<PAGE>

                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 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 0-20803
                          BROADWING COMMUNICATIONS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


           Delaware                                     74-2644120
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

          1122 Capital of Texas Highway South, Austin, Texas 78746-6426

      (Registrant's telephone number, including area code): (512) 328-1112

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                          NAME OF EACH EXCHANGE
TITLE OF EACH CLASS                                       ON WHICH REGISTERED
-------------------------------------------------------------------------------
12 1/2% Series B Junior Exchangeable Preferred Stock Due 2009 (par value $0.01
per share) New York Stock Exchange

        SECURITIES REGISTERED 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 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. [ ]

    All outstanding shares of the Registrant's common stock are owned by
Broadwing Inc.

    The aggregate market value of the Preferred Stock of the Registrant held by
non-affiliates of the Registrant on February 28, 2001 based on the closing price
of the Preferred Stock on the New York Stock Exchange on such date, was
$403,114,200.

    The number of shares of Preferred Stock outstanding was 395,210 on February
28, 2001.

                       DOCUMENTS INCORPORATED BY REFERENCE
    Portions of the Registrant's Information Statement to be filed with the
Securities and Exchange Commission within 120 days of December 31, 2000.

                                      -1-
<PAGE>

                          BROADWING COMMUNICATIONS INC.

                                    FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>



                                                  PART I
                                                                                                                  PAGE

<S>      <C>                                                                                                           <C>
Item 1.  Business................................................................................................  4
Item 2.  Properties..............................................................................................  8
Item 3.  Legal Proceedings.......................................................................................  8
Item 4.  Submission of Matters to a Vote of Security Holders.....................................................  9

                                                  PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters...................................  9
Item 6.  Selected Financial Data.................................................................................  10
Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations...................  11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk..............................................  23
Item 8.  Financial Statements and Supplementary Schedules........................................................  24
Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....................  53


                                                 PART III

Item 10. Directors and Executive Officers of the Registrant......................................................  54
Item 11. Executive Compensation..................................................................................  56
Item 12. Security Ownership of Certain Beneficial Owners and Management..........................................  56
Item 13. Certain Relationships and Related Transactions..........................................................  56

                                                  PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................................  57

Signatures.......................................................................................................  62
</TABLE>


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

                                      -2-
<PAGE>

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 that 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
communications technology; the ability of the Company to generate sufficient
cash flow to fund its business plan and expand its optical network; changes in
the communications 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 qualified employees and the performance of equity securities of other
companies held within the Company's investment portfolio.

                                      -3-
<PAGE>

ITEM 1. BUSINESS

OVERVIEW

    Broadwing Communications Inc. and its subsidiaries (collectively referred
to as "the Company") is an Austin, Texas based provider of communications
services. The Company utilizes its advanced optical network consisting of
more than 18,000 route miles to provide broadband transport, Internet
services and switched long distance. Broadwing Communications also offers
data collocation, information technology consulting, network construction and
other services. In addition, the Company provides network capacity and fibers
in the form of indefeasible right of use ("IRU") agreements.

    The Company is a wholly owned subsidiary of Broadwing Inc. ("Broadwing" or
"the Parent Company"). On November 9, 1999 the Company was merged with a wholly
owned subsidiary of Broadwing ("the Merger"). The Merger was accounted for as a
purchase business combination and, accordingly, the purchase accounting
adjustments, including goodwill, have been pushed down and are reflected in
these financial statements subsequent to November 9, 1999. The financial
statements for periods ended prior to November 9, 1999 were prepared using the
Company's historical basis of accounting and are designated as "Predecessor."
The comparability of operating results for the Predecessor periods, the period
from November 10 to December 31, 1999 and fiscal year 2000 are affected by the
purchase accounting adjustments.

    In 2000, Broadwing Communications' results include the results of Broadwing
IT Consulting Inc. ("IT Consulting") as the Parent Company contributed the
capital stock of the information technology consulting business to the Company
during the year. In addition, the 2000 results include the revenues and expenses
related to servicing Cincinnati Bell Long Distance Inc. ("CBLD") customers
outside of the Cincinnati, Ohio area. This change was further described in each
of the Company's Reports on Forms 10-Q during 2000. The contribution of the IT
Consulting stock resulted in approximately $11 million in assets and $12 million
in liabilities (at historical cost) being contributed to the Company in January
2000, representing net liabilities of approximately $1 million. During 2000, the
Company recognized $66 million in revenues and expenses related to IT
Consulting. The Company also recognized approximately $59 million in revenues
and $51 million in expenses related to the CBLD agreement.

