Annual Report (Form 10-K), fiscal year 1994

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. Its principal subsidiaries are divided into three industry segments. The telephone operations segment, Cincinnati Bell Telephone Company ("CBT"), provides telecommunications services and products, mainly local service, network access and toll telephone services. The information systems segment, Cincinnati Bell Information Systems Inc. ("CBIS"), provides data processing and software development services for telecommunications and general business needs. The marketing services segment, MATRIXX Marketing Inc. ("MATRIXX"), provides telephone marketing, research, fulfillment and database services. Other businesses 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.
TELEPHONE OPERATIONS
GENERAL. CBT is engaged principally in the business of furnishing telecommunications services and products, mainly local service, network access and toll telephone services, in four counties in southwestern Ohio, six counties in northern Kentucky and parts of two counties in southeastern Indiana. On December 31, 1994, CBT had approximately 877,000 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 AT&T Corp. ("AT&T") and also sells products of other companies.
CBT's local exchange, network 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 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 ------------------------------------
1994 1993 1992 1991 1990 Network Access Lines ---- ---- ---- ---- ---- 877 848 827 808 800
Recurring charges for network access lines and other local services for the year ended December 31, 1994 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 the Public Utilities Commission of Ohio (the "PUCO") and the Public Service Commission of Kentucky (the "PSCK"). Approximately 77% of CBT's 1994 revenues was derived from intrastate service. Approximately 82% of 1994 intrastate revenues was derived from Ohio service, approximately 18% was derived from Kentucky service and minor amounts were derived from Indiana and other states service. Of the total 1994 intrastate revenues, local service accounted for approximately 71%, intrastate long distance service and network access accounted for approximately 13% and miscellaneous revenue accounted for approximately 16% of such revenues.
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 alternate forms of regulation for competitive services and basic service rates. CBT filed for a threshold increase in rates together with an alternative regulation proposal in 1993. Thereafter, CBT and the intervenors signed a settlement agreement which was approved by the PUCO on May 5, 1994 approving an alternative regulation plan and increasing revenues by $11.9 million annually or 3.75% on Ohio regulated services. The alternative regulation provisions and new rates became effective May 6, 1994. CBT's authorized rate of return on capital is 11.18%, but CBT can earn up to 11.93% in a monitoring period without any retargeting of rates. Earnings higher than 11.93% will trigger a revenue retargeting formula. This formula will allow for certain adjustments in the following monitoring period. This alternative regulation plan provides increased pricing flexibility in some areas, which allows CBT to be more responsive to customers and the market.
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.
In October 1994, CBT filed a proposal with the PSCK for new regulated rates for telephone services provided to its Kentucky customers. This proposal, if approved in its entirety, would result in uniform rates for basic service in CBT's Kentucky and Ohio metropolitan service areas and increase revenues by $3.4 million annually.
INTERSTATE RATES. Approximately 23% of CBT's 1994 revenues 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, revenues, 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 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). Residential and single line business Subscriber Line Charges have a cap of $3.50 and multi-line customers' Subscriber Line Charges have a $6.00 cap. The Carrier Common Line rate recovers the remaining non-traffic costs.
For interstate services, CBT began to operate under an Optional Incentive Regulation ("OIR") plan in January 1994. This is an alternative form of regulation (i.e. departure from traditional rate of return regulation) for small and mid-sized companies. Under OIR more emphasis is placed on price regulation similar to price caps. In addition, CBT has some pricing flexibility. Rate changes can become effective on a 14-day notice without cost support if the rate changes do not increase "aggregate service basket" rates. New services can be offered on a 14-day notice without cost support if CBT sets rates no higher than a geographically adjacent price cap local exchange carrier. This allows CBT to be more responsive to customers and the market.
In January 1994, CBT completed a successful triennial depreciation represcription with regulators from the FCC, the PUCO and the PSCK. The new depreciation rates were effective January 1, 1994 in the interstate and Kentucky jurisdictions, and were effective July 1, 1994 in the Ohio jurisdiction.
COMPETITION. Customer demands, technology, the preferences of policy makers and the convergence of other industries with the telecommunications industry are causes for increasing competition in the telecommunications industry for CBT. 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.
