CBB » Topics » Costs and Expenses

These excerpts taken from the CBB 10-Q filed May 7, 2009.

Costs and Expenses

Cost of services and products decreased by $4.4 million for the three months ended March 31, 2009 as compared to the corresponding period in 2008. The decrease in the first quarter was due to decreased wages of $1.9 million related to the new union agreement signed in February 2008 and the restructuring plan announced in the fourth quarter of 2007, $2.0 million in lower benefit costs, primarily from lower pension and postretirement costs as a result of plan changes announced in February 2009, lower operating taxes of $1.1 million, and other lower costs from operations including a $0.6 million claim settlement. These decreases were offset by an increase of $2.4 million in network charges to support growth in VoIP and broadband services and increased CLEC revenues.

Selling, general and administrative expenses increased by $0.4 million for the three months ended March 31, 2009 versus the prior year primarily due to increased bad debt expense.

The restructuring gain for the three months ended March 31, 2009 resulted from a curtailment due to changes in the pension and postretirement plans announced in February 2009. Restructuring charges for the three months ended March 31, 2008 resulted from an early retirement option offered by the Company and accepted by certain eligible union employees during the first quarter of 2008. See Note 6 to the Condensed Consolidated Financial Statements for further information.

 

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Form 10-Q Part I

  Cincinnati Bell Inc.

 

Costs and Expenses

Cost of services and products consists largely of network operation costs, interconnection expenses with other telecommunications providers, roaming expense (which is incurred for subscribers to use their handsets in the territories of other wireless service providers), and cost of handsets and accessories sold. These expenses increased $0.7 million during the first quarter of 2009 versus the prior year period. The increase for the three month period was primarily attributable to a $2.7 million increase in handset subsidy costs due to Company initiatives to attract new customers and to retain existing customers. This increase was partially offset by lower handset equipment costs of $1.3 million and lower operating taxes.

Selling, general and administrative expenses increased $1.0 million for the three months ended March 31, 2009 compared to the same period in 2008 primarily due to an increase in bad debt expense.

Costs and Expenses

Cost of services and products decreased by $13.9 million in the first quarter of 2009 as compared to the same period in 2008. The decrease in the first quarter primarily resulted from a $16.3 million decrease in cost of goods sold related to lower telecom and equipment distribution revenue. This decrease was partially offset by a $1.8 million increase for higher payroll related costs due to growth in the data center and managed services and professional services revenue and increased data center facilities costs.

Selling, general and administrative expenses increased by $1.2 million for the first quarter of 2009. The increase in the first quarter primarily resulted from an increase in payroll related costs to support the growing operations of CBTS.

The increase in depreciation expense for the three months ended March 31, 2009 compared to the three months ended March 31, 2008 was primarily due to capital expenditures associated with expanding data center capacity.

These excerpts taken from the CBB 10-K filed Feb 27, 2009.

Costs and expenses

Cost of services and products decreased by $10.7 million in 2008 compared to 2007. The decrease in cost of services and products was due to $7.5 million in lower benefit costs, mainly lower pension and postretirement costs from plan changes announced in the third quarter of 2007, a $9.0 million decrease from costs associated with a large one-time business customer premise wiring project in 2007, and $4.4 million in lower wages primarily related to the restructuring plan announced in the fourth quarter 2007 and the new union agreement signed in February 2008. These decreases were offset by an increase of $5.7 million in network costs to support the growth in long distance, VoIP, broadband services and CLEC revenues, and $5.8 million in costs due to the acquisition of eGIX.

Selling, general and administrative expenses increased $5.0 million in 2008 versus the prior year. The increase was primarily due to the acquisition of eGIX, which had $6.2 million of costs, and an increase in commissions. These increases were partially offset by lower pension and postretirement costs due to plan changes announced in the third quarter of 2007.

Restructuring expenses for 2008 and 2007 were primarily related to the restructuring plans announced in the fourth quarter of 2007 and the first quarter of 2008 to reduce costs and increase operational efficiencies. See Note 3 to the Consolidated Financial Statements for further discussions.

The operating tax settlement of $10.2 million resulted from the Company’s resolution of a contingent liability from prior years related to exposures on past regulatory filing positions.