    Broadband transport services, which accounted for 39% of the Company's
2000 revenues, represent the long-haul transmission of voice, data and
Internet traffic over dedicated circuits. In addition, the broadband
transport category includes revenues from IRU agreements which typically
cover a fixed period of time and represent the prepaid lease of capacity or
network fibers. The Company maintains sufficient network capacity and
believes that the sale of IRU agreements will have no negative impact on its
ability to carry traffic for its retail customers. IRU agreements are offered
as a standard practice within the industry among Broadwing Communications'
competitors.

    Switched services, which accounted for 41% of the Company's total 2000
revenues, represent billed minutes of use, primarily for the transmission of
voice long distance services. These revenues have been decreasing as a
percentage of total Company revenues as Broadwing Communications has focused its
efforts on margin improvement and optimization of this revenue source. Switched
services also include revenues associated with certain customers of the former
CBLD in 2000.

                                      -4-
<PAGE>

    Data and Internet services represent the sale of high-speed data transport
services such as frame relay, Internet access and web hosting. These revenues
constituted nearly 7% of the Company's 2000 revenues. However, the Company
envisions a growing market for these types of services and expects that the data
and Internet category will provide a greater share of the Company's revenues in
the future. Data and Internet revenues represented 4% of the Company's
consolidated revenues in 1999.

    Other services, which accounted for 13% of the Company's 2000 revenues,
consist of information technology consulting services and network
construction projects. For the year 2000, information technology consulting
revenues, including equipment sales, were $66 million. The Company typically
gains access to rights of way or to additional routes through its network
construction activities. In 2000, these services, in addition to revenue
related to equipment trials, provided $67 million in revenue, compared to no
such revenue in the prior year. However, in 1999, the Company recorded $28
million in nonrecurring revenues from the sale of dark fiber.

    The centerpiece of Broadwing Communications' assets is its
next-generation network. This network is fully operational and includes a
second generation Internet backbone and that is the first commercially
deployed, optically switched network.

    Since Broadwing Communications' revenues are conditioned primarily on
carrying data and voice traffic and the ratable recognition of contract
revenues, its operations follow no particular seasonal pattern. However, the
Company 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.

    Prices and rates for the Company's service offerings are primarily
established through contractual agreements. Accordingly, the Company is
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.

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

    EMPLOYEES

    At December 31, 2000, the Company employed 2,900 people, of whom 1,000
provided operational and technical services, 400 provided engineering services,
and the balance engaged in sales, administration and marketing. These employees
are not represented by labor unions, and the Company considers employees
relations to be good.

RISK FACTORS

    INCREASED COMPETITION COULD AFFECT PROFITABILITY AND CASH FLOW

    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 emerging
competitors. These companies have similarly equipped fiber networks and have
enjoyed certain competitive advantages over

                                      -5-
<PAGE>

the Company in the past. The Company's failure to succeed against these
competitors would affect its ability to continue construction of its network,
which would have a material adverse effect on its business, financial condition
and results of operations.

    The current and planned optical network capacity of the aforementioned
competitors could result in decreasing prices even as the demand for
high-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
profit margins.

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

    Broadwing Communications is committed to the expansion and maintenance of
its nationwide optical network. These initiatives will require a considerable
amount of funding in the future, aggregating to approximately $1.3 billion
over the next three years. Since the Company does not expect to generate
sufficient cash flow to provide for these investing activities, it is
dependent on the Parent Company for funding. In order to provide for these
cash requirements, the Parent Company has obtained a $2.1 billion credit
facility from a group of both banking and non-banking institutions. As of
December 31, 2000, the Parent Company had approximately $460 million in
additional borrowing capacity from this credit facility.

    The ability to borrow from this credit facility is predicated on the Parent
Company's ability to satisfy certain debt covenants that have been negotiated
with its lenders. Failure to satisfy these debt covenants could severely
constrain the Parent Company's ability to borrow from the credit facility
without receiving a waiver from its lenders. If the Company were unable to
continue the construction of its optical network, 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 Parent 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, Broadwing Communications 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 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.

                                      -6-
<PAGE>

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

    The Company is committed to the expansion of its nationwide optical network
and the nationwide deployment of high-speed data transport services. This
expansion will require a significant amount of capital expenditures to complete
and maintain.

    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, along with another of the Parent Company's subsidiaries, is
subject to regulatory oversight of varying degrees at the state and federal
levels. Regulatory initiatives that would put either subsidiary at a competitive
disadvantage or mandate lower rates for its services could result in lower
profitability and cash flow for the Parent Company. This could potentially
compromise the expansion of the Company's national optical network, which would
have a material adverse effect on its business, financial condition and results
of operations.

    THE COMPANY MAINTAINS INVESTMENTS IN THE EQUITY SECURITIES OF OTHER
    COMPANIES

    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 (further discussion of these investments 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 that would affect its reported operating results and the
carrying amount of the associated securities in the Company's balance sheet.

