SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 1-8519
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CINCINNATI BELL INC.
SAVINGS AND SECURITY PLAN
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CINCINNATI BELL INC.
201 East Fourth Street
Cincinnati, Ohio 45202
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 1997 and
1996
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 1997
Notes to Financial Statements
Schedules:
Item 27(a) - Schedule of Assets Held for Investment Purposes as of December
31, 1997
Item 27(d) - Schedule of Reportable Transactions for the Year Ended
December 31, 1997
Other schedules are omitted because the information required is contained
in the financial statements.
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Report of Independent Accountants
To the Employees' Benefit Committee of
Cincinnati Bell Inc.
We have audited the accompanying statements of net assets available for benefits
of the Cincinnati Bell Inc. Savings and Security Plan as of December 31, 1997
and 1996, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1997. These financial statements are
the responsibility of the Plan'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 net assets available for benefits of the Cincinnati
Bell Inc. Savings and Security Plan as of December 31, 1997 and 1996, and the
changes in net assets available for benefits for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets Held
for Investment Purposes as of December 31, 1997 and Schedule of Reportable
Transactions for the year ended December 31, 1997 are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The Fund Information in the statement
of net assets available for benefits and the statement of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for benefits and changes in net assets
available for benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Coopers & Lybrand L.L.P.
Cincinnati, Ohio
May 22,1998
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CINCINNATI BELL INC. SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997
Thousands of Dollars
-------------------------- ----------------------------
Equity Equity Capital
Cincinnati Bell Spectrum Balanced Income Index Appreciation
ASSETS Stable Value Fund Income Fund Fund Fund Fund Fund
----------------- ----------- -------- ------ ------ ------------
Investments - stated at fair value (cost of $39,568):
Temporary cash investments - - - - - -
Cincinnati Bell Inc. shares - -
Mutual funds $9,217 $652 $1,310 $3,733 $1,869 $772
Contracts with insurance companies 244 - - - - -
Loans to participants - - - - - -
Interest and dividends receivable - - - - - -
------ ---- ------ ------ ------ ----
Total Investments 9,461 652 1,310 3,733 1,869 772
------ ---- ------ ------ ------ ----
------ ---- ------ ------ ------ ----
LIABILITIES
Administrative fees payable and other 2 - - - - -
------ ---- ------ ------ ------ ----
Net Assets Available for Benefits $9,459 $652 $1,310 $3,733 $1,869 $772
------ ---- ------ ------ ------ ----
------ ---- ------ ------ ------ ----
Thousands of Dollars
-------------------------- -------------------
International New America Cincinnati Bell Inc. Loan
ASSETS Stock Fund Growth Fund Shares Fund Fund Total
------------- ------------ -------------------- ---- -----
Investments - stated at fair value (cost of $39,568):
Temporary cash investments - - $3,625 - $3,625
Cincinnati Bell Inc. shares 64,446 - 64,446
Mutual funds $1,334 $2,349 - - 21,236
Contracts with insurance companies - - - - 244
Loans to participants - - - $ 2,214 2,214
Interest and dividends receivable - - 15 - 15
------ ------ ------- ------- -------
Total Investments 1,334 2,349 68,086 2,214 91,780
------ ------ ------- ------- -------
------ ------ ------- ------- -------
LIABILITIES
Administrative fees payable and other - - 6 - 8
------ ------ ------- ------- -------
Net Assets Available for Benefits $1,334 $2,349 $68,080 $2,214 $91,772
------ ------ ------- ------- -------
------ ------ ------- ------- -------
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See Notes to Financial Statements
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CINCINNATI BELL INC. SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996
Thousands of Dollars
-------------------------- -------------------
Equity Equity Capital
Cincinnati Bell Spectrum Balanced Income Index Appreciation
ASSETS Stable Value Fund Income Fund Fund Fund Fund Fund