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CBT is redesigning and streamlining its processes and work activities to improve responsiveness to customer needs, permit more rapid introduction of new products and services, improve the quality of products and service offerings and reduce costs. On February 6, 1995, CBT announced the approval of a restructuring plan which ultimately will result in the reduction in CBT's workforce by approximately 800 employees. In addition, 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 Dialing and Number Privacy.
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, cable companies and wireless providers have all made clear their intent to compete for segments of the local exchange business. 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.
During the fourth quarter 1994, two companies filed requests with the PUCO to offer basic local exchange telephone service within CBT's Ohio operating territory. CBT will actively participate in any proceedings which address the issue of local telecommunications competition.
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.
INFORMATION SYSTEMS
GENERAL. CBIS provides data processing and software development services for the telecommunications industry. CBIS is the leading supplier of billing solutions to the cellular telecommunications industry.
During 1994, CBIS substantially completed its disposal and restructuring plan by divesting its holdings in CBIS Federal and other businesses, closing its foreign data center, eliminating other unprofitable domestic and international activities and restructuring the remaining CBIS operations. As a result, CBIS is now focusing on high volume billing and customer transaction solutions that serve wireless and wireline telecommunications companies.
CBIS's principal domestic markets include cellular telephone providers and their resellers, inter-exchange carriers, independent telephone companies and regional Bell operating companies.
Internationally, CBIS's principal markets include post, telegraph & telephone ("PTT's") organizations, mobile telecommunications providers and their resellers, and new competing networks. In the United Kingdom, CBIS Ltd. is an ISO-9001 certified supplier with TickIT accreditation.
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CBIS continues to develop open-systems, client-server billing applications that could serve wireline, wireless and interexchange companies. These new applications will form a foundation for more advanced solutions that CBIS expects to deliver to current and future clients.
COMPETITION. 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 client 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 March 1995, a service bureau client of CBIS that represents approximately five percent of CBIS's revenues decided not to renew its contract with CBIS. The current contract expires in 1997.
MARKETING SERVICES
GENERAL. During 1994, MATRIXX became larger and more profitable because of its WATS Marketing acquisition in 1993 and its growth in its existing business. The majority of MATRIXX's customers come from the telecommunications, financial services, consumer products, high technology and direct marketing industries. 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, business-to-business telephone marketing, marketing research, fulfillment, direct mail, database management, and facilities management.
MATRIXX's inbound and outbound telephone marketing services enable clients to manage high volumes of inbound and outbound customer contacts in an environment of shared resources and also increases market awareness with rapid response to consumer requests for information or services. Its business-to- business telephone marketing 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. MATRIXX's marketing research services assist clients in finding and qualifying 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. MATRIXX also designs customized client solutions for consumer markets with a dedicated staff and services uniquely tailored to the needs of each client.
MATRIXX has international operations in Europe with headquarters in Paris and an office in the United Kingdom, offering business-to-business and business- to-consumer telephone marketing, including toll-free services, direct response services and facilities management.
COMPETITION. 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 continued trend in the outsourcing of telephone marketing is important for MATRIXX's continued growth. 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 controlling a large portion of the French market.
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OTHER BUSINESSES
GENERAL. 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.
CBLD is a reseller of long distance telecommunications services. CBLD sells high-quality, competitively-priced long distance services and products to residence customers and small to medium-sized businesses in Ohio, Indiana, Kentucky, Western Pennsylvania and Michigan. CBLD also provides voice mail and paging services.
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.
Cincinnati Bell Supply Company engages in the purchase, sale and reconditioning of telecommunications and computer equipment to customers nationwide.
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".
COMPETITION. CBLD, CBD 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 needs of their customers.
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 derive significant revenues from AT&T and its affiliates by providing to them network services, information management systems and marketing services. With the completion of the merger of AT&T and McCaw Cellular Communications Inc., in 1994, the Company's revenues from AT&T (combined with McCaw) have increased compared to prior years. During 1994, the Company's revenues from AT&T (excluding network access revenues) were approximately $228 million or 18.6% of the Company's consolidated revenues, and the Company's purchases of goods and services from AT&T and its affiliates were approximately $80 million. For 1994 revenues from AT&T (combined with McCaw) accounted for 45% of the information systems segment revenues.
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 challenges and increase the operating efficiency and productivity of its network.
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The following is a summary of capital additions for the years 1990 through 1994:
The total investment in telephone plant increased from approximately $1,221 million at December 31, 1989 to approximately $1,447 million at December 31, 1994, after giving effect to retirements but before deducting accumulated depreciation at either date.