    ATTRACTING AND RETAINING HIGHLY QUALIFIED EMPLOYEES IS NECESSARY TO MAINTAIN
    A 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 anticipating 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, it could have a material adverse impact on
its business, financial condition and results of operations.

                                      -7-
<PAGE>

    CAPITAL ADDITIONS

    The Company's capital expenditures are primarily for its nationwide optical
network 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.
Capital expenditures totaled $592 million and $644 million in 2000 and 1999,
respectively.

ITEM 2. PROPERTIES

    The principal properties of Broadwing Communications consist of its
nationwide optical network. The Company and its subsidiaries own or maintain
communications 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.

    The Company's principal offices are located in Austin, Texas and consist of
three separate leased offices. The leases for these facilities expire at
different times varying from July 2002 to July 2005. The Company also subleases
former office space in two other locations in Austin. The sublease payments
satisfy the monthly rental obligations under the original leases.

    The Company leases sites for its switches in various metropolitan locations
under lease agreements that expire between 2001 and 2005. Five of the Company's
13 voice switches are leased under capital leases from DSC Finance Corporation
over a five-year term. In order to build the network, the Company has entered
several hundred site, conduit, right-of-way and storage leases. These sites are
located across the United States, with lease terms ranging from 5 to 25 years.

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

<TABLE>
<CAPTION>

                                                                2000                   1999
                                                     --------------------    --------------------
<S>                                                           <C>                     <C>
Land and rights of way                                        $  152.0                $  150.3
Buildings and leasehold improvements                             226.3                   253.8
Transmission system                                            1,503.7                 1,081.5
Furniture, fixtures, vehicles and other                           26.2                    20.9
Fiber usage rights                                                40.5                    40.6
Construction in process                                          449.6                   207.1
                                                              --------                --------
       Total                                                  $2,398.3                $1,754.2
                                                              ========                ========
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

    The information required by this item is included in Note 13 of the Notes to
Financial Statements that are contained in Item 8 of this Report on Form 10-K,
"Financial Statements and Supplementary Data".

                                      -8-
<PAGE>

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

    No matters were submitted to a vote of the Company's security holders during
the quarter ended December 31, 2000.

                                     PART II

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

MARKET INFORMATION

    At December 31, 2000, all of the Company's common stock was held by
Broadwing Inc. As such, there is no established public trading market for this
common stock.

DIVIDEND POLICY

    The Company does not pay dividends on its common stock. Dividends on the
Company's 12 1/2% Junior Exchangeable Preferred Stock (the "Preferred Stock")
are payable quarterly at the annual rate of 12 1/2% of the aggregate liquidation
preference (which amounted to $401.4 million at December 31, 2000 including
accrued dividends of $6.2 million). Previously, the Company had elected to pay
dividends in additional shares of the Preferred Stock. Effective February 15,
2000, the Company elected to switch to a cash payment option for the Preferred
Stock rather than issue additional shares of the Preferred Stock.

                                      -9-
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

    The following table sets forth Broadwing Communications' selected historical
financial data. The historical financial data has been derived from the audited
Consolidated Financial Statements. The selected historical financial data set
forth below is qualified in its entirety by, and should be read in conjunction
with, Item 1, "Business"; Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations"; and the Company's Consolidated
Financial Statements, related notes thereto and other financial information
included herein.
<TABLE>
<CAPTION>
                                                              PREDECESSOR                                COMPANY
                                             -----------------------------------------------    --------------------------
                                                          YEAR ENDED DECEMBER 31,                  YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------------------------------
                                                                               PERIOD FROM         PERIOD FROM
                                                                              JAN 1 TO NOV 9    NOV 10 TO DEC 31
                                                 1996        1997       1998      1999                1999        2000
--------------------------------------------------------------------------------------------------------------------------

                                                  (DOLLARS IN MILLIONS)
<S>                                           <C>         <C>        <C>       <C>                  <C>         <C>
Statement of Operations Data (1):
    Net operating revenue...................  $  282.0    $  521.6   $  668.6  $  568.2             $  99.0     $   999.7
    Operating loss..........................     (19.9)      (49.5)     (30.8)   (214.1)              (46.5)       (224.6)
    Loss before extraordinary item..........     (44.2)      (99.2)     (95.5)   (281.0)              (38.9)       (463.3)
    Extraordinary loss (2)..................        --          --      (67.0)      --                 (6.6)          --
    Net loss................................     (44.2)      (99.2)    (162.5)   (281.0)              (45.5)    $  (463.3)

Other Financial Data (3):
    EBITDA..................................  $   16.0    $   23.2   $   90.8  $   (8.8)            $   0.2     $    81.3
</TABLE>