----------------- ----------- -------- ------ ------ ------------
Investments - stated at fair value (cost of $48,809):
Temporary cash investments - - - - - -
Cincinnati Bell Inc. shares - -
Mutual funds $11,346 $611 $943 $2,700 $1,176 $545
Contracts with insurance companies 3,220 - - - - -
Loans to participants - - - - - -
Interest and dividends receivable - - - - - -
Other receivables 126 - - - - -
------- ---- ------ ------ ------ ----
Total Investments 14,692 611 943 2,700 1,176 545
------- ---- ------ ------ ------ ----
------- ---- ------ ------ ------ ----
LIABILITIES
Administrative fees payable and other 3 - - - - -
------- ---- ------ ------ ------ ----
Net Assets Available for Benefits $14,689 $611 $943 $2,700 $1,176 $545
------- ---- ------ ------ ------ ----
------- ---- ------ ------ ------ ----
Thousands of Dollars
-------------------------- -------------------
International New America Cincinnati Bell Inc. Loan
ASSETS Stock Fund Growth Fund Shares Fund Fund Total
------------- ------------ -------------------- ---- -----
Investments - stated at fair value (cost of $48,809):
Temporary cash investments - - $4,335 - $4,335
Cincinnati Bell Inc. shares 82,268 82,268
Mutual funds $1,318 $1,796 - - 20,435
Contracts with insurance companies - - - - 3,220
Loans to participants - - - $2,176 2,176
Interest and dividends receivable - - 14 - 14
Other receivables - - - - 126
------ ------ ------- ------- -------
Total Investments 1,318 1,796 86,617 2,176 112,574
------ ------ ------- ------- -------
------ ------ ------- ------- -------
LIABILITIES
Administrative fees payable and other - - 7 - 10
------ ------ ------- ------- -------
Net Assets Available for Benefits $1,318 $1,796 $86,610 $2,176 $112,564
------ ------ ------- ------- -------
------ ------ ------- ------- -------
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See Notes to Financial Statements
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CINCINNATI BELL INC. SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
Thousands of Dollars
-------------------------- ----------------------------
Equity Equity Capital
Cincinnati Bell Spectrum Balanced Income Index Appreciation
Stable Value Fund Income Fund Fund Fund Fund Fund
----------------- ----------- -------- ------ ------ ------------
Net Assets Available for Benefits $14,689 $611 $943 $2,700 $1,176 $545
as of December 31, 1996
Employee allotments 655 126 134 340 190 100
Participating company contributions - - - - - -
Transfers to other Cincinnati Bell Inc. plans (51) (3) - 8 (16) (6)
Transfer of participants' balances -- net (1,018) (36) 339 576 418 125
------- ---- ------ ------ ------ ----
Total allotments, contributions and transfers (414) 87 473 924 592 219
Investment income:
Dividends on Cincinnati Bell Inc. shares - - - - - -
Other dividends - 45 47 356 37 98
Interest 653 - - - - -
Net appreciation/(depreciation) of investments - 23 134 386 325 (4)
------- ---- ------ ------ ------ ----
Total additions 239 155 654 1,666 954 313
Less: Distributions to participants 5,469 114 287 633 261 86
Administrative and other expenses paid by
the Plan - - - - - -
------- ---- ------ ------ ------ ----
Total deductions 5,469 114 287 633 261 86
Net Assets Available for Benefits $9,459 $652 $1,310 $3,733 $1,869 $772
as of December 31, 1997
------- ---- ------ ------ ------ ----
------- ---- ------ ------ ------ ----
Thousands of Dollars
-------------------------- ----------------------------
International New America Cincinnati Bell Inc. Loan
Stock Fund Growth Fund Shares Fund Fund Total
------------- ------------ -------------------- ---- -----
Net Assets Available for Benefits $1,318 $1,796 $86,610 $2,176 $112,564
as of December 31, 1996
Employee allotments 199 358 1,359 - 3,461
Participating company contributions - - 1,420 - 1,420
Transfers to other Cincinnati Bell Inc. plans 10 (90) (411) (103) (662)
Transfer of participants' balances -- net (90) 229 (669) 126 -
------ ------ ------- ------- -------
Total allotments, contributions and transfers 119 497 1,699 23 4,219
Investment income:
Dividends on Cincinnati Bell Inc. shares - - 877 - 877
Other dividends 72 112 - - 767
Interest - - 191 193 1,037
Net appreciation/(depreciation) of investments (56) 238 (1,265) - (219)
------ ------ ------- ------- -------
Total additions 135 847 1,502 216 6,681
Less: Distributions to participants 119 294 20,002 178 27,443
Administrative and other expenses paid by
the Plan - - 30 - 30
