Exhibit 99(i)
BROADWING INC. PRESS RELEASE
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INVESTOR CONTACT: MEDIA CONTACT:
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Mike Hemsath Thomas Osha
513.397.7788 513.397.7316
mike.hemsath@broadwing.com tom.osha@broadwing.com
BROADWING INC. REPORTS THIRD QUARTER PROFIT, POSITIVE
CASH FLOW; IMPLEMENTS BROADBAND UNIT RESTRUCTURING
- CASH FLOW POSITIVE AT $62 MILLION, A QUARTER AHEAD OF SCHEDULE
- EPS OF $0.01, UP $0.19 PER SHARE OVER LOSS FOR SAME PERIOD IN 2001
- ANNOUNCES PLAN TO REDUCE COSTS WITH OBJECTIVE TO REACH
CASH FLOW POSITIVE AT BROADBAND UNIT
- REDUCES DEBT BY $43 MILLION
CINCINNATI--October 29, 2002--Broadwing Inc. (NYSE:BRW) today announced
financial results for the third quarter, reporting $62 million in positive cash
flow. Revenue for the quarter was $563 million and earnings from continuing
operations were $0.01 per share, up $0.19 per share over the same period last
year. As a result of the reorganization of Teleglobe, the company recognized a
$41 million non-recurring, non-cash benefit in revenue and earnings before
interest, taxes, depreciation, and amortization (EBITDA) for the quarter. The
company also recorded a $7 million restructure charge related to employee
severance and a contract termination during the period.
The company's new management team announced a restructuring of its Broadwing
Communications unit that is intended to reduce expenses by approximately $200
million annually. The company believes that this substantial expense reduction
is a critical step in enabling Broadwing Communications to become cash flow
positive. The company also said it plans to soon approach its banks to amend
various provisions of its credit facilities, including extending 2004
maturities.
"We are committed to building value for our shareholders, and the steps we
announce today will allow us to do just that, as we reposition Broadwing
Communications for positive cash flow which should continue de-leveraging our
company," said Kevin Mooney, who was named Chief Executive Officer on September
20. "At the same time, we are assessing a complete range of strategic
alternatives, including raising capital, selling select assets, and
discontinuing lines of business, in order to maximize the value of our company.
"I am pleased to announce that Broadwing Inc. is cash flow positive on a
consolidated basis, one quarter ahead of schedule, and that we reduced our debt
by $43 million in the quarter," Mooney said. "We are now focused on maintaining
the strength and stability of our Cincinnati businesses while driving our
broadband unit to positive cash flow."
Restructuring Plan
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The company said the restructuring plan it began implementing yesterday for
Broadwing Communications will benefit its large enterprise customers and the
overall business. The plan is intended to reduce current expenses by
approximately $200 million annually and enables the unit to reach its goal of
being cash flow positive. The plan targets line cost reductions of 25 percent
over the next six months through network grooming, optimization, and rate
negotiations; consolidates the unit's workforce by 500 positions; and also calls
for exiting its wholesale international voice business.
The plan continues to focus the company's sales efforts on large enterprise
accounts, which will continue to be served through local sales offices along
with the highly successful national accounts program. The company will service
its smaller enterprise accounts through its more cost effective consumer and
small business channel.
Bob Shingler, 45, currently president of voice services, has been promoted to
president of Broadwing Communications to oversee the plan. Shingler, who will be
based in Austin, is an industry veteran with over 20 years of experience. Prior
to joining Broadwing Communications
earlier this year, he held a variety of positions with BellSouth Corporation
both in Europe and the U.S.
Earnings Results
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Broadwing reported revenue of $563 million for the third quarter, down 3 percent
from the same period a year ago. EBITDA increased 27 percent year over year to
$195 million. Operating income was $61 million, up from $11 million in the third
quarter of 2001. These results are inclusive of the one-time items previously
mentioned.
The company generated a total of $62 million in cash flow in the quarter, $24
million from operations and $38 million from a federal tax refund. This cash was
used to reduce $43 million of debt in the quarter. Broadwing's credit facility
balance as of September 30 was $1.66 billion. It is in compliance with all its
debt covenants.
"For the quarter, Broadwing Communications consumed $39 million of cash flow
while the remaining businesses generated a positive $63 million of cash flow,"
commented Tom Schilling, Broadwing's CFO. "Therefore, lowering Broadwing
Communications cash consumption should substantially improve consolidated cash
flow."
Cincinnati-based Operations
Broadwing's Cincinnati-based businesses reported revenue of $289 million,
unchanged from a year ago. EBITDA of $138 million represented an 11 percent
improvement and operating income increased 15 percent to $93 million. Selling,
general and administrative expenses were down 28 percent. Capital spending for
the Cincinnati Bell companies in the third quarter was $27 million, a 34 percent
reduction versus the same quarter a year ago.
