FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

             [X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934

             For the fiscal year ended December 31, 2000

                                       OR

             [  ]    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

                                 BROADWING INC.

         An Ohio                                    I.R.S. Employer
         Corporation                                No. 31-1056105

                 201 East Fourth Street, Cincinnati, Ohio 45202
                          Telephone Number 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                        Cincinnati Stock Exchange
6.75% Preferred Shares                                 New York Stock Exchange

Securities requested pursuant to Section 12(g) of the Act:  None

                     ---------------------------------------


    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. [ ]

    At February 28, 2001, there were 217,842,953 Common Shares outstanding.

    At February 28, 2001, the aggregate market value of the voting shares owned
by non-affiliates was $5,013,092,925.

----------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's definitive proxy statement dated March 30, 2001
issued in connection with the annual meeting of shareholders (Part III)





                                TABLE OF CONTENTS


                                     PART I


                                                                                                               Page
                                                                                                            
Item 1.    Business............................................................................................  1
Item 2.    Properties.......................................................................................... 10
Item 3.    Legal Proceedings................................................................................... 12
Item 4.    Submission of Matters to a Vote of Security Holders................................................. 12
Item 4A.   Executive Officers of the Registrant................................................................ 12


                                     PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters............................... 14
Item 6.    Selected Financial Data............................................................................. 15
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations............... 17
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.......................................... 42
Item 8.    Financial Statements and Supplementary Schedules.................................................... 44
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................ 81


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant.................................................. 82
Item 11.   Executive Compensation.............................................................................. 82
Item 12.   Security Ownership of Certain Beneficial Owners and Management...................................... 82
Item 13.   Certain Relationships and Related Transactions...................................................... 82


                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K.................................... 82
           Signatures.......................................................................................... 87


This report contains trademarks, service marks and registered marks of the
Company and its subsidiaries, as indicated.






PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 SAFE HARBOR CAUTIONARY
STATEMENT

         This Form 10-K contains "forward-looking" statements, as defined in
the Private Securities Litigation Reform Act of 1995, which are based on the
Company's current expectations, estimates and projections. Statements that
are not historical facts, including statements about the beliefs and
expectations of the Company and its subsidiaries, are forward-looking
statements. These statements involve potential risks and uncertainties;
therefore, actual results may differ materially. You are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date on which they were made. The Company does not undertake any
obligation to update any forward-looking statements, whether as a result of
new information, future events or otherwise.

         Important factors that may affect the Company's expectations
include, but are not limited to: changes in the overall economy; changes in
competition in markets in which the Company and its subsidiaries operate;
advances in telecommunications technology; the ability of the Company to
generate sufficient cash flow to fund its business plan and expand its
optical network; changes in the telecommunications regulatory environment;
changes in the demand for the services and products of the Company and its
subsidiaries; the ability of the Company and its subsidiaries to introduce
new service and product offerings in a timely and cost effective basis; the
ability of the Company to attract and retain highly qualified employees; the
successful implementation of restructuring initiatives and the performance of
marketable equity securities of other companies held within the Company's
investment portfolio.

                                     PART I
ITEM 1.  BUSINESS

GENERAL

         Broadwing Inc. (together with its consolidated subsidiaries, the
"Company") is a full-service, local and national provider of data and voice
communications services, and a regional provider of wireless communications
services. The Company seeks to provide world-class service on a national
level by combining two sets of strengths: its nationwide optical network and
Internet backbone and its well-regarded brand name and reputation for service
in its local and regional franchise area. The Company has principal
businesses in four industry segments: Broadband, Local Communications,
Wireless and Other Communications.

         The Company completed its merger with the former IXC Communications,
Inc. ("IXC", now "Broadwing Communications") on November 9, 1999 (the
"Merger") and accounted for this transaction according to the purchase method
of accounting. As such, Broadwing Communications' operating results are
included in the Company's operating results prospectively from November 9,
1999 and are referred to as the "as reported" results. The Company's "pro
forma" results assume that the Merger took place on January 1, 1998 and
combine the operating results of the historical Cincinnati Bell Inc. and the
former IXC. The pro forma numbers are subject to certain assumptions and
related adjustments, all of which pertain to the Merger.

         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).

    BROADBAND

    The Broadband segment was created as a result of the Merger and reflects
the operations of the Company's Broadwing Communications subsidiary.
Broadband revenues constituted 47% of consolidated Company revenues in 2000,
or two percentage points higher than the 45% generated in the prior year on a
pro forma basis.

    Broadwing Communications is a nationwide provider of data and voice
communications services. These services are provided over more than 18,000
route miles of fiber-optic transmission facilities. Revenues for the
Broadband segment come chiefly from broadband transport and switched
long-distance services, categories constituting 39% and 41%, respectively, of
Broadband segment revenues. The remaining 20% of revenues are comprised of
data and Internet services, information technology consulting and network
construction services.


                                       1


    Broadband transport services provided by this segment represent the
long-haul transmission of data, voice and Internet traffic over dedicated
circuits. Additionally, the broadband transport category includes revenues
from IRU agreements. IRU agreements typically cover a fixed period of time
and represent the lease of capacity or network fibers. The Company currently
maintains sufficient network capacity such that it believes that the sale of
IRU agreements will have no negative impact on its ability to carry traffic
for its retail customers. The offering of IRU agreements is standard practice
within the industry and among Broadwing Communications' competitors.

    Switched services represent billed minutes of use, primarily for the
transmission of voice long distance services. These revenues have been
decreasing as a percentage of total Broadband segment revenues as Broadwing
Communications has focused its efforts on margin improvement and optimization
of this revenue source. Switched services have provided 41%, 50% and 65% of
Broadband segment pro forma revenues in 2000, 1999 and 1998, respectively.

    Data and Internet services represent the sale of high-speed data
transport services such as frame relay, Internet access and web hosting.
These services are growing as a percentage of segment revenues, doubling from
3% in 1999 to more than 6% in 2000. The Company envisions a growing market
for these types of services and it expects that the Data and Internet
category will provide a greater share of Broadband segment revenues in the
future.

    Other services consist primarily of information technology consulting
services and network construction projects. For the year 2000, information
technology consulting revenues were $66 million, or $52 million higher than
in the prior year. In 2000, network construction projects provided $68
million in revenue, compared to no such revenue in the prior year. The
Company typically gains access to rights of way or additional fiber routes
through its network construction activities. In 1999, the Company recorded
$28 million in nonrecurring, residual revenues from a prior sale of dark
fiber.

    The centerpiece of the Broadband segment is its next-generation network.
This network is fully operational and includes an Internet backbone and
represents the first commercially deployed, optically switched network.

    Since revenues from this segment are conditioned primarily on usage and
the ratable recognition of contract revenues, the operations of the segment
follow no particular seasonal pattern. However, this segment does receive a
significant portion of its revenues from a relatively small group of
interexchange carriers that are capable of constructing their own network
facilities.

    In order to satisfy the contractual commitments that Broadwing
Communications has entered into with respect to IRU agreements and network
construction projects, approximately 2,700 route miles must still be
constructed at an estimated cost of $88 million. Prices and rates for this
segment's services offerings are primarily established through contractual
agreements. Accordingly, they are influenced by competitive conditions such
as the number of competitors, availability of comparable service offerings
and the amount of fiber network capacity available from these competitors.

    Broadwing Communications faces significant competition from other
fiber-based telecommunications companies such as AT&T, Worldcom, Sprint,
Level 3 Communications, Qwest Communications International, Global Crossing
and Williams Communications. These companies have similarly equipped fiber
networks, are well-financed, and have enjoyed certain competitive advantages
over Broadwing Communications in the past.

LOCAL COMMUNICATIONS

    The Local Communications segment provides local telephone service,
network access, high-speed Internet access, data transport services and
switched long distance, as well as other ancillary products and services to


                                       2


customers in southwestern Ohio, northern Kentucky and southeastern Indiana.
This market consists of approximately 2,400 square miles located within a
25-mile radius of Cincinnati, Ohio. Services are provided through the
Company's Cincinnati Bell Telephone ("CBT") subsidiary.

    CBT's service offerings are generally classified into three major
categories: local service, network access, and other services. On a pro forma
basis, the Local Communications segment produced 37%, 44% and 47% of
consolidated Company revenues in 2000, 1999 and 1998, respectively.
Approximately 98% of CBT's network access lines are in one local access
transport area.

    Local service revenues are primarily from end-user charges for use of the
public switched telephone network and for value-added services such as
custom-calling features. These services are provided to business and
residential customers and represented 57% of CBT's revenues in 2000. Network
access represented 25% of CBT's revenues in 2000 and came from interexchange
carriers for access to CBT's local communications network and business
customers for customized access arrangements. Other services provided the
remaining 18% of CBT's revenues in 2000 and resulted from the sale and
installation of telecommunications equipment, Internet access, inside wire
installation and maintenance and other ancillary services.

    CBT has successfully leveraged its embedded network investment to provide
value-added services and unique product bundling packages, resulting in
additional revenue with minimal incremental costs. CBT's plant, equipment and
network are state-of-the-art and are capable of handling new service
offerings as they are developed. All of the network access lines subscribed
to CBT are served by digital switches and have the ISDN and Signaling System
7 capability necessary to support enhanced features such as Caller ID, Call
Trace and Call Return. The network also includes more than 2,800 route miles
of fiber-optic cable, with synchronous optical network ("SONET") rings
linking Cincinnati's downtown with other major business centers. These SONET
rings offer increased reliability and redundancy to CBT's major business
customers.

    CBT's capital investment has been held relatively constant in recent
years, normally ranging between $130 million and $152 million per year. CBT
will still require a significant amount of capital spending in 2001 in order
to facilitate widespread deployment of its high-speed digital subscriber line
service (ZoomTown-SM-) and equip its entire network for the delivery of
high-speed data transport services. However, CBT currently plans to spend
less for capital expenditures than the $152 million spent in 2000.

    In order to maintain its network, CBT relies on readily available
supplies from a variety of external vendors. Since the majority of CBT's
revenues result from use of the public switched telephone network, its
operations follow no particular seasonal pattern. CBT's franchise area is
granted under regulatory authority, and is subject to increasing competition
from a variety of competitors. CBT is not aware of any regulatory initiative
that would restrict the franchise area in which it is able to operate. A
significant portion of its revenues is derived from pricing plans that
require regulatory overview and approval. In recent years, these pricing
plans have resulted in decreasing or fixed rates for some services, offset by
price increases and more flexibility for other services.

    As of December 31, 2000, more than 50 companies were certified to offer
telecommunications services in CBT's local franchise area and 39 of those
companies have sought interconnection agreements with CBT. CBT seeks to
maintain a competitive advantage over these carriers through its service
quality, network capabilities, innovative products and services, creative
bundling ideas for products and customer billing and value pricing. CBT has
experienced only a 1% net loss in access lines in spite of an increased level
of competition.

    CBT had approximately 1,049,000 network access lines in service on
December 31, 2000, a 1% reduction in comparison to 1,055,000 access lines in
service at December 31, 1999. Approximately 68% of CBT's network access lines
serve residential customers and 32% serve business customers. In addition,
voice-grade equivalents


                                       3


from digital services, a measure used to express the sale of higher-bandwidth
services, increased 37% and 34% in 2000 and 1999, respectively.

WIRELESS

    The Wireless segment comprises the operations of Cincinnati Bell Wireless
LLC ("CBW"), a venture with AT&T PCS, Inc. ("AT&T PCS") in which the Company
owns 80.1% and AT&T PCS owns the remaining 19.9%. The Company acquired its
80.1% ownership interest from AT&T PCS on December 31, 1998. CBW provides
advanced digital personal communications to customers in its Greater
Cincinnati and Dayton, Ohio operating areas. Services are provided over the
Company's regional and AT&T PCS' national networks.

    Revenues for the Wireless segment come primarily from two sources:
provision of wireless communications services to its subscribers and the sale
of handsets and associated equipment. In 2000, approximately 93% of revenues
for the segment were from services and the remaining 7% were from equipment
sales. This compares to approximately 86% and 14%, respectively, of prior
year revenues. In total, the Wireless segment contributed 9% of consolidated
pro forma revenues and also supplied more than 23% of the growth in
consolidated revenues for 2000. In 1999, the Wireless segment produced 5% of
consolidated pro forma revenues and 70% of the growth in consolidated
revenues.

    Service revenues are generated through subscriber use of the Company's
wireless communications network. This network is maintained by the Company
with respect to the Greater Cincinnati and Dayton, Ohio operating areas, with
wireless calls beyond these areas being terminated on AT&T PCS' national
wireless network. Service revenues are generated through a variety of rate
plans, which typically include a fixed number of minutes for a flat monthly
rate, with additional minutes being charged at a per-minute-of-use rate.
Additional revenues are generated when subscribers of other wireless
providers initiate calls while roaming in CBW's service area. However,
significant expenses are also incurred by this segment when its own wireless
subscribers use their handsets in the operating territory of other wireless
providers.

    Approximately 90% of all service revenues were generated on a postpaid
basis, whereby subscribers pay in arrears based on usage. The remaining 10%
of service revenues were generated by the Company's new i-wireless-SM-
prepaid service. In October 1999, the Company introduced this new service,
allowing for the purchase of a specific number of minutes, in advance, at a
fixed price. Since this service leverages the Company's existing network and
requires no billing capabilities, it does not require significant incremental
capital investment.

    Sales of handsets and associated equipment take place primarily at the
Company's retail locations, which consist of store locations and kiosks in
high-traffic shopping malls and commercial buildings in the Cincinnati and
Dayton, Ohio areas. Sales also take place in the retail stores of major
electronic retailers pursuant to agency agreements. The Company sells
handsets and equipment from a variety of vendors with the Nokia brand being
the most popular with its customers. The Company maintains a supply of
equipment and does not envision any shortages that would compromise its
ability to add new customers. Unlike service revenues (which are a function
of wireless handset usage), some degree of seasonality is experienced with
respect to sales of equipment. In order to attract customers, handsets are
typically sold by the Company for less than direct costs.

    The Wireless segment offers its services over a digital wireless network
using Time Division Multiple Access ("TDMA") technology. The Company believes
that TDMA technology will meet the existing needs of its customers and enable
it to introduce new products and services as part of its business plan. As
previously mentioned, this segment relies on AT&T PCS' national network for
calls outside of its Greater Cincinnati and Dayton, Ohio operating areas. The
Company believes that AT&T PCS will maintain its national digital wireless
network in a form and manner that will allow CBW to attract and retain
customers.

                                       4


    Rates and prices for this segment are determined as a function of
marketplace conditions. As such, rates can and will be influenced by the
pricing plans of as many as six active wireless service competitors. As
evidenced by its record of attracting and retaining customers since its entry
into the wireless business in 1998, the Company believes that its combination
of technology, pricing, brand name and customer service enable it to succeed
in its current operating environment.

    Given that this venture is jointly owned with AT&T PCS, income or losses
generated by this segment are shared between CBW and AT&T PCS in accordance
with respective ownership percentages. As a result, 19.9% of the operating
income or loss of this segment is reflected as minority interest income or
loss in the Company's Consolidated Statements of Income and Comprehensive
Income (Loss).

OTHER COMMUNICATIONS

    Other Communications combines the operations of the Cincinnati Bell Any
Distance, Cincinnati Bell Directory, ZoomTown.com and Cincinnati Bell Public
Communications segments. Revenues for the Other Communications segment
constituted approximately 7% of consolidated Company revenues in 2000. The
results of operations of the Company's former Cincinnati Bell Supply
subsidiary are no longer reflected in this segment pursuant to the sale of
this business in the second quarter of 2000.

Cincinnati Bell Any Distance (formerly Cincinnati Bell Long Distance)

    In 2000, Cincinnati Bell Any Distance ("CBAD") resold long distance
services to small and medium-sized businesses and residential customers in
the Greater Cincinnati area, producing $46 million in revenues for the Other
Communications segment and representing approximately 2% of consolidated
revenues. Customers of the former Cincinnati Bell Long Distance ("CBLD")
outside of the Greater Cincinnati operating territory were serviced by
Broadwing Communications, with the associated revenues and expenses being
reported in the results of the Broadband segment. In January 2001, the
Company officially established the new CBAD subsidiary to assume the
Cincinnati-based marketing activities for the Any Distance service. The
former CBLD was then merged into Broadwing Communications. Accordingly,
revenues for the Any Distance Service in the Cincinnati area will continue to
be reported as a component of the Other Communications segment while revenues
and expenses associated with non-Cincinnati area customers will continue to
be reported in the results of the Broadband segment.

Cincinnati Bell Directory ("CBD")

    CBD publishes Yellow Pages directories and sells directory advertising
and informational services in Cincinnati Bell Telephone's local service area.
These services are available to more than 1.2 million residential and
business customers in the form of traditional printed directories, an
Internet-based service known as "Cincinnati Exchange," and on CD-Rom. In
2000, CBD produced $78 million in revenues, or approximately 4% of
consolidated revenues.

ZoomTown.com ("ZoomTown")

    ZoomTown provides managed web hosting nationally, while all other
operations are primarily directed to the Greater Cincinnati metropolitan
area. In 2000, ZoomTown provided $5 million in revenues, less than 1% of
consolidated revenues of the Company.

Cincinnati Bell Public Communications Inc. ("Public")


                                       5


    Public provides public payphone services to customers in a regional area
consisting of eight states. Public has approximately 8,400 stations in
service and generated approximately $14 million in revenue in 2000, or
approximately 1% of consolidated revenues.

BUSINESS OUTLOOK

    Evolving technology, the preferences of consumers, the legislative and
regulatory initiatives of policy makers and the convergence of other
industries with the communications industry are causes for increasing
competition. 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. These initiatives and developments could make
it difficult for the Company to maintain current revenue and operating
margins.

         Broadwing Communications faces significant competition from other
fiber-based telecommunications companies such as AT&T, Worldcom, Sprint,
Level 3 Communications, Qwest Communications International, Global Crossing
and Williams Communications. These companies have enjoyed a competitive
advantage over Broadwing Communications in the past. Broadwing IT Consulting,
a subsidiary of Broadwing Communications, competes with Intranet hardware
vendors, wiring vendors, and other information technology consulting
businesses. In order to achieve competitive advantage, the Company intends to
develop new products and services or blend products and services from other
subsidiaries into the operations of Broadwing Communications as deemed
necessary.

    Cincinnati Bell Telephone's current and potential competitors include
other incumbent local exchange carriers, wireless services providers,
interexchange carriers, competitive local exchange carriers and others. To
date, CBT has signed various interconnection agreements with competitors and
approximately 1% of net access lines have been transferred since the advent
of competition in CBT's service area.

    The Company's other subsidiaries face intense competition in their
markets, principally from larger companies. These subsidiaries primarily seek
to differentiate themselves by leveraging the strength and recognition of the
Company's brand equity, by providing customers with superior service, and by
focusing on niche markets and opportunities to develop and market customized
packages of services.

    Cincinnati Bell Wireless is one of six active wireless service providers
in the Cincinnati and Dayton, Ohio metropolitan market areas. Cincinnati Bell
Directory's competitors are directory services companies, newspapers and
other media advertising service providers in the Cincinnati metropolitan
market area. CBD now competes with "Yellow Book" following the sale of
Donnelley's Cincinnati operations to Yellow Book. This competition may affect
CBD's ability to grow or maintain profits and revenues.

    Cincinnati Bell Any Distance has captured substantial market share in the
Greater Cincinnati area since the introduction of its Any Distance offer in
January 2000, but still faces intense competition from larger long distance
providers and other resellers. As a matter of necessity, margins on long
distance minutes continue to fall as providers attempt to hold on to their
subscriber base. Furthermore, additional advertising and other start-up costs
are necessary in order to capture and retain market share. ZoomTown.com
enjoyed a successful launch in 2000, but competes with nationally known
web-hosting providers such as Exodus Communications, Inc. and Digex,
Incorporated.

    The Company believes that its reputation for quality service and
innovative products can be successfully exported outside of its local
franchise area. The Company has successfully blended its provisioning and
marketing expertise with Broadwing Communications' next-generation optical
network in order to introduce advanced calling and data transport services
throughout the United States. The Company intends to retain


                                       6


market share with respect to its current service offerings and continue to
pursue rapid growth in data transport and wireless communications services.
The Company also intends to continue to leverage its investment in its local
communications and its regional wireless networks and national partnership
with AT&T PCS to provide new and incremental product and service offerings to
its customers in the Greater Cincinnati and Dayton, Ohio markets.

RISK FACTORS

    INCREASED COMPETITION COULD AFFECT PROFITABILITY AND CASH FLOW

    CBT continues to be the predominant provider of local data and voice
communications in the Greater Cincinnati and Northern Kentucky areas. This
business is becoming increasingly competitive. CBT offers modern
telecommunications services (such as its high-speed Asynchronous Digital
Subscriber Line ("ADSL") service and its FUSE(R) Internet access services) to
its local customers, but faces competition from competitive local exchange
carriers, cable modem providers and Internet access providers. The Company
believes CBT will face greater competition as more competitors emerge and
focus additional resources on the Greater Cincinnati and Northern Kentucky
metropolitan areas.

    Broadwing Communications presents the Company with significant
opportunities to reach a nationwide customer base and provide new services to
local customers. However, the Company's success in this regard will depend on
a sustained ability to meet the price, quality and service expectations of
its customers. From a national perspective, the Company faces competition
from well-managed and well-financed companies such as AT&T, Worldcom, Sprint,
Level 3 Communications, Qwest Communications International, Global Crossing,
Williams Communications and several new emerging competitors.

    Competition from other national providers could also have another effect
on the Company. The current and planned fiber-optic network capacity of these
and other competitors could result in decreasing prices even as the demand
for higher-bandwidth services increases. Most of these competitors have
announced plans to expand, or are currently in the process of expanding,
their networks. Increased network capacity and traffic optimization could
place downward pressure on prices, thereby making it difficult for the
Company to maintain current prices and profit margins. As with competition in
the local arena, the Company's failure against these competitors would affect
its ability to continue construction of its optical network, which would have
a material adverse effect on its business, financial condition and results of
operations.

    The Company's other subsidiaries operate in a largely local or regional
area, and each of these subsidiaries faces significant competition. CBAD's
competitors include large national interexchange carriers. CBD's competitors
are other directory services companies such as "Yellow Book", newspapers and
other media advertising services providers in the Cincinnati metropolitan
market area. CBW is one of six active wireless service providers in the
Cincinnati and Dayton metropolitan market areas, most of which are nationally
known and well-financed. ZoomTown provides managed web-hosting and other
Internet-based products and services and competes with other web hosting
providers such as Exodus Communications, Inc. and Digex, Incorporated. Public
competes with several other public payphone providers, some of which are
national in scope and offer lower prices for coin-based local calling
services. Public is also being adversely impacted by the growing popularity
of wireless communications.

    The Company's inability to succeed against these competitors would affect
its profitability and cash flow. This would result in increased reliance on
borrowed funds and could affect the Company's ability to continue expansion
of its wireline and wireless networks.


                                       7



    INSUFFICIENCY OF CASH FLOW FOR PLANNED INVESTING AND FINANCING ACTIVITIES
    WILL RESULT IN A SUBSTANTIAL INCREASE IN INDEBTEDNESS

    Prior to the Merger, the Company was able to generate sufficient cash
flow for its investing and financing needs as a result of mature businesses
that benefited from a local telephone franchise, an embedded customer base
and relative freedom from competition. However, increased demand for data,
Internet-based and wireless communications has made it necessary and prudent
for the Company to diversify into new businesses. Entering these businesses
requires the Company to explore new markets in an attempt to reach new
customers, and has resulted in substantial start-up costs, net operating
losses and a drain on cash flow. To successfully compete in these markets,
the Company expects to make $1.6 billion in aggregate capital expenditures
over the next three years, with an increasing proportion of these
expenditures resulting from projected growth.

    In order to provide for these cash requirements, the Company has obtained
a $2.1 billion credit facility from a group of both banking and non-banking
institutions. The Company increased its indebtedness in 2000 under this
credit facility by approximately $900 million in order to fund its capital
investment program and to refinance $404 million in existing debt. The
Company anticipates a significant level of additional borrowings from this
facility in 2001, though it expects these new borrowing requirements to be
considerably less than in 2000. At the end of 2000, the Company had
approximately $460 million in remaining borrowing capacity from this credit
facility.

    The ability to borrow from this credit facility is predicated on the
Company's ability to satisfy certain debt covenants that have been negotiated
with lenders. Failure to satisfy these debt covenants could severely
constrain the Company's ability to borrow from the credit facility without
receiving a waiver from these lenders. If the Company were unable to continue
the construction of its optical network and other capital initiatives,
current and potential customers could be lost to competitors, which would
have a material adverse effect on its business, financial condition and
results of operations. To date, the Company has maintained compliance with
regard to all of its financial covenants.

    NETWORK EXPANSION IS DEPENDENT ON ACQUIRING AND MAINTAINING RIGHTS-OF-WAY
    AND PERMITS

    The expansion of the Company's network also depends on acquiring
rights-of-way and required permits from railroads, utilities and governmental
authorities on satisfactory terms and conditions and on financing such
expansion. In addition, after the network is completed and required rights
and permits are obtained, the Company cannot guarantee that it will be able
to maintain all of the existing rights and permits. Although the Company
expects to maintain and renew its existing agreements, the loss of a
substantial number of existing rights and permits would have a material
adverse effect on its business, financial condition and results of
operations.   Furthermore, the Company may incur significant future
expenditures in order to remove its facilities upon expiration of related
rights-of-way agreements.

    A SIGNIFICANT AMOUNT OF CAPITAL EXPENDITURES WILL BE REQUIRED TO FUND
    EXPANSION OF THE NETWORK

    The Company is committed to the expansion of its nationwide optical
network, the deployment of high-speed data transport services both nationally
and in its local telephone franchise area and continued infrastructure
development for its wireless business. These initiatives will require a
significant amount of capital expenditures to complete and maintain.

    The Company's annual capital expenditures increased significantly in 2000
and 1999 in support of these initiatives and as a result of the Merger.
Capital expenditures of $144 million in 1998 more than doubled to $381
million in 1999 and then again to $844 million in 2000 primarily as a result
of the Merger. Of the $844 million in capital expenditures in 2000,
approximately 70% and 10%, respectively, can be attributed to the Broadband
and Wireless segments (see "Capital Additions" later in this Form 10-K for
additional information as to capital expenditures). The Company's current
plans call for $700 million in capital spending in 2001 and more than $900
million over the succeeding two-year period, primarily related to continued
expansion of the optical network.


                                       8



    The Company believes that it is imperative to invest heavily in its
network in order to offer leading-edge products and services to its
customers. Failure to construct and maintain such a network would leave the
Company vulnerable to customer loss to other fiber-optic network providers,
and would cause slower than anticipated growth. This would have a material
adverse effect on the Company's business, financial condition and results of
operations.

    REGULATORY INITIATIVES MAY IMPACT THE COMPANY'S PROFITABILITY

    The Company's most profitable subsidiary, CBT, is subject to regulatory
oversight of varying degrees at both the state and federal level. Regulatory
initiatives that would put CBT at a competitive disadvantage or mandate lower
rates for its services could result in lower profitability and cash flow for
the Company. This could potentially compromise the expansion of its national
optical network and development of its wireless business.

    A further discussion of specific regulatory matters pertaining to the
Company and its operations is contained in Item 7 of this Report on Form
10-K, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

    THE COMPANY MAINTAINS AN INVESTMENT IN THE EQUITY SECURITIES OF OTHER
    COMPANIES

    As a result of the Merger and in the normal course of its operations, the
Company has accumulated a portfolio of public and non-public equity
securities, some of which are subject to certain restrictions as to exercise
(further discussion of these securities can be found in Note 4 of the Notes
to Financial Statements).

    The value of this portfolio is subject to considerable fluctuations in
market value that, under certain circumstances, could require the Company to
recognize a loss on investments that would affect its reported operating
results and the carrying amount of the associated securities in the Company's
balance sheet.

    THE COMPANY'S RECENTLY ANNOUNCED RESTRUCTURING INITIATIVE IS CRITICAL TO
    ITS SUCCESS

    The Company announced a restructuring initiative on February 20, 2001
that is intended to realign its Cincinnati-based operations and implement a
new customer focus for these businesses. Successfully completing this
initiative by executing the various business strategies that embody the
initiative, retaining customers and maintaining employee morale and focus
will be critical to the continued profitability of the Company's
Cincinnati-based businesses. Failure to successfully implement this
initiative could have an adverse effect on the Company's business, financial
condition and results of operations.

ATTRACTING AND RETAINING HIGHLY QUALIFIED EMPLOYEES ARE NECESSARY FOR
COMPETITIVE ADVANTAGE

    The Company seeks to achieve competitive advantage by hiring, and
retaining, highly skilled senior management, sales and engineering personnel.
The Company deems this to be of particular importance in an industry that
depends on innovation and execution in order to attract and retain the
customer. If the Company failed to attract or retain these skilled personnel,
its financial condition and results of operations could be materially
impacted.

THE COMPANY'S SUCCESS DEPENDS ON THE INTRODUCTION OF NEW PRODUCTS AND SERVICES

    The Company's success depends on being able to anticipate the needs of
current and future enterprise customers, many of which are currently
evolving. The Company seeks to meet these needs through new product
introductions, service quality and technological superiority. If the Company
failed to anticipate the needs of these customers and did not introduce the
new products and services necessary to attract or retain these customers, its
could have a material adverse impact on its business, financial condition and
results of operations.


                                       9


CAPITAL ADDITIONS

    The capital additions of the Company are primarily for its fiber-optic
transmission facilities, telephone plant in its local service area,
development of the infrastructure for its wireless business and construction
of additional data centers to meet the demand for web hosting and data
collocation services. As a result of these expenditures, the Company expects
to be able to introduce new products and services, respond to competitive
challenges and increase its operating efficiency and productivity.