Anticipated capital additions in 1995 for the Company including all subsidiaries are approximately $140 million, of which $100 million is for telephone plant.
EMPLOYEES
At December 31, 1994 the Company and its subsidiaries had approximately 15,600 employees. CBT and CBIS had approximately 2,500 employees 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.
In November 1994, CBT presented a separation offer to 18 of its senior managers, 12 of whom accepted the offer. In February 1995, the Company approved a restructuring plan for CBT which will result in the need for fewer people to operate that business. In all, CBT expects to eliminate approximately 800 management and hourly positions by 1997.
BUSINESS SEGMENT INFORMATION
The amounts of revenues, 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, 1994 is set forth in the table relating to business segment information in Note 21 of the Notes to Financial Statements in the Company's annual report to security holders, and such table is incorporated herein by reference.
ITEM 2.



ITEM 2. PROPERTIES
The property of the Company is principally telephone plant which does not lend itself to description by character and location of principal units. Other property of the Company is principally computer equipment, computer software, furniture and fixtures.
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The gross investment in telephone plant and other property, in thousands of dollars, at December 31, 1994 was as follows:
Telephone Plant Land, buildings and leasehold improvements $ 184,847 Central office equipment 551,619 Connecting lines (not on customer premises) 578,921 Station equipment 28,538 Furniture, fixtures, vehicles and other 88,341 Telephone plant under construction 15,145 --------- Total telephone plant 1,447,411 ---------
Other Property Information systems 175,256 Marketing services 62,811 Other 41,288 ---------- Total other property 279,355 ----------
Total $1,726,766 ---------- ----------
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.
In March 1995, CBIS entered into a build-to-suit lease agreement for a new office building and data center in Maitland, Florida. Under the terms of the agreement, the lease is a 15 year lease term with four 5-year renewal options. The office building will contain 125,000 square feet and the data center will be in a separate building of 60,000 square feet. The annual base rent will be approximately $3.7 million for an initial total commitment of $55.5 million over the 15 year term.
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.

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.
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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 terminate on December 31, 1993. On November 11, 1993, the Company filed a Complaint against Anixter and the Joint Venture in the Court of Common Pleas for Hamilton County contending that Anixter refused to compensate the Company for the going concern value of the Joint Venture and that the managing partner failed to account properly for 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, and on December 16, 1993 filed its Answer and Counterclaim contending that the Company wrongfully competed with the Joint Venture. On January 10, 1994, the Company filed a motion to remand the case to state court contending that the federal court lacked jurisdiction. On November 25, 1994, the Company filed a petition for mandamus in the U.S. Court of Appeals for the Sixth Circuit asking that court to order the District Court to remand the case to the state court. 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.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE 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 OF THE REGISTRANT (DURING 1994).
The names, ages and positions of the executive officers of the Company are as follows:
Name Age Title ---- --- ----- (as of 3/31/95)
Dwight H. Hibbard (a,b) 71 Chairman of the Board
John T. LaMacchia (a,b) 53 President and Chief Executive Officer
Raymond R. Clark (a) 57 Executive Vice President and Chief Executive Officer of Cincinnati Bell Telephone Company
Brian C. Henry 38 Executive Vice President and Chief Financial Officer
David J. Lahey (c) 56 Executive Vice President
William H. Zimmer III 41 Secretary and Treasurer
Donald E. Hoffman (d) 56 Senior Vice President of Cincinnati Bell Telephone Company
Scott Aiken (e) 59 Vice President of Cincinnati Bell Telephone Company
James F. Orr (f) 49 President and Chief Executive Officer of CBIS
William D. Baskett III 55 General Counsel and Chief Legal Officer
Barbara J. Stonebraker 50 Senior Vice President of Cincinnati Bell Telephone Company
(a) Member of the Board of Directors
(b) Member of the Executive Committee
(c) Served as President and Chief Executive Officer of CBIS and Chairman of MATRIXX until December 31, 1994.
(d) Served as an officer until February 28, 1995.
(e) Served as an officer until December 30, 1994.
(f) Effective January 1, 1995, Mr. Orr was elected President and Chief Executive Officer of CBIS.
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Officers are elected annually but are removable at the discretion of the Board of Directors.