<TABLE>
<CAPTION>
                                                        PREDECESSOR                                          COMPANY
                                                 ---------------------------                        ----------------------
                                                 1996         1997      1998                          1999        2000
--------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>        <C>                            <C>         <C>
Balance Sheet Data (1):
    Cash and cash equivalents................ $  64.1     $   155.9  $   264.8                      $    56.2   $    30.4
    Total assets.............................   485.3         968.9    1,748.2                        5,147.2     4,994.2
    Total debt and capital lease obligations.   305.6         320.7      693.0                        1,046.2     1,057.1
    Redeemable preferred stock...............    --           403.4      447.9                          418.2       421.0
    Shareowners' equity (deficit)............    75.3         (18.7)     (72.5)                       2,463.6     2,394.0
</TABLE>

(1)      On November 9, 1999 (the "Merger Date"), the Company completed a merger
         with a wholly owned subsidiary of Broadwing. This Merger was accounted
         for as a purchase business combination and, accordingly, purchase
         accounting adjustments, including goodwill, have been pushed down and
         are reflected in the Company's financial statements subsequent to the
         Merger Date. The financial statements for periods before the Merger
         Date were prepared using the Company's historical basis of accounting
         and are designated as "Predecessor." The financial statements for
         periods after the Merger are designated as "Company." The comparability
         of operating results for the Predecessor and Company periods are
         affected by the purchase accounting adjustments. The 2000 results
         presented include the results of Broadwing IT Consulting as the Parent
         Company contributed the capital stock of the information technology
         consulting business to the Company during the year. The 2000 results
         also reflect an agreement with Cincinnati Bell Long Distance ("CBLD")
         to service its customers outside of the Cincinnati, Ohio area. All
         revenues and expenses associated with the former CBLD's customers
         outside the Cincinnati area were assigned to Broadwing Communications.
         This change was further described in the Company's Reports on the Forms
         10-Q during 2000.

                                      -10-
<PAGE>

(2)      Extraordinary losses of $67.0 million in 1998 and $6.6 million in 1999
         relate to the early extinguishment of debt and were recorded net of
         tax.

(3)      EBITDA represents operating income before depreciation, amortization,
         merger and other infrequent costs, and restructuring expenses. 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.

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

    This report and the related consolidated financial statements and
accompanying notes contain certain forward-looking statements that involve
potential risks and uncertainties. Broadwing Communications Inc.'s ("the
Company") 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.

    As previously discussed, a wholly owned subsidiary of Broadwing merged
with the Company as of November 9, 1999 and the Company became a wholly owned
subsidiary of Broadwing. For purposes of the following discussion of the
results of operations, the financial information for the Predecessor period
has been combined with the financial information for the period from November
10, 1999 to December 31, 1999. The comparability of operating results for the
Predecessor and Company periods are affected by purchase accounting
adjustments.

    The 2000 results presented include the results of Broadwing IT Consulting,
as the Parent Company contributed the capital stock of the information
technology consulting business to the Company during the year. The 2000 results
also reflect an agreement with Cincinnati Bell Long Distance ("CBLD") to service
its customers outside of the Cincinnati, Ohio area. All revenues and expenses
associated with the former CBLD's customers outside the Cincinnati area were
assigned to Broadwing Communications. This change was further described in the
Company's Reports on each of the forms 10-Q during 2000.

CONSOLIDATED OVERVIEW

    Broadwing Communications utilizes its advanced optical network consisting
of more than 18,000 route miles to provide broadband transport, Internet
services and switched long distance. The Company also offers data
collocation, information technology consulting, network construction and
other services. In addition, the Company provides network capacity and fibers
in the form of indefeasible right of use ("IRU") agreements.

    Broadband transport services are comprised of leased 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,

                                      -11-
<PAGE>

network construction services, revenues earned for trials of vendor-supplied
equipment and, in 1999, revenues from a prior sale of dark fiber.

MERGER WITH BROADWING INC. AND RESTRUCTURING

    On November 9, 1999, the Company merged with a wholly owned subsidiary of
Broadwing and became a wholly owned subsidiary of Broadwing. The Merger was
accounted for as a purchase business combination and, accordingly, purchase
accounting adjustments, including goodwill, were pushed down and reflected in
the Company's financial statements after November 9, 1999. The financial
statements for periods before November 9, 1999 were prepared using the Company's
historical basis of accounting and are designated as "Predecessor." The
comparability of operating results before and after the Merger are affected by
the purchase accounting adjustments.