Local Communications Services
Cincinnati Bell Telephone revenue declined 1 percent versus the same quarter in
2001 to $207 million. EBITDA was up 1 percent to $107 million and the EBITDA
margin was 52 percent.
Operating income grew 1 percent to $71 million. Complete Connections, Cincinnati
Bell's bundled services product, added 9,000 subscribers. Cincinnati Bell is one
of the industry leaders in the penetration of value added services, with 39
percent penetration.
Wireless Services
Cincinnati Bell Wireless posted revenue of $67 million, representing a 4 percent
increase over the same period in 2001. EBITDA improved 54 percent to $30 million
and the EBITDA margin of 45 percent represented an improvement of 15 points.
Operating income was up 80 percent to $22 million and capital spending was down
$8 million to $4 million for the quarter. Cincinnati Bell Wireless ended the
quarter with 465,000 subscribers, a 1 percent decline sequentially, but an
increase of 6 percent from a year ago. Churn was under 1.8 percent and postpaid
ARPU was $60 per month.
Other Communications Services
Other Communications Services revenue was flat with the third quarter of 2001 at
$20 million, while EBITDA improved to $1 million from breakeven during the same
period last year.
Market share for Cincinnati Bell Any Distance, the company's long distance
offering, improved to 69 percent in the residential market and 42 percent in the
business market.
Broadband Services
Broadwing Communications recorded revenue of $296 million, a decline of 3
percent from the third quarter 2001. EBITDA was $57 million, up $24 million. The
EBITDA and revenue figures include the non-cash recognition of $41 million
related to the Teleglobe reorganization. In the quarter, operating loss improved
$39 million to a loss of $28 million. Broadwing Communications experienced solid
growth in sales to up-market enterprise customers, while the prolonged erosion
in the carrier market continued to be responsible for the revenue and EBITDA
decline. With the national network complete, capital expense was reduced from
$121 million in the third quarter of 2001 to $13 million for the quarter this
year.
Additionally, Broadwing Communications has deferred cash payment of the
quarterly dividend, due November 15, 2002, on its Broadwing Communications
subsidiary 12 1/2 percent preferred shares, in accordance with the terms of the
security. The dividend will be accrued and the Company will conserve
approximately $12.4 million of cash in the fourth quarter.
"We have fulfilled our commitment to achieve positive cash flow for Broadwing
Inc. and we are moving with the purpose and urgency required to make our
broadband services business cash flow positive, address our financing needs, and
continue to keep our Cincinnati Bell franchise strong and healthy," said Mooney.
Broadwing updated its financial guidance for 2002, reaffirming $2.15 billion in
revenue, raising projected EBITDA to $640 million, and lowering the capital
expenditures figure for the second time this year to $190 million from $230
million.
The company also indicated that as a result of the announced restructuring of
Broadwing Communications, it expects to record a cash charge of up to $10
million for the fourth quarter.
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CONFERENCE CALL/WEBCAST
Broadwing will host a conference call discussing the third quarter results on
Tuesday, October 29, 2002 at 11:00 EST, which will be web-cast on the company's
website at www.broadwing.com.
ABOUT BROADWING
Broadwing Inc. (NYSE: BRW) is an integrated communications company comprised of
Broadwing Communications and Cincinnati Bell. Broadwing Communications leads the
industry as the world's first intelligent, all-optical, switched network
provider and offers businesses nationwide a competitive advantage by providing
data, voice and Internet solutions that are flexible, reliable and innovative on
its 18,500-mile optical network and its award-winning IP backbone. Cincinnati
Bell is one of the nation's most respected and best performing local exchange
and wireless providers with a legacy of unparalleled customer service excellence
and financial strength. The company was recently ranked number one in customer
satisfaction, for the second year in a row, by J.D. Power and Associates for
local residential telephone service and residential long distance among
mainstream users and received the number one ranking in wireless customer
satisfaction in its Cincinnati market. Cincinnati Bell provides a wide range of
telecommunications products and services to residential and business customers
in Ohio, Kentucky and Indiana. Broadwing Inc. is headquartered in Cincinnati,
Ohio. For more information, visit www.broadwing.com.
NOTE: Information included in this news release contains forward-looking
statements that involve potential risks and uncertainties. Broadwing's future
results could differ materially from those discussed herein. Factors that could
cause or contribute to such differences include, but are not limited to,
Broadwing's ability to maintain its market position in communications services,
general economic trends affecting the purchase of telecommunication services,
world and national events that may affect the ability to provide services, and
its ability to develop and launch new products and services. More information on
potential risks and uncertainties is available in the company's recent filings
with the Securities and Exchange Commission, including the 2001 Form 10-K for
Broadwing Inc. and Broadwing Communications Inc.