The following is a summary of capital additions for the years 1996 through 2000
on an as-reported basis:



                                                        DOLLARS IN MILLIONS
                                                        -------------------
               LOCAL TELEPHONE              FIBER-OPTIC                      WIRELESS                            TOTAL CAPITAL
                 OPERATIONS           TRANSMISSION FACILITIES            INFRASTRUCTURE            OTHER         ADDITIONS
               ---------------        -----------------------            --------------            -----         --------------
                                                                                                  
    2000            $151.9                    $591.7                         $ 84.2               $16.1              $843.9

    1999            $152.1                    $166.1*                        $ 55.9               $ 7.1              $381.2

    1998            $134.9                      --                             $2.2               $ 6.3              $143.4

    1997            $140.0                      --                             --                 $18.4              $158.4

    1996            $101.4                      --                             --                 $ 4.9              $106.3


    * Includes capital expenditures from the November 9, 1999 closing date of
    the Merger until the end of the year. On a pro forma basis in 1999, total
    capital expenditures were $819 million. The difference between pro forma and
    as-reported capital expenditures, or $438 million, is attributable to
    "fiber-optic transmission facilities" in the above table.

    EMPLOYEES

         At December 31, 2000, the Company and its subsidiaries had
    approximately 6,400 employees. CBT had approximately 2,100 employees covered
    under a collective bargaining agreement with the Communications Workers of
    America, which is affiliated with the AFL-CIO. This collective bargaining
    agreement expires in May 2002.

    BUSINESS SEGMENT INFORMATION

         The amounts of revenues, intersegment revenues, earnings before income
    taxes, depreciation and amortization ("EBITDA"), assets, capital additions
    and depreciation and amortization attributable to each of the Company's
    business segments for the year ended December 31, 2000 are set forth in Note
    14 of the Notes to Financial Statements that are contained in Item 8 of this
    Report on Form 10-K, "Financial Statements and Supplementary Schedules."

ITEM 2.  PROPERTIES

    Broadwing Inc. and its subsidiaries own or maintain telecommunications
facilities in 37 states. Principal office locations are in Austin, TX;
Cincinnati, OH, Baton Rouge, LA; Minneapolis, MN and Indianapolis, IN. Data
Centers are located in Austin, TX; Cincinnati, OH; Chicago, IL; Newark, DE;
Boston, MA; New York, NY; Atlanta, GA; Dallas, TX; Santa Clara, CA; Salt Lake
City, UT and Los Angeles, CA.


                                      10


    The property of the Company is principally composed of its nationwide
optical transmission system, telephone plant in its local telephone franchise
area (i.e., Greater Cincinnati), and the infrastructure associated with its
wireless business in the Greater Cincinnati and Dayton, Ohio operating areas.
Each of the Company's subsidiaries maintains some investment in furniture and
office equipment, computer equipment and associated operating system
software, leasehold improvements and other assets. Facilities leased as part
of an operating lease arrangement are expensed as incurred and are not
included in the totals below.

    With regard to its local telephone operations, substantially all of the
central office switching stations are owned and situated on land owned by the
Company. Some business and administrative offices are located in rented
facilities, some of which are treated as capitalized leases and included in
the "Furniture, fixtures, vehicles and other" caption below.

    Fiber-optic transmission facilities consist largely of fiber-optic cable,
associated optronics and the land and rights-of-way necessary to place these
facilities. The wireless infrastructure consists primarily of transmitters,
receivers, towers, antennae and associated land and rights-of-way.

    The gross investment in property, plant and equipment, in millions of
dollars, at December 31, 2000 and 1999 is comprised of the following:



                                                                     2000             1999
                                                                     ----             ----
                                                                                
    Land and rights of way                                          $  157.6          $  155.9

    Buildings and leasehold improvements                               403.7             428.3

    Local telephone plant                                            1,839.7           1,697.2

    Fiber-optic transmission facilities                              1,587.4           1,183.2

    Furniture, fixtures, vehicles and other                            132.8             116.2

    Construction in process                                            509.1             232.0
                                                         -------------------------------------

         Total                                                      $4,630.3          $3,812.8


    Properties of the Company are divided between operating segments as follows:



                                                                       2000               1999
                                                                       ----               ----
                                                                                   
    Broadband                                                           51.8%             46.0%

    Local Communications                                                42.0%             48.7%

    Wireless                                                             5.5%              4.5%

    Other Communications                                                 0.7%              0.8%
                                                                      -------          --------

         Total                                                         100.0%            100.0%
                                                                       ======            ======




                                       11



ITEM 3.  LEGAL PROCEEDINGS

    The information required by this Item is included in Note 18 of the Notes
to Financial Statements that are contained in Item 8 of this Report on Form
10-K, "Financial Statements and Supplementary Data."

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS

    None.

ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT (DURING 2000)

The names, ages and positions of the executive officers of the Company as of
December 31, 2000 are as follows:



                  NAME                                        AGE                              TITLE
                  ----                                        ---                              -----
                                                                                
James D. Kiggen (a)(b)                                         68                     Chairman of the Board

Richard G. Ellenberger (a)(b)                                  48                     President and Chief Executive Officer

Kevin W. Mooney                                                42                     Executive Vice President
                                                                                      and Chief Financial Officer

Thomas E. Taylor  (c)                                          54                     General Counsel and Secretary

Richard S. Pontin                                              47                     President and Chief Operating Officer
                                                                                      of Broadwing Communications Inc.

John F. Cassidy                                                46                     President and Chief Operating Officer
                                                                                      of the Cincinnati Bell Companies

Jeffrey C. Smith (d)                                           49                     General Counsel and Secretary



------------------------------

(a)  Member of the Board of Directors

(b)  Member of the Executive Committee

(c)  Mr. Taylor retired from the Company on February 21, 2001. The Company
     appointed Jeffrey C. Smith to assume the duties of General Counsel and
     Secretary effective February 21, 2001. This change was further discussed in
     the Company's press release on this matter on February 21, 2001 and in a
     Report on Form 8-K filed with the Securities and Exchange Commission, date
     of report February 20, 2001.

(d)  Mr. Smith has been appointed by the Company to succeed Thomas E. Taylor as
     General Counsel and Secretary, effective February 21, 2001.

Officers are elected annually but are removable at the discretion of the Board
of Directors.


                                       12


JAMES D. KIGGEN, Chairman of the Board of the Company since January 1, 1999;
Chairman of the Board of Xtek, Inc. (manufacturer of engineered steel
products for heavy industry) 1985-1999; Director of Xtek, Inc. 1999-2000;
Chief Executive Officer of Xtek, Inc., 1981-1998; President of Xtek, Inc.,
1979-1995. Director of Fifth Third Bancorp and its subsidiary, The Fifth
Third Bank, and The United States Playing Card Company. Chairman of the
Executive Committee and Chairman of the Governance and Nominating Committee.

RICHARD G. ELLENBERGER, President and Chief Executive Officer of the Company
since March 1, 1999; Chief Operating Officer of the Company from July 1, 1998
to March 1, 1999; President and Chief Executive Officer of Cincinnati Bell
Telephone Company from 1997-1998; Chief Executive Officer of Broadwing
Communications Inc. since November 9, 1999; Chief Executive Officer of
XLConnect, 1996-1997; President, Business Services of MCI Telecommunications,
1995-1996; Senior Vice President, Worldwide Sales of MCI Telecommunications,
1994-1995; Senior Vice President, Branch Operations of MCI
Telecommunications, 1993-1994; Vice President, Southeast Region of MCI
Telecommunications, 1992-1993. Director of the Company since 1998; member of
the Executive Committee.

KEVIN W. MOONEY, Executive Vice President and Chief Financial Officer of the
Company since September 1, 1998; Senior Vice President and Chief Financial
Officer of Cincinnati Bell Telephone since January 1998; Vice President and
Controller of the Company, 1996-1998; Vice President of Financial Planning
and Analysis of the Company, 1994-1996; Director of Financial Planning and
Analysis of the Company, 1990-1994.

THOMAS E. TAYLOR, General Counsel and Secretary of the Company from September
1998 to February 2001; Senior Vice President and General Counsel of
Cincinnati Bell Telephone from 1996 to February 2001; Partner at law firm of
Frost & Jacobs from 1987 to 1996.

RICHARD S. PONTIN, President and Chief Operating Officer of Broadwing
Communications since November 1999; President and Chief Operating Officer of
Cincinnati Bell Telephone, April 1999 to November 1999; Vice President,
Engineering & Operations of Nextel Communications, 1997-1999; Vice President,
National Accounts, MCI Communications, 1996; Vice President Data Services,
MCI Communications, 1994-1996; Vice President, Global Alliances, MCI
Communications, 1992-1994.

JOHN F. CASSIDY, President and Chief Operating Officer of the Cincinnati Bell
Companies since May 2000; President of Cincinnati Bell Enterprises since
August, 1999; President of Cincinnati Bell Wireless since 1996; Senior Vice
President, National Sales & Distribution of Rogers Cantel in Canada from
1992-1996; Vice President, Sales and Marketing, Ericsson Mobile
communications from 1990-1992; Vice President, Sales and Marketing, General
Electric Company from 1988-1990.

JEFFREY C. SMITH, General Counsel and Corporate Secretary of the Company
since February 2001; Chief Legal/Administrative Officer of the Company since
November 1999; Senior Vice President of IXC Communications, Inc. from
September 1997 until November 1999; Vice President, General Counsel and
Secretary of IXC Communications, Inc. from January 1997 until September 1997;
Vice President Planning and Development for Times Mirror Training, a
subsidiary of Times Mirror, from August 1994 to December 1996. Served in a
variety of legal capacities, including five years as General Counsel to the
Baltimore Sun newspaper and Associate General Counsel and Assistant Secretary
at Times Mirror from 1985 through August 1994. Prior to 1985, employed for
seven years in private law practice as a trial and business attorney.


                                       13



                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS.

MARKET INFORMATION

    The Company's common shares (symbol: BRW) are listed on the New York
Stock Exchange and on the Cincinnati Stock Exchange. As of February 28, 2001,
there were approximately 105,000 holders of record of the 217,842,953
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:



QUARTER                                     1ST               2ND               3RD              4TH
-------                                     ---               ---               ---              ---
                                                                                     
2000     HIGH                               $  40.50      $  36.75              $29.94           $ 28.25
         LOW                                $  29.63      $  22.00              $23.69           $ 20.00


1999     High                               $ 23.44       $  26.50              $26.50           $ 37.88
         Low                                $ 16.06       $  19.63              $16.31           $ 18.75
         Dividend Declared                  $   .10       $    .10              $  --            $   --


* Dividends discontinued after quarterly dividend declared on June 21, 1999.

DIVIDENDS

    The Company discontinued its dividend payment on its common shares
effective after the second quarter 1999 dividend payment in August 1999. The
Company does not intend to pay dividends on its common shares in the
foreseeable future. Furthermore, the Company's future ability to pay
dividends is restricted by certain covenants and agreements pertaining to
outstanding indebtedness. The Company is required to pay dividends on its 6
3/4% preferred shares, and began paying dividends in cash rather than shares
of Broadwing Communications 12 1/2% preferred shares on February 15, 2000.
Dividends on the 12 1/2% preferred shares are accounted for in the caption
"Minority Interest Expense (Income)" in the Consolidated Statements of Income
and Comprehensive Income (Loss).


                                       14





ITEM 6.  SELECTED FINANCIAL DATA



MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS                     2000             1999         1998           1997          1996
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
RESULTS OF OPERATIONS
Revenues                                                         $2,050.1      $1,102.0      $ 861.4        $804.4         $761.1
Costs and expenses, less depreciation and amortization            1,552.1         771.5        576.4         516.1          495.5
                                                                  -------         -----        -----         -----          -----
  EBITDA (a)                                                        498.0         330.5        285.0         288.3          265.6
Depreciation and amortization                                       459.7         180.9        111.0         124.3          120.8
Restructuring and other charges (credits) (b)                         (.8)         10.9         (1.1)        (21.0)         (29.7)
                                                                 ---------         ----      --------     ---------        -------
Operating income                                                     39.1         138.7        175.1         185.0          174.5
Equity loss in unconsolidated entities (c)                           15.5          15.3         27.3          --             --
Minority interest expense (income) (d)                               44.1          (2.7)        --            --             --
Loss on investments (c)                                             356.3            --         --            --             --
Other expense (income), net                                           1.7          (1.4)         2.4           2.6           (0.4)
Interest expense (e)                                                163.6          61.6         24.1          30.1           28.1
                                                                    -----          ----        -----          ----           ----
Income (loss) from continuing operations before
   income taxes, extraordinary items and cumulative
   effect of change in accounting principle                        (542.1)         65.9        121.3         152.3          146.8
Income tax provision (benefit) (f)                                 (165.6)         31.3         42.5          54.1           51.2
                                                                   -------         ----         ----          ----           ----
Income (loss) from continuing operations before
   extraordinary items and cumulative effect of
   change in accounting principle                                  (376.5)         34.6         78.8          98.2           95.6
Income from discontinued operations, net of taxes (g)                  .2           3.4         72.1          95.4           89.4
Extraordinary item, net of taxes                                       --          (6.6)        (1.0)       (210.0)            --
Cumulative effect of change in accounting principle,
   net of taxes (h)                                                   (.8)         --           --            --               --
                                                                  --------        ------     ---------      --------         -----
Net income (loss)                                                  (377.1)         31.4        149.9         (16.4)         185.0
Dividends and accretion applicable
  to preferred stock                                                  8.1           2.1           --          --               --
                                                                 --------          ----       -------       --------       -------
Net income (loss) applicable to common
   shareholders                                                  $ (385.2)     $   29.3       $149.9        $(16.4)        $185.0
                                                                  --------        -----       ------        -------         ------
Basic earnings (loss) per common share:
  Income (loss) from continuing operations                       $  (1.82)     $     .23     $    .58       $   .72        $   .71
  Income from discontinued operations, net of taxes                    --            .02          .53           .71            .67
  Extraordinary items and cumulative effect of change
   in accounting principle, net of taxes                               --           (.05)        (.01)        (1.55)            --
                                                                    ------         -----      ------        ------         -------
Income (loss)                                                    $  (1.82)     $     .20     $   1.10       $  (.12)       $  1.38
                                                                 =========         =====      =======       ========       =======

Diluted earnings (loss) per common share:
  Income (loss) from continuing operations                       $  (1.82)     $     .22     $    .57       $   .71        $   .70
   Income from discontinued operations, net of taxes                   --            .02          .52           .70            .65
   Extraordinary items and cumulative effect of change
   in accounting principle, net of taxes                               --           (.04)        (.01)        (1.53)            --
                                                                    -------        -----       ------         -----           ----
   Income (loss)                                                 $  (1.82)     $     .20     $   1.08       $  (.12)       $  1.35
                                                                 ==========        =====       ======        =======       =======
Dividends declared per common share                                    --      $     .20     $    .40       $   .40        $   .40
Weighted average common shares (millions)
   Basic                                                           211.7          144.3        136.0         135.2          133.9
   Diluted                                                         211.7          150.7        138.2         137.7          137.2


                                         15



ITEM 6.  SELECTED FINANCIAL DATA (CONTINUED)



MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS                     2000             1999         1998           1997          1996
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
FINANCIAL POSITION
Total assets (j) (g)                                             $6,477.6   $   6,505.4    $ 1,041.8     $ 1,273.8      $ 1,415.1
Long-term debt (e)                                               $2,507.0   $   2,136.0    $   366.8     $   268.0      $   271.2
Redeemable Preferred stock (i)                                   $   ---    $     228.6    $    --       $    --        $    --
Total debt (e)                                                   $2,521.0   $   2,145.2    $   553.0     $   399.5      $   409.0
Common shareowners' equity (j) (g)                               $2,021.5   $   2,132.8    $   142.1     $   579.7      $   634.4
Cash flow from continuing operations                             $  332.2   $     314.5    $   205.9     $   194.7      $   131.2


     (a) EBITDA represents operating income before depreciation, amortization,
     and restructuring and related charges or credits. EBITDA does not represent
     cash flow for the periods presented and should not be considered as an
     alternative to net income (loss) as an indicator of the Company's operating
     performance or as an alternative to cash flows as a source of liquidity,
     and may not be comparable with EBITDA as defined by other companies.
     (b) See Note 3 of Notes to Financial Statements.
     (c) See Note 4 of Notes to Financial Statements.
     (d) See Note 6 of Notes to Financial Statements.
     (e) See Note 5 of Notes to Financial Statements.
     (f) See Note 9 of Notes to Financial Statements.
     (g) See Note 12 of Notes to Financial Statements.
     (h) See Note 1 of Notes to Financial Statements.
     (i) See Note 7 of Notes to Financial Statements.
     (j) See Note 2 of Notes to Financial Statements.



                                      16





ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

    Broadwing Inc. ("the Company") is a full-service provider of wireline and
wireless telecommunications services that conducts its operations through the
following reportable segments: Broadband, Local Communications, Wireless and
Other Communications. A further discussion of these segments and their
operating results is contained in Item 1, "Business", and in the individual
segment discussions that begin on page 23 of this Report on Form 10-K.

    This report and the related consolidated financial statements and
accompanying notes contain certain forward-looking statements that involve
potential risks and uncertainties. The Company's future results could differ
materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed herein. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to review or update these forward-looking
statements or to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

RESULTS OF OPERATIONS

    On November 9, 1999, the Company completed its merger (the "Merger") with
IXC Communications, Inc. ("IXC"; now "Broadwing Communications"), with the
operations of Broadwing Communications now constituting the Broadband
segment. The Merger constituted a major strategic initiative for the Company,
which substantially increased the scope of the Company's businesses and the
revenues of the Company.

    As a result of the Merger, the Company's operating results for periods
prior to November 9, 1999 are not directly comparable to periods subsequent
thereto. Therefore, management's discussion and analysis of results of
operations has been presented both on an actual, historical basis and on a
pro forma basis for 1999 and 1998, with the Company's historical results for
these periods having been adjusted to give pro forma effect to the Merger as
if it had occurred on January 1, 1998. The pro forma adjustments are based
upon available information and certain assumptions that management believes
are reasonable. The pro forma results of operations do not purport to
represent what the Company's results of operations would actually have been
if the Merger and related transactions had in fact occurred on January 1,
1998. The pro forma results have been prepared on a basis comparable to the
pro forma financial statements contained in the Company's Report on Form 8-K
dated December 29, 1999.

    The pro forma results of operations presented below also give effect to
discontinued operations and a change in operating segments effective in 2000,
which change is described in the Company's Quarterly Reports on Form 10-Q for
the first two fiscal quarters of 2000.

    A tabular presentation of the Company's "as reported" financial results
can be found in Item 6, "Selected Financial Data" on page 15 and in the
Consolidated Statements of Income and Comprehensive Income (Loss) on page 47
of this Report on Form 10-K. A discussion of the Company's as-reported
financial results can be found on Page 33 of this Report on Form 10-K.


                                        17


BROADWING INC.
CONSOLIDATED STATEMENTS OF INCOME - PRO FORMA




(DOLLARS IN MILLIONS)                                                               PRO FORMA - YEAR ENDED DECEMBER 31,
                                                                    -------------------------------------------------------------
                                                                                               2000 VS.                  1999 VS.
                                                                                                 1999                      1998
                                                                    2000           1999        % CHANGE     1998        % CHANGE
                                                                    ----           ----        --------     ----        ---------
                                                                                                         

REVENUES:
Broadband                                                        $  999.7        $ 742.9          35      $ 729.6               2
Local Communications                                                793.9          739.9           7        718.4               3
Wireless                                                            180.0           91.4          97            -              --
Other Communications                                                142.2          109.3          30         90.7              21
Intersegment                                                        (65.7)         (13.2)        n/m         (8.7)            (52)
                                                                 ------------------------                  -------
   Total Revenues                                                 2,050.1        1,670.3          23      1,530.0               9

COSTS & EXPENSES:
Cost of Providing Services and Products Sold                        968.1          856.8          13        795.7               8
Selling, General & Administrative                                   584.0          491.9          19        358.6              37
                                                                 ------------------------                  -------
   EBITDA                                                           498.0          321.6          55        375.7             (14)

Depreciation                                                        346.2          285.2          21        203.3              40
Amortization                                                        113.5          113.3           0        109.4               4
Restructuring Charge (Credit)                                        (0.8)          30.6          --            -              --
Other Infrequent Costs                                                  -           37.8          --          7.9              --
                                                                 ------------------------                  -------
   Operating Income (Loss)                                           39.1         (145.3)         --         55.1              --

Equity Loss in Unconsolidated Entities                               15.5           21.8        (29)         60.4             (64)
Minority Interest Expense (Income)                                   44.1           38.5          15         48.5             (21)
Loss on Investments                                                 356.3              -         n/m            -             n/m
Other Expense (Income), Net                                           1.7            2.1         (19)       (12.3)             --
Interest Expense                                                    163.6          113.7          44         82.8              37
                                                                 ------------------------                 --------
   Loss from Continuing Operations Before
   Income Taxes, Extraordinary Item and Cumulative
   Effect of Change in Accounting Principle                        (542.1)        (321.4)         69       (124.3)            159

Income Tax Provision (Benefit)                                     (165.6)          31.5         n/m         44.7             (30)
                                                                 ------------------------                 --------
   Loss from Continuing Operations Before
   Extraordinary Item and Cumulative Effect
   of Change in Accounting Principle                               (376.5)        (352.9)          7       (169.0)            109

Discontinued Operations, Net of Taxes                                 0.2            3.4         (94)        72.1             (95)
Extraordinary Item, Net of Taxes                                        -           (6.6)        n/m        (67.0)            (90)
Cumulative Effect of Change in Accounting Principle                  (0.8)             -         n/m            -              --
                                                                 ------------------------                 --------
   Net Loss                                                        (377.1)        (356.1)          6       (163.9)            117

Dividends and Accretion Applicable to Preferred Stock                 8.1            6.9          17          6.5               6
                                                                 ------------------------                 --------
   Net Loss Applicable to Common Shareowners                     $ (385.2)       $(363.0)          6      $(170.4)            113
                                                                 ========================                 ========
Basic and Diluted Loss Per Common Share                            ($1.82)        ($1.79)          2        ($.83)            116



                                      18




CONSOLIDATED OVERVIEW ON A PRO FORMA BASIS:

2000 COMPARED TO 1999

    The Company continued to produce revenue growth across all of its
operating segments. Consolidated revenues of $2,050 million were $380 million
higher than in the prior year, representing revenue growth of 23%. The
Broadband segment, which encompasses the operations of the Company's
Broadwing Communications subsidiary, produced more than two-thirds of the
revenue growth in the current year. Broadband revenues of $1 billion were
$257 million, or 35% higher than in the prior year with growth coming from
all revenue categories in the segment. The Local Communications segment
contributed an additional $54 million to consolidated revenue growth,
representing 7% growth versus the prior year. The Wireless segment continued
its significant growth, with its current year revenues of $180 million nearly
doubling in comparison to $91 million in 1999. Revenues for the Other
Communications segment were 30% higher in 2000, increasing $33 million.

    Costs of providing services and products sold were $968 million in the
current year, a $111 million, or 13% increase in comparison to the prior
year. Higher costs were incurred by the Wireless and Other Communications
segments for customer care, maintenance of the optical network and material
costs associated with wireless handsets and information technology consulting
sales. Somewhat offsetting these increases were reduced access and
transmission fees that result from a reduced reliance on other interexchange
carriers as the Company expands and grooms its national network
infrastructure. The 13% increase in costs of providing services and products
sold compared favorably with 23% revenue growth. The Company's gross profit
margin increased significantly as a result, rising four margin points to
approximately 53%.

    Selling, general and administrative ("SG&A") expenses of $584 million
represented a 19%, or $92 million increase over the prior year. The Broadband
segment incurred the majority of the increase, or $47 million, primarily as a
result of $17 million of advertising expense in order to introduce the new
"Broadwing" brand. Also, the Company added more than 600 employees to support
the expanded network and sales function. The Wireless segment reported a $23
million increase in SG&A expense primarily for handset subsidies and selling
expenses in response to significant growth in subscribership. Additional
increases for the category were incurred primarily on behalf of the Other
Communications segment and were the result of initial costs associated with
the introduction of the Any Distance offering and expansion of web-hosting
services.

    EBITDA of $498 million represented a 55% improvement over the $322
million reported in the prior year. Higher EBITDA was contributed by the
Broadband, Local Communications and Wireless segments. This was somewhat
offset by the declining EBITDA of the Other Communications segment which was
primarily attributable to advertising and other start-up costs associated
with the Any Distance service. EBITDA margin expanded by five margin points,
increasing to more than 24% in 2000.

    Depreciation expense of $346 million represented a $61 million increase
over the prior year. This increase was incurred primarily by the Broadband
segment and reflects the continued buildout of its national optical network.
Higher depreciation expenses were also incurred by the Local Communications
and Wireless segments as both continued construction of their regional
network infrastructures. Amortization expense of $113 million pertains to
purchased goodwill and other intangible assets and was virtually unchanged in
comparison to 1999.

    The Company recorded approximately $1 million in net restructuring
credits relating to the restructuring initiative that was undertaken in the
fourth quarter of 1999 and further described in Note 3 of the Notes to
Financial Statements. These credits consisted of $.7 million in additional
severance expense, offset by a $1.5 million reduction related to lease
terminations.


                                       19


    Operating income of $39 million in 2000 improved significantly over the
$145 million operating loss reported in 1999 as a result of the above, with
increases being provided by the Broadband, Wireless and Local Communications
segments.

    The Company recorded nearly $16 million in losses in 2000 on the Applied
Theory investment that is accounted for under the equity method. This is
approximately $6 million less than the $22 million recorded in the prior
year, with approximately $5 million in increased losses on the Applied Theory
investment being more than offset by $11 million in losses on the Unidial
investment in 1999 that did not recur. These amounts are reported in the
Consolidated Statements of Income and Comprehensive Income (Loss) under the
caption "Equity Loss in Unconsolidated Entities".

    Minority interest expense for 2000 consists of $49 million in dividends
and accretion on the 12 1/2% preferred stock of Broadwing Communications
offset by approximately $5 million that is attributable to AT&T PCS' 19.9%
minority interest in the operating loss of the Company's wireless business.
Net minority interest expense of $44 million in 2000 represented a 15%
increase in comparison to the prior year due to improved operating results of
the CBW subsidiary in the current year.

    The Company incurred a $356 million net loss on investments in 2000. This
was the result of $405 million in recognized losses on the PSINet, Applied
Theory and ZeroPlus.com investments, net of $49 million in realized gains on
the sale of the Company's investment in PurchasePro.com.

    Interest expense of $164 million in 2000 represented a 44% increase in
comparison to the $114 million incurred on a pro forma basis in 1999. Of the
$50 million increase in interest expense, $48 million was attributable to
additional borrowings and $2 million was the result of higher average
interest rates on floating-rate debt (see further discussion of indebtedness
and interest expense in Note 5 of the Notes to Financial Statements).

    Other expense of $2 million in 2000 was unchanged in comparison to 1999.

    The income tax benefit of $166 million in 2000 represented a $197 million
decrease in income tax expense versus the $31 million tax provision recorded
in 1999. This resulted primarily from recognized losses on minority-owned
investments, somewhat offset by the effect of certain non-deductible expenses
such as goodwill amortization and preferred stock dividends treated as
minority interest expense.

    Income from discontinued operations, comprising the operations of the
Company's former Cincinnati Bell Supply subsidiary, contributed an additional
$.2 million in income (net of tax) in 2000, or approximately $3 million less
than in 1999. This was attributable to the fact that this business was sold
in May 2000. The Company also recognized $0.8 million in expense from a
cumulative effect adjustment that resulted from the adoption of Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" as
required by the Securities and Exchange Commission on January 1, 2000 (see
Note 1 of the Notes to Financial Statements).

    The Company reported a net loss of $377 million in 2000 as a result of
the above, or $21 million higher than the $356 million pro forma loss
reported in 1999. Dividends and accretion on preferred stock was $8 million
in the current year, resulting in a net loss attributable to common
shareholders of $385 million. The loss per share of $1.82 was 2% higher than
in the prior year, but included a $1.00 per common share loss pertaining to
investments. Excluding investment losses, the adjusted loss per share of $.82
improved 54% in comparison to the pro forma loss per share of $1.79 in 1999.



                                       20




1999 COMPARED TO 1998

    In 1999, the Company achieved revenue growth across all its segments in
spite of the de-emphasis of a major revenue source within the Broadband
segment and an increased level of competition within Cincinnati Bell
Telephone's service area. Consolidated revenues of $1,670 million were $140
million higher than in the prior year, representing revenue growth of 9%. The
primary source of revenue growth for the Company in 1999 was the new
Cincinnati Bell Wireless subsidiary, which provided more than $91 million in
new revenues. The Broadband segment produced a $13 million increase in
revenues, growing 2% to $743 million. The Local Communications segment
contributed an additional $21 million to consolidated revenues, or 3% growth
in comparison to the prior year. The Wireless segment provided an additional
$91 million in revenues in 1999 during its first year of operations as a
subsidiary of the Company.

    Costs of providing services and products sold were $857 million in 1999,
a $61 million, or 8% increase, in comparison to the prior year. The Wireless
segment incurred $59 million in its first year of operations, mainly for
incollect expense, handset costs and network operations and facilities. The
Other Communications segment incurred $18 million in additional costs of
providing services, $13 million of which was attributable to the inclusion of
public telephone operations in this segment in 1999. The Broadband segment
incurred an additional $8 million that was primarily attributable to higher
employee costs and hardware and material costs associated with the growth of
Broadwing IT Consulting. The Local Communications segment reduced its
expenses by $29 million, as lower employee costs and operating taxes were
accompanied by transfer of public telephone operations to the Other
Communications segment in 1999. Gross profit margin was approximately 48% in
both years.

    SG&A expenses were 37% higher in 1999, increasing $133 million to $492
million. The Broadband segment incurred the largest increase, with additional
expenses of $114 million. This was primarily attributable to higher employee
costs necessary to maintain, support, promote and sell services as Broadwing
Communications adopted a direct sales model to complement its Carrier
business. The Wireless segment incurred approximately $58 million in its
first year of operations, consisting primarily of handset subsidies,
promotional expenses, customer care and sales commissions. The Other
Communications segment increased its SG&A expenses by approximately $1
million, as lower employee costs were offset by the expenses of the public
payphone operations. The Local Communications segment had significantly lower
expenses in 1999, decreasing 13%, or $21 million. This was primarily
attributable to an $11 million decrease in regulator-mandated costs due to
the completion of the local number portability initiative in the prior year.
Year-2000 computer programming expenses were also approximately $6 million
lower, with the majority CBT's preparedness taking place prior to the
beginning of 1999.