    Broadwing's cost to acquire the Company was 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 purchase price allocation. Property, plant and
equipment was recorded at fair market value based on appraisal results, and
useful lives were assigned to the assets. Other intangibles such as customer
lists and fiber exchange agreements were valued at fair market value and are
being amortized using the straight-line method over five to twenty years. The
excess of cost over the fair value assigned to the net assets acquired was
recorded as goodwill and is being amortized using the straight-line method over
30 years.

    Included in the allocation of the cost to acquire the Company are
restructuring costs associated with initiatives to integrate operations of the
Company with its Parent Company. The restructuring costs accrued in 1999
included the costs of involuntary employee separation benefits related to 263
employees of the Company. As of December 31, 2000, all of the employee
separations had been completed. 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. The Company expects that most of these
restructuring actions will be complete by June 30, 2001, and will result in cash
outlays of $3.4 million in 2001.

ACQUISITION TRANSACTIONS

    Prior to the Merger, the Company made several acquisitions that resulted
in goodwill and other intangibles being recorded in the Company's financial
statements. Effective with this Merger, all previously acquired goodwill and
other intangibles were eliminated as part of purchase accounting. Further
discussion of the acquisition of the Company by Broadwing follows in Note 2
of the Notes to Financial Statements that are contained in Item 8 of this
report.

    During the period from March to June 1998, the Company acquired four
Internet businesses to expand its data and Internet product offerings: (1) Data
Place, a supplier of complete network systems integration solutions to
businesses: (2) NTR Corporation, a company that offers custom back office
support to wholesale customers and Internet dial-up services to retail
customers: (3) NEI, an Internet consulting company: and (4) SMARTNAP, a company
that provides aggregated Internet access, collocation of web servers, routers
and end-site managed connectivity. None of these acquisitions were considered
material to the Company's revenue or net income.

                                      -12-
<PAGE>

    On June 3, 1998, the Company acquired Eclipse through a merger of a Company
subsidiary with Eclipse by exchanging approximately 4.1 million shares of its
former common stock for all of the outstanding common stock of Eclipse. Each
share of Eclipse common stock was exchanged for .2998 shares of the Company's
former common stock. The merger constituted a tax-free reorganization and was
accounted for as a pooling of interests. Accordingly, all prior period
consolidated financial statements have been restated to include the combined
results of operations, financial position and cash flows of Eclipse as though it
had always been a part of the Company. This acquisition is described more fully
in Note 3 of the Notes to Financial Statements that are included in Item 8 of
this report.

    On May 10, 1999, the Company acquired a retail long distance reseller,
Coastal Telecom Limited Company, and other related companies under common
control ("Coastal"), for a purchase price of approximately $110 million. This
acquisition was treated as a purchase for accounting purposes and, as such,
results of operations for the Company include Coastal after the acquisition
date. This acquisition is described more fully in Note 3 of the Notes to
Financial Statements that are contained in Item 8 of this report.

INVESTMENTS

PSINET TRANSACTION

    The Company's investment in PSINet consisted 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. After considering all of the
facts and circumstances surrounding the decrease in market value of this
marketable security at December 31, 2000, the Company made the determination
that the impairment was "other than temporary". Accordingly, the Company
recognized net pretax losses of $342 million on the PSINet investment and
related forward sale, representing the difference between the market value
and the Company's recorded basis in these investments at December 31, 2000.
The Company sold all of its shares in PSINet in the first quarter of 2001,
and no longer maintains any ownership or investment position in PSINet.

APPLIED THEORY

    The Company has a 22.5% investment in Applied Theory, which is accounted for
using the equity method. The book value and market value of this investment at
December 31, 2000 was approximately $12 million. 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
pretax charge to earnings in the fourth quarter of 2000.

STORM TELECOMMUNICATIONS, LTD.

    In 1997, the Company formed Storm Telecommunications, Ltd. ("Storm") as a
joint venture with Telenor Carrier Services AS ("Telenor"), the Norwegian
national telephone company, to provide communication services to carriers and
resellers in Europe. The joint venture was owned 40% by the Company, 40% by
Telenor and 20% by Clarion Resources Communications Corporation, a U.S.-based
communications company in which Telenor owns a controlling interest. This
investment was accounted for using the equity method. During the third quarter
of 1999, the Company determined

                                      -13-
<PAGE>

that it wanted to exit this joint venture to concentrate on its domestic
business. In February 2000, the Company sold its investment in Storm, plus
amounts it was due relating to the joint venture, for $14.4 million. The
Company's investment in Storm had been written down to zero prior to the Merger
because the Company did not expect to realize any amounts pertaining to this
investment. The subsequent recovery of this investment resulted in an $8.2
million adjustment to the purchase price allocation during the first quarter of
2000.

DCI TELECOMMUNICATIONS, INC.

