred during the period covered by this report.
PART III
ITEMS 10 THROUGH 13.
Information regarding executive officers required by Item 401 of Regulation
S-K is furnished in a separate disclosure in Part I of this report under the
caption "Executive Officers and Significant Employees of the Registrant" since
the registrant did not furnish such information in its definitive proxy
statement prepared in accordance with Schedule 14A.
- 14 -
<PAGE>
The other information required by these items is included in the
registrant's definitive proxy statement dated March 14, 1994 in the last
paragraph on page 1, the accompanying notes on page 2 and the last paragraph on
page 2, the information under "Election of Directors" on pages 5 through 7, the
information under "Share Ownership of Directors and Officers" on pages 4 and 5,
the information under, "Compensation Committee Report on Executive
Compensation," "Executive Compensation" and "Performance Graphs" on pages 7
through 17, and the information under "Compensation Committee Interlocks and
Insider Participation" on page 4. The foregoing is incorporated herein by
reference pursuant to General Instruction G(3).
- 15 -
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as a part of the report:
(1) Consolidated Financial Statements: Page
----
Report of Management. . . . . . . . . . . . . . . . . . . . *
Report of Independent Accountants . . . . . . . . . . . . . *
Statements:
Consolidated Statements of Income. . . . . . . . . . *
Consolidated Statements of Common Shareowners'
Equity . . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Balance Sheets. . . . . . . . . . . . . *
Consolidated Statements of Cash Flows. . . . . . . . *
Notes to Financial Statements. . . . . . . . . . . . *
(2) Financial Statement Schedules:
Report of Independent Accountants . . . . . . . . . . . . . 25
V - Telephone Plant and Other Property. . . . . . . . . 26
VI - Accumulated Depreciation. . . . . . . . . . . . . . 30
VIII - Valuation and Qualifying Accounts . . . . . . . . . 32
Financial statements and financial statement schedules other than
those listed above have been omitted because the required
information is contained in the financial statements and notes
thereto, or because such schedules are not required or applicable.
- -------------------------
*Incorporated herein by reference to the appropriate portions of the
registrant's annual report to security holders for the fiscal year ended
December 31, 1993. (See Part II.)
- 16 -
<PAGE>
(3) Exhibits:
Exhibits identified in parentheses below, on file with the
Securities and Exchange Commission ("SEC"), are incorporated herein by reference
as exhibits hereto.
Exhibit
Number
- -------
(3)(a) Amended Articles of Incorporation effective November 9,
1989. (Exhibit (3)(a) to Form 10-K for 1989, File No.
1-8519).
(3)(b) Amended Regulations of the Registrant. (Exhibit 3.2 to
Registration Statement No. 2-96054).
(4)(a) Provisions of the Amended Articles of Incorporation and
the Amended Regulations of the registrant which define
the rights of holders of Common Shares and the Preferred
Shares are incorporated by reference to such Amended
Articles filed as Exhibit (3)(a) hereto and such Amended
Regulations filed as Exhibit (3)(b) hereto.
(4)(b)(i) Rights Agreement dated as of October 27, 1986 between
the Company and Morgan Shareholder Services Trust
Company, Rights Agent. (Exhibit (1) to Form 8-A, File
No. 1-8519).
(4)(b)(ii) First Amendment to Rights Agreement, dated as of October
3, 1988, between the Company and Morgan Shareholder
Services Trust Company, Rights Agent. (Exhibit
(4)(b)(ii) to Form 10-K for 1988, File No. 1-8519).
(4)(c)(i) Indenture dated June 15, 1990 between Cincinnati Bell
Inc. and The Bank of New York, Trustee, in connection
with $75,000,000 of Cincinnati Bell Inc. Ten Year 9.10%
Notes Due June 15, 2000. (Exhibit (4)(c)(ii) to Form
10-K for 1990, File No. 1-8519).
Indenture dated December 15, 1992 between Cincinnati
Bell Inc., Issuer, and The Bank of New York, Trustee, in
connection with $100,000,000 of Cincinnati Bell Inc.
6.70% Notes Due December 15, 1997. A copy of this
Indenture is not being filed because it is similar in
all material respects to the Indenture filed as Exhibit
(4)(c)(i) above.
Indenture dated July 1, 1993 between Cincinnati Bell
Inc., Issuer, and The Bank of New York,Trustee, in
connection with $50,000,000 of Cincinnati Bell, Inc.
7 1/4% Notes Due June 15, 2023. Exhibit 4-A to Form 8-K,
date of report July 12, 1993, File No. 1-8519.
- 17 -
<PAGE>
(4)(c)(ii) Indenture dated December 27, 1989 among Cincinnati Bell
Telephone Company, Issuer, Cincinnati Bell Inc.,
Guarantor, and The Bank of New York (Delaware), Trustee,
in connection with $40,000,000 of Cincinnati Bell
Telephone Company Guaranteed Ten Year 8 5/8% Notes, Due
December 15, 1999. (Exhibit 4(c)(ii) to Form 10-K for
1992, File No. 1-8519).
Indenture dated April 30, 1986 among Cincinnati Bell
Telephone Company, Issuer, Cincinnati Bell Inc.,
Guarantor, and The Bank of New York (Delaware), Trustee,
in connection with $40,000,000 of Cincinnati Bell
Telephone Company Guaranteed Ten Year 7.30% Notes, Due
April 30, 1996. A copy of this Indenture is not being
filed because it is similar in all material respects to
the Indenture filed as Exhibit (4)(c)(ii) above.
(4)(c)(iii) Indenture dated August 1, 1962 between Cincinnati Bell
Telephone Company and Bank of New York, Trustee
(formerly, The Central Trust Company was trustee), in
connection with $20,000,000 of Cincinnati Bell Telephone
Company Forty Year 4 3/8% Debentures, Due August 1,
2002. (Exhibit 4(c)(iii) to Form 10-K for 1992, File No.
1-8519).
Indenture dated October 1, 1958 between Cincinnati Bell
Telephone Company and Bank of New York, Trustee
(formerly, The Central Trust Company was trustee), in
connection with $25,000,000 of Cincinnati Bell Telephone
Company Thirty-Five Year 4 l/2% Debentures, Due October
1, 1993. A copy of this Indenture is not being filed
because it is similar in all material respects to the
Indenture filed as Exhibit (4)(c)(iii) above.
Indenture dated August 1, 1971 between Cincinnati Bell
Telephone Company and Bank of New York, Trustee
(formerly The Fifth Third Bank was trustee), in
connection with $50,000,000 of Cincinnati Bell Telephone
Company Forty Year 7 3/8% Debentures, Due August 1,
2011. A copy of this Indenture is not being filed
because it is similar in all material respects to the
Indenture filed as Exhibit (4)(c)(iii) above.
(4)(c)(iv) Indenture dated as of October 27, 1993 among Cincinnati
Bell Telephone Company, as Issuer, Cincinnati Bell Inc.,
as Guarantor, and The Bank of New York, as Trustee.
(Exhibit 4-A to Form 8-K, date of report October 27,
1993, File No. 1-8519).
(4)(c)(v) No other instrument which defines the rights of holders
of long term debt of the registrant is filed herewith
pursuant to Regulation S-K, Item 601(b)(4)(iii)(A).
Pursuant to this regulation, the registrant hereby
agrees to furnish a copy of any such instrument to the
SEC upon request.
- 18 -
<PAGE>
(10)(ii)(B) Agreement Establishing Cincinnati SMSA Limited
Partnership between Advanced Mobile Phone Service, Inc.
and Cincinnati Bell Inc. executed on December 9, 1982.
(Exhibit (10)(k) to Registration Statement No. 2-82253).
(10)(iii)(A)(1)(i)* Short Term Incentive Plan of Cincinnati Bell Inc., as
amended February 3, 1986. (Exhibit (10)(iii)(A)1 to Form
10-K for 1986, File No. 1-8519).
(10)(iii)(A)(1)(ii)* Amendment to Short Term Incentive Plan of Cincinnati
Bell Inc. (effective December 5, 1988). (Exhibit
(10)(iii)(A)(1)(ii) to Form 10-K for 1988, File No.
1-8519).
(10)(iii)(A)(2)(i)* Cincinnati Bell Inc. Senior Management Long Term
Incentive Plan, as amended January 1, 1984. (Exhibit
(10)(iii)(A)2 to Form 10-K for 1986, File No. 1-8519).
(10)(iii)(A)(2)(ii)* Amendment to Cincinnati Bell Senior Management Long
Term Incentive Plan (effective December 5, 1988).
(Exhibit (10)(iii)(A) (2)(ii) to Form 10-K for 1988,
File No. 1-8519).
(10)(iii)(A)(3)* Cincinnati Bell Inc. Deferred Compensation Plan for
Non-Employee Directors, as amended July 1, 1983.
(Exhibit (10)(iii)(A)3 to Form 10-K for 1986, File
No. 1-8519).
(10)(iii)(A)(4)* Cincinnati Bell Inc. Pension Program, as amended
effective June 5, 1989. (Exhibit (10)(iii)(A)4 to
Form 10-K for 1989, File No. 1-8519).
(10)(iii)(A)5* Cincinnati Bell Inc. 1988 Incentive Award Deferral
Plan, as amended (effective November 11, 1988).
(Exhibit (10)(iii)(A)5 to Form 10-K for 1988, File
No. 1-8519).
(10)(iii)(A)(6)(i)* Cincinnati Bell Inc. Senior Management Incentive
Award Deferral Plan, as amended January 1, 1984.
(Exhibit (10)(iii)(A)6 to Form 10-K for 1986, File
No. 1-8519).
(10)(iii)(A)(6)(ii)* Amendment to Cincinnati Bell Senior Management Incentive
Award Deferral Plan (effective December 5, 1988).
(Exhibit (10)(iii)(A)(6)(ii) to Form 10-K for 1988, File
No. 1-8519).
(10)(iii)(A)(7)(i)* Cincinnati Bell Inc. 1984 Stock Option Plan, as amended
January 7, 1987. (Exhibit (10) (iii)(A)7 to Form 10-K
for 1986, File No. 1-8519).
- ---------------------------------------
* Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
- 19 -
<PAGE>
(10)(iii)(A)(7)(ii)* Amendment to Cincinnati Bell 1984 Stock Option Plan
(effective December 5, 1988). (Exhibit
(10)(iii)(A)(7)(ii) to Form 10-K for 1988, File No.
1-8519).
(10)(iii)(A)(8)(i)* Executive Employment Agreement dated December 1, 1987
between the Company and Dwight H. Hibbard. (Exhibit
(10)(iii)(A)8 to Form 10-K for 1987, File No. 1-8519).
(10)(iii)(A)(8)(ii)* Amendment to Executive Employment Agreement dated
November 4, 1991 between the Company and Dwight H.
Hibbard. (Exhibit (10)(iii) (A)(8)(ii) to Form 10-K for
1991, File No. 1-8519).
(10)(iii)(A)(8)(iii)* Amendment to Executive Employment Agreement dated
February 4, 1994 between the Company and Dwight H.
Hibbard.
(10)(iii)(A)(9)* Executive Employment Agreement dated December 1, 1987
between the Company and John T. LaMacchia. (Exhibit
(10)(iii)(A)(10) to Form 10-K for 1987, File No.
1-8519).
(10)(iii)(A)(10)* Executive Employment Agreement dated December 1, 1987
between the Company and Raymond R. Clark. (Exhibit
(10)(iii)(A)11 to Form 10-K for 1987, File No. 1-8519).
(10)(iii)(A)(11)* Compensation Agreement between the Company and Sheldon
Horing, effective January 1, 1991. (Exhibit
(10)(iii)(A)12 to Form 10-K for 1991, File No. 1-8519).
(10)(iii)(A)(12)* Employment Agreement dated as of April 1, 1988 between
the Company and David J. Lahey. (Exhibit (10)(iii)(A)16
to Form 10-K for 1991, as amended, File No. 1-8519).
(10)(iii)(A)(13)* Employment Agreement dated as of February 7, 1994
between the Company and David J. Lahey.
10(iii)(A)(14)* Executive Employment Agreement dated as of March 29,
1993 between the Company and Brian C. Henry.
10(iii)(A)(15)(i)* Employment Agreement dated as of January 1, 1989 between
the Company and James F. Orr.
(10)(iii)(A)(15)(ii)* Amendment to Employment Agreement dated as of June 30,
1993 between the Company and James F. Orr.
- ------------------------------------
* Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
- 20 -
<PAGE>
10(iii)(A)(16)* Employment Agreement dated as of December 31, 1993
between the Company and James F. Orr.
10(iii)(A)(17)* Cincinnati Bell Inc. Executive Deferred Compensation
Plan
(10)(iii)(A)(18)(i)* Cincinnati Bell Inc. 1988 Long Term Incentive Plan.
(Exhibit (10)(iii)(A)(12) (i) to Form 10-K for 1988,
File No. 1-8519).
(10)(iii)(A)(18)(ii)* Amendment to Cincinnati Bell Inc. 1988 Long Term
Incentive Plan (effective December 5, 1988). (Exhibit
(10)(iii)(A)(12)(ii) to Form 10-K for 1988, File No.
1-8519).
(10)(iii)(A)(19)* Cincinnati Bell Inc. 1988 Stock Option Plan for
Non-Employee Directors. (Exhibit (10)(iii)(A)13 to Form
10-K for 1988, File No. 1-8519).
(10)(iii)(A)(20)* Cincinnati Bell Inc. 1989 Stock Option Plan. (Exhibit
(10)(iii)(A)14 to Form 10-K for 1989, File No. 1-8519).
(10)(iii)(A)(21)* Cincinnati Bell Inc. Retirement Plan for Outside
Directors.
(11) Computation of Earnings per Common Share.
(12) Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Dividends.
(13) Portions of the Cincinnati Bell Inc. annual report to
security holders for the fiscal year ended December 31,
1993 as incorporated by reference including the Selected
Financial Data, Management's Discussion and Analysis and
Consolidated Financial Statements.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(28)(a) Annual Report on Form 11-K for the Cincinnati Bell Inc.
Retirement Savings Plan (formerly the Cincinnati Bell
Inc. Savings Plan for Salaried Employees) for the year
1993 will be filed by amendment on or before April 30,
1994.
- -------------------------------------
*Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
- 21 -
<PAGE>
(28)(b) Annual Report on Form 11-K for the Cincinnati Bell Inc.
Savings and Security Plan for the year 1993 will be
filed by amendment on or before April 30, 1994.
(28)(c) Annual Report on Form 11-K for the MATRIXX Marketing
Inc. Profit Sharing/401(k) Plan for the year 1993 will
be filed by amendment on or before April 30, 1994.
The Company will furnish, without charge, to a security holder upon
request, a copy of the documents, portions of which are incorporated by
reference (Annual Report to security holders and proxy statement), and will
furnish any other exhibit at cost.
(b) Reports on Form 8-K.
(1) Form 8-K, dated October 26, 1993, reporting that Cincinnati Bell Inc.
announced its earnings for the third quarter of 1993.
(2) Form 8-K, dated October 27, 1993, reporting that Cincinnati Bell
Telephone Company had set up its Medium-Term Note program with Morgan
Stanley & Co., Incorporated, Merrill Lynch & Co., and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
- 22 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CINCINNATI BELL INC.
March 29, 1994 By /s/JOHN T. LAMACCHIA
---------------------------
John T. LaMacchia, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Principal Executive Officer;
President, Chief Executive
JOHN T. LAMACCHIA* Officer and Director
- ------------------------------
Principal Accounting and
Financial Officer; Executive
Vice President and
BRIAN C. HENRY* Chief Financial Officer
- ------------------------------
Brian C. Henry
JOHN F. BARRETT* Director
- ------------------------------
John F. Barrett
PAUL W. CHRISTENSEN, JR.* Director
- ------------------------------
Paul W. Christensen, Jr.
RAYMOND R. CLARK* Director
- ------------------------------
Raymond R. Clark
PHILLIP R. COX* Director
- ------------------------------
Phillip R. Cox
- 23 -
<PAGE>
SIGNATURE TITLE
--------- -----
WILLIAM A. FRIEDLANDER* Director
- ------------------------------
William A. Friedlander
Chairman of the Board
DWIGHT H. HIBBARD* and Director
- ------------------------------
Dwight D. Hibbard
ROBERT P. HUMMEL, M.D.* Director
- ------------------------------
Robert P. Hummel, M.D.
JAMES D. KIGGEN* Director
- ------------------------------
James D. Kiggen
DAVID B. SHARROCK* Director
- ------------------------------
David B. Sharrock
*By /s/JOHN T. LAMACCHIA March 29, 1994
---------------------------
John T. LaMacchia
as attorney-in-fact and on
his own behalf as President
and Chief Executive Officer
and Director
- 24 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareowners of
Cincinnati Bell Inc.
Our report on the consolidated financial statements of Cincinnati Bell Inc. has
been incorporated by reference in this Form 10-K from page 39 of the 1993 annual
report of Cincinnati Bell Inc. In connection with our audits of such
consolidated financial statements, we have also audited the related financial
statement schedules listed in the index on page 16 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information required to be
included therein.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Cincinnati, Ohio
February 11, 1994
- 25 -
<PAGE>
Schedule V - Sheet 1
CINCINNATI BELL INC.
SCHEDULE V - TELEPHONE PLANT AND OTHER PROPERTY
(Thousands of Dollars)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- ----------------------------------------------------------------------------------------------------------
Balance at Additions Retire- Balance
Classification Beginning at Cost ments Other at End
of Period -Note (a) -Note (b) Changes ofPeriod
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1993
Land . . . . . . . . . . . . . . . . . $ 4,379 $ (21) $ - $ (20) $ 4,338
Buildings. . . . . . . . . . . . . . . 140,203 8,496 2,026 (883) (c) 145,790
Central Office Equipment . . . . . . . 557,923 63,176 53,124 (57) (c) 567,918
Station Apparatus. . . . . . . . . . . 28,386 (401) 25,978 - 2,007
Large Private Branch Exchanges (PBX) and
Other PBX Terminating Equipment. . . 4,992 589 1,612 - 3,969
Pole Lines . . . . . . . . . . . . . . 40,172 3,534 470 - 43,236
Aerial and Intrabuilding Cable . . . . 191,740 12,068 1,129 - 202,679
Underground Cable. . . . . . . . . . . 130,615 5,561 666 - 135,510
Buried Cable . . . . . . . . . . . . . 91,497 7,358 266 - 98,589
Submarine Cable. . . . . . . . . . . . - - - - -
Aerial Wire. . . . . . . . . . . . . . 3,014 211 78 - 3,147
Conduit Systems. . . . . . . . . . . . 67,203 2,799 42 - 69,960
Furniture, Computers and Office Equipment 54,652 7,665 1,398 (3) (c) 60,916
Vehicles and Work Equipment. . . . . . 27,875 919 1,748 - 27,046
Other Terminating Equipment. . . . . . 106 994 (93) - 1,193
Public Telephone Equipment . . . . . . 5,497 976 343 - 6,130
Other Communications Equipment . . . . 15,304 1,690 922 - 16,072
Capitalized Leases . . . . . . . . . . 21,905 5,816 23 (182) 27,516
--------- ------- ------ ------- ---------
Total Telephone Plant
in Service (d) . . . . . . . . . 1,385,463 121,430 89,732 (1,145) (c) 1,416,016
Telephone Plant Under Construction . . 23,418 (8,612) - - 14,806
--------- -------- -------- ------- ----------
Total Telephone Plant. . . . . . . $1,408,881 $112,818 $ 89,732 $(1,145) (c) $1,430,822
---------- -------- -------- --------- ----------
---------- -------- -------- --------- ----------
Information Systems Property (d) . $ 175,627 $ 40,053 $ 5,763 $(1,208) (e) $ 208,709
---------- -------- -------- --------- ----------
---------- -------- -------- --------- ----------
Other Property (d) . . . . . . . . $ 78,361 $ 8,597 $ 1,309 $ 9,559 (c)(e) $ 95,208
---------- -------- -------- --------- ----------
---------- -------- -------- --------- ----------
<FN>
The notes on Sheet 4 are an integral part of this Schedule.
</TABLE>
- 26 -
<PAGE>
Schedule V - Sheet 2
CINCINNATI BELL INC.
SCHEDULE V - TELEPHONE PLANT AND OTHER PROPERTY
(Thousands of Dollars)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- -----------------------------------------------------------------------------------------------------
Balance at Additions Retire- Balance
Classification Beginning at Cost ments Other at End
of Period -Note (a) -Note (b) Changes of Period
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1992
Land . . . . . . . . . . . . . . . . . $ 4,355 $ 24 $ - $ - $ 4,379
Buildings. . . . . . . . . . . . . . . 130,952 10,937 1,665 (21)(c) 140,203
Central Office Equipment . . . . . . . 529,902 51,924 23,170 (733)(c) 557,923
Station Apparatus. . . . . . . . . . . 34,823 1,364 5,400 (2,401)(c) 28,386
Large Private Branch Exchanges (PBX) and
Other PBX Terminating Equipment. . . 5,810 808 1,626 - 4,992
Pole Lines . . . . . . . . . . . . . . 38,629 2,127 584 - 40,172
Aerial and Intrabuilding Cable . . . . 183,125 11,216 2,601 - 191,740
Underground Cable. . . . . . . . . . . 127,643 3,693 721 - 130,615
Buried Cable . . . . . . . . . . . . . 85,832 6,096 431 - 91,497
Submarine Cable. . . . . . . . . . . . - - - - -
Aerial Wire. . . . . . . . . . . . . . 2,869 216 71 - 3,014
Conduit Systems. . . . . . . . . . . . 65,121 2,177 95 - 67,203
Furniture, Computers and Office Equipment 55,847 5,566 6,311 (450)(c) 54,652
Vehicles and Work Equipment. . . . . . 26,801 2,688 1,614 - 27,875
Other Terminating Equipment. . . . . . 2,494 214 170 (2,432)(c) 106
Public Telephone Equipment . . . . . . 5,724 250 477 - 5,497
Other Communications Equipment . . . . 16,105 (9) 792 - 15,304
Capitalized Leases . . . . . . . . . . 21,938 - - (33) 21,905
---------- ------- ------ ------- ---------
Total Telephone Plant
in Service (d) . . . . . . . . . 1,337,970 99,291 45,728 (6,070)(c) 1,385,463
Telephone Plant Under Construction . . 27,576 (4,158) - - 23,418
---------- ------- ------ ------- ----------
Total Telephone Plant. . . . . . . $1,365,546 $ 95,133 $ 45,728 $(6,070)(c) $1,408,881
---------- -------- -------- -------- ----------
---------- -------- -------- -------- ----------
Information Systems Property (d) . $ 160,073 $ 32,286 $ 7,407 $(9,325)(e)(h) $ 175,627
---------- -------- -------- -------- ----------
---------- -------- -------- -------- ----------
Other Property (d) . . . . . . . . $ 66,640 $ 10,618 $ 4,143 $ 5,246(c)(e) $ 78,361
---------- -------- -------- -------- ----------
---------- -------- -------- -------- ----------
<FN>
The notes on Sheet 4 are an integral part of this Schedule.
</TABLE>
- 27 -
<PAGE>
Schedule V - Sheet 3
CINCINNATI BELL INC.
SCHEDULE V - TELEPHONE PLANT AND OTHER PROPERTY
(Thousands of Dollars)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL.F
- --------------------------------------------------------------------------------------------------------------------
Balance at Additions Retire- Balance
Classification Beginning at Cost ments Other at End
of Period -Note (a) -Note (b) Changes of Period
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1991
Land . . . . . . . . . . . . . . . . . $ 4,307 $ 48 $ - $ - $ 4,355
Buildings. . . . . . . . . . . . . . . 129,533 3,940 2,521 - 130,952
Central Office Equipment . . . . . . . 496,964 54,159 21,221 - 529,902
Station Apparatus. . . . . . . . . . . 39,967 (570) 4,574 - 34,823
Large Private Branch Exchanges (PBX) and
Other PBX Terminating Equipment. . . 8,003 513 2,706 - 5,810
Pole Lines . . . . . . . . . . . . . . 37,123 1,986 480 - 38,629
Aerial and Intrabuilding Cable . . . . 174,170 11,430 2,475 - 183,125
Underground Cable. . . . . . . . . . . 122,724 5,795 876 - 127,643
Buried Cable . . . . . . . . . . . . . 79,938 6,167 273 - 85,832
Submarine Cable. . . . . . . . . . . . - - - - -
Aerial Wire. . . . . . . . . . . . . . 2,750 224 105 - 2,869
Conduit Systems. . . . . . . . . . . . 63,289 1,927 95 - 65,121
Furniture, Computers and Office Equipment 52,275 6,285 2,713 - 55,847
Vehicles and Work Equipment. . . . . . 25,819 2,848 1,866 - 26,801
Other Terminating Equipment. . . . . . 2,093 435 34 - 2,494
Public Telephone Equipment . . . . . . 5,583 270 129 - 5,724
Other Communications Equipment . . . . 16,533 1,034 1,462 - 16,105
Capitalized Leases . . . . . . . . . . 19,485 2,874 - (421)(f) 21,938
---------- ------- ------ ------- ---------
Total Telephone Plant
in Service (d) . . . . . . . . . . 1,280,556 99,365 41,530 (421)(f) 1,337,970
Telephone Plant Under Construction . . 15,008 12,568 - - 27,576
---------- ------- ------ ----- ---------
Total Telephone Plant. . . . . . . . $1,295,564 $ 111,933 $ 41,530 $ (421)(f) $1,365,546
---------- ------- ------ ----- ----------
---------- ------- ------ ----- ----------
Information Systems Property (d) . . $ 116,164 $ 57,391 $ 9,277 $(4,205)(c)(e)(g) $ 160,073
---------- ------- ------ ------ ----------
---------- ------- ------ ------ ----------
Other Property (d) . . . . . . . . . $ 54,621 $ 10,143 $ 2,344 $ 4,220(c)(e) $ 66,640
---------- ------- ------ ----- ----------
---------- ------- ------ ----- ----------
<FN>
The notes on Sheet 4 are an integral part of this Schedule.
</TABLE>
- 28 -
<PAGE>
Schedule V - Sheet 4
(a) Additions shown include (1) the original cost (estimated if not known) of
reused material, which is concurrently credited to Material and supplies,
and (2) Interest charged construction. Transfers between the
classifications listed are included in this column, except as indicated in
note (c).
(b) Items of telephone plant when retired or sold are deducted from the
property accounts at the amounts at which they are included therein,
estimated if not known.
(c) Transferred (to) from non-telephone company operations.
(d) The Company's provision for depreciation is based on the remaining life
method of depreciation and straight-line composite rates. The remaining
life method provides for the full recovery of the investment in
telephone plant. The provision for depreciation of information systems
property and other property is based on the straight-line method over the
estimated useful life.
(e) Other changes include the following: 1) Reclassification of property and
2) Revaluation of assets acquired during the year as part of a business
acquisition in order to record them at their fair value in accordance with
APB 16 "Business Combinations".
(f) Capitalized lease balances were adjusted to remove executory costs that
were originally capitalized.
(g) Includes certain capitalized software costs which were written-down as the
result of the information systems segment determination of the need to re-
direct the development of some of its software products.
(h) Includes amounts removed from property accounts related to the
reserve set up the prior year for the write down of certain capitalized
software costs. The primary product that was reserved for in 1991 was
NS/90, a cellular customer billing support system.
- 29 -
<PAGE>
Schedule VI - Sheet 1
CINCINNATI BELL INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION
(Thousands of Dollars)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- -----------------------------------------------------------------------------------------------------------------
Balance at Additions Retire- Other Balance
Description Beginning Charged to ments Changes at End
of Period Expenses -Note (a) of Period
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1993
Telephone Plant. . . . . . $ 525,215 $ 98,575 $ 89,709 $ 7,609 $ 541,690
Information Systems and
Other Property . . . . . $ 100,846 $ 50,328(c) $ 5,665 $ (29)(b) $ 145,480
Year 1992
Telephone Plant. . . . . . $ 475,783 $ 99,807 $ 46,987 $ (3,388) $ 525,215
Information Systems and
Other Property . . . . . $ 85,817 $ 26,825 $ 6,034 $ (5,762)(d) $ 100,846
Year 1991
Telephone Plant. . . . . . $ 426,291 $ 88,100 $ 41,456 $ 2,848 $ 475,783
Information Systems and
Other Property . . . . . . $ 56,566 $ 34,653(c) $ 6,983 $ 1,581 $ 85,817
</TABLE>
- 30 -
<PAGE>
Schedule VI - Sheet 2
(a) Comprised principally of (1) proceeds from sales of telephone plant
accounted for as required by the FCC and (2) depreciation provision for
vehicles and other work equipment charged initially to clearing accounts
and apportioned to Maintenance, Telephone Plant and other accounts on the
basis of the usage of such equipment. Other, also includes recoveries from
retired property.
(b) Includes accumulated depreciation on assets which were acquired during
the year as part of a business acquisition. In accordance with APB 16,
the assets have been recorded at their fair value by recording original
cost less accumulated depreciation.
(c) Includes $17 million and $10.5 million recorded in 1993 and 1991,
respectively to reduce the carrying value of certain capitalized
software costs to net realizable value.
(d) Includes amounts removed from the reserve recorded in the prior year
related to the write down of certain capitalized software costs to net
realizable value.
- 31 -
<PAGE>
Schedule VIII
CINCINNATI BELL INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
COL. B COL. C COL. D COL. E
- ------------------------------------------------------------------------------------------------------------------------
Additions Deductions
-----------------------
(1) (2)
Charged
Balance at to Other Balance
Description Beginning Charged to Accounts at End
of Period Expenses -Note (a) of Period
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1993
Allowance for doubtful accounts. . . . . . $ 6,705 $ 14,614 $ 4,121 $ 11,409(b) $ 14,031
Accrual for disposal and restructuring . . $ 10,545 $ 35,385 $ 0 $ 10,545 $ 35,385
Year 1992
Allowance for doubtful accounts. . . . . . $ 4,959 $ 8,225 $ 5,140 $ 11,619(b) $ 6,705
Accrual for disposal and restructuring . . $ 9,991 $ 10,545 $ 0 $ 9,991 $ 10,545
Year 1991
Allowance for doubtful accounts. . . . . . $ 4,570 $ 9,772 $ 4,306 $ 13,689(b) $ 4,959
Accrual for disposal and restructuring . . $ 0 $ 9,991 $ 0 $ 0 $ 9,991
<FN>
(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.
</TABLE>
- 32 -
<PAGE>
Exhibit (10)(iii)(A)(8)(iii)
to Form 10-K for 1993
Cincinnati Bell Inc.
201 E. Fourth Street
P.O. Box 2301
Cincinnati, Ohio 45201
(513) 397-7250
John T. LaMacchia
President and
Chief Executive Officer
February 1, 1994
Mr. Dwight H. Hibbard
Chairman of the Board
Cincinnati Bell Inc.
201 East Fourth Street
Cincinnati, OH 45202
Dear Dwight:
You will retire as an employee of Cincinnati Bell Inc. ("CBI") on February 11,
1994. Under the terms of your employment agreement, you were required to
maintain your employment until December 31, 1995. The parties specifically
waive any breach of the employment agreement resulting from your retirement on
February 11. Your retirement does not alter the terms of Section 6(h) of the
employment agreement which provides for an income tax supplement if your
employment continues after December 31, 1992.
Although you are retiring as an employee of CBI, you have agreed to continue to
serve as Chairman, at the pleasure of the Board, for an indefinite period. As a
non-employee director, you will be an independent contractor and will be
responsible for all taxes and other obligations of independent contractors. In
consideration for the services which you will perform as Chairman, you will
receive the following benefits:
1. Annual Fee - You will receive an annual fee of $300,00 for services
performed from February 12 of each year to February 11 of the succeeding
year. This fee will be prorated if you cease to be Chairman during any
compensation period. The fee will be paid in equal amounts on a monthly
basis.
2. Directors' Plans - You will be entitled to participate in the Deferred
Compensation Plan for Non-Employee Directors and in the 1988 Stock Option
Plan for Non-Employee Directors according to the terms of those Plans. You
will not participate in the Retirement Plan for Outside Directors.
<PAGE>
Dwight H. Hibbard
February 1, 1994
Page Two
3. Perquisites - Except for telephone concession service which you will
continue to receive indefinitely as part of our customary CEO retirement
package, you will continue to receive the following perquisites which you
were receiving as an employee of CBI as long as you continue to serve as
Chairman:
- An office
- A secretary (but not necessarily a full-time secretary)
- First class travel for CBI business
- Business travel expenses-lodging, meals and other expenses
- Cellular telephone service
- Payments for tax and financial advice up to a maximum of $7,000 during
each calendar year
- Chauffeur service
- Use of an automobile
- Payments for automobile maintenance
- Club memberships
- Company credit card
We appreciate your continued commitment to CBI. To evidence your agreement as
to the terms set forth in this letter, please sign one copy of this letter and
return it to me.
Very truly yours,
/s/ John T. LaMacchia
John T. LaMacchia
/s/ Dwight Hibbard
__________________
Dwight Hibbard
<PAGE>
Exhibit (10)(iii)(A)(13)
to Form 10-K for 1993
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 7th day of February, 1994 between
Cincinnati Bell, Inc., an Ohio corporation with its principal place of business
in Cincinnati, Ohio ("Employer" or "CBI"), and David J. Lahey, an individual
residing in Ohio ("Employee").