    EBITDA of $322 million represented a 14% decrease, or $54 million, versus
the $376 million recorded in the prior year. This was primarily the result of
Local Communications' improvement of $72 million being more than offset by a
$109 million EBITDA decrease for the Broadband segment and a $25 million
decrease associated with the launch of the Company's wireless communications
business. As a result, EBITDA margin declined six margin points to slightly
more than 19%.

    Depreciation and amortization expenses of $399 million represented an $86
million increase over the prior year, nearly all of which was attributable to
depreciation of network and other assets. This increase was incurred
primarily by the Broadband segment, with an additional $65 million resulting
from the continued buildout of its national optical network. Higher
depreciation expenses were also incurred by the Wireless and Local
Communications segments as both continued construction of their regional
network infrastructures, amounting to approximately $10 million and $7
million, respectively. Amortization expense was $4 million higher than in
1998 due to the amortization of goodwill arising from the purchase of the
Company's 80.1% ownership interest in the wireless business.


                                       21


    In December 1999, the Company's management approved restructuring plans
that included initiatives to integrate operations of the Company and
Broadwing Communications to improve service delivery and reduce the Company's
expense structure. Total restructuring costs and impairments of $19 million
were recorded in the fourth quarter of 1999 related to these initiatives. The
$19 million consisted of $8 million relating to Broadwing Communications
(recorded as a component of the purchase price allocation) and $11 million
relating to the Company (recorded as a cost of operations). The $11 million
relating to the Company consisted of restructuring and other liabilities of
approximately $10 million and related asset impairments of approximately $1
million.

    The Company's estimated restructuring costs were based on management's
best estimate of those costs based on available information. The
restructuring costs accrued in 1999 included the costs of involuntary
employee separation benefits related to 347 employees (263 Broadwing
Communications employees and 84 other employees). As of December 31, 2000,
all of the employee separations had been completed for a total cash
expenditure of approximately $9 million. Employee separation benefits include
severance, medical and other benefits, and primarily affect customer support,
infrastructure, and the Company's long distance operations. The restructuring
plans also included costs associated with the closure of a variety of
technical and customer support facilities, the decommissioning of certain
switching equipment and the termination of contracts with vendors.

    In connection with the restructuring plan, the Company performed a review
of its long-lived assets to identify any potential impairments in accordance
with Statement of Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed Of". Accordingly, the Company
recorded a charge of approximately $1 million as an expense of operations,
resulting from the abandonment and write-off of certain assets including
duplicate network equipment. In total, the Company expects these
restructuring-related activities to result in cash outlays of approximately
$15 million and non-cash items of approximately $4 million. The Company now
expects that nearly all restructuring actions will be completed by June 30,
2001.

    The operating loss of $145 million represented a $200 million decrease in
comparison to the $55 million in operating income recorded in the prior year,
as significant improvements by the Local Communications segment were more
than offset by the operating losses of the Broadband and Wireless segments.

    The Company recorded equity losses in unconsolidated entities in both
years. These losses amounted to approximately $22 million in 1999, or $38
million less than the $60 million recorded in the prior year. The majority of
this difference was attributable to the $27 million wireless venture loss
recorded in 1998. This loss resulted from the Company's agreement with AT&T
PCS to fund its proposed share of wireless venture losses from inception to
the close of the acquisition on December 31, 1998. The Company managed the
joint venture during this period while awaiting regulatory approval of the
acquisition. The operating results for this business from January 1, 1999 to
the present are consolidated in Company operations.

    Minority interest expense of $39 million represented a 21% reduction
versus the $49 million recorded in 1998. This difference is primarily
attributable to AT&T PCS' minority share of the operating losses of the
wireless business.

    Other expense of $2 million represented a $14 million decrease versus the
$12 million in other income recorded in 1998. In 1998, Broadwing
Communications earned $14 million in interest income on invested funds that
resulted from a series of nonrecurring equity transactions such as the sale
of preferred stock and corporate bonds.

    Interest expense increased $31 million in 1999, or 37%, as a result of
higher average debt levels needed to fund expansion of the fiber-optic
network and to acquire an 80.1% ownership interest in the wireless business.
The Company also incurred additional interest expense due to the issuance of
$400 million in 6 3/4% Notes in


                                       22


July 1999, and the amortization of debt issuance costs and bank commitment
fees associated with the 6 3/4% Notes and the Company's $2.1 billion credit
facility (obtained in 1999).

    Income taxes decreased $13 million in comparison to the prior year, or
30%, as a function of lower pre-tax income, somewhat offset by the effect of
nondeductible expenses such as goodwill amortization and preferred stock
dividends treated as minority interest expense.

    The loss from continuing operations before extraordinary items was $353
million, or 109% higher than the $169 million loss recorded in 1998. This was
primarily due to the higher operating losses discussed above.

    Income from discontinued operations includes the results of the Company's
former Cincinnati Bell Supply subsidiary in 1999 and 1998. In 1998, income
from discontinued operations combines the results of Cincinnati Bell Supply
and the Company's former Convergys subsidiary that the Company divested in a
December 31, 1998 spin-off.

    Extraordinary items related to the early extinguishment of debt affected
results for each year. In 1999, costs related to the early extinguishment of
Broadwing Communications' debt as a result of the Merger resulted in a charge
of approximately $7 million, net of taxes. In 1998, the former IXC incurred a
$67 million extraordinary charge, net of taxes, for the early extinguishment
of the 12 1/2% Senior Subordinated Notes in April 1998.

    For the reasons noted above, the Company's net loss increased from $164
million in 1998 to $356 million in 1999.

DISCUSSION OF OPERATING SEGMENT RESULTS:

     The following discussion of the operating results of the Broadband
segment is being presented on a pro forma basis because it represents a
better basis for comparison. The Local Communications, Wireless and Other
Communications segments are discussed on an as-reported basis since there is
no distinction between pro forma and as-reported results with respect to
these segments.

BROADBAND

     The Broadband segment utilizes its advanced optical network consisting
of more than 18,000 route miles to provide broadband transport, Internet
services and switched long distance. The Broadband segment also offers data
collocation, information technology consulting, network construction and
other services. This segment also provides network capacity and fibers in the
form of IRU agreements. These services are offered nationally by the
Company's Broadwing Communications subsidiary.

    Broadband transport services are comprised of the lease of dedicated
circuits that customers use to transmit data and voice traffic. These
services are sold on a circuit lease and indefeasible right-to-use basis.
Switched services represent the transmission of long-distance switched
traffic to retail business customers and resellers. Data and Internet
services include providing ATM/frame relay, data collocation and web hosting.
Other services are comprised of information technology consulting and network
construction services, and, in 1999, residual revenues from a prior sale of
dark fiber.

    The Broadband segment reflects the results of Broadwing Communications,
which became a subsidiary of the Company on November 9, 1999 as a result of
the Merger. The operations of Broadwing Communications are included in the
Company's financial results prospectively from November 9, 1999. For purposes
of comparability, the following discussion assumes the Broadband segment
existed in its current form effective January 1, 1998 and refers to "pro
forma" results. As a result, the numbers referred to in this discussion will
be different from Broadband segment amounts included in the Consolidated
Statements of Income and


                                       23


Comprehensive Income (Loss). The pro forma numbers also include the revenues
and expenses associated with Broadwing IT Consulting and an agreement with
Cincinnati Bell Long Distance to service its customers outside of the
Cincinnati, Ohio area. This change was further described in the Company's
Reports on Form 10-Q for the first two quarters of 2000.





                                                                                                                    % Change
                                                                           % CHANGE                                PRO FORMA
                                                       PRO FORMA             2000 VS.            PRO FORMA           1999 VS.
($ IN MILLIONS)                           2000              1999          PRO FORMA 1999            1998            PRO FORMA 1998
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                    
Revenues:
     Broadband Transport                 $393.2            $304.3               29               $225.4                35
     Switched Services                    408.6             373.5                9                475.4               (21)
     Data and Internet                     64.8              23.6              175                  9.0               162
     Other                                133.1              41.5              221                 19.8               110
                                        -------              ----                                ------
         Total                            999.7             742.9               35                729.6                 2
                                          -----             -----                                 -----

Cost and expenses:
Cost of providing services
     and products sold                    596.8             475.3               26                466.9                 2
Selling, general and
     administrative expense               321.5             274.5               17                160.6                71
                                          -----             -----                                 -----
         Total                            918.3             749.8               22                627.5                19

EBITDA                                  $  81.4            $ (6.9)             n/m               $102.1              (107)
EBITDA margin                               8.1%             (0.9)%             +9 pts             14.0%              -15 pts.



2000 COMPARED TO 1999

REVENUES

    Revenues increased 35% to reach $1 billion in 2000, with all revenue
categories contributing to the $257 million in growth. More than half of this
increase, or $130 million, came from the broadband transport and data and
Internet categories. The switched services category provided an additional
$35 million as a result of higher volumes, with an additional $92 million in
revenue growth resulting from information technology consulting and an
increase in the number of network construction projects.

    In 2000, the broadband transport category contributed an additional $89
million in revenues, increasing 29% to $393 million. Broadwing Communications
continues to experience increased demand for higher-bandwidth services from
its enterprise customers and also benefited from higher IRU revenues in the
current year.

    Switched services revenue increased by $35 million or 9% in the current
year, with $13 million and $22 million, respectively, in additional revenues
being generated by the retail and wholesale components of this business.
Switched wholesale revenues increased 14%, as higher volumes resulting from
the service agreement with CBAD customers were further supplemented by an
increase in international minutes carried. Switched retail revenues increased
6%, as higher minutes of use were somewhat offset by a lower rate per minute.
The retail and wholesale components also benefited from improved credit
management procedures, resulting in lower uncollectible revenues.

    Data and Internet revenues nearly tripled in the current year, increasing
175% or $41 million in comparison to the prior year. These revenues continue
to grow on the strength of demand for Internet-based, ATM/frame relay, data
collocation and web-hosting services. The Company is fulfilling demand for
these services through


                                       24


the construction of new data centers in the current year, bringing the number
of fully operational data centers maintained by the Broadband segment to ten
nationwide.

    Other revenues more than tripled in the current year, increasing from $41
million in 1999 to more than $133 million in the current year. The majority
of this $92 million increase is attributable to the growth of the Broadwing
IT Consulting division, which contributed $52 million in additional
consulting revenues and related equipment sales. The remainder of the
increase in this category, or approximately $40 million, was the result of
network construction projects undertaken on behalf of Touch America Inc. and
El Paso Energy Communications Company, somewhat offset by nonrecurring,
residual revenues from a prior sale of dark fiber.

COSTS AND EXPENSES

    Costs of providing services and products sold consist primarily of access
charges paid to local exchange carriers, transmission lease payments to other
carriers, costs incurred for network construction projects and personnel and
hardware costs in the information technology consulting arena. In 2000, costs
of providing services and products sold amounted to $597 million, a 26%
increase over the prior year. These increases were driven primarily by
revenue growth, but were held to a minimum due to a decreased reliance on
transmission and access charges from other carriers as the Company continues
to expand and groom its own nationwide optical network. These costs decreased
as a percentage of revenue in 2000, dropping four points to approximately 60%
of revenue. Future costs of providing services and products sold is expected
to continue to grow as a function of revenue, but decline somewhat as a
percentage of revenue as more of the traffic is carried on the Company's
network.

    Gross profit margin continues to improve, increasing four margin points
to more than 40%. The Broadband segment's gross profit margin would have
experienced a larger increase were it not for growth in lower-margin services
such as network construction. The Company views network construction services
as an important revenue source because it typically gains access to rights of
way or additional fiber routes through its network construction activities.

    SG&A expenses were higher in the current year, increasing 17%, or $47
million, to $321 million. This was primarily due to the addition of more than
600 employees in support of new products and services and the information
technology consulting business. Broadwing Communications also incurred
significant advertising expenditures in early-2000 in order to introduce the
new "Broadwing" brand. Of the $22 million increase in advertising expense in
the current year, $17 million was attributable to the initial nationwide
advertising campaign that ran in the first quarter of this year. Additional
advertising expenditures were incurred in support of new and existing
products and services. In the aggregate, SG&A expenses as a percentage of
revenue decreased by two percentage points to slightly less than 33%.

    Despite the higher SG&A expenses noted above, the Broadband segment
produced a significant improvement in EBITDA. EBITDA increased by more than
$88 million from negative EBITDA of $7 million in 1999 to $81 million in
positive EBITDA in 2000. EBITDA margin grew to slightly more than 8% in 2000,
an improvement of nine margin points versus the -1% EBITDA margin reported in
1999.

1999 COMPARED TO 1998

REVENUES

    Revenues increased only slightly in 1999, growing 2% to $743 million.
This $13 million increase represented a mixed result, with a $101 million
reduction in switched services revenue offset by increases in all other
categories. The reduction in switched services revenue was the result of a
decision by prior management to de-emphasize this business. Most significant
was the 35% increase in broadband transport, which provided an additional $79
million in revenues as a result of other carriers utilizing Broadwing
Communication's next-


                                       25


generation, optical network. Data and Internet revenues increased $15
million, or 162%, as a result of higher demand for Internet access and
web-hosting services in 1999. Other services grew by nearly $22 million, or
110%, with $14 million being provided as a result of the growth and expansion
of the Broadwing IT Consulting division. The remaining $8 million in revenue
growth was attributable to residual revenues from a prior sale of dark fiber.

COSTS AND EXPENSES

    Costs and expenses of $750 million (excluding depreciation, amortization
and special charges) were $122 million, or 19% greater than the prior year.
Costs of providing services and products sold increased by over $8 million,
or 2%, as lower access costs were offset by higher transmission, Internet
expenses and material costs associated with the growth of Broadwing IT
Consulting. The reduction in access costs was a direct result of Broadwing
Communications making greater utilization of its fiber-optic network as well
as the reduction in minutes of use caused by the decision to de-emphasize the
switched wholesale business. Gross margin was 36% in 1999 and 1998.

    SG&A expenses increased by $114 million, or 71% in comparison to the
prior year. This increase was due in part to additional staffing required to
support, sell and market the expanded fiber- optic network. During 1999,
Broadwing Communications focused on migrating from network construction to
sales and marketing as its own network increased from approximately 9,300 to
15,700 fiber route miles. Headcount increased by approximately 600 in 1999
versus 1998, with 60% of the new positions representing sales positions and
the remaining 40% for network operations.

LOCAL COMMUNICATIONS

    The Local Communications segment provides local telephone service,
network access, data transport, high-speed Internet access, switched long
distance and other ancillary products and services to customers in
southwestern Ohio, northern Kentucky and southeastern Indiana. These services
are provided by the Company's Cincinnati Bell Telephone ("CBT") subsidiary.




                                                                            % CHANGE                           % CHANGE
($ IN MILLIONS)                           2000              1999            00 VS. 99          1998            99 VS. 98
------------------------------------------------------------------------------------------------------------------------
                                                                                                
Revenues:
     Local service                       $452.8            $427.0                6             $407.9               5
     Network access                       199.9             184.8                8              180.9               2
     Other services                       141.2             128.1               10              129.6              (1)
                                          -----             -----                               -----
         Total                            793.9             739.9                7              718.4               3



                                       26



                                                                                                
Costs and expenses:
     Cost of providing services
         and products sold                262.9             274.9               (4)             296.6              (7)
     Selling, general and
         administrative expense           138.5             140.8               (2)             152.4              (8)
     Y2K and regulator-mandated            --                 4.6              n/m               21.5             (79)
                                       ---------           ------                              --------
     Total                                401.4             420.3               (4)             470.5             (11)

EBITDA                                   $392.5            $319.6               23             $247.9              29
EBITDA margin                              49.4%             43.2%              +6 pts           34.5%             +9 pts

Access lines (thousands)                  1,049             1,055               (1)             1,033               2
VGEs - digital (thousands)                  711               518               37                387              34



2000 COMPARED TO 1999

REVENUES

    Revenues increased $54 million to $794 million as all revenue categories
contributed to the 7% growth. Of this increase, 74% came from high-speed data
and Internet services. CBT also continues to leverage the investment in its
network assets through the sale of value-added services such as custom
calling features. The sale of these and other value-added services were the
primary drivers of the remaining revenue growth.

    The local service category provided consistent revenue growth and
accounted for nearly half of the increase for the segment, growing 6% or $26
million in the current year. Nearly 78,000 new subscribers were added for the
Company's Complete Connections(R) calling service bundle during 2000,
bringing total residential subscribership and penetration rates to 174,000
and 25%, respectively. Of the 78,000 new Complete Connections subscribers,
nearly 10,000 chose CBT's latest product bundling offer, Complete Connections
Universal(R) (introduced May 1, 2000), which allows the customer to combine
high-speed data transport, local service, custom-calling features, Internet
access, wireless and long-distance services on one customer bill. Similar
success has been achieved with regard to the Company's ZoomTown(SM)
high-speed data transport service with subscribership now nearing 40,000,
resulting in $8 million in additional revenues in 2000. CBT is now able to
provision asynchronous digital subscriber line ("ADSL") service across the
vast majority of its regional network infrastructure, with 80% of its access
lines being loop-enabled for ADSL transport.

    Network access revenues of $200 million represented an 8%, or $15
million, increase over the prior year. Voice-grade equivalents ("VGEs") from
digital and optical services increased 37% and 59%, respectively, providing
an additional $17 million of revenue growth for the segment. The Company also
realized approximately $5 million in additional revenues due to the recovery
of mandated telecommunications costs. In spite of a 6% increase in access
minutes of use, current year switched access revenues were approximately $7
million lower due to decreased per-minute rates as part of the optional
incentive rate regulation instituted at the Federal level in July 1999.

    Other services revenue grew 10% in the current year, increasing $13
million to $141 million. The Company's Internet access service (FUSE(R))
produced 26,000 new subscribers and $5 million in new revenues for the year,
ending the year with 74,000 subscribers. Further increases in the other
services category are


                                       27


attributable to equipment sales and related installation and maintenance ($6
million) and inside wire installation and maintenance ($2 million).

COSTS AND EXPENSES

    Costs of providing services and products sold of $263 million in the
current year was $12 million less than in the prior year, representing a 4%
decrease. In 2000, CBT benefited from a $4 million reduction in salaries and
wages, a $5 million reduction in post-retirement and post-employment benefits
and a $7 million reduction in computer programming expense ($3 million of
which was attributable to the completion of Year 2000 programming
initiatives). This was partially offset by a $1 million increase in customer
care expenses for the high-speed Internet access service and a $2 million
increase in materials and supplies related to equipment sales. As a result of
higher revenues and the aforementioned expense reductions, gross profit
margin improved by four margin points to approximately 67% in the current
year.

    SG&A expenses were $6 million lower than in the prior year due to a $5
million reduction in Year 2000 programming expenses and a reduction in
outsourced telemarketing expense. These reductions were somewhat offset by
higher advertising expenses associated with new calling service bundles and
the Company's ZoomTown(SM) ADSL service.

    As a result of the above, EBITDA grew to nearly $393 million in the
current year, a $73 million, or 23%, increase over 1999. Similar improvement
was achieved with regard to EBITDA margin, which expanded by six margin
points to more than 49%.

    CBT's combination of revenue growth and focused cost management has now
produced ten consecutive quarters of EBITDA margin expansion. CBT continues
to improve its margins, EBITDA and profitability by leveraging the investment
in its telecommunications network to offer new value-added products and
services without significant incremental costs. Furthermore, CBT is able to
offer a wide variety of telecommunications services at attractive prices with
the added convenience of one customer bill and has maintained approximately
99% of its access lines since the advent of competition in its operating area.

1999 COMPARED TO 1998

    The Local Communications segment posted a strong performance in 1999,
with revenues and EBITDA increasing by 3% and 29% respectively. The
combination of revenue growth and a focus on cost control efforts resulted in
an EBITDA margin increase of nine margin points.

REVENUES

    Revenues of $740 million were 3% higher than the $718 million recorded in
1998, primarily due to growth in local service and network access categories.
The local service category increased 5% for the year, or $19 million. Within
this category, growth came primarily from new product bundling offers (e.g.,
Complete Connections(R) added 110,000 subscribers within the year),
high-speed data transport (e.g., the ZoomtownSM ADSL product launched late in
1998 grew to 18,000 subscribers by December 31, 1999) and other services.
These services, in the aggregate, contributed more than 80% of the increase
for this category, or $15 million. Access line growth was responsible for the
remainder of the increase, with a 2% increase in lines contributing
approximately $4 million in additional revenue for the year.

    Network access revenues were 2% higher, or approximately $4 million. VGEs
from digital services increased 34%, resulting in approximately $13 million
in new revenues for the category. The Company also realized approximately $5
million in additional revenues due to the recovery of mandated
telecommunications costs. In spite of a 7% increase in access minutes of use,
switched access revenues were approximately $14 million lower due to rate
reductions initiated as part of the Company's Commitment 2000 program in Ohio
and



                                       28


the optional incentive rate regulation instituted at the Federal level. These
rate changes were sought by the Company in order to gain earnings freedom
with regard to these services.

    Other services revenue decreased approximately $2 million in 1999, or 1%.
This was the result of a $13 million decrease in public telephone revenues
(now included in the Other Communications segment) being nearly offset by an
additional $2 million in Internet access revenues, $6 million in rent and
facilities collocation revenue and $3 million in other ancillary products and
services.

COSTS AND EXPENSES

    Excluding depreciation, amortization and special charges, costs and
expenses of $420 million were $50 million less than in 1998, representing an
11% decrease.

    Costs of providing services decreased by nearly $22 million in 1999, $8
million of which is attributable to lower expenditures for payroll and
temporary labor sources resulting from CBT's continuing efforts at increasing
productivity. These efforts resulted in a 4% increase in access lines per
employee during 1999. Remaining expense decreases are attributable to the
public payphone operations that are no longer included in the Local
Communications segment.

    SG&A expenses decreased by nearly $12 million in comparison to 1998.
Consulting and contract services were approximately $7 million less due to
lower usage of external labor sources. Computer programming expenses and
right-to-use fees decreased approximately $14 million due to a reduction in
projects initiated and the capitalization of approximately $10 million in
internal use software as required by AICPA Statement of Position 98-1. These
expense decreases were somewhat offset by approximately $15 million in
increases related to materials and supplies, rent, reciprocal compensation
due to Internet service providers and advertising expense in support of new
calling service bundles and the Company's new ZoomTown-SM- ADSL service.

    Year-2000 programming expenses were approximately $6 million lower than
in 1998, reflecting the progress previously made on critical systems and the
conclusion of remediation efforts in 1999. No mandated telecommunications
costs were incurred in 1999 for local number portability and interconnection
requirements, whereas $11 million in such costs were incurred in 1998.

    As a result of the revenue increase and expense decrease detailed above,
EBITDA grew from $248 million in 1998 to $320 million in 1999, a 29%
increase. EBITDA margin expanded by nearly nine margin points to more than
43%.

WIRELESS

    The Wireless segment comprises the operations of Cincinnati Bell Wireless
LLC, a venture in which the Company owns 80.1% and AT&T PCS owns the
remaining 19.9%. This segment provides advanced digital personal
communications services and sales of related communications equipment to
customers in its Greater Cincinnati and Dayton, Ohio operating areas.
Services are provided over the Company's regional and AT&T PCS' national
wireless networks.

    The Company acquired its 80.1% ownership interest in this business on
December 31, 1998. Accordingly, the operating results for the wireless
business have been reflected in the operating results of the Company since
January 1, 1999. The agreement between Cincinnati Bell Wireless and AT&T PCS
specified that prior to the acquisition the Company and AT&T PCS would
operate under an interim agreement whereby losses would be funded in the same
percentages as the proposed venture. In 1998, this resulted in a loss of
approximately $27


                                       29


million, which was recorded as an equity loss in unconsolidated entities. As
a result, a detailed comparison of the operating results of 1999 to 1998 is
not provided.



                                                                                     % CHANGE
($ IN MILLIONS)                                    2000              1999            00 VS. 99
----------------------------------------------------------------------------------------------
                                                                            
Revenues
     Service                                      $167.1           $ 78.7              112
     Equipment                                      12.9             12.7                2
                                                    ----             ----
     Total                                        $180.0           $ 91.4               97

Costs and expenses:
  Cost of providing services and                    80.2             58.6               37
     products sold
  Selling, general and
     administrative expense                         81.3             58.4               39
                                                    ----             ----
  Total                                            161.5            117.0               38

EBITDA                                            $ 18.5           $(25.6)             172
EBITDA margin                                       10.3%           (28.0)%            +38 pts



2000 COMPARED TO 1999

REVENUES

    Wireless segment revenues nearly doubled in 2000, growing 97% to $180
million. Revenue growth of $89 million was the result of higher service
revenues as equipment sales were virtually unchanged in comparison to 1999.
Service revenues continue to grow on the basis of both postpaid and prepaid
subscribership, increasing from $79 million in 1999 to $167 million in 2000
as a result of relatively high average revenue per unit ("ARPU") and low
customer churn.

    Approximately 177,000 net subscribers were added during the year, with
growth coming almost equally from the postpaid and prepaid categories. Total
subscribership now stands at approximately 340,000, a 110% increase versus
the prior year. Subscribership of 340,000 represents approximately 10% of the
licensed population of potential subscribers within the Greater Cincinnati
and Dayton, Ohio metropolitan areas. ARPU from postpaid subscribers of $66
remained relatively constant in comparison to 1999 due to pricing pressure
from increasing competition. Average monthly customer churn remained low and
was among the best in the industry at 1.42% for postpaid subscribers.
Additionally, subscribership to the Company's i-wireless-SM- prepaid product
grew from approximately 11,000 subscribers at the end of the prior year to
more than 97,000 at the end of 2000. This is significant because
i-wireless-SM- represents an efficient use of the Company's wireless network
because these subscribers generally make use of the network during off-peak
periods. Additionally, the cost per gross addition ("CPGA") for i-wireless-SM-
subscribers is approximately half that of postpaid subscribers.

COSTS AND EXPENSES

    Cost of providing services and products sold consists largely of
incollect expense (whereby CBW incurs costs associated with its subscribers
using their handsets while in the territories of other wireless service
providers), network operations costs, interconnection expenses and cost of
equipment sold. These costs were 45% of revenue during 2000, significantly
less than the 64% incurred during the prior year. In total, costs of
providing services and products sold increased 37% in the current year to $80
million due primarily to increased subscribership and associated
interconnection charges, incollect expense, customer care and operating
taxes. Gross profit and gross profit margin also continued their rapid
improvement, increasing to almost $100 million


                                       30


and 55%, respectively. Gross profit margin of 55% in 2000 represents nearly
20 points in gross margin improvement versus 36% in 1999.

    SG&A expenses include the cost of customer acquisition, which consists
primarily of the subsidy of customer handsets, advertising, distribution and
promotional expenses. These costs increased by nearly $23 million in 2000, or
39%, in support of significant growth in subscribership. In 2000, the CPGA
for postpaid customers was $342, or 9% less than the $376 incurred in the
prior year. SG&A expenses also dropped significantly as a percentage of total
revenue, decreasing from 64% of revenues in 1999 to 45% in 2000.

    Significant EBITDA improvements have been achieved as the Company begins
to leverage its network investment and benefit from an embedded customer
base, low customer churn and previous promotional efforts. In the current
year, EBITDA of nearly $19 million represented a $44 million improvement over
the prior year. Also increasing was EBITDA margin, expanding to 10% in the
current year, an improvement of more than 38 margin points versus the -28%
EBITDA margin reported in the prior year.

1999 COMPARED TO 1998

    As indicated above, the Company did not have a controlling interest in
the wireless business until completion of the acquisition of an 80.1%
ownership in this business on December 31, 1998. As a result of its minority
ownership in the venture during 1998, a $27 million loss was recorded as an
equity loss in unconsolidated entities during that year.

OTHER COMMUNICATIONS SERVICES

    The Other Communications Services segment comprises the operations of the
Company's Cincinnati Bell Any Distance ("CBAD"; formerly Cincinnati Bell Long
Distance), and its Cincinnati Bell Directory ("CBD"), ZoomTown.com
("ZoomTown") and Cincinnati Bell Public Communications ("Public")
subsidiaries. The results of operations of Cincinnati Bell Supply are no
longer reflected in this segment pursuant to the sale of this business in the
second quarter of 2000.



                                                                            % CHANGE                           % CHANGE
($ IN MILLIONS)                           2000              1999            00 VS. 99          1998            99 VS. 98
------------------------------------------------------------------------------------------------------------------------
                                                                                                
Revenues                                $142.2             $109.3              30             $ 90.7              21

Cost and expenses:
  Cost of providing services
     and products sold                     84.3              58.3              45               40.1              45
  Selling, general and
     administrative expense                54.3              26.6             104               25.4               5
                                      ---------           -------                           --------
  Total                                   138.6              84.9              63               65.5              30

EBITDA                                  $   3.6            $ 24.4             (85)            $ 25.2              (3)
EBITDA margin                               2.5%             22.3%            -20 pts           27.8%             -6 pts



                                         31


2000 COMPARED TO 1999

REVENUES

    Revenues of $142 million represented a 30%, or $33 million increase
versus the prior year. Producing the vast majority of the revenue growth was
CBAD, increasing $27 million in comparison to the prior year on the success
of its new "Any Distance" service offering. This offer has been successful in
capturing 365,000 subscribers in Cincinnati during its first year,
representing residential and business market share of 60% and 29%,
respectively. Accounting for more than half of the total revenues for this
segment and 12% of its growth was CBD, producing $4 million in additional
revenues versus the prior year on the strength of a successful sales
campaign. ZoomTown's web hosting and content business provided approximately
$5 million in additional revenues in its first full year of operation.
Revenues from Public were approximately $2 million less than in the prior
year, and was attributable to erosion caused by the steady growth in the use
of wireless communications.

COSTS AND EXPENSES

    Costs of providing services and products sold were $84 million in the
current year, a 45%, or $26 million increase versus the prior year. CBAD and
Zoomtown incurred $18 million and $5 million increases, respectively,
primarily for employee and customer care costs associated with the new Any
Distance offering and the launch of ZoomTown's web hosting business. CBD also
experienced a $2 million increase in direct costs resulting from higher sales
commissions and printing costs for its directories. The remaining $1 million
increase was incurred by Public and was primarily attributable to increased
line charges.

    In 2000, gross profit margin for the segment decreased six margin points
to approximately 41% as a result of the above. The gross profit margin
remained relatively constant over the course of 2000, with improving gross
profit margins at CBAD and ZoomTown being offset by a decreasing margin for
Public. Gross profit margin improvement at CBAD and ZoomTown in the latter
part of 2000 was the result of the Company beginning to leverage its initial
expenditures for the Any Distance offering and the new web hosting operations.