    In November 1998, the Company entered into an agreement to acquire 4.25
million shares of common stock of DCI Telecommunications, Inc. ("DCI") as
consideration for payment of amounts due from one of the Company's customers
that was also a vendor of DCI. The agreement provided that DCI was to issue
additional shares of common stock to the Company if the market value of the
shares the Company owned did not reach $17.7 million by June 1, 1999. As of June
1, 1999, and subsequent thereto, the market value of the shares the Company
owned was significantly less than the $17.7 million guaranteed in the November
1998 agreement. The Company has continued to pursue the remedies to which it is
entitled under the November 1998 agreement, but has written this investment down
to zero as the decline in the financial condition of DCI was considered other
than temporary.

MARCA-TEL

    The Company has an indirect investment equal to 28.8% of Grupo Marca-Tel
S.A. de C.V. ("Marca-Tel") resulting from its ownership of 65.4% of Progress
International, LLC ("Progress") which, in turn, owns 44.0% of Marca-Tel. The
remaining 56.0% of Marca-Tel is owned by a Mexican individual, Marca Beep, S.A.
de C.V. and Siemens. The other owner of Progress is Westel International, Inc.
This investment was previously written down to zero and is being carried on the
Company's books at that amount at December 31, 2000.

FIBER SALES AND IRUS

The Company has entered into various agreements to sell fiber and capacity
usage rights. Sales of these rights are recorded as unearned revenue and are
included in other current and other non-current liabilities in the
accompanying consolidated balance sheets when the fiber or capacity is
accepted by the customer. Revenue is recognized over the terms of the related
agreements. The Company received approximately $22.9 million and $262.5
million in cash in 2000 and 1999, respectively, from these sales and
recognized $42.1 million and $12.2 million, respectively, as revenue.

                                      -14-
<PAGE>

<TABLE>
<CAPTION>

RESULTS OF OPERATIONS
                                                                            % CHANGE                          % CHANGE
                                                           COMBINED          2000 VS.                       COMBINED 1999
(IN MILLIONS)                                   2000         1999         COMBINED 1999         1998          VS. 1998
-----------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>                <C>           <C>             <C>
Revenues
       Broadband transport                     $ 393.2       $ 301.1            31%           $ 225.4           34%
       Switched services                         408.6         307.0            33%             414.4          (26)%
       Data and Internet                          64.8          23.5           176%               9.0          161%
       Other                                     133.1          35.6           274%              19.8           80%
                                               -------       -------                          -------
                   Total                         999.7         667.2            50%             668.6            -
Costs and expenses:
Costs of providing services
   and products sold                             596.9         427.1            40%             433.3           (1)%
Selling, general and
   administrative expense                        321.5         248.7            29%             144.5           72%
                                               -------       -------                          -------
                   Total                       $ 918.4       $ 675.8            36%           $ 577.8           17%

EBITDA                                         $  81.3       $  (8.6)           n/m           $  90.8          n/m
EBITDA margin                                      8.1%         (1.3)%         +9 pts            13.6%        -15 pts

Depreciation and amortization                    305.9         194.3            57%             113.6           71%
Restructuring                                      -            19.8          (100)%              -            n/m
Other charges                                      -            37.9          (100)%              8.0          n/m
                                               -------       -------                          -------
Operating loss                                  (224.6)       (260.6)           14%             (30.8)         n/m
Interest expense                                  69.8          43.8            59%              31.6           39%
Equity loss in unconsolidated
   entities                                       15.5          10.8            43%              33.0          (67)%
Loss on investment                               394.5          23.8            n/m                -           n/m
Other (expense) income, net                        0.2          (6.3)          (103)%           (14.5)         (57)%
                                               -------       -------                          -------
Loss before income taxes,
   minority interest and
   extraordinary loss                           (704.6)       (332.7)          (112)%           (80.9)         n/m
Income tax (benefit) provision                  (241.3)        (13.3)            n/m             13.9          196%
Minority Interest                                  -            (0.5)           100%             (0.7)          29%
                                               -------       -------                          -------
Loss before extraordinary item                  (463.3)       (319.9)            45%            (95.5)        (234)%
Extraordinary loss                                 -            (6.6)           100%            (67.0)          90%
                                               -------       -------                          -------
Net loss                                        (463.3)       (326.5)          (42)%           (162.5)        (101)%
                                               =======       =======                          =======
</TABLE>

                                      -15-
<PAGE>

2000 COMPARED TO 1999

REVENUES

    Revenues increased 50% to reach $1 billion in 2000, with all revenue
categories contributing to the $333 million in growth. The broadband transport
category contributed an additional $92 million in revenues, increasing 31% to
$393 million. The Company continued to experience increased demand for
higher-bandwidth services from its enterprise customers and benefited from
higher IRU revenues in the current year.