WITNESSETH
WHEREAS, Employee wishes to be employed by Employer and Employer wishes to
employ Employee, all pursuant to the terms hereof; and
WHEREAS, Employer intends to retain the right to assign this Agreement to
any other entity which is part of the same controlled group of corporations, as
defined in Section 1563 of the Internal Revenue Code of 1986, as it may from
time to time be amended or restated.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements contained herein, the parties agree as follows:
1. EMPLOYMENT. Employer employs Employee and Employee accepts employment
upon the terms and conditions hereinafter set forth. For purposes of this
Agreement, Employer shall include any entity to which this Agreement is assigned
under Section 13.
2. TERM OF EMPLOYMENT. Employee's employment under this Agreement shall
commence on February 7, 1994 and, subject to the early termination provisions of
Section 12, shall end on December 31, 1995.
<PAGE>
3. DUTIES.
(A) During 1994, Employer agrees to employ Employee and Employee
agrees to serve Employer as Executive Vice President of CBI and President and
Chief Executive Officer of Cincinnati Bell Information Systems Inc. ("CBIS").
Employee also shall continue to serve Employer in the other capacities in which
he was serving Employer on February 6, 1994. Employee shall report to the Chief
Executive Officer of CBI.
(i) In connection with performing the services required in
Section 3(A), Employee will be provided appropriate office space at the CBI
general offices and the CBIS general offices, a top level administrative
assistant, a secretary at CBIS and a part time or shared secretary at CBI
and travel expenses as described in Section 5 hereof. Any change in such
support resources will be agreed upon from time to time by Employee and the
President of CBI.
(ii) Employee shall devote his entire time, attention, and energies
during 1994 to the performance of his duties under this Agreement. The
words "entire time, attention, and energies" are intended to mean that
Employee shall devote his full effort during reasonable working hours to
the performance of his duties under this Agreement and shall devote at
least 40 hours per week to the performance of his duties under this
Agreement.
(B) During 1995, Employer agrees to employ Employee and Employee
agrees to serve Employer as an executive vice president level employee of CBI.
Employee shall undertake such projects as are mutually agreed upon from time to
time by the Chief Executive Officer of CBI and Employee. Employee shall report
to the Chief Executive Officer of CBI.
2
<PAGE>
(i) In connection with performing the services required in
Section 3(B), Employee will be provided appropriate office space at the CBI
general offices, a part time or shared secretary as needed to perform his
assignments and travel expenses as described in Section 5 hereof. Any
change in such support resources will be agreed upon from time to time by
Employee and the President of CBI.
(ii) Employee shall devote such portion of his time, attention,
and energies during 1995 as are required to perform his assignments under
this Agreement.
(C) Employee shall not be required to change his current residence;
however, Employee shall travel to such areas and places as are reasonably
necessary in the performance of his duties.
4. COMPENSATION.
(A) Employee shall receive a base salary (the "Base Salary") of
$16,666.66 per month, subject to proration for any partial month, while Employee
remains employed under this Agreement. Such Base Salary, and any other amounts
payable hereunder, shall be subject to withholding as required by law.
(B) On at least an annual basis, Employee shall receive a formal
performance review and be considered for salary increases and bonuses.
5. EXPENSES. All reasonable and necessary expenses incurred by Employee
in the course of the performance of Employee's duties to Employer shall be
reimbursable in accordance with Employer's then current travel and expense
policies.
3
<PAGE>
6. BENEFITS.
(A) Employee was granted options to purchase 20,000 common shares of
CBI in February, 1993 (the "93 Options") and options to purchase 90,000 common
shares of CBI on February 10, 1994, consisting of 20,000 options awarded for
duties performed by Employee prior to February 7, 1994 (the "Old Options") and
70,000 options awarded for duties to be performed under this Agreement (the "New
Options"). All 110,000 of such options shall be exercisable by Employee at any
time during their ten year term as though Employee had remained an employee of
Employer during the entire term of such stock options. Part or all of such
options may vest upon the occurrence of an event of termination described in
Section 12. Employer shall modify the terms of Employee's 1993 and 1994 Options
as necessary to conform to the terms of this Agreement.
(B) During the entire term of this Agreement, Employee shall be
entitled to participate in all of the various employee benefit plans and
programs in which an executive vice president of CBI would be entitled to
participate, including Retirement Savings Plan; Deferred Compensation Plan;
vacation program; medical and dental plans; life, disability, accidental death,
disability and travel insurance; parking at Atrium One; financial consultation
and tax preparation up to $3,000 per year; cellular phone; annual physical;
luncheon club dues; and Cincinnati Bell Management Pension Plan. In addition,
Employer shall provide Employee with the following benefits: Employee will not
participate in Cincinnati Bell Inc. Pension Program.
(1) RETIREE MEDICAL BENEFITS. Upon termination of Employee's
employment hereunder in all circumstances except dismissal for cause,
Employee shall be entitled to participate in the retiree medical plans then
available to
4
<PAGE>
an employee of CBI at the executive vice president level, who retires after
twenty years of service having attained age 60.
(2) LONG TERM DISABILITY PLAN FOR SALARIED EMPLOYEES AND THE
SICKNESS AND ACCIDENT DISABILITY BENEFIT PLAN. While Employee remains in
the employ of Employer, Employer shall provide Employee with benefits which
are at least equivalent to the benefits Employee would have been entitled
to receive under the Long Term Disability Plan for Salaried Employees and
the Sickness and Accident Disability Benefit Plan (a) assuming that he
became eligible to participate in the plans on April 1, 1988, and (b)
assuming that he was credited with 25 years of completed service as of
April 1, 1988. The benefits payable under this Section 6(B)(2) shall be
reduced by any benefits paid under the Long Term Disability Plan for
Salaried Employees and the Sickness and Accident Disability Benefit Plan.
(3) AUTOMOBILE. While Employee remains employed hereunder,
Employee may choose the use of a Buick Park Avenue automobile or equivalent
or an automobile allowance of $10,000 per year for calendar years 1994 and
1995.
(C) Employee received a restricted stock award of 20,000 common
shares of CBI on February 7, 1994. The restrictions on part or all of such
shares may lapse upon the occurrence of an event of termination described in
Section 12. Employer shall modify the terms of Employee's restricted stock if
necessary to conform to the terms of this Agreement.
(D) Notwithstanding anything contained herein to the contrary, the
Base Salary otherwise payable to Employee shall be reduced by any benefits paid
to Employee by Employer under the Employer's Sickness and Accident Disability
Plan and Long Term
5
<PAGE>
Disability Plan for Salaried Employees or under Section 6(B)(2) above.
7. CONFIDENTIAL INFORMATION AND MATERIALS.
(A) As used herein, the term "confidential information and materials"
refers to all information belonging to, used by or in the possession of Employer
or any of Employer's subsidiaries now and in the future relating to their
present and/or future business strategies, finances, methods of operation,
customers, programs, marketing plans, developmental plans, inventions,
developments and trade secrets of every kind and character; provided, however,
that Employee shall not be obligated to treat as confidential any of the
information described in this Section 7(A) which is or becomes publicly
available or readily ascertainable from public sources or any information in
Employee's possession or knowledge prior to April 1, 1988 and not provided to
him by Employer or any of Employer's subsidiaries.
(B) Employee hereby acknowledges that all of the confidential
information and materials are and shall continue to be the exclusive proprietary
property of Employer, whether or not prepared in whole or in part by Employee
and whether or not disclosed to or entrusted to the custody of Employee.
Employee further hereby acknowledges that all confidential information and
materials (to which Employee has had access or which Employee has learned during
his employment or to which Employee shall hereafter have access or which he
shall hereafter learn) have been disclosed to Employee solely by virtue of
Employee's employment with Employer and solely for the purpose of assisting him
in performing his duties for Employer.
(C) Employee hereby agrees that Employee will not, either during the
course of Employee's employment with Employer or at any time thereafter,
disclose any confidential information
6
<PAGE>
or materials of Employer or any of Employer's subsidiaries, in whole or in part,
to any person or entity, for any reason or purpose whatsoever, unless Employer
shall have given written consent to such disclosure. Employee further agrees
that Employee shall not use in any manner other than for and in the course of
Employee's furtherance of the business of Employer and Employer's subsidiaries,
any confidential information or materials of Employer or any of Employer's
subsidiaries for Employee's own purposes or for the benefit of any other person
or entity except Employer and Employer's subsidiaries, whether such use consists
of the duplication, removal, oral use or disclosure, or the transfer of any
confidential information or materials in any manner, or such other unauthorized
use in whatever manner, unless Employer shall have given prior written consent
to such use.
8. NEW DEVELOPMENTS. Employee agrees that during the term of this
Agreement, Employee will promptly disclose to Employer any and all improvements,
inventions, developments, discoveries, innovations, systems, techniques, ideas,
processes, programs and other things which may be of assistance to Employer or
any of Employer's subsidiaries, whether patentable or unpatentable, relating to
or arising out of any developments, services or products, or pertaining to in
any manner, the business of Employer or any of Employer's subsidiaries, and made
or conceived by Employee, alone or with others, while employed by Employer,
whether or not conceived or made during his regular working hours (collectively
referred to hereinafter as the "New Developments"). Employee further agrees
that all New Developments shall be and shall remain the sole and exclusive
property of Employer and that Employee shall, upon the request of Employer, and
without further compensation, do all lawful things reasonably necessary to
ensure Employer's ownership of such New Developments, including without
limitation, the execution of any necessary documents assigning and transferring
to Employer, or Employer's assigns all of
7
<PAGE>
Employee's right, title and interest in and to such New Developments, and the
rendering of assistance in the execution of all necessary documents required to
enable Employer to file and obtain patents, trademarks and copy rights in the
United States and foreign countries on any of such New Developments; provided,
however, that all expenses relating to the foregoing shall be borne by Employer.
9. SURRENDER OF MATERIAL UPON TERMINATION. Employee hereby agrees that
upon cessation of his employment, for whatever reason and whether voluntary or
involuntary, he will immediately surrender to Employer all property and other
things of value in his possession or in the possession of any person or entity
under his control, that are the property of Employer or any of Employer's
subsidiaries including, without limitation, all personal notes, drawings,
manuals, documents, photographs, or the like, including copies and derivatives
thereof, relating directly or indirectly to any confidential information or
materials or New Developments, or relating directly or indirectly to the
business of Employer or any of Employer's subsidiaries.
10. REMEDIES. Employer and Employee hereby acknowledge and agree that the
services rendered by Employee to Employer and the information disclosed to
Employee during and by virtue of his employment, and Employee's commitments and
obligations to Employer herein are of a special, unique and extraordinary
character, and that the breach of any provision of this Agreement will cause the
non-breaching party irreparable injury and damage, and consequently the non-
breaching party shall be entitled to, in addition to all other remedies
available to it, injunctive and equitable relief to prevent a breach of this
Agreement, or any part of it, and to secure the enforcement of this Agreement.
11. COVENANT NOT TO COMPETE. For a period with a duration equal to the
duration of this Agreement (but not less than one
8
<PAGE>
year if, under Section 12(F), Employee voluntarily terminates this Agreement),
and beginning on (i) the date of cessation of Employee's employment under this
Agreement, or (ii) the date of the last payment of compensation to Employee, if
Employee's employment ceases as a result of a Terminating Disability pursuant to
Section 12(A), whether during or at the end of the term of this Agreement, or
for whatever time within that period found by a court of competent jurisdiction
to be reasonably necessary for the protection of Employer, Employee will not,
himself or together with other persons, directly or indirectly, own, manage,
operate, join, control or participate in the ownership (other than as an owner
of shares in a publicly traded corporation), management, operation or control of
or become an employee or consultant of or to any business that engages in the
business of providing telemarketing services, any business in which CBIS is
engaged or any other business of any type in which Employee is involved on
behalf of Employer or any of Employer's subsidiaries immediately prior to the
date of termination of this Agreement. This restriction will apply throughout
the continental United States and in any foreign jurisdiction in which Employer
or any of Employer's subsidiaries operates at the time Employee's employment
ceases or whatever geographic scope found by a court of competent jurisdiction
to be reasonably necessary for the protection of Employer.
Employee hereby agrees (i) that the restrictions set forth in the
paragraph immediately above are founded on valuable consideration and are
reasonable in duration and geographic extent in view of the circumstances in
which this Agreement is executed and are necessary to protect the legitimate
interests of Employer, and (ii) that the remedy at law for any breach of the
foregoing covenant will be inadequate and that Employer will be entitled to
injunctive relief in the event of any such breach. Nothing herein stated shall
be construed as prohibiting Employer from pursuing any other remedies available
to it for any such
9
<PAGE>
breach or threatened breach or for any other breach of this Agreement, including
the recovery of damages from Employee.
12. TERMINATION.
(A) Employer or Employee may terminate this Agreement upon Employee's
failure or inability to perform the services required hereunder because of any
physical or mental infirmity for which Employee receives disability benefits
under Employer's Sickness and Accident Disability Benefit Plan and/or Employer's
Long Term Disability Plan for Salaried Employees or under Section 6(B)(2)
hereof, as the case may be (the "Plans"), over a period of one hundred twenty
consecutive working days during any twelve consecutive month period (a
"Terminating Disability").
(i) If Employer or Employee elects to so terminate this Agreement in
the event of a Terminating Disability, such termination shall be effective
immediately upon the giving of written notice by the terminating party to
the other.
(ii) Upon termination of this Agreement on account of disability,
Employer shall pay Employee his accrued compensation hereunder, whether
Base Salary, or otherwise (subject to offset for any amounts received
pursuant to the Plans), to the date of termination. For as long as such
Terminating Disability may exist, Employee shall continue to be an employee
of Employer for all other purposes and Employer shall provide Employee with
disability benefits and all other benefits (including continued
participation in Employer's medical and dental plans) according to the
provisions of the Plans and any other Employer plans in which Employee is
then participating. Upon termination of Employee's participation in
Employer's medical and dental
10
<PAGE>
plans Employee shall be immediately eligible to participate in the retiree
medical plan described in Section 6(B)(1).
(iv) If the parties elect not to terminate this Agreement upon an
event of a Terminating Disability and Employee returns to active employment
with Employer prior to such a termination, or if such disability exists for
less than one hundred twenty consecutive working days, the provisions of
this Agreement shall remain in full force and effect.
(B) This Agreement terminates immediately and automatically on the
death of Employee, provided, however, that the Employee's estate shall be paid
Employee's accrued compensation hereunder whether Base Salary, or otherwise to
the date of death and Employee's spouse shall be immediately eligible to
participate in the retiree medical plan described in Section 6(B)(1) to the same
extent that such Plan provides benefits to the spouses of other retirees who die
while participating in the plan.
(C) Employer may terminate this Agreement immediately in the event
that Employee is wilfully negligent in the performance of his duties or in the
event of Employee's conviction of a criminal act.
(D) Employer may terminate this Agreement upon 60 days written notice
for any reason other than those set forth in Section 12(A), (B) or (C). In the
event of a Termination under this Section 12(D), Employer shall pay Employee an
amount equal to the Base Salary set forth in Section 4 which would otherwise be
due Employee over the balance of the term of this Agreement, and all other
ancillary and accrued compensation of any type which have or would have accrued
over the term of this Agreement. Such amount shall be paid to Employee in 1994
or 1995 at
11
<PAGE>
Employee's option. In calculating Employee's pension under all qualified
defined benefit pension plans maintained by Employer, Employee shall be credited
with service and compensation, as though his employment continued under this
Agreement until December 31, 1995. In addition, Employee shall be immediately
eligible to participate in the retiree medical plan described in Section
6(B)(1).
(E) If Employee resigns within 90 days after a Change in Control of
CBI or CBIS, this Agreement shall thereupon terminate. In the case of CBI,
"Change in Control" means a change in control as defined in the CBI's 1988 Long
Term Incentive Plan. In the case of CBIS, "Change in Control" means a change of
ownership in which CBIS ceases to be a wholly owned direct or indirect
subsidiary of CBI or a change in which substantially all of the assets of CBIS
are sold to another company which is not a wholly owned direct or indirect
subsidiary of CBI. Employer or any successor of Employer shall pay to Employee
thirty-six (36) times the monthly Base Salary set forth in Section 4, and all
other ancillary and accrued compensation of any type which have or would have
accrued over the term of this Agreement. In addition, Employee shall be
immediately eligible to participate in the retiree medical plan described in
Section 6(B)(1).
(F) Employee may terminate this Agreement upon 60 days written
notice. In the event of a Termination under this Section 12(F), Employer shall
pay Employee the Base Salary set forth in Section 4 to the date of Termination,
and all other ancillary and accrued compensation of any type which have accrued
to the date of termination. Such amount shall be paid to Employee in 1994 or
1995 at Employee's option. In addition, Employee shall be immediately eligible
to participate in the retiree medical plan described in Section 6(B)(1).
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(G)(i) Upon termination of this Agreement on account of Employee's
Terminating Disability, death, or termination by Employee under Section
12(F), there shall become immediately exercisable all stock options granted
to Employee prior to February 10, 1994, the 20,000 Old Options granted on
February 10, 1994 and a number of the then otherwise unexercisable New
Options, rounded up to the nearest whole option, that bears the same ratio
to the total number of then unexercisable New Options as the number of days
from February 7, 1994 through the date of termination bears to 365.
(ii) Upon termination of this Agreement by Employee under Section
12(F), the restrictions on stock, granted to Employee under Section 6(C),
shall terminate and be of no further force and effect as of the date
Employee ceases to be an Employee with respect to the number of shares,
rounded up to the nearest whole share, that bears the same ratio to the
total number of then restricted shares as the number of days from February
7, 1994 through the date of Termination bears to 365.
(iii) Upon termination of this Agreement by CBI under Section 12(D) or
by Employee under Section 12(E), all otherwise unexercisable stock options
shall be immediately exercisable by Employee and all restrictions on stock
granted to Employee under Section 6(C) shall terminate and be of no further
force and effect as of the date Employee ceases to be an Employee.
(H) Upon Termination of this Agreement as a result of an event of
termination described in this Section 12 and except for Employer's payment of
the required payments under this Section 12, all further compensation under this
Agreement shall terminate; provided, however, that all qualified deferred
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compensation which Employee may be entitled to receive pursuant to any of
Employer's pension or profit sharing plans in which Employee may participate
during Employee's employment with Employer shall be paid pursuant to the
provisions of such plans at such times as any such amounts become payable to
Employee. It is further understood that for purposes of this Section 12, the
term "accrued compensation" shall include all non-qualified deferred
compensation, of whatever type or form, either previously granted to Employee by
Employer or otherwise earned or received by Employee.
(I) The termination of this Agreement shall not amend, alter or
modify the rights and obligations of the parties under Sections 7, 8, 9, 10, and
11 hereof, the terms of which shall survive the termination of this Agreement.
13. ASSIGNMENT. As this is an agreement for personal services involving a
relation of confidence and trust between Employer and Employee, all rights and
duties of Employee arising under this Agreement, and the Agreement itself, are
nonassignable by Employee except for the right of his estate to receive any
payment due Employee upon Employee's death. Employer expressly reserves the
right to assign this Agreement to any other entity which is part of the same
controlled group of corporations, as defined in Section 1563 of the Internal
Revenue Code of 1986, as it may from time to time be amended or restated.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient, if in writing, and if delivered by the sending
party personally or by certified mail to Employee at Employee's place of
residence as then recorded on the books of Employer or to Employer at its
principal office.
15. WAIVER. No waiver or modification of this Agreement or the terms
contained herein shall be valid unless in writing and
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duly executed by the party to be charged therewith. The waiver by any party
hereto of a breach of any provision of this Agreement by the other party shall
not operate or be construed as a waiver of any subsequent breach by such party.
16. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to Employee's employment by Employer on and after February
7, 1994. There are no other contracts, agreements or understandings, whether
oral or written, existing between them except as contained or referred to in
this Agreement. This Agreement amends and suspends all prior agreements and
understandings of the parties with respect to Employee's employment by Employer.
18. SEVERABILITY. In case any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or other unenforceability shall not affect any other
provisions hereof, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein.
19. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 13
above, this Agreement shall be binding upon Employee, Employer and their
successors and assigns. Employer further expressly agrees that in the event
Employer shall merge or consolidate with, or be acquired by, any other entity,
the continuing entity resulting from such merger, consolidation or acquisition
shall be obligated to perform the duties and obligations of Employer as set
forth in this Agreement. Employer further agrees that in the event Employer
should voluntarily dissolve and liquidate the assets and business of Employer,
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Employer will undertake to have the terms and provisions of this Agreement
fulfilled prior to the distribution or disposal of Employer's assets.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EMPLOYER:
CINCINNATI BELL INC.
By: /S/ JOHN T. LAMACCHIA
---------------------
John T. LaMacchia, President
and CEO
EMPLOYEE:
/S/ DAVID J. LAHEY
------------------
David J. Lahey
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Exhibit (10)(iii)(A)(14)
to Form 10-K for 1993
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made as of the 29th day of March,
1993 between Cincinnati Bell Inc. (the "Company") and Brian Craig Henry (the
"Executive").
TERM OF EMPLOYMENT
The Executive's employment under this Agreement commences on March 29, 1993
(the "Effective Date") and ends on the fifth anniversary of the Effective Date
(the "Expiration Date") unless the Executive's employment is earlier terminated.
POSITION AND DUTIES
1. The Executive will have the position of Executive Vice President and
Chief Financial Officer of the Company, being the most senior finance position
within the parent organization. Further the Executive will be a member of the
Company's Office of the Chairman but will not at this time be proposed for
election to the Company's Board of Directors. Whether to propose to the Board
the Executive's nomination for election to the Board of Directors will be
reconsidered by senior management from time to time.
2. The Executive will be provided appropriate office space, a full-time
secretary (who may be shared with another executive) and travel expenses as
described under EXPENSES.
3. The Executive shall devote the Executive's full business time and
efforts to the business of the Company. The Executive may serve as a director
or member of a committee of any other corporation or other organization
involving no conflict of interest with the interests of the Company and may
participate in civic and charitable activities to an extent determined by
<PAGE>
the Executive, provided that such service and participation shall not interfere
with the Executive's performance of the Executive's duties and responsibilities
under this Agreement.
4. The Executive shall move his residence to the Greater Cincinnati area
within a reasonable period of time after the Effective Date.
COMPENSATION
1. BASE SALARY--The Executive shall receive a base salary (the "Base
Salary") of at least $270,000 for each calendar year, subject to proration for
any partial year, during the term of his employment under this Agreement.
2. BONUSES--in addition to the Base Salary, the Executive shall be
eligible to receive the following bonuses:
a. An annual bonus under the Company's Short Term Incentive Plan for
each calendar year in which the Executive performs services under this Agreement
based on the Executive's performance. The maximum performance bonus payable for
a performance period (a calendar year) shall not exceed 250% of the Standard
Award described in the Short Term Incentive Plan. For the 1993 performance year
the Executive shall receive a minimum performance bonus of $80,000. Awards of
amounts exceeding $80,000 for 1993 may be made at the discretion of the
Company's Board of Directors. For succeeding performance years no minimum
amount shall be guaranteed but achievement of at least 100% of all applicable
performance goals (WHICH PERFORMANCE GOALS AND ACHIEVEMENT CRITERIA ARE
COMPARABLE TO THOSE OF THE COMPANY'S PRESIDENT AND CHIEF OPERATING OFFICER)
shall result in a bonus of at least $80,000.
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b. A one-time bonus different from (a) above in the amount of $80,000
shall be paid at the later of the Effective Date or the date the Executive first
performs services for the Company.
c. The payment of any bonus paid under the provisions of the
Company's Short Term Incentive Plan may be deferred by the Executive under the
terms and conditions of the Company's Incentive Award Deferral Plan.
3. SALARY AND BONUS INCREASES--Salary and bonus increases may be awarded
at the discretion of the Company's Board of Directors based on the
recommendations of the Compensation Committee.
4. EFFECT OF DISABILITY AND OTHER BENEFITS--The Base Salary and bonuses
otherwise payable to the Executive shall be reduced by any benefits paid to the
Executive by the Company under the Company's Sickness and Accident Disability
Plan and Long Term Disability Plan for Salaried Employees.
5. WITHHOLDING--Federal, state and local withholding shall be made on any
amounts paid to the Executive or benefits provided for the Executive under this
Agreement as required by law.
EXPENSES
All reasonable and necessary expenses incurred by the Executive in the
course of the Executive's performance of duties for the Company shall be
reimbursable in accordance with the Company's then current travel and expense
policies.
MISCELLANEOUS BENEFITS/COMPENSATION/PERQUISITES
1. Options--On April 5, 1993 the Executive shall be granted non-qualified
options to purchase 80,000 common shares of the Company. Such options shall be
granted under the
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Company's 1988 Long Term Incentive Plan (the "1988 Plan"). The terms of such
options are further described in Exhibit A attached hereto and made a part
hereof. All options in the initial grant will become immediately exercisable by
the Executive in the event of a change of control.
After calendar year 1993, the Executive may participate in the Company's
1988 Plan or any similar stock option plan established by the Company, subject
to the actions of the Compensation Committee of the Company's Board of
Directors.
2. NON-QUALIFIED RETIREMENT SAVINGS CONTRIBUTIONS--The Company shall
compensate the Executive for the period the Executive is not eligible to
participate in the Company's Retirement Savings Plan by paying $14,500 to the
Executive on April 6, 1994. Such amount shall be payable to the Executive only
if the Executive is continuously employed by the Company from the Effective Date
through April 5, 1994. This payment shall not be used in the calculation of any
benefits that are otherwise provided by the Company.
3. NON-QUALIFIED PENSION BENEFIT - A supplemental, non-qualified pension
will be provided to the Executive by the Company in accordance with the
provisions of this Paragraph 3.
a. If the Executive's employment with the Company terminates on or
after the Expiration Date and prior to the fifth anniversary of the Expiration
Date, the non-qualified pension shall be equal to that portion of the
Executive's accrued pension under the Company's Management Pension Plan
("CBMPP") which is attributable to his first five years of service with the
Company.
b. If the Executive's employment with the Company terminates on or
after the fifth anniversary of the Expiration Date, the non-qualified pension
shall be equal to that portion
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of the Executive's accrued pension under CBMPP which is attributable to his
first ten years of service with the Company.
c. Notwithstanding the foregoing, if the Executive's employment with
the Company terminates after a change in control (as hereafter defined in this
Agreement) and prior to the fifth anniversary of the Expiration Date, the
Executive shall be entitled to receiving a non-qualified pension equal to that
portion of the pension which the Executive would have accrued under CBMPP if the
Executive had been employed by the Company throughout the 10-year period ending
on the date the Executive's employment terminates and if his average annual
compensation for the portion of such 10-year period prior to the Effective Date
was equal to his average annual compensation counted for purposes of CBMPP for
the period from the Effective Date through the date on which the Executive's
employment terminates.
d. The Executive's non-qualified pension under this Paragraph 3
shall be paid at the same time, and in the same form, as the Executive's
qualified pension under CBMPP.
e. If the Executive dies during employment, a non-qualified survivor
annuity shall be payable to the Executive's spouse equal to the non-qualified
survivor annuity (if any) which would have been payable to the Executive's
spouse if the Executive had terminated employment on the day preceding the date
of his death and elected a survivor annuity option for his non-qualified pension
computed in the same manner as a survivor annuity option under CBMPP.
f. Nothing contained in this Paragraph 3 shall be construed to give
the Executive any right to continued employment except under the express terms
of this Agreement. The
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<PAGE>
provisions of this Paragraph 3 shall survive the term of the Executive's
employment under this Agreement.
4. AUTOMOBILE--On the Effective Date and through the term of the
Executive's employment under this Agreement, the Executive shall be entitled to
the use of a vehicle or cash in lieu of a vehicle. The specific provisions
relating to this benefit are described in Exhibit B.
5. FINANCIAL CONSULTANT AND TAX RETURN PREPARATION--On and after the
Effective Date and through the term of the Executive's employment under this
Agreement, the Company shall reimburse the Executive for reasonable financial
consulting fees and income tax return preparation fees.
6. COUNTRY CLUB INITIATION FEE--The Company shall provide a single
initiation fee at a country club located in the metropolitan Cincinnati, Ohio
area, which country club shall be selected by the Executive.
7. RELOCATION ASSISTANCE--The Company shall pay the cost of lodging at the
Garfield House in Cincinnati, Ohio (or at a comparable facility if lodging is
unavailable at the Garfield House) for a period beginning on the Effective Date
and ending on the earlier of the date the Executive's family assumes permanent
residence in the Greater Cincinnati area or six months from the Effective Date.
In addition the Executive shall be eligible to participate in the Company's Home
Acquisition Program, the details of which have previously been supplied to the
Executive and which is made a part of this Agreement. The Executive shall not
receive any other payments or benefits to compensate the Executive or the
Executive's family for the cost of relocation.
STANDARD BENEFITS
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The Executive shall be entitled to receive all benefits that are
customarily granted to a Company Executive Vice President, such as FLEXbenefit
Program benefits, participation in the Retirement Savings Plan, certain club
memberships, physical examinations, vacations, parking, concession telephone
service, use of a cellular telephone and participation in a qualified pension
plan. The Executive shall receive such benefits subject to the terms and
conditions that apply to each benefit, including applicable waiting periods for
participation, and required consents of the Compensation Committee of the
Company's Board of Directors. Nothing contained in this provision shall permit
the Executive to participate in the qualified pension plan prior to the date he
would be eligible to participate according to the terms of the plan.
CONFIDENTIAL INFORMATION AND MATERIALS
The Executive will not disclose any confidential information or materials
of the Company or its affiliates to third parties.
NEW DEVELOPMENTS
The Executive will disclose any ideas, improvements, innovations,
developments and the like to the Company except any that are unrelated to the
Company's business.
SURRENDER OF MATERIAL UPON TERMINATION
The Executive will return all property of the Company or its affiliates on
termination of the Executive's employment.
REMEDIES
Both parties agree that the services the Executive provides and the
information disclosed to the Executive during and by virtue of the Executive's
employment are of a special, unique and extraordinary character, that the
Executive's commitments and obligations to the Company
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<PAGE>
herein are of a special, unique and extraordinary character, and that the breach
of any provision of this Agreement will cause the non-breaching party
irreparable injury and damage, and consequently the non-breaching party shall be
entitled to, in addition to all other remedies available to him or it,
injunctive and equitable relief to prevent a breach of this Agreement, or any
part of it, and to secure the enforcement of this Agreement.
COVENANT NOT TO COMPETE
The Executive will not compete with the Company or its affiliates from the
Effective Date through two years following the termination of the Executive's
employment under this Agreement (or, if later, two years from the date of the
last payment of compensation to the Executive if the Executive's employment
terminates as a result of a Terminating Disability) or for whatever lesser time
within that period found by a court of competent jurisdiction to be reasonably
necessary for protection of the Company; provided, however, this restriction
shall not apply to any period for which the Executive is not being compensated
hereunder except for voluntary termination (not due to a breach by the Company)
by the Executive or termination for Cause.
TERMINATION
1. EVENTS OF TERMINATION--The Executive's employment under this Agreement
may be terminated without any breach of this Agreement only under the following
circumstances:
a. DEATH--The Executive's employment hereunder shall terminate upon
his death.
b. DISABILITY--If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive is absent from his duties on a full-
time basis for the entire period of six consecutive months and, within 30 days
after written Notice of Termination (as defined herein)
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<PAGE>
is given, does not return to the performance of his duties on a full-time basis,
the Company may terminate the Executive's employment under this Agreement.
c. CAUSE--The Company may terminate the Executive's employment under
this Agreement for Cause. For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment under this Agreement if the
Executive willfully engages in misconduct that is materially injurious to the
Company, monetarily or otherwise. For purposes of this paragraph, no act, or
failure to act, on the Executive's part, shall be considered "willful" unless
willfully done, or willfully omitted to be done, by the Executive not in good
faith and without reasonable belief that the Executive's action or omission was
in the best interest of the Company.
d. CHANGE IN CONTROL--If, during the Executive's employment under
this Agreement there is a change in control, the Executive may terminate the
Executive's employment under this Agreement upon 30 days prior written notice to
the Company. For purposes of this Agreement, a "change in control" of the
Company shall mean a "change in control" as defined in the Company's 1988 Plan.
2. NOTICE OF TERMINATION--Any termination of the Executive's employment
(other than termination by death) shall be communicated by written Notice of
Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provisions so indicated.
3. DATE OF TERMINATION--"Date of Termination" shall mean:
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<PAGE>
a. If the Executive's employment is terminated by death, the date of
the Executive's death;
b. If the Executive's employment is terminated on disability, 30 days
after Notice of Termination is given (provided that such Notice of Termination
is given no sooner than 30 days prior to the end of the consecutive six month
period during which the Executive is absent, and provided further that the
Executive does not return to the performance of his duties on a full-time basis
during such 30 day period);
c. If the Executive's employment is terminated for Cause or on a
change in control, the date specified in the Notice of Termination; and
d. If the Executive's employment is terminated for any other reason,
a 30 DAYS AFTER Notice of Termination is given.
4. COMPENSATION UPON TERMINATION OR UPON DISABILITY--The Executive shall
receive the following compensation on termination of the Executive's employment
under this Agreement:
a. DEATH--If the Executive's employment is terminated by death, the
Company shall pay the Executive's estate the Executive's full Base Salary
through the end of the month in which death occurred at the rate in effect at
the time of death, plus any bonus that was awarded to the Executive but was
unpaid at the date of the Executive's death. On payment of the amounts
described in the preceding sentence, the Company shall have no further
obligations to the Executive or the Executive's estate under this Agreement
except for amounts accrued but not paid as of the date of the Executive's death
and obligations under any employee benefit plans or arrangements.