DWIGHT H. HIBBARD, Chairman of the Board since January 1, 1985; Chief Executive Officer of the Company, 1985-September 30, 1993; Chairman of Cincinnati Bell Telephone Company, 1985-October 31, 1993. Director of 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 Information Systems Inc. since October 1988. Director of Multimedia, Inc. and The Kroger Company.
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, Ohio National Life Insurance Company 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.
DAVID J. LAHEY, Executive Vice President of the Company since January 1, 1993; President and Chief Executive Officer of CBIS, February 4, 1994-December 31, 1994; Chairman of MATRIXX Marketing Inc., January 1, 1993-December 31, 1994; President and Chief Executive Officer of MATRIXX Marketing Inc., February 2, 1989 December 31, 1992.
WILLIAM H. ZIMMER III, Secretary and Treasurer of the Company since August 1, 1991; Secretary and Assistant Treasurer of the Company, December 1, 1988-July 31, 1991.
DONALD E. HOFFMAN, Senior Vice President of Cincinnati Bell Telephone Company January 1, 1990-February 28, 1995.
SCOTT AIKEN, Vice President of Cincinnati Bell Telephone Company, May 13, 1985- December 30, 1994.
JAMES F. ORR, President and Chief Executive Officer of CBIS since January 1, 1995; Chief Operating Officer of CBIS, February 4, 1994-December 31, 1994; President and Chief Executive Officer of MATRIXX Marketing Inc., January 1, 1993-December 31, 1994; Vice President-Market Development, January 1, 1989- December 31, 1992.
WILLIAM D. BASKETT III, General Counsel and Chief Legal Officer of the Company since July 1993; Partner of Frost & Jacobs since 1970.
BARBARA J. STONEBRAKER, Senior Vice President of Cincinnati Bell Telephone Company since 1990.
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PART II
ITEM 5.

ITEM 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, 1995 there were approximately 21,553 holders of record of the 66,061,106 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:
ITEMS 6 THROUGH 8.
The Selected Financial Data, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Financial Statements and Supplementary Data required by these items are included in the registrant's annual report to security holders for the fiscal year ended December 31, 1994 included in Exhibit 13 and are incorporated herein by reference pursuant to General Instruction G(2).
ITEM 9.





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 of the Registrant" since the registrant did not furnish such information in its definitive proxy statement prepared in accordance with Schedule 14A.
The other information required by these items is included in the registrant's definitive proxy statement dated March 13, 1995 in the first paragraph on page 2, the accompanying notes on page 2 and the last paragraph on page 2, the information under "Election of Directors" on pages 6 and 7, the information under "Share Ownership of Directors and Officers" on pages 4 and 5, the information under "Executive Compensation" on pages 12 through 16, 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).
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PART IV
ITEM 14.







ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report:
(1) Consolidated Financial Statements: Page ----
Report of Management . . . . . . . . . . . . . . . . . . . . . *
Report of Independent Accountants. . . . . . . . . . . . . . . *
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 Schedule:
Report of Independent Accountants. . . . . . . . . . . . . . . 22
II - Valuation and Qualifying Accounts. . . . . . . . . . . . 23
Financial statements and financial statement schedules other than that 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.
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* Incorporated herein by reference to the appropriate portions of the registrant's annual report to security holders for the fiscal year ended December 31, 1994. (See Part II)
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(3) Exhibits
Exhibits identified in parenthesis 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.
(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).
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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.
(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).
----------------------- * Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
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(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)(i)* 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)(4)(ii)* Cincinnati Bell Inc. Pension Program, as amended effective November 4, 1991.
(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)* 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)(7)(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)(7)(iii)* Amendment to Executive Employment Agreement Dated April 20, 1992 between the Company and Dwight H. Hibbard.
(10)(iii)(A)(7)(iv)* Amendment to Executive Employment Agreement dated February 4, 1994 between the Company and Dwight H. Hibbard. (Exhibit (10)(iii)(A)(8)(iii) to Form 10-K for 1993, File No. 1-8519).
(10)(iii)(A)(8)* 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).
----------------------- * Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
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(10)(iii)(A)(9)* 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)(10)* 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)(11)* Separation and Consulting Agreement and Waiver and Release between the Company and Sheldon Horing effective March 11, 1994.
(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. (Exhibit (10)(iii)(A)(13) to Form 10-K for 1993, File No. 1-8519).