------ ------ ------- ------- -------
Total deductions 119 294 20,032 178 27,473
Net Assets Available for Benefits $1,334 $2,349 $68,080 $2,214 $91,772
as of December 31, 1997 ------ ------ ------- ------- -------
------ ------ ------- ------- -------
- --------------------
See Notes to Financial Statements
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NOTES TO FINANCIAL STATEMENTS
(1) PLAN DESCRIPTION AND ACCOUNTING POLICIES:
a. General: The Cincinnati Bell Inc. Savings and Security Plan (the
"Plan") is available to all eligible hourly employees at Cincinnati
Bell Inc. (CBI, the Company) and Cincinnati Bell Telephone (CBT). The
Plan is subject to the provisions of the Employee Retirement Income
Act of 1974 (ERISA). The contributions and earnings are taxable to
participants subject to certain exemptions, upon withdrawal from the
Plan. The defined contribution plan is administered by a committee (
the "Plan Committee" ) appointed in accordance with the provisions of
the Plan. The trustee of the Plan is T.Rowe Price. Participants should
refer to the Plan document for a complete description of the Plan.
b. Employee Contributions: Participants in the Plan may contribute up to
16% of their compensation to the Plan in before tax dollars.
Participants' before-tax contributions could not exceed $9,500 for
calendar years 1997 and 1996. Participants may also contribute to the
Plan on an after-tax basis. Total before-tax and after-tax
contributions may not exceed 16% of a participant's compensation. The
participants specify the manner in which their own contribution shall
be invested in the available funds. Participants may elect to change
the manner in which contributions are allocated and may also transfer
contributions from one fund to another.
c. Employer Contributions: The Company is required to make monthly
matching contributions of an amount equal to 60% of the contributions
of the participants. All employer contributions are allocated to the
Cincinnati Bell Inc. Shares Fund. If a participant has less than five
years of vesting service, the Company's contributions are subject to
forfeiture, per terms of a vesting schedule. If a participant has at
least five years of vesting service, he/she is fully vested in the
Company's matching contributions to their account. In addition, a
participant becomes fully vested at age 65 or at the participant's
death.
d. Distributions to Participants: Distributions are made to participants,
or their beneficiary, upon termination of employment, attainment of
age 70-1/2, death, disability, or financial hardship.
e. Participant Loans: Loans are available to participants from their
individual accounts. For each participant, the number of loans
outstanding is limited to two, and no more than two loans are allowed
to originate during a single Plan year. The minimum amount of any
loan is $1,000, while the maximum amount cannot exceed the lesser of
50% of the vested value of the participant's Plan account or $50,000,
reduced by any outstanding loan balances. The Plan Committee (the
Committee) determines the interest rate charged. The loan rates are
stated at the prime rate + 1% as of 1st day of the quarter at the time
the loan is taken. During 1997 and 1996, rates varied between 9.25%
and 9.50%. The minimum term of the loan is 6 months and the maximum
term is five years, unless the loan is used to acquire the
participant's principal residence, in which case the term of the loan
may not exceed fifteen years.
f. Temporary Cash Investments: Temporary cash investments include all
cash balances and highly liquid investments with maturity of three
months or less at the time of purchase. Temporary cash investments
are placed in short-term investment funds with the Trustee.
g. Investments: There are nine investment funds available to plan
participants. These include: Cincinnati Bell Stable Value Fund,
Spectrum Income Fund, Balanced Fund, Equity Income Fund, Equity Index
Fund, Capital Appreciation Fund, International Stock Fund, New America
Growth Fund and the Cincinnati Bell Inc. Shares Fund. All of the
above funds are administered, trusted and invested by T. Rowe Price or
a related subsidiary.
All funds except for the Cincinnati Bell Stable Value Fund and the
Cincinnati Bell Inc. Shares Fund are quoted in shares. These shares
represent the Net Asset Value of shares in T. Rowe Price mutual funds.
The Cincinnati Bell Stable Value Fund and the Cincinnati Bell Inc.