    SG&A expenses more than doubled this year, increasing 104% to $54
million. Of the $28 million increase, $23 million was attributable to the
relatively high customer acquisition costs incurred by CBAD as part of the
introduction of the Any Distance offering. The remaining $5 million was
incurred by ZoomTown as a result of the launch of its web hosting business.

    EBITDA decreased to $4 million as a result of the above, an 85% reduction
in comparison to the $24 million reported in the prior year. EBITDA margin
experienced a similar decline, decreasing from 22% in 1999 to less than 3% in
the current year. Because 2000 contained many start-up costs and advertising
expenses associated with new product introductions, the Company anticipates
higher EBITDA and EBITDA margin in 2001 as it begins to more fully realize
the benefits of its initial investment in CBAD and its Any Distance service.
The Company expects that significant expenditures will still be required in
order to grow the web hosting business, but anticipates an increasing demand
for these types of services.

                                       32


1999 COMPARED TO 1998

REVENUES

     Revenues were $109 million in 1999, a 21% increase versus the $91
million reported in 1998. Of the $18 million in additional revenues, $1
million was contributed by CBAD as decreases in its then-existing voice
products were offset by sales of new data and Internet services. CBD revenues
were also slightly higher than in 1998, increasing $1 million to nearly $74
million for the year. Lastly, the inclusion of Public in this segment in 1999
resulted in an additional $16 million in revenues.

COSTS AND EXPENSES

    Costs and expenses increased 30%, or $19 million. Costs of providing
services and products sold accounted for nearly all of this increase, or $18
million. The majority of this increase, or $13 million, can be attributed to
the inclusion of the Public in this segment in 1999. The remaining $6 million
increase was incurred by CBAD in support of then-existing services and the
introduction of new services such as Internet access and frame relay.

    SG&A expenses were approximately $1 million higher than in the prior
year, as approximately $1 million in reduced employee-related costs at CBAD
and CBD were offset by the inclusion of nearly $2 million in SG&A expense for
the public telephone operations.

    EBITDA decreased to $24 million as a result of the above; a $1 million
decrease versus the $25 million reported in 1998. EBITDA margin experienced a
similar decline, dropping nearly six margin points to slightly more than 22%.

CONSOLIDATED OVERVIEW ON AN AS REPORTED BASIS:

    A tabular presentation of the "as reported" financial results for 2000,
1999 and 1998 that are referred to in this discussion can be found in the
Consolidated Statements of Income and Comprehensive Income (Loss) on page 47
of this report on Form 10-K.

2000 COMPARED TO 1999

    Consolidated revenues of $2,050 million were $948 million higher than the
$1,102 million reported in the prior year, representing growth of 86%. In
addition to the reasons noted in the segment discussions, this significant
increase was primarily the result of the Merger. This results from the fact
that 2000 included a full year of the operating results of Broadwing
Communications, whereas 1999 only included Broadwing Communications
prospectively from the November 9, 1999 date of the Merger. This affects
nearly all aspects of the following discussion, with the exception of the
Local Communications, Wireless and Other Communications segments (see
detailed discussion of the operating results of these segments within the
individual segment discussions that begin on page 23 of this Report on Form
10-K).

    Costs of providing services and products sold were $968 million in the
current year, a $478 million, or 97% increase in comparison to the prior
year. Nearly all of this increase was attributable to the operations of the
Broadband segment, with an additional $487 million that resulted primarily
from the Merger and volume-based expenditures associated with revenue growth
and maintenance of the optical network. Higher costs were incurred by the
Wireless and Other Communications segments primarily for customer care,
material costs associated with wireless handsets and promotional expenses
required to launch new products and services. Lower costs were incurred by
the Local Communications segment, as a decrease in salaries and wages,
post-retirement and post-employment and computer programming expenses were
partially offset by an increase in

                                       33


customer care and materials and supplies relating to equipment sales. The
Company's gross profit margin decreased two margin points to 53%, as the
lower gross profit margin of the Other Communications segment was partially
offset by improvement from all other segments.

    SG&A expenses of $584 million represented a $303 million, or 108%,
increase over the prior year. The Broadband segment incurred the majority of
the increase, or $258 million, primarily as a result of the Merger, $17
million of advertising expense in order to introduce the new "Broadwing"
brand and the addition of more than 600 employees to support the expanded
network and sales function. The Wireless segment reported a $23 million
increase in SG&A expense primarily for handset subsidies and selling expenses
in response to significant growth in subscribership. An additional $28
million was incurred by the Other Communications segment and resulted from
initial costs associated with the introduction of the Any Distance offering
and expansion of web-hosting services.

    EBITDA of $498 million represented a $168 million, or 51% improvement
over the $330 million reported in the prior year. The Broadband segment
contributed $80 million in additional EBITDA as a result of the Merger and
operating improvements realized during 2000. The Local Communications and
Wireless segments increases of $73 million and $44 million, respectively, as
these segments begin to more fully leverage previous network investment and
promotional efforts. This was somewhat offset by the declining EBITDA of the
Other Communications segment which was primarily attributable to advertising
and other start-up costs associated with the Any Distance service. EBITDA
margin decreased by six margin points to 24%, as a significant decrease in
the EBITDA margin of the Other Communications segment was partially offset by
the improvements of the remaining segments.

    Depreciation expense of $346 million represented a $186 million, or 117%,
increase over the prior year. This increase was incurred primarily by the
Broadband segment as a result of the Merger and reflects the continued
buildout of its national optical network. Higher depreciation expenses were
also incurred by the Local Communications and Wireless segments as both
continued construction of their regional network infrastructures.
Amortization expense of $113 million pertains to purchased goodwill and other
intangible assets and represented a $92 million increase over the prior year
and due almost exclusively to the Merger.

    The Company recorded approximately $1 million in net restructuring
credits relating to the restructuring initiative that was undertaken in the
fourth quarter of 1999 and further described in Note 3 of the Notes to
Financial Statements. These credits consisted of $0.7 million in additional
severance expense, offset by a $1.5 million reduction related to lease
terminations.

    Operating income of $39 million declined by nearly $100 million in
comparison to the $139 million reported in the prior year. The operating
income of the Broadband segment decreased significantly as a result of the
Merger, while Other Communications also experienced a drop in operating
income due to the introduction of new products and services. This was
partially offset by the improvement of the Local Communications and Wireless
segments.

    The Company recorded nearly $16 million in losses in 2000 on the Applied
Theory investment that is accounted for under the equity method. This is
approximately 1% more than the $15 million recorded in the prior year. Prior
year losses were related to Applied Theory and a 13% share of operating
losses of IXC due to its ownership of IXC common stock from August 16, 1999
to the November 9, 1999 closing date of the Merger. These amounts are
reported in the Consolidated Statements of Income and Comprehensive Income
(Loss) under the caption "Equity Loss in Unconsolidated Entities".

    Minority interest expense consists of $49 million in dividends and
accretion on the 12 1/2% preferred stock of Broadwing Communications offset
by approximately $5 million that is attributable to AT&T PCS' 19.9% minority
interest in the operating loss of the Company's wireless business. Minority
interest expense (net) of $44 million represented a significant increased
expense of $47 million from minority interest income of $3


                                       34


million in the prior year. The increase is due to a full year of dividends
and accretion on the 12 1/2% preferred stock in 2000 versus only two months
of dividends and accretion in 1999, as the Merger took place on November 9,
1999.

    The Company incurred a $356 million net loss on investments in 2000. This
was the result of $405 million in recognized losses on the PSINet, Applied
Theory and ZeroPlus.com investments, net of $49 million in realized gains on
the sale of the Company's investment in PurchasePro.com. No such losses were
incurred in the prior year.

    Other expense of $2 million was $3 million higher than other income of $1
million in 1999.

    Interest expense increased to $164 million in 2000, a 165% or $102
million increase over 1999. This was attributable to higher average debt
levels necessary to fund expansion of the optical, wireless and local
networks and higher interest rates in the current year. In addition, the 2000
amounts reflect an entire year of interest expense related to the debt used
to fund the Merger, versus only two months of interest expense related to
such debt in 1999 (see further discussion of interest expense and
indebtedness later in this discussion and in Note 5 of the Notes to Financial
Statements).

    The income tax benefit of $166 million represented a $197 million
decrease in income tax expense versus the $31 million tax provision recorded
in the prior year. This resulted primarily from recognized losses on
minority-owned investments, somewhat offset by the effect of certain
non-deductible expenses such as goodwill amortization and preferred stock
dividends treated as minority interest expense. The income tax provision for
the 1999 period reflects a net expense due to not recognizing tax benefits in
the pre-Merger environment.

    Income from discontinued operations, comprising the operations of the
Company's former Cincinnati Bell Supply ("CBS") subsidiary, contributed an
additional $.2 million in income (net of tax) in 2000, or approximately $3
million less than in the prior year. This was attributable to the fact that
this business was sold in May 2000. The Company also recognized $0.8 million
in expense from a cumulative effect adjustment that resulted from the
adoption of Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements" as required by the Securities and Exchange Commission
on January 1, 2000 (see Note 1 of the Notes to Financial Statements).

    The Company reported a net loss of $377 million as a result of the above,
or $408 million higher than the $31 million net income reported in 1999.
Dividends and accretion on preferred stock was $8 million in the current
year, resulting in a net loss attributable to common shareholders of $385
million. The loss per share of $1.82 was $2.02 higher than in the prior year,
but included a $1.00 per common share loss pertaining to investments.
Excluding investment losses, the adjusted loss per share of $0.82 decreased
$1.02 in comparison to the income per share of $0.20 in 1999. The decrease in
both the net income and income per share is related to inclusion of a full
year of results from Broadwing Communications versus only two months of
results after the Merger in 1999.

1999 COMPARED TO 1998

    In 1999, the Company transformed itself from a provider of local
communications services into a national provider of voice and data
communications. The transition began in 1998 with the spin-off of Convergys
Corporation, a former subsidiary that held the Company's information and
customer management businesses and is accounted for as a discontinued
operation, and was solidified with the addition of the Broadwing
Communications subsidiary and its high-speed, optical network and national
presence. The acquisition of an 80.1% interest in the wireless business from
AT&T PCS on December 31, 1998 also added significant growth to the Company's
local and regional service offerings.

    The addition of Broadwing Communications subsidiary and the acquisition
of the wireless business from AT&T PCS had a significant impact on 1999
operating results. Of the $231 million in additional revenues in


                                       35


1999, more than 82% (or $190 million) came from these new businesses. The
Company continued to expand its product and service offerings, as well as its
geographic footprint, with all previously existing segments reporting
improved results. Revenues from Local Communications increased 3%, or $21
million, while Other Communications grew 21%, or $19 million. The growth in
the Other Communications segment was primarily attributable to the inclusion
of public payphone operations in the Other Communications segment (public
payphone had previously been included in the Local Communications segment).

    Costs and expenses, excluding depreciation, amortization and special
charges, were $772 million, up $195 million or 34%. Of this increase, $99
million was due to the Merger and $116 million was due to the acquisition of
Cincinnati Bell Wireless, which became a consolidated entity upon completion
of the acquisition of this business from AT&T PCS on December 31, 1998.
Excluding these two additions, operating expenses were down $20 million from
the prior year. EBITDA margins excluding Broadwing Communications and
Cincinnati Bell Wireless increased five margin points to 39%.

    Depreciation and amortization expense increased $70 million over 1998,
with $47 million resulting from the Merger and $14 million attributable to
the wireless business.

    In December 1999, the Company's management approved restructuring plans
that included initiatives to integrate operations of the Company and
Broadwing Communications to improve service delivery and reduce the Company's
expense structure. Total restructuring costs and impairments of $19 million
were recorded in the fourth quarter related to these initiatives. The $19
million consisted of $8 million relating to Broadwing Communications
(recorded as a component of the preliminary purchase price allocation) and
$11 million relating to the Company (recorded as a cost of operations). The
$11 million relating to the Company consisted of restructuring and other
liabilities of approximately $10 million and related asset impairments of
approximately $1 million.

    The Company's estimated restructuring costs were based on management's
best estimate of those costs based on available information. The
restructuring costs accrued in 1999 included the costs of involuntary
employee separation benefits related to 347 employees (263 Broadwing
Communication employees and 84 other employees). As of December 31, 2000, 346
of the employee separations had been completed for a total cash expenditure
of approximately $9 million (nearly $1 million of which was reflected as
additional restructuring expense in 2000). Employee separation benefits
include severance, medical and other benefits, and primarily affect customer
support, infrastructure, and the Company's long distance operations. The
restructuring plans also included costs associated with the closure of a
variety of technical and customer support facilities, the decommissioning of
certain switching equipment and the termination of contracts with vendors.

    In connection with the restructuring plan, the Company performed a review
of its long-lived assets to identify any potential impairments in accordance
with SFAS 121, "Accounting for the Impairment of Long-Lived Assets to be
Disposed Of". Accordingly, the Company recorded a charge of approximately $1
million as an expense of operations, resulting from the abandonment and
write-off of certain assets including duplicate network equipment. In total,
the Company expects these restructuring-related activities to result in cash
outlays of approximately $15 million and non-cash items of approximately $4
million. The Company expects that nearly all restructuring actions will be
completed by June 30, 2001.

    Operating income decreased by $36 million from the prior year reflecting
a $64 million improvement by the Local Communications segment that was offset
by a $63 million decrease for the Broadband segment. The remaining decrease
in operating income was attributable to the Wireless segment and the $11
million for business restructuring described above. Excluding the operating
losses resulting from acquisitions and restructuring, operating income
increased by $60 million, or 34%, due primarily to the operations of the
Local Communications segment.


                                       36


    The Company recorded equity losses in unconsolidated entities in both
years. In 1999, the Company recorded a 13% share of the operating losses of
Broadwing Communications (formerly IXC), or $16 million, due to its ownership
of IXC common stock from August 16, 1999 to the November 9, 1999 closing date
of the Merger. In 1998, the Company recorded a $27 million loss on its
wireless venture with AT&T. This loss resulted from the Company's agreement
with AT&T PCS to fund its proposed share of wireless venture losses from
inception to the close of the acquisition on December 31, 1998. The Company
managed the joint venture during this period while awaiting regulatory
approval of the acquisition. The operating results for this business from
January 1, 1999 to the present are consolidated in Company operations.

    Minority interest and other expense (income), resulted in income of $4
million, a $6 million increase to income in comparison to the $2 million in
expense incurred in 1998. The $6 million increase results from interest
income earned on cash invested following the issuance of 6 3/4% Convertible
Subordinated Notes (the "6 3/4% Notes") in July 1999 and $3 million of
minority interest income recorded on AT&T PCS' 19.9% share in the losses of
our wireless subsidiary.

    Interest expense increased significantly in 1999, owing to higher average
debt levels associated with the Merger, the issuance of the 6 3/4% Notes and
the amortization of debt issuance costs and bank commitment fees associated
with the Company's $2.1 billion credit facility and the 6 3/4% Notes. Of the
$38 million increase in interest expense, approximately $14 million was
attributable to the operations of the Wireless business and $24 million was
related to the Merger.

    Income taxes decreased $12 million, or 27% in comparison to the prior
year, as a function of lower pre-tax income and the offsetting impact of
nondeductible expenses such as goodwill amortization and preferred stock
dividends.

    Extraordinary items related to the early extinguishment of debt affected
results for each year. In 1999, costs related to the early extinguishment of
Broadwing Communications' debt as a result of the Merger resulted in a charge
of approximately $7 million, net of taxes. The spin-off of Convergys
Corporation in 1998 reduced the borrowing capacity that was needed from the
Company's then-existing credit facility and some debt and a portion of that
credit facility were retired, resulting in a $1 million extraordinary charge,
net of tax.

    Income from continuing operations decreased from $79 million in 1998 to
$35 million in 1999 as a result of the above. Earnings per common share
("EPS") from continuing operations decreased from $.58 in 1998 to $.23 in
1999. Excluding the Merger, EPS from continuing operations would have been
$.80, a 38% increase over 1998.

    Income from discontinued operations, net of taxes includes the results of
the Company's former Cincinnati Bell Subsidiary that was sold in May 2000.
From 1995 through 1998, discontinued operations also includes the results of
Convergys Corporation ("Convergys"), the billing and customer management
operations that were divested on December 31, 1998 through a tax free
spin-off.

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

CAPITAL INVESTMENT, RESOURCES AND LIQUIDITY

    The Company's continued transformation from a local wireline voice
communications provider to a nationwide provider of data, voice and Internet
services and a regional provider of wireless services has resulted in
significantly different financing requirements. Although the Company expects
to continue to generate positive cash flow from operations in 2001, capital
expenditures and other investing needs will continue to increase the
Company's need for additional borrowings in the near term.


                                   37


    In order to provide for these cash requirements and other general
corporate purposes, the Company maintains a $2.1 billion credit facility with
a group of lending institutions. The credit facility consists of $900 million
in revolving credit, $750 million in term loans from banking institutions and
$450 million in term loans from non-banking institutions. At December 31,
2000, the Company had drawn approximately $1.64 billion from the credit
facility in order to refinance its existing debt and debt assumed as part of
the Merger and to provide for the Company's business needs. At December 31,
2000, the Company had approximately $460 million in additional borrowing
capacity from this facility. The Company believes that this will be
sufficient to provide for its financing requirements in excess of amounts
generated from its operations.

    The interest rates to be charged on borrowings from the credit facility
can range from 100 to 225 basis points above the London Interbank Offering
Rate ("LIBOR"), and are currently at 175 basis points as a result of the
Company's credit rating. The Company incurs banking fees in association with
this credit facility that range from 37.5 basis points to 75 basis points,
applied to the unused amount of borrowings of the facility. During 2000,
these fees amounted to approximately $3 million.

    The Company is also subject to financial covenants in association with
the credit facility. These financial covenants require that the Company
maintain certain debt to EBITDA, debt to total capitalization, senior debt to
EBITDA and interest coverage ratios. This facility also contains certain
covenants which, among other things, may restrict the Company's ability to
incur additional debt, pay dividends, repurchase Company common stock and
sell assets or merge with another company.

    As of the date of this filing, the Company maintains the following credit
ratings:



                                                                                 DUFF & PHELPS                   MOODY'S
ENTITY            DESCRIPTION               STANDARD AND POOR'S            CREDIT RATING SERVICE          INVESTOR SERVICE
---------------------------------------------------------------------------------------------------------------------------
                                                                                              
BRW            Corporate Credit Rating                  BB+                          BB+                         Ba2
CBT            Corporate Credit Rating                  BB+                          BBB+                        Baa3


    The Company also has an ownership position in equity securities that were
valued at approximately $252 million as of December 31, 2000, net of the $3
million collateralized on the forward sale of PSINet common stock discussed
in Note 5 of the Notes to Financial Statements. The market value of this
portfolio decreased approximately $588 million in the year due to a decline
in the market value of the Company's investments in PSINet, Applied Theory
and ZeroPlus.com and the liquidation of the Company's investment in
PurchasePro.com. This was partially offset by an increase in the market value
of the Company's investment in Corvis Corporation (see Note 4 for a further
discussion of these various investments).

    On April 6, 2000, the Company completed the redemption and conversion of
its 7 1/4% convertible preferred stock, exchanging 9,466,000 shares of its
common stock for 1,058,292 shares of the 7 1/4% preferred stock, based on a
conversion factor of 8.9446 common shares for each of the preferred shares.
Conversion of these preferred shares into common stock of the Company
eliminated approximately $8 million per year in cash dividend payments.

    Capital expenditures to maintain and grow the nationwide optical network,
complete the wireless network expansion, maintain the local Cincinnati
network and grow the Company's web hosting and collocation business are
expected to be approximately $700 million in 2001.


                                       38


BALANCE SHEET

    The following comparisons are relative to December 31, 1999.

    The change in cash and cash equivalents, property, plant and equipment,
investments in other entities, long-term debt, redeemable preferred stock and
additional paid in capital is further explained in the preceding discussion
and in the cash flow discussion below. The increase in accounts receivable
was primarily the result of revenue growth, particularly for network
construction projects, and a 12% increase in days sales outstanding. Goodwill
and other intangibles decreased by $108 million due to recurring amortization
of related amounts, offset by $32 million of adjustments to the purchase
price allocation associated with the Merger (see Note 2).

    Accounts payable and accrued liabilities increased primarily as a result
of additional materials necessary to support revenue growth and capital
spending associated with construction of the optical network. Restructuring
liabilities recorded in conjunction with the 1999 restructuring plan
decreased primarily as a result of cash expenditures during the year.
Net deferred taxes decreased by $312 million in total as the $186 million net
deferred tax liability in the prior year became a $126 million net deferred
tax asset in 2000. This was a result of the recognition of losses on
minority-owned investments and net operating losses generated in the current
year. Net assets of discontinued operations decreased approximately $7
million in comparison to the prior year due to the collections on accounts
and notes receivable and sale of inventory and fixed assets.

    Redeemable preferred stock decreased due to the conversion of 7 1/4%
convertible preferred stock into common stock of the Company in April 2000,
resulting in a corresponding increase to common stock outstanding and
additional paid in capital. Further increases to common stock outstanding and
additional paid in capital are due to stock option exercises during 2000.
Accumulated other comprehensive income decreased in response to net
unrealized changes in the market value of the Company's current equity
investment portfolio (see additional description in subsequent paragraphs).

    The Company's investment in PSINet consists of 20.5 million common shares
which had a market value of approximately $15 million and $632 million at
December 31, 2000 and 1999, respectively. During most of 2000, the Company
had adjusted this investment to fair market value at each balance sheet date
by recording the unrealized holding gain or loss (net of tax) in
comprehensive income in accordance with SFAS 115. During the fourth quarter
of 2000, the Company recognized a $342 million net pre-tax loss on the PSINet
investment and forward sale and recorded an additional $63 million loss on
investments in Applied Theory and ZeroPlus.com that was partially offset by
approximately $49 million in gains on the liquidation of the Company's
position in PurchasePro.com. The PSINet, Applied Theory and ZeroPlus.com
investments were written down to their respective market values at December
31, 2000.

CASH FLOW

    In 2000, cash provided by operating activities was $332 million, $17
million higher than the $315 million generated during 1999.

    The Company's significant investing activities were capital expenditures
and equity investments. Capital expenditures in 2000 were approximately $844
million, considerably higher than the $381 million spent in the prior year.
The majority of this increase is attributable to the Merger in that prior
year results only included approximately two months of expenditures on the
fiber-optic network. Other increases in capital expenditures were primarily
related to the expansion of the wireless and web hosting businesses. The
Company made $80


                                       39


million in strategic investments in 2000, investing $44 million in equity
instruments of Corvis and $36 million in various other companies.
Approximately $58 million in cash was provided through the sale of the
Company's investment in PurchasePro.com and ownership in a joint venture.

    In contrast to 1999 when $46 million in common stock dividends were paid
to shareowners, no dividends were paid on common stock in 2000. However,
approximately $12 million in preferred stock dividends were paid to holders
of the 7 1/4% and 6 3/4% preferred stocks during 2000 (the 7 1/4% preferred
stock was converted into common shares of the Company in April 2000).
Additionally, the Company switched to cash payments of dividends on its
12 1/2% preferred stock in February 2000 and approximately $49 million in
dividends were paid on this preferred stock in the current year. This amount
is included in the "Minority Interest Expense (Income)" caption in the
Consolidated Statements of Income and Comprehensive Income (Loss).

    During 2000, the Company increased its net borrowings by $376 million.
The increase in debt during 2000 is mainly comprised of $884 million in
credit facility borrowings and $28 million in payment-in-kind interest on the
6 3/4% Notes, offset by the retirement of $404 million of the 9% bonds
originally issued by Broadwing Communications and $124 million reduction in
the PSINet forward sale liability. Both the payment-in-kind and the PSINet
loan adjustment were non-cash transactions. Additionally, the Company retired
amounts remaining on the Coastal note in the fourth quarter of 2000. This
required nearly $5 million in cash but reduced long-term debt by $8 million
due to favorable settlement terms.

     Approximately $64 million in cash was generated through the issuance of
common shares of the Company as a result of stock option exercises during
2000.

REGULATORY MATTERS AND COMPETITIVE TRENDS

FEDERAL - In February 1996, Congress enacted the Telecommunications Act of
1996 ("the 1996 Act"), the primary purpose of which was to introduce greater
competition into the market for telecommunications services. Since February
1996, the Federal Communications Commission ("FCC") has initiated numerous
rulemaking proceedings to adopt regulations pursuant to the 1996 Act. The
1996 Act and the FCC's rulemaking proceedings can be expected to impact CBT's
in-territory local exchange operations in the form of greater competition.
However, these statutes and regulations also create opportunities for the
Company to expand the scope of its operations, both geographically and in
terms of products and services offered.

OHIO - The TELRIC phase of CBT's alternative regulation case, which will
establish the rates CBT can charge to competitive local exchange carriers for
unbundled network elements, remains pending. The Public Utilities Commission
of Ohio ("PUCO") issued its decision on the methodology CBT must use to
calculate these rates on November 4, 1999. On January 20, 2000, the PUCO
denied all parties' requests for rehearing except for one issue regarding
nonrecurring charges. On March 17, 2000, CBT filed an appeal to the Ohio
Supreme Court with respect to several issues. The appeal has been fully
briefed and was argued on January 30, 2001, but no decision has been released
at this time. Nevertheless, CBT has submitted new cost studies as required by
the PUCO's orders and is awaiting comments. After a period for review of the
studies and resolution of any disputes, CBT is to file a tariff implementing
the resulting rates.

CONTINGENCIES

    In the normal course of business, the Company is subject to various
regulatory proceedings, lawsuits, claims and other matters. Such matters are
subject to many uncertainties and outcomes are not predictable with
assurance. However, the Company believes that the resolution of such matters
for amounts in excess of those reflected in the consolidated financial
statements would not likely have a materially adverse effect on the Company's
financial condition.


                                       40


    A total of twenty-six Equal Employment Opportunity Commission ("EEOC")
charges were filed beginning in September 1999 by Broadwing
Telecommunications Inc. employees located in the Houston office (formerly
Coastal Telephone, acquired by IXC in May 1999) alleging sexual harassment,
race discrimination and retaliation. After completing its internal
investigation of the charges and cooperating fully with the EEOC, the Company
and the complainants participated in a voluntary mediation proceeding
conducted by the EEOC. Through the mediation process, the Company was able to
reach settlement with all twenty-six complainants. The Company also entered
into a Conciliation Agreement with the EEOC.

    In the course of closing the Company's merger with IXC, the Company
became aware of IXC's possible non-compliance with certain requirements under
state and federal environmental laws. Since the Company is committed to
compliance with environmental laws, management decided to undertake a
voluntary environmental compliance audit of the IXC facilities and operations
and, by letter dated November 9, 1999, disclosed potential non-compliance at
the IXC facilities to the U.S. Environmental Protection Agency ("EPA") under
the Agency's Self-Policing Policy. The Company made similar voluntary
disclosures to various state authorities. The EPA determined that IXC appears
to have satisfied the "prompt disclosure" requirement of the Self-Policing
Policy for the Company to complete its environmental audit of all IXC
facilities and report any violations to the Agency. The Company has filed its
preliminary environmental audit report with the EPA and is currently working
with the EPA and several state environmental protection agencies to bring the
Company into compliance with all applicable regulations, and to develop
internal procedures to ensure future compliance.

RECENTLY ISSUED ACCOUNTING STANDARDS

    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"). In SAB 101, the SEC Staff expressed its views
regarding the appropriate recognition of revenue with respect to a variety of
circumstances, some of which are of particular relevance to the Company. As
required, the Company adopted SAB 101 effective January 1, 2000 and modified
its revenue recognition policies with respect to initial service activation
fees.

    Following the guidance in SAB 101, the Company is now recognizing service
activation revenues and associated direct incremental costs over their
respective service lives. The adoption of this accounting change resulted in
a one-time, non-cash, after-tax charge of $0.8 million, which had virtually
no effect on earnings per share in the current year. However, at December 31,
2000, the deferral process associated with the adoption of SAB 101 had the
effect of increasing other current assets and other noncurrent assets by $15
million each, while increasing other current liabilities and other long-term
liabilities by $16 million and $15 million, respectively.

    In 2000, the Company recognized $14.1 million in additional revenues and
$13.3 million in incremental direct expenses pertaining to amounts included
in the cumulative effect adjustment for SAB 101 as of December 31, 1999.
Offsetting these amounts were $17.0 million in current year revenues and
$16.2 million in incremental direct expenses that are being deferred to
future periods in accordance with SAB 101. This deferral process has
virtually no effect on the Company's EBITDA or net income in the current
year. The Company restated the first, second and third quarter 2000 operating
results to reflect the adoption of SAB 101 as of January 1, 2000 (see Note 17
of the Notes to Financial Statements).

    In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards requiring that a derivative instrument may
need to be recorded in the balance sheet as either an asset or liability,
measured at its fair value. SFAS 133 was subsequently amended through the
release of SFAS 137, which provided for a deferral of the effective date of
SFAS 133 to all fiscal years beginning after June 15, 2000. As a result,
implementation of SFAS 133 is not mandatory for the Company until January 1,
2001. Management expects that the adoption of SFAS 133 and related amendments
on January 1, 2001 will have an immaterial effect on the Company's results of
operations,

                                       41


cash flows and financial position. The Company does not hold or issue
derivative financial instruments for trading purposes or enter into interest
rate transactions for speculative purposes.

BUSINESS DEVELOPMENT

    In order to enhance shareowner value, the Company actively reviews
opportunities for acquisitions, divestitures and strategic partnerships.

ITEM 7A.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company is exposed to the impact of interest rate changes. To manage
its exposure to interest rate changes, the Company uses a combination of
variable rate short-term and fixed rate long-term financial instruments. The
Company may, from time to time, employ a small number of derivative financial
instruments to manage its exposure to fluctuations in interest rates. The
Company does not hold or issue derivative financial instruments for trading
purposes or enter into interest rate transactions for speculative purposes.

    The Company is, however, required by terms negotiated with its lenders to
 engage in interest rate swaps once certain thresholds are exceeded with
regard  to floating rate debt as a percentage of the Company's total debt.
The Company  exceeded this threshold during 2000 and, accordingly, entered
into a series of  interest rate swap agreements on notional amounts totaling
$130 million. The  purpose of these agreements is to hedge against changes in
market interest  rates to be charged on the Company's borrowings against the
credit facility.