(10)(iii)(A)(14)* Executive Employment Agreement dated as of March 29, 1993 between the Company and Brian C. Henry. (Exhibit (10)(iii)(A)(14) to Form 10-K for 1993, File No. 1-8519).
(10)(iii)(A)(15)(i)* Employment Agreement dated as of January 1, 1989 between the Company and James F. Orr. (Exhibit (10)(iii)(A)(15)(i) to Form 10-K for 1993, File No. 1-8519).
(10)(iii)(A)(15)(ii)* Amendment to Employment Agreement dated as of June 30, 1993 between the Company and James F. Orr. (Exhibit (10)(iii)(A)(15)(ii) to Form 10-K for 1993, File No. 1-8519).
(10)(iii)(A)(16)* Employment Agreement dated as of December 31, 1993 between the Company and James F. Orr. (Exhibit (10)(iii)(A)(16) to Form 10-K for 1993, File No. 1-8519).
(10)(iii)(A)(17)(i)* Employment Agreement dated as of August 19, 1994 between the Company and James F. Orr.
(10)(iii)(A)(17)(ii)* Amendment to Employment Agreement dated as of October 31, 1994 between the Company and James F. Orr.
(10)(iii)(A)(18)* Employment Agreement dated as of December 30, 1994 between the Company and Barbara J. Stonebraker.
(10)(iii)(A)(19)* Separation Agreement and Waiver and Release between the Company and Donald E. Hoffman dated December 21, 1994.
(10)(iii)(A)(20)(i)* Cincinnati Bell Inc. Executive Deferred Compensation Plan. (Exhibit (10)(iii)(A)(17) to Form 10-K for 1993, 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.
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(10)(iii)(A)(20)(ii)* Amendment to Cincinnati Bell Inc. Executive Deferred Compensation Plan effective January 1, 1994.
(10)(iii)(A)(21)(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)(21)(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)(22)* 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)(23)* 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)(24)* Cincinnati Bell Inc. Retirement Plan for Outside Directors. (Exhibit (10)(iii)(A)(21) to Form 10-K for 1993, File No. 1-8519).
(11) Computation of Earnings (Loss) 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, 1994 as incorporated by reference including the Selected Financial Data, Report of Management, Report of Independent Accountants, Management's Discussion and Analysis and Consolidated Financial Statements.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Accountants.
(24) Powers of Attorney.
(27) Financial Data Schedules.
(99)(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 1994 will be filed by amendment on or before June 30, 1995.
(99)(b) Annual Report on Form 11-K for the Cincinnati Bell Inc. Savings and Security Plan for the year 1994 will be filed by amendment on or before June 30, 1995.
(99)(c) Annual Report on Form 11-K for the MATRIXX Marketing Inc. Profit Sharing/401(k) Plan for the year 1994 will be filed by amendment on or before June 30, 1995.
(99)(d) Annual Report on Form 11-K for the CBIS Retirement and Savings Plan for the year 1994 will be filed by amendment on or before June 30, 1995.
---------------------- *Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
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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.
No reports on Form 8-K were filed during the last quarter of the period covered by this report.
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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 28, 1995 By /s/ Brian C. Henry ----------------------------- Brian C. Henry, Executive Vice President and Chief Financial 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 ------------------------------- John T. LaMacchia
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
WILLIAM A. FRIEDLANDER* Director ------------------------------- William A. Friedlander
Chairman of the Board and DWIGHT H. HIBBARD* Director ------------------------------- Dwight H. Hibbard
ROBERT P. HUMMEL, M.D.* Director ------------------------------- Robert P. Hummel, M.D.
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Signature Title Date --------- ----- ----
JAMES D. KIGGEN* Director ------------------------------- James D. Kiggen
MARY D. NELSON* Director ------------------------------- Mary D. Nelson
DAVID B. SHARROCK* Director ------------------------------- David B. Sharrock
*By /s/ Brian C. Henry March 28, 1995 ------------------------------------ Brian C. Henry as attorney-in-fact and on his behalf as Executive Vice President and Chief Financial Officer
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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 23 of the 1994 annual report of Cincinnati Bell Inc. In connection with our audits of such consolidated financial statements, we have also audited the related financial statement schedule on page 23 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio February 13, 1995
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Schedule II
CINCINNATI BELL INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Thousands of Dollars)
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