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b. CAUSE--If the Executive's employment is terminated for Cause, the
Company shall pay the Executive the Executive's full Base Salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given, plus any bonus which was awarded to the Executive but was unpaid at the
time the Notice of Termination is given. On payment of the amounts described in
the preceding sentence, the Company shall have no further obligations to the
Executive under this Agreement except for amounts accrued but not paid as of the
date the Notice of Termination was given and obligations under any employee
benefit plans or arrangements.
c. TERMINATION AFTER CHANGE IN CONTROL--If the Executive terminates
his employment following a change in control, then the Company shall make a lump
sum severance payment to the Executive, in cash, on the fifth day following the
Date of Termination. The amount of the severance payment shall equal the
greater of (i) $810,000 or (ii) three times the Executive's Base Salary on the
Date of Termination. On payment of the amount described in the preceding
sentence, the Company shall have no further obligations to the Executive under
this Agreement except for amounts accrued but not paid as of the date the Notice
of Termination was given (including accrued but unpaid bonus amounts and non-
qualified pension amounts) and obligations under any employee benefit plans or
arrangements.
d. TERMINATION BY THE COMPANY--If the Company terminates the
Executive's employment, other than for Cause or disability (it being understood
that a purported termination for Cause or on a disability that is disputed and
finally determined not to have been proper shall be a termination by the
Company) after the second anniversary of the Effective Date, the Company shall
pay to the Executive an amount equal to the total Base Salary paid to the
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Executive during the twelve month period preceding the Date of Termination. If
the Company terminates the Executives employment, other than for Cause or
disability (it being understood that a purported termination for Cause or on a
disability that is disputed and finally determined not to have been proper shall
be a termination by the Company) before the second anniversary of the Effective
Date, the Company shall pay to the Executive an amount equal to the total Base
Salary payable to the Executive for the remainder of the term ending on the
Expiration Date. Payment of any amount called for under the two previous
sentences shall be made within 30 days after termination of the Executive's
employment. On payment of such amount, the Company shall have no further
obligations to the Executive under this Agreement except for amounts accrued but
not paid as of the date the Notice of Termination was given and obligations
under any employee benefit plans or arrangements.
5. EFFECT OF PAYMENTS--Upon the Company's payment of the required amounts
under this provision, all further compensation under this Agreement shall
terminate; provided, however, that all qualified deferred compensation that the
Executive may be entitled to receive pursuant to any of the Company's pension or
profit sharing plans in which the Executive may participate during the
Executive's employment with the Company shall be paid pursuant to the provisions
of such plans at such times as any such amounts become payable to the Executive.
It is further understood that for purposes of this provision, the term "accrued
compensation" shall include all non-qualified deferred compensation, of whatever
type or form, either previously granted to the Executive by the Company or
otherwise earned by the Executive. The termination of this Agreement shall not
amend, alter or modify the rights and obligations of the parties relating to
confidential information and materials, new developments, surrender of material
upon
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termination, remedies and covenants not to compete which shall survive the
termination of this Agreement.
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NOTICES
Any notice required or permitted to be given under this Agreement shall be
sufficient, if in writing, and if delivered by the sending party personally or
by certified mail to the Executive at the Executive's place of residence as then
recorded on the books of the Company or to the Company at its principal office.
GOVERNING LAW
This Agreement shall be governed by the laws of the State of Ohio.
ENTIRE AGREEMENT
This Agreement contains the entire agreement of the parties with respect to
the Executive's employment by the Company. There are no other contracts,
agreements or understandings, whether oral or written, existing between them
except as contained or referred to in this Agreement.
MITIGATION
The Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination or otherwise.
WAIVER AND AMENDMENT
No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and signed by an
officer of the Company (other than the Executive) who is at or above the level
of senior vice president or such
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other officer as may be specifically designated by the board of the Company. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
SEVERABILITY
In case any one or more of the provisions of this Agreement is held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
other unenforceability shall not effect any other provisions hereof, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein.
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon the Executive, the Company and their
successor and assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
CINCINNATI BELL INC.
By: /S/ JOHN T. LAMACCHIA
-------------------------
/S/ BRIAN CRAIG HENRY
-------------------------
Brian Craig Henry
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Exhibit (10)(iii)(A)(15)(i)
to Form 10-K for 1993
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the lst day of January, 1989 between
Cincinnati Bell Inc., an Ohio corporation with its principal place of business
in Cincinnati, Ohio ("Employer" or "CBI"), and James F. Orr, an individual
residing in Ohio ("Employee").
WITNESSETH
WHEREAS, Employer wishes to develop its telemarketing business through a
new subsidiary ("Newco");
WHEREAS, Employee has a marketing background and has indicated a desire to
work for Employer in developing its telemarketing business;
WHEREAS, Employee wishes to be employed by Employer and Employer wishes to
employ Employee, all pursuant to the terms hereof; and
WHEREAS, Employer intends to retain the right to assign this Agreement to
any other entity which is part of the same controlled group of corporations, as
defined in Section 1563 of the Internal Revenue Code of 1986, as it may from
time to time be amended or restated, provided, that upon such assignment CBI
will guarantee or otherwise support any payments due hereunder to employee.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements contained herein, the parties agree as follows:
1. EMPLOYMENT. Employer employs Employee and Employee accepts employment
upon the terms and conditions hereinafter set forth. For purposes of this
Agreement, Employer
<PAGE>
shall include any entity to which this Agreement is assigned under Section 14.
2. TERMS OF EMPLOYMENT. This Agreement shall continue in full force and
effect commencing on January 1, 1989 (the "Effective Date") and ending on
December 31, 1993 (the "Expiration Date"), unless this Agreement is earlier
terminated in accordance with the provisions of Section 13 hereof.
3. DUTIES.
(A) Employer agrees to employ Employee and Employee agrees to serve
Employer as Vice President Market Development of Newco. In such position,
Employee shall have primary responsibility for developing and implementing a
marketing plan for the telemarketing services of Newco, and shall directly
supervise all marketing employees and activities.
(B) In connection with performing the services required in Section
3(A), Employee will be provided appropriate office space, a secretary (but not
necessarily a full-time secretary), and travel expenses as described in Section
5, hereof. The extent of such support resources will be agreed upon from time
to time by Employee and the President of Newco.
(C) Employee shall devote his entire time, attention, and energies to
the business of Newco. The words "entire time, attention, and energies" are
intended to mean that Employee shall devote his full effort during reasonable
working hours to the business of Newco and shall devote at least 40 hours per
week to the business of Newco.
(D) Employee shall not be required to change his current residence;
however, Employee shall travel to such areas and places as are reasonably
necessary in the performance of his duties.
4. COMPENSATION.
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(A) Employee shall receive a base salary (the "Base Salary") of at
least $150,000 for each calendar year, subject to proration for any partial
year, during the term of this Agreement. Such Base Salary, and any other
amounts payable hereunder, shall be subject to withholding as required by law.
(B) In addition to the Base Salary, Employee shall be entitled to
receive an annual bonus (the "Bonus") for each calendar year for which services
are performed under this Agreement, subject to proration for any partial year
during such term. Any Bonus shall be payable after the conclusion of Employer's
calendar year in accordance with its regular bonus payment policies. Employee
shall receive Bonuses as follows:
Initially, a maximum of $50,000 per year, based (i) 50% on the
results of Newco's earnings (computed as provided in Section 7)
results as compared to its earnings commitment submitted to and
approved by the Board of Directors of CBI, and (ii) 50% on CBI's
earnings results as compared to its earnings commitment submitted
to and approved by the Board of Directors of CBI.
At the discretion of the President of Newco, such bonus
computation may be revised and based 100% on the results of
Newco's revenue and earnings results as compared to its revenue
and earnings commitment submitted to and approved by the Board of
Directors of CBI. In computing Newco's earnings results or CBI's
earnings results, any salaries, bonuses, employee benefit plan
obligations, other compensatory amounts or reimbursement for
employee expenses for any person who devotes substantially all of
his or her time, attention and energy to the
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business of Newco, whether or not paid or accrued by Newco, shall
be allocated solely to Newco's earnings results. The earnings
results of Newco and CBI shall not be decreased or adjusted by
any amount payable to any person who devotes substantially all of
his or her time, attention and energy to the business of Newco,
whether or not paid or accrued by Newco, for any repurchase of
Newco's Class B Common Shares or for the accrual or payment of
the Performance Award to Employee or the payment or accrual of a
similar award to any other person. At the discretion of the
President of Newco, such Bonus computation may be revised and
based 100% on the results of Newco's revenue and earnings results
as compared to its revenue and earnings commitment submitted to
and approved by the Board of Directors of CBI. While the Bonus
for each year is to be determined in the sole discretion of the
President of Newco, it is understood by the parties that such
Bonus generally will be paid in full upon the reasonable
satisfaction of the above criteria.
(C) On or before February 1, 1989, Employee shall receive from
Employer a one-time payment of $30,000 representing a bonus for agreeing to be
employed by Employer.
(D) On at least an annual basis, Employee shall receive a formal
performance review and be considered for salary and/or bonus increases.
5. EXPENSES.
All reasonable and necessary expenses incurred by Employee in the
course of the performance of his duties to Employer shall be reimbursable in
accordance with Employer's
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<PAGE>
then current travel and expense policies.
6. BENEFITS.
(A) Employee shall be granted options to purchase 2,000 common shares
of CBI. Such options shall be granted under CBI's 1988 Long Term Incentive Plan
(the "1988 Plan") effective as of the date of the next meeting of the
Compensation Committee of the Board of Directors of CBI following the Effective
Date. Such options shall further be subject to the terms of the 1988 Plan and
to the same terms and conditions as were applied to options granted to Vice
Presidents of Cincinnati Bell Telephone Company in 1988. Pursuant to the terms
of the 1988 Plan, such options will become immediately exercisable upon a Change
in Control, as defined therein.
(B) After calendar year 1989, Employee may participate in CBI's 1988
Plan or any similar stock option plan established by CBI, subject to the actions
of the Compensation Committee.
(C) After satisfying the applicable waiting periods and while the
Employee remains in the employ of the Employer, Employee shall be entitled to
participate in all of the various employee benefit plans in which Vice
Presidents of Cincinnati Bell Telephone Company are participating, with the
exceptions that Employee shall not receive a cellular telephone or concession
telephone service. In addition, Employer shall provide Employee with the
following benefits:
(1) SAVINGS PLAN FOR SALARIED EMPLOYEES. Within 30 days of the
execution of this Agreement by Employer and Employee, Employer shall compensate
Employee for the period he is not eligible to participate in the Savings Plan
for Salaried Employees by paying to Employee a sum equal to (a) the amount that
Employer would have
-5-
<PAGE>
contributed to such Savings Plan for Employee's account if Employee had fully
participated therein plus (b) the amount of tax incurred by Employee on such
payment.
(2) WELFARE PLANS - GENERAL. In the case of each employee
welfare benefit plan in which Vice Presidents of Cincinnati Bell Telephone
Company are participating, prior to satisfying any waiting period called for in
the plan and while Employee remains in the employ of Employer, Employer shall
provide Employee with benefits which are at least equivalent to the benefits
Employee would have been entitled to receive under the plan if he had been
eligible to participate in the plans.
(3) LONG TERM DISABILITY PLAN FOR SALARIED EMPLOYEES AND THE
SICKNESS AND ACCIDENT DISABILITY BENEFIT PLAN. While Employee remains in the
employ of Employer, Employer shall provide Employee with benefits which are at
least equivalent to the benefits Employee would have been entitled to receive
under the Long Term Disability Plan for Salaried Employees and the Sickness and
Accident Disability Benefit Plan (a) assuming that he became eligible to
participate in the plans on January 1, 1989 and (b) assuming that he was
credited with 25 years of completed service as of January 1, 1989. The benefits
payable under this Section 6(B)(3) shall be reduced by any benefits paid under
the Long Term Disability Plan for Salaried Employees and the Sickness and
Accident Disability Benefit Plan.
(4) LIFE INSURANCE. For the first year of Employee's
employment, Employer will at its expense provide Employee with life insurance in
the basic amount of $200,000.
(5) MANAGEMENT PENSION PLAN. Subject to satisfying the
applicable waiting period, while Employee remains in the employ of Employer,
Employee shall participate in the Management Pension Plan. Employee's accrued
benefit under the Plan shall
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<PAGE>
vest in accordance with the terms of the Plan. In the event that Employee is
employed by Employer on the Expiration Date but has not been credited with five
years of service, Employer and Employee agree that an equitable adjustment shall
be made.
(D) Notwithstanding anything contained herein to the contrary, the
Base Salary and Bonuses otherwise payable to Employee shall be reduced by any
benefits paid to Employee by Employer under Employer's Sickness and Accident
Disability Plan and Long Term Disability Plan for Salaried Employees or under
Section 6(B)(3) above.
7. PERFORMANCE AWARDS.
(A) If the net revenues of Newco from all sources (including
Telephone Marketing Services ("TMS"), whether or not contributed to Newco) for
its preceding fiscal year equal or exceed $30,000,000, Employee shall
immediately after the end of such fiscal year become entitled at all times
thereafter to receive a Performance Award (as defined in Section 7(B)) and the
Employee's Performance Award percentage shall be equal to 1%. Employee's
Performance Award percentage shall be increased to 2% if the net revenues of
Newco from all sources (including TMS, whether or not contributed to Newco) for
its preceding fiscal year equal or exceed $50,000,000. Only net revenues of TMS
in excess of the net revenues of TMS for the 12-month period ending June 30,
1988 may be included in calculating the $30,000,000 and the $50,000,000 amounts.
The Performance Award percentage to which Employee may become entitled under
this Section 7(A) shall hereafter be referred to as the "Performance Award
Percentage".
(B) Except as otherwise set forth in Section 7(C), upon Employee
ceasing to be an employee of Employer, or any other entity described in Section
14, for any reason (the last day of the month preceding such cessation hereafter
being referred to as the "Performance
-7-
<PAGE>
Award Date"), Employer shall pay a Performance Award to Employee in an amount
determined and on the terms as follows:
(i) The Performance Award shall be calculated based upon test
period net revenues and test period pre-tax earnings of Newco. For purposes
hereof, the test period is the period beginning one year before the Performance
Award Date (the date as of which the payment of the Performance Award by
Employer will be deemed to occur) and ending on the date one year after the
Performance Award Date. Test period net revenues shall equal the total net
revenues of Newco for such 24-month period divided by two. Test period pre-tax
earnings shall equal the pre-tax earnings for such 24-month period divided by
two. In calculating test period pre-tax earnings (or net revenues if such could
be affected), no deduction or adjustment shall be made for any repurchases of
Newco's Class B Common Shares from any holder of Class B Common Shares or for
the payment of the Performance Award to Employee or the payment of a similar
award to any other person, but deduction or adjustment shall be made for
salaries, bonuses, employee benefit plan obligations, other compensatory amounts
or reimbursement for employee expenses for any person who devotes substantially
all of his or her time, attention and energy to the business of Newco, whether
or not paid or accrued by Newco.
(ii) Net revenues and pre-tax earnings shall be calculated by
Employer using Employer's standard accounting principles and practices which
shall be in accordance with generally accepted accounting principles ("GAAP"),
as employed by Cincinnati Bell Information Systems, Inc. Net revenues shall be
defined as gross revenues from sales less uncollectible reserves. Pre-tax
earnings shall be defined as gross revenues less all expenses and costs of doing
business (including Employee's salary, bonus and benefits),
-8-
<PAGE>
except for federal income taxes; provided, however, that no deduction shall be
made for any payment of dividends by Newco at any time. For the purposes of
calculating net revenues and pre-tax earnings in computing the Performance Award
payable by Employer to Employee, interest shall be computed monthly at the prime
rate of Employer's primary bank as in effect for the last banking day of each
month during the test period, and deducted from gross revenues on the amount by
which Employer's capital investments in Newco exceed $30,000,000 (not including
Employer's contribution of TMS to Newco).
(iii) The amount of the Performance Award which Employer
shall pay to Employee shall be equal to the sum of the Revenue Component and the
Earnings Component, which sum is known as the "Performance Award". The Revenue
Component shall equal one-half of the test period net revenues of Newco
multiplied by the Employee's Performance Award Percentage. The Earnings
Component shall equal one-half of the test period pre-tax earnings of Newco
multiplied by each of (a) twelve and (b) the Employee's Performance Award
Percentage.
If Newco's test period pre-tax earnings are positive or zero, the
Performance Award shall be calculated pursuant to this Section 7(B)(iii) based
upon actual test period net revenues and pre-tax earnings as demonstrated by the
attached Table 1. Table 1 shall in no way be construed to limit the maximum
Performance Award payable to Employee.
If Newco's test period pre-tax earnings are negative, the Performance
Award shall be as set forth in one of the last two rows of Table 1 (such rows
are referred to as Row 1 and Row 2, respectively) based upon the range in which
test period pre-tax earnings losses fall, and (a) to the extent that actual
Newco test period net revenues are greater than $30,000,000 but less than
$50,000,000 (plus the amount of the net revenues of TMS for the
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<PAGE>
12-month period ending June 30, 1988) and do not exactly correspond with any
entry in Row 1 or Row 2, the Performance Award shall be increased by (I) $.00375
for each additional $l.OO of net revenues, if Row 1 is applicable or (II) $.0025
for each additional $1.00 of net revenues, if Row 2 is applicable, or (b) to the
extent that actual Newco test period net revenues are $50,000,000 or greater
(plus the amount of net revenues of TMS for the 12-month period ending June 30,
1988) and do not exactly correspond with any entry in Row 1 or Row 2, the
Performance Award shall be increased by (I) $.0075 for each $1.00 of net
revenues, if Row 1 is applicable or (II) $.005 for each additional $1.00 of net
revenues, if Row 2 is applicable. In no event shall the Performance Award be
less than the minimum specified in Section 7(B)(v).
(iv) At the Performance Award Date, Employer shall compute the
Performance Award based upon (a) the actual net revenues and pre-tax earnings of
Newco for the preceding 12-month period as specified in Section 7(B)(i) above
and (b) Employer's reasonable, good faith estimate of the net revenues and
pre-tax earnings of Newco for the 12-month period following the Performance
Award Date (the "Subsequent Period"). Unless Employee and Employer otherwise
mutually agree, Employer shall pay Employee 80% of such estimated Performance
Award no later than 60 days following the Performance Award Date. Thereafter,
Employer shall recompute the Performance Award at the end of the Subsequent
Period based upon the actual net revenues and pre-tax earnings of Newco for such
period. Unless Employee and Employer otherwise mutually agree, no later than 60
days following the end of the Subsequent Period, Employer or Employee, as
appropriate, shall pay the other the difference between 80% of the estimated
Performance Award originally paid and the final Performance Award computed at
the end of the Subsequent Period. In the event of a
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<PAGE>
disagreement between Employer and Employee as to Employer's determination of the
final Performance Award, Employee and Employer shall jointly select a nationally
recognized independent accounting firm which shall determine the final
Performance Award and such determination shall be binding upon the parties
hereto.
(v) Notwithstanding anything to the contrary contained in this
Section 7(B), the minimum Performance Award shall be $300,000.
(C) Employer shall pay any Performance Award earned by Employee
pursuant to Section 7(A) and (B), adjusted as set forth in this Section 7(C).
If Employee ceases to be an employee of Employer (i) on or before the last day
of the two-year period commencing from the Effective Date, no Performance Award
shall be paid to Employee; (ii) at any time after the last day of the period
described in Section 7(C)(i) but on or before the last day of the three-year
period commencing from the Effective Date, Employer shall pay Employee the
Performance Award as calculated pursuant to Section 7(B) multiplied by the sum
of .50 and one-half times a fraction having as its numerator the number of days
elapsed in the current one-year period through the Performance Award Date and
having 365 as its denominator; or (iii) at any time after the last day of the
period described in Section 7(C)(ii), Employer shall pay Employee the full
Performance Award as calculated pursuant to Section 7(B).
8. CONFIDENTIAL INFORMATION AND MATERIALS.
(A) As used herein, the term "confidential information and materials"
refers to all information belonging to, used by or in the possession of Employer
and Newco now and in the future relating to their present and/or future business
strategies, finances, methods of operation, customers, programs, marketing
plans, developmental plans, inventions,
-11-
<PAGE>
developments and trade secrets of every kind and character; provided, however,
that Employee shall not be obligated to treat as confidential any of the
information described in this Section 8(A) which is or becomes publicly
available or readily ascertainable from public sources or any information in
Employee's possession or knowledge prior to the Effective Date and not provided
to him by Employer or Newco.
(B) Employee hereby acknowledges that all of the confidential
information and materials are and shall continue to be the exclusive proprietary
property of Employer and Newco, whether or not prepared in whole or in part by
Employee and whether or not disclosed to or entrusted to the custody of
Employee. Employee further hereby acknowledges that all confidential
information and materials (to which Employee has had access or which Employee
has learned during his employment or to which Employee shall hereafter have
access or which he shall hereafter learn) have been disclosed to Employee solely
by virtue of Employee's employment with Employer and solely for the purpose of
assisting him in performing his duties for Employer and Newco.
(C) Employee hereby agrees that Employee will not, either during the
course of Employee's employment with Employer or at any time thereafter,
disclose any confidential information or materials of Employer or Newco, in
whole or in part, to any person or entity, for any reason or purpose whatsoever,
unless Employer and Newco shall have given their written consent to such
disclosure. Employee further agrees that Employee shall not use in any manner
other than for and in the course of Employee's furtherance of Employer's and
Newco's business, any confidential information or materials of Employer or Newco
for Employee's own purposes or for the benefit of any other person or entity
except Employer or Newco, whether such use consists of the duplication, removal,
oral use or disclosure, or the transfer of any
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<PAGE>
confidential information or materials in any manner, or such other unauthorized
use in whatever manner, unless Employer and Newco shall have given their prior
written consent to such use.
9. NEW DEVELOPMENTS. Employee agrees that during the term of this
Agreement, Employee will promptly disclose to Employer and Newco any and all
improvements, inventions, developments, discoveries, innovation, systems,
techniques, ideas, processes, programs and other things which may be of
assistance to Employer or Newco, whether patentable or unpatentable, relating to
or arising out of any developments, services or products, or pertaining to in
any manner, the business of Employer or Newco, and made or conceived by
Employee, alone or with others, while employed by Employer, whether or not
conceived or made during his regular working hours (collectively referred to
hereinafter as the "New Developments"). Employee further agrees that all New
Developments shall be and shall remain the sole and exclusive property of
Employer and Newco and that Employee shall, upon the request of Employer or
Newco, and without further compensation, do all lawful things reasonably
necessary to ensure Employer's or Newco's ownership of such New Developments,
including without limitation the execution of any necessary documents assigning
and transferring to Employer, Newco or their assigns all of Employee's right,
title and interest in and to such New Developments, and the rendering of
assistance in the execution of all necessary documents required to enable
Employer or Newco to file and obtain patents, trademarks and copy rights in the
United States and foreign countries on any of such New Developments; provided,
however, that all expenses relating to the foregoing shall be borne by Employer
or Newco.
10. SURRENDER OF MATERIAL UPON TERMINATION. Employee hereby agrees that
upon
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<PAGE>
cessation of his employment, for whatever reason and whether voluntary or
involuntary, he will immediately surrender to Employer or Newco all of
Employer's or Newco's property and other things of value in his possession or in
the possession of any person or entity under his control, that are the property
of Employer or Newco including without limitation all personal notes, drawings,
manuals, documents, photographs, or the like, including copies and derivatives
thereof, relating directly or indirectly to any confidential information or
materials or New Developments, or relating directly or indirectly to the
business of Employer or Newco.
11. REMEDIES. Employer and Employee hereby acknowledge and agree that the
services rendered by Employee to Employer and Newco and the information
disclosed to Employee during and by virtue of his employment, that Employee's
commitments and obligations to Employer and Newco herein are of a special,
unique and extraordinary character, and that the breach of any provision of this
Agreement will cause the non-breaching party irreparable injury and damage, and
consequently the non-breaching party shall be entitled to, in addition to all
other remedies available to it, injunctive and equitable relief to prevent a
breach of this Agreement, or any part of it, and to secure the enforcement of
this Agreement.
12. COVENANT NOT TO COMPETE. For the period ending on the second
anniversary of (i) the date of cessation of Employee's employment under this
Agreement or (ii) the date of the last payment of compensation to Employee, if
Employee's employment ceases as a result of a Terminating Disability pursuant to
Section 13(A), whether during or at the end of the term of this Agreement, or
for whatever time within that period found by a court of competent jurisdiction
to be reasonably necessary for the protection of Employer, Employee will not,
himself or together with other persons, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of or become an
-14
<PAGE>
employee of any business that engages in business-to-business telemarketing or
any other business of any type in which Employee is involved on behalf of
Employer or Newco immediately prior to the date of termination of this
Agreement. This restriction will apply throughout the continental United States
or whatever geographic scope found by a court of competent jurisdiction to be
reasonably necessary for the protection of Employer.
Employee hereby agrees (i) that the restrictions set forth in the paragraph
immediately above are founded on valuable consideration and are reasonable. in
duration and geographic extent in view of the circumstances in which this
Agreement is executed and are necessary to protect the legitimate interests of
Employer, and (ii) that the remedy at law for any breach of the foregoing
covenant will be inadequate and that Employer will be entitled to injunctive
relief in the event of any such breach. Nothing herein stated shall be
construed as prohibiting Employer from pursuing any other remedies available to
it for any such breach or threatened breach or for any other breach of this
Agreement, including the recovery of damages from Employee.
13. TERMINATION.
(A) Employer or Employee may terminate this Agreement upon Employee's
failure or inability to perform the services required hereunder because of any
physical or mental infirmity for which Employee receives disability benefits
under Employer's Sickness and Accident Disability Benefit Plan and/or Employer's
Long Term Disability Plan for Salaried Employees or under Section 6(C)(3)
hereof, as the case may be, (the "Plans") over a period of one hundred twenty
consecutive working days during any twelve consecutive month period (a
"Terminating Disability"). If Employer or Employee elects to so terminate this
Agreement in the event of a Terminating Disability, (i) such termination shall
be effective immediately
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<PAGE>
upon the giving of written notice by the terminating party to the other, (ii)
Employer shall pay Employee, but in no event beyond the Expiration Date, (a) his
accrued compensation, whether Base Salary, Bonus or otherwise (subject to offset
for any amounts received pursuant to the Plans), (b) based upon the date of the
one hundred twentieth working day following the occurrence of the Terminating
Disability, the greater of (I) $300,000 or (II) the amount required pursuant to
Sections 7(B) and 7(C), and (c) for as long as such Terminating Disability may
exist, Employee shall continue to be an employee of Employer and Employer shall
provide Employee with disability benefits and all other benefits according to
the provisions of the Plans and any other Employer plans in which Employee is
then participating. If the parties elect not to terminate this Agreement upon
an event of a Terminating Disability and Employee returns to active employment
with Employer prior to such a termination, or if such disability exists for less
than one hundred twenty consecutive working days, the provisions of this
Agreement shall remain in full force and effect and the payment of the
Performance Award shall ultimately be made as if such disability had never
arisen. This Agreement terminates immediately and automatically on the death of
Employee, provided, however, that the Employee's estate shall be paid (a) the
greater of (I) $300,000 or (II) the amount required to be paid the Employee
pursuant to Sections 7(B) and 7(C), and (b) Employee's accrued compensation
hereunder whether Base Salary, Bonus or otherwise to the date of death. In
addition, upon Employee's death or Terminating Disability, Employee or his
estate shall be entitled to take whatever actions with respect to Employee's
stock options as may be permitted by the terms thereof, or by the plan under
which such options were granted, upon such death or disability.
(B) Either Employer or Employee may terminate this Agreement upon 30
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<PAGE>
days written notice for any reason other than those reasons set forth in Section
13(A). In the event of termination for any reason other than as set forth in
Section 13(A), Employer shall pay Employee the greater of (i) the amount
required and as determined pursuant to Sections 7(B) and 7(C), or (ii) $300,000,
plus all accrued compensation to the date of such termination, whether Base
Salary, Bonus or otherwise.
(C) Upon Employer's payment of the required payments under this
Section 13, all further compensation under this Agreement shall terminate;
provided, however, that all qualified deferred compensation to which Employee
may be entitled to receive pursuant to any of Employer's pension or profit
sharing plans in which he may participate during his employment with Employer
shall be paid pursuant to the provisions of such plans at such times as any such
amounts become payable to Employee. It is further understood that for purposes
of this Section 13, the term "accrued compensation" shall include all
non-qualified deferred compensation, of whatever type or form, either previously
granted to Employee by Employer or otherwise earned or received by Employee.
The termination of this Agreement shall not amend, alter or modify the rights
and obligations of the parties under Sections 8, 9, 10, 11 and 12 hereof, the
terms of which shall survive the termination of this Agreement.
14. ASSIGNMENT. As this is an agreement for personal services involving a
relation of confidence and trust between Employer and Employee, all rights and
duties of Employee arising under this Agreement, and the Agreement itself, are
nonassignable by Employee except for the right of his estate to receive any
payments due Employee upon his death. Employer expressly reserves the right to
assign this Agreement to any other entity which is part of the same controlled
group of corporations, as defined in Section 1563 of the Internal Revenue Code
of 1986, as it may from time to time be amended or restated.
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<PAGE>
15. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient, if in writing, and if delivered by the sending
party personally or by certified mail to Employee at his place of residence as
then recorded on the books of Employer or to Employer at its principal office.
16. WAIVER. No waiver or modification of this Agreement or the terms
contained herein shall be valid unless in writing and duly executed by the party
to be charged therewith. The waiver by any party hereto of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach by such party.
17. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
18. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to Employee's employment by Employer. There are no other
contracts, agreements or understandings, whether oral or written, existing
between them except as contained or referred to in this Agreement.
19. SEVERABILITY. In case any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or other uneforceability shall not affect any other
provisions hereof, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein.
20. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 14
above, this Agreement shall be binding upon Employee, Employer and their
successors and assigns. Employer further expressly agrees that in the event it
shall merge or consolidate with, or be acquired by, any other entity, the
continuing entity resulting from such merger, consolidation
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<PAGE>
or acquisition shall be obligated to perform the duties and obligations of
Employer as set forth in this Agreement. Employer further agrees that in the
event it should voluntarily dissolve and liquidate the assets and business of
Employer, it will undertake to have the terms and provisions of this Agreement
fulfilled prior to the distribution or disposal of Employer's assets.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EMPLOYER:
CINCINNATI BELL INC.
By: /S/ RAYMOND R. CLARK
-----------------------
12-23-88
EMPLOYEE:
/S/ JAMES F. ORR
--------------------------
12-23-88
--------------------------
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<PAGE>
<TABLE>
<CAPTION>
TABLE 1: NEWCO PERFORMANCE AWARD
(M = Millions of Dollars)
Test Period Newco Revenues* 30M (1)(3) 40M (1)(3) 50M (1)(4)
<S> <C> <C> <C>
R = .15M R = .2M R = .50M
- --------------------------------------------------------------------------------
8% E = .14M E = .192M E = .48M
T = .29M T = .392M T = .98M
- --------------------------------------------------------------------------------
5% E = .09M E = .12M E = .30M
T = .24M T = .32M T = .80M
- --------------------------------------------------------------------------------
3% E = .054M E = .072M E = .18M
T = .204M T = .272M T = .68M
- --------------------------------------------------------------------------------
0% E = 0 E = 0 E = 0
T = .15M T = .2M T = .50M
- --------------------------------------------------------------------------------
Less than 0% and *** E = -.0375 E = -.05 E = -.125M
higher or equal Row 1
to -4% T = .1125 T = .15M T = .375M
- --------------------------------------------------------------------------------
Lower than *** E = -.075 E = -.10 E = -.25M
- -4% Row 2
T = .075M T = .10M T = .25M
- --------------------------------------------------------------------------------
KEY: R = Revenue Contribution to Value
E = Earnings Contribution to Value
T = R + E
</TABLE>
<PAGE>
(1) To be increased by the amount of the net revenues of TMS
for the 12-month period ending June 30, 1988
(2) To be increased by the amount of the pre-tax earnings of
TMS for the 12-month period ending June 30, 1988
(3) Assumes 1% Performance Award Percentage
(4) Assumes 2% Performance Award Percentage
*Test period revenues and pre-tax earnings of Newco,
respectively, include those net revenues and pre-tax earnings of TMS whether or
not contributed to Newco, in excess of the net revenues and pre-tax earnings of
TMS for the 12 months period.
<PAGE>
Exhibit (10)(iii)(A)(15)(ii)
to Form 10-K for 1993
AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO AGREEMENT is made on this 30TH day of JUNE, 1993, between
MATRIXX Marketing Inc., an Ohio corporation with its principal place of business
in Cincinnati, Ohio ("Employer" or "MATRIXX"), Cincinnati Bell Inc., an Ohio
corporation with its principal place of business in Cincinnati, Ohio ("CBI"),
and James F. Orr, an individual residing in Ohio ("Employee").
