EXHIBIT 99.1
CINCINNATI BELL INC.
PRESS RELEASE
Investor / Media contact:
Michael Vanderwoude
513.397.7685
mike.vanderwoude@cinbell.com
CINCINNATI BELL COMPLETES INVESTIGATION
AND SEEKS EXTENSION TO FILE 2003 FORM 10-K
CINCINNATI - March 15, 2004 - Cincinnati Bell Inc. (NYSE:CBB) announced today
that it has sought a 15-day extension to file its 2003 Form 10-K.
As previously disclosed, the Company has been investigating the allegations
contained in an amended class action securities lawsuit filed in December 2003.
These allegations relate primarily to the manner in which the Company recognized
revenue, and wrote down assets, with respect to its former broadband business.
The Audit Committee of the Company's Board of Directors has now completed its
investigation of those matters. In connection with that investigation,
adjustments have been identified related to the manner that the Company recorded
a particular broadband network construction agreement entered into in 2000.
These adjustments related to the timing of revenue recognition resulting from
the inappropriate inclusion of certain costs that had not been fully incurred
and use of estimates regarding the extent to which the construction contract had
been completed. The Company intends to restate its financial statements to
reflect the revised accounting for this contract. In investigating plaintiffs'
other allegations, the Audit Committee did not identify any information that
warranted any modification or change to the Company's financial statements.
While the following amounts could change on final review, the Company believes
its revenue for the year-to-date period ended September 30, 2003 will remain the
same as previously reported, cost of services and products will decrease by
approximately $51 million and net income will increase by approximately $51
million; revenue and cost of services and products will likely be unchanged in
2002 and net loss will increase by approximately $18 million due to an increase
in income tax expense; revenue for 2001 will decrease by approximately $31
million, cost of services and products for 2001 will increase by approximately
$15 million and net loss for 2001 will increase by approximately $30 million;
and revenue for 2000 will decrease by approximately $23 million, cost of
services and products for 2000 will decrease by approximately $18 million and
net loss for 2000 will increase by approximately $3 million. Thus, the Company
believes that there will be no cumulative change to net income over the
reporting period as a result of this restatement.
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While no definitive assurance can be given, the Company believes that the
amounts summarized above are an accurate reflection of the effects of the
restatement.
In November 2001, the Company publicly announced its intention to exit the
broadband network construction business. Thereafter, the Company did not enter
into any new network construction agreements and no revenue was recognized in
either 2002 or 2003 on the broadband network construction contract referenced
above. As previously disclosed, the Company effectively completed the sale of
substantially all of the assets of its broadband business in June 2003.
The anticipated impact of the restatement on the Company's historical financial
statements gives rise to an event of default under the Company's credit
agreement and prevents future borrowings under the Company's revolving credit
facility. In conjunction with finalizing its revised financial statements, the
Company intends to seek a waiver from its lenders relating to these provisions.
Due to cross default provisions, an event of default under the credit agreement
also gives rise to an event of default under certain other indebtedness of the
Company, which events of default will be cured upon receipt of the waiver of the
lenders under the credit agreement. The Company believes it will obtain the
requested waiver on or before March 30, although there can be no assurances in
that regard. Citibank, the administrative agent of the credit agreement, has
approved the waiver and will recommend that the other lenders approve it as
well. In the event that the waiver is not obtained, substantially all of the
Company's debt would be classified as current obligations, which would give rise
to a going concern opinion from the Company's independent auditors.
The Company has already received a waiver from the holders of its 16% notes for
an event of default relating to representations and warranties contained in the
16% notes purchase agreement.
Assuming that the Company is able to obtain the waiver from its lenders, the
Company expects to be in a position, on or before March 30, to announce its
fourth quarter and full year 2003 results, issue its 2003 Form 10-K and release
its restated financial statements for prior years. The Company will also file
amended Form 10-Qs for the first three quarters of 2003.
ABOUT CINCINNATI BELL INC.
Cincinnati Bell Inc. (NYSE: CBB) is parent to one of the nation's most respected
and best performing local exchange and wireless providers with a legacy of
unparalleled customer service excellence. The Company was recently ranked number
one in customer satisfaction, for the third year in a row, by J.D. Power and
Associates for residential long distance among mainstream users. Cincinnati Bell
provides a wide range of telecommunications products and services to residential
and business customers in Ohio, Kentucky and Indiana. Cincinnati Bell is
headquartered in Cincinnati, Ohio. For more information, visit
www.cincinnatibell.com.
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SAFE HARBOR NOTE
Certain of the statements and predictions contained in this press release
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act. In particular, any statements, projections or
estimates that include or reference the words "believe," "anticipates," "plans,"
"expects," "will," or any similar expression fall within the safe harbor for
forward-looking statements contained in the Reform Act. Actual results or
outcomes may differ materially from those indicated or suggested by any such
forward-looking statement for a variety of reasons, including but not limited
to, Cincinnati Bell'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, changes in the regulatory environment, any rulings, orders or decrees
that may be issued by any court or arbitrator, the decision of any of the
Company's lenders to withhold its consent to provide waivers, the audit of the
adjustments to prior period financial statements is not fully complete, and
Cincinnati Bell's 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 Cincinnati
Bell's Annual Form 10-K report, Quarterly Form 10-Q reports, Forms 8-K, and
Forms S-4 and S-3 Registration Statements. The forward-looking statements
included in this press release represent the Company's estimates as of March 15,
2004. The Company anticipates that subsequent events and developments will cause
its estimates to change.
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