    Switched services revenue increased by $102 million or 33% in the current
year, with $80 million and $22 million, respectively, in additional revenues
being generated by the retail and wholesale components of this business.
Approximately $59 million of the increase in retail switched services is the
result of an agreement between Broadwing Communications and Cincinnati Bell
Long Distance ("CBLD"), a subsidiary of the Parent Company. On January 1,
2000, the Company began recording revenues and expenses associated with an
agreement whereby the Company began servicing CBLD's customers outside of the
Cincinnati, Ohio area (during 1999 these revenues and expenses were included
in the Parent Company's operating results). Switched wholesale revenues
increased 14%, as higher volumes resulting from the service agreement with
CBLD customers were further supplemented by an increase in international
minutes carried. In switched retail, 3% higher minutes of use were offset by
a 3% lower rate per minute. The retail and wholesale components both
benefited from improved credit management procedures, resulting in lower
uncollectible revenues.

    Data and Internet revenues more than doubled in the current year,
increasing 176% 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 the construction of new data
centers, bringing the number of fully operational data centers maintained by
the Company to eleven nationwide.

    Other revenues almost quadrupled in the current year, increasing from $36
million in 1999 to more than $133 million in 2000. The majority of this $97
million increase is attributable to Broadwing IT Consulting, which contributed
$66 million in revenues. An additional $67 million resulted from network
construction projects undertaken on behalf of Touch America, Inc. and El Paso
Energy Communications Company and revenue from a trial of vendor equipment. This
was partially offset by revenues from a nonrecurring sale of dark fiber in 1999.

    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 for information technology consulting. In 2000, costs of
providing services and products sold amounted to $597 million, a 40% 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 continued to expand its own
nationwide optical network. 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.

                                      -16-
<PAGE>

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

    Selling, general and administrative ("SG&A") expenses were 29% higher in the
current year, increasing $73 million, to $322 million. This was primarily due to
the addition of more than 600 employees as a result of the expansion of the
Company's sales force in support of new products and of the retail and
information technology consulting businesses. 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 the year. The
Company incurred additional advertising expenditures in support of new and
existing products and services. In addition, the contribution of Broadwing IT
Consulting by the Parent Company and the service agreement with CBLD resulted in
higher personnel costs in 2000. In the aggregate, SG&A expenses as a percentage
of revenue decreased by five percentage points to approximately 32%.

    Despite the higher SG&A expenses noted above, the Company produced a
significant improvement in EBITDA. EBITDA increased by nearly $90 million from
an EBITDA loss of $9 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.

    Depreciation and amortization expenses of $306 million represented a $112
million increase over the prior year, $72 million of which was attributable
to amortization of goodwill recorded on the Company's books following the
Merger. The remainder of the increase, or $40 million, was attributable to
the depreciation of network and other assets. The Company expects
depreciation expense to continue to increase in the near term due to the
continued expansion of the optical network.

    Restructuring expense decreased $20 million from the prior year. In the
second quarter of 1999, the Company initially recorded a charge of
approximately $13 million to exit certain operations in the switched
wholesale business. The restructuring charge consisted of severance and
various other costs associated with workforce reduction, network
decommissioning and various terminations. The workforce reduction of 94
people included employees contributing to the sales function and employees
contributing to the network operations. These restructuring activities are
expected to be substantially completed by June 30, 2001.

    Due to the Merger, it was determined that the Company would need the
switches that had been marked for decommissioning in the second quarter's
restructuring charge. Additionally, it was determined that the total period
contemplated for lease payments relating to an abandoned office would not be
required. Consequently, the second quarter's restructuring charge was reduced by
$1.2 million during the third quarter related to decommissioning the switches
and $0.4 million related to a reduction in the lease pay off requirement.

    In the third quarter of 1999, the Company recorded a charge of approximately
$8 million relating to the restructuring of the organization and the exiting of
certain foreign operations. The plan was developed by the previous Chief
Executive Officer after reviewing the Company's operations. The workforce
reduction of 15 employees included management, administrative and foreign sales

                                      -17-
<PAGE>

personnel. The employees were notified of this program during July and August of
1999. These restructuring activities are expected to be substantially completed
by September 30, 2002.

    Other charges decreased from $38 million in 1999 to $0 in 2000. These
charges resulted from costs related to the Merger, which did recur in 2000.

    The Company's operating loss decreased from $261 million in the prior year
to $225 million in 2000 due to a reduction in operating expenses as a percentage
of revenues. Gross profit, EBITDA and operating margins were all improved in the
current year as a result.