Shares Fund are quoted in units. These units represent a
proportionate interest in two investment funds in which both the
Cincinnati Bell Inc. Retirement Savings Plan and Cincinnati Bell Inc.
Savings and Security Plan participate.
The unit values for both the Cincinnati Bell Stable Value Fund and the
Cincinnati Bell Inc. Shares Fund were initiated at a value of 1.0000
on July 1, 1992. The Cincinnati Bell Stable Value Fund will maintain
a unit value of 1.000 at all times and any income, gains or losses,
contributions or withdrawals would result in more or less units being
credited to an account. The Cincinnati Bell Inc. Shares Fund unit
value will fluctuate with the performance of the underlying
investments which consists primarily of Cincinnati Bell Inc. shares
and a small amount of temporary investments.
The values of investments on December 31, 1997 and 1996 are determined
as follows: Cincinnati Bell shares in the Cincinnati Bell Inc. Shares
Fund on the basis of the last published sales prices on December 31,
1997 and 1996 on the New York Stock Exchange; shares in the following
T. Rowe Price mutual funds: Spectrum Income Fund, Balanced Fund,
Equity Income Fund, Equity Index Fund, Capital Appreciation Fund,
International Stock Fund and the New America Growth Fund on the basis
of the last published net asset value on December 31, 1997 and 1996;
contracts with insurance companies in the Cincinnati Bell Stable Value
Fund at principal plus accrued earnings on December 31, 1997 and 1996;
loans to participants in the Loan Fund at the principal owed by the
participants on December 31, 1997 and 1996.
The Plan presents in the Statement of Changes in Net Assets Available
for Benefits the net appreciation (depreciation) in the value of its
investments which consists of the realized gains or losses and the
unrealized appreciation (depreciation) of those investments.
h. Administrative Expenses: Administrative expenses are paid by the Plan.
i. Forfeiture of Rights: Units in the Cincinnati Bell Inc. Shares Fund
forfeited by employees under the Plan are valued as of the end of the
same day as the event causing the forfeiture and are applied as
credits reducing subsequent matching Participating Company
contributions.
j. Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reporting
amounts of Net Assets Available for Benefits as of the date of the
Plan's financial statements and the reported Changes in Net Assets
Available for Benefits during the reporting period. Actual results
could differ from these estimates.
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(2) TERMINATION: While CBI has not expressed any intent to terminate the Plan,
it reserves the right to terminate the Plan at any time. In the event of
such termination, all participants' accounts would become 100% vested and
subject to distribution under the provisions of the Plan.
(3) The interest of an employee in each type of investment of the Plan on
December 31, 1997 and December 31, 1996 is represented by units or shares.
The number and value of units or shares were:
December 31, 1997 December 31, 1996
-------------------------------------- --------------------------------
Number of Value per Number of Value per
units/shares unit/share units/shares unit/share
Cincinnati Bell Stable Value Fund 9,458,605 units $1.0000 14,689,133 units $1.0000
Spectrum Income Fund 55,917 shares $11.6600 54,571 shares $11.2000
Balanced Fund 79,213 shares $16.5400 65,154 shares $14.4800
Equity Income Fund 143,217 shares $26.0700 119,803 shares $22.5400
Equity Index Fund 70,829 shares $26.3800 57,793 shares $20.3400
Capital Appreciation Fund 52,446 shares $14.7100 37,636 shares $14.4700
International Stock Fund 99,304 shares $13.4200 95,487 shares $13.8000
New America Growth Fund 53,146 shares $44.1900 46,796 shares $38.3700
Cincinnati Bell Inc. Shares Fund 17,484,179 units $3.8938 22,717,452 units $3.8100
As of December 31, 1997 the number of participants with balances by
investment fund was:
Cincinnati Bell Stable Value Fund 759
Spectrum Income Fund 201
Balanced Fund 186
Equity Income Fund 460
Equity Index Fund 273
Capital Appreciation Fund 175
International Stock Fund 301
New America Growth Fund 436
Cincinnati Bell Inc. Shares Fund 1,527
(4) TAX STATUS:
The Internal Revenue Service has issued a determination that the Plan meets
the requirements of Section 401(a) of the Internal Revenue Code (the
"Code") and is exempt from Federal income taxes under Section 501(a) of the
Code.