MATRIXX, CBI and Employee previously entered into an employment agreement
made as of January 1, 1989 (the "Employment Agreement"). The parties now desire
to amend the Employment Agreement, such amendment being supported by full and
adequate consideration, and agree that the Employment Agreement shall be
modified as follows:
I. The introductory language of Section 7(B) shall be amended and restated
as follows:
(B) Except as otherwise set forth in Section 7(C), on the earlier of
the Expiration Date or Employee ceasing to be an employee of Employer, or
any other entity described in Section 14, for any reason (the last day of
the month preceding the Expiration Date or such cessation hereafter being
referred to as the "Performance Award Date"), Employer shall pay a
Performance Award to Employee in an amount determined and on the terms as
follows:
II. Section 7(B)(i) and the introductory language of Section 7(B)(ii)
shall be
<PAGE>
amended and restated as follows:
(i) The Performance Award shall be calculated based upon test period
net revenues and pre-tax earnings of Newco (hereinafter referred to as
"MATRIXX" in this Amendment). For purposes hereof, the test period is the
period beginning one year before the Performance Award Date (the date as of
which the payment of the Performance Award by Employer will be deemed to
occur) and ending on the date one year after the Performance Award Date.
Test period net revenues shall equal the total net revenues of MATRIXX for
such 24-month period divided by two. Test period pre-tax earnings shall
equal the pre-tax earnings for such 24-month period divided by two. In
calculating test period pre-tax earnings (or net revenues if such could be
affected), deduction or adjustment shall be made for salaries, bonuses,
employee benefit plan obligations, other compensatory amounts or
reimbursement for employee expenses for any person who devotes
substantially all of his or her time, attention and energy to the business
of MATRIXX, whether or not paid or accrued by MATRIXX.
(ii) Net revenues and pre-tax earnings shall be calculated by
Employer using Employer's standard accounting principles and practices
which shall be in accordance with generally accepted accounting principles
("GAAP"), as employed by Cincinnati Bell Information Systems Inc. Net
revenues shall be defined as gross revenues from sales less uncollectible
reserves. Revenues for a particular month, which are earned in a currency
other than United States
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<PAGE>
Dollars, shall be converted to United States Dollars at the average of the
daily rates for conversion of the foreign currency into United States
Dollars during that month. Conversion rates shall be those published in
the Wall Street Journal. Pre-tax earnings shall be defined as gross
revenues less all expenses and costs of doing business (including
Employee's salary, bonus and benefits), except for federal income taxes;
provided, however, that no deduction shall be made for any payment of
dividends by MATRIXX at any time. Provided further that, unless the
parties agree otherwise, for purposes of determining pre-tax earnings, GAAP
"pushdown" accounting rules shall apply in the case of acquisitions. It is
agreed for purposes of this calculation that 75 percent of the purchase
price, including the value of CBI restricted stock issued in connection
with the purchases of ADI and Ameritel, shall be allocated to goodwill and
the amortization of goodwill relating to acquired companies shall be deemed
to occur over a 40-year period. For the purpose of calculating pre-tax
earnings in computing the Performance Award payable to Employee:
III. New Section 7(B)(ii)(a), (b) and (c) shall be added to read as
follows:
(a) interest expense shall be computed monthly, on the amount of
CBI's Average Daily Outstanding Capital Investment in MATRIXX and its
subsidiaries (the "MATRIXX Group"), and deducted from gross revenues.
CBI's Daily Outstanding Capital Investment in MATRIXX, for any day, means
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<PAGE>
CBI's Capital Investments in the MATRIXX Group, as of such day, reduced by
MATRIXX's Cash Flow. CBI's Capital Investment in the MATRIXX Group excludes the
first $30,000,000 of capital invested in MATRIXX and excludes CBI's contribution
of TMS to MATRIXX. A portion of all other capital investment shall be included,
in the percentage applicable to the year in which the capital investment is
made, as set forth below:
<TABLE>
<CAPTION>
YEAR INVESTMENT MADE PERCENTAGE
-------------------- ----------
<S> <C>
1988 100%
1989 100%
1990 100%
1991 65%
1992 35%
1993 0%
1994 0%
</TABLE>
MATRIXX's Cash Flow, as of any day, is the sum of the cash removed
from the MATRIXX Group by CBI's cash management system, from the date of
the Employment Agreement through such day, plus the cash balances of the
MATRIXX Group, as of such day, minus the cash advanced to the MATRIXX Group
by CBI's cash management system from the date of the Employment Agreement
through such day, however, MATRIXX's Cash Flow shall never be less than
zero. The payment of intercorporate invoices is not to be treated as cash
removed from the MATRIXX Group. CBI's Average Daily Outstanding
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<PAGE>
Capital Investment in MATRIXX for any month shall be the sum of each day's
Daily Outstanding Capital Investment, divided by the number of days in such
month. The rate of interest shall be the prime rate of CBI's primary bank
minus One Percent (1%).
For example, after exhausting the $30,000,000 of excluded capital, CBI
makes capital investments in MATRIXX of $40,000,000 in 1990, $20,000,000 in
1991 and $30,000,000 in 1992. For March, 1994 the prime rate is Eleven
Percent (11%). Prior to March, CBI's cumulative cash removal from the
MATRIXX Group was $11,000,000, and the cumulative cash advanced was
$500,000. No cash is advanced or removed in March. The cash balances of
the MATRIXX Group during March are a constant sum of $200,000. CBI's
Capital Investment totals $63,500,000 (1990 equals 100% of $40,000,000
invested; 1991 equals 65% of $20,000,000 invested; 1992 equals 35% of
$30,000,000 invested). MATRIXX's Cash Flow is $10,700,000 ($11,000,000
cash removed plus $200,000 cash balances minus $500,000 cash advanced).
CBI's Average Daily Outstanding Capital Investment is $52,800,000
($63,500,000 Capital Investment minus $10,700,000 Cash Flow). The March,
1994 interest charge for purposes of computation of the Performance Award
is $440,000 (one month's interest on $52,800,000 at an annual rate of Ten
Percent (10%), which is the March, 1994 prime rate minus One Percent (1%)).
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<PAGE>
(b) foreign currency denominated pre-tax earnings for each month of
the test period will be converted into dollars at the average of the daily
rates for conversion of the foreign currency into United States Dollars
during that month (using rates published in the Wall Street Journal).
Capital Investments in, cash advances to and cash repayments by the MATRIXX
Group shall be recorded in United States Dollars at the time the
investment, cash advance or cash repayment is made even though the funds
are transferred to or from a foreign subsidiary of MATRIXX. Foreign
currency cash balances of the MATRIXX Group for a particular month shall be
valued at the average of the high and low exchange rates for that month, as
published in the Wall Street Journal.
(c) no deduction or adjustment shall be made for the payment of the
Performance Award to Employee or the payment of a similar award or amount
(including a tax gross-up on any such award or amount) to any other person.
IV. New Section 7(B)(vi) shall be added to read as follows:
(vi) If Employee remains in the employ of Employer until the date
preceding the Expiration Date by sixty (60) days, Employee and Employer may
mutually agree to defer the Performance Award payment by Employer until (a)
Employee ceases to be an employee of Employer, or (b) Employee reaches the
age of 65, whichever occurs first. If Employee ceases to remain in the
employ
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<PAGE>
of Employer at any time after the Expiration Date and if Employee and
Employer have agreed to defer payment of the Performance Award, Employee
and Employer may mutually agree to further defer such payment for
Employee's Performance Award until a date within three (3) years from the
date of such cessation if Employee and Employer agree to such deferral no
later than sixty (60) days preceding Employee's last date of employment.
The amount of the Performance Award, as calculated pursuant to this
Section 7(B), shall bear interest at the rate as utilized in CBI's
Executive Deferred Compensation Plan, as set from time to time, from the
Expiration Date until the date Employee actually receives such payment
under this Section 7(B)(vi). Such payment amount, plus all accrued
interest thereon, shall be paid to Employee on such date.
V. In all other respects the terms of the Employment Agreement shall
remain as originally executed and as amended, except as necessary for
cross-referencing.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Agreement to be duly executed on the day and year first above written.
EMPLOYER:
MATRIXX MARKETING INC.
By:/S/ DAVID J. LAHEY
------------------------
David J. Lahey, Chairman of the Board
CINCINNATI BELL INC.
By:/S/ J. T. LAMACCHIA
--------------------------
J.T. LaMacchia, President and COO
EMPLOYEE:
/S/ JAMES F. ORR
----------------------------
James F. Orr
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<PAGE>
Exhibit (10)(iii)(A)(16)
to Form 10-K for 1993
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 3lst day of December, 1993 between
Cincinnati Bell Inc., an Ohio corporation with its principal place of business
in Cincinnati, Ohio ("Employer" or "CBI"), and James F. Orr, an individual
residing in Ohio ("Employee").
WITNESSETH
WHEREAS, Employee wishes to be employed by Employer and Employer wishes to
employ Employee, all pursuant to the terms hereof; and
WHEREAS, Employer intends to retain the right to assign this Agreement to
any other entity which is part of the same controlled group of corporations, as
defined in Section 1563 of the Internal Revenue Code of 1986, as it may from
time to time be amended or restated.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements contained herein, the parties agree as follows:
1. EMPLOYMENT. Employer employs Employee and Employee accepts employment
upon the terms and conditions hereinafter set forth. For purposes of this
Agreement, Employer shall include any entity to which this Agreement is assigned
under Section 14.
2. TERMS OF EMPLOYMENT. This Agreement shall continue in full force and
effect commencing on December 31, 1993 (the "Effective Date") and ending on
December 31, 1998 (the "Expiration Date"), unless this Agreement is earlier
terminated in accordance with the provisions of Section 13 hereof.
3. DUTIES.
(A) Employer agrees to employ Employee and Employee agrees to serve
Employer as President and Chief Executive Officer of MATRIXX Marketing Inc.
<PAGE>
("MATRIXX") or in such other capacity as may be determined from time to time by
the President of CBI.
(B) In connection with performing the services required in Section
3(A), Employee will be provided appropriate office space, a secretary and travel
expenses as described in Section 5, hereof. The extent of such support
resources will be agreed upon from time to time by Employee and the President of
CBI.
(C) Employee shall devote his entire time, attention, and energies to
the performance of his duties under this Agreement. The words "entire time,
attention, and energies" are intended to mean that Employee shall devote his
full effort during reasonable working hours to the performance of his duties
under this Agreement and shall devote at least 40 hours per week to the
performance of his duties under this Agreement.
(D) Employee shall not be required to change his current residence;
however, Employee shall travel to such areas and places as are reasonably
necessary in the performance of his duties.
4. COMPENSATION.
(A) Employee shall receive a base salary (the "Base Salary") of at
least $225,000 for each calendar year, subject to proration for any partial
year, during the term of this Agreement. Such Base Salary, and any other
amounts payable hereunder, shall be subject to withholding as required by law.
(B) In addition to the Base Salary, Employee shall be entitled to
receive an annual bonus (the "Bonus") for each calendar year after 1993 during
which services are performed under this Agreement, subject to proration for any
partial year during such term. Any Bonus for any calendar year shall be payable
after the conclusion of such calendar year in accordance with Employer's regular
bonus payment policies. Employee shall receive Bonuses
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<PAGE>
as follows: for calendar years 1994, 1995 and 1996, a minimum Bonus of $50,000
per year, based on the results of CBI's earnings results as compared to its
earnings commitment submitted to and approved by the Board of Directors of CBI
and for calendar years 1997 and 1998, a minimum Bonus of $50,000 per year, based
on the results of CBI's earnings results as compared to its earnings commitment
submitted to and approved by the Board of Directors of CBI plus a minimum Bonus
of $70,000 per year, based on the results of MATRIXX's earnings results as
compared to its earnings commitment submitted to and approved by the President
of CBI.
(C) On at least an annual basis, Employee shall receive a formal
performance review and be considered for salary and/or bonus increases.
5. EXPENSES.
All reasonable and necessary expenses incurred by Employee in the
course of the performance of his duties to Employer shall be reimbursable in
accordance with Employer's then current travel and expense policies.
6. BENEFITS.
(A) Subject to approval by the Compensation Committee of the Board of
Directors of CBI (the "Compensation Committee"), and while Employee remains
employed hereunder, Employee shall be granted options to purchase a minimum of
20,000 common shares of CBI during each of calendar years 1994 through 1998.
Such options for any calendar year shall be granted under CBI's 1988 Long Term
Incentive Plan (the "1988 Plan") effective as of the date of the first meeting
of the Compensation Committee during the calendar year. Such options shall
further be subject to the terms of the 1988 Plan and to the same terms and
conditions as are applied to options granted to similarly situated employees of
CBI in the calendar year in which the option are granted to Employee. Pursuant
to the terms of the 1988
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<PAGE>
Plan, such options will become immediately exercisable upon a Change in Control,
as defined therein.
(B) While the Employee remains in the employ of the Employer,
Employee shall be entitled to participate in all of the various employee benefit
plans and programs in which similarly situated employees of CBI are
participating, including Retirement Savings Plan; Deferred Compensation Plan;
vacation program; medical and dental plans; life, disability, accidental death,
disability and travel insurance; parking; financial consultation and tax
preparation up to $3,000 per year; cellular phone; annual physical; luncheon
club dues; and Cincinnati Bell Management Pension Plan. In addition, Employer
shall provide Employee with the following benefits:
(1) MINIMUM PENSION. If Employee remains employed under this
Agreement through December 31, 1998, Employee shall be entitled to receive a
monthly pension, commencing at age 55 (or, if he retires later, on the day
following the date on which Employee retires from active service) and payable
for the joint lives of Employee and his spouse, or if Employee is unmarried at
the time payments begin, then for his life, in an amount not less than $40,000
per year. To the extent that Employee or Employee's spouse is also entitled to
receive any benefit under Cincinnati Bell Management Pension Plan ("CBMPP") or
any non-qualified pension plan or program maintained by CBI or MATRIXX (other
than a deferred compensation plan under which Employee's current compensation is
reduced in exchange for payments at or after termination of employment), the
payments otherwise called for under the first sentence of this Section 6(B)(1)
shall be reduced to reflect the value of the benefits payable to Employee and
Employee's spouse under CBMPP and each such other non-qualified pension plan or
program.
-4-
<PAGE>
(2) RETIREE MEDICAL BENEFITS. If Employee remains employed
under this Agreement through December 31, 1998, upon his subsequent retirement
Employee shall be entitled to participate in the retiree medical plans then
available to similarly situated employees of CBI who retire after attaining age
60.
(3) LONG TERM DISABILITY PLAN FOR SALARIED EMPLOYEES AND THE
SICKNESS AND ACCIDENT DISABILITY BENEFIT PLAN. While Employee remains in the
employ of Employer, Employer shall provide Employee with benefits which are at
least equivalent to the benefits Employee would have been entitled to receive
under the Long Term Disability Plan for Salaried Employees and the Sickness and
Accident Disability Benefit Plan (a) assuming that he became eligible to
participate in the plans on January 1, 1989 and (b) assuming that he was
credited with 25 years of completed service as of January 1, 1989. The benefits
payable under this Section 6(B)(3) shall be reduced by any benefits paid under
the Long Term Disability Plan for Salaried Employees and the Sickness and
Accident Disability Benefit Plan.
(4) AUTOMOBILE. While Employee remains employed hereunder,
Employee shall be given the use of a Buick Park Avenue automobile or its
equivalent in accordance with current practice for similarly situated employees
of CBI.
(C) Subject to approval by the Compensation Committee, Employee shall
receive a restricted stock award of 20,000 common shares of CBI. Such award
shall be made under the 1988 Plan effective as of the date of the first meeting
of the Compensation Committee in 1994 on the terms set forth in Exhibit A. Such
shares shall be further subject to the terms of the 1988 Plan. Pursuant to the
term of the 1988 Plan, the restrictions applicable to such shares will
immediately lapse upon a Change in Control, as defined therein.
-5-
<PAGE>
(D) Notwithstanding anything contained herein to the contrary, the
Base Salary and Bonuses otherwise payable to Employee shall be reduced by any
benefits paid to Employee by Employer under Employer's Sickness and Accident
Disability Plan and Long Term Disability Plan for Salaried Employees or under
Section 6(B)(3) above.
(E) Employer has guaranteed a loan made by The Fifth Third Bank to
Employee. On or before January 31, 1994, Employee shall provide Employer with
written evidence, satisfactory to it, that Employer has been released from its
obligation to guarantee any loan made to Employee by The Fifth Third Bank.
7. AWARDS.
(A) PERFORMANCE AWARD. In recognition of Employee's contribution to
Employer and in full payment of Employer's obligation under the Employment
Agreement with Employee in effect on December 30, 1993, Employee shall receive
a payment of $2,400,000. This amount shall be reduced by applicable withholding
for federal, state and local taxes and by withholding for any other amounts
which are required by law or for which withholding has been directed by
Employee. Such payment shall be made by December 31, 1993. Employee waives the
right to receive any further compensation or bonus for 1993 and certifies that,
to the best of his knowledge, MATRIXX' books conform to generally accepted
accounting principles.
(B) INCENTIVE AWARD. If the Cumulative Operating Income of MATRIXX
and its subsidiaries for the period January 1, 1994 through December 31, 1996
equals or exceeds $55,800,000, Employee shall receive an Incentive Award. In
order to compute the Cumulative Operating Income of MATRIXX: (1) the long term
performance award of Employee and other long term incentive awards granted by
MATRIXX will not be considered as an operating cost; and (2) the operating
income of MATRIXX will be adjusted to offset any changes in accounting practices
which would have the effect of reducing or increasing operating income when
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<PAGE>
compared to the calculation of operating income under the accounting practices
of CBI and MATRIXX which were in effect in 1993. The Incentive Award shall be
determined by a formula. Under this formula the Incentive Award will equal
$100,000 if Cumulative Operating Income is $55,800,000. If Cumulative Operating
Income is in excess of $55,800,000 but less than or equal to $75,800,000, the
Incentive Award will equal $100,000 plus 1% multiplied by the difference between
$55,800,000 and Cumulative Operating Income. If Cumulative Operating Income is
in excess of $75,800,000, the Incentive Award will equal $300,000 plus 2%
multiplied by the difference between $75,800,000 and Cumulative Operating
Income. The formula for calculating the Incentive Award is illustrated on
Exhibit B, attached to this Agreement and made a part hereof. The Incentive
Award shall be paid on February 28, 1997. The amount paid as the Incentive
Award shall be reduced by applicable withholding for federal, state and local
taxes and by withholding for any other amounts which are required by law or for
which withholding has been directed by Employee.
8. CONFIDENTIAL INFORMATION AND MATERIALS.
(A) As used herein, the term "confidential information and materials"
refers to all information belonging to, used by or in the possession of Employer
and MATRIXX now and in the future relating to their present and/or future
business strategies, finances, methods of operation, customers, programs,
marketing plans, developmental plans, inventions, developments and trade secrets
of every kind and character; provided, however, that Employee shall not be
obligated to treat as confidential any of the information described in this
Section 8(A) which is or becomes publicly available or readily ascertainable
from public sources or any information in Employee's possession or knowledge
prior to the Effective Date and not provided to him by Employer or MATRIXX.
-7-
<PAGE>
(B) Employee hereby acknowledges that all of the confidential
information and materials are and shall continue to be the exclusive proprietary
property of Employer and MATRIXX, whether or not prepared in whole or in part by
Employee and whether or not disclosed to or entrusted to the custody of
Employee. Employee further hereby acknowledges that all confidential
information and materials (to which Employee has had access or which Employee
has learned during his employment or to which Employee shall hereafter have
access or which he shall hereafter learn) have been disclosed to Employee solely
by virtue of Employee's employment with Employer and solely for the purpose of
assisting him in performing his duties for Employer and MATRIXX.
(C) Employee hereby agrees that Employee will not, either during the
course of Employee's employment with Employer or at any time thereafter,
disclose any confidential information or materials of Employer or MATRIXX, in
whole or in part, to any person or entity, for any reason or purpose whatsoever,
unless Employer and MATRIXX shall have given their written consent to such
disclosure. Employee further agrees that Employee shall not use in any manner
other than for and in the course of Employee's furtherance of Employer's and
MATRIXX's business, any confidential information or materials of Employer or
MATRIXX for Employee's own purposes or for the benefit of any other person or
entity except Employer or MATRIXX, whether such use consists of the duplication,
removal, oral use or disclosure, or the transfer of any confidential information
or materials in any manner, or such other unauthorized use in whatever manner,
unless Employer and MATRIXX shall have given their prior written consent to such
use.
9. NEW DEVELOPMENTS. Employee agrees that during the term of this
Agreement, Employee will promptly disclose to Employer and MATRIXX any and all
improvements, inventions, developments, discoveries, innovations, systems,
techniques, ideas, processes,
-8-
<PAGE>
programs and other things which may be of assistance to Employer or MATRIXX,
whether patentable or unpatentable, relating to or arising out of any
developments, services or products, or pertaining to in any manner, the business
of Employer or MATRIXX, and made or conceived by Employee, alone or with others,
while employed by Employer, whether or not conceived or made during his regular
working hours (collectively referred to hereinafter as the "New Developments").
Employee further agrees that all New Developments shall be and shall remain the
sole and exclusive property of Employer and MATRIXX and that Employee shall,
upon the request of Employer or MATRIXX, and without further compensation, do
all lawful things reasonably necessary to ensure Employer's or MATRIXX's
ownership of such New Developments, including without limitation the execution
of any necessary documents assigning and transferring to Employer, MATRIXX or
their assigns all of Employee's right, title and interest in and to such New
Developments, and the rendering of assistance in the execution of all necessary
documents required to enable Employer or MATRIXX to file and obtain patents,
trademarks and copy rights in the United States and foreign countries on any of
such New Developments; provided, however, that all expenses relating to the
foregoing shall be borne by Employer or MATRIXX.
10. SURRENDER OF MATERIAL UPON TERMINATION. Employee hereby agrees that
upon cessation of his employment, for whatever reason and whether voluntary or
involuntary, he will immediately surrender to Employer or MATRIXX all of
Employer's or MATRIXX's property and other things of value in his possession or
in the possession of any person or entity under his control, that are the
property of Employer or MATRIXX including without limitation all personal notes,
drawings, manuals, documents, photographs, or the like, including copies and
derivatives thereof, relating directly or indirectly to any confidential
information or materials or New Developments, or relating directly or indirectly
to the business of Employer or MATRIXX.
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<PAGE>
11. REMEDIES. Employer and Employee hereby acknowledge and agree that the
services rendered by Employee to Employer and MATRIXX and the information
disclosed to Employee during and by virtue of his employment, that Employee's
commitments and obligations to Employer and MATRIXX herein are of a special,
unique and extraordinary character, and that the breach of any provision of this
Agreement will cause the non-breaching party irreparable injury and damage, and
consequently the non-breaching party shall be entitled to, in addition to all
other remedies available to it, injunctive and equitable relief to prevent a
breach of this Agreement, or any part of it, and to secure the enforcement of
this Agreement.
12. COVENANT NOT TO COMPETE. For the period ending on the second
anniversary of (i) the date of cessation of Employee's employment under this
Agreement or (ii) the date of the last payment of compensation to Employee, if
Employee's employment ceases as a result of a Terminating Disability pursuant to
Section 13(A), whether during or at the end of the term of this Agreement, or
for whatever time within that period found by a court of competent jurisdiction
to be reasonably necessary for the protection of Employer, Employee will not,
himself or together with other persons, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of or become an employee or consultant of or to any business that
engages in the business of providing telemarketing services or any other
business of any type in which Employee is involved on behalf of Employer or
MATRIXX immediately prior to the date of termination of this Agreement. This
restriction will apply throughout the continental United States and in any
foreign jurisdiction in which MATRIXX operates at the time Employee's employment
ceases or whatever geographic scope found by a court of competent jurisdiction
to be reasonably necessary for the protection of Employer.
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<PAGE>
Employee hereby agrees (i) that the restrictions set forth in the paragraph
immediately above are founded on valuable consideration and are reasonable in
duration and geographic extent in view of the circumstances in which this
Agreement is executed and are necessary to protect the legitimate interests of
Employer, and (ii) that the remedy at law for any breach of the foregoing
covenant will be inadequate and that Employer will be entitled to injunctive
relief in the event of any such breach. Nothing herein stated shall be
construed as prohibiting Employer from pursuing any other remedies available to
it for any such breach or threatened breach or for any other breach of this
Agreement, including the recovery of damages from Employee.
13. TERMINATION.
(A) Employer or Employee may terminate this Agreement upon Employee's
failure or inability to perform the services required hereunder because of any
physical or mental infirmity for which Employee receives disability benefits
under Employer's Sickness and Accident Disability Benefit Plan and/or Employer's
Long Term Disability Plan for Salaried Employees or under Section 6(B)(3)
hereof, as the case may be, (the "Plans") over a period of one hundred twenty
consecutive working days during any twelve consecutive month period (a
"Terminating Disability"). If Employer or Employee elects to so terminate this
Agreement in the event of a Terminating Disability, (i) such termination shall
be effective immediately upon the giving of written notice by the terminating
party to the other, and (ii) Employer shall pay Employee his accrued
compensation hereunder, whether Base Salary, Bonus or otherwise (subject to
offset for any amounts received pursuant to the Plans), to the date of
termination, and (b) for as long as such Terminating Disability may exist,
Employee shall continue to be an employee of Employer and Employer shall provide
Employee with disability benefits and all other benefits according to the
provisions of the Plans and any other Employer plans in which
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<PAGE>
Employee is then participating. If the parties elect not to terminate this
Agreement upon an event of a Terminating Disability and Employee returns to
active employment with Employer prior to such a termination, or if such
disability exists for less than one hundred twenty consecutive working days, the
provisions of this Agreement shall remain in full force and effect and the
payment of the Performance Award shall ultimately be made as if such disability
had never arisen. This Agreement terminates immediately and automatically on
the death of Employee, provided, however, that the Employee's estate shall be
paid Employee's accrued compensation hereunder whether Base Salary, Bonus or
otherwise to the date of death. In addition, upon Employee's death or
Terminating Disability, Employee or his estate shall be entitled to take
whatever actions with respect to Employee's stock options as may be permitted by
the terms thereof, or by the plan under which such options were granted, upon
such death or disability.
(B) Employer may terminate this Agreement immediately in the event
that Employee is wilfully negligent in the performance of his duties or in the
event of Employee's conviction of a criminal act.
(C) Employer may terminate this Agreement upon 60 days written notice
for any reason other than those set forth in Sections 13(A) and (B). In the
event of termination by Employer prior to 1996 for any reason other than as set
forth in Section 13(A) or (B), Employer shall pay Employee the greater of (1)
two times Employee's Base Salary in effect on the date of termination, or (2)
the compensation due Employee under Section 4 over the remainder of the term of
this Agreement. In the event of termination by Employer during 1996 for any
reason other than as set forth in Section 13(A) or (B), Employer shall pay
Employee two times Employee's base salary in effect on the date of termination
plus a portion of the restricted stock awarded to Employee under Section 6(C),
prorated for the portion of the term of this Agreement
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<PAGE>
actually completed, and a portion of the Incentive Award under Section 7(B),
calculated as though Employee had continued in Employer's service until December
31, 1996, prorated for the portion of the period December 31, 1993 through
December 31, 1996 actually completed by Employee. In the event of termination
by Employer after 1996 for any reason other than as set forth in Section 13(A)
or (B), Employer shall pay Employee two times Employee's Base Salary in effect
on the date of termination.
(D) If Employee resigns prior to the Expiration Date and within 90
days after a Change in Control of CBI or MATRIXX, this Agreement shall thereupon
terminate. In the case of CBI, "Change in Control" means a change in control as
defined in the 1988 Plan. In the case of MATRIXX, "Change in Control" means a
change of ownership in which MATRIXX ceases to be a wholly owned direct or
indirect subsidiary of CBI or a change in which substantially all of the assets
of MATRIXX are sold to another company which is not a wholly owned direct or
indirect subsidiary of CBI. Employer or any successor of Employer shall pay to
Employee (within 30 days after Employee's resignation) an amount equal to the
greater of: (i) $675,000, and (ii) 2.99 times his annual Base Salary in effect
immediately prior to the Change in Control.
(E) Upon Employer's payment of the required payments under this
Section 13, all further compensation under this Agreement shall terminate;
provided, however, that all qualified deferred compensation which Employee may
be entitled to receive pursuant to any of Employer's pension or profit sharing
plans in which he may participate during his employment with Employer shall be
paid pursuant to the provisions of such plans at such times as any such amounts
become payable to Employee. It is further understood that for purposes of this
Section 13, the term "accrued compensation" shall include all non-qualified
deferred compensation, of whatever type or form, either previously granted to
Employee by Employer or otherwise earned
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<PAGE>
or received by Employee. The termination of this Agreement shall not amend,
alter or modify the rights and obligations of the parties under Sections 8, 9,
10, 11 and 12 hereof, the terms of which shall survive the termination of this
Agreement.
14. ASSIGNMENT. As this is an agreement for personal services involving a
relation of confidence and trust between Employer and Employee, all rights and
duties of Employee arising under this Agreement, and the Agreement itself, are
nonassignable by Employee except for the right of his estate to receive any
payments due Employee upon his death. Employer expressly reserves the right to
assign this Agreement to any other entity which is part of the same controlled
group of corporations, as defined in Section 1563 of the Internal Revenue Code
of 1986, as it may from time to time be amended or restated.
15. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient, if in writing, and if delivered by the sending
party personally or by certified mail to Employee at his place of residence as
then recorded on the books of Employer or to Employer at its principal office.
16. WAIVER. No waiver or modification of this Agreement or the terms
contained herein shall be valid unless in writing and duly executed by the party
to be charged therewith. The waiver by any party hereto of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach by such party.
17. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
18. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to Employee's employment by Employer on and after December
31, 1993. There are no other contracts, agreements or understandings, whether
oral or written, existing between
-14-
<PAGE>
them except as contained or referred to in this Agreement. This Agreement
amends and suspends all prior agreements and understandings of the parties with
respect to Employee's employment by Employer.
19. SEVERABILITY. In case any one or more of the provisions of this
Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or other unenforceability shall not affect any other
provisions hereof, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein.
20. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 14
above, this Agreement shall be binding upon Employee, Employer and their
successors and assigns. Employer further expressly agrees that in the event it
shall merge or consolidate with, or be acquired by, any other entity, the
continuing entity resulting from such merger, consolidation or acquisition shall
be obligated to perform the duties and obligations of Employer as set forth in
this Agreement. Employer further agrees that in the event it should voluntarily
dissolve and liquidate the assets and business of Employer, it will undertake to
have the terms and provisions of this Agreement fulfilled prior to the
distribution or disposal of Employer's assets.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EMPLOYER:
CINCINNATI BELL INC.
By:/s/ David J. Lahey
-------------------------
David J. Lahey
EMPLOYEE:
/s/ James F. Orr
------------------------
James F. Orr
-15
<PAGE>
EXHIBIT A
RESTRICTED STOCK AWARD
UNDER THE PROVISIONS OF
THE CINCINNATI BELL INC.
1988 LONG TERM INCENTIVE PLAN
Name of Employee: James F. Orr
------------------
Award Date: ______________________
Number of Restricted Shares: 20,000
-------
Pursuant to the provisions of the Cincinnati Bell Inc. 1988 Long Term
Incentive Plan (the "Plan"), a copy of which has been delivered to you, the
Compensation Committee of the Board of Directors of Cincinnati Bell Inc. (the
"Compensation Committee") has granted you an award of 20,000 common shares, par
value $1.00 per share, of Cincinnati Bell Inc. (the "Shares"), on and subject to
the terms of the Plan and your agreement to the following terms, conditions and
restrictions.
1. SECURITIES SUBJECT TO THIS AGREEMENT. This agreement is made with
respect to the Shares and any securities (including additional common
shares of Cincinnati Bell Inc. (the "Company")) issued in respect of the
Shares, whether by way of a share dividend, a share split, any
reorganization or recapitalization of the Company or its stock or any
merger, exchange of securities or like event or transaction as the result
of which any security or securities of any kind are issued to you by reason
of your ownership of the Shares. Reference herein to the Shares shall
include any such securities issued in respect of the Shares.
2. RIGHTS OF OWNERSHIP. Except for the Restrictions (as defined in
Section 3 hereof) and subject to the provisions regarding forfeiture set
forth in Section 7 hereof, you are the record and beneficial owner of the
Shares, with all rights and privileges (including but not limited to the
right to vote, to receive dividends and to receive distributions upon
liquidation of the Company) appertaining thereto.
3. RESTRICTIONS. Neither the shares nor any interest therein may be
transferred or conveyed by you in any manner whatsoever, whether or not for
consideration (the "Restrictions"), except upon the passage of time or
occurrence of events as specified in Sections 4, 5 and 6 hereof.
4. LAPSE.
(a) The Restrictions shall lapse and be of no further force or effect
as to:
(i) 12,000 shares on December 31, 1996
-1-
<PAGE>
(ii) 4,000 Shares on December 31, 1997
(iii) 4,000 Shares on December 31, 1998
5. TERMINATION OF RESTRICTIONS - DEATH. In the event of your death while
employed by the Company or any of its subsidiaries and on or prior to a
Date of Lapse, the Restrictions shall terminate and be of no further force
or effect, effective as of the date of death, with respect to the number of
Shares (rounded up to the nearest whole Share) that bears the same ratio to
the total number of Shares as the number of days from the Date of Grant of
the then restricted Shares through the date of your death bears to the
number of days from the Date of Grant to the Date of Lapse. Any Shares
which remain subject to the Restrictions after the calculations prescribed
in the preceding sentences shall be forfeited to the Company as of your
date of death. Upon the Restrictions terminating with respect to certain
Shares, the executor, administrator or other personal representative of
your estate, or the trustee of any trust becoming entitled thereto by
reason of your death, may transfer the unrestricted Shares to any person or
persons entitled thereto under your will or under your trust or other
instrument (or in the absence of any will under the laws of descent and
distribution) governing the distribution of your estate in the event of
your death.