    These swap agreements involve the exchange of fixed and variable rate
interest payments and do not represent an actual exchange of the notional
amounts between the parties. Because these amounts are not exchanged, the
notional amounts of these agreements are not indicative of the Company's
exposure resulting from these derivatives. The amounts to be exchanged
between the parties are primarily the result of the swap's notional amount
and the fixed and floating rate percentages to be charged on the swap.
Interest rate differentials associated with the Company's interest rate swaps
are recorded as an adjustment to interest payable or receivable with the
offset to interest expense over the life of the swap.

    Potential non-performance by counter-parties to the swap agreements
exposes the Company to a certain amount of credit risk due to the possibility
of counter-party default. Because the Company's only counter-parties in these
transactions are financial institutions who are at least investment grade, it
believes the risk of counter-party default is minimal.

    Interest Rate Risk Management - The Company's objective in managing its
exposure to interest rate changes is to limit the impact of interest rate
changes on earnings and cash flows and to lower its overall borrowing costs.



                                       42






    The following table sets forth the face amounts, maturity dates and average
interest rates for the fixed- and floating-rate debt held by the Company at
December 31, 2000 (excluding the PSINet forward sale and capital leases):




($ IN MILLIONS)                      2002        2003        2004         2005      THEREAFTER       TOTAL         FAIR VALUE
---------------------------------------------------------------------------------------------------------------------------------
                                                                                              
Fixed-rate debt:                        $20.0       $20.0  $       -         $20.0        $766.2         $826.2           $735.0
Average interest rate on
  fixed-rate debt                        4.4%        6.2%          -          6.3%          6.9%           6.8%               -

Floating-rate debt:
Average interest rate on          $     -      $     -       $1,189.0       $450.0  $        -         $1,639.0         $1,639.0
  floating-rate debt                                             8.6%         8.9%                         8.7%
                                        -            -                                       -                                -














                                       43





ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                                                               PAGE
                                                                                                               ----
                                                                                                            
Consolidated Financial Statements:

     Report of Management........................................................................................45

     Report of Independent Accountants...........................................................................46

     Consolidated Statements of Income and Comprehensive Income (Loss)...........................................47

     Consolidated Balance Sheets.................................................................................48

     Consolidated Statements of Cash Flows.......................................................................49

     Consolidated Statements of Shareowners' Equity..............................................................50

     Notes to Consolidated Financial Statements..................................................................51

Financial Statement Schedule:

     For each of the three years in the period ended December 31, 2000:

     II  - Valuation and Qualifying Accounts.....................................................................86



    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.


                                       44





REPORTS OF MANAGEMENT AND INDEPENDENT ACCOUNTANTS                 BROADWING INC.

REPORT OF MANAGEMENT

    The management of Broadwing Inc. is responsible for the information and
representations contained in this report. Management believes that the
financial statements have been prepared in accordance with generally accepted
accounting principles and that the other information in this report is
consistent with those statements. In preparing the financial statements,
management is required to include amounts based on estimates and judgments
that it believes are reasonable under the circumstances.

    In meeting its responsibility for the reliability of the financial
statements, management maintains a system of internal accounting controls,
which is continually reviewed and evaluated. Our internal auditors monitor
compliance with the system of internal controls in connection with their
program of internal audits. However, there are inherent limitations that
should be recognized in considering the assurances provided by any system of
internal accounting controls. Management believes that its system provides
reasonable assurance that assets are safeguarded and that transactions are
properly recorded and executed in accordance with management's authorization,
that the recorded accountability for assets is compared with the existing
assets at reasonable intervals, and that appropriate action is taken with
respect to any differences. Management also seeks to assure the objectivity
and integrity of its financial data by the careful selection of its managers,
by organization arrangements that provide an appropriate division of
responsibility, and by communications programs aimed at assuring that its
policies, standards and managerial authorities are understood throughout the
organization.

    The financial statements have been audited by PricewaterhouseCoopers LLP,
independent accountants. Their audit was conducted in accordance with
auditing standards generally accepted in the United States of America.

    The Audit and Finance Committee of the Board of Directors, which is
composed of four directors who are not employees, meets periodically with
management, the internal auditors and PricewaterhouseCoopers LLP to review
their performance and responsibilities and to discuss auditing, internal
accounting controls and financial reporting matters. Both the internal
auditors and the independent accountants periodically meet alone with the
Audit and Finance Committee and have access to the Audit and Finance
Committee at any time.

    RICHARD G. ELLENBERGER
    PRESIDENT AND CHIEF EXECUTIVE OFFICER



    KEVIN W. MOONEY
    EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER


                                      45

                        REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND THE
SHAREOWNERS OF BROADWING INC.


In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of
Broadwing Inc. ("the Company") and its subsidiaries at December 31, 2000 and
1999, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. In addition, in
our opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
These financial statements and financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, the Company
adopted SEC Staff Accounting Bulletin No. 101 in 2000 and AICPA Statement of
Position 98-1 in 1999 and changed its methods of accounting for certain revenues
and related costs and internal use software development costs, respectively.


/s/ PricewaterhouseCoopers LLP
------------------------------
Cincinnati, Ohio
March 7, 2001

                                       46



                        CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)                          BROADWING INC.

MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS              YEAR ENDED DECEMBER 31               2000           1999           1998
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  
REVENUES                                                                                    $2,050.1         $1,102.0       $861.4
-----------------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
     Costs of providing services and products sold                                             968.1            490.3        362.5
     Selling, general and administrative                                                       584.0            281.2        213.9
     Depreciation                                                                              346.2            159.7        110.4
     Amortization                                                                              113.5             21.2           .6
     Restructuring and other charges (credits)                                                  (0.8)            10.9         (1.1)
                                                                                           ----------            ----     ---------
OPERATING INCOME                                                                                39.1            138.7        175.1
Equity Loss in Unconsolidated Entities                                                          15.5             15.3         27.3
Minority Interest Expense (Income)                                                              44.1             (2.7)        --
Loss on Investments                                                                            356.3             --           --
Other Expense (Income), Net                                                                      1.7             (1.4)         2.4
Interest Expense                                                                               163.6             61.6         24.1
                                                                                           ---------             ----         ------

Income (Loss) from Continuing Operations Before Income Taxes,
  Extraordinary Items and Cumulative Effect of Change
  in Accounting Principle                                                                     (542.1)            65.9        121.3
Income Tax Provision (Benefit)                                                                (165.6)            31.3         42.5
                                                                                              -------          ------     --------

Income (Loss) from Continuing Operations Before
  Extraordinary Items and Cumulative Effect of Change
  in Accounting Principle                                                                     (376.5)            34.6         78.8

Income from Discontinued Operations, Net of Taxes                                                0.2              3.4         72.1
Extraordinary Item, Net of Taxes                                                                --               (6.6)        (1.0)
Cumulative Effect of Change in Accounting Principle, Net of Taxes                               (0.8)            --           --
                                                                                             --------       ----------   ----------
NET INCOME (LOSS)                                                                             (377.1)            31.4        149.9

Dividends and Accretion Applicable to Preferred Stock                                            8.1              2.1         --
                                                                                             ---------    -----------    ----------
NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS                                          $(385.2)       $    29.3      $ 149.9
------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                                                                            $(377.1)       $    31.4      $ 149.9

Other Comprehensive Income (Loss), Net of Tax:
     Unrealized gain on investments                                                             85.9            170.0         --
     Reclassification adjustment-marketable equity securities                                 (170.0)            --           --
     Additional minimum pension liability adjustment                                             (.1)             3.6         (2.5)
     Currency translation adjustments                                                           --               --           (4.8)
                                                                                           ----------        ----------  ----------
Total other comprehensive income (loss)                                                        (84.2)           173.6         (7.3)
                                                                                               ------         -------    ----------
COMPREHENSIVE INCOME (LOSS)                                                                  $(461.3)          $205.0      $ 142.6
------------------------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS (LOSS) PER COMMON SHARE
     Income from Continuing Operations                                                     $    (1.82)    $     .23      $     .58
     Income from Discontinued Operations, Net of Taxes                                          --              .02            .53
     Extraordinary Items and Cumulative Effect of Change
       in Accounting Principle, Net of Taxes                                                    --             (.05)          (.01)
                                                                                           ----------     ----------     ----------
     Net Income (Loss)                                                                     $    (1.82)    $     .20      $    1.10
                                                                                           -----------    -------------------------
DILUTED EARNINGS (LOSS) PER COMMON SHARE
     Income from Continuing Operations                                                     $    (1.82)     $    .22      $    .57
     Income from Discontinued Operations, Net of Taxes                                          --              .02           .52
     Extraordinary Items and Cumulative Effect of Change
       in Accounting Principle, Net of Taxes                                                    --             (.04)         (.01)
                                                                                           ----------      ---------     ---------
     Net Income (Loss)                                                                     $    (1.82)     $    .20      $   1.08
                                                                                           ----------      ---------     ---------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (MILLIONS)
     Basic                                                                                     211.7            144.3        136.0
     Diluted                                                                                   211.7            150.7        138.2
------------------------------------------------------------------------------------------------------------------------------------


The accompanying notes are an integral part of the financial statements.

                                       47




                                         CONSOLIDATED BALANCE SHEETS                                           BROADWING INC.

MILLIONS OF DOLLARS                         AT DECEMBER 31                                              2000             1999
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                                  
ASSETS
Current Assets
     Cash and cash equivalents                                                                          $37.9            $ 80.8
     Receivables, less allowances of $49.0 and $53.4                                                    330.6             224.5
     Materials and supplies                                                                              34.1              25.7
     Deferred income tax benefits                                                                        16.6              35.7
     Prepaid expenses and other current assets                                                           43.5              36.3
                                                                                                    ---------         ---------
     Total current assets                                                                               462.7             403.0

Property, Plant and Equipment, Net                                                                    2,966.2           2,500.6
Goodwill and Other Intangibles, Net                                                                   2,572.2           2,679.8
Investments in Other Entities                                                                           254.9             843.3
Deferred Income Tax Benefits                                                                            109.1              --
Other Noncurrent Assets                                                                                 112.1              70.8
Net Assets from Discontinued Operations                                                                   0.4               7.9
                                                                                                   ----------        ----------
     TOTAL ASSETS                                                                                    $6,477.6          $6,505.4
-------------------------------------------------------------------------------------------------------------------------------
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND SHAREOWNERS' EQUITY
Current Liabilities
     Short-term debt                                                                                $    14.0         $     9.2
     Accounts payable                                                                                   244.4             178.2
     Current portion of unearned revenue and customer deposits                                           88.0              82.6
     Accrued taxes                                                                                       90.4              87.7
     Other current liabilities                                                                          290.5             207.3
                                                                                                        -----          --------
         Total current liabilities                                                                      727.3             565.0
Long-Term Debt, less current portion                                                                  2,507.0           2,136.0

Unearned Revenue, less current portion                                                                  611.0             633.5
Deferred Income Taxes                                                                                    --               221.8

Other Long-Term Liabilities                                                                             177.0             153.7
                                                                                                        -----          --------
     Total Liabilities                                                                                4,022.3           3,710.0

 Minority Interest                                                                                      433.8             434.0

7 1/4% Convertible Preferred Stock, redeemable, $.01 par value; authorized -
   5,000,000 shares of all classes of Preferred Stock; no shares and 1,058,380
   shares issued and outstanding at December 31, 2000 and 1999 (aggregate
   liquidation preference of $0 and $105.8 at December 31, 2000 and 1999,
   respectively)                                                                                       --                 228.6
Commitments and Contingencies
Shareowners' Equity
6 3/4% Cumulative Convertible Preferred Stock, $.01 par value; authorized -
   5,000,000 shares of all classes of Preferred Stock; 155,250 shares issued
   and outstanding at December 31, 2000 and 1999                                                        129.4             129.4
Common shares, $.01 par value; 480,000,000 shares authorized;
     223,335,343 and 208,678,058 shares issued at December 31, 2000 and 1999                              2.1               2.1
Additional paid-in capital                                                                            2,329.5           1,979.5
Accumulated deficit                                                                                    (377.1)             --
Accumulated other comprehensive income                                                                   82.7             166.9
Common stock in treasury, at cost
     7,805,800 shares at December 31, 2000 and 1999                                                    (145.1)           (145.1)
                                                                                                       -------           -------
Total Shareowners' Equity                                                                             2,021.5           2,132.8
                                                                                                      -------           --------
Total Liabilities, Redeemable Preferred Stock and Shareowners' Equity                                $6,477.6          $6,505.4
--------------------------------------------------------------------------------------------------------------------------------


    The accompanying notes are an integral part of the financial statements.

                                       48




                                       CONSOLIDATED STATEMENTS OF CASH FLOWS                                          BROADWING INC.

MILLIONS OF DOLLARS                         YEAR ENDED DECEMBER 31                    2000              1999             1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                              $(377.1)            $31.4           $ 149.9
     Less: income from discontinued operations, net of taxes                           (0.2)             (3.4)            (72.1)
                                                                                   ---------           ------          ---------
     Net income (loss) from continuing operations                                    (377.3)             28.0              77.8
     Adjustments to reconcile income (loss) from continuing operations to net
     cash provided by (used in) operating activities:
         Depreciation                                                                 346.2             159.7             110.4
         Amortization                                                                 113.5              21.2               0.6
         Restructuring and related charges (credits)                                   --                10.9              (1.1)
         Provision for loss on receivables                                             73.6              28.2              15.8
         Extraordinary items, net of taxes                                             --                 6.6               1.0
         Non-cash interest expense                                                     38.7              15.8               1.9
         Minority interest                                                             44.1              (2.7)             --
         Equity loss in unconsolidated entities                                        15.5              15.3              27.3
         Loss on investments, net                                                     356.3              --                --
         Deferred income taxes                                                       (166.4)            (24.6)            (12.8)
         Tax benefits from employee stock option plans                                 40.2              13.9               2.5
         Other, Net                                                                    (9.1)             (0.3)             --
     Change in operating assets and liabilities net of effects from
     acquisitions:
         Decrease (increase) in receivables                                          (179.7)              0.3             (25.4)
         Decrease (increase) in prepaid expenses and other current assets               6.1             (15.7)              3.0
         Increase (decrease) in accounts payable                                       75.1             (16.6)             47.9
         Increase (decrease) in other current liabilities                              95.1              30.3             (16.5)
         Increase (decrease) in unearned revenues                                     (19.9)             75.0              --
         Decrease (increase) in other assets and liabilities, net                    (119.8)            (30.8)            (26.5)
                                                                                     -------           -------        ----------
            Net cash provided by operating activities of continuing
              operations                                                              332.2             314.5             205.9
                                                                                      -----             -----             -----
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                            (843.9)           (381.2)           (143.4)
     Payments for investments/acquisitions, net of cash acquired                      (36.5)           (247.0)           (165.6)
     Purchase of equity securities                                                    (44.0)            (12.8)             --
     Proceeds from sale of marketable equity securities                                58.5               --               --
     Other, net                                                                         2.5             --                --
                                                                                      -----          ---------           ------
     Net cash used in investing activities of continuing operations                  (863.4)           (641.0)           (309.0)
                                                                                     -------           -------           -------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Issuance of long-term debt                                                       884.0           1,175.0             150.0
     Repayment of long-term debt                                                     (404.0)           (221.2)            (51.2)
     Short-term borrowings, net                                                        (1.9)           (371.4)             54.7
     Debt issuance costs                                                               --               (31.5)             --
     Issuance of common shares-exercise of stock options                               64.2              37.0               0.3
     Purchase of treasury shares                                                       --              (145.1)             --
     Dividends paid                                                                   (12.3)            (45.6)            (54.4)
     Minority interest dividends paid                                                 (49.4)           --                 --
                                                                                      ------         --------           --------
     Net cash provided by financing activities of
        continuing operations                                                         480.6             397.2               99.4
--------------------------------------------------------------------------------------------------------------------------------

     Net cash provided by discontinued operations                                       7.7              --                 6.0
-------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                                 $(42.9)         $   70.7          $    2.3
Cash and cash equivalents at beginning of year                                         80.8              10.1               7.8
                                                                                       ----              ----         ---------
Cash and cash equivalents at end of year                                              $37.9          $   80.8           $  10.1
--------------------------------------------------------------------------------------------------------------------------------


    The accompanying notes are an integral part of the financial statements.


                                      49




                                   CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY                                     BROADWING INC.

                                6 3/4% CUMULATIVE
                              CONVERTIBLE PREFERRED                                                 RETAINED      ACCUMULATED
                                      STOCK          COMMON STOCK   TREASURY STOCK      ADDITIONAL  EARNINGS/     OTHER
-------------------------------------------------------------------------------------   PAID-IN     ACCUMULATED   COMPREHENSIVE
DOLLARS AND SHARES IN MILLIONS  SHARES    AMOUNT   SHARES   AMOUNT  SHARES    AMOUNT    CAPITAL     DEFICIT       INCOME      TOTAL
------------------------------------------------------------------------------------------------------------------------------------
                                                                                               
BALANCE AT JANUARY 1, 1998       --        --       136.1    $1.4   --       --        $364.5       $221.9        $(8.1)     $579.7
Shares issued under shareowner
     and employee plans          --        --         0.3    --     --       --          --           --           --          --
Net income                       --        --        --      --     --       --          --          149.9         --         149.9
Additional minimum pension
     liability adjustment        --        --        --      --     --       --          --           --           (2.5)       (2.5)
Currency translation
     adjustments                 --        --        --      --     --       --          --           --           (4.8)       (4.8)
Restricted stock issuance        --        --        --      --     --       --          (4.9)        --           --          (4.9)
Dividends on common shares,
     $.40 per share              --        --        --      --     --       --          --          (54.6)        --         (54.6)
Spin-off of Convergys            --        --        --      --     --       --        (212.2)      (317.2)         8.7      (520.7)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998     --        --       136.4     1.4   --       --         147.4         --           (6.7)      142.1
Shares issued under shareowner
     and employee plans          --        --         3.2    --     --       --          46.3         --           --          46.3
Net income                       --        --        --      --     --       --          --           31.4         --          31.4
Additional minimum pension
     liability adjustment        --        --        --      --     --       --          --           --            3.6         3.6
Unrealized gain on investments   --        --        --      --     --       --          --           --          170.0       170.0
Restricted stock amortization    --        --         0.7    --     --       --           5.1         --           --           5.1
Dividends:
         Common Shares, at
            $.20 per share       --        --        --      --     --       --          --          (27.5)        --         (27.5)
         Preferred Shares        --        --        --      --     --       --           1.8         (3.9)        --          (2.1)
Equity issued in connection
     with Merger                  0.2     129.4      68.4     0.7   --       --       1,778.9         --           --       1,909.0
Treasury shares repurchased      --        --        --      --     (7.8)  (145.1)       --           --           --        (145.1)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999      0.2     129.4     208.7     2.1   (7.8)  (145.1)    1,979.5         --          166.9      2,132.8
Shares issued under shareowner
     and employee plans          --        --         6.8    --     --       --         130.1         --           --         130.1
Net loss                         --        --        --      --     --       --          --         (377.1)        --        (377.1)
Additional minimum pension
     liability adjustment        --        --        --      --     --       --          --           --           (0.1)       (0.1)
Unrealized loss on
     investments, net of
     reclassification
     adjustments--               --        --        --      --     --       --           --          --          (84.1)      (84.1)
Restricted stock amortization    --        --        --      --     --       --           3.6         --           --           3.6
Dividends on preferred shares    --        --        --      --     --       --         (12.3)        --           --         (12.3)
Redemption of 7 1/4%
Convertible preferred stock      --        --        --      --     --       --         228.6         --           --         228.6
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000      0.2    $129.4     215.5    $2.1   (7.8) $(145.1)   $2,329.5      $(377.1)       $82.7    $2,021.5


      The accompanying notes are an integral part of the financial statements.



                                      50


NOTES TO FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

    The Company provides diversified communications services through
businesses in four material segments: Broadband, Local Communications,
Wireless, and Other Communications. On November 9, 1999 the Company merged
with IXC Communications, Inc. ("IXC") in a transaction accounted for as a
purchase (the "Merger"). Accordingly, IXC's operations (since renamed
Broadwing Communications) have been included in the consolidated financial
statements for all periods subsequent to November 9, 1999 (See Note 2).

BASIS OF CONSOLIDATION -- The consolidated financial statements include the
consolidated accounts of Broadwing Inc. ("the Company"), and its majority
owned subsidiaries in which the Company exercises control. Investments in
which the Company has the ability to exercise significant influence, but
which it does not control, are accounted for using the equity method. For
equity method investments, the Company's share of income is calculated
according to the Company's equity ownership. Any differences between the
carrying amount of an investment and the amount of the underlying equity in
the net assets of the investee are amortized over the expected life of the
asset. Significant intercompany accounts and transactions have been
eliminated in the consolidated financial statements.

USE OF ESTIMATES -- Preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported. Actual results
could differ from those estimates.

CASH EQUIVALENTS -- Cash equivalents consist of short-term, highly liquid
investments with original maturities of three months or less.

MATERIALS AND SUPPLIES -- The Company's inventory of materials and supplies
are carried at the lower of average cost or market.

PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment is generally
stated at cost. However, a significant portion of the property, plant and
equipment of the Broadband segment was recorded at fair market value on the
November 9, 1999 date of the Merger. The Company's provision for depreciation
of telephone plant is determined on a straight-line basis using the whole
life and remaining life methods. Provision for depreciation of other property
is based on the straight-line method over the estimated useful life. Repairs
and maintenance expense items are generally charged to expense as incurred.
Telephone plant is retired at its original cost, net of cost of removal and
salvage, and is charged to accumulated depreciation. For other property,
plant and equipment, retired or sold, the gain or loss is recognized in other
income.

LONG-LIVED ASSETS, OTHER ASSETS AND GOODWILL -- Deferred financing costs are
costs incurred in connection with obtaining long-term financing; such costs
are amortized as interest expense over the terms of the related debt
agreements. Certain costs incurred with the connection and activation of
customers are amortized on a straight-line basis over the average customer
life. Goodwill resulting from the purchase of businesses and other
intangibles are recorded at cost and amortized on a straight-line basis from
5 to 40 years, with the vast majority of recorded goodwill being amortized
over 30 years. Broadwing reviews the carrying value of long-lived assets and
goodwill for impairment when events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable. An impairment loss
would be recognized when estimated future undiscounted cash flows expected to
result from the use of the asset and its eventual disposition are less than
its carrying amount, with the loss measured based on discounted expected cash
flows.


                                       51


INVESTMENTS - Investments over which the Company does not exercise
significant influence are reported at fair value. The Company reviews its
investments for impairment whenever the fair value of the individual
investment is less than its cost basis. An impairment loss is recognized if
the decline in fair value is deemed to be "other than temporary".

REVENUE RECOGNITION -- As further discussed later in this footnote, the
Company modified its revenue recognition policies on January 1, 2000 to be in
conformity with the Securities and Exchange Commission's ("SEC") Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). Accordingly, service activation revenues are now deferred and
recognized over the appropriate service life for the associated service.
Local service revenues are billed monthly, in advance, with revenues being
recognized when earned. Remaining revenues (with the exception of those
described below) are billed and recognized as services are provided.
Construction revenues and estimated profits are recognized according to the
percentage of completion method on a cost incurred to total costs estimated
at completion basis. Revenues from product sales are generally recognized
upon performance of contractual obligations, such as shipment, delivery,
installation or customer acceptance. Indefeasible right-to-use agreements, or
"IRUs", represent the lease of network capacity or dark fiber and are
recorded as unearned revenue at the earlier of the acceptance of the
applicable portion of the network by the customer or the receipt of cash.
Associated IRU revenue is then recognized over the life of the agreement as
services are provided, beginning on the date of customer acceptance (IRU and
related maintenance revenue are included in the broadband transport category
for the Broadband segment). Directory publishing revenues and related
directory costs are generally deferred and recognized over the life of the
associated directory, normally twelve months.

ADVERTISING -- Costs related to advertising are expensed as incurred and
amounted to $42 million, $22 million, and $11 million in 2000, 1999 and 1998,
respectively.

FIBER EXCHANGE AGREEMENTS -- In connection with the fiber-optic network
expansion, the Company entered into various agreements to exchange fiber
usage rights. Non-monetary exchanges of fiber usage are recorded at the cost
of the asset transferred or, if applicable, the fair value of the asset
received. The Company accounts for agreements with other carriers to exchange
fiber for capacity by recognizing the fair value of the revenue earned and
expense incurred under the respective agreements. Exchange agreements
accounted for non-cash revenue and expense (in equal amounts) of
approximately $19 million in 2000 and $3 million in 1999.

INCOME TAXES -- The income tax provision (or benefit) consists of an amount
for taxes currently payable and a provision (or benefit) for tax consequences
deferred to future periods.

STOCK-BASED COMPENSATION -- Compensation cost is measured under the intrinsic
value method. Pro forma disclosures of net income and earnings per share are
presented as if the fair value method had been applied in Note 11 of the
Notes to Financial Statements.

DERIVATIVE FINANCIAL INSTRUMENTS -- In the normal course of business, the
Company employs a small number of derivative financial instruments to manage
its exposure to fluctuations in interest rates. The Company does not hold or
issue derivative financial instruments for trading purposes. Interest rate
differentials associated with the Company's interest rate swaps are recorded
as an adjustment to interest payable or receivable with an offset to interest
expense over the life of the swap. The forward sale of equity investments is
accounted for by recording a current asset and current liability at the time
of execution of the forward sale contract. Once the forward contract is
settled, the gain or loss on the hedged investment is reclassified from other
comprehensive income to a realized gain or loss and the current asset and
current liability are removed from the Company's books.

RECLASSIFICATIONS -- Certain prior year amounts have been reclassified to
conform to the current classifications with no effect on financial results.


                                       52


RECENTLY ISSUED ACCOUNTING STANDARDS -- In December 1999, the SEC issued SAB
101. In SAB 101, the SEC Staff expressed its views regarding the appropriate
recognition of revenue with respect to a variety of circumstances, some of
which are of particular relevance to the Company. As required, the Company
adopted SAB 101 on January 1, 2000 and modified its revenue recognition
policies with respect to initial service activation fees.

Following the guidance in SAB 101, the Company is now recognizing service
activation revenues and associated direct incremental costs over their
respective average customer lives. The adoption of this accounting change
resulted in a one-time, non-cash, after-tax charge of $0.8 million, having
virtually no effect on reported earnings per share in the current year.

In 2000, the Company recognized $14.1 million in additional revenues and
$13.3 million in incremental direct expenses pertaining to amounts included
in the cumulative effect adjustment for SAB 101 as of January 1, 2000.
Offsetting these amounts were deferrals of $17.0 million in current year
revenues and $16.2 million in incremental direct expenses deferred to future
periods in accordance with SAB 101. This deferral process has virtually no
effect on the Company's EBITDA or net income in the current year. However, at
December 31, 2000, the deferral process associated with the adoption of SAB
101 had the effect of increasing other current assets and other noncurrent
assets by $15 million each, while increasing other current liabilities and
other long-term liabilities by $16 million and $15 million, respectively. The
Company restated the first, second, and third quarter 2000 income statements
to reflect the adoption of SAB 101 as of January 1, 2000 (see Note 17 of the
Notes to Financial Statements).

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards requiring that a derivative instrument may
need to be recorded in the balance sheet as either an asset or liability,
measured at its fair value. SFAS 133 was subsequently amended through the
release of SFAS 137, which provided for a deferral of the effective date of
SFAS 133 to all fiscal years beginning after June 15, 2000. As a result,
implementation of SFAS 133 and related amendments is not mandatory for the
Company until January 1, 2001. The Company does not anticipate a material
effect on its results of operations, cash flows and financial position
resulting from the Company's adoption of this new standard on January 1,
2001. The Company does not hold or issue derivative financial instruments for
trading purposes or enter into interest rate transactions for speculative
purposes.

On January 1, 1999, the Company adopted AICPA Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" ("SOP 98-1"). SOP 98-1 requires the capitalization of certain
expenditures for software that is purchased or internally developed for use
in the business. As compared to prior years when these types of expenditures
were expensed as incurred, the adoption of SOP 98-1 resulted in the
capitalization of $60 million of internal use software development costs in
2000 and $10 million in 1999. These costs are now being amortized over a
three to five-year period.

2. ACQUISITIONS

IXC COMMUNICATIONS INC.:

    The Company completed its merger with IXC Communications, Inc. ("IXC") on
November 9, 1999 ("the Merger"). Under the terms of the Merger, each share of
IXC common stock was exchanged for 2.0976 shares of the Company's common
stock. The aggregate purchase price of approximately $3.2 billion consisted
of (all numbers approximate): $0.3 billion in cash for the purchase of five
million shares of IXC stock from GE Capital Pension Trust; the issuance of 69
million shares of the Company's common stock valued at $1.6 billion, 155,000
shares of 6 3/4% convertible preferred stock valued at $0.1 billion; the
assumption of $1.0 billion of


                                       53



IXC's indebtedness, and the issuance of 14 million options to purchase
Broadwing common stock valued at $0.2 billion. These options were issued
coincident with the Merger to replace the then outstanding and unexercised
options exercisable for shares of IXC common stock. These options were
granted on the same terms and conditions as the IXC options, except that the
exercise price and the number of shares issuable upon exercise were divided
and multiplied, respectively, by 2.0976. The Merger was accounted for as a
purchase and, accordingly, the operating results of IXC (since renamed
Broadwing Communications) have been included in the Company's consolidated
financial statements since the Merger date of November 9, 1999.

    The cost of the Merger has been allocated to the assets acquired and
liabilities assumed according to their estimated fair values at the Merger
date. During 2000, the Company adjusted the fair values of certain assets
acquired and liabilities assumed based on the receipt of additional
information which was outstanding at the date of the acquisition. These
adjustments did not have a material impact on the preliminary purchase price
allocation. The following table reflects the $3.5 billion fair value
allocation, comprised of the $2.2 billion consideration paid, the assumption
of $1.0 billion in indebtedness and the $.3 billion historical net deficit
acquired:



Millions of dollars:
-------------------------------------------------------------------------------------------
                                                                               
Property, Plant & Equipment                                                       $   124.0
Other Intangibles                                                                     423.0
Debt                                                                                 (174.0)
Deferred Tax Liabilities                                                              (33.0)
Other                                                                                  42.3
-------------------------------------------------------------------------------------------

Subtotal                                                                              382.3
-------------------------------------------------------------------------------------------

Goodwill                                                                            2,155.2

Assumption of Debt                                                                    963.7
-------------------------------------------------------------------------------------------

Total                                                                              $3,501.2
-------------------------------------------------------------------------------------------



    The amount allocated to goodwill represents the excess of price paid over
the fair value of assets realized and liabilities assumed in the Merger. These
amounts will be amortized to expense over a 30-year period.