(5) PLAN AMENDMENTS:
The following Plan amendments became effective January 1, 1997:
- Amend the definition of "Covered Employee" to generally exclude
salaried employees and include hourly employees temporarily promoted
to salaried employee positions, consistent with the definitions used
in the Cincinnati Bell Pension Plan (CBPP).
- Amend the rules relating to required distributions of pre-tax
allotments, post-tax allotments and Company-matching contributions to
provide that any required distribution will be made by reducing the
highest dollar amount of excess contributions rather than highest
percentage of excess contributions.
- Adopt the simplified definition of highly compensated employee,
generally, an employee earning $80,000 or more.
- Recognize credit for military service.
- Mandatory distributions not required for employees who remain employed
after age 70 1/2.
- A participant's loan will not be automatically defaulted because of a
reduction or suspension of pay, provided that adequate provisions for
manual repayments are made.
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CINCINNATI BELL INC. SAVINGS AND SECURITY PLAN
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
Thousands of Dollars
----------- ---------
Number of
Shares or
Principal
Name of Issuer and Title of Issue Amount Cost Value
--------------------------------- --------- ---- -----
CINCINNATI BELL INC. SHARES FUND
Temporary cash investments $ 3,625 $ 3,625 $ 3,625
Cincinnati Bell Inc. shares*# 2,078,907 shs. 16,213 64,446
Interest receivable $ 15 15 15
------- -------
Total Cincinnati Bell Inc.
Shares Fund 19,853 68,086
T. ROWE PRICE SPECTRUM INCOME FUND 55,917 shs. 622 652
T. ROWE PRICE BALANCED FUND 79,213 shs. 1,120 1,310
T. ROWE PRICE EQUITY INCOME FUND 143,217 shs. 3,091 3,733
T. ROWE PRICE EQUITY INDEX FUND 70,829 shs. 1,397 1,869
T. ROWE PRICE CAPITAL APPRECIATION FUND 52,446 shs. 759 772
T. ROWE PRICE INTERNATIONAL STOCK FUND 99,304 shs. 1,294 1,334
T. ROWE PRICE NEW AMERICA GROWTH FUND 53,146 shs. 1,974 2,349
CINCINNATI BELL STABLE VALUE FUND
T. Rowe Price Stable Value
Common Trust Fund * 9,217 9,217 9,217
Contracts with Metropolitan
Life Insurance Company + 153 units 153 153
Contracts with Prudential
Insurance Company of America + 91 units 91 91
------- -------
Total Cincinnati Bell Stable
Value Fund 9,461 9,461
LOAN FUND
Loans to Participants $ 2,214 0 2,214
------- -------
GRAND TOTAL $39,568 $91,780
------- -------
------- -------
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* Investment represents 5% or more of the Net Assets Available for
Benefits.
+ The contracts with these insurance companies guarantee the repayment
of principal and the crediting of interest. During 1997, the
composite effective annual interest rate earned under these contracts
for the plan years 1997 and 1996 was approximately 6.85% and 6.48%
respectively. The interest rate at December 31, 1997 and 1996 was
6.85% and 6.48%, repsectively. The rate at which interest will be
credited in future years may be either higher or lower.
# Party-in-interest to the Plan.
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CINCINNATI BELL INC. SAVINGS AND SECURITY PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Current
Value on
Identity of Purchase Selling Cost of Date of Net Gain
Party Involved Description of Asset Price Price Asset Transactions or (Loss)
- --------------------------- -------------------- ------------ ------------- ------------ ------------- -------------
Cincinnati Bell Shares Fund Company Stock $ 3,573,358 $ 3,573,358 $ 3,573,358
Cincinnati Bell Shares Fund Company Stock $ 7,527,866 $ 21,910,301 $ 7,527,866 $ 21,910,301 $ 14,382,435
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Employees' Benefit Committee have duly caused this annual report
to be signed by the undersigned, thereunto duly authorized.
CINCINNATI BELL INC. SAVINGS AND
SECURITY PLAN
By /s/ Pamela B. Wolfe
------------------------------------
Pamela B. Wolfe
Secretary
Employees' Benefit Committee
June 16, 1998
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