6. TERMINATION OF RESTRICTIONS - DISABILITY. If you (a) shall become
disabled and as a result thereof cease to be an employee of the Company or
any of its subsidiaries under and pursuant to applicable disability
provisions of any employment contract to which you and the Company or any
of its subsidiaries are parties or, (b) shall become disabled to such
extent that you are unable to perform the usual duties of your job for a
period of 12 consecutive weeks or more and if as the result thereof the
Compensation Committee approves the termination of your employment within
12 months following the first day of the 12 consecutive week period on
terms that include the right to transfer the Shares free of the
Restrictions, then and in either such event the Restrictions shall
terminate and be of no further force and effect as of the date you cease to
be an employee in the same manner as prescribed in the event of death
outlined in Section 5 above.
7. FORFEITURE. If you cease to be an employee of the Company or any of
its subsidiaries, except as provided in Section 4, 5 and 6 hereof, any
Shares which remain subject to the Restrictions as of the date such
employment terminates shall be at once forfeited to the Company as of the
date of such termination of employment (the "Forfeiture Date"). Upon such
forfeiture all of your rights in respect of such Shares shall cease
automatically and without further action by the Company or you. For the
purpose of giving effect to this provision, you have executed and delivered
to the Company a stock power with respect to each certificate evidencing
any of the Shares, thereby assigning to the Company all of your interest in
the Shares. By the execution and delivery of this Agreement, you authorize
and empower the Company, in the event of a forfeiture of any of the Shares
under this Section 7 to (i) date (as of the Forfeiture Date) those stock
powers relating to Shares that remain subject to the Restrictions as of the
Forfeiture Date and (ii) present such stock powers and the certificates to
which they relate to the Company's transfer agent or other appropriate
party of the sole purpose of transferring the forfeited Shares to the
Company.
-2-
<PAGE>
8. MATTERS RELATING TO CERTIFICATES.
(a) Upon their issuance, the certificates representing the Shares
shall be deposited with the Secretary of the Company and shall be
released to you only pursuant to the provisions of this Section 8.
(b) Each certificate for Shares issued to you in accordance with this
Agreement shall bear the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A RESTRICTED STOCK AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND
CINCINNATI BELL INC., DATED AS OF _____________, 1994 AND MAY NOT BE
TRANSFERRED BY THE HOLDER, EXCEPT AS PROVIDED BY THE TERMS OF SUCH
AGREEMENT, A COPY OF WHICH IS ON DEPOSIT WITH THE SECRETARY OF
CINCINNATI BELL INC, AND WHICH WILL BE MAILED TO A SHAREHOLDER OF
CINCINNATI BELL INC. WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF
A WRITTEN REQUEST."
Upon the lapse or termination of the Restrictions as to any Shares,
the certificate evidencing such Shares shall be promptly presented to the
Company's transfer agent or other appropriate party with instructions to
cause such certificate to be reissued, to the extent appropriate, in your
name and without the foregoing legend. Any Shares evidenced by such
certificate which remain subject to the Restrictions shall be evidenced by
a new certificate, bearing the foregoing legend, which shall be returned to
the Company. Upon the lapse or termination of the Restrictions as to any
Shares, the stock power or powers held by the Company with respect to such
Shares shall be surrendered to you (in exchange, if applicable, for a stock
power relating to any Shares which remain subject to the Restrictions).
9. INTERPRETATION. You acknowledge that the Compensation Committee has
the authority to construe and interpret the terms of the Plan and Agreement
if and when any questions of meaning arises under the Plan or this
Agreement, and any such construction or interpretation shall be binding on
you, your heirs, executors, administrators, personal representatives and
any other persons having or claiming to have an interest in the Shares.
10. WITHHOLDING. In connection with the award of Shares to you and any
dividend payments made while such Shares remain subject to restrictions
hereunder, the Company will withhold or cause to be withheld from your
salary payments such amounts of tax at such times as may be required by law
to be withheld with respect to the Shares and/or dividends, provided that
if your salary is not sufficient for such purpose, you shall remit to the
Company, on request, the amount required for such withholding taxes.
Within 45 days after issuance of the certificates representing the Shares,
you shall advise the Company in writing whether or not you have made an
election, under Section 83(b) of the Internal Revenue Code of 1986, to
include the fair market value of the Shares in your gross income for the
calendar year in which the certificates are issued.
3
<PAGE>
11. NOTICES. All notices and other communications to be given hereunder
shall be in writing and shall be deemed to have been duly given when
delivered personally or when deposited in the United Sates mail, first
class postage prepaid, and addressed as follows:
TO THE COMPANY: Cincinnati Bell Inc.
201 East Fourth Street, 102-200
Cincinnati, Ohio 45202
Attention: Secretary of the Compensation Committee
TO THE EMPLOYEE: _________________________________
_________________________________
_________________________________
or to any other address as to which notice has been given in the manner
herein provided.
12. MISCELLANEOUS. This Agreement shall be binding upon the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and assigns. Subject to the provisions of the
Plan, this Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and shall be construed and
interpreted in accordance with the laws of the State of Ohio. This
Agreement may not be amended except in a writing signed by each of the
parties hereto. If any provision of this Agreement shall be deemed to be
invalid or void under any applicable law, the remaining provisions hereof
shall not be affected thereby and shall continue in full force and effect.
Please indicate your acceptance by signing at the place provided and
returning this Agreement.
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS OF
CINCINNATI BELL INC.
Dated:________ By:________________________________
Senior Vice President - Administration
Dated: 12/14/93 /s/ James F. Orr
------------------------------
Accepted and Agreed
-4-
<PAGE>
EXHIBIT (B)
<TABLE>
<CAPTION>
3 YEAR INCENTIVE PLAN
AWARD FORMULA
(J.F. ORR)
CUMULATIVE
OPERATING INCOME AWARD AMOUNT
(MILLIONS) ($000)
<S> <C>
0 - 55.79 0
AT 55.80 100
55.81- 75.80 100-300 (1)
>75.80 300 + (2)
</TABLE>
(1) THE INCENTIVE AWARD IS CALCULATED BY ADDING 1% OF THE EXCESS CUMULATIVE
OPERATING INCOME OVER $55,800,000 TO THE BASE AMOUNT OF $100,000.
(2) THE INCENTIVE AWARD IS CALCULATED BY ADDING 2% OF THE EXCESS CUMULATIVE
OPERATING INCOME OVER $75,800,000 TO THE BASE AMOUNT OF $300,000. IF CUMULATIVE
OPERATING INCOME IS IN EXCESS OF $75,800,000, THERE IS NO CAP ON THE AMOUNT OF
THE INCENTIVE AWARD WHICH MAY BE PAID.
<PAGE>
Exhibit (10)(iii)(A)(17)
to Form 10-K for 1993
CINCINNATI BELL INC.
EXECUTIVE
DEFERRED COMPENSATION PLAN
(As adopted effective January 1, 1994)
<PAGE>
TABLE OF CONTENTS
SECTION 1 NAME AND PURPOSE OF PLAN. . . . . . . . . . . . . . . . . . . 1
1.1 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 GENERAL DEFINITIONS; GENDER AND NUMBER. . . . . . . . . . . . 1
2.1 General Definitions . . . . . . . . . . . . . . . . . . . . . 1
2.2 Gender and Number . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3 DEFERRALS; COMPANY MATCH. . . . . . . . . . . . . . . . . . . 2
3.1 Election of Deferrals . . . . . . . . . . . . . . . . . . . . 2
3.2 Changing Deferrals. . . . . . . . . . . . . . . . . . . . . . 3
3.3 Suspending Deferrals. . . . . . . . . . . . . . . . . . . . . 3
3.4 Company Match . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4 MAINTENANCE AND VALUATION OF ACCOUNTS . . . . . . . . . . . . 4
4.1 Cash Deferral Accounts. . . . . . . . . . . . . . . . . . . . 4
4.2 Share Deferral Accounts . . . . . . . . . . . . . . . . . . . 4
4.3 Company Matching Accounts . . . . . . . . . . . . . . . . . . 4
4.4 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 CBI Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5 DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Termination of Employment . . . . . . . . . . . . . . . . . . 5
5.3 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Form of Payment . . . . . . . . . . . . . . . . . . . . . . . 7
5.5 Change in Control . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 6 ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . . 7
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.3 Compensation of Committee . . . . . . . . . . . . . . . . . . 7
6.4 Rules of Plan . . . . . . . . . . . . . . . . . . . . . . . . 8
6.5 Agents and Employees. . . . . . . . . . . . . . . . . . . . . 8
6.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7 FUNDING OBLIGATION. . . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
SECTION 8 AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . 8
SECTION 9 NON-ALIENATION OF BENEFITS. . . . . . . . . . . . . . . . . 9
SECTION 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 9
10.1 Delegation. . . . . . . . . . . . . . . . . . . . . . . . . . 9
10.2 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . 9
10.3 Separability of Provisions. . . . . . . . . . . . . . . . . . 9
10.4 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
CINCINNATI BELL INC.
EXECUTIVE
DEFERRED COMPENSATION PLAN
(As adopted effective January 1, 1994)
SECTION 1
NAME AND PURPOSE OF PLAN
1.1 NAME. The plan set forth herein shall be known as the Cincinnati Bell
Inc. Executive Deferred Compensation Plan (the "Plan").
1.2 PURPOSE. The purpose of the Plan is to provide deferred compensation
for a select group of officers and highly compensated employees of Cincinnati
Bell Inc. and its Affiliates.
SECTION 2
GENERAL DEFINITIONS; GENDER AND NUMBER
2.1 GENERAL DEFINITIONS. For purposes of the Plan, the following terms
shall have the meanings hereinafter set forth unless the context otherwise
requires:
2.1.1 "Accounts" means, collectively, all outstanding Cash
Deferral Accounts, Share Deferral Accounts and Company Matching Accounts
maintained for a Key Employee.
2.1.2 "Beneficiary" means the person or entity designated by a Key
Employee, on forms furnished and in the manner prescribed by the Committee, to
receive any benefit payable under the Plan after the Key Employee's death. If a
Key Employee fails to designate a beneficiary or if, for any reason, such
designation is not effective, his "Beneficiary" shall be his surviving spouse
or, if none, his estate.
2.1.3 "CBI" means Cincinnati Bell Inc.
2.1.4 "CBI Shares" means common shares of CBI.
2.1.5 "Company" means CBI, each corporation which is a member of a
controlled group of corporations (within the meaning of section 414(b) of the
Code, as modified by section 415(h) of the Code) which includes CBI, each trade
or business (whether or not incorporated) which is under common control (within
the meaning of section 414(c) of the Code as modified by section 415(h) of the
Code) with CBI, each member of an affiliated service group
1
<PAGE>
(within the meaning of section 414(m) of the Code) which includes CBI and each
other entity required to be aggregated with CBI under section 414(o) of the
Code.
2.1.5 "Code" means the Internal Revenue Code of 1986 as such Code now
exists or is hereafter amended.
2.1.6 "Committee" means the Compensation Committee of the Board of
Directors of CBI.
2.1.8 "Employee" means any person who is an employee of a Company.
2.1.9 "Key Employee" means, with respect to any calendar year, an
Employee who is employed at a level equivalent to senior vice president or above
during the calendar year.
2.2 GENDER AND NUMBER. For purposes of the Plan, words used in any gender
shall include all other genders, words used in the singular form shall include
the plural form, and words used in the plural form shall include the singular
form, as the context may require.
SECTION 3
DEFERRALS; COMPANY MATCH
3.1 ELECTION OF DEFERRALS.
3.1.1 Subject to such rules as the Committee may prescribe, a Key
Employee may elect to defer up to 75% of his Basic Salary for any calendar year
(or such larger percentage of his Basic Salary as may be prescribed by the
Committee) by completing a deferral form and filing such form with the Committee
prior to January 1 of such calendar year (or such earlier date as may be
prescribed by the Committee). Notwithstanding the foregoing, if an Employee
first becomes a Key Employee after January 1, 1994, such Key Employee may elect
to defer a permissible percentage of his Basic Salary for the remainder of the
calendar year by completing and signing a deferral form provided by the
Committee and filing such form with the Committee within 30 days of the date on
which he first becomes a Key Employee. Any election under the preceding
sentence shall be effective as of the first payroll period beginning after the
date the election is filed. For purposes of the Plan, "Basic Salary" means the
basic salary payable to a Key Employee by a Company.
3.1.2 Subject to such rules as the Committee may prescribe, a Key
Employee may elect to defer up to 100% (not less than $1,000) or a specific
dollar amount (not less than $1,000) of any Cash Award payable during a calendar
year by completing a deferral form and filing such form with the Committee prior
to January 1 of such calendar year (or such earlier date as may be prescribed by
the Committee). For purposes of the Plan, "Cash Award" means an award or bonus
payable in cash to a Key Employee by a Company, including a cash award
2
<PAGE>
under the Cincinnati Bell Inc. 1988 Long Term Incentive Plan or the Cincinnati
Bell Inc. Short Term Incentive Plan.
3.1.3 Subject to such rules as the Committee may prescribe, a Key
Employee may elect to defer up to 100% (not less than the equivalent of $1,000)
of a Share Award payable during a calendar year by completing a deferral form
and filing such form with the Committee prior to January 1 of such calendar year
(or such earlier date as may be prescribed by the Committee). For purposes of
the Plan, "Share Award" means an award under the Cincinnati Bell Inc. 1988 Long
Term Incentive Plan which is payable in the form of CBI Shares, except that
shares awarded under such plan as restricted shares shall not be considered
"Share Awards" for purposes of the Plan.
3.2 CHANGING DEFERRALS. Subject to such rules as the Committee may
prescribe, a Key Employee who has elected to defer a portion of his Basic
Salary, Cash Award or Share Award may change the amount of his deferral from one
permissible amount to another, effective as of any January 1, by completing and
signing a new deferral form and filing such form with the Committee prior to
such January 1 (or such earlier date as may be prescribed by the Committee).
3.3 SUSPENDING DEFERRALS.
3.3.1 Subject to such rules as the Committee may prescribe, a Key
Employee who has elected to defer a portion of his Basic Salary may suspend such
election, as of the first day of any payroll period, by completing and signing a
form provided by the Committee and filing such form with the Committee prior to
the first day of such payroll period. A Key Employee who has suspended his
election for deferrals in accordance with this Section 3.3.1 may again elect to
defer a portion of his Basic Salary, effective as of any January 1 following the
six month period beginning on the effective date of the suspension, by
completing and signing a new deferral form and filing such form with the
Committee prior to such January 1 (or such earlier date as may be prescribed by
the Committee).
3.3.2 A Key Employee's election to defer a portion of a Cash Award
or Share Award for a calendar year may not be revoked during the calendar year.
3.4 COMPANY MATCH. As of each day on which Basic Salary or Cash Award
deferrals are credited, under Section 4.1, to the Cash Deferral Account of a Key
Employee who is not a participant in the Cincinnati Bell Inc. Pension Program
("Deferral Date"), there shall also be credited to such Key Employee's Company
Matching Account under Section 4.3, an amount computed in accordance with the
provisions of this Section 3.4.
3.4.1 To the extent that the Key Employee's aggregate non-deferred
Basic Salary and Cash Awards for the calendar year through the Deferral Date are
not in excess of $150,000, the Company match to be credited to such Key
Employee's Company Matching Account on the
3
<PAGE>
Deferral Date shall be 4% of the Basic Salary and Cash Awards deferred on the
Deferral Date (or such lesser percentage as may be prescribed by the Committee).
3.4.2 To the extent that the Key Employee's aggregate non-deferred
Basic Salary and Cash Awards for the calendar year through the Deferral Date
exceed $150,000, the Company match to be credited to such Key Employee's Company
Matching Account on the Deferral Date shall be the lesser of (a) 66-2/3% of the
Basic Salary and Cash Award deferred on the Deferral Date (or such lesser
percentage as may be prescribed by the Committee) or (b) 4% of that portion of
the Key Employee's Basic Salary and Cash Award paid or deferred on the Deferral
Date (or such lesser percentage as may be prescribed by the Committee).
SECTION 4
MAINTENANCE AND VALUATION OF ACCOUNTS
4.1 CASH DEFERRAL ACCOUNTS. There shall be established for each Key
Employee who has elected to defer a portion of his Basic Salary or Cash Award
under Section 3.1.1 or 3.1.2 a separate Account, called a Cash Deferral Account,
which shall reflect the amounts deferred by the Key Employee and the assumed
investment thereof. Subject to such rules as the Committee may prescribe, any
amount deferred by a Key Employee under Section 3.1.1 or 3.1.2 shall be credited
to the Key Employee's Cash Deferral Account as of the day on which such deferred
amount would have otherwise been paid to the Key Employee and shall be assumed
to have been invested in the investments designated by the Key Employee on a
form provided by and filed with the Committee.
4.2 SHARE DEFERRAL ACCOUNTS. There shall be established for each Key
Employee who has elected to defer all or a portion of his Share Award under
Section 3.1.3 a separate Account, called a Share Deferral Account, which shall
reflect the amounts deferred by the Key Employee under Section 3.1.3 and the
assumed investment thereof. Subject to the such rules as the Committee may
prescribe, the amounts deferred by a Key Employee under Section 3.1.3 shall be
credited to the Key Employee's Share Deferral Account as of the day on which
such amount would have otherwise been paid to the Key Employee. Amounts
credited to a Key Employee's Share Deferral Account shall be assumed to have
been invested exclusively in CBI Shares.
4.3 COMPANY MATCHING ACCOUNTS. There shall be established for each Key
Employee who is entitled to a Company match under Section 3.4 a separate
Account, called a Company Matching Account, which shall reflect the Company
match to be credited on behalf of the Key Employee under Section 3.4 and the
assumed investment thereof. The amount of the Company's match shall be credited
to the Key Employee's Company Matching Account as of the day on which the
deferred Basic Salary or Cash Award to which the Company match relates would
have otherwise been paid to the Key Employee. Amounts credited to a Key
Employee's Company Matching Account shall be assumed to have been invested in
the investments designated by the Key Employee on a form provided by and filed
with the Committee.
4
<PAGE>
4.4 VALUATION. As soon as practical following the end of each calendar
year, each Key Employee or, in the event of his death, his Beneficiary, shall be
furnished a statement as of December 31 showing the then balance of the Key
Employee's Accounts, the total credits to such Accounts during the preceding
calendar year, and, if amounts credited to any such Accounts are assumed to have
been invested in securities, a description of such securities including the
number of shares assumed to have been purchased by the amounts credited to such
Accounts.
4.5 CBI SHARES. To the extent Key Employee's Accounts are assumed to have
been invested in CBI Shares:
4.5.1 Whenever any cash dividends are paid with respect to CBI
Shares, additional amounts shall be credited to the Key Employee's Accounts as
of the dividend payment date. The additional amount to be credited to each
account shall be determined by multiplying the per share cash dividend paid with
respect to the CBI Shares on the dividend payment date by the number of assumed
CBI Shares credited to the Key Employee's Accounts on the day preceding the
dividend payment date. Such additional amount credited to the Key Employee's
Accounts shall be assumed to have been invested in additional CBI Shares on the
day on which such dividends are paid.
4.5.2 If there is any change in CBI Shares through the declaration
of a stock dividend or a stock split or through a recapitalization resulting in
a stock split, or a combination or a change of shares, the number of shares
assumed to have been purchased for each Account shall be appropriately adjusted.
4.5.3 Whenever CBI Shares are to be valued for purposes of the
Plan, the value of each such share shall be the average of the high and low
price per share as reported on the composite tape on the last business day
preceding the date as of which the distribution is made or, if no sales were
made on that date, on the next preceding day on which sales were made.
SECTION 5
DISTRIBUTION
5.1 GENERAL. Except as otherwise provided in Section 5.5, no amount shall
be paid with respect to a Key Employee's Accounts while he remains an Employee.
Unless the Committee otherwise provides, all payments with respect to a Key
Employee's Accounts shall be made by the Company which otherwise would have paid
the Basic Salary, Cash Award or Share Award deferred by the Key Employee.
5.2 TERMINATION OF EMPLOYMENT. A Key Employee may elect to receive the
amounts credited to his Accounts in up to ten annual installment payments,
commencing on the first business day of March of the calendar year following the
calendar year in which he ceases to
5
<PAGE>
be an Employee. If a Key Employee fails to make such election, the amounts
credited to the Key Employee's Accounts shall be paid to the Key Employee in two
annual installments with the first installment being made on the first business
day of March of the calendar year following the calendar year in which the Key
Employee ceases to be an Employee.
5.2.1 The amount of each annual installment payable under this
Section 5.2 shall be, at the election of the Key Employee, either (1) a specific
dollar amount specified by the Key Employee (not less than $50,000 or more than
$1,000,000), or (2) a fraction of the amounts credited to the Key Employee's
Accounts as of the installment payment date, the numerator of which is 1 and the
denominator of which is equal to the total number of installments remaining to
be paid (including the installment to be paid on the subject installment payment
date). If a Key Employee elects (2) above and the amount of any annual
installment is less than $50,000 or more than $1,000,000, it shall be increased
to $50,000 or reduced to $1,000,000, as the case may be; provided that if the
remaining amount credited to the Accounts on any annual installment date is less
than $50,000, the payment shall be the amount necessary to reduce the amount
credited to the Account to $0.
5.2.2 Any election under this Section 5.2 must be made prior to
the effective date of the Key Employee's termination and within the time
prescribed by the Key Employee's Company but in no event later than four months
prior to the effective date of the Key Employee's termination. When the consent
of the Committee, and subject to such rules as the Committee may prescribe, a
Key Employee may elect (a) to receive the amounts credited to his Accounts in up
to 120 monthly installments and (b) to accelerate the time at which any payment
may be made (to a date not earlier than the date on which he ceases to be an
Employee).
5.2.3 In its discretion, the Committee may condition the right to
receive payments with respect to a portion or all of a Key Employee's Company
Matching Account on the Key Employee's completing a minimum period of service
prior to the date on which he ceases to be an Employee. To the extent that a
Key Employee has not satisfied any applicable service requirement prior to the
date on which he ceases to be an Employee (other than by reason of his death),
he shall not be entitled to receive any payment with respect to his Company
Matching Account.
5.3 DEATH. If a Key Employee ceases to be an Employee by reason of his
death, or if a Key Employee dies after ceasing to be an Employee but before the
amounts credited to his Accounts have been paid, the amounts credited to the Key
Employee's Accounts shall be paid to the Key Employee's Beneficiary in one lump
sum as of the first business day of the third quarter following the date of the
Key Employee's death; provided, however, that if the Key Employee has elected to
have his Accounts distributed in installments and if he dies after distribution
has commenced, the remaining installments shall be paid to the Beneficiary as
they become due.
6
<PAGE>
5.4 FORM OF PAYMENT. Payments with respect to assumed investments other
than CBI Shares shall be made in cash. Payments with respect to assumed
investments in CBI Shares shall be made in CBI Shares or cash, in the discretion
of the Committee.
5.5 CHANGE IN CONTROL. If a Change in Control of CBI occurs, each Key
Employee's Plan Accounts shall be paid to him in one lump sum as of the day next
following the date on which such Change in Control occurred. A "Change in
Control of CBI" shall be deemed to have occurred if (i) a tender offer shall be
made and consummated for the ownership of 30% or more of the outstanding voting
securities of CBI; (ii) CBI shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than 75% of the
outstanding voting securities of the surviving or resulting corporation shall be
owned in the aggregate by the former shareholders of CBI, other than affiliates
(within the meaning of the Securities Exchange Act of 1934) of any party to such
merger or consolidation, as the same shall have existed immediately prior to
such merger or consolidation; (iii) CBI shall sell substantially all of its
assets to another corporation which is not a wholly owned subsidiary; (iv) a
person within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as in
effect on January 1, 1994) of the Securities Exchange Act of 1934, shall acquire
20% or more of the outstanding voting securities of CBI (whether directly,
indirectly, beneficially or of record), or a person, within the meaning of
Section 3(a)(9) or Section 13(d)(3) (as in effect on January 1, 1994) of the
Securities Exchange Act of 1934 controls in any manner the election of a
majority of the directors of CBI; or (v) within any period of two consecutive
years after January 1, 1994, individuals who at the beginning of such period
constitute CBI's Board of Directors cease for any reason to constitute at least
a majority thereof, unless the election of each director who was not a director
at the beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors then in office who were
directors at the beginning of the period. For purposes hereof, ownership of
voting securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(1)(i) (as in effect on
January 1, 1994) pursuant to the Securities Exchange Act of 1934.
SECTION 6
ADMINISTRATION OF THE PLAN
6.1 GENERAL. The general administration of the Plan and the
responsibility for carrying out its provisions shall be placed in the Committee.
6.2 EXPENSES. Expenses of administering the Plan shall be shared by each
Company participating in this Plan in such proportions as may be determined by
CBI.
6.3 COMPENSATION OF COMMITTEE. The members of the Committee shall not
receive compensation for their services as such, and, except as required by law,
no bond or other security need be required of them in such capacity in any
jurisdiction.
7
<PAGE>
6.4 RULES OF PLAN. Subject to the limitations of the Plan, the Committee
may, from time to time, establish rules for the administration of the Plan and
the transaction of its business. The Committee may correct errors, however
arising, and, as far as possible, adjust any benefit payments accordingly. The
determination of the Committee as to the interpretation of the provisions of the
Plan or any disputed question shall be conclusive upon all interested parties.
6.5 AGENTS AND EMPLOYEES. The Committee may authorize one or more agents
to execute or deliver any instrument. The Committee may appoint or employ such
agents, counsel (including counsel of any Company), auditors (including auditors
of any Company), physicians, clerical help and actuaries as in the Committee's
judgment may seem reasonable or necessary for the proper administration of the
Plan.
6.6 INDEMNIFICATION. East Company participating in the Plan shall
indemnify each member of the Committee for all expenses and liabilities
(including reasonable attorney's fees) arising out of the administration of the
Plan, other than any expenses or liabilities resulting from the Committee's own
gross negligence or willful misconduct. The foregoing right of indemnification
shall be in addition to any other rights to which the members of the Committee
may be entitled as a matter of law.
SECTION 7
FUNDING OBLIGATION
No Company shall have any obligation to fund, either by the purchase of CBI
Shares or the investment in any account or by any other means, its obligation to
Key Employees hereunder. If, however, a Company does elect to allocate assets
to provide for any such obligation, the assets allocated for such purpose shall
be assets of the Company subject to claims against the Company, including claims
of the Company's creditors, to the same extent as are other corporate assets,
and the Key Employees shall have no right or claim against the assets so
allocated, other than as general creditors of the Company.
SECTION 8
AMENDMENT AND TERMINATION
The Committee or CBI may, without the consent of any Key Employee or
Beneficiary, amend or terminate the Plan at any time; provided that no amendment
shall be made or act of termination taken which divests any Key Employee of the
right to receive payments under the Plan with respect to amounts theretofore
credited to the Key Employee's Accounts.
8
<PAGE>
SECTION 9
NON-ALIENATION OF BENEFITS
No Key Employee or Beneficiary shall alienate, commute, anticipate, assign,
pledge, encumber or dispose of the right to receive the payments required to be
made by any Company hereunder, which payments and the right to receive them are
expressly declared to be nonassignable and nontransferable. In the event of any
attempt to assign or transfer any such payments or the right to receive them, no
Company shall have any further obligation to make any payments otherwise
required of it hereunder.
SECTION 10
MISCELLANEOUS
10.1 DELEGATION. The Committee may delegate to any Company, person or
committee certain of its rights and duties hereunder. Any such delegation shall
be valid and binding on all persons and the person or committee to whom or which
authority is delegated shall have full power to act in all matters so delegated
until the authority expires by its terms or is revoked by the Committee, as the
case may be. Unless the Committee otherwise provides, each Company shall have
and may exercise, with respect to its Key Employees, the powers reserved to the
Committee in Sections 3, 4, 5.1 and 5.2.
10.2 APPLICABLE LAW. The Plan shall be governed by applicable federal law
and, to the extent not preempted by applicable federal law, the laws of the
State of Ohio.
10.3 SEPARABILITY OF PROVISIONS. If any provision of the Plan is held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, and the Plan shall be construed and enforced as if
such provision had not been included.
10.4 HEADINGS. Headings used throughout the Plan are for convenience only
and shall not be given legal significance.
10.5 COUNTERPARTS. The Plan may be executed in any number of counterparts,
each of which shall be deemed an original. All counterparts shall constitute
one and the same instrument, which shall be sufficiently evidenced by any one
thereof.
IN WITNESS WHEREOF, Cincinnati Bell Inc. has caused its name to be
subscribed on the ________ day of December, 1993.
CINCINNATI BELL INC.
By/s/ PAUL W. CHRISTENSEN, JR.
------------------------------
9
<PAGE>
Exhibit 11
to
Form 10-K for 1993
<TABLE>
<CAPTION>
CINCINNATI BELL INC.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(Dollars in thousands, except per share amounts; shares in thousands)
1993 1992 1991
-------- ------- -------
<S> <C> <C> <C>
Income (loss) before extraordinary charges . . . . $(56,795) $38,937 $42,710
Extraordinary charges, net of income
tax benefit. . . . . . . . . . . . . . . . . . . -- (3,690) --
-------- ------- -------
Net income (loss). . . . . . . . . . . . . . . . . $(56,795) $35,247 $42,710
Preferred dividend requirements. . . . . . . . . . 2,248 4,350 4,350
-------- ------- -------
Income (loss) applicable to common shares. . . . . $(59,043) $30,897 $38,360
-------- ------- -------
-------- ------- -------
Weighted average number of common
shares outstanding . . . . . . . . . . . . . . . 63,296 61,914 61,334
Common share conversions applicable to
common share options . . . . . . . . . . . . . . 74 41 108
-------- ------- -------
Total number of shares for computing
primary earnings (loss) per share. . . . . . . . 63,370 61,955 61,442
Average contingent issues of common shares
from convertible preferred shares. . . . . . . . 1,531 3,158 3,158
-------- ------- -------
Total number of shares for computing
fully diluted earnings (loss) per share. . . . . 64,901 65,113 64,600
-------- ------- -------
-------- ------- -------
Earnings (Loss) per Common Share
As Reported
Income (loss) before extraordinary charges $ (.93) $ .56 $ .63
Extraordinary charges. . . . . . . . . . . . . -- (.06) --
-------- ------- -------
Net income (loss). . . . . . . . . . . . . . . $ (.93) $ .50 $ .63
-------- ------- -------
-------- ------- -------
Primary
Income (loss) before extraordinary charges . . $ (.93) $ .56 $ .62
Extraordinary charges. . . . . . . . . . . . . -- (.06) --
-------- ------- -------
Net income (loss). . . . . . . . . . . . . . . $ (.93) $ .50 $ .62
-------- ------- -------
-------- ------- -------
Fully Diluted
Income (loss) before extraordinary charges . . $ (.88) $ .60 $ .66
Extraordinary charges. . . . . . . . . . . . . -- (.06) --
-------- ------- -------
Net income (loss). . . . . . . . . . . . . . . $ (.88) $ .54 $ .66
-------- ------- -------
-------- ------- -------
</TABLE>
Earnings (loss) per share amounts for the years ended December 31, 1993, 1992
and 1991 as reported in the Consolidated Statements of Income are based on the
weighted average number of common shares outstanding for the respective periods.
Primary and fully diluted earnings (loss) per share amounts are not shown in the
Consolidated Statements of Income as they differ from the reported earnings
(loss) per share amounts by less than three percent or are antidilutive.
<PAGE>
Exhibit 12
to
Form 10-K for 1993
CINCINNATI BELL INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED DIVIDENDS
<TABLE>
<CAPTION>
(Thousands of Dollars)
------------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
1. Earnings
(a) Income (loss) before Income Taxes,
adjusted for undistributed income
and losses from partnerships . . . . . . . $(53,789) $ 55,580 $ 68,734 $137,226 $132,157
(b) Interest Expense . . . . . . . . . . . . . . 45,760 46,158 52,839 45,254 31,394
(c) One-third of Rental Expense. . . . . . . . . 23,665 22,521 20,820 17,425 13,312
-------- -------- -------- -------- --------
$ 15,636 $124,259 $142,393 $199,905 $176,863
2. Fixed Charges -------- -------- -------- -------- --------
-------- -------- -------- -------- --------
(a) Interest Expense . . . . . . . . . . . . . . $ 45,760 $ 46,158 $ 52,839 $ 45,254 $ 31,394
(b) Preferred Dividends. . . . . . . . . . . . . 3,458 6,591 6,591 6,591 6,591
(c) One-third of Rental Expense. . . . . . . . . 23,665 22,521 20,820 17,425 13,312
-------- -------- -------- -------- --------
$ 72,883 $ 75,270 $ 80,250 $ 69,270 $ 51,297
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
3. Ratio of Earnings to Combined Fixed Charges
and Preferred Dividends
(1 divided by 2). . . . . . . . N/M 1.65 1.77 2.89 3.45
<FN>
N/M - Not meaningful as earnings are inadequate to cover the fixed charges by $57,247.
</TABLE>
<PAGE>
Exhibit 13
To Form 10-K for 1993
SELECTED FINANCIAL AND OPERATING DATA Cincinnati Bell Inc.