    CINCINNATI BELL WIRELESS:

    On December 31, 1998 the Company paid approximately $162 million in cash
to AT&T PCS in exchange for an 80.1% interest in the business known as
Cincinnati Bell Wireless, including a PCS license and other assets and
liabilities. The Company paid an additional $12 million towards this purchase
during the first half of 1999 as a result of the determination of final
purchase price. The goodwill, licenses and other intangibles related to this
purchase were approximately $96 million and are being amortized to expense on
a straight-line basis over a 20- to 40-year period.

    The following summarized unaudited Pro forma financial information
assumes the Merger and the Cincinnati Bell Wireless acquisition occurred on
January 1, 1998:




MILLIONS OF DOLLARS (EXCEPT PER SHARE AMOUNTS)             YEAR ENDED DECEMBER 31                      1999              1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               
Revenues                                                                                            $1,670.3         $1,548.3
EBITDA                                                                                                 321.6            348.4
Loss from Continuing Operations                                                                       (352.9)          (174.0)

Net Loss                                                                                              (356.1)        $ (168.9)
------------------------------------------------------------------------------------------------------------------------------------


                                       54


Loss from Continuing Operations per Common Share                                                 $     (1.75)      $     (.88)
Loss per Common Share                                                                            $     (1.79)  $         (.86)
------------------------------------------------------------------------------------------------------------------------------------


    These unaudited Pro forma results of operations have been prepared for
comparative purposes only and do not purport to be indicative of the results
of operations which actually would have resulted had the Merger and the
Cincinnati Bell Wireless acquisition occurred on January 1, 1998.

3. RESTRUCTURING AND OTHER CHARGES (CREDITS)

1999 RESTRUCTURING PLAN

    In December 1999, the Company's management approved restructuring plans
which included initiatives to integrate operations of the Company and
Broadwing Communications, improve service delivery, and reduce the Company's
expense structure. Total restructuring costs and impairments of $18.6 million
were recorded in the fourth quarter related to these initiatives. The $18.6
million consisted of $7.7 million relating to Broadwing Communications
(recorded as a component of the preliminary purchase price allocation) and
$10.9 million relating to the Company (recorded as a cost of operations). The
$10.9 million relating to the Company consisted of restructuring and other
liabilities in the amount of $9.5 million and related asset impairments in
the amount of $1.4 million. The restructuring-related liabilities recorded in
the fourth quarter of 1999 were comprised of the following:





                                            BROADWING, EXCLUDING
MILLIONS OF DOLLARS                        BROADWING COMMUNICATIONS                  BROADWING COMMUNICATIONS            TOTAL
------------------------------------------------------------------------------------------------------------------------------
                                                                                                                
Employee separations                                  $6.0                                      $2.2                       $8.2
Facility closure costs                                 2.3                                       2.1                        4.4
Relocation                                             ---                                       0.2                        0.2
Other exit costs                                       1.2                                       3.2                        4.4
                                                   -------                                   -------                   --------
Total accrued restructuring costs                   $  9.5                                    $  7.7                     $ 17.2
------------------------------------------------------------------------------------------------------------------------------------


    The Company's estimated restructuring costs were based on management's
best estimate of those costs based on available information. The
restructuring costs accrued in 1999 included the costs of involuntary
employee separation benefits related to 347 employees (263 Broadwing
Communications employees and 84 employees from other subsidiaries of the
Company). As of December 31, 2000, all employee separations had been
completed for a total cash expenditure of $8.9 million. Employee separation
benefits include severance, medical and other benefits, and primarily affect
customer support, infrastructure, and the Company's long distance operations.
The restructuring plans also included costs associated with the closure of a
variety of technical and customer support facilities, the decommissioning of
certain switching equipment, and the termination of contracts with vendors.

     In connection with the restructuring plan, the Company performed a
review of its long-lived assets to identify any potential impairments in
accordance with Statement of Financial Accounting Standard No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed of" ("SFAS
121"). The Company recorded a $1.4 million charge as an expense of operations
according to SFAS 121, resulting from the abandonment of certain assets
including duplicate network equipment.


                                       55





The following table illustrates activity in this reserve since December 31,
1999:



                                                  BALANCE                                                       BALANCE
       TYPE OF COSTS (IN MILLIONS):          DECEMBER 31, 1999        UTILIZATIONS        ADJUSTMENTS      DECEMBER 31, 2000
       ----------------------------          -----------------        ------------        -----------      -----------------
                                                                                               
          Employee separations                   $     7.8               $   (8.9)        $    1.2        $         0.1
          Facility closure costs                       4.4                   (0.7)            (1.5)                 2.2
          Relocation                                   0.2                      --            (0.2)                  --
          Other exit costs                             4.4                   (3.2)             0.3                  1.5
                                                 ---------               ---------        ---------           ---------

          Total                                  $    16.8               $  (12.8)        $   (0.2)       $         3.8
                                                 =========               =========        =========       =============


    The Company incurred $0.4 million in employee separation expenditures in
1999.

    Net restructuring credits of $0.8 million recorded in operations during
2000 consisted of $0.7 million in additional employee severance offset by a
$1.5 million adjustment related to lease terminations. An offsetting
reduction of $0.6 million in adjustments was recorded at Broadwing
Communications and was applied to goodwill as part of the purchase allocation
associated with the Merger. This consisted of $0.4 million in additional
employee separations and $0.2 million in additional exit costs.

    In total, the Company expects these restructuring plans to result in cash
outlays of $14.6 million and non-cash items of $3.3 million. Management
believes that the remaining balance of $3.8 million at December 31, 2000 is
adequate to complete the restructuring plan and that most of the related
actions will be completed by June 30, 2001.

4. INVESTMENTS IN OTHER ENTITIES

    INVESTMENTS IN EQUITY METHOD SECURITIES - The Company holds a 23.5%
ownership investment in Applied Theory. The Company made the determination
during the fourth quarter of 2000 that the impairment in the value of this
investment was "other than temporary". Accordingly, the Company has written
this investment down to its market value, resulting in a $53 million pre-tax
charge to earnings in the fourth quarter of 2000. Also in 2000, the Company
recognized approximately $15 million in losses pertaining to its equity share
in the net losses of Applied Theory and amortization of implied goodwill
resulting from this investment. This is reflected in the Consolidated
Statements of Income and Comprehensive Income (Loss) under the caption
"Equity Loss in Unconsolidated Entities". The book value and market value of
this investment was approximately $12 million at December 31, 2000.

    INVESTMENTS IN MARKETABLE SECURITIES - At December 31, 2000, investments
held in Corvis Corporation ("Corvis"), PSINet, and ZeroPlus.com were
classified as "available-for-sale" securities under the provisions of
Statement of Financial Accounting Standard No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115"). The Company reviews
its portfolio of SFAS 115 investments and makes adjustments to the individual
carrying values of these investments if an "other than temporary" impairment
is determined to exist or if an investment is transferred between SFAS 115
categories (e.g., from the "available for sale" to the "trading" category).

    The Company's investment in PSINet consists of 20.5 million common shares
which had a market value of approximately $15 million and $632 million at
December 31, 2000 and 1999, respectively. Additionally, the Company maintains
an investment in

                                       56


approximately 1.9 million common shares of ZeroPlus.com having a market value
of approximately $0.6 million and $24 million at December 31, 2000 and 1999,
respectively.

    After considering all of the facts and circumstances surrounding the
decrease in market value of these marketable securities at December 31, 2000,
the Company made the determination that these impairments were "other than
temporary". Accordingly, the Company recognized additional pre-tax losses of
$342 million and $10 million, respectively, on the PSINet and ZeroPlus.com
investments representing the difference between the market value and the
Company's recorded basis in these investments at December 31, 2000. In 2000,
the Company also recorded a pre-tax gain of $49 million that resulted from
the liquidation of the Company's investment in PurchasePro.com. The sale of
all of the Company's shares in PSINet was completed in the first quarter of
2001 and the Company no longer owns any shares in PSINet.

    INVESTMENTS IN OTHER SECURITIES - The Company enters into certain equity
investments for the promotion of business and strategic objectives. A portion
of these investments is in securities which do not have readily determinable
fair market values. These investments are recorded at cost based on specific
identification. The carrying value of cost method investments was
approximately $38 million and $4 million as of December 31, 2000 and 1999,
respectively. Management reviews these investments on a regular basis using
external valuations and discounted cash flows to determine the existence of
an "other than temporary" impairment.

    5. DEBT

Debt consists of the following:



MILLIONS OF DOLLARS                         AT DECEMBER 31                            2000            1999
-----------------------------------------------------------------------------------------------------------------------------
                                                                                              
Short-Term Debt:

     Capital lease obligations                                                       $  5.7              $5.9
     Current maturities of long-term debt                                               8.3               3.3
                                                                                    -------            ------
     Total short-term debt                                                            $14.0              $9.2
-----------------------------------------------------------------------------------------------------------------------------

Long-Term Debt:
     Bank notes                                                                    $1,639.0            $755.0
     9.0% senior subordinated notes                                                    46.0             450.0
     6.75% convertible notes                                                          440.2             412.0

     Various Cincinnati Bell Telephone notes                                          290.0             290.0
     7.25% senior secured notes                                                        50.0              50.0
     PSINet forward sale                                                                3.0             133.9
     Capital lease obligations                                                         38.8              37.0
     Other                                                                             --                 8.1
-----------------------------------------------------------------------------------------------------------------------------

     Total long-term debt                                                          $2,507.0          $2,136.0
-----------------------------------------------------------------------------------------------------------------------------



                                       57





Average balances of short-term debt and related interest rates for the last
three years are as follows:



MILLIONS OF DOLLARS                                                                   2000              1999             1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Average amounts of short-term debt
   outstanding during the year*                                                       $12.4            $190.0             $87.5

Maximum amounts of short-term debt
   at any month-end during the year                                                    17.8            $230.0            $185.5


Weighted average interest rate during the year**                                        8.4%              4.9%              5.6%


* Amounts represent the average daily face amount of notes.

** Weighted average interest rates are computed by dividing aggregate related
interest expense by the daily average face amount of notes.

BANK NOTES

    In November 1999, the Company obtained a $2.1 billion credit facility
from a group of lending institutions. The credit facility consists of $900
million in revolving credit and $750 million in term loans from banking
institutions and $450 million in term loans from non-banking institutions. At
December 31, 2000, the Company had drawn approximately $1.64 billion from the
credit facility in order to refinance its existing debt and debt assumed as
part of the Merger. This amount included approximately $404 million borrowed
in order to redeem the outstanding 9% Senior Subordinated Notes assumed
during the Merger as part of a tender offer. This tender offer was required
under the terms of the bond indenture due to the change in control provision.
At December 31, 2000, the Company had approximately $460 million in
additional borrowing capacity under this facility.

     This facility's financial covenants require that the Company maintain
certain debt to EBITDA, debt to total capitalization, senior debt to EBITDA
and interest coverage ratios. This facility also contains covenants which,
among other things, restrict the Company's ability to incur additional debt,
pay dividends, repurchase Company common stock, sell assets or merge with
another company.

    The interest rates to be charged on borrowings from this credit facility
can range from 100 to 225 basis points above the London Interbank Offering
Rate ("LIBOR") and are currently at 175 basis points above LIBOR based on the
Company's credit rating. The Company will incur banking fees in association
with this credit facility ranging from 37.5 basis points to 75 basis points,
applied to the unused amount of borrowings of the facility. In 2000, these
commitment fees amounted to approximately $3 million.

9% SENIOR SUBORDINATED NOTES

    In 1998, the former IXC issued $450 million of 9% senior subordinated
notes due 2008 ("the 9% notes"). The 9% notes are general unsecured
obligations and are subordinate in right of payment to all existing and
future senior indebtedness and other liabilities of the Company's
subsidiaries. The indenture related to the 9% notes requires the Company to
comply with various financial and other covenants and restricts the Company
from incurring certain additional indebtedness. In January 2000, $404 million
of these 9% notes were redeemed through a tender offer as a result of the
change of control terms of the bond indenture. Accordingly, $46 million of
the 9% notes remain outstanding at December 31, 2000.


                                       58


6.75% CONVERTIBLE NOTES

    In July 1999, the Company issued $400 million of 10-year, convertible
subordinated debentures to Oak Hill Capital Partners, L.P. These notes are
convertible into common stock of the Company at a price of $29.89 per common
share at the option of the holder. For as long as this debt is outstanding,
these notes bear a coupon rate of 6.75% per annum, with the associated
interest expense being added to the debt principal amount. Through December
31, 2000, the Company has recorded approximately $40 million in cumulative
interest expense ($28 million was recorded in the current year) and has
adjusted the carrying amount of the debt accordingly.

CINCINNATI BELL TELEPHONE NOTES

Cincinnati Bell Telephone has $290 million in corporate bonds outstanding
that are guaranteed by its parent company, Broadwing Inc. These bonds are not
guaranteed by other subsidiaries of the Company, generally have maturity
terms ranging from 30 to 40 years and were issued at various dates from 1962
to 1998. Interest rates on this indebtedness ranges from 4.375% to 7.27%.

7.25% SENIOR SECURED NOTES

In 1993, the Company issued $50 million of 7.25% senior secured notes due
2023 (the "7.25% notes"). The indenture related to these 7.25% notes does not
subject the Company to restrictive financial covenants.

PSINET FORWARD SALE

    At December 31, 2000, the Company's total investment in PSINet (including
six million shares collateralized by a forward sale agreement) consisted of
20.5 million shares after adjusting for their February 2000 two-for-one stock
split. In June and July 1999, Broadwing Communications received approximately
$111.8 million representing amounts from a financial institution in
connection with two prepaid forward sale contracts on six million shares of
the PSINet common stock. This amount is accounted for as notes payable and is
collateralized by these six million shares of PSINet common stock owned by
the Company.

    Given the significant decline in the value of PSINet common stock during
2000, this liability could be settled for approximately $3 million at
December 31, 2000. Accordingly, the Company adjusted the carrying value of
this liability to approximately $3 million during the fourth quarter of 2000.
On January 25, 2001, the Company settled the forward sale liability for
approximately 5.8 million shares of PSINet common stock. The difference
between the six million shares collateralized and the 5.8 million shares
required to settle the liability were sold in the open market on January 25,
2001, generating a pre-tax gain of approximately $0.5 million.

CAPITAL LEASE OBLIGATIONS

The Company leases facilities and equipment used in its operations, some of
which are required to be capitalized in accordance with Statement of
Financial Accounting Standard No. 13, "Accounting for Leases" ("SFAS 13").
SFAS 13 requires the capitalization of leases meeting certain criteria, with
the related asset being recorded in property, plant and equipment and an
offsetting amount recorded as a liability. The Company had $44 million in
total indebtedness relating to capitalized leases as of December 31, 2000,
$39 million of which is considered long-term.


                                       59





Annual maturities of long-term debt and minimum payments under capital leases
for the five years subsequent to December 31, 2000 are as follows:



MILLIONS OF DOLLARS                       AT DECEMBER 31                             2000
-----------------------------------------------------------------------------------------------------------------------------
                                                                               
Debentures/Notes
Year of Maturity
2001                                                                                $   --
2002                                                                                  20.0
2003                                                                                  20.0
2004                                                                               1,189.0
2005                                                                                 470.0
THEREAFTER                                                                           766.2
-----------------------------------------------------------------------------------------------------------------------------
     Subtotal                                                                      2,465.2
PSINet forward sale                                                                    3.0
Capital Leases and Other                                                              38.8
-----------------------------------------------------------------------------------------------------------------------------
     TOTAL                                                                        $2,507.0


Interest expense recognized on the Company's debt is as follows:



MILLIONS OF DOLLARS                       YEAR ENDED DECEMBER 31                      2000              1999              1998
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                                
Interest expense:
     Long-term debt                                                                  $157.1             $55.8             $20.8
     Short-term debt                                                                    1.1               5.4               4.8
     Other                                                                              5.4               0.4              (1.5)
------------------------------------------------------------------------------------------------------------------------------------

         Total                                                                       $163.6             $61.6            $ 24.1
------------------------------------------------------------------------------------------------------------------------------------


    The increase in interest expense on long-term debt is a function of
higher average debt levels resulting primarily from the funding of
construction of the fiber-optic network and the issuance of $400 million in
6.75% Convertible Notes. Interest on long-term debt is net of the
capitalization of $25 million, $4 million and $2 million in interest expense
in 2000, 1999 and 1998, respectively. Interest on short-term debt decreased
in 2000 due to the retirement of the Company's commercial paper program in
August 1999. Other interest expense pertains primarily to capitalized leases,
which also increased as a result of the Merger.

    In 1999, costs related to the early extinguishment of Broadwing
Communications' debt as a result of the Merger resulted in an extraordinary
charge of approximately $7 million, net of taxes. The spin-off of Convergys
Corporation in 1998 reduced the borrowing capacity that was needed from the
Company's then-existing credit facility and some debt and a portion of that
credit facility were retired, resulting in a $1 million extraordinary charge,
net of tax.


                                       60





6. MINORITY INTEREST



MILLIONS OF DOLLARS                         AT DECEMBER 31                           2000              1999
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                
     Minority interest consists of:
     12.5% Exchangeable Preferred Stock                                              $421.0            $418.2
     Minority Interest in Cincinnati Bell
       Wireless held by AT&T PCS                                                       10.2              13.1
       Other                                                                            2.6               2.7
------------------------------------------------------------------------------------------------------------------------------------
         Total                                                                       $433.8            $434.0
------------------------------------------------------------------------------------------------------------------------------------


    Broadwing Communications has outstanding approximately 395,000 shares of
12 1/2% Junior Exchangeable Preferred Stock ("12 1/2% Preferreds") that are
carried on the Company's balance sheet at $421 million. The 12 1/2%
Preferreds are mandatorily redeemable on August 15, 2009 at a price equal to
their liquidation preference of $1,000 a share, plus accrued and unpaid
dividends. Through November 15, 1999, dividends on the 12 1/2% Preferreds
were being effected through additional shares of the 12 1/2% Preferreds. The
Company converted to a cash pay option for these dividends on February 15,
2000. Dividends on the 12 1/2% Preferreds are classified as "Minority
Interest Expense (Income)" in the Consolidated Statements of Income and
Comprehensive Income (Loss) and consisted of $49 million and $3 million in
2000 and 1999, respectively. At the Merger date, and as part of purchase
accounting, the 12 1/2% Preferreds were adjusted to a fair market value
exceeding the redemption value. As such, the accretion of the difference
between the new carrying value and the mandatory redemption value is treated
as an offsetting reduction to minority interest expense.

     AT&T PCS maintains a 19.9% ownership in the Company's Cincinnati Bell
Wireless LLC ("CBW") subsidiary. The balance is adjusted as a function of
AT&T PCS' 19.9% share of the operating income (or loss) of CBW, with an
offsetting amount being reflected in the Consolidated Statements of Income
and Comprehensive Income (Loss) under the caption "Minority Interest Expense
(Income)".

7. COMMON AND PREFERRED SHARES

COMMON SHARES

    The par value of the Company's common shares is $.01 per share. At
December 31, 2000 and 1999, common shares outstanding were 215.5 million and
200.9 million, respectively, including the issuance of 69.4 million shares in
November 1999 in association with the Merger. In July 1999, the Company's
Board of Directors approved a share repurchase program authorizing the
repurchase of up to $200 million of common shares of the Company. As of
December 31, 2000, common shares outstanding of 215.5 million are net of the
repurchase of approximately 7.8 million shares of Company common stock
accounted for as if retired. These shares were acquired by the Company at a
cost of $145 million.

COMMON SHARE PURCHASE RIGHTS PLAN

    In the first quarter of 1997, the Company's Board of Directors adopted a
Share Purchase Rights Plan by granting a dividend of one preferred share
purchase right for each outstanding common share to shareowners of record at
the close of business on May 2, 1997. Under certain conditions, each right
entitles the holder to purchase one-thousandth of a Series A Preferred Share.
The rights cannot be exercised or transferred apart from common shares,
unless a person or group acquires 15% or more of the Company's outstanding
common shares. The rights will expire May 2, 2007, if they have not been
redeemed.


                                       61


PREFERRED SHARES

    The Company is authorized to issue up to four million voting preferred
shares and one million nonvoting preferred shares.

    In connection with the Merger, the Company issued 155,250 shares of 6
3/4% cumulative convertible preferred stock at a par value of $1,000. These
shares were subsequently converted into 3,105,000 depository shares bearing a
par value of $50 per share. Shares of this preferred stock can be converted
at any time at the option of the holder into common stock of the Company at a
conversion rate of 1.44 shares of Company common stock per depository share
of 6 3/4% convertible preferred stock. Dividends on the 6 3/4% convertible
preferred stock are payable quarterly in arrears in cash or common stock.

    Also in connection with the Merger, the Company issued approximately $100
million (1,074,000 shares) of 7 1/4% junior convertible preferred stock due
2007. Pursuant to the Company's March 21, 2000 redemption offer, these
preferred shares were converted into common shares of the Company at a rate
of 8.945 common shares for each preferred share, creating approximately 9.5
million additional common shares on April 26, 2000. Approximately 100
preferred shares were redeemed for an immaterial amount of cash in order to
complete the Company's obligations related to this preferred stock.

8. EARNINGS (LOSS) PER COMMON SHARE

    Basic earnings (loss) per common share ("EPS") is based upon the weighted
average number of common shares outstanding during the period. Diluted EPS
reflects the potential dilution that would occur if common stock equivalents
were exercised. The following table is a reconciliation of the numerators and
denominators of the basic and diluted EPS computations for income from
continuing operations before extraordinary items and the cumulative effect of
a change in accounting principle for the following periods:




SHARES AND DOLLARS
IN MILLIONS (EXCEPT
PER SHARE AMOUNTS)                          YEAR ENDED DECEMBER 31                        2000           1999          1998
---------------------------------------------------------------------------------------------------------------------------
                                                                                                              
Numerator:
     Income (loss) from continuing operations before
         extraordinary items and cumulative effect of change
         in accounting principle                                                        $(376.5)        $34.6         $78.8
     Preferred stock dividends                                                              8.1           2.1              --
                                                                                      ---------        ------       ---------
     Numerator for EPS and EPS assuming dilution - income
         applicable to common shareowners                                               $(384.6)        $32.5         $78.8
   ---------------------------------------------------------------------------------------------------------------------------------
Denominator:
     Denominator for basic EPS - weighted average common shares                           211.7         144.3         136.0
     Potential dilution:
     Stock options                                                                         --             5.6           1.7
     Stock-based compensation                                                              --              .8            .5
     arrangements
--------------------------------------------------------------------------------------------------------------------------------

                                                     62


                                                                                                              
     Denominator for diluted EPS per common share                                        211.7           150.7         138.2
------------------------------------------------------------------------------------------------------------------------------------
Basic EPS from continuing operations                                                     $(1.82)           $.23          $.58
------------------------------------------------------------------------------------------------------------------------------------
Diluted EPS from continuing operations                                                   $(1.82)           $.22          $.57
------------------------------------------------------------------------------------------------------------------------------------


    Weighted average common shares outstanding at December 31, 2000 includes
a full year of the approximately 69 million shares issued in conjunction with
the Merger and the conversion of approximately 1.1 million shares of 7 1/4%
convertible preferred stock into approximately 9.5 million shares of the
Company's common stock on April 6, 2000. These 9.5 million shares were added
to the denominator of the EPS calculation during the second quarter of 2000.

    Because the effect of their inclusion in the EPS calculation would be
anti-dilutive, approximately 7.4 million additional shares related to stock
options, restricted stock and the assumed conversion of the Company's 6 3/4%
convertible preferred stock and 6 3/4% convertible subordinated debentures
are not included in the denominator of the EPS calculation. The total number
of potential additional shares outstanding related to these securities is
approximately 47 million if all stock options currently outstanding were
exercised and all convertible securities were to convert.

9. INCOME TAX PROVISION (BENEFIT)

Income tax provision (benefit) consists of the following:



MILLIONS OF DOLLARS                         YEAR ENDED DECEMBER 31                   2000              1999              1998
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                                
Current:
     Federal                                                                           $0.3             $50.5             $48.9
     State and local                                                                    0.9               6.6               8.0
                                                                                        ---               ---               ---
     Total current                                                                      1.2              57.1              56.9
     Investment tax credits                                                            (0.4)             (1.2)             (1.6)

Deferred:
     Federal                                                                         (132.5)            (21.1)            (12.1)
     State and local                                                                  (33.9)             (3.5)             (0.7)
                                                                                      ------             -----             -----
     Total deferred                                                                  (166.4)            (24.6)            (12.8)
                                                                                     -------            ------            ------
         Total                                                                      $(165.6)            $31.3             $42.5
     ----------------------------------------------------------------------------------------------------------------------------


    Income taxes decreased $197 million in comparison to the prior year as a
function of the pre-tax losses from continuing operations that were partially
offset by the impact of certain nondeductible expenses such as goodwill
amortization and preferred stock dividends treated as minority interest
expense.

    The following is a reconciliation of the statutory Federal income tax
rate with the effective tax rate for each year:


                                                                                     2000              1999              1998
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                                
U.S. Federal statutory rate                                                            35.0%             35.0%             35.0%
State and local income taxes, net of federal income tax benefit                         4.0               3.4               3.9
Amortization of non-deductible intangible assets                                       (4.5)              4.9              --
Dividends on preferred stock                                                           (3.1)              3.5              --
Other differences, net                                                                 (0.8)              0.7              (3.9)
                                                                                       -----          -------            -------
EFFECTIVE RATE                                                                         30.6%             47.5%             35.0%
------------------------------------------------------------------------------------------------------------------------------------


                                        63


     The income tax effects relating to other comprehensive income components
were $55 million, $104 million and $0 in 2000, 1999 and 1998, respectively.

     The Company realized an income tax benefit from the exercise of certain
stock options in 2000, 1999 and 1998 of $40 million, $14 million and $3
million, respectively. This benefit resulted in a decrease in current income
taxes payable and an increase in additional paid in capital.

The components of the Company's deferred tax assets and liabilities are as
follows:




MILLIONS OF DOLLARS                         AT DECEMBER 31                           2000              1999
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                
Deferred tax assets:
     Loss carryforwards                                                              $158.0            $126.2
     Unearned revenues                                                                189.2             193.9
     Investments                                                                       47.8             (90.0)
     Other                                                                            101.1              90.8
                                                                                      -----             -----
     Total deferred tax assets                                                        496.1             320.9
     Valuation allowance                                                               (8.8)             (0.6)
                                                                                       -----         --------
     Net deferred income tax assets                                                  $487.3            $320.3
                                                                                      -----            ------
Deferred tax liabilities:
     Depreciation and amortization                                                   $310.4            $400.8
     Unrealized gain on investments                                                    42.7             101.0
     Other                                                                              8.5               4.6
                                                                                        ---          --------
     Total deferred tax liabilities                                                  $361.6           $ 506.4
                                                                                      -----           -------
     Net deferred tax asset (liability)                                              $125.7           $(186.1)
------------------------------------------------------------------------------------------------------------------------------------


    The Company recorded a net decrease in its deferred tax liabilities of
approximately $145 million in 2000 to account for the tax effect of certain
purchase accounting adjustments resulting from the Merger, from the
unrealized losses on investments (net) and from tax deductions originating
from the exercise of employee stock options. The corresponding tax benefit
associated with such adjustments was accounted for as a credit to goodwill,
other comprehensive income, or additional-paid in capital, and not as a
reduction of the deferred income tax provision for the current year.

    Tax loss carryforwards will generally expire between 2005 and 2020. U.S.
tax laws limit the annual utilization of tax loss carryforwards of acquired
entities. These limitations should not materially impact the utilization of
the tax carryforwards.

    The Company has recorded a valuation allowance of $8.8 million related to
certain tax loss carryforwards due to uncertainty of the ultimate realization
of such future benefits in certain state and local taxing jurisdictions.

10. EMPLOYEE BENEFIT PLANS

    PENSIONS AND POSTRETIREMENT PLANS

    The Company sponsors three noncontributory defined benefit pension plans:
one for eligible management employees, one for non-management employees and
one supplementary, nonqualified, unfunded plan for certain senior managers.

    The pension benefit formula for the management plan is a cash balance
plan; the pension benefit is determined by a combination of
compensation-based credits and annual guaranteed interest credits. The
non-


                                       64


management pension is also a cash balance plan; the pension benefit is
determined by a combination of service and job-classification-based credits
and annual interest credits. Benefits for the supplementary plan are based on
years of service and eligible pay. Funding of the management and
non-management plans is achieved through contributions to an irrevocable
trust fund. The contributions are determined using the aggregate cost method.
The Company uses the projected unit credit cost method for determining
pension cost for financial reporting purposes.

    The Company also provides health care and group life insurance benefits
for retirees with a service pension. The Company funds its group life
insurance benefits through Retirement Funding Accounts and funds health care
benefits using Voluntary Employee Benefit Association ("VEBA") trusts. It is
the Company's practice to fund amounts as deemed appropriate from time to
time. Contributions are subject to IRS limitations developed using the
aggregate cost method. The associated plan assets are primarily equity
securities and fixed income investments. The Company recorded an accrued
post-retirement benefit liability of approximately $47 million at December
31, 2000.

    Effective January 1, 1999, after the spin-off of Convergys, pension
assets were divided between the pension trusts of the Company and Convergys
so that each company's plans had the required assets to meet the minimum
requirements set forth in applicable benefit and tax regulations. The
remaining assets in excess of the minimum requirements were divided between
the pension trusts of the Company and Convergys in accordance with the
Employee Benefits Agreement between the two companies.