    In order to continue expansion of the optical network, the Company increased
borrowings from the Parent Company and depleted the cash it had on hand
throughout most of 1999. As a result of this and higher average interest rates
on borrowings, interest expense increased $26 million to $70 million in 2000, a
59% increase over 1999 (see further discussion of interest expense and
indebtedness later in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and in the Notes to Financial Statements).

    The Company recorded equity losses in unconsolidated entities in both 2000
and 1999. These losses amounted to $16 million in 2000, or $5 million more than
the $11 million recorded in the prior year. This reduction is the result of $5
million in additional equity losses on the Applied Theory investment recorded in
the current year.

    The Company incurred a $395 million pretax loss on investments in 2000
compared to $24 million in 1999. This was the result of recognized losses on the
PSINet and Applied Theory investments during the fourth quarter of 2000. The
1999 losses were due to the writedown of the Unidial and DCI investments of $11
million and $13 million, respectively.

    Other income/expense was an expense of less than $1 million in the current
year versus income of $6 million in 1999. The decrease is due to interest income
in 1999 which did not recur in 2000, as cash was used to fund capital
expenditures.

    The income tax benefit of $241 million represented a $228 million increase
in comparison to the $13 million tax benefit recorded in the prior year. This
was primarily the result of the pretax losses from continuing operations, which
includes the recognized losses on minority-owned investments previously
discussed, somewhat offset by the effect of certain non-deductible expenses such
as goodwill amortization and preferred stock dividends treated as minority
interest expense.

    The net loss was $463 million in 2000, compared to $327 million reported in
1999. This was due to the investment losses previously discussed, offset by
improved operating results. The $327 million net loss in the prior year included
an extraordinary charge of approximately $7 million, recorded net of tax and
pertaining to an early extinguishment of the Company's debt as a result of the
Merger. No extraordinary items were incurred in the current year.

                                      -18-
<PAGE>

1999 COMPARED TO 1998

REVENUES

    Revenues of $667 million in 1999 were nearly equivalent to the $669 million
in revenues recorded in 1998 during a transitional year. Broadband transport
revenues contributed the largest increase, growing by nearly $76 million, or
34%, as existing customers chose higher-bandwidth services while a growing
number other carriers began utilizing the Company's advanced fiber-optic
network. Broadband transport revenues also included an $18 million increase in
service and maintenance revenue associated with indefeasible right to use
("IRU") agreements. Switched services decreased $107 million in total, or 26%,
as a result of the decision by the Company's former management to de-emphasize
the switched wholesale component of this business. The de-emphasis of the
switched wholesale business resulted in a $117 million reduction in switched
services revenue that was only slightly offset by a $10 million increase in
switched retail revenues. Data and Internet revenues increased 161% in 1999,
growing nearly $15 million due to higher demand for Internet access, data
collocation and web hosting services. Other revenues increased nearly $16
million, or 80%, resulting from revenues related to a prior sale of dark fiber.

COSTS AND EXPENSES

    Cost of providing services declined $6 million, or 1%, due mainly to a
$23 million decrease in access costs resulting from the decision to
de-emphasize the switched wholesale business and the Company's ability to
make greater use of its own network in order to carry data and voice traffic.
This was partially offset by a $17 million, or 16%, increase in transmission
lease expense. The gross profit margin increased 1% to approximately 36% as a
result of the expense decrease noted above.

    SG&A expenses increased $104 million, or 72%, to $249 million in 1999. This
increase was primarily due to increased staffing required to maintain, promote
and sell the expanded fiber-optic network as employee headcount increased by
nearly 600. Nearly 60% of these new positions were for sales, with the remaining
40% added for network operations.

    The EBITDA loss of $9 million in 1999 represented a $100 million decline
versus $91 million in EBITDA in the prior year, and was primarily attributable
to the $104 million increase in SG&A expenses described above. EBITDA margin
decreased to -1%, a decline of 15 margin points in comparison to nearly 14% in
EBITDA margin in the prior year.

    Depreciation and amortization costs of $194 million represented an $81
million, or 71%, increase in comparison to the prior year. This increase was
attributable to the expansion of the fiber-optic network, with more than $600
million in fixed assets being added in 1999 in addition to the write-up of the
Company's assets related to the Merger and amortization expense being applied to
more than $2.7 billion in goodwill and other intangibles.

    Restructuring expense increased nearly $20 million in 1999 due to
restructuring initiatives throughout the year. In the second quarter of 1999,
the Company recorded a charge of approximately $13 million to exit certain
operations of the switched wholesale business. The restructuring charge
consisted of severance and various other costs associated with workforce
reduction, network decommissioning, and various terminations. The workforce
reduction of 94 people included employees contributing to the sales function and
employees contributing to the network operations.

                                      -19-
<PAGE>

Due to the Merger, it was determined that the Company would need