<TABLE>
<CAPTION>
Dollars in Thousands
Except Per Share Amounts 1993 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Revenues and sales (d) $1,089,637 $1,101,448 $1,064,687 $ 996,025 $ 887,081
Costs and expenses (d,e) 1,108,370 1,010,258 946,823 822,547 728,451
---------- ---------- ---------- ---------- ----------
Operating income (loss) (18,733) 91,190 117,864 173,478 158,630
Other income (expense) - net 9,405 10,947 4,250 8,157 5,168
Interest expense 45,760 46,158 52,839 45,254 31,394
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes
and extraordinary charges (55,088) 55,979 69,275 136,381 132,404
Income taxes 1,707 17,042 26,565 45,387 38,045
---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary charges (56,795) 38,937 42,710 90,994 94,359
Extraordinary charges, net of income
tax benefit -- (3,690) -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss) (56,795) 35,247 42,710 90,994 94,359
Preferred dividend requirements 2,248 4,350 4,350 4,350 4,350
---------- ---------- ---------- ---------- ----------
Income (loss) applicable to common shares $ (59,043) $ 30,897 $ 38,360 $ 86,644 $ 90,009
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Earnings (loss) per common share $ (.93) $ .50 $ .63 $ 1.44 $ 1.50
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Dividends declared per common share (a) $ .80 $ .80 $ .80 $ .76 $ .68
---------- ---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding (000) 63,296 61,914 61,334 60,282 59,993
---------- ---------- ---------- ---------- ----------
Pre-tax profit percent (5.1)% 5.1% 6.5% 13.7% 14.9%
---------- ---------- ---------- ---------- ----------
After tax profit percent (5.2)% 3.2% 4.0% 9.1% 10.6%
---------- ---------- ---------- ---------- ----------
Effective tax rate 3.1 % 30.4% 38.3% 33.3% 28.7%
---------- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Telephone plant investment at cost $1,430,822 $1,408,881 $1,365,546 $1,295,564 $1,221,050
---------- ---------- ---------- ---------- ----------
Total assets $1,664,090 $1,632,521 $1,743,134 $1,656,426 $1,393,329
---------- ---------- ---------- ---------- ----------
Debt maturing within one year $ 112,029 $ 192,962 $ 172,840 $ 140,167 $ 73,591
Long-term debt 522,888 350,069 445,237 437,038 362,182
Preferred shares subject to
mandatory redemption -- 60,000 60,000 60,000 60,000
Common shareowners' equity 515,615 568,883 581,594 578,610 516,114
---------- ---------- ---------- ---------- ----------
Total capitalization $1,150,532 $1,171,914 $1,259,671 $1,215,815 $1,011,887
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Dollars in Thousands
Except Per Share Amounts 1988 1987 1986 1985 1984 1983
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Revenues and sales (d) $ 730,258 $ 635,035 $ 533,838 $ 487,089 $ 447,417 $ 428,150
Costs and expenses (d,e) 584,732 509,128 418,567 379,829 348,265 322,416
---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss) 145,526 125,907 115,271 107,260 99,152 105,734
Other income (expense) - net 850 (1,870) 136 231 2,154 (288)
Interest expense 28,846 25,279 18,436 19,596 21,365 19,535
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes
and extraordinary charges 117,530 98,758 96,971 87,895 79,941 85,911
Income taxes 33,195 34,405 38,743 36,290 31,587 36,272
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary charges 84,335 64,353 58,228 51,605 48,354 49,639
Extraordinary charges, net of income
tax benefit -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) 84,335 64,353 58,228 51,605 48,354 49,639
Preferred dividend requirements 1,945 -- -- -- 103 660
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) applicable to common shares $ 82,390 $ 64,353 $ 58,228 $ 51,605 $ 48,251 $ 48,979
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) per common share $ 1.31 $ 1.00 $ .89 $ .78 $ .72 $ .66
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Dividends declared per common share (a) $ .56 $ .48 $ .44 $ .39 $ .37 $ .35
---------- ---------- ---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding (000) 62,702 64,050 65,610 66,426 67,236 73,773
---------- ---------- ---------- ---------- ---------- ----------
Pre-tax profit percent 16.1% 15.6% 18.2% 18.0% 17.9% 20.1%
---------- ---------- ---------- ---------- ---------- ----------
After tax profit percent 11.5% 10.1% 10.9% 10.6% 10.8% 11.6%
---------- ---------- ---------- ---------- ---------- ----------
Effective tax rate 28.2% 34.8% 40.0% 41.3% 39.5% 42.2%
---------- ---------- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Telephone plant investment at cost $1,229,539 $1,195,066 $1,115,459 $1,078,808 $1,027,664 $ 988,559
---------- ---------- ---------- ---------- ---------- ----------
Total assets $1,276,586 $1,154,240 $ 993,734 $ 949,696 $ 895,335 $ 878,081
---------- ---------- ---------- ---------- ---------- ----------
Debt maturing within one year $ 1,684 $ 330 $ 824 $ 1,694 $ 1,345 $ 500
Long-term debt 322,619 319,303 210,146 210,137 211,443 214,052
Preferred shares subject to
mandatory redemption 60,000 -- -- -- -- 2,500
Common shareowners' equity 483,761 448,772 423,229 395,370 373,539 372,688
---------- ---------- ---------- ---------- ---------- ----------
Total capitalization $ 868,064 $ 768,405 $ 634,199 $ 607,201 $ 586,327 $ 589,740
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA Cincinnati Bell Inc.
<TABLE>
<CAPTION>
Dollars in Thousands
Except Per Share Amounts 1993 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OTHER DATA
Total capital additions
(including acquisitions) $ 235,411 $ 140,056 $ 193,348 $ 284,335 $ 202,532
---------- ---------- ---------- ---------- ----------
Telephone plant construction $ 111,595 $ 94,956 $ 115,931 $ 127,690 $ 142,871
---------- ---------- ---------- ---------- ----------
Common shareowners 22,478 23,010 22,244 20,530 19,173
---------- ---------- ---------- ---------- ----------
Ratio of earnings to combined fixed
charges and preferred dividends (b) (c) 1.65 1.77 2.89 3.45
---------- ---------- ---------- ---------- ----------
Access minutes of use (000)
Interstate 2,132,281 1,985,239 1,852,207 1,788,449 1,685,110
---------- ---------- ---------- ---------- ----------
Intrastate 887,769 836,018 793,037 782,679 720,301
---------- ---------- ---------- ---------- ----------
Network access lines 848,000 827,000 808,000 800,000 781,000
---------- ---------- ---------- ---------- ----------
Total employees 14,700 11,200 12,100 11,800 11,000
---------- ---------- ---------- ---------- ----------
CBT employees 3,400 3,700 3,800 4,200 4,300
---------- ---------- ---------- ---------- ----------
Network access lines per CBT employee 249 224 213 190 182
---------- ---------- ---------- ---------- ----------
Market price per share
High $ 24.375 $ 20.875 $ 25.375 $ 27.875 $ 35.000
Low $ 16.125 $ 15.375 $ 17.875 $ 18.625 $ 20.000
Close $ 18.000 $ 17.125 $ 19.375 $ 23.250 $ 27.250
<CAPTION>
Dollars in Thousands
Except Per Share Amounts 1988 1987 1986 1985 1984 1983
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA
Total capital additions
(including acquisitions) $ 201,354 $ 196,989 $ 112,236 $ 110,311 $ 66,530 $ 49,674
---------- ---------- ---------- ---------- ---------- ----------
Telephone plant construction $ 76,268 $ 87,269 $ 78,358 $ 86,311 $ 59,280 $ 49,674
---------- ---------- ---------- ---------- ---------- ----------
Common shareowners 18,500 18,003 17,109 16,435 16,950 17,320
---------- ---------- ---------- ---------- ---------- ----------
Ratio of earnings to combined fixed
charges and preferred dividends (b) 3.77 4.19 5.16 4.88 4.25 4.42
---------- ---------- ---------- ---------- ---------- ----------
Access minutes of use (000)
Interstate 1,558,533 1,444,253 1,344,669 1,291,228 1,158,373 n/a
---------- ---------- ---------- ---------- ---------- ----------
Intrastate 672,646 609,644 502,458 462,009 409,059 n/a
---------- ---------- ---------- ---------- ---------- ----------
Network access lines 763,000 748,000 727,000 714,000 700,000 687,000
---------- ---------- ---------- ---------- ---------- ----------
Total employees 9,800 5,900 5,300 5,100 4,900 5,000
---------- ---------- ---------- ---------- ---------- ----------
CBT employees 4,100 4,300 4,300 4,400 4,400 4,700
---------- ---------- ---------- ---------- ---------- ----------
Network access lines per CBT employee 186 174 169 162 159 146
---------- ---------- ---------- ---------- ---------- ----------
Market price per share
High $ 23.500 $ 13.438 $ 11.938 $ 7.063 $ 5.375 $ 5.188
Low $ 10.625 $ 9.688 $ 6.844 $ 5.281 $ 4.391 $ 4.078
Close $ 21.875 $ 12.375 $ 10.250 $ 6.906 $ 5.313 $ 5.078
<FN>
(a) Dividends declared per common share for 1985 exclude a special dividend of
$.03 which was a one-time payment declared by the Company to accommodate a
change in the schedule of its regular dividend payments.
(b) For the purpose of this ratio: (i) Earnings have been calculated by adding
to Income before income taxes and extraordinary charges, adjusted for
undistributed income and losses of partnerships, the amount of interest
expense and the portion of rentals representative of the interest factor;
(ii) Fixed charges comprise total interest expense, such portion of rentals
representative of the interest factor and preferred dividend requirements.
(c) Earnings before income taxes were inadequate to cover fixed charges by
$57,247 for the year ended December 31, 1993.
(d) Certain CBIS reimbursable costs previously recorded as revenues have been
reclassified as a reduction of operating expenses. This reclassification
decreased revenues and operating expenses, but had no effect on operating
income (loss) or net income (loss) for all periods presented. In addition
to this reclassification, certain prior year amounts have been reclassified
to be consistent with the 1993 presentation.
(e) Included in costs and expenses for 1993, 1992 and 1991 are approximately
$102 million, $11 million and $10 million for special charges (see note (b)
of Notes to Financial Statements).
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THE COMPANY
Cincinnati Bell Inc. (the "Company") is a holding company whose subsidiaries
operate in four principal areas: telephone operations, information systems,
marketing services and other telecommunications. Segment data are reported for
telephone operations, information systems and marketing services. The telephone
operations segment includes Cincinnati Bell Telephone Company ("CBT"), the
information systems segment is comprised of Cincinnati Bell Information Systems
Inc. ("CBIS") and the marketing services segment is represented by MATRIXX
Marketing Inc. Other telecommunications includes Cincinnati Bell Directory,
Cincinnati Bell Long Distance Inc. and Cincinnati Bell Supply.
This discussion should be read in conjunction with the consolidated financial
statements and the accompanying notes.
RESULTS OF OPERATIONS
The Company's consolidated net loss for 1993 was $56.8 million compared to net
income of $35.2 million in 1992 and $42.7 million in 1991. The 1993 loss per
common share was $.93 compared to earnings per common share of $.50 in 1992 and
$.63 in 1991. The 1993 results include approximately $102 million of special
charges for the divesting of CBIS Federal and restructuring CBIS that reduced
net income by approximately $88 million, or $1.39 per common share.
Revenues and sales decreased to $1,089.6 million from $1,101.4 million in 1992.
This represents a decrease of 1 percent compared to an increase of 3 percent in
1992. The decrease was primarily the result of CBT's sale of the residential
equipment leasing and PhoneCenter store businesses to AT&T in February 1993 and
CBIS's completion of the Nippon Telegraph and Telephone ("NTT") project in 1992.
Total costs and expenses increased to $1,108.4 million from $1,010.3 million in
1992. This was an increase of 10 percent compared to an increase of 7 percent
in 1992. The increase in expenses can be directly attributed to CBIS which
recorded approximately $102 million of special charges in the fourth quarter
1993. In addition to the special charges, CBIS recorded significant write-downs
of capitalized software costs to net realizable value and other costs and
expenses related to the termination of certain contracts and products.
<PAGE>
Certain reimbursable costs previously recorded as revenues in the information
systems segment have been reclassified as a reduction of operating expenses.
The reclassification had no effect on operating income (loss) or net income
(loss) for all periods presented.
SPECIAL CHARGES - CBIS OPERATIONS
In late 1993, the Company determined the need to reorganize CBIS, its
information systems subsidiary. The reorganization focused on two phases. The
first phase was the elimination of non-strategic and under-performing
operations. This resulted in CBIS taking action to divest its holdings in its
federal operation (CBIS Federal), consolidating its foreign data center
operations, and eliminating domestic and international activities. The second
phase of the plan was to reorganize the remaining operations into strategic
business units. This change will allow the CBIS organization to better serve
its clients, align accountability with responsibility, and narrow its focus on
customer care and billing systems for the converging telecommunications market
while reducing staffing levels. These actions began in 1993 and are expected to
be completed in 1994.
These actions taken by CBIS resulted in recording special charges amounting to
approximately $102 million for restructuring the operations of CBIS. The
decision to sell CBIS Federal resulted in charges of $86 million that include
the expected loss on the sale, projected operating losses through estimated date
of sale, and other sale related expenses. CBIS Federal provides information
services to governmental agencies and employees approximately 1,000 employees.
In addition to the charges related to the sale of CBIS Federal, CBIS also
recorded approximately $16 million of charges for restructuring the remainder of
its operations. The charges include employee severance costs of approximately
$4 million, $6 million of fixed asset write-offs, and $6 million in costs
associated with discontinuing unprofitable domestic and international business
ventures. Included in the $102 million of special charges are approximately $68
million of charges that do not require future cash outlays. The write-off of
approximately $63 million of unamortized goodwill accounted for the majority of
the non-cash charges.
The net assets of the operations to be disposed or discontinued consist of $26
million of net current assets as of December 31, 1993. These amounts consist
primarily of accounts receivable, property, plant and equipment and related
liabilities. Included in the Consolidated Statements of Income for the year
ended December 31, 1993 are $67.4 million of
<PAGE>
revenues and $88.6 million of expenses related to the operations to be disposed
or discontinued.
The Company expects that future financial results will benefit from the actions
taken by CBIS to reorganize its operations. The exclusion of operating losses
and other costs recognized by CBIS in 1993 related to CBIS Federal and other
under-performing operations will help to restore profitability to CBIS. It is
currently estimated that 1994 operating income could be increased up to $10
million, net of increased software product development costs, as a result of the
above actions.
In the fourth quarter 1992, CBIS recorded special charges totaling approximately
$11 million for the consolidation of its European operations. Included in these
charges were write-offs of fixed assets, lease termination payments, employee
severance and relocation costs and estimated operating losses.
In the fourth quarter 1991, the Company recorded special charges of
approximately $10 million to expense special termination benefits related to an
early retirement incentive package, employee costs for involuntary separations
and other related costs. Of this amount, $6 million was recorded at CBIS.
CHANGES IN REVENUES AND SALES
TELEPHONE OPERATIONS
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
Local service $ 10,677 4 % $ 6,876 2 %
</TABLE>
In 1993, the increase in revenues was attributable to an increase in access
lines, greater sales of advanced calling features, increased use of directory
assistance services and higher public telephone revenues.
In 1992, the increase was caused primarily by access line growth and greater
sales of advanced calling features.
Access lines increased by 21,000 or 2.5 percent to 848,000 from 827,000 in 1992
compared to an increase of 19,000 or 2.4 percent in 1992 over 1991.
<PAGE>
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
Network access $ (6,702) (5)% $ 12,022 10 %
</TABLE>
During 1993, CBT recorded a $6.6 million reduction in interstate access revenues
as the result of orders from the Federal Communications Commission ("FCC"). The
FCC orders involved complaints against CBT alleging that CBT had exceeded
targeted earnings levels for interstate access services for the 1987-1988
monitoring period. Other decreases were caused by reductions in July, 1992 and
1993 in rates for common carrier access. Partially offsetting the decreases
were increases in end user charges from access line growth and increases in
multi-line rates.
The increase in 1992 was the result of increased common carrier access and end
user charges, transport services provided to independent carriers and
settlements, which more than offset common carrier access rate reductions in
July 1992.
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
Long distance $ 8,297 25 % $ (2,733) (8)%
</TABLE>
The increase in 1993 was caused primarily by higher settlements and increased
IntraLATA message toll revenues.
In 1992, lower settlement revenues was the principal cause for the decrease.
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
Other $(31,200) (28)% $ (35,005) (24)%
</TABLE>
The primary reason for the 1993 decrease was significant reductions in
residential equipment leasing and PhoneCenter store revenues. These businesses
were sold to AT&T Consumer Products in February 1993 and were responsible for
approximately $24 million of the decrease in revenues. Billing and collection
revenues decreased primarily as the result of AT&T's decision to perform certain
functions in-house in 1992. Revenues from CBT owned leasing business
telecommunications equipment decreased in 1993 as CBT discontinued this service
and commission revenues were lower from concluding certain business activities.
Partially
<PAGE>
offsetting the decreases were increases from new services offered, maintenance
contracts and sales of used equipment.
In 1992, the decrease was caused by decreases in billing and collection revenues
primarily from AT&T, lower commission revenues from reduced sales and leases of
equipment and less lease revenues. In addition, lower sales of material and
merchandise also contributed to the decrease. Partially offsetting the
decreases were lower provisions for uncollectibles, discounts and allowances.
INFORMATION SYSTEMS
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$(18,217) (6)% $ 39,036 14 %
</TABLE>
Professional and consulting revenues decreased in 1993 from 1992 as a result of
the completion of the NTT project in 1992. Also contributing to the decrease
were lower federal government contract revenues resulting from a decision in
late 1992 by the Internal Revenue Service ("IRS") not to renew an automated data
processing support contract. Partially offsetting the decreases were increased
revenues from international contracts for the customization of
telecommunications software and data processing revenues for increased business
with existing customers.
The increase in 1992 was caused primarily from data processing revenues for
increased business with existing customers, partially offset by a decrease in
professional and consulting revenues caused by the completion of the NTT
project.
Because of the decision to sell CBIS Federal and discontinue certain other
unprofitable business ventures, revenues for 1994 will be lower than 1993. In
addition, data processing revenues from card billing services provided to AT&T
are expected to decline significantly in 1994. The negative impact should be
partially offset by growth in CBIS' core business.
MARKETING SERVICES
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$ 21,217 25 % $ 1,953 2 %
</TABLE>
<PAGE>
The acquisition of WATS Marketing of America ("WATS Marketing") in November 1993
accounted for $11.9 million of the increase in 1993 and will continue to
contribute significant revenue increases in 1994. The remaining increase was
from increased volume of business from new and existing customers. The
increases were partially offset by a decrease caused from the completion of a
major telephone marketing contract at the end of 1992.
The increase in 1992 was principally the result of increased volume of business
from new and existing customers. Partially offsetting the increase was lower
foreign telephone marketing revenues from the termination of lower profit margin
contracts.
OTHER TELECOMMUNICATIONS
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$ 4,117 4 % $ 14,612 14 %
</TABLE>
The increases in 1993 and 1992 were principally caused by increased revenues in
the long distance business from expansion into new market areas and additional
product offerings. The directory and supply businesses also contributed to the
increase in 1992 because of higher sales.
CHANGES IN COSTS AND EXPENSES
Operating Expenses
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$ (5,859) (1)% $ 51,006 9 %
</TABLE>
One of the significant reasons for the decrease in 1993 was the result of fewer
expenses related to the NTT project at CBIS that was completed in 1992. Costs
also were lower in 1993 because of reduced work on government contracts at CBIS
Federal. Additionally, the selling of the residential equipment leasing and
PhoneCenter store businesses in early 1993, reduced cost of sales and operating
expenses. Employee costs were lower in 1993 as the result of workforce
reductions primarily at CBT and a change in CBT vacation policy.
Even though operating expenses decreased overall in 1993, there were several
increases. CBIS recorded charges of $5.1 million to withdraw from certain
unprofitable international contracts and products. Product development expenses
increased approximately $15.6 million in 1993 over the prior year. The
acquisition of WATS Marketing in November 1993, also
<PAGE>
contributed to the increase in costs over the prior period. The adoption of
Statement of Financial Accounting Standards ("SFAS") SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", in 1993 increased
expenses by approximately $6 million over the 1992 expense. Other reasons for
increases in 1993 were increased provisions for inventory losses primarily at
Cincinnati Bell Supply and various other costs.
Expenses for 1994 will be increased by the full-year effects for the acquired
WATS Marketing and the absence of the one-time benefit of the change in the CBT
vacation policy. Cost and expenses related to the businesses to be disposed and
the withdrawal from unprofitable ventures will help to decrease 1994 amounts.
During 1993, CBT revised its vacation policy for management and non-management
employees to be on an equivalent basis with the Company's other subsidiaries.
The policy changed the period in which the employees earn vacation. The change
in vacation policy decreased operating expenses and plant and building services
expenses by approximately $6.2 million in 1993 compared to 1992.
The increase in 1992 was attributable to higher product development expenses of
approximately $7.6 million at CBIS, greater expenses related to revenue
generation efforts and increased advertising costs. Also included were
increases in employee costs and consulting fees. Partially offsetting the
increases were decreased expenses associated with the NTT project.
PLANT AND BUILDING SERVICES
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$ (8,879) (5)% $ 3,943 2 %
</TABLE>
Lower employee costs resulting from CBT workforce reductions was a significant
reason for the decrease in 1993. The CBT vacation policy change and a reduction
in supplies and expensed purchases of equipment also contributed to the 1993
decrease. Partially offsetting the decreases were increases in expenses in 1993
over 1992 caused by higher office lease costs, increased telecommunications
costs related to higher marketing service revenues, and the inclusion of the
inclusion of the acquired WATS Marketing expenses.
In 1992, the increase was caused principally from increases in office lease
costs. The increases were partially offset by lower employee costs from a
reduction of employees at CBT
<PAGE>
and lower telecommunications costs directly related to a major telephone
marketing contract.
DEPRECIATION AND AMORTIZATION
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$ 21,492 16 % $ 5,173 4 %
</TABLE>
The increase in 1993 was mainly the result of charges made in the third and
fourth quarters by CBIS to reduce the carrying value of certain capitalized
software to net realizable value. These charges increased amortization of
software costs by approximately $17 million. The remaining increase was
attributed to the acquisition of WATS Marketing and higher investment in
property, plant and equipment.
In 1992, the increase was caused by federal and state depreciation rate
represcriptions at CBT and higher investment in property, plant and equipment.
Partially offsetting the increases was a decrease resulting from the reduction
of the carrying value of capitalized software costs to net realizable value in
June 1991.
TAXES OTHER THAN INCOME TAXES
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$ 273 - $ 2,759 3 %
</TABLE>
The increase in 1992 was caused by property taxes increasing as a result of
higher rates and amounts of property, plant and equipment and gross receipts
taxes increasing from higher revenue subject to taxes. Partially offsetting the
increase was a decrease in payroll taxes resulting from workforce reductions.
CHANGES IN OTHER INCOME (EXPENSE) - NET
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$ (1,542) (14)% $ 6,697 158 %
</TABLE>
The decrease in 1993 included the recording of $4.2 million in provisions for
losses related to an investment in and loans to an international distributor of
CBIS products and services. Other decreases were from lower interest charged
construction and the effect of recording interest income in 1992 from IRS tax
refunds. Mainly offsetting the decreases was an
<PAGE>
increase from the difference between the gain on the 1993 sale by CBT of its
residential equipment and PhoneCenter store business to AT&T and the gain
recognized in 1992 for an amendment to CBT's marketing agency relationship with
AT&T.
For the past ten years, the Company has been a partner in the Anixter-Cincinnati
joint venture with Anixter Bros., Inc. This joint venture sold equipment and
material to CBT. According to the terms of the partnership agreement, the
partnership was terminated at the end of 1993. The Company's share of the
profits from this partnership for 1993 was $2.7 million, which is expected to be
discontinued in 1994.
The increase in 1992 was primarily the result of a gain from an amendment to
CBT's marketing agency relationship with AT&T and the effect of the Company's
write-off of its investment in AT&E Corporation in 1991. There were higher
amounts of interest charged construction and lower foreign exchange losses in
1992 compared to 1991.
CHANGES IN INTEREST EXPENSE
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$ (398) (1)% $ (6,681) (13)%
</TABLE>
The decrease in 1993 was primarily caused by decreasing interest rates and the
effect of long-term refinancing activities in 1992 to take advantage of lower
interest rates. Mostly offsetting the decreases was $4.2 million of interest
expense which CBT recorded related to the FCC orders to refund interstate access
revenues.
In 1992, the decrease was caused primarily by decreasing interest rates, lower
average debt outstanding and the absence in 1992 of interest expense related to
a 1991 federal tax settlement.
Interest expense in 1994 is expected to increase over 1993 as a consequence of
higher total debt levels and a higher weighted average interest rate. The
Company issued $170 million of long-term debt, mostly in late 1993 at long-term
interest rates that were higher than short-term debt rates that the Company used
as financing during most of 1993.
CHANGES IN INCOME TAXES
<PAGE>
<TABLE>
<CAPTION>
Increase (Decrease)
Thousands of Dollars
-------------------------------------
1993 1992
- -------------------------------------------------------------------
<S> <C> <C>
$(15,335) (90)% $ (9,523) (36)%
</TABLE>
The decrease in 1993 was principally the result of lower U. S. income before
taxes. The decision to sell CBIS Federal resulted in losses which did not
create income tax benefits.
The decrease in 1992 was attributable to lower U.S. income before taxes, the
realization of research and development and foreign sales corporation tax
benefits and higher amortization of investment tax credits.
OTHER FINANCIAL INFORMATION
The Financial Accounting Standards Board has issued SFAS No. 112, "Employers'
Accounting for Postemployment Benefits". Implementation of SFAS 112 is required
in 1994. SFAS 112 requires the accrual of the obligation for benefits provided
to former or inactive employees, their beneficiaries and covered dependents
after employment but before retirement. These benefits include workers'
compensation, disability benefits and health care coverage for a limited time.
SFAS 112 will change the Company's current method of accounting for
postemployment benefits from recognizing costs as benefits are paid to accruing
the expected costs of providing these benefits. The Company estimates that the
adoption of SFAS 112 will increase result in a one-time charge of approximately
$5 million in the first quarter 1994. Preliminary estimates indicate that the
on-going expense recognized under SFAS 112 will not be significantly different
from that recorded under existing methods.
REGULATORY MATTERS
In November 1993, CBT filed modifications to its proposed alternative regulation
plan with the Public Utilities Commission of Ohio ("PUCO"). CBT's original
proposal was filed in May 1993. CBT filed its request under alternative
regulation guidelines that were approved by the PUCO in January 1993, to give
regulated telephone companies the flexibility to price services competitively
and bring services to the market more quickly. The request only applies to Ohio
and Indiana customers. It has not been filed in Kentucky. The May 1993 filing
included a request to raise the prices of most regulated local services by
approximately 9 percent and if approved in its entirety, the proposal would
yield about $17 million in new revenue annually from business and residence
customers.
There is no assurance that the request, in whole or in part, will be
<PAGE>
approved or when any increase would be effective.
CBT presently gives accounting recognition to the actions of regulators where
appropriate, as prescribed by SFAS No. 71, Accounting for the Effects of Certain
Types of Regulation". Under SFAS 71, CBT records certain assets and liabilities
because of the actions of regulators. Amounts charged to operations for
depreciation expense reflect estimated useful lives and methods prescribed by
regulators rather than those that might otherwise apply to unregulated
enterprises. In the event CBT determines that it no longer meets the criteria
for following SFAS 71, the accounting impact to CBT would be an extraordinary
non-cash charge to operations of an amount which would be material. Criteria
that give rise to the discontinuance of SFAS 71 include increasing competition,
which restricts CBT's ability to establish prices to recover specific costs and
a significant change in the manner in which rates are set by regulators from
cost-based regulation to another form of regulation. CBT periodically reviews
these criteria to ensure that continuing application of SFAS 71 is appropriate.
FINANCIAL CONDITION
Cash provided by operating activities in 1993 was $198.1 million compared to
$268.7 million in 1992. The 1992 amount included almost $100 million of
non-recurring cash receipts related to the completion of the NTT project and was
the primary explanation of the $70.6 million decrease between 1992 and 1993.
Lower cash payments for interest and income taxes in 1993 helped to partially
offset the decrease in cash from operating activities. In September 1993, the
Company and First Data Corporation announced an agreement in principle for the
Company to acquire First Data's telephone marketing subsidiary, WATS Marketing
of America. The finalized agreement was signed in November 1993. The cost of
the acquisition was $67.8 million, which included the purchase price of $63
million and $4.8 million of related acquisition costs and working capital
adjustments. The purchase was financed by the issuance of short-term debt. The
agreement contains provisions which could increase the purchase price up to
$87.5 million, if certain conditions are met.
Investing activities used $72.2 million more cash in 1993 compared to 1992.
Capital expenditures were $234.3 million and $147.2 million for 1993 and 1992,
respectively. The 1993 capital expenditures include the acquisition of WATS
Marketing mentioned above. Included in the capital expenditures were
capitalized software costs of $26.2 million and $14.8 million, respectively. In
1994, capital expenditures are expected to be approximately $160 million of
which $95 million is for telephone property, plant and equipment.
<PAGE>
Financing activities provided $29.8 million in 1993 while using $123.9 million
in 1992. In 1993, debt increased as a result of less cash available from
operating activities and additional cash needed for the acquisition of WATS
Marketing. In 1992, debt decreased as a result of using NTT project cash
collections to reduce outstanding debt.
The Company was authorized by its Board of Directors to purchase up to 1,000,000
common shares in open market transactions through December 1993. The Company
acquired 281,000 common shares for $5.5 million during 1993 under this program.
The Company's debt to capitalization ratio at December 31, 1993 was 55.2 percent
compared to 46.3 percent at December 31, 1992. The increase was caused by a
decrease in equity resulting primarily from the special charges and an increase
in debt.
In May 1993, CBT filed a shelf registration with the Securities Exchange
Commission for the issuance of up to $120 million of guaranteed debt securities.
Pursuant to the shelf registration, CBT issued the $120 million during November
and December 1993 with various interest rates and redemption and maturity dates.
The debt securities are guaranteed by the Company on a subordinated basis. The
net proceeds from the sale were used, in part, to reduce CBT' outstanding
indebtedness which was incurred in December 1992 to redeem $75 million of CBT's
long-term debt.
In July 1993, pursuant to a November 1992 shelf registration, the Company issued
$50 million of thirty-year 7.25 percent notes due June 15, 2023. The net
proceeds from the sale were used to reduce the Company's short-term borrowings.
In July 1993, the Western and Southern Life Insurance Company
("Western-Southern") elected to convert the outstanding preferred shares to
common shares. The Company issued 3,157,896 common shares which increased
Western-Southern's ownership of the Company's outstanding common shares to
6,627,696 shares or 10.2 percent of the shares then outstanding.
Western-Southern's ownership has subsequently been reduced to 6,452,696 shares
or 9.9 percent of the shares outstanding at December 31, 1993. The elimination
of the preferred dividend approximately offsets the dilution in earnings per
common share for 1993 that results from issuing these additional common shares.
In July 1993, CBT's debt rating on its senior notes and debentures was lowered
by Duff & Phelps from AA+ to AA-. The deterioration in telephone company's
earnings was the reason
<PAGE>
cited by Duff & Phelps for the change in the rating.
In February 1994, Duff & Phelps said that in light of the CBIS write-offs, which
occurred in the fourth quarter 1993, it would be expanding again its credit
rating review of the Company. At the same time, Moody's Investor Service
lowered the ratings of the Company's senior long-term debt from A-1 to A-2,
citing the continuing difficulties in achieving adequate earnings from its
diversification strategy.
Management believes that the Company has adequate internal and external
resources available to finance its business development, construction and
dividend programs. The Company maintains adequate lines of credit with several
institutions to provide support for borrowings and general corporate purposes.
Inflation did not have a material effect in 1993 on the operations of the
Company. The Company continually attempts to minimize the impact from inflation
through greater productivity and cost improvement programs.
COMPETITION
Regulatory, legislative and judicial decisions, new technologies and the
convergence of other industries with the telecommunications industry are causes
of increasing competition in the telecommunications industry. The range of
communications services, the equipment available to provide and access such
services and the number of competitors offering such services continue to
increase. Federal and state regulators are encouraging changes that promote
competition in the industry. These impacts are expected to make it difficult to
maintain and grow telephone revenues. The telephone company will need to
respond with active programs to market products and reduce costs.
BUSINESS OUTLOOK
Cincinnati Bell operates businesses in several different markets. Each of the
businesses has fluctuations in revenues and operating earnings as the result of
the overall level, timing and terms of many contracts. These circumstances may
increase the variability of financial results on a quarter-to-quarter basis.
Important to the Company's growth is the success of products developed using
CBIS's new "Edge" system, an object-oriented, open-architecture, distributed
processing platform. Precedent 2000, an important product using the CBIS Edge
platform, is expected to be in use by certain customers later in the year. It
is too early to predict the success of this system.
<PAGE>
CBT continues to monitor the technological changes and competitive and
regulatory environment of the telecommunications business and to develop
strategies to address these changes.
CBT is evaluating the way it conducts business in order to further improve
customer responsiveness and quality. CBT is evaluating regulatory changes that
will be needed. Also, CBT is evaluating productively improvement programs that
could involve retraining of employees, re-engineering of systems, restructure of
its organization, resource levels and other operating costs.