    The following information relates to all Company non-contributory
defined-benefit pension plans, post-retirement healthcare, and life insurance
benefit plans. Pension and post-retirement benefit costs are as follows:



                                                                                                       POSTRETIREMENT AND
                                                                   PENSION BENEFITS                     OTHER BENEFITS
                                                               ---------------------------         --------------------------
MILLIONS OF DOLLARS       YEAR ENDED DECEMBER 31               2000         1999      1998         2000       1999       1998
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Service cost (benefits earned during the period)                $5.5        $6.0       $4.8         $1.2       $1.8       $1.5
Interest cost on projected
benefit obligation                                              32.0        30.3       18.1         15.4       14.4       15.3
Expected return on plan assets                                 (43.3)      (37.8)     (23.3)       (11.0)     (10.3)      (9.4)
Settlement gains                                                --          --         --           --         --         --
Curtailment loss                                                 0.1        --          1.4         --         --         --
Amortization of:
     Transition (asset)/obligation                              (2.4)       (2.4)      (1.3)         4.8        4.9        4.9
     Prior service cost                                          2.0         1.5        0.7          0.3        0.3        0.2
     Net (gain)/loss                                            (3.7)        0.3        0.3         (1.0)      (0.3)      (0.2)
--------------------------------------------------------------------------------------------------------------------------------
Actuarial net pension cost (income)                            $(9.8)   $   (2.1)   $   0.7      $   9.7    $  10.8    $  12.3
                                                               ------   ---------   ---------    --------   --------   ---------


Reconciliation of the beginning and ending balance of the plans' funded status
were:


                                                                                                          POSTRETIREMENT AND
                                                                   PENSION BENEFITS                         OTHER BENEFITS
                                                                  ---------------------                 ---------------------
MILLIONS OF DOLLARS       YEAR ENDED DECEMBER 31                  2000             1999                 2000             1999
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
Change in benefit obligation:
     Benefit obligation at January 1                             $434.7           $476.5               $201.2          $234.8
         Service cost                                               5.5              6.0                  1.2             1.8
         Interest cost                                             32.0             30.2                 15.4            14.4
         Amendments                                                 1.0              8.9                 --              (0.4)
         Actuarial  (gain) loss                                    14.5            (44.1)                 8.1           (34.1)
         Benefits paid                                            (48.1)           (42.8)               (15.9)          (15.3)
                                                                  ------           ------               -------       ---------
         Benefit obligation at December 31                       $439.6           $434.7               $210.0          $201.2
                                                                 ------           ------               ------          ------
                                         65


                                                                                                          
Change in plan assets:
     Fair value of plan assets at January 1                      $666.2           $579.3               $135.3          $127.9
         Actual return on plan assets                             (11.4)           125.0                  1.8             9.3
         Employer contribution                                      4.4              4.7                  7.9            13.4
         Benefits paid                                            (48.1)           (42.8)               (15.9)          (15.3)
                                                                  ------           ------               ------         -------
         Fair value of plan assets at December 31                $611.1           $666.2               $129.1          $135.3
                                                                 ------           ------               ------          ------
Reconciliation to Balance Sheet:
     Funded status                                               $171.4           $231.5               $(80.9)         $(65.9)
     Unrecognized transition asset                                 (9.7)           (12.0)                58.1            62.9
     Unrecognized prior service cost                               25.5             26.6                  2.4             2.7
     Unrecognized net gain                                       (164.0)          (237.1)               (26.3)          (44.6)
------------------------------------------------------------------------------------------------------------------------------------
              Net amount recognized                               $23.2             $9.0               $(46.7)         $(44.9)
------------------------------------------------------------------------------------------------------------------------------------



The combined net prepaid benefit expense consists of:



                                                                                         PENSION BENEFITS
                                                                                         --------------------
MILLIONS OF DOLLARS                 YEAR ENDED DECEMBER 31                               2000            1999
-------------------------------------------------------------------------------------------------------------
                                                                                                 
Prepaid benefit cost                                                                  $49.7             $42.0
Accrued benefit liability                                                             (32.6)            (39.1)
Intangible asset                                                                        1.1               1.3
Accumulated other comprehensive income                                                  5.0               4.8
                                                                                        ---               ---
     Net amount recognized                                                            $23.2           $   9.0
-------------------------------------------------------------------------------------------------------------



    At December 31, 2000 and 1999, respectively, pension plan assets include $32
million and $51 million in Company common stock.

The following are the weighted average assumptions as of December 31:



                                                             PENSION BENEFITS                            OTHER BENEFITS
                                                     ------------------------------               ---------------------------
AT DECEMBER 31                                       2000          1999        1998               2000        1999       1998
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                       
Discount rate - projected
     benefit obligation                             7.50%        7.75 %      6.50%               7.50%       7.75 %      6.50%
Expected long-term rate of return
     on Pension and VEBA plan assets                8.25%        8.25 %      8.25%               8.25%       8.25 %      8.25%
Expected long-term rate of return
     on retirement fund account assets                --            --          --               8.00%       8.00%       8.00%
Future compensation growth rate                     4.50%        4.50 %      4.00%               4.50%       4.50%       4.00%
------------------------------------------------------------------------------------------------------------------------------------


    The assumed health care cost trend rate used to measure the
post-retirement health benefit obligation at December 31, 2000, was 6.71% and
is assumed to decrease gradually to 4.69% by the year 2005. In addition, a
one percentage point change in assumed health care cost trend rates would
have the following effect on the post-retirement benefit costs and obligation:


MILLIONS OF DOLLARS                                                           1% INCREASE            1% DECREASE
----------------------------------------------------------------------------------------------------------------
                                                                                               
2000 service and interest costs                                                $ 0.5                   $ (0.5)
Post-retirement benefit obligation
     at December 31, 2000                                                      $ 7.1                   $ (6.2)



                                              66





SAVINGS PLANS

    The Company sponsors several defined contribution plans covering
substantially all employees. The Company's contributions to the plans are
based on matching a portion of the employee contributions or on a percentage
of employee earnings or net income for the year. Total Company contributions
to the defined contribution plans were $7.2 million, $4.5 million and $4.0
million for 2000, 1999, and 1998, respectively. These amounts exclude $6.8
million in 1998 related to the spin-off of Convergys.

11. STOCK-BASED COMPENSATION PLANS

    During 2000 and in prior years, certain employees of the Company were
granted stock options and other stock-based awards under the Company's
Long-Term Incentive Plan ("Company LTIP"). Under the Company LTIP, options
are granted with exercise prices that are no less than market value of the
stock at the grant date. Generally, stock options have ten-year terms and
vesting terms of three to five years. There were no Company stock
appreciation rights granted or outstanding during the three-year period ended
December 31, 2000. The number of shares authorized and available for grant
under this plan were approximately 30 million and 4 million, respectively at
December 31, 2000.

    Effective December 31, 1998, awards outstanding under the Company LTIP
were modified such that, for each Company option or share award, the holder
also received a Convergys option or share award pursuant to Convergys'
Long-Term Incentive Plan. These Convergys stock options or share awards have
the same vesting provisions, option periods and other terms and conditions as
the original Company options. In addition, upon completion of the Merger, the
historic IXC options were exchanged for Company options with the same vesting
provisions, option periods, and other terms and conditions of the original
IXC options.

    The Company follows the disclosure-only provisions of Statement of
Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), but applies Accounting Principles Board Opinion
25 and related interpretations in accounting for its plans. If the Company
had elected to recognize compensation cost for the issuance of the Company or
Convergys options to employees based on the fair value at the grant dates for
awards consistent with the method prescribed by SFAS 123, net income and
earnings per share would have been impacted as follows:




MILLIONS OF DOLLARS
EXCEPT PER SHARE AMOUNTS                YEAR ENDED DECEMBER 31                       2000            1999         1998
----------------------------------------------------------------------------------------------------------------------
                                                                                                        
Net income (loss):
     As reported                                                                    $(377.1)         $31.4       $149.9
     Pro forma compensation expense,
     net of tax benefits                                                              (17.8)          (7.8)        (2.1)
     Total pro forma                                                                $(394.9)         $23.6       $147.8
Diluted earnings (loss) per share:
     As reported                                                                      $(1.82)        $  .20       $ 1.08
     Pro forma                                                                        $(1.90)        $  .14       $ 1.06


    The pro forma disclosure for 1998 includes incremental compensation
expense based on the difference in the fair value of the replacement options
issued at the date of the distribution to employees who held Company options.


                                       67


    The weighted average fair values at the date of grant for the Company
options granted to employees during 2000 and 1999 were $12.75 and $8.40,
respectively. Such amounts were estimated using the Black-Scholes
option-pricing model with the following weighted average assumptions:



                                                                                     2000              1999              1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
Expected dividend yield                                                                --            --                1.4%
Expected volatility                                                                  48.9%            48.0%           25.0%
Risk-free interest rate                                                               5.1%             6.4%            5.7%
Expected holding
period -- years                                                                       4                4               4
-----------------------------------------------------------------------------------------------------------------------------


     Presented below is a summary of the status of outstanding Company stock
options issued to employees, options issued in the Merger, the issuance of
Convergys options to Company option holders at the date of distribution, and
related transactions (shares in thousands):



                                                                                                    WEIGHTED AVERAGE
                                                                                     SHARES           EXERCISE PRICE
---------------------------------------------------------------------------------------------------------------------------
                                                                                              
Company options held by
employees at January 1, 1998                                                        2,664                    $17.16
Granted                                                                               374                    $31.25
Exercised                                                                            (124)                   $12.02
Forfeited/expired                                                                     (80)                   $28.26
-------------------------------------------------------------------------------------------------------------------
Company options held by
employees at December 31, 1998                                                      2,834                    $20.33
Effect of Convergys split                                                           4,450                    $11.61
-------------------------------------------------------------------------------------------------------------------
Company options held by
employees at January 1, 1999                                                        7,284                     $8.72
Options granted in Merger                                                          14,583                    $15.78
Granted to employees                                                               11,341                    $19.38
Exercised                                                                          (3,198)                   $11.57
Forfeited/expired                                                                  (1,308)                   $17.55
-------------------------------------------------------------------------------------------------------------------
Company options held by
Employees at December 31, 1999                                                     28,702                    $15.81
-------------------------------------------------------------------------------------------------------------------
Granted to employees                                                                6,409                    $30.84
Exercised                                                                          (4,745)                   $14.17
Forfeited/expired                                                                  (3,607)                   $22.74
-------------------------------------------------------------------------------------------------------------------
Company options held by
Employees at December 31, 2000                                                     26,759                    $18.54




                                               68




The following table summarizes the status of Company stock options outstanding
and exercisable at December 31, 2000:



SHARES IN THOUSANDS                                    OPTIONS OUTSTANDING                             OPTIONS EXERCISABLE
                                           ---------------------------------------------        --------------------------------
                                             WEIGHTED AVERAGE
RANGE OF                                   REMAINING CONTRACTUAL        WEIGHTED AVERAGE
EXERCISE PRICES                  SHARES         LIFE IN YEARS             EXERCISE PRICE        SHARES            EXERCISE PRICE
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
$1.440 to $12.981                  5,307             5.05                 $8.08                 4,497                $  7.49
$12.994 to $16.781                10,384             8.17                $16.19                 2,971                $ 15.50
$17.500 to $25.406                 6,299             8.61                $20.96                 1,946                $ 19.97
$25.450 to $38.406                 4,769             8.90                $32.10                   277                $ 28.53
                                   -----                                                        ------
     TOTAL                        26,759                                 $18.54                 9,691                $ 13.05
----------------------------------------------------------------------------------------------------------------------------


    Restricted stock awards during 2000, 1999 and 1998 were 362,184 shares,
739,250 shares and 320,000 shares, respectively. The weighted average market
value of the shares on the grant date were $25.54 in 2000, $17.37 in 1999
and, on a pre-spin-off basis, $32.59, in 1998, respectively. Restricted stock
awards generally vest within one to five years. Total compensation expense
for restricted stock awards during 2000, 1999, and 1998 was $3.8 million,
$5.7 million and, $0.6 million, respectively.

    On January 4, 1999, the Company announced stock option grants to each of
its then existing employees (approximately 3,500). According to the terms of
this program, stock option grant recipients remaining with the Company until
January 4, 2002 can exercise their options to purchase up to 500 common
shares each. This plan also includes a provision for option grants to
employees hired after the January 4, 1999 grant date, in smaller amounts and
at an exercise price based on the month of hire (e.g., employees hired during
2000 receive options to purchase up to 400 common shares of the Company).
Grant recipients must exercise their options prior to January 4, 2009. The
Company does not expect a significant amount of dilution as a result of this
grant.

12. DISCONTINUED OPERATIONS

    On May 23, 2000, the Company completed the sale of its Cincinnati Bell
Supply ("CBS") subsidiary. Furthermore, on December 31, 1998, the Company
completed the tax-free spin-off of its Convergys subsidiary by distributing
shares of Convergys common stock to Company shareowners on a one-for-one
basis, resulting in a $521 million reduction in the Company's common
shareowners' equity in 1998.

    For 2000 and all prior periods, the consolidated financial statements
have been restated to reflect the sale of CBS and the disposition of
Convergys as discontinued operations. Accordingly, the revenues, costs and
expenses, assets and liabilities, and cash flows of CBS and Convergys have
been reported as "discontinued operations" in the financial statements.



                                       69





Summarized financial information for the discontinued operations is as follows:



MILLIONS OF DOLLARS                         YEAR ENDED DECEMBER 31                   2000              1999              1998
------------------------------------------------------------------------------------------------------------------------------
                                                                                                              
RESULTS OF OPERATIONS
Revenues                                                                            $ 13.1            $ 29.1           $1,411.0

Income (loss) before income taxes                                                     (0.9)              5.4              123.1
Income tax provision (benefit)                                                        (0.4)              2.0               51.0
                                                                                    ------            ------           --------
Income from operations                                                                (0.5)              3.4               72.1
Gain on sale of discontinued operations, net of tax                                    0.7              --                 --
                                                                                    ------            ------           --------
Net income                                                                          $  0.2            $  3.4           $   72.1
FINANCIAL POSITION
Current assets                                                                      $  0.5             $10.4           $  366.6
Total assets                                                                           0.5              11.0            1,457.3
Current liabilities                                                                    0.1               3.0              698.8
Total liabilities                                                                      0.1               3.1              931.1
Net assets of discontinued operations                                               $  0.4             $ 7.9           $  526.2
-------------------------------------------------------------------------------------------------------------------------------


    Income before income taxes includes allocated interest expense of $33.7
million in 1998. Interest expense was allocated based on the capital
structure of Convergys anticipated at the date of distribution and the
Company's weighted average interest rates. The effective tax rates for
discontinued operations in 2000, 1999 and 1998 were 44%, 37% and 41%,
respectively.

    The Company had revenues from Convergys of $10.1 million in 1998
resulting from the provision of communications and other services. Revenues
from CBS were immaterial in each of the three years ended December 31, 2000.
The Company incurred costs for product purchases from CBS of $0.9 million,
$7.9 million and $23.7 million in 2000, 1999 and 1998, respectively. The
Company incurred costs of $49.8 million from Convergys in 1998 for billing
and customer management services. No such costs were incurred from Convergys
in 1999 and 2000 related to discontinued operations.

    The Company and Convergys entered into the Plan of Reorganization and
Distribution Agreement ("the Plan") dated July 20, 1998. The Plan provided,
among other things, that the Company indemnify Convergys for all liabilities
arising from the Company's business and operations and for all contingent
liabilities related to the Company's business and operations otherwise
assigned to the Company. The Plan provided for the equal sharing of
contingent liabilities not allocated to one of the companies. In addition,
the Company has a number of other agreements with Convergys regarding
federal, state and local tax allocation and sharing, employee benefits,
general services, billing and information services provided to the Company by
Convergys, and telecommunications support services provided by the Company to
Convergys.


                                     70





13. ADDITIONAL FINANCIAL INFORMATION

BALANCE SHEET



MILLIONS OF DOLLARS                YEAR ENDED DECEMBER 31                       2000             1999      DEPRECIABLE LIVES (YRS.)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
PROPERTY PLANT AND EQUIPMENT, NET:
     Land and rights of way                                                $   157.6        $   155.9               0 - 30
     Buildings and leasehold improvements                                      403.7            428.3               5 - 40
     Telephone plant                                                         1,839.7          1,697.2               6 - 29
     Transmission system                                                     1,587.4          1,183.2               5 - 20
     Furniture, fixtures, vehicles, and other                                  132.8            116.2               8 - 15
     Construction in process                                                   509.1            232.0                   --
------------------------------------------------------------------------------------------------------------------------------------
     Subtotal                                                                4,630.3          3,812.8
     Less: Accumulated depreciation                                         (1,664.1)        (1,312.2)
     -------------------------------------------------------------------------------------------------------------------------------
     Property Plant and Equipment, Net                                     $ 2,966.2        $ 2,500.6
------------------------------------------------------------------------------------------------------------------------------------

MILLIONS OF DOLLARS                YEAR ENDED DECEMBER 31                       2000             1999      AMORTIZATION LIVES (YRS.)
------------------------------------------------------------------------------------------------------------------------------------
GOODWILL AND OTHER INTANGIBLES:
Goodwill                                                                   $ 2,211.9        $ 2,240.1               5 - 40
Assembled workforce                                                             24.0             24.0               2 - 4
Installed customer base                                                        399.0            373.0               2 - 20
Other intangibles                                                               76.8             68.1               3 - 40
------------------------------------------------------------------------------------------------------------------------------------
                                                                             2,711.7          2,705.2
Less: Accumulated amortization                                                (139.5)           (25.4)
------------------------------------------------------------------------------------------------------------------------------------

Goodwill and Other Intangibles                                             $ 2,572.2        $ 2,679.8
------------------------------------------------------------------------------------------------------------------------------------

MILLIONS OF DOLLARS                YEAR ENDED DECEMBER 31                     2000             1999
------------------------------------------------------------------------------------------------------------------------------------
OTHER CURRENT LIABILITIES:
Accrued payroll and benefits                                               $    48.9        $    48.9
Accrued interest                                                                21.2             18.8
Accrued restructuring costs                                                      6.5             30.2
Accrued cost of service                                                         67.6             47.7
Other current liabilities                                                      146.3             61.7
------------------------------------------------------------------------------------------------------------------------------------
     Total                                                                 $   290.5        $   207.3
------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
     Unrealized gain on investments                                        $    85.9        $   170.0
     Additional minimum pension liability                                       (3.2)            (3.1)
------------------------------------------------------------------------------------------------------------------------------------
         Total                                                             $    82.7        $   166.9
------------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
MILLIONS OF DOLLARS                 YEAR ENDED DECEMBER 31                    2000               1999                 1998
---------------------------------------------------------------------------------------------------------------------------
CASH PAID FOR:
     Interest (net of amount capitalized)                                  $   124.9        $    53.8                $26.8
     Income taxes (net of refunds)                                         $   (36.6)       $    40.2                $81.4
NONCASH INVESTING AND FINANCING ACTIVITIES:
     Common stock, warrants and options
         issued in purchase of business                                    $    --          $ 1,909.0                  --
     Preferred stock dividends                                             $    --          $    12.0                  --
     Accretion of preferred stock                                          $     4.1        $     2.4                  --



                                       71


14. BUSINESS SEGMENT INFORMATION

    The Company is organized on the basis of products and services. The
Company's segments are strategic business units that offer distinct products
and services and are aligned with specific subsidiaries of the Company. The
Company operates in the four business segments described below.

    The Broadband segment utilizes its advanced optical network consisting of
more than 18,000 route miles to provide broadband transport, Internet
services and switched long distance. The Broadband segment offers data
collocation, information technology consulting, network construction and
other services, as well as the leasing of network capacity in the form of IRU
agreements. These services are offered nationally through the Company's
Broadwing Communications subsidiary.

    The Local Communications segment comprises the operations of the CBT
subsidiary which provides local telephone service, network access, data
transport, high-speed Internet access, switched long distance and other
ancillary products and services to customers in southwestern Ohio, northern
Kentucky and southeastern Indiana.

    The Wireless segment comprises the operations of the CBW subsidiary, a
venture in which the Company owns 80.1% and AT&T PCS Inc. owns the remaining
19.9%. This segment provides advanced digital personal communications and
sales of related communications equipment to customers in its Greater
Cincinnati and Dayton, Ohio operating areas.

    The Other Communications segment combines the operations of Cincinnati
Bell Any Distance (formerly Cincinnati Bell Long Distance, now "CBAD"),
Cincinnati Bell Directory ("CBD"), ZoomTown.com ("ZoomTown") and Cincinnati
Bell Public Communications Inc. ("Public"). CBAD resells voice long distance
service, CBD publishes Yellow Pages directories, ZoomTown provides web
hosting and Internet-based services and Public provides public payphone
services.

    The Company evaluates performance of its segments based on EBITDA
(earnings before interest, taxes, depreciation, amortization, and
restructuring and other charges/credits). EBITDA is commonly used in the
communications industry to measure operating performance. EBITDA is not
intended to represent cash flows for the periods. Because EBITDA is not
calculated identically by all companies, the amounts presented for the
Company may not be comparable to similarly titled measures of other companies.

    The Company generally accounts for intersegment sales and transfers as if
the sales or transfers were to third parties, i.e., at current market prices.
The accounting policies of the business segments are the same as those
described in Accounting Policies (see Note 1). Certain corporate
administrative expenses have been allocated to segments based upon the nature
of the expense.


                                       72





MILLIONS OF DOLLARS                 YEAR ENDED DECEMBER 31                     2000             1999                1998
-------------------------------------------------------------------------------------------------------------------------
                                                                                                        
REVENUES
     Broadband                                                              $  999.7        $   174.6            $   61.0
     Local Communications                                                      793.9            739.9               718.4
     Wireless                                                                  180.0             91.4                 --
     Other Communications                                                      142.2            109.3                90.7
     Intersegment                                                              (65.7)           (13.2)               (8.7)
-------------------------------------------------------------------------------------------------------------------------

     Total                                                                  $2,050.1        $ 1,102.0            $  861.4
-------------------------------------------------------------------------------------------------------------------------

INTERSEGMENT REVENUES
     Broadband                                                              $   34.1        $    --              $    --
     Local Communications                                                       30.2             12.6                 8.0
     Wireless                                                                    1.0             --                   --
     Other Communications                                                        0.4              0.6                 0.7
-------------------------------------------------------------------------------------------------------------------------

     Total                                                                  $   65.7       $     13.2            $    8.7
-------------------------------------------------------------------------------------------------------------------------

EBITDA
     Broadband                                                              $   81.4      $       1.9            $   11.4
     Local Communications                                                      392.5            319.6               247.9
     Wireless                                                                   18.5            (25.6)               (0.8)
     Other Communications                                                        3.6             24.4                25.2
     Corporate and Eliminations                                                  2.0             10.2                 1.3
-------------------------------------------------------------------------------------------------------------------------

     Total                                                                  $  498.0        $   330.5            $  285.0
-------------------------------------------------------------------------------------------------------------------------

ASSETS
     Broadband                                                              $5,000.3         $5,166.0            $     --
     Local Communications                                                      825.0            777.2               735.7
     Wireless                                                                  356.2            268.4               212.1
     Other Communications                                                       85.0             58.6                81.1
     Corporate and Eliminations                                                211.1            235.2                12.9
-------------------------------------------------------------------------------------------------------------------------

     Total                                                                  $6,477.6         $6,505.4            $1,041.8
-------------------------------------------------------------------------------------------------------------------------

CAPITAL ADDITIONS
     Broadband                                                              $  591.7        $   166.1            $    --
     Local Communications                                                      151.9            152.1               134.9
     Wireless                                                                   84.2             55.9                 2.2
     Other Communications                                                       14.9              7.1                 3.8
     Corporate                                                                   1.2             --                   2.5
-------------------------------------------------------------------------------------------------------------------------

     Total                                                                  $  843.9        $   381.2            $  143.4
-------------------------------------------------------------------------------------------------------------------------

DEPRECIATION AND AMORTIZATION
     Broadband                                                              $  305.8       $     52.6            $    3.6
     Local Communications                                                      122.9            113.0               106.2
     Wireless                                                                   21.2             14.3                 --
     Other Communications                                                        9.6              1.0                 0.1
     Corporate                                                                   0.2             --                   1.1
-------------------------------------------------------------------------------------------------------------------------
     Total                                                                  $  459.7        $   180.9            $  111.0
-------------------------------------------------------------------------------------------------------------------------



                                           73


15. FAIR VALUE OF FINANCIAL INSTRUMENTS

    The following methods and assumptions were used to estimate, where
practicable, the fair value of each class of financial instruments:

    Cash and cash equivalents, and short-term debt -- the carrying amount
approximates fair value because of the short-term maturity of these
instruments.

    Accounts receivable and accounts payable - the carrying amounts reported
in the balance sheets for accounts receivable and accounts payable
approximate fair value.

    Long-term debt -- the fair value is estimated based on year-end closing
market prices of the Company's debt and of similar liabilities. The carrying
amounts at December 31, 2000 and 1999 were $2,465 million and $1,957 million,
respectively. The estimated fair values at December 31, 2000 and 1999 were
$2,374 million and $1,805 million, respectively. Long-term debt also includes
the forward sale of six million shares of PSINet common stock, as further
described in Note 5. The Company adjusts the carrying amount of this
liability based on its settlement value. The carrying amount of this
obligation at December 31, 2000 and 1999 was $3 million and $134 million,
respectively.

    Convertible preferred stock - the fair value of the 12 1/2% Exchangeable
Preferred Stock at December 31, 2000 and 1999, respectively, was $379 million
and $436 million, based on the trading value of this item on those dates.

    Interest rate risk management --The Company is exposed to the impact of
interest rate changes. The Company's objective is to manage the impact of
interest rate changes on earnings and cash flows and to lower its overall
borrowing costs. The Company continuously monitors the ratio of variable to
fixed interest rate debt to maximize its total return. As of December 31, 2000,
approximately 34% of debt was long-term, fixed-rate debt and approximately 66%
were bank loans with variable interest rates. A further discussion of the
Company's interest rate risk management policies can be found in Item 7A,
"Qualitative and Quantitative Disclosures about Market Risk" on page 42 of this
Report on Form 10-K.

16. SUPPLEMENTAL GUARANTOR INFORMATION

    Cincinnati Bell Telephone ("CBT"), a wholly owned subsidiary of the
Parent Company, has debt outstanding that is guaranteed by both CBT and the
Parent Company. Substantially all of the Parent Company's income and cash
flow is generated by its subsidiaries. Generally, funds necessary to meet the
Parent Company's debt service obligations are provided by distributions or
advances from its subsidiaries.