The asset impairment charge of $1.2 million related to software that is no longer being used.

 

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Costs and Expenses

Cost of services and products increased by $12.5 million in 2007 versus 2006. The increase was due to costs associated with a large one-time business customer premise wiring project of $9.0 million, higher network costs of $6.1 million related to higher CLEC interconnection charges due to increased subscribers and increased minutes of use for long distance, audio conferencing, and VoIP, higher facilities costs of $1.6 million and higher software development costs. The increases were partially offset by a $2.8 million decrease in pension and postretirement costs and a $3.9 million decrease in property and other operating taxes, primarily due to the phase out of Ohio personal property taxes.

Selling, general and administrative expenses increased $5.5 million compared to 2006 primarily due to an increase in payroll and employee-related expenses of $5.1 million and higher consulting expenses, partially related to the evaluation of marketing strategies for business customers. The Company is responding to competitive pressures by increasing its sales and marketing activities, particularly in the business markets.

Restructuring expenses for 2007 were primarily due to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and increase operational efficiencies. Restructuring costs for 2006 primarily related to the outsourcing of certain supply chain functions. See Note 3 to the Consolidated Financial Statements for further discussions.

 

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Costs and expenses

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Cost of services and products decreased by $10.7 million in 2008 compared to 2007. The decrease in cost of services and products was due to $7.5 million
in lower benefit costs, mainly lower pension and postretirement costs from plan changes announced in the third quarter of 2007, a $9.0 million decrease from costs associated with a large one-time business customer premise wiring project in 2007, and
$4.4 million in lower wages primarily related to the restructuring plan announced in the fourth quarter 2007 and the new union agreement signed in February 2008. These decreases were offset by an increase of $5.7 million in network costs to support
the growth in long distance, VoIP, broadband services and CLEC revenues, and $5.8 million in costs due to the acquisition of eGIX.

Selling,
general and administrative expenses increased $5.0 million in 2008 versus the prior year. The increase was primarily due to the acquisition of eGIX, which had $6.2 million of costs, and an increase in commissions. These increases were partially
offset by lower pension and postretirement costs due to plan changes announced in the third quarter of 2007.

Restructuring expenses for
2008 and 2007 were primarily related to the restructuring plans announced in the fourth quarter of 2007 and the first quarter of 2008 to reduce costs and increase operational efficiencies. See Note 3 to the Consolidated Financial Statements for
further discussions.

The operating tax settlement of $10.2 million resulted from the Company’s resolution of a contingent liability
from prior years related to exposures on past regulatory filing positions.

The asset impairment charge of $1.2 million related to software
that is no longer being used.

 


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Costs and Expenses


Cost of services and products increased by $12.5 million in 2007 versus 2006. The increase was due to costs associated with a large one-time business
customer premise wiring project of $9.0 million, higher network costs of $6.1 million related to higher CLEC interconnection charges due to increased subscribers and increased minutes of use for long distance, audio conferencing, and VoIP, higher
facilities costs of $1.6 million and higher software development costs. The increases were partially offset by a $2.8 million decrease in pension and postretirement costs and a $3.9 million decrease in property and other operating taxes, primarily
due to the phase out of Ohio personal property taxes.

Selling, general and administrative expenses increased $5.5 million compared to 2006
primarily due to an increase in payroll and employee-related expenses of $5.1 million and higher consulting expenses, partially related to the evaluation of marketing strategies for business customers. The Company is responding to competitive
pressures by increasing its sales and marketing activities, particularly in the business markets.

Restructuring expenses for 2007 were
primarily due to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and increase operational efficiencies. Restructuring costs for 2006 primarily related to the outsourcing of certain supply chain functions. See Note 3 to
the Consolidated Financial Statements for further discussions.

 


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Costs and Expenses

Cost of services and products consists largely of network operation costs, interconnection expenses with other telecommunications providers, roaming expense (which is incurred for subscribers to use their handsets in the territories of other wireless service providers), and cost of handsets and accessories sold. These expenses increased $10.5 million during 2008 versus the prior year period. The increase was primarily attributable to a $9.7 million increase in network costs due to increased usage per subscriber and a $1.9 million increase in handset and subsidy costs, primarily due to Company initiatives to attract new customers and to retain existing customers. These increases were partially offset by lower operating taxes.

Selling, general and administrative expenses increased $2.5 million for 2008 compared to 2007, primarily due to an increase in bad debt expense.

The decrease in amortization expense from the prior year is due to the Company’s accelerated amortization methodology.

Restructuring expenses for 2008 and 2007 were primarily related to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and increase operational efficiencies. See Note 3 to the Consolidated Financial Statements for further discussions.

Costs and Expenses

The increase in costs of services and products of $6.0 million compared to 2006 primarily resulted from higher network costs of $7.7 million due to the higher number of subscribers offset by lower subsidies and handset costs of $2.2 million. The decrease in subsidies and handset costs resulted from high subsidies in 2006 caused by the migration from the Company’s legacy TDMA network to its new GSM network and a change in third party dealer compensation practice in the second quarter of 2006. As a result of this change, the Company now predominantly pays a commission, which is reported as a selling expense, rather than incurring a subsidy by selling handsets to dealers at a rate below retail price.

Selling, general, and administrative expenses increased $5.6 million in 2007 compared to 2006. The increase was primarily due to higher commissions of $2.0 million resulting from the change in compensation practice for the third party commissions discussed above and higher activations, and increased retail store costs of $2.6 million.

 

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Depreciation expense increased $5.8 million for 2007 versus 2006. The increase was primarily due to the shortening of the useful lives of certain GSM assets as a result of the Company constructing its 3G network overlay, which the Company completed in 2008.

Decreased amortization expense resulted from the accelerated amortization methodology used, which causes a decrease in amortization in each subsequent year.

Restructuring expenses for 2007 were primarily due to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and increase operational efficiencies. See Note 3 to the Consolidated Financial Statements for further discussion.

Costs and Expenses

Cost of services and products increased by $35.8 million in 2008 compared to 2007. The increase in 2008 primarily resulted from a $19.0 million increase in the cost of goods sold related to higher telecom and IT equipment distribution revenue, $12.8 million increase in payroll costs due to growth in data center and managed services revenue and professional services revenue, increased data center facilities costs and the acquisition of GramTel.

Selling, general and administrative increased by $12.5 million in 2008 compared to 2007. The increase in 2008 was primarily due to an $8.8 million increase in labor and employee related costs to support the growing operations of CBTS and the acquisition of GramTel and higher operating taxes, bad debt expense, and advertising costs.

The increase in depreciation expense for 2008 compared to 2007 was primarily due to capital expenditures associated with expanding data center capacity.

The increase in amortization expense resulted from the allocation of a portion of the purchase price to the customer relationship intangible asset associated with the GramTel acquisition in December 2007.

Restructuring expenses for 2008 and 2007 were primarily related to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and increase operational efficiencies. See Note 3 to the Consolidated Financial Statements for further discussion.

Costs and Expenses

Cost of services and products increased by $29.4 million in 2007 versus 2006. The increase in 2007 primarily resulted from a $12.3 million increase in the cost of goods sold related to higher telecom and IT equipment distribution revenue, $13.7 million increase in payroll costs due to growth in data center and managed services revenue, and increased data center facilities costs.

 

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The increase in selling, general and administrative expenses for 2007 was primarily due to an increase in labor and employee related costs associated with increased headcount to support the growing operations.

The increase in depreciation expense for 2007 compared to 2006 was primarily due to capital expenditures associated with expanding data center capacity.

Restructuring expenses for 2007 were primarily due to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and increase operational efficiencies. See Note 3 to the Consolidated Financial Statements for further discussion.

Costs and Expenses

FACE="Times New Roman" SIZE="2">Cost of services and products increased by $35.8 million in 2008 compared to 2007. The increase in 2008 primarily resulted from a $19.0 million increase in the cost of goods sold related to higher telecom and IT
equipment distribution revenue, $12.8 million increase in payroll costs due to growth in data center and managed services revenue and professional services revenue, increased data center facilities costs and the acquisition of GramTel.


Selling, general and administrative increased by $12.5 million in 2008 compared to 2007. The increase in 2008 was primarily due to an $8.8 million
increase in labor and employee related costs to support the growing operations of CBTS and the acquisition of GramTel and higher operating taxes, bad debt expense, and advertising costs.

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">The increase in depreciation expense for 2008 compared to 2007 was primarily due to capital expenditures associated with expanding data center capacity.

The increase in amortization expense resulted from the allocation of a portion of the purchase price to the customer relationship
intangible asset associated with the GramTel acquisition in December 2007.

Restructuring expenses for 2008 and 2007 were primarily related
to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and increase operational efficiencies. See Note 3 to the Consolidated Financial Statements for further discussion.

STYLE="margin-top:12px;margin-bottom:0px">2007 Compared to 2006

Costs and Expenses

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Cost of services and products increased by $29.4 million in 2007 versus 2006. The increase in 2007 primarily resulted from a $12.3 million increase in the
cost of goods sold related to higher telecom and IT equipment distribution revenue, $13.7 million increase in payroll costs due to growth in data center and managed services revenue, and increased data center facilities costs.

STYLE="margin-top:0px;margin-bottom:0px"> 


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The increase in selling,
general and administrative expenses for 2007 was primarily due to an increase in labor and employee related costs associated with increased headcount to support the growing operations.

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">The increase in depreciation expense for 2007 compared to 2006 was primarily due to capital expenditures associated with expanding data center capacity.

Restructuring expenses for 2007 were primarily due to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and
increase operational efficiencies. See Note 3 to the Consolidated Financial Statements for further discussion.

This excerpt taken from the CBB 10-Q filed Oct 31, 2008.

Costs and Expenses

Cost of services and products decreased by $6.1 million in the third quarter of 2008 and increased by $28.5 million for the nine months ended September 30, 2008 as compared to the same periods in 2007. The decrease in the third quarter primarily resulted from a $9.5 million decrease in cost of goods sold related to the sale of telephony and IT equipment. This decrease was partially offset by a $3.9 million increase for higher payroll related costs due to growth in the data center and managed services and professional services revenue, increased data center facilities costs and the acquisition of GramTel. The increase for the nine months ending September 30, 2008 was primarily due to a $15.6 million increase in cost of goods sold related to the increase in telephony and IT equipment sales, a $10.0 million increase for higher payroll related costs due to growth in the data center and managed services and professional services revenue, increased data center facilities costs and the acquisition of GramTel.

Selling, general and administrative expenses increased by $2.8 million and $9.6 million for the third quarter of 2008 and the nine months ended September 30, 2008, respectively. The increase in the third quarter primarily resulted from an increase in labor and employee related costs of $2.0 million to support the growing operations and the acquisition of GramTel. The increase for the nine months ending September 30, 2008 was primarily due to a $6.3 million increase in labor and employee related costs to support the growing operations, higher operating taxes and the acquisition of GramTel.

The increase in depreciation expense for the three and nine months ended September 30, 2008 compared to the three and nine months ended September 30, 2007 was primarily due to capital expenditures associated with expanding data center capacity.

The increase in amortization expense resulted from the allocation of a portion of the purchase price to the customer relationship intangible asset associated with the GramTel acquisition in December 2007.

This excerpt taken from the CBB 10-Q filed Jul 31, 2008.

Costs and Expenses

Cost of services and products increased by $14.7 million in the second quarter of 2008 and $34.7 million for the six months ended June 30, 2008 as compared to the same periods in 2007. The increase in the second quarter primarily resulted from a $10.5 million increase in cost of goods sold related to the increase in telephony and IT equipment sales, a $3.1 million increase for higher payroll related costs due to growth in the data center and managed services and professional services revenue, increased data center facilities costs and the acquisition of GramTel. The increase for the six months ending June 30, 2008 was primarily due to a $26.0 million increase in cost of goods sold related to the increase in telephony and IT equipment sales, a $6.2 million increase for higher payroll related costs due to growth in the data center and managed services and professional services revenue, increased data center facilities costs and the acquisition of GramTel.

Selling, general and administrative expenses increased by $3.5 million and $6.8 million for the second quarter of 2008 and the six months ended June 30, 2008, respectively. The increase in the second quarter primarily resulted from an increase in labor and employee related costs of $2.6 million to support the growing operations and the acquisition of GramTel. The increase for the six months ending June 30, 2008 was primarily due to a $4.2 million increase in labor and employee related costs to support the growing operations, higher operating taxes and the acquisition of GramTel.

The increase in depreciation expense for the three and six months ended June 30, 2008 compared to the three and six months ended June 30, 2007 was primarily due to capital expenditures associated with expanding data center capacity.

The increase in amortization expense resulted from the allocation of a portion of the purchase price to the customer relationship intangible asset associated with the GramTel acquisition in December 2007.

This excerpt taken from the CBB 10-Q filed May 6, 2008.

Costs and Expenses

Cost of services and products increased by $20.0 million in the first quarter of 2008 as compared to the same period in 2007. The increase in the first quarter primarily resulted from a $15.5 million increase in cost of goods sold related to the increase in telephony and IT equipment sales, a $3.8 million increase for higher payroll and contracted services due to growth in both the data center and managed services and professional services revenue, and increased data center facilities costs.

The increase of $3.3 million in selling, general and administrative expenses for the first quarter period of 2008 was primarily due to an increase in labor and employee related costs of $2.3 million to support the growing operations and higher operating taxes.

The increase in depreciation expense for the three months ended March 31, 2008 compared to the three months ended March 31, 2007 was primarily due to capital expenditures associated with expanding data center capacity.

The increase in amortization expense resulted from the allocation of a portion of the purchase price to the customer relationship intangible asset associated with the GramTel acquisition in December 2007.

These excerpts taken from the CBB 10-K filed Feb 26, 2008.

Costs and Expenses

Cost of services and products increased by $35.7 million in 2006 versus 2005. The increase results from a $28.4 million increase in cost of goods sold mainly due to the increased IT and equipment sales, a $5.0 million increase in payroll and contracted services costs to support the increased revenue growth of the data center and managed services unit, higher rent of $1.1 million primarily due to the opening of a data center in June 2005 and higher utilities.

The increase in selling, general and administrative expenses in 2006 compared to 2005 was primarily due to an increase in labor costs associated with increased headcount to support the growing operations.

Depreciation expense was higher in 2006 primarily due to the increased capital expenditures for the data centers.

Amortization expense in 2006 results from the allocation of a portion of the purchase price to the customer relationship intangible asset associated with the ATI acquisition. See Note 5 to the Consolidated Financial Statements.

 

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Costs and Expenses

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Cost of services and products increased by $29.4 million in 2007 compared to 2006. The increase in 2007 primarily resulted from a $12.3 million increase
in the cost of goods sold related to higher IT and equipment revenue, $13.7 million increase in payroll and contracted services due to growth in data center and managed service revenue, and increased data center facilities costs.

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">The increase in selling, general, and administrative expenses for 2007 was primarily due to an increase in labor and employee related costs associated
with increased headcount to support the growing operations.

The increase in depreciation expense for 2007 compared to 2006 was primarily
due to capital expenditures associated with expanding data center capacity.

Amortization expense results from the allocation of a portion
of the purchase price to the customer relationship intangible asset associated with the ATI acquisition in May 2006. See Note 5 to the Consolidated Financial Statements.

FACE="Times New Roman" SIZE="2">Restructuring expenses for 2007 were primarily due to the restructuring plan announced in the fourth quarter of 2007 to reduce costs and increase operational efficiencies. See Note 3 to the Consolidated Financial
Statements for further discussions.

This excerpt taken from the CBB 10-Q filed Nov 6, 2007.

Costs and Expenses

Cost of services and products increased by $13.7 million in the third quarter of 2007 and $19.0 million for the nine months ended September 30, 2007 as compared to the same periods in 2006. The increase in the third quarter primarily resulted from a $9.2 million increase in cost of goods sold related to the increase in telephony and IT equipment sales and a $3.3 million increase for higher payroll and contracted services due to growth in both the data center and managed services revenue. The year-to-date increase resulted from a $6.3 million increase in the cost of goods sold and a $9.9 million increase in payroll and contracted services costs for the reasons discussed above, and increased data center facilities costs.

 

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Form 10-Q Part I   Cincinnati Bell Inc.

 

The increase in selling, general and administrative expenses for the third quarter and year-to-date periods of 2007 was primarily due to an increase in labor and employee related costs of $1.2 million and $3.6 million, respectively, to support the growing operations.

The increase in depreciation expense for the three and nine months ended September 30, 2007 compared to the three and nine months ended September 30, 2006 was primarily due to capital expenditures associated with expanding data center capacity.

Amortization expense results from the allocation of a portion of the purchase price to the customer relationship intangible asset associated with the ATI acquisition in May 2006.

 

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Form 10-Q Part I   Cincinnati Bell Inc.

 

This excerpt taken from the CBB 10-Q filed Aug 7, 2007.

Costs and Expenses

Cost of services and products decreased by $2.3 million in the second quarter of 2007 and increased $5.1 million for the six months ended June 30, 2007 as compared to the same periods in 2006. The decrease in the second quarter resulted from a $6.5 million decline in cost of goods sold related to the decrease in telephony and hardware sales partially offset by a $3.6 million increase for higher payroll and contracted services due to growth in both the data center and managed services revenue and higher installation and maintenance services. Data center facilities costs also increased due to the increase in data center capacity. The year-to-date increase resulted from a $5.7 million increase for higher payroll and contracted services costs for the reasons discussed above, and increased data center facilities costs partially offset by a decrease in cost of goods sold of $2.5 million related to the decrease in telephony equipment and hardware sales.

 

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Form 10-Q Part I   Cincinnati Bell Inc.

 

The increase in selling, general and administrative expenses for both periods was primarily due to an increase in labor and employee related costs of $1.3 million in the second quarter and $2.8 million increase for the six months ended June 30, 2007 as compared to the same periods in 2006. The increase in labor costs was offset by a decrease in bad debt expense of $0.2 million in the second quarter and $0.6 million for the six months ended June 30, 2007.

The increase in depreciation expense for the three and six months ended June 30, 2007 compared to the three and six months ended June 30, 2006 was primarily due to capital expenditures associated with expanding the capacity of the data centers.

Amortization expense results from the allocation of a portion of the purchase price to the customer relationship intangible asset associated with the ATI acquisition in May 2006.

 

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Form 10-Q Part I   Cincinnati Bell Inc.

 

This excerpt taken from the CBB 10-Q filed May 10, 2007.

Costs and Expenses

Cost of services increased $0.7 million in the first quarter of 2007 as compared to 2006 due to an increase in costs at CBAD for $0.9 million. The increase was mainly driven by increased network charges resulting from increased minutes of use for both long-distance and audio conferencing. In addition, CBAD also incurred additional costs related to the introduction of VoIP.

Depreciation expense increased $0.2 million from last year due to an increase in capital expenditures in 2006 related to the introduction of VoIP.

This excerpt taken from the CBB 10-Q filed Nov 8, 2006.

Costs and Expenses

CBAD cost of service for the third quarter of 2006 and nine months ended September 30, 2006 compared to the same periods in 2005 increased approximately $0.6 million and $1.7 million, respectively. In addition, CBCP cost of service increased $0.3 million for both the three and nine months ended September 30, 2006 compared to the same periods last year. The increase in costs at CBAD and CBCP was primarily related to the increase in subscriber revenues. The increases at CBAD and CBCP were partially offset by a decrease of costs at Public due to the decrease in Public revenue.

Selling, general and administrative expenses decreased $0.2 million in the third quarter of 2006 and were $0.7 million favorable for the nine months ended September 30, 2006 as compared to last year. The decrease for the nine month period was mainly from lower labor costs, advertising and bad debt expense at CBAD.

This excerpt taken from the CBB 10-Q filed Aug 8, 2006.

Costs and Expenses

CBAD cost of service for the second quarter of 2006 and six months ended June 30, 2006 compared to the same periods in 2005 increased approximately $0.5 million and $1.1 million, respectively. The increase in costs was primarily related to the increase in business subscriber revenues. The increase at CBAD was partially offset by a decrease of costs at Public due to the decrease in Public revenue.

Selling, general and administrative expenses were flat in the second quarter of 2006 and $0.4 million favorable for the six months ended June 30, 2006 as compared to last year. The decrease for the six month period was mainly from lower advertising and labor costs at CBAD.

BROADBAND

During 2003, the Company completed the sale of substantially all of its Broadband assets and, in connection with the sale, retained certain Broadband obligations. Operating income in the second quarter of 2006 was $2.3 million compared to $1.4 million in the second quarter 2005 and $1.8 million for the six months ended June 30, 2006 versus $2.6 million for the six months ended June 30, 2005. The operating income in the second quarter of 2006 and six months ended June 30, 2006 includes $2.9 million of income due to the expiration of certain warranties and guarantees established at the time the Broadband assets were sold, partially offset by legal and operating tax expenses. Operating income in the second quarter of 2005 and six months ended June 30, 2005 was mainly due to the favorable resolution of certain operating tax issues.

 

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Form 10-Q Part I

   Cincinnati Bell Inc.

 

This excerpt taken from the CBB 10-Q filed May 10, 2006.

Costs and Expenses

Cost of services and products increased in the first quarter of 2006 compared to the first quarter of 2005. CBAD’s cost of service for the first quarter of 2006 compared to the same period in 2005 increased approximately $0.6 million, primarily related to the increase in business subscriber revenues and consulting costs. The increase at CBAD was partially offset by a decrease at Public due to the decrease in revenue.

Selling, general and administrative expenses decreased in the first quarter of 2006 compared to the first quarter of 2005 due primarily to decreases in labor and advertising costs at CBAD.

This excerpt taken from the CBB 10-Q filed Nov 9, 2005.

Costs and Expenses

 

Cost of services and products decreased in the third quarter of 2005 and in the nine months ended September 30, 2005, compared to the same periods in 2004. CBAD’s cost of service for the third quarter of 2005 compared to the same period in 2004 increased approximately $1.0 million as a result of increased network charges related to increased minutes of use, but this was more than offset by cost decreases of $2.4 million for CBCP and Public as a result of sold and exited businesses. The year-to-date decrease in cost of services and products resulted primarily from a $7.5 million decrease associated with lower costs per long distance minute due to the installation of long distance switching equipment in June 2004, and the renegotiation of wholesale transport rates in June 2004 and June 2005. Cost of services and products for CBCP and Public also decreased an additional $5.7 million for the nine month period ended September 30, 2005 versus the comparable period of 2004 as a result of sold and exited businesses. These cost decreases were partially offset by increases in operating taxes of $2.6 million.

 

Selling, general and administrative expenses remained relatively flat in the third quarter of 2005 compared to the third quarter of 2004. Selling, general, and administrative expenses increased slightly for the nine months ended September 30, 2005 compared to the same period in 2004. A significant portion of the expenses was associated with software development costs at CBAD.

 

This excerpt taken from the CBB 10-Q filed Aug 9, 2005.

Costs and Expenses

 

Cost of services and products totaled $8.3 million in the second quarter of 2005 and $17.1 million in the first six months of 2005, representing a decrease of 36% and 34%, respectively, compared to the same periods in 2004. This resulted primarily from $3.0 million and $6.4 million respective decreases as a result of lower costs per long distance minute due to the installation of long distance switching equipment in June 2004, and the renegotiation of wholesale transport rates in June 2004 and June 2005. Cost of services and products have also decreased an additional $1.6 million and $3.0 million over the respective time periods as a result of sold and exited businesses.

 

SG&A expenses increased slightly to $3.7 million in the second quarter of 2005 compared to the second quarter of 2004. SG&A expenses increased to $7.6 million for the first six months of 2005 compared to $6.1 million for the same period in 2004. A significant portion of the increase was associated with software development costs at CBAD.

 

This excerpt taken from the CBB 10-Q filed May 10, 2005.

Costs and Expenses

 

Cost of services and products totaled $8.8 million in the first three months of 2005, representing a decrease of $4.3 million, or 33%, compared to the first three months 2004. This resulted primarily from decreased access charges for CBAD due to the installation of long distance switching equipment and a renegotiated rate for transport in June 2004 that significantly lowered the Company’s cost per long distance minute. Public’s costs decreased $1.5 million in the first three months of 2005 compared to the first three months of 2004 as a result of lower revenue associated with the payphone assets sold.

 

SG&A expenses increased $0.9 million, or 30%, in the first three months of 2005 compared to the first three months of 2004. A significant portion of this increase was associated with software development costs at CBAD.

 

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