As previously announced the Company estimated that earnings for the first
quarter 1994 will be below results for the first quarter 1993. Improvement is
contingent on the following: CBT must successfully navigate new technology,
changes in regulatory policy and the competitive environment; CBIS must improve
operational processes and generate sufficient revenues to recover its software
costs; and, MATRIXX must successfully integrate the WATS acquisition.
The Company will continue to look carefully at its options in each of the
business to improve shareowner value.
<PAGE>
REPORT OF MANAGEMENT
The management of Cincinnati Bell Inc. is responsible for the information and
representations contained in this Annual Report. Management believes that the
financial statements have been prepared in accordance with generally accepted
accounting principles and that the other information in the Annual Report is
consistent with those statements. In preparing the financial statements,
management is required to include amounts based on estimates and judgments which
it believes are reasonable under the circumstances.
In meeting its responsibility for the reliability of the financial statements,
management maintains a system of internal accounting controls which is
continually reviewed and evaluated. Our internal auditors monitor compliance
with it in connection with their program of internal audits. However, there are
inherent limitations that should be recognized in considering the assurances
provided by any system of internal accounting controls. The concept of
reasonable assurance recognizes that the costs of a system of internal
accounting controls should not exceed, in management's judgment, the benefits to
be derived. Management believes that its system provides reasonable assurance
that assets are safeguarded and that transactions are properly recorded and
executed in accordance with management's authorization, that the recorded
accountability for assets is compared with the existing assets at reasonable
intervals, and that appropriate action is taken with respect to any differences.
Management also seeks to assure the objectivity and integrity of its financial
data by the careful selection of its managers, by organizational arrangements
that provide an appropriate division of responsibility, and by communications
programs aimed at assuring that its policies, standards and managerial
authorities are understood throughout the organization.
The financial statements have been audited by Coopers & Lybrand, independent
accountants. Their audit was conducted in accordance with generally accepted
auditing standards.
The Audit Committee of the Board of Directors (see page 60), which is composed
of three directors who are not employees, meets periodically with management,
the internal auditors and Coopers & Lybrand to review the manner in which they
are performing their responsibilities and to discuss auditing, internal
accounting controls and financial reporting matters. Both the internal auditors
and the independent accountants periodically meet alone with the Audit Committee
and have free access to the Audit Committee at any time.
/s/ Brian C. Henry
Executive Vice President and Chief Financial Officer
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREOWNERS OF CINCINNATI BELL INC.
We have audited the accompanying consolidated balance sheets of Cincinnati
Bell Inc. and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, common shareowners' equity and cash flows for
each of the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Cincinnati Bell
Inc. and subsidiaries as of December 31, 1993, and 1992, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1993, in conformity with generally accepted
accounting principles.
As discussed in note (d) to the financial statements, the Company changed its
method of accounting for postretirement benefits other than pensions in 1993.
/s/ Coopers & Lybrand
Cincinnati, Ohio
February 11, 1994
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME Cincinnati Bell Inc.
<TABLE>
<CAPTION>
Thousands of Dollars Except Per Share Amounts Year Ended December 31 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues and Sales
Telephone operations
Local service $ 301,412 $ 290,735 $ 283,859
Network access 129,663 136,365 124,343
Long distance 41,448 33,151 35,884
Other 80,008 111,208 146,213
---------- ---------- ----------
552,531 571,459 590,299
Information systems 309,684 327,901 288,865
Marketing services 107,780 86,563 84,610
Other telecommunications 119,642 115,525 100,913
---------- ---------- ----------
Total revenues and sales 1,089,637 1,101,448 1,064,687
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Operating expenses 603,574 609,433 558,427
Plant and building services 153,614 162,493 158,550
Depreciation and amortization 158,515 137,023 131,850
Taxes other than income taxes 91,037 90,764 88,005
Special charges 101,630 10,545 9,991
---------- ---------- ----------
Total costs and expenses 1,108,370 1,010,258 946,823
---------- ---------- ----------
Operating income (loss) (18,733) 91,190 117,864
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
Other Income (Expense) - Net 9,405 10,947 4,250
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
Interest Expense 45,760 46,158 52,839
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Income Taxes and
Extraordinary Charges (55,088) 55,979 69,275
Income Taxes 1,707 17,042 26,565
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Extraordinary Charges (56,795) 38,937 42,710
Extraordinary Charges, Net of Income Tax Benefit -- (3,690) --
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 35,247 42,710
Preferred Dividend Requirements 2,248 4,350 4,350
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
Income (Loss) Applicable to Common Shares $ (59,043) $ 30,897 $ 38,360
---------- ---------- ----------
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
Weighted Average Number of Common Shares Outstanding (000) 63,296 61,914 61,334
Earnings (Loss) Per Common Share
Income (Loss) Before Extraordinary Charges $ (.93) $ .56 $ .63
Extraordinary Charges -- (.06) --
---------- ---------- ----------
Net Income (Loss) $ (.93) $ .50 $ .63
---------- ---------- ----------
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF COMMON SHAREOWNERS' EQUITY Cincinnati Bell Inc.
<TABLE>
<CAPTION>
Common Shareowners' Equity
---------------------------------------------
Foreign Common
Additional Currency Shares
Common Paid-In Reinvested Translation Outstanding
Thousands of Dollars Except Per Share Amounts Total Shares Capital Earnings Adjustment (000)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1991 $578,610 $ 60,937 $139,400 $378,273 $ -- 60,937
Shares issued under shareowner plans 4,835 218 4,617 -- -- 218
Shares issued under employee plans 10,612 540 10,305 (233) -- 540
Acquisition of shares (1,833) (100) (246) (1,487) -- (100)
Net income 42,710 -- -- 42,710 -- --
Adjustment for foreign currency translation 138 -- -- -- 138 --
Dividends:
Preferred shares 7.25% (4,350) -- -- (4,350) -- --
Common shares $.80 per share (49,128) -- -- (49,128) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1991 581,594 61,595 154,076 365,785 138 61,595
Shares issued under shareowner plans 4,553 256 4,297 -- -- 256
Shares issued under employee plans 7,126 426 6,917 (217) -- 426
Acquisition of shares (5,593) (322) (845) (4,426) -- (322)
Net income 35,247 -- -- 35,247 -- --
Adjustment for foreign currency translation (138) -- -- -- (138) --
Dividends:
Preferred shares 7.25% (4,350) -- -- (4,350) -- --
Common shares $.80 per share (49,556) -- -- (49,556) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992 568,883 61,955 164,445 342,483 -- 61,955
Shares issued under shareowner plans 1,467 64 1,403 -- -- 64
Shares issued under employee plans 1,115 86 1,313 (284) -- 86
Acquisition of shares (5,480) (281) (746) (4,453) -- (281)
Preferred shares converted to common shares 60,000 3,158 56,842 -- -- 3,158
Net income (loss) (56,795) -- -- (56,795) -- --
Adjustment for foreign currency translation (16) -- -- -- (16) --
Dividends:
Preferred shares 7.25% (2,248) -- -- (2,248) -- --
Common shares $.80 per share (51,311) -- -- (51,311) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 $515,615 $ 64,982 $223,257 $227,392 $ (16) 64,982
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Thousands of Dollars at December 31 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 8,668 $ 5,304
Receivables, less allowances of
$14,031 and $6,705, respectively 241,669 219,169
Material and supplies 21,627 27,522
Prepaid expenses 30,391 31,041
Deferred charges 22,471 11,780
---------- ----------
324,826 294,816
---------- ----------
- ----------------------------------------------------------------------------------------------------
Property, Plant and Equipment - At Cost
Telephone plant
In service 1,416,016 1,385,463
Under construction 14,806 23,418
---------- ----------
1,430,822 1,408,881
Less: Accumulated depreciation (541,690) (525,215)
---------- ----------
889,132 883,666
---------- ----------
Other property 303,917 253,988
Less: Accumulated depreciation
and amortization (145,480) (100,846)
---------- ----------
158,437 153,142
---------- ----------
1,047,569 1,036,808
---------- ----------
- ----------------------------------------------------------------------------------------------------
Other Assets
Intangibles, primarily goodwill-net 192,161 223,751
Deferred charges and other 56,504 33,967
Other investments 43,030 45,179
---------- ----------
291,695 300,897
---------- ----------
- ----------------------------------------------------------------------------------------------------
Total Assets $1,664,090 $1,632,521
---------- ----------
---------- ----------
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Cincinnati Bell Inc.
<TABLE>
<CAPTION>
Thousands of Dollars at December 31 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities and Invested Capital
Current Liabilities
Debt maturing within one year $ 112,029 $ 192,962
Accounts payable 132,648 108,797
Accrued disposal and restructuring costs 35,385 10,545
Accrued taxes 38,135 33,538
Advance billing and customers' deposits 31,553 26,464
Accrued compensated absences 7,414 19,404
Other 17,173 17,234
---------- ----------
374,337 408,944
---------- ----------
- ----------------------------------------------------------------------------------------------------
Long-Term Debt 522,888 350,069
- ----------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Deferred income taxes 158,438 144,391
Unamortized investment tax credits 19,371 22,258
Other 73,441 77,976
---------- ----------
251,250 244,625
---------- ----------
- ----------------------------------------------------------------------------------------------------
Commitments and Contingencies
- ----------------------------------------------------------------------------------------------------
Preferred Shares Subject to Mandatory Redemption -- 60,000
- ----------------------------------------------------------------------------------------------------
Common Shareowners' Equity
Common shares - $1.00 par value 64,982 61,955
Authorized shares: 240,000,000
Outstanding shares: 1993 - 64,982,178
1992 - 61,954,967
Additional paid-in capital 223,257 164,445
Reinvested earnings 227,392 342,483
Foreign currency translation adjustment (16) --
---------- ----------
515,615 568,883
---------- ----------
- ----------------------------------------------------------------------------------------------------
Total Liabilities and Invested Capital $1,664,090 $1,632,521
---------- ----------
---------- ----------
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS Cincinnati Bell Inc.
<TABLE>
<CAPTION>
Thousands of Dollars Year Ended December 31 1993 1992 1991
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ (56,795) $ 35,247 $ 42,710
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 158,515 137,023 131,850
Special charges 101,630 10,545 9,991
Provision for loss on receivables 14,614 8,225 9,772
Extraordinary charges -- 5,591 --
Other-net (2,122) 6,830 18,158
Change in assets and liabilities net of effects
from acquisitions:
Decrease (increase) in receivables (11,354) 55,801 (39,458)
Decrease (increase) in other current assets 12,677 26,652 (25,808)
Increase (decrease) in accounts payable 9,083 (5,259) 5,152
Increase (decrease) in other current liabilities (2,816) (12,848) 12,235
Decrease in deferred income taxes and
unamortized investment tax credits (6,850) (6,061) (4,324)
Decrease (increase) in other assets and
liabilities-net (18,440) 6,941 19,523
--------- --------- ---------
Net cash provided by operating activities 198,142 268,687 179,801
--------- --------- ---------
- ----------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Capital expenditures - telephone plant (109,279) (103,896) (103,131)
Capital expenditures - other (57,206) (43,318) (58,524)
Payments made for acquisitions, net of cash
acquired (67,795) -- (4,653)
Other-net 9,683 (5,190) 4,184
--------- --------- ---------
Net cash used in investing activities (224,597) (152,404) (162,124)
--------- --------- ---------
- ----------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from long-term debt 169,615 99,956 --
Redemption of long-term debt -- (169,168) --
Principal payments on long-term debt (28,115) (3,465) (2,676)
Proceeds from (payments on) notes payable (55,467) (3,445) 32,842
Proceeds from issuance of common shares 2,582 11,679 15,447
Dividends paid (53,294) (53,853) (52,740)
Payments made to acquire common shares (5,480) (5,593) (1,833)
--------- --------- ---------
Net cash provided by (used in) financing
activities 29,841 (123,889) (8,960)
--------- --------- ---------
- ----------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash
equivalents (22) (662) 786
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 3,364 (8,268) 9,503
Cash and cash equivalents at beginning of year 5,304 13,572 4,069
--------- --------- ---------
Cash and cash equivalents at end of year $ 8,668 $ 5,304 $ 13,572
--------- --------- ---------
--------- --------- ---------
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(a) Accounting Policies
The consolidated financial statements of Cincinnati Bell Inc.
reflect the application of the accounting policies described in
this note. These statements have been prepared in conformity
with generally accepted accounting principles.
Certain reimbursable costs previously recorded as information
systems revenues have been reclassified as a reduction of
operating expenses. The reclassification amounted to $43.2
million, $34.9 million and $23.3 million for 1993, 1992 and
1991, respectively. This reclassification had no effect on
operating income (loss) or net income (loss) for all periods
presented. In addition to the information systems revenues,
certain prior year amounts have been reclassified to be
consistent with the 1993 presentation.
Consolidation - These consolidated financial statements
include the accounts of Cincinnati Bell Inc. and its wholly
owned subsidiaries (the "Company"). The significant
subsidiaries include: Cincinnati Bell Telephone Company
("CBT"), Cincinnati Bell Information Systems Inc. ("CBIS") and
MATRIXX Marketing Inc. ("MATRIXX"). Investments in certain
partnerships and joint ventures are accounted for using the
equity method. The Company has a 45 percent interest in a
limited partnership which provides cellular mobile telephone
service to an area of Southern Ohio with a population of over
four million people. The Company's share of income from such
investments is included in Other Income (Expense) - Net in the
Consolidated Statements of Income. All significant intercompany
transactions and balances have been eliminated in consolidation.
Regulatory Accounting - CBT follows the accounting for
regulated enterprises under Statement of Financial Accounting
Standards ("SFAS") 71, "Accounting for the Effects of Certain
Types of Regulation". This accounting reflects the rate actions
of regulators in the financial statements. The rate actions can
provide reasonable assurance of the existence of an asset,
reduce or eliminate the value of an asset, or impose a
liability. Actions of a regulator can also eliminate a
liability previously imposed by the regulator. The Company
continually reviews the applicability of SFAS 71 based on the
developments in its current regulatory
<PAGE>
and competitive environment.
Foreign Currency Translation - Assets and liabilities of
foreign subsidiaries are translated to U.S. dollars at year-end
exchange rates and revenue and expense items are translated at
average rates of exchange prevailing during the year. The
foreign currency translation adjustments are recorded in a
separate component of shareowners' equity.
Financial Instruments - Certain foreign currency transactions
are designated as effective hedges of the net investment in
foreign subsidiaries. The related gains and losses are included
in the foreign currency translation adjustment account. Foreign
currency transaction gains and losses related to forward
contracts that are designated and effective as hedges are
deferred and recognized with the assets, liabilities or
transactions being hedged. All other foreign currency
transaction gains and losses are reflected in income. The
interest rate differential to be paid or received on interest
rate swap agreements is accrued as interest rates change and is
recognized as an adjustment of interest expense.
Cash Equivalents - Cash equivalents represent highly liquid
debt instruments with original maturities of three months or
less and are stated at cost, which approximates market value.
Material and Supplies - New and reusable material, related to
the regulated telephone operations, are carried in inventory at
average original cost, except that specific costs are used in
the case of large individual items. Nonreusable material is
carried at estimated salvage value. All other material and
supplies are stated at the lower of cost or market principally
on an average cost basis.
Property, Plant and Equipment - Property, plant and equipment
is stated at its original cost and does not purport to represent
reproduction costs or current value. Telephone plant dedicated
to providing communication services, other than minor items
thereof which are replaced, is retired at the amount at which
such plant has been carried in telephone plant in service and is
charged to accumulated depreciation.
The Company's provision for depreciation of telephone plant is
based on the remaining life method of depreciation and straight-
line composite rates. The remaining life method provides for
the full recovery of the investment in telephone plant.
Provision for depreciation of other property is based on the
straight-line method over the estimated useful life.
<PAGE>
Software Development Costs - Research and development
expenditures are charged to expense as incurred. The
development costs of software to be marketed are charged to
research and development expense until technological feasibility
is established. After that time, the remaining software
production costs are capitalized as Other Property in the
Consolidated Balance Sheets. Amortization of the capitalized
amounts is computed on a product-by-product basis using the
straight-line method over the remaining estimated economic life
of the product. Reductions in the carrying value of capitalized
software costs to net realizable value are also included in
amortization expense.
Intangibles, Primarily Goodwill-Net - Intangible assets
consists primarily of goodwill, which represents the excess of
the purchase price over the fair value of net assets acquired in
business combinations accounted for using the purchase method.
These amounts are amortized on a straight-line basis over
periods benefited, principally in the range of twenty to forty
years. Other intangible assets are amortized on a straight-line
basis over periods of five to nine years. Accumulated
amortization of intangible assets at December 31, 1993 and 1992
was $49 million and $40 million, respectively. The Company
periodically evaluates the carrying amount of its recorded
goodwill related to acquired businesses. Management uses their
best estimate of the future cash flows expected to result from
the operations of the business and its eventual disposition. If
future expected undiscounted net cash flows are insufficient to
recover the carrying amount of the asset, then an impairment
loss is recognized.
Revenue Recognition - Local telephone service revenues are
generally billed monthly in advance and revenues are recognized
in the following month when services are provided. Software
license revenue is recognized at the time of delivery if the
Company does not have to provide additional significant service
under the contract. All anticipated future costs under the
contract are accrued at the time the revenue is recognized. If
the contract requires significant additional obligations in
addition to the delivery of the software license, the Company
recognizes revenue under the percentage of completion method of
accounting. Information systems maintenance revenue is
generally recognized over the term of the agreement. All other
revenues are recognized when services are performed regardless
of the period in which they are billed.
<PAGE>
Income Taxes - The provision for income taxes consists of an
amount for taxes currently payable and a provision for tax
consequences deferred to future periods.
During 1992, the Company implemented the provisions of SFAS
109, "Accounting for Income Taxes". SFAS 109 supersedes SFAS 96
which the Company had adopted in 1990. The Statement requires
the use of the asset and liability approach for financial
accounting and reporting for income taxes. CBT has recorded a
regulatory asset and liability to recognize the cumulative
effects of ratemaking activities. Financial statements for 1991
have not been restated and the cumulative effect of the
accounting change was not material.
For financial statement purposes, deferred investment tax
credits of CBT are being amortized as a reduction of the
provision for income taxes over the estimated useful lives of
the related property, plant and equipment.
Earnings (Loss) Per Common Share - Earnings (loss) per common
share are calculated by using the weighted average number of
common shares outstanding. The dilutive effect of the Company's
common share equivalents (shares under option) is insignificant.
<PAGE>
- --------------------------------------------------------------------------------
(b) Special Charges - CBIS Operations
In late 1993, the Company determined the need to reorganize
CBIS, its information systems subsidiary. This reorganization
focused on two phases. The first phase was the elimination of
non-strategic and underperforming operations. This resulted in
CBIS taking action to divest its holdings in its federal
operation (CBIS Federal), consolidating its foreign data center
operations, and eliminating unprofitable domestic and
international activities. The second phase of the plan was to
reorganize the remaining operations into strategic business
units. These actions began in 1993 and are expected to be
completed in 1994.
These actions taken by CBIS resulted in recording special
charges amounting to approximately $102 million ($88 million
after tax, or $1.39 per common share) for divesting of its
federal operations and restructuring the operations of CBIS.
The decision to sell CBIS Federal resulted in charges of $86
million that include the expected loss on the sale, projected
operating losses through estimated date of sale, and other sale
related expenses. CBIS Federal provides information services to
governmental agencies and employs approximately 1,000 employees.
In addition to the charges related to the sale of CBIS
Federal, CBIS also recorded approximately $16 million of charges
for restructuring the remainder of its operations. The charges
include employee severence costs of approximately $4 million, $6
million of fixed asset write-offs, and $6 million in costs
associated with discontinuing unprofitable domestic and
international business ventures.
Included in the $102 million of special charges are
approximately $68 million of charges that do not require future
cash outlays. The write-off of approximately $63 million of
unamortized goodwill accounted for the majority of the non-cash
charges.
The net assets of the operations to be disposed or
discontinued consist of $26 million of net current assets and
$10.2 million of net non-current assets as of December 31, 1993.
These amounts consist primarily of accounts receivable,
property, plant and equipment and related liabilities. Included
in the Consolidated Statements of Income for the year ended
December 31, 1993 are $67.4 million of revenues and $88.6
million of expenses related to the operations to be disposed or
discontinued.
<PAGE>
In the fourth quarter of 1992, CBIS recorded special charges
totaling $10.5 million for the consolidation of its European
operations. Included in these charges were write-offs of fixed
assets, lease termination payments, employee severance and
relocation costs and estimated operating losses.
In the fourth quarter of 1991, the Company recorded special
charges of approximately $10 million to expense special
termination benefits related to an early retirement incentive
package, employee severance costs for involuntary separations
and other related costs. Of this amount, $6 million was
recorded at CBIS.
Also, during the fourth quarter 1993, the Company recorded
significant other charges unrelated to the restructuring of
CBIS. CBIS has accrued and included in operating expenses $5.1
million of costs to withdraw from certain international
contracts and products. CBIS also recorded additional software
amortization expense of $12 million in the fourth quarter 1993
and $5 million in the third quarter of 1993 related to the
write-down of capitalized software costs to net realizable value
(see note (f)).
In addition, a $4.2 million reserve for losses has been
established related to an investment in and loans to an
international distributor of CBIS products and services. These
charges are included in Other Income (Expense)-net.
<PAGE>
- -------------------------------------------------------------------------------
(c) Income Taxes
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Thousands of Dollars Year Ended December 31 1993 1992 1991
------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $19,113 $18,482 $32,475
Foreign 1,658 512 1,028
State and Local 2,282 3,327 2,556
------- ------- -------
Total current 23,053 22,321 36,059
------- ------- -------
Deferred:
Federal (14,592) (1,593) (7,932)
State and Local 15 (419) 520
------- ------- -------
Total deferred (14,577) (2,012) (7,412)
------- ------- -------
Investment tax credits (2,888) (3,267) (2,082)
------- ------- -------
Adjustment of valuation allowance related
to net operating and capital losses (3,881) -- --
------- ------- -------
Total $ 1,707 $17,042 $26,565
------- ------- -------
------- ------- -------
</TABLE>
The components of the Company's deferred tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
Thousands of Dollars at December 31 1993 1992
------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax asset:
Unamortized investment tax credit $10,432 $11,468
Net operating loss carryforwards 7,510 6,711
Deferred tax consequences of net
regulatory liability 4,823 7,152
Allowance for doubtful accounts 3,321 892
Accrual for disposal and restructuring costs 12,964 3,077
Accrued rent liability 3,969 2,231
FCC complaint 3,779 --
Property, plant and equipment depreciation
and amortization 3,194 3,352
Accrual for compensated absences 1,102 3,323
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Other 10,200 5,605
-------- --------
61,294 42,919
Less: Valuation allowance (3,391) (6,711)
-------- --------
Net deferred tax asset 57,903 36,208
-------- --------
Deferred tax liability:
Property, plant and equipment depreciation
and amortization 164,080 149,589
Basis differences on items previously flowed
through to ratepayers 15,914 16,961
Accrual for property taxes 2,496 7,838
Other 5,620 1,748
-------- --------
Total deferred tax liability 188,110 176,136
-------- --------
Total net deferred tax liability $130,207 $139,928
-------- --------
-------- --------
</TABLE>
The Company's deferred tax asset valuation allowance decreased
approximately $3.3 million in 1993 principally as a result of
certain business strategies involving the Company's operations
in France.
During 1991, deferred income taxes were provided for
significant temporary differences in the recognition of certain
expenses for tax and financial statement purposes. These items,
in thousands of dollars, for the year ended December 31, 1991,
consisted of the following:
<TABLE>
<S> <C>
Depreciation $ 4,265
Compensated absences (1,430)
Property taxes 1,142
Capital loss (1,700)
Pension and employee benefits (7,409)
Other (2,280)
-------
Total $(7,412)
-------
-------
</TABLE>
The following is a reconciliation of the statutory Federal
income tax rate of 35% for 1993 and 34% for 1992 and 1991
with the effective tax rate for each year:
<TABLE>
<CAPTION>
1993 1992 1991
-----------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Federal statutory rate (35.0%) 34.0% 34.0%
Plant basis differences, net of depreciation 2.0 2.0 2.0
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Amortization of investment tax credits (5.2) (5.8) (2.3)
Rate differential on reversing temporary
differences (4.0) (3.0) (3.0)
Disposal losses without income tax benefit 40.0 -- --
Amortization of intangible assets 5.2 4.3 3.8
Foreign subsidiaries' losses for which no tax
benefit has been recognized -- 2.6 3.2
Change in valuation allowance (6.0) -- --
State and local income taxes, net of federal
income tax benefit 2.7 3.4 2.9
Research and development tax credit (4.1) (2.3) --
Taxes related to prior years 5.6 -- --
Other differences 1.9 (4.8) (2.3)
----- ----- -----
Effective rate 3.1% 30.4% 38.3%
----- ----- -----
----- ----- -----
</TABLE>
The Omnibus Budget Reconciliation Act of 1993, which was
enacted in August 1993, increased the Federal income tax rate
to 35 percent effective January 1, 1993. Pursuant to SFAS
71, the effect of the income tax rate increase on the
deferred tax balances of CBT was primarily deferred through
the establishment of regulatory assets of $.5 million and the
reduction of regulatory liabilities of $5.6 million. The
effect of the income tax rate increase on the deferred tax
balances of the other subsidiaries was not material to the
financial statements.
At December 31, 1993 and 1992, the liability for income
taxes includes approximately $16 million and $17 million,
respectively, representing the cumulative amount of income
taxes on temporary differences which were previously flowed
through to ratepayers. CBT also recorded a corresponding
regulatory asset on the balance sheet for these items,
representing amounts which will be recovered through the
ratemaking process, which is recorded in Deferred Charges and
Other. These deferrals have been increased for the tax
effect of the future revenue requirement and will be
amortized over the lives of the related depreciable assets
concurrently with their recovery in rates.
In addition, Other Deferred Credits and Liabilities
includes a regulatory liability at December 31, 1993 and 1992
of approximately $34.5 million and $45.1 million,
respectively. A substantial portion of the regulatory
<PAGE>
liability represents the excess deferred taxes on depreciable
assets, resulting primarily from the reduction in the
statutory federal income tax rate from 46 percent to 35
percent. This amount will be amortized over the lives of the
related depreciable assets in accordance with the average
rate assumption method required by the Tax Reform Act of
1986. Another item included in the regulatory liability is
associated with unamortized investment tax credits. This
amount will be amortized in the same manner as the underlying
investment tax credits. These regulatory liabilities have
been increased to reflect future revenue requirement levels.
The Company has net operating loss carryforwards applicable
to foreign subsidiaries at December 31, 1993 and 1992 of
approximately $19.4 million and $16.7 million, respectively.
Net operating loss carryforwards acquired through a business
combination with a domestic subsidiary are approximately $3.0
million at December 31, 1993 and 1992. Utilization of both
the U.S. and foreign carryforwards is dependent upon future
earnings of each subsidiary with foreign carryforwards
expiring 1994 through 2003 and the U.S. carryforwards
expiring in 2003 through 2005. The Company has capital loss
carry forwards of approximately $4.7 million at December 31,
1993. Utilization of these capital losses is dependent upon
the generation of future capital gains with the carryforwards
expiring in 1996 through 1998.
<PAGE>
- -------------------------------------------------------------------------------
(d) Employee Retirement and Postemployment Benefits
PENSIONS
The Company sponsors three noncontributory defined benefit
pension plans: one for eligible management employees, one
for nonmanagement employees and one supplementary,
nonqualified, unfunded plan for certain senior managers. The
pension benefit formula for the management plan was based on
a stated percentage of adjusted career income for retirees
prior to 1993. Effective December 31, 1993, the management
pension plan change the method of calculating the defined
benefit payable at retirement date to a cash balance benefit.
The annual credits are based on a combination of age, rate of
pay, the Social Security Taxable Wage Base and annual
guaranteed interest credits. Further, the supplementary
death benefit payable from the pension plan was frozen at the
December 31, 1993 compensation level. The benefit formula
for the nonmanagement plan is based on a flat dollar amount
according to job classification times years of service.
Benefits for the supplementary plan are based on years of
service and eligible pay.
Funding of the management and nonmanagement plans is
achieved through contributions made to an irrevocable trust
fund. The contributions are determined in accordance with
the Aggregate Cost Method.
The Company uses the Projected Unit Credit Cost Method for
determining pension cost for financial reporting purposes and
accounts for certain benefits provided under early retirement
packages discussed below as a special termination benefit.
Pension cost includes the following components:
<TABLE>
<CAPTION>
Thousands of Dollars Year Ended December 31 1993 1992 1991
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned during
the period) $ 10,045 $ 12,605 $ 14,520
Interest cost on projected benefit
obligations 40,270 39,874 34,933
Actual return on plan assets (79,576) (64,852) (111,179)
Amortization and deferrals - net 29,424 15,091 63,451
Charge to expense for special
termination benefits 7,616 -- 2,760
Settlement gain (7,901) -- --
-------- -------- ---------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Pension cost (income) $ (122) $ 2,718 $ 4,485
-------- -------- --------
-------- -------- --------
</TABLE>
The following table sets forth the plans' funded status:
<TABLE>
<CAPTION>
Thousands of Dollars at December 31 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated benefit
obligations including vested benefits of
$458,415 and $409,772, respectively $515,807 $465,531
-------- --------
-------- --------
Plan assets at fair value (primarily listed
stocks, bonds and real estate, including
$62,230 and $59,205, respectively in common
shares of Cincinnati Bell Inc.) $706,385 $689,839
Actuarial present value of projected benefit
obligation (557,192) (534,556)
-------- --------
Excess of assets over projected benefit
obligation 149,193 155,283
Unrecognized prior service cost 7,818 23,021
Unrecognized transition asset (45,292) 52,770
Unrecognized net gain (92,997) 114,233
Recognition of minimum liability (8,946) 8,527
-------- --------
Prepaid pension cost $ 9,776 $ 2,774
-------- --------
-------- --------
</TABLE>
The Company used the following rates in determining the
actuarial present value of the projected benefit obligation
and pension cost:
<TABLE>
<CAPTION>
At December 31 1993 1992 1991
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate - projected benefit obligation 7.25% 8.00% 8.00%
Future compensation growth rate 4.00% 5.00% 5.00%
Expected long-term rate of return on plan assets 8.25% 8.25% 8.25%
</TABLE>
Pension cost has been determined in such a manner as to
anticipate that improvements in the pension plans will
continue in the future. In the event of a change of control
of the Company, the excess plan assets are to be used
<PAGE>
solely for providing pension benefits or post-retirement
medical benefits for a period of five years.
Collective bargaining was completed with the Communication
Workers of America in May 1993. As a result of the
bargaining, nonmanagement pension plan participants were
granted an increase in the flat dollar pension amount of 5
percent effective October 1, 1993, an additional 5 percent
effective October 1, 1994 and an additional 4 percent
effective October 1, 1995. Further, the supplementary death
benefit payable from the pension plan was frozen at the
December 31, 1993 compensation level.
In November 1991, the Company offered an early retirement
incentive package to certain management employees. The
package included an amendment to the management pension plan
which was accounted for as a special termination benefit.
The impact of the workforce reduction on 1991 earnings,
including the special termination benefit, severance pay
related to involuntary separations and related costs, reduced
net income by approximately $7 million or, $.11 per common
share.
In December 1992, the Company offered a voluntary
separation incentive package to certain management employees.
The package provided for enhancements to the benefit payments
of the management pension plan or allowed for a lump sum
payment. There were 137 employees who accepted the offer in
1993 and as a result, the Company recorded an expense for
special termination benefits of $7.6 million and a settlement
gain of $7.9 million.
EMPLOYEE POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides health care and group life insurance
benefits for its retired employees. Substantially all the
Company's employees may become eligible for these benefits if
they retire with a service pension. Effective January 1,
1993, the Company adopted SFAS 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions". SFAS 106
requires that the cost of the net periodic postretirement
benefit is to be recognized in the period in which employees
render services necessary to earn such benefits. Prior to
1993, the Company's accrual method did not consider the
health care inflation factor in the calculation of future
benefits as required by SFAS 106. The Company used the
Projected Unit Credit Cost Method for the determination of
postretirement health care and life insurance benefits cost.
In adopting SFAS 106, the Company elected to amortize the
accumulated postretirement benefit obligation over twenty
<PAGE>
years.
The Company has funded its group life insurance benefits
through Retirement Funding Accounts ("RFAs") for many years
and began funding trusts for health care benefits in 1989
using Voluntary Employee Benefit Associations ("VEBAs").
Contributions are determined in accordance with the Aggregate
Cost Method. The associated plan assets, primarily corporate
securities and bonds and temporary investments, were
considered in determining the transition obligation under
SFAS 106. The investments held by the management VEBAs earn
income after a deduction for income taxes, whereas the
nonmanagement VEBAs and RFAs earn income without tax. The
Company intends to continue to fund the VEBAs and RFAs, and
is exploring other available funding and cost containment
alternatives.