    The following information sets forth the condensed consolidating balance
sheets of the Company as of December 31, 2000 and 1999 and the condensed
consolidating statements of income and cash flows for the three years then
ended:

                                       74





CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
(IN MILLIONS OF DOLLARS)
                                                                                FOR THE YEAR ENDED DECEMBER 31, 2000
                                                                 -------------------------------------------------------------------
                                                                    PARENT        CBT         OTHER      ELIMINATIONS     TOTAL
                                                                    ------        ---         -----      ------------     -----
                                                                                                           
Revenues                                                              $    -     $  793.9    $  1,321.9    $    (65.7)    $ 2,050.1
Operating costs and expenses                                            (1.4)       524.2       1,554.8         (66.6)      2,011.0
                                                                 -------------------------------------------------------------------
Operating income                                                         1.4        269.7        (232.9)          0.9          39.1
Interest expense                                                       153.7         22.0          92.8        (104.9)        163.6
Other expense (income), net                                            (57.8)         0.4         369.0         106.0         417.6
                                                                 -------------------------------------------------------------------
Income (loss) before income taxes,
  extraordinary items and cumulative effect of
  change in accounting principle                                       (94.5)       247.3        (694.7)         (0.2)       (542.1)
Income tax provision (benefit)                                         (13.8)        86.6        (238.4)            -        (165.6)
                                                                 -------------------------------------------------------------------
Income (loss) before
  extraordinary items and cumulative effect of
  change in accounting principle                                       (80.7)       160.7        (456.3)         (0.2)       (376.5)
Income from discontinued operations, net                                   -           -             -            0.2           0.2
Extraordinary item, net of tax                                             -           -             -              -            -
Cumulative effect of a change in accounting
  principle, net of tax                                                    -         (0.8)           -              -          (0.8)
                                                                 -------------------------------------------------------------------

  NET INCOME (LOSS)                                                   $(80.7)    $  159.9    $   (456.3)   $        -     $  (377.1)
                                                                 ===================================================================



                                                                                FOR THE YEAR ENDED DECEMBER 31, 1999
                                                                 -------------------------------------------------------------------
                                                                    PARENT        CBT         OTHER      ELIMINATIONS     TOTAL
                                                                    ------        ---         -----      ------------     -----
                                                                                                          
Revenues                                                            $       -    $  739.9      $  375.3    $    (13.2)      1,102.0
Operating costs and expenses                                             (5.6)      534.3         447.7         (13.1)        963.3
                                                                 -------------------------------------------------------------------
Operating income                                                          5.6       205.6         (72.4)         (0.1)        138.7
Interest expense                                                         35.8        22.8          22.0         (19.0)         61.6
Other expense (income), net                                               1.1        (1.0)         (8.2)         19.3          11.2
                                                                 -------------------------------------------------------------------
Income (loss) before income taxes,
  extraordinary items and cumulative effect of
  change in accounting principle                                        (31.3)      183.8         (86.2)         (0.4)         65.9
Income tax provision (benefit)                                           (7.6)       64.8         (25.9)              -        31.3
                                                                 -------------------------------------------------------------------

Income (loss) before
   extraordinary items and cumulative effect of
   change in accounting principle                                       (23.7)      119.0         (60.3)          (0.4)        34.6
Income from discontinued operations, net                                    -           -             -            3.4          3.4
Extraordinary item, net of tax                                              -           -          (6.6)             -         (6.6)
Cumulative effect of a change in accounting
   principle, net of tax                                                    -           -             -              -            -
                                                                 -------------------------------------------------------------------
  NET INCOME (LOSS)                                                 $   (23.7)   $  119.0      $  (66.9)   $       3.0     $   31.4
                                                                 ===================================================================


                                                                                FOR THE YEAR ENDED DECEMBER 31, 1998
                                                                 ------------------------------------------------------------------
                                                                    PARENT        CBT         OTHER      ELIMINATIONS    TOTAL
                                                                    ------        ---         -----      ------------    -----
                                                                                                          
Revenues                                                               $   -     $  718.4     $   151.7     $     (8.7)       861.4
Operating costs and expenses                                           (10.8)       576.7         119.7            0.7        686.3
                                                                 ------------------------------------------------------------------
Operating income                                                        10.8        141.7          32.0           (9.4)       175.1
Interest expense                                                        42.8         19.6           1.3          (39.6)        24.1
Other expense (income), net                                            (95.6)         0.1          26.7           98.5         29.7
                                                                 ------------------------------------------------------------------

Income (loss) before income taxes,
  extraordinary items and cumulative
  effect of change in accounting principle                              63.6        122.0           4.0          (68.3)       121.3
Income tax provision (benefit)                                          29.9         40.3           1.6          (29.3)        42.5
                                                                 ------------------------------------------------------------------
Income (loss) before
  extraordinary items and cumulative effect of
  change in accounting principle                                        33.7         81.7           2.4          (39.0)        78.8
Income from discontinued operations, net                                   -            -             -           72.1         72.1
Extraordinary item, net of tax                                          (0.3)        (0.7)            -              -         (1.0)
Cumulative effect of a change in accounting
   principle, net of tax                                                   -            -             -              -           -
                                                                 ------------------------------------------------------------------

  NET INCOME (LOSS)                                                   $ 33.4     $   81.0     $     2.4      $    33.1     $  149.9
                                                                 ==================================================================

                                              75



CONDENSED CONSOLIDATING BALANCE SHEETS
(IN MILLIONS OF DOLLARS)
                                                                                    DECEMBER 31, 2000
                                                        --------------------------------------------------------------------------
                                                          PARENT        CBT        OTHER     ELIMINATIONS          TOTAL
                                                          ------        ---        -----     ------------          -----
                                                                                                          
Cash and cash equivalents                                 $     5.8     $     -     $   32.1   $         -              $    37.9
Receivables, net                                                  -       101.4        229.2             -                  330.6
Other current assets                                            5.5        50.6         40.6          (2.5)                  94.2
Intercompany receivables                                    1,429.6           -            -      (1,429.6)                     -
                                                        --------------------------------------------------------------------------
  Total current assets                                      1,440.9       152.0        301.9      (1,432.1)                 462.7
Property, plant and equipment, net                              1.3       619.4      2,345.5             -                2,966.2
Goodwill and other intangibles, net                             1.1        12.8      2,558.3             -                2,572.2
Investments in subsidiaries and other entities              2,874.8           -        253.2      (2,873.1)                 254.9
Deferred charges and other assets                             102.9        40.8        155.8         (78.3)                 221.2
Net assets from discontinued operations                           -           -            -           0.4                    0.4
                                                        --------------------------------------------------------------------------
  TOTAL ASSETS                                            $ 4,421.0     $ 825.0     $5,614.7   $  (4,383.1)             $ 6,477.6
                                                        ==========================================================================

Short-term debt                                           $       -     $   5.7     $    8.3   $         -                $  14.0
Accounts payable                                                9.0        45.9        189.5             -                  244.4
Other current liabilities                                      42.0        91.3        323.5          12.1                  468.9
Intercompany payables                                             -        31.1      1,377.7      (1,408.8)                     -
                                                        --------------------------------------------------------------------------
  Total current liabilities                                    51.0       174.0      1,899.0      (1,396.7)                 727.3
Long-term debt, less current portion                        2,128.8       324.2         54.0             -                2,507.0
Other long-term liabilities                                    74.5        69.8        736.7         (93.0)                 788.0
                                                        --------------------------------------------------------------------------
  Total liabilities                                         2,254.3       568.0      2,689.7      (1,489.7)               4,022.3
Minority interest                                             423.6           -         10.2             -                  433.8
Mezzanine financing                                               -           -        423.6        (423.6)                     -
Shareowners' equity                                         1,743.1       257.0      2,491.2      (2,469.8)               2,021.5
                                                        --------------------------------------------------------------------------
  TOTAL LIABILITIES AND SHAREOWNERS' EQUITY               $ 4,421.0     $ 825.0     $5,614.7   $  (4,383.1)             $ 6,477.6
                                                        ==========================================================================



                                                                                    DECEMBER 31, 1999
                                                        --------------------------------------------------------------------------
                                                          PARENT        CBT        OTHER     ELIMINATIONS          TOTAL
                                                          ------        ---        -----     ------------          -----
                                                                                                     
Cash and cash equivalents                                  $   24.6       $   -       $ 56.2   $         -              $    80.8
Receivables, net                                                1.3       103.8        119.4             -                  224.5
Other current assets                                           10.3        40.7         46.7             -                   97.7
Intercompany receivables                                      694.3           -            -        (694.3)                     -
                                                        --------------------------------------------------------------------------
  Total current assets                                        730.5       144.5        222.3        (694.3)                 403.0
Property, plant and equipment, net                              0.1       606.9      1,893.6             -                2,500.6
Goodwill and other intangibles, net                             1.3        10.3      2,664.2           4.0                2,679.8
Investments in subsidiaries and other entities              2,877.5           -        836.5      (2,870.7)                 843.3
Deferred charges and other assets                              39.9        15.5          4.0          11.4                   70.8
Net assets from discontinued operations                           -           -            -           7.9                    7.9
                                                        --------------------------------------------------------------------------
  TOTAL ASSETS                                             $3,649.3     $ 777.2     $5,620.6   $  (3,541.7)             $ 6,505.4
                                                        ==========================================================================

Short-term debt                                            $      -  $      3.3     $    5.9    $        -               $    9.2
Accounts payable                                               16.4        53.2        108.6             -                  178.2
Other current liabilities                                       9.0        92.5        276.1             -                  377.6
Intercompany payables                                             -         8.4        721.0        (729.4)                     -
                                                        --------------------------------------------------------------------------
  Total current liabilities                                    25.4       157.4      1,111.6        (729.4)                 565.0
Long-term debt, less current portion                        1,216.6       322.0        597.4             -                2,136.0
Other long-term liabilities                                    28.4        45.1        924.1          11.4                1,009.0
                                                        --------------------------------------------------------------------------
  Total liabilities                                         1,270.4       524.5      2,633.1        (718.0)               3,710.0
Minority interest                                             418.2           -         15.8             -                  434.0
Mezzanine financing                                           228.6           -        412.2        (412.2)                 228.6
Shareowners' equity                                         1,732.1       252.7      2,559.5      (2,411.5)               2,132.8
                                                        --------------------------------------------------------------------------
  TOTAL LIABILITIES AND SHAREOWNERS' EQUITY                $3,649.3   $   777.2     $5,620.6     $(3,541.7)              $6,505.4
                                                        ==========================================================================


                                            76



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(IN MILLIONS OF DOLLARS)
                                                                             FOR THE YEAR ENDED DECEMBER 31, 2000
                                                           ------------------------------------------------------------------------
                                                             PARENT        CBT           OTHER        ELIMINATIONS      TOTAL
                                                             ------        ---           -----        ------------      -----
                                                                                                         
Cash Flows from operating activities                         $ (45.2)        $ 302.5        $   8.0          $  66.9       $ 332.2
                                                           ------------------------------------------------------------------------
Capital expenditures                                            (1.3)         (151.8)        (690.8)               -        (843.9)
Other investing activities                                       0.3               -          (19.8)               -         (19.5)
                                                           ------------------------------------------------------------------------
Cash Flows from investing activities                            (1.0)         (151.8)        (710.6)               -        (863.4)
                                                           ------------------------------------------------------------------------

Issuance of long-term debt/capital contributions               (33.9)         (150.7)       1,143.2            (74.6)        884.0
Repayment of long-term debt                                        -               -         (404.0)               -        (404.0)
Short-term borrowings, net                                       9.6               -          (11.5)               -          (1.9)
Other financing activities                                      51.7               -          (49.2)               -           2.5
                                                           ------------------------------------------------------------------------
Cash Flows from financing activities                            27.4          (150.7)         678.5            (74.6)        480.6
                                                           ------------------------------------------------------------------------

Cash Flows from discontinued operations                            -               -              -              7.7           7.7
                                                           ------------------------------------------------------------------------

         Increase (decrease) in cash and cash equivalents      (18.8)              -          (24.1)               -         (42.9)

         Beginning cash and cash equivalents                    24.6               -           56.2                -          80.8
                                                           ------------------------------------------------------------------------

         Ending cash and cash equivalents                    $   5.8         $     -        $  32.1          $     -       $  37.9
                                                           ========================================================================


                                                                             FOR THE YEAR ENDED DECEMBER 31, 1999
                                                           ------------------------------------------------------------------------
                                                             PARENT        CBT           OTHER        ELIMINATIONS      TOTAL
                                                             ------        ---           -----        ------------      -----
                                                                                                         
Cash Flows from operating activities                         $ (75.2)        $ 240.7        $  64.3          $  84.7       $ 314.5
                                                           ------------------------------------------------------------------------
Capital expenditures                                               -          (152.2)        (229.0)               -        (381.2)
Other investing activities                                    (314.9)              -           55.1                -        (259.8)
                                                           ------------------------------------------------------------------------
Cash Flows from investing activities                          (314.9)         (152.2)        (173.9)               -        (641.0)
                                                           ------------------------------------------------------------------------

Issuance of long-term debt/capital contributions               962.7           (88.5)         551.4           (250.6)      1,175.0
Repayment of long-term debt                                        -               -         (387.1)           165.9        (221.2)
Short-term borrowings, net                                    (371.4)              -              -                -        (371.4)
Other financing activities                                    (185.2)              -              -                -        (185.2)
                                                           ------------------------------------------------------------------------
Cash Flows from financing activities                           406.1           (88.5)         164.3            (84.7)        397.2
                                                           ------------------------------------------------------------------------

Cash Flows from discontinued operations                            -               -              -                -             -
                                                           ------------------------------------------------------------------------

         Increase (decrease) in cash and cash equivalents       16.0               -           54.7                -          70.7

         Beginning cash and cash equivalents                     8.6               -            1.5                -          10.1
                                                           -----------------------------------------------------------------------

         Ending cash and cash equivalents                    $  24.6         $     -        $  56.2          $     -       $  80.8
                                                           =======================================================================


                                                                             FOR THE YEAR ENDED DECEMBER 31, 1998
                                                           ------------------------------------------------------------------------
                                                             PARENT        CBT           OTHER        ELIMINATIONS      TOTAL
                                                             ------        ---           -----        ------------      -----
                                                                                                         
Cash Flows from operating activities                           $ 69.9         $206.5        $(176.1)       $   105.6       $ 205.9
                                                           ------------------------------------------------------------------------
Capital expenditures                                             (2.6)        (134.9)          (5.9)               -        (143.4)
Other investing activities                                     (164.2)          (1.4)             -                -        (165.6)
                                                           ------------------------------------------------------------------------
Cash Flows from investing activities                           (166.8)        (136.3)          (5.9)               -        (309.0)
                                                           ------------------------------------------------------------------------

Issuance of long-term debt/capital contributions                 97.1          (16.3)         183.5           (114.3)        150.0
Repayment of long-term debt                                         -          (53.9)             -              2.7         (51.2)
Short-term borrowings, net                                       54.7              -              -                -          54.7
Other financing activities                                      (54.1)             -              -                -         (54.1)
                                                           ------------------------------------------------------------------------
Cash Flows from financing activities                             97.7          (70.2)         183.5           (111.6)         99.4
                                                           ------------------------------------------------------------------------

Cash Flows from discontinued operations                             -              -              -              6.0           6.0
                                                           ------------------------------------------------------------------------

         Increase (decrease) in cash and cash equivalents         0.8              -            1.5                -           2.3

         Beginning cash and cash equivalents                      7.8              -              -                -           7.8

                                                           ------------------------------------------------------------------------

         Ending cash and cash equivalents                      $  8.6          $   -         $  1.5          $     -       $  10.1
                                                           ========================================================================


                                              77


17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)



MILLIONS OF DOLLARS EXCEPT
PER COMMON SHARE AMOUNTS                           1ST               2ND              3RD               4TH              TOTAL
------------------------------------------------------------------------------------------------------------------------------
                                                                                                        
2000
REVENUES                                          $ 460.2         $  497.8         $  531.2         $    560.9         $2,050.1
EBITDA                                               85.0            129.7            137.3              146.0            498.0
OPERATING INCOME                                    (25.6)            20.7             20.1               24.0             39.1
INCOME FROM:
     CONTINUING OPERATIONS BEFORE
       EXTRAORDINARY ITEM AND
      CUMULATIVE EFFECT OF CHANGE IN
       ACCOUNTING PRINCIPLE                         (55.6)           (29.5)           (23.4)            (267.8)          (376.5)
     DISCONTINUED OPERATIONS                          0.1              0.2              0.1               (0.3)             0.2
     EXTRAORDINARY ITEM AND CUMULATIVE
       EFFECT OF CHANGE IN ACCOUNTING
       PRINCIPLE                                     (0.8)             -                -                  -               (0.8)
NET INCOME                                        $ (56.3)        $  (29.3)        $  (23.3)        $   (268.1)        $ (377.1)
BASIC EARNINGS
     PER COMMON SHARE                             $ (0.28)        $  (0.15)        $  (0.12)        $    (1.26)        $  (1.82)
DILUTED EARNINGS
     PER COMMON SHARE                             $ (0.28)        $  (0.15)        $  (0.12)        $    (1.26)        $  (1.82)
--------------------------------------------------------------------------------------------------------------------------------



                                        78





MILLIONS OF DOLLARS EXCEPT
PER COMMON SHARE AMOUNTS                           1ST               2ND              3RD               4TH              TOTAL
------------------------------------------------------------------------------------------------------------------------------
                                                                                                       
1999
Revenues                                           $235.2           $247.1           $255.7            $ 364.0        $ 1,102.0
EBITDA                                               76.3             83.2             90.4               80.5            330.4
Operating Income                                     44.1             50.6             57.1              (13.1)           138.7
Income from:
   Continuing Operations Before
    Extraordinary Item and Cumulative
    Effect of Change in Accounting
    Principle                                        24.0             27.6             25.1              (42.1)            34.6
   Discontinued Operations                            0.7              0.7              0.7                1.3              3.4
   Extraordinary Item and Cumulative
    Effect of Change in Accounting
    Principle                                          -                -                -                (6.6)            (6.6)
Net Income                                        $  24.7           $ 28.3           $ 25.8            $ (47.4)       $    31.4
Basic Earnings
     Per Common Share                             $   .18           $  .21           $  .19            $  (.29)       $     .20
Diluted Earnings
     Per Common Share                             $   .18           $  .20           $  .19            $  (.29)       $     .20
-------------------------------------------------------------------------------------------------------------------------------


    In the first quarter of 2000, the Company incurred a charge of $0.8
million, net of tax, associated with the adoption of SAB 101 and presented as
a cumulative effect of change in accounting principle (further described in
Note 1). Revenues and expenses appearing in the above table have been
restated to reflect the adoption of SAB 101 on January 1, 2000.

    In the fourth quarter of 2000, the Company incurred a pre-tax charge of
$405 million in order to write down its portfolio of minority equity
investments to market value at December 31, 2000. The Company also recognized
approximately $17 million in pre-tax gains resulting from the liquidation of
the Company's investment in PurchasePro.com. The net effect of these
investment losses reduced earnings per share by $1.08 in the fourth quarter.

    In the fourth quarter of 1999, the extraordinary item was for the early
extinguishment of long-term debt associated with the Merger. This reduced net
income by approximately $7 million, or $.04 per common share, net of tax.
Third quarter 1999 results were restated to reflect an equity share of IXC's
losses as part of the step acquisition that began with the acquisition of
five million shares of IXC common stock in August 1999 and was finalized on
November 9, 1999.



                                       79



18. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

    The Company leases certain facilities and equipment used in its operations.
Total rental expenses were approximately $32 million, $23 million and $12
million in 2000, 1999 and 1998, respectively.

    At December 31, 2000, the total minimum annual rental commitments under
noncancelable leases are as follows:



                                                                  OPERATING                            CAPITAL
MILLIONS OF DOLLARS                                                 LEASES                             LEASES
-------------------------------------------------------------------------------------------------------------
                                                                                                
2001                                                                  $41.3                              $15.2
2002                                                                   23.7                               12.8
2003                                                                   20.5                                9.1
2004                                                                   17.2                                5.7
2005                                                                   12.5                                4.8
Thereafter                                                             52.3                               31.6
--------------------------------------------------------------------------------------------------------------
Total                                                                $167.5                              $79.2
Amount representing interest                                                                              30.6
--------------------------------------------------------------------------------------------------------------
Present value of net minimum lease payments                                                              $48.6
--------------------------------------------------------------------------------------------------------------



COMMITMENTS

    In order to satisfy the contractual commitments that Broadwing has
entered into with respect to IRU agreements and network construction
projects, approximately 2,700 route miles must be constructed at an
approximate cost of $88 million.

    Furthermore, the Company and its Broadwing Communications subsidiary have
entered into a purchase commitment with Corvis Corporation, a Columbia,
Maryland-based manufacturer of optical network equipment. The agreement
specifies that the Company will purchase $200 million in optical network
equipment from Corvis Corporation over a two-year period beginning in July
2000. As of December 31, 2000, the Company had satisfied $89 million of this
purchase commitment.

CONTINGENCIES

    In the normal course of business, the Company is subject to various
regulatory proceedings, lawsuits, claims and other matters. Such matters are
subject to many uncertainties and outcomes are not predictable with assurance.

    A total of twenty-six Equal Employment Opportunity Commission ("EEOC")
charges were filed beginning in September 1999 by Broadwing
Telecommunications Inc. employees located in the Houston office (formerly
Coastal Telephone, acquired by IXC in May 1999) alleging sexual harassment,
race discrimination and retaliation. After completing its internal
investigation of the charges and cooperating fully with the EEOC, the Company
and the complainants participated in a voluntary mediation proceeding
conducted by the EEOC. Through the mediation process, the Company was able to
reach settlement with all twenty-six complainants. The Company also entered
into a Conciliation Agreement with the EEOC.


                                       80





     In the course of closing the Company's Merger with IXC, the Company
became aware of IXC's possible non-compliance with certain requirements under
state and federal environmental laws. Since the Company is committed to
compliance with environmental laws, management decided to undertake a
voluntary environmental compliance audit of the IXC facilities and operations
and, by letter dated November 9, 1999, disclosed potential non-compliance at
the IXC facilities to the U.S. Environmental Protection Agency ("EPA") under
the Agency's Self-Policing Policy. The Company made similar voluntary
disclosures to various state authorities. The EPA determined that IXC appears
to have satisfied the "prompt disclosure" requirement of the Self-Policing
Policy for the Company to complete its environmental audit of all IXC
facilities and report any violations to the Agency. The Company has filed its
preliminary environmental audit report with the EPA and is currently working
with the EPA and several state environmental protection agencies to bring the
Company into compliance with all applicable regulations, and to develop
internal procedures to ensure future compliance.

    The Company believes that the resolution of such matters for amounts in
excess of those reflected in the consolidated financial statements would not
likely have a materially adverse effect on the Company's financial condition.

19. SUBSEQUENT EVENTS

    On February 20, 2001, the Company announced a reorganization of the
activities of its Cincinnati, Ohio based subsidiaries, including CBT, CBW,
CBAD and CBD. The reorganization is intended to create a unified presence for
all Cincinnati Bell customers. The reorganization is expected to result in a
non-recurring charge of approximately $10 million during the first quarter of
2001.

    Although the Company is restricted as to the sale of its investment in
Corvis Corporation, it entered into a forward sale agreement with a financial
institution during the first quarter of 2001 in order to effectively hedge
2.4 million shares of this investment. The forward sale will be settled
during the third quarter of 2001, resulting in a pre-tax gain of
approximately $25 million.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

    No disagreements with accountants on any accounting or financial
disclosure or auditing scope or procedure occurred during the period covered
by this report.


                                      81





                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by this Item regarding directors of Broadwing
Inc. can be found in the Proxy Statement for the Company's 2001 Annual
Meeting of Shareholders, dated March 30, 2001, and incorporated herein by
reference.

    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.

 ITEMS 11 AND 12.  EXECUTIVE COMPENSATION AND SECURITY OWNERSHIP OF CERTAIN
                   BENEFICIAL OWNERS AND MANAGEMENT

    The information required by these items can be found in the Proxy
Statement for the Company's 2001 Annual Meeting of Shareholders dated March
30, 2001 and incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Not Applicable.

ITEM 14.  EXHIBITS AND REPORTS ON FORM 8-K.

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                                  DESCRIPTION
                 
(3)(a)              Amended Articles of Incorporation of Broadwing Inc. (Exhibit
                    (3)(a) to Form 10-Q for the three months ended June 30,
                    2000, File No. 1-8519).


                                         82


(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 April 29, 1997, between the
                    Company and The Fifth Third Bank which includes the form of
                    Certificate of Amendment to the Amended Articles of
                    Incorporation of the Company as Exhibit A, the form of
                    Rights Certificate as Exhibit B and the Summary of Rights to
                    Purchase Preferred Stock as Exhibit C (Exhibit 4.1 to the
                    Company's Registration Statement on Form 8-A filed on May 1,
                    1997).

(4)(b)(ii)          Amendment No. 1 to the Rights Agreement dated as of July 20,
                    1999, between the Company and The Fifth Third Bank (Exhibit
                    1 to Amendment No. 1 of the Company's Registration Statement
                    on Form 8-A filed on August 6, 1999).

(4)(b)(iii)         Amendment No. 2 to the Rights Agreement dated as of November
                    2, 1999, between the Company and The Fifth Third Bank
                    (Exhibit 1 to Amendment No. 2 of the Company's Registration
                    Statement on Form 8-A filed on November 8, 1999).

(4)(c)(i)           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 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).

(4)(c)(iii)         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)(iv)          Indenture dated as of November 30, 1998 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 November 30, 1998, File No.
                    1-8519).

(4)(c)(v)           Investment Agreement dated as of July 21, 1999, among
                    Cincinnati Bell, Oak Hill Capital Partners L.P. and certain
                    related parties of Oak Hill (Exhibit 4.9 to Form S-4 filed
                    on September 13, 1999, File No. 1-8519).

(4)(c)(vi)          Indenture dated as of July 21, 1999 among Cincinnati Bell
                    Inc., and The Bank of New York, as Trustee (Exhibit 4.10 to
                    Form S-3 filed on November 10, 1999, File No. 1-8519).

(4)(c)(vii)         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.


                                       83


(10)(i)(1)          Credit Agreement dated as of November 9, 1999, and
                    amended as of January 12, 2000, among Cincinnati Bell and
                    IXCS as the Borrowers, Cincinnati Bell as Parent Guarantor,
                    the Initial Lenders, Initial Issuing Banks and Swing Line
                    Banks named herein, Bank of America, N.A., as Syndication
                    Agent, Citicorp USA, Inc., as Administrative Agent, Credit
                    Suisse First Boston and The Bank of New York, as
                    Co-Documentation Agents, PNC Bank, N.A., as Agent and Salomon
                    Smith Barney Inc. and Banc of America Securities LLC, as
                    Joint Lead Arrangers. (original agreement filed as Exhibit
                    10.1 to Form 8-K, date of report November 12, 1999, File No.
                    1-8519).

(10)(iii)(A)(1)*    Short Term Incentive Plan of Broadwing Inc., as amended and
                    restated effective July 24, 2000. (Exhibit (10)(iii)(A)(1)
                    to Form 10-Q for the three months ended June 30, 2000, File
                    No. 1-8519).

(10)(iii)(A)(2)*    Broadwing Inc. Deferred Compensation Plan for Outside
                    Directors, as amended and restated effective July 24, 2000.
                    (Exhibit (10)(iii)(A)(3) to Form 10-Q for the three months
                    ended June 30, 2000, File No. 1-8519).

(10)(iii)(A)(3)(i)* Broadwing Inc. Pension Program, as amended and restated
                    effective July 24, 2000. (Exhibit (10)(iii)(A)(4) to Form
                    10-Q for the three months ended June 30, 2000, File No.
                    1-8519).

(10)(iii)(A)(3)(ii)* Cincinnati Bell Pension Program, as amended and restated
                     effective March 3, 1997. (Exhibit (10)(iii)(A)(3)(ii) to
                     Form 10-K for 1997, File No. 1-8519).

(10)(iii)(A)(4)*    Broadwing Inc. Executive Deferred Compensation Plan, as
                    amended and restated effective July 24, 2000. (Exhibit
                    (10)(iii)(A)(5) to Form 10-Q for the three months ended June
                    30, 2000, File No. 1-8519).

(10)(iii)(A)(5)*    Broadwing Inc. 1997 Long Term Incentive Plan, as amended and
                    restated effective July 24, 2000. (Exhibit (10)(iii)(A)(1)
                    to Form 10-Q for the three months ended June 30, 2000, File
                    No. 1-8519).

(10)(iii)(A)(6)*    Cincinnati Bell Inc. 1997 Stock Option Plan for Non-Employee
                    Directors, as revised and restated effective February 1,
                    1999. (Exhibit (10)(iii)(A)(15) to Form 10-K for 1998, File
                    No. 1-8519).

(10)(iii)(A)(7)*    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)(8)*    Employment Agreement dated January 1, 1999 between the
                    Company and Richard G. Ellenberger. (Exhibit (10)(iii)(A)(9)
                    to Form 10-K for 1998, File No. 1-8519).

(10)(iii)(A)(9)*    Employment Agreement effective January 1, 1999 between the
                    Company and Kevin W. Mooney. (Exhibit (10)(iii)(A)(ii) to
                    Form 10-K for 1998, File No. 1-8519).

(10)(iii)(A)(10)*   Employment Agreement dated January 1, 1999 between the
                    Company and Thomas E. Taylor. (Exhibit (10)(iii)(A)(12) to
                    Form 10-K for 1998, File No. 1-8519).

(10)(iii)(A)(11)*   Employment Agreement effective April 9, 1999 between the
                    Company and Richard S. Pontin. (Exhibit (10)(iii)(A)(1) to
                    Form 10-Q for the quarter ended June 30, 1999, File No.
                    1-8519).

(10)(iii)(A)(12)*   Employment Agreement dated January 1, 1999 between the
                    Company and John F. Cassidy.


                                       84



(12)+               Ratio of Earnings to Fixed Charges.

(21)+               Subsidiaries of the Registrant.

(23)+               Consent of Independent Accountants.

(24)+               Powers of Attorney.

+    Filed herewith.

* Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.

    Upon request, the Company will furnish a copy of the Proxy Statement to its
security holders without charge, portions of which are incorporated herein by
reference. The Company will furnish any other exhibit at cost.

REPORTS ON FORM 8-K.

Form 8-K, date of report February 20, 2001, reporting that the Company has
reorganized the activities of its Cincinnati-based subsidiaries and would, as a
result, be recording a restructuring charge of approximately $10 million in the
first quarter of 2001. The Company also announced the appointment of Jeffrey C.
Smith as General Counsel and Corporate Secretary, effective immediately.

Form 8-K, date of report March 9, 2001, reporting that the Company's Board of
Directors had approved amendments to the Company's insider trading policy to
permit its officers, directors and other insiders to enter into trading plans
or arrangements for systematic trading in the Company's securities.

                                    85




    Schedule II

                                 BROADWING INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                              (Millions of Dollars)




                                                                          ADDITIONS
                                                                ------------------------------
                                                 BALANCE AT                          CHARGED                            BALANCE
                                                 BEGINNING        CHARGED TO        TO OTHER                            AT END
                                                 OF PERIOD         EXPENSES         ACCOUNTS         DEDUCTIONS        OF PERIOD
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                        
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Year 2000                                          $ 53.6             $ 67.3          $  1.1(a)         $ 73.0(b)        $ 49.0
Year 1999                                          $ 12.0             $ 21.1          $ 51.6(a)         $ 31.1(b)        $ 53.6
Year 1998                                          $  9.1             $ 18.1          $ 11.0(a)         $ 26.2(b)        $ 12.0

RESERVES RELATED TO
BUSINESS RESTRUCTURING
Year 2000                                          $ 30.2             $   --          $      --         $ 23.7           $  6.5
Year 1999                                          $  0.5             $ 10.9          $ 33.9(c)         $ 15.1           $ 30.2
Year 1998                                          $  5.3             $   --          $      --         $  4.8           $  0.5

DEFERRED TAX
VALUATION ALLOWANCE
Year 2000                                          $  0.6             $   8.8         $     --          $  0.6(d)        $  8.8
Year 1999                                          $  0.6             $    --         $     --          $      --        $  0.6
Year 1998                                          $  0.6             $    --         $     --          $      --        $  0.6


    (a) Primarily includes amounts previously written off which were credited
directly to this account when recovered and an allocation of the purchase price
for receivables purchased from interexchange carriers. In 1999, amounts include
$45.3 million assumed on November 9, 1999 as part of the Merger.

    (b) Primarily includes amounts written off as uncollectible.

    (c) Includes amounts assumed as part of the Merger.

    (d) Includes amount reversed when benefit was realized.




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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.


                                                     BROADWING INC.

March 7, 2001                                        By /s/ Kevin W. Mooney
                                                        --------------------
                                                     Kevin W. Mooney
                                                     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
---------                     -----                                         ----
                                                                      

RICHARD G. ELLENBERGER*       Principal Executive Officer;
---------------------------   President, Chief Executive
Richard G. Ellenberger        Officer and Director


                              Principal Accounting and
KEVIN W. MOONEY*              Financial Officer;
---------------------------   Executive Vice President and Chief
Kevin W. Mooney               Financial Officer

PHILLIP R. COX*               Director
---------------------------
Phillip R. Cox

J. TAYLOR CRANDALL*           Director
---------------------------
J. Taylor Crandall

WILLIAM A. FRIEDLANDER*       Director
---------------------------
William A. Friedlander

KAREN M. HOGUET*              Director
---------------------------
Karen M. Hoguet

JAMES D. KIGGEN*              Chairman of the Board and Director
---------------------------
James D. Kiggen

JOHN T. LAMACCHIA*            Director
---------------------------
John T. LaMacchia

DANIEL J. MEYER*              Director
---------------------------
Daniel J. Meyer



                                          87




                                                                      
MARY D. NELSON*               Director
---------------------------
Mary D. Nelson

CARL REDFIELD*                Director
---------------------------
Carl Redfield

DAVID B. SHARROCK*            Director
---------------------------
David B. Sharrock

JOHN M. ZRNO*                 Director
---------------------------
John M. Zrno



*By:   /s/ Kevin W. Mooney                                         March 7, 2001
       -------------------
         Kevin W. Mooney
         as attorney-in-fact and on his behalf
         as Chief Financial Officer



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