FORM 10-K CINCINNATI BELL INC - CBB Filed: February 26, 2008 (period: December 31, 2007) Annual report which provides a comprehensive overview of the company for the past year Table of Contents 10-K - FORM 10-K PART I Item 1. 2 Part I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved SEC Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of the Security Holders PART II Item 5. Market for the Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. Selected Financial Data Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 8. Financial Statements and Supplementary Schedules Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III Item 10. Directors and Executive Officers and Corporate Governance Items 11 and 12. Executive Compensation and Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships, Related Transactions and Director Independence Item 14. Principal Accountant Fees and Services PART IV Item 15. Exhibits and Financial Statement Schedules Signatures EX-10.II.A (ASSEST PURCHASE AGREEMENT) EX-10.II.B (ASSEST PURCHASE AGREEMENT) EX-10.III.A.1.1 (AMENDMENT TO CINCINNATI BELL SHORT TERM INCENTIVE PLAN AS OF MAY 27) EX-10.III.A.2.1 (AMENDMENT TO CINCINNATI BELL DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS) EX-10.III.A.2.2 (AMENDMENT TO CINCINNATI BELL DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS) EX-10.III.A.2.3 (AMENDMENT TO CINCINNATI BELL DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS) EX-10.III.A.3.2 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PROGRAM) EX-10.III.A.4.1 (AMENDMENT TO CINCINNATI BELL EXECUTIVE DEFERRED COMPENSATION PLAN) EX-10.III.A.5.1 (AMENDMENT TO CINCINNATI BELL 1997 LONG TERM INCENTIVE PLAN) EX-10.III.A.5.2 (AMENDMENT TO CINCINNATI BELL 1997 LONG TERM INCENTIVE PLAN) EX-10.III.A.6.1 (AMENDMENT TO CINCINNATI BELL 1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS) EX-10.III.A.17 (CINCINNATI BELL MANAGEMENT PENSION PLAN DATED JANUARY 1) EX-10.III.A.17.1 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED JANUARY 1) EX-10.III.A.17.2 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED MAY 27) EX-10.III.A.17.3 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED JANUARY 1) EX-10.III.A.17.4 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED DECEMBER 4) EX-10.III.A.17.5 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED AUGUST 19) EX-10.III.A.17.6 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED JUNE 1) EX-10.III.A.17.7 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED MARCH 28) EX-10.III.A.17.8 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED JANUARY 1) EX-10.III.A.17.9 (AMENDMENT TO CINCINNATI BELL MANAGEMENT PENSION PLAN DATED JANUARY 1) EX-21 (SUBSIDIARIES OF REGISTRANT) EX-23 (CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM) EX-24 (POWERS OF ATTORNEY) EX-31.1 (SECTION 302 CEO CERTIFICATION) EX-31.2 (SECTION 302 CFO CERTIFICATION) EX-32.1 (SECTION 906 CEO CERTIFICATION) EX-32.2 (SECTION 906 CFO CERTIFICATION) Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2007 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-8519 CINCINNATI BELL INC. Ohio 31-1056105 (State of Incorporation) (I.R.S. Employer Identification No.) 221 East Fourth Street, Cincinnati, Ohio 45202 Telephone 513-397-9900 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 $0.01 per share) New York Stock Exchange Preferred Share Purchase Rights National Stock Exchange 6 3/4% Convertible Preferred Shares New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x 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 ¨ 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. ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x The aggregate market value of the voting common shares owned by non-affiliates of the registrant was $1.4 billion, computed by reference to the closing sale price of the common stock on the New York Stock Exchange on June 30, 2007, the last trading day of the registrant’s most recently completed second fiscal quarter. The Company has no non-voting common shares. At February 1, 2008, there were 248,375,399 common shares outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive proxy statement relating to the Company’s 2008 Annual Meeting of Shareholders are incorporated by reference into Part III of this report to the extent described herein. Source: CINCINNATI BELL INC, 10-K, February 26, 2008 Table of Contents TABLE OF CONTENTS PART I Page Item 1. Business 2 Item 1A. Risk Factors 7 Item 1B. Unresolved SEC Staff Comments 15 Item 2. Properties 15 Item 3. Legal Proceedings 15 Item 4. Submission of Matters to a Vote of the Security Holders 15 PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 16 Item 6. Selected Financial Data 18 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46 Item 8. Financial Statements and Supplementary Schedules 48 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 99 Item 9A. Controls and Procedures 99 Item 9B. Other Information 99 PART III Item 10. Directors and Executive Officers and Corporate Governance 100 Item 11. Executive Compensation 101 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 101 Item 13. Certain Relationships, Related Transactions and Director Independence 101 Item 14. Principal Accountant Fees and Services 101 PART IV Item 15. Exhibits and Financial Statement Schedules 102 Signatures 108 This report contains trademarks, service marks and registered marks of Cincinnati Bell Inc., as indicated. Source: CINCINNATI BELL INC, 10-K, February 26, 2008 Table of Contents Part I Item 1. Business General Cincinnati Bell Inc. and its consolidated subsidiaries (the “Company”) is a full-service local provider of data and voice communications services and equipment and a regional provider of wireless and long distance communications services. The Company provides telecommunications service primarily on its owned local and wireless networks with a well-regarded brand name and reputation for service. The Company also sells telecommunication equipment, information technology hardware, and related services. The Company operates in three segments: Wireline, Wireless, and Technology Solutions. The Company’s segments were realigned to be consistent with changes made in the second quarter of 2007 to its management structure and reporting. The Wireline segment combines the operations of Cincinnati Bell Telephone Company LLC (“CBT”) and Cincinnati Bell Extended Territories LLC (“CBET”), which were formerly included in the Local segment, and the operations of Cincinnati Bell Any Distance Inc. (“CBAD”), Cincinnati Bell Complete Protection Inc. (“CBCP”), the Company’s payphone business and Cincinnati Bell Entertainment Inc. (“CBE”), which were formerly included in the Other segment. The Broadband segment, which does not have any substantive on-going operations, has been eliminated. The remaining liabilities associated with the former broadband operations are now included in Corporate activities. The Wireless and Technology Solutions segments were not impacted by the segment realignment. The Company is an Ohio corporation, incorporated under the laws of Ohio in 1983. Its principal executive offices are at 221 East Fourth Street, Cincinnati, Ohio 45202 (telephone number (513) 397-9900 and website address http://www.cincinnatibell.com). As soon as practicable after they have been electronically filed, the Company makes available its reports on Form 10-K, 10-Q, and 8-K (as well as all amendments to these reports), proxy statement and other information free of charge, on its website at the Investor Relations section.