The components of postretirement benefit cost for the year
ended December 31, 1993, in thousands of dollars, are as
follows:
<TABLE>
<S> <C>
Service cost (benefits earned during the period) $ 2,431
Interest cost on accumulated postretirement
benefit obligation 13,283
Actual return on plan assets (5,369)
Amortization and deferrals - net 9,495
--------
Postretirement benefit cost $ 19,840
--------
--------
</TABLE>
The funded status of the plans, in thousands of dollars, at
December 31, 1993:
<TABLE>
<S> <C>
Retirees and dependents $130,143
Fully eligible active participants 18,272
Other active participants 47,632
--------
Total Accumulated postretirement benefit obligation 196,047
Less: plan assets at fair value 46,926
--------
Accumulated postretirement benefit obligation
in excess of plan assets 149,121
Less: unrecognized transition obligation 129,063
Less: unrecognized net loss 19,407
--------
Accrued postretirement benefit obligation $ 651
--------
--------
</TABLE>
The assumed discount rate used to measure the accumulated
postretirement benefit obligation was 7.25 percent. The
expected long-term rate of return on plan assets was 8.25
percent on VEBAs and 8.0 percent on RFAs. The
<PAGE>
assumed health care cost trend rate used to measure the
postretirement health benefit obligation at December 31, 1993
was 9 percent and is assumed to decrease gradually to 4.5
percent. A one percent increase in the assumed health care
cost trend rate would have increased the aggregate of the
service and interest cost components of 1993 postretirement
health benefits by approximately $.6 million, and would
increase the accumulated postretirement benefit obligation as
of December 31, 1993, by approximately $8 million.
Collective bargaining was completed with the Communication
Workers of America in May 1993. As a result of the
bargaining agreement, bargained employees reimbursement of
the Medicare Part B was capped at $50 per month. The
provision for retiree contributions in excess of the
Company's reimbursement was amended. Retiree contributions
shall not begin before January 1, 1997.
As of December 31, 1993, the Company had approximately
2,500 retirees eligible to receive health care and group life
insurance benefits.
A substantial portion of the cost recognized under SFAS 106
is related to the Company's telephone subsidiary, CBT, which
is subject to rate regulation. In April 1993, CBT received
approval from the Public Utilities Commission of Ohio
("PUCO") to defer the incremental SFAS 106 costs, subject to
certain return on equity limits. Deferrals began January 1,
1993, and will cease the earliest of December 31, 1997, the
day prior to the effective date of rates which include
postretirement costs on a SFAS 106 basis, or the date of the
Company's consent to or withdrawal of a PUCO approved
alternative regulation plan currently pending. During 1993,
CBT recorded approximately $3.6 million in postretirement
benefit cost as a regulatory asset related to the recovery of
future incremental costs. The recording of a regulatory
asset is in accordance with SFAS 71.
Prior to the adoption of SFAS 106, the Company had accrued
and funded an actuarially determined amount. For the years
1992 and 1991, postretirement health care and life insurance
benefit expense were approximately $10.2 million and $7.6
million, respectively. The effect of adoption of SFAS 106 on
1993 results (excluding the amounts deferred by CBT) was to
increase postretirement expense by approximately $6 million
or $.06 per common share.
<PAGE>
SAVINGS PLANS
The Company sponsors several defined contribution plans
covering substantially all employees. The Company's
contributions to the plans are based on matching a portion of
the employee contributions or on a percentage of employee
earnings or net income for the year. Total Company
contributions to the defined contribution plans were $7.3
million, $7.9 million and $7.2 million for 1993, 1992 and
1991, respectively.
EMPLOYEE POSTEMPLOYMENT BENEFITS
The Financial Accounting Standards Board issued SFAS 112,
"Employers Accounting for Postemployment Benefits".
Implementation of SFAS 112 is required in 1994. SFAS 112
requires the accrual of the obligation for benefits provided
to former or inactive employees, their beneficiaries and
covered dependents after employment but before retirement.
These benefits include workers' compensation, disability
benefits and health care coverage for a limited time. SFAS
112 will change the Company's current method of accounting
for postemployment benefits from recognizing costs as
benefits are paid, to accruing the expected costs of
benefits. The Company estimates that the adoption of SFAS
112 will result in a one-time charge of approximately $5
million in the first quarter 1994. Preliminary estimates
indicate that the on-going expense recognized under SFAS 112
will not be significantly different from that recorded under
existing methods.
<PAGE>
- -------------------------------------------------------------------------------
(e) Extraordinary Charges
On August 15, 1992, the Company redeemed $90 million of 8
5/8 percent notes due July 1997 at a redemption price of
101.5 percent of the principal amount. The call premium
paid, associated call expenses and the unamortized note issue
costs and issue discount reduced Net Income by $1.7 million
or $.03 per common share.
On December 24, 1992, CBT redeemed $35 million of 8 3/8
percent debentures due October 2009 at a redemption price of
102.38 percent of the principal amount and $40 million of
9.60 percent debentures due October 2015 at a redemption
price of 104.94 percent of the principal amount. The call
premiums paid, associated call expenses and the unamortized
note issue costs and issue discounts reduced Net Income by $2
million or $.03 per common share.
The charges resulting from the above redemptions were
recognized as extraordinary charges in the Consolidated
Statements of Income.
<PAGE>
- -------------------------------------------------------------------------------
(f) Software Development Costs
Capitalized software costs, net of amortization, amounted
to $35.3 million and $34.7 million at December 31, 1993 and
1992, respectively. The Company incurred product development
costs totaling approximately $29.9 million, $14.3 million and
$6.7 million, which were expensed in 1993, 1992 and 1991,
respectively. Amortization amounted to $25.8 million, $4.8
million and $14.0 million for 1993, 1992 and 1991,
respectively, and is included in depreciation and
amortization expense. Included in amortization expense were
charges of approximately $5 million and $12 million the
Company recorded during the third and fourth quarter 1993,
respectively, to reduce the carrying value of certain
capitalized software costs to net realizable value. Included
in amortization expense for 1991 is a charge of approximately
$10.5 million to reduce the carrying value of capitalized
software costs to net realizable value.
<PAGE>
- -------------------------------------------------------------------------------
(g) Debt Maturing Within One Year and Lines of Credit
Debt maturing within one year consists of the following:
<TABLE>
<CAPTION>
Thousands of Dollars at December 31 1993 1992 1991
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Notes Payable
Commercial paper $ 91,420 $140,047 $168,200
Other 18,200 25,041 489
Current maturities of long-term debt 2,409 27,874 4,151
-------- -------- --------
Total $112,029 $192,962 $172,840
-------- -------- --------
-------- -------- --------
Weighted Average Interest Rates on
Notes Payable 3.3% 3.4% 4.7%
</TABLE>
Average notes payable and the related interest rates for the
last three years are as follows:
<TABLE>
<CAPTION>
Thousands of Dollars 1993 1992 1991
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Average amounts of notes payable
outstanding during the year* $162,504 $158,251 $170,535
Weighted average interest rate
during the year** 3.2% 3.8% 6.0%
Maximum amounts of notes payable at
any month-end during the year $202,475 $209,823 $184,039
<FN>
* Amounts represent the average daily face amount of notes.
** Weighted average interest rates are computed by dividing
the daily average face amount of notes into the aggregate
related interest expense.
</TABLE>
At December 31, 1993, the Company had approximately $170
million of unused bank lines of credit, which are available
to provide support for commercial paper borrowings. These
lines of credit are available for general corporate purposes.
There are no material compensating balances or commitment fee
agreements under these credit arrangements.
<PAGE>
- --------------------------------------------------------------------------------
(h) Long-Term Debt
Interest rates and maturities of long-term debt outstanding,
at December 31, in thousands of dollars, were as follows:
<TABLE>
<CAPTION>
Description 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C>
Debentures/Notes
Year of Maturity Interest Rate
---------------- -------------
1993 4 1/2 $ -- $ 25,000
1996 7.30 40,000 40,000
1997 6.70 100,000 100,000
1999 8 5/8 40,000 40,000
2000 9.10 75,000 75,000
2002 4 3/8 20,000 20,000
2003 6.24 20,000 --
2005 6.33 20,000 --
2011 7 3/8 50,000 50,000
2023 7 1/4 50,000 --
2023 7.18-7.27 80,000 --
Capital lease obligations 29,986 26,982
Other 919 1,222
Unamortized discount-net (608) (261)
Less: Current maturities of
long-term debt (2,409) (27,874)
-------- --------
Total $522,888 $350,069
-------- --------
-------- --------
</TABLE>
In November 1992, the Company filed a shelf registration
statement with the Securities and Exchange Commission ("SEC")
for the sale of up to $150 million in debt securities with
terms to be determined at the time of sale. Pursuant to the
shelf registration, the Company issued $100 million of 6.70
percent unsecured notes on December 15, 1992 which will
mature in December 1997 and $50 million of 7 1/4 percent
unsecured notes on July 12, 1993 which will mature in June
2023. The proceeds were used to reduce short-term notes
payable and for other general corporate purposes.
CBT filed a shelf registration on May 5, 1993 with the SEC
for the
<PAGE>
issuance of up to $120 million in debt securities. Pursuant
to the shelf registration, CBT has issued $120 million of
notes during November and December 1993 with various interest
rates and redemption and maturity dates. The debt securities
are guaranteed by the Company on a subordinated basis. The
net proceeds from the sale were used, in part, to reduce
CBT's outstanding indebtedness which was incurred in December
1992 to redeem $75 million of CBT's long-term debt.
<PAGE>
- --------------------------------------------------------------------------------
(i) Off-Balance-Sheet Risk and Concentration of Credit Risk
The Company has entered into a foreign currency and
interest rate swap agreement with Morgan Guaranty Trust
Company of New York to reduce the impact of changes in
interest rates and currency translation rates. At December
31, 1993, the Company had outstanding a currency and interest
rate swap agreement with a notional principal amount of
225,000,000 French francs which will be swapped for
approximately $41.7 million in the year 2000. This agreement
effectively changed the Company's interest rate exposure on a
portion of its variable rate short-term borrowings to a long-
term fixed rate and reduced the currency risk associated with
non-U.S. dollar denominated assets.
The Company continually monitors its positions and the
credit ratings of its contracting parties. While the Company
may be exposed to credit losses in the event of
nonperformance by its contracting parties, it does not expect
to incur such losses.
<PAGE>
- --------------------------------------------------------------------------------
(j) Fair Value of Financial Instruments
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for
which it is practicable to estimate that value:
Cash and cash equivalents, commercial paper and short-term
notes payable - the carrying amount approximates fair value
because of the short maturity of those instruments.
Long-term debt - the fair value of long-term debt is
estimated based on the quotes for similar liabilities
obtained from an underwriter.
Foreign currency and interest rate swap agreement - the
fair value of foreign currency and interest rate swaps (used
for hedging purposes) is the estimated amount that the
Company would receive or (pay) to terminate the swap
agreements at the reporting date, taking into account current
currency translation and interest rates and the current
credit-worthiness of the swap counterparty.
Cash and cash equivalents have both a carrying value and an
estimated fair value of $8.7 at December 31, 1993 and $5.3
million at December 31, 1992.
Commercial paper and short-term notes payable have both a
carrying value and an estimated fair value of $109.6 million
at December 31, 1993 and $165.3 million at December 31, 1992.
Long-term debt had a carrying value of $495.3 million and
an estimated fair value of $513.0 million at December 31,
1993. Long-term debt had a carrying value of $351.0 million
and an estimated fair value of $358.8 million at December 31,
1992.
As described in note (i) the Company has entered into a
foreign currency and interest rate swap agreement. At
December 31, 1993 and 1992, if the Company had closed its
position on this agreement, additional costs of approximately
$9.9 million and $6.7 million, respectively, would have been
incurred.
<PAGE>
- --------------------------------------------------------------------------------
(k) Preferred Shares Subject to Mandatory Redemption
The Company is authorized to issue up to 4,000,000 voting
preferred shares and 1,000,000 nonvoting preferred shares.
On July 22, 1988, the Company issued to The Western and
Southern Life Insurance Company ("Western-Southern")
1,578,948 7.25 percent Cumulative Convertible Voting
Preferred Shares ("Voting Preferred Shares"), without par
value, for $38 per share.
On July 7, 1993, Western-Southern elected to convert the
Voting Preferred Shares to common shares. The Company issued
3,157,896 common shares which increased Western-Southern's
ownership of the Company's outstanding common shares to
6,627,696 shares or 10.2 percent of the shares then
outstanding. Western-Southern's ownership of the Company's
common shares has subsequently been reduced to 6,452,696
shares or 9.9 percent of the shares outstanding at December
31, 1993.
<PAGE>
- --------------------------------------------------------------------------------
(l) Common Shares
The Company initiated programs to repurchase its common
shares as market conditions warrant. As part of these
programs, the Company repurchased 281,000 common shares for
$5.5 million in 1993, 322,000 common shares in 1992 for $5.6
million, and 100,000 common shares in 1991 for $1.8 million.
The most recent program expired in December 1993.
SHARE PURCHASE RIGHTS PLAN
On November 5, 1986, the Company granted a dividend of one
preferred share purchase right for each outstanding common
share. The number of rights associated with each common
share is subject to adjustment in certain situations,
including a share split, share dividend or a combination of
shares. At December 31, 1993, the number of rights
associated with each common share was one quarter right.
Under certain conditions, each right entitles the holder to
purchase one one-hundredth of a newly-issued Series A
Preferred Share, without par value, for $125. The rights may
only be exercised or transferred apart from the common shares
after a person or group has acquired 20 percent or more of
the Company's common shares, or after commencement of a
tender offer by a third party which would result in such
person or group controlling 30 percent or more of the
outstanding common shares of the Company. Thereafter, if the
Company is the surviving corporation in a merger, or if an
acquirer becomes the beneficial owner of more than 40 percent
of the common shares of the Company, or in the event of
certain self-dealing transactions between the acquirer and
the Company, each holder of a right will be entitled to
purchase common shares of the Company having a value equal to
two times the exercise price of the right. If the Company is
not the surviving corporation in a merger, or if 50 percent
or more of the Company's assets or earning power is sold or
transferred, each holder of a right will be entitled to
purchase common shares of the surviving company equal to two
times the exercise price of the right. In either of these
circumstances, any rights owned by the acquirer would be null
and void. The rights, which expire on November 5, 1996, may
be redeemed by the Company at a price of $.01 per right at
any time prior to ten days (or such longer period as the
Board of Directors may determine) after the acquisition of 20
percent of the Company's common shares.
<PAGE>
- --------------------------------------------------------------------------------
(m) Stock Option and Other Incentive Plans
The Company has several incentive plans which allow for the
granting of options, stock appreciation rights ("SARs") and
other awards.
The Cincinnati Bell Inc. 1988 Long Term Incentive Plan
provides for the granting of stock options, SARs in tandem
with stock options or free standing, and other awards. Under
the Plan, one percent of the Company's outstanding common
shares as of the first day of each calendar year is available
for grant in such year. All shares available for grant in
any year which are not granted under the Plan shall be
available for grant in subsequent years. The exercise price
of any stock option or award will be the fair market value of
the shares on the date of the grant. Options generally may
be exercised no earlier than one year after the date of the
grant and no later than ten years after the date of the
grant. Under the Plan, exercise of either a related option
or a related SAR cancels the other to the extent of such
exercise. There were no SARs issued under the Plan during
1993, 1992, and 1991. Prior to the adoption of this plan,
stock options were granted under the Cincinnati Bell Inc.
1984 Stock Option Plan, under which no new options can be
granted.
The Cincinnati Bell Inc. 1988 Stock Option Plan for Non-
Employee Directors provides for the granting of stock options
to non-employee directors. Under this Plan, options to
purchase the Company's common shares are granted at the fair
market value of the shares on the date of the grant, for a
term not to exceed ten years.
The Cincinnati Bell Inc. 1989 Stock Option Plan provides
for the granting of stock options to certain employees.
Options are granted at or greater than the fair market value
of the shares at the grant date, with the term of the options
not to exceed ten years.
Option transactions during 1993, 1992 and 1991 are
summarized as follows:
<TABLE>
<CAPTION>
Options 1993 1992 1991
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at beginning of year 1,972,135 1,483,354 1,058,709
Granted 923,050 717,725 644,985
Exercised (239,245) (102,194) (102,900)
Cancelled (123,112) (126,750) (117,440)
--------- --------- ---------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Outstanding at end of year 2,532,828 1,972,135 1,483,354
--------- --------- ---------
--------- --------- ---------
Exercisable at December 31 1,326,053 926,315 601,459
Price of options exercised $10.97-$21.13 $10.97-$11.13 $7.57-$21.13
Exercise price of options
outstanding $12.00-$26.50 $10.97-$26.50 $10.97-$26.50
</TABLE>
There were 4,049,000, 4,124,000 and 4,101,000 common shares
available for granting of options under the Plans at December
31, 1993, 1992 and 1991, respectively. During 1993, 1992 and
1991, 5,500 shares, 1,000 shares and 45,000 shares,
respectively, were granted as other awards under the 1988
Long Term Incentive Plan.
<PAGE>
- --------------------------------------------------------------------------------
(n) Lease Commitments
The Company leases certain facilities and equipment used in
its operations. Total rental expenses amounted to
approximately $71 million, $67.6 million and $62.4 million in
1993, 1992 and 1991, respectively.
At December 31, 1993, the aggregate minimum rental
commitments under noncancelable leases for the periods shown,
in thousands of dollars, are as follows:
<TABLE>
<CAPTION>
Operating Capital
Years Leases Leases
------------------------------------------------------------------------
<S> <C> <C>
1994 $ 50,414 $ 6,558
1995 42,218 4,737
1996 28,695 4,446
1997 20,471 4,431
1998 22,286 6,313
Thereafter 45,284 50,968
-------- --------
Total $209,368 77,453
--------
--------
Amount representing interest 47,467
--------
Present value of net minimum lease payments $ 29,986
--------
--------
</TABLE>
Capital lease obligations incurred were approximately
$5.8 million, $.9 million and $14.2 million in 1993,
1992 and 1991 respectively.
<PAGE>
- --------------------------------------------------------------------------------
(o) Quarterly Financial Information (Unaudited)
All adjustments necessary for a fair statement of income
for each period have been included.
<TABLE>
<CAPTION>
Thousands of Dollars
-----------------------------------------------------------
Calendar Total Revenues Operating Earnings (Loss) Per
Quarter and Sales Income (Loss) Net Income (Loss) Common Share
------------------------------------------------------------------------------------------------
<S>
1993 <C> <C> <C> <C>
1st $ 262,467 $ 31,197 $ 20,827 $ .32
2nd 262,602 28,240 13,500 .20
3rd 277,357 32,185 15,645 .24
4th 287,211 (110,355) (106,767) (1.69)
---------- -------- -------- -----
Total $1,089,637 $(18,733) $(56,795) $(.93)
---------- -------- -------- -----
---------- -------- -------- -----
1992
1st $ 290,242 $ 30,010 $14,451 $.22
2nd 266,976 27,902 11,410 .16
3rd 268,223 26,318 10,783 .16
4th 276,007 6,960 (1,397) (.04)
---------- -------- -------- ----
Total $1,101,448 $ 91,190 $ 35,247 $.50
---------- -------- -------- ----
---------- -------- -------- ----
</TABLE>
Fourth quarter 1993 results were affected by several
significant charges as described in notes (b), (f) and (q).
On a combined basis, these charges increased Net Loss by
approximately $108.6 million or $1.72 per common share.
Net Income for the third quarter 1993 was reduced by $2.8
million or $.04 per common share because of capitalized
software adjustments as described in note (f).
Net Income for the second quarter 1993 was reduced by $2.0
million or $.03 per common share charge recorded by
Cincinnati Bell Supply to reduce the carrying amount of its
inventory to net realizable value.
First quarter 1993 results include the $6.5 million or $.10
per common share gain on the sale of certain CBT businesses
as described in note (q).
Fourth quarter 1992 results include extraordinary charges
because of the
<PAGE>
early redemption of CBT debentures as described in note (e).
The charges reduced net income by $2 million or $.03 per
common share. The results for the quarter also included
special charges of $7 million or $.12 per common share for
restructuring as described in note (b). CBIS also recorded
charges of $5.9 million or $.09 per common share related to
the write-off of the IRS contract acquisition costs and
related expenses in the quarter.
Third quarter 1992 results include extraordinary charges
because of the early redemption of the Company's notes as
described in note (e). The charges reduced Net Income by
$1.7 million or $.03 per common share.
First quarter 1992 results include an increase in Net
Income of $3.1 million or $.05 per common share resulting
from an amendment to CBT's marketing agency agreement as
described in note (q).
<PAGE>
- --------------------------------------------------------------------------------
(p) Additional Financial Information
<TABLE>
<CAPTION>
Thousands of Dollars Year Ended December 31 1993 1992 1991
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Taxes other than income taxes:
Property $39,065 $39,869 $34,583
Gross receipts 18,232 18,031 17,422
Payroll-related 33,085 32,460 35,331
Other 655 404 669
------- ------- -------
Total $91,037 $90,764 $88,005
------- ------- -------
------- ------- -------
Interest expense:
Long-term debt $35,983 $39,242 $39,391
Notes payable and other 9,777 6,916 13,448
------- ------- -------
Total $45,760 $46,158 $52,839
------- ------- -------
------- ------- -------
Cash paid for:
Interest (net of amount capitalized) $36,584 $40,255 $48,236
Income taxes $22,667 $35,153 $24,008
</TABLE>
In November 1993, the Company finalized an agreement to
acquire WATS Marketing of America ("WATS Marketing") from
First Data Corporation. WATS Marketing provides inbound and
outbound telephone marketing services and as been combined
with MATRIXX as part of the Marketing Services segment. The
cost of the acquisition was $67.8 million which includes the
purchase price of $63 million and $4.8 million of related
acquisition costs and working capital adjustments. The
purchase was financed by the issuance of short-term debt.
The purchase contract contains provisions that could increase
the purchase price up to $87.5 million if certain conditions
are met. Any increases in the purchase price will be
recorded as goodwill. This transaction was accounted for as
a purchase and the resulting goodwill of $45.6 million is
being amortized over twenty years. In conjunction with this
acquisition, $7.6 million in liabilities were assumed. The
operating results of WATS Marketing, which were not
significant, are included in the accompanying Consolidated
Statements of
<PAGE>
Income since the date of acquisition.
In 1991, the Company also incurred additional costs related
to 1990 acquisitions.
<PAGE>
- --------------------------------------------------------------------------------
(q) Cincinnati Bell Telephone Company
The following summarized financial information is for the
Company's consolidated wholly owned subsidiary, Cincinnati
Bell Telephone Company:
<TABLE>
<CAPTION>
Thousands of Dollars Year Ended December 31 1993 1992 1991
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues and sales $575,511 $594,273 $612,581
Costs and expenses $481,944 $506,162 $510,961
Net income $ 59,224 $ 53,450 $ 58,364
</TABLE>
<TABLE>
<CAPTION>
Thousands of Dollars At December 31 1993 1992
-----------------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 159,641 $ 113,696
Telephone plant-net 900,141 895,259
Other noncurrent assets 32,161 24,686
---------- ----------
Total assets $1,091,943 $1,033,641
---------- ----------
---------- ----------
Current liabilities $ 139,438 $ 199,239
Noncurrent liabilities 196,389 195,974
Long-term debt 310,500 184,959
Common shareowner's equity 445,616 453,469
---------- ----------
Total liabilities and invested
capital $1,091,943 $1,033,641
---------- ----------
---------- ----------
</TABLE>
Results in all four quarters of 1993 reflect a decrease in
Operating Expenses and Plant and Building Services expenses as
a result of CBT revising its vacation policy. The policy
changed the period in which employees earn vacations. The
change decreased Net Loss for the year by approximately $3.9
million ($.06 per common share).
CBT's results for 1993 include amounts accrued related to
orders by the Federal Communications Commission ("FCC") to
refund to interexchange carriers earnings in excess of the
FCC's target range in the 1987-1988 monitoring period. CBT is
appealing the FCC's order to the Federal Court of Appeals.
The accruals reduced Network Access Revenues by approximately
<PAGE>
$6.6 million and increased Interest Expense by approximately
$4.2 million. These charges increased Net Loss by
approximately $7 million.
CBT's results for 1993 include a gain recorded in Other
Income (Expense)-Net from the sale of the residential
equipment leasing and PhoneCenter stores businesses to AT&T
Consumer Products which reduced Net Loss by approximately $6.5
million ($.10 per common share).
Fourth quarter 1992 results include extraordinary charges
because of the early redemption of CBT debentures as described
in note (e). The charges reduced Net Income by approximately
$2 million ($.03 per common share).
CBT's results for 1992 also include a gain recorded in Other
Income (Expense)-Net from an amendment to the marketing agency
relationship with AT&T which increased Net Income by
approximately $3.1 million ($.05 per common share).
<PAGE>
- --------------------------------------------------------------------------------
(r) Business Segment Information
The Company operates primarily in three industry segments,
Telephone Operations, Information Systems and Marketing
Services. Telephone Operations provides telecommunications
network services. Information Systems designs, markets, and
manages information systems for telecommunications and general
business needs. Marketing Services provides telephone
marketing, research, fulfillment and data base services.
For the years ended December 31, 1993, 1992 and 1991, the
Company's segment information is as follows:
<TABLE>
<CAPTION>
Corporate,
Telephone Information Marketing Other and
Thousands of Dollars Operations Systems Services Eliminations Consolidated
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Revenues and sales to
unaffiliated customers $ 552,531 $ 309,684 $ 107,780 $ 119,642 $1,089,637
Intersegment revenues
and sales $ 22,980 $ 46,876 $ 415 $ (70,271) $ --
Operating income (loss) $ 93,568 $ (124,579) $ 2,018 $ 10,260 $ (18,733)
Assets $1,091,943 $ 293,394 $ 225,238 $ 53,515 $1,664,090
Capital additions (includes $ 111,595 $ 40,053 $ 73,726 $ 10,037 $ 235,411
acquisitions)
Depreciation and amortization $ 99,179 $ 46,977 $ 8,422 $ 3,937 $ 158,515
----------------------------------------------------------------------------------------------------------------
1992
Revenues and sales to
unaffiliated customers $ 571,459 $ 327,901 $ 86,563 $ 115,525 $1,101,448
Intersegment revenues
and sales $ 22,814 $ 58,719 $ 1,701 $ (83,234) $ --
Operating income (loss) $ 88,111 $ (11,833) $ 744 $ 14,168 $ 91,190
Assets $1,033,641 $ 355,636 $ 140,200 $ 103,044 $1,632,521
Capital additions $ 94,596 $ 32,286 $ 5,268 $ 7,906 $ 140,056
Depreciation and amortization $ 100,262 $ 26,085 $ 7,574 $ 3,102 $ 137,023
----------------------------------------------------------------------------------------------------------------
1991
Revenues and sales to $ 590,299 $ 288,865 $ 84,610 $ 100,913 $1,064,687
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
unaffiliated customers
Intersegment revenues
and sales $ 22,282 $ 62,850 $ 1,726 $ (86,858) $ --
Operating income (loss) $ 101,620 $ 7,418 $ (5,410) $ 14,236 $ 117,864
Assets $1,109,511 $ 438,042 $ 145,696 $ 49,885 $1,743,134
Capital additions $ 115,931 $ 57,623 $ 11,576 $ 8,218 $ 193,348
Depreciation and amortization $ 88,554 $ 34,796 $ 6,341 $ 2,159 $ 131,850
</TABLE>
Certain corporate administrative expenses have been
allocated to segments based upon the nature of the expense.
Assets are those assets used in the operations of the segment.
Certain reimbursable costs previously recorded as revenues
in the Information Systems segment have been reclassified.
This reclassification decreased revenues and operating
expenses but had no effect on operating income (loss) for all
periods presented.
During 1993, 1992 and 1991 the Information Systems segment
had special charges of approximately $102 million, $10.5
million and $6 million, respectively (see note (b)).
During November 1993, the Company acquired WATS Marketing.
The results, assets and the cost of the acquisition are
included in the Marketing Services segment (see note (p)).
<PAGE>
- --------------------------------------------------------------------------------
(s) Contingencies
The Company is from time to time subject to routine
complaints incidental to the business. The Company believes
that the results of any complaints and proceedings will not
have a materially adverse effect on the Company's financial
condition.
<PAGE>
- --------------------------------------------------------------------------------
(t) Major Customer
The Company derives significant revenue from AT&T by
providing network services, information management systems and
marketing services. During 1993, 1992, and 1991, revenues
from AT&T accounted for 11.7 percent, 13.7 percent and 12.2
percent of consolidated revenues, respectively.
<PAGE>
Exhibit 21
to
Form 10-K for 1993
Subsidiaries of the Registrant
(as of March 29, 1994)
State of
Subsidiary Incorporation
- ---------- -------------
Cincinnati Bell Telephone Company Ohio
Cincinnati Bell Information Systems Inc. Ohio
CBIS Federal Systems Inc. * Virginia
Cincinnati Bell Long Distance Inc. Ohio
Cincinnati Bell Supply Company Ohio
MATRIXX Marketing Inc. Ohio
Cincinnati Bell Properties Inc. Kentucky
Cincinnati Bell Directory Inc. Ohio
Cincinnati Bell Cellular Systems Company Ohio
- -------------------
* Indirect subsidiary of Registrant and direct subisidary of Cincinnati Bell
Information Systems Inc.
<PAGE>
Exhibit 23
to
Form 10-K for 1993
CINCINNATI BELL INC.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Cincinnati Bell Inc. on Form S-3 (File No. 33-39385), Form S-3 (File No. 33-
42215), Form S-3 (File No. 33-54750), Form S-3 (File No. 33-62044), Form S-8
(File No. 33-29332), Form S-8 (File No. 33-3195), Form S-8 (File No. 33-1462),
Form S-8 (File No. 33-1487), Form S-8 (File No. 33-15467), Form S-8 (File No.
33-23159), Form S-8 (File No. 33-29331), Form S-8 (File No. 33-36381), Form S-8
(File No. 33-36380), Form S-8 (File No. 33-39654), Form S-8 (File No. 33-43775),
and Form S-14 (File No. 2-82253) of our report dated February 11, 1994 on our
audits of the consolidated financial statements and financial statement
schedules of Cincinnati Bell Inc. as of December 31, 1993 and 1992, and for each
of the three years in the period ended December 31, 1993, which report is
included in this Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
Cincinnati, Ohio
March 29, 1993
<PAGE>
Exhibit 24
to
Form 10K for 1993
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ Paul W. Christensen, Jr.
--------------------------------
Paul W. Christensen, Jr.
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me Paul
W. Christensen, Jr., to me known and known to me to be the person described
in and who executed the foregoing instrument, and he duly acknowledged to
me that he executed and delivered the same for the purposes therein
expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ John F. Barrett
--------------------------------
John F. Barrett
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me Paul
John F. Barrett, to me known and known to me to be the person described in
and who executed the foregoing instrument, and he duly acknowledged to me
that he executed and delivered the same for the purposes therein expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ William A. Friedlander
--------------------------------
William A. Friedlander
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me
William A. Friedlander, to me known and known to me to be the person
described in and who executed the foregoing instrument, and he duly
acknowledged to me that he executed and delivered the same for the purposes
therein expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ Raymond R. Clark
--------------------------------
Raymond R. Clark
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me
Raymond R. Clark, to me known and known to me to be the person described in
and who executed the foregoing instrument, and he duly acknowledged to me
that he executed and delivered the same for the purposes therein expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ Phillip R. Cox
--------------------------------
Phillip R. Cox
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me , to
me Phillip R. Cox, known and known to me to be the person described in and
who executed the foregoing instrument, and he duly acknowledged to me that
he executed and delivered the same for the purposes therein expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ Robert P. Hummel
--------------------------------
Robert P. Hummel
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me
Robert P. Hummel, to me known and known to me to be the person described in
and who executed the foregoing instrument, and he duly acknowledged to me
that he executed and delivered the same for the purposes therein expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ James D. Kiggen
--------------------------------
James D. Kiggen
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me
James D. Kiggen, to me known and known to me to be the person described in
and who executed the foregoing instrument, and he duly acknowledged to me
that he executed and delivered the same for the purposes therein expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ David B. Sharrock
--------------------------------
David B. Sharrock
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me David
B. Sharrock, to me known and known to me to be the person described in and
who executed the foregoing instrument, and he duly acknowledged to me that
he executed and delivered the same for the purposes therein expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ John T. LaMacchia
--------------------------------
John T. LaMacchia
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me John
T. LaMacchia, to me known and known to me to be the person described in and
who executed the foregoing instrument, and he duly acknowledged to me that
he executed and delivered the same for the purposes therein expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Robert D. Lemmink
-------------------------------
Notary Public
Robert Dale Lemmink, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Section 147.03
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, CINCINNATI BELL INC., an Ohio corporation (hereinafter
referred to as the "Company"), proposes shortly to file with the Securities
and Exchange Commission under the provisions of the Securities Exchange Act
of 1934, as amended, and the Rules and Regulations thereunder; an annual
report on Form 10-K; and
WHEREAS, the undersigned is a director of the Company;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
John T. LaMacchia, Brian C. Henry, William H. Zimmer III and William D.
Baskett III, and each of them singly, his attorneys for him and in his
name, place and stead, and in his office and capacity in the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute
and file any amendments or supplements thereto, hereby giving and granting
to said attorneys full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
7th day of March, 1994.
/s/ Dwight H. Hibbard
--------------------------------
Dwight H. Hibbard
Director
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
On the 7th day of March, 1994, personally appeared before me
Dwight H. Hibbard, to me known and known to me to be the person described
in and who executed the foregoing instrument, and he duly acknowledged to
me that he executed and delivered the same for the purposes therein
expressed.
Witness my hand and official seal this 7th day of March, 1994.
/s/ Mary Lou Parker
-------------------------------
Notary Public
Mary Louise Parker
Notary Public, State of Ohio
My Commission Expires August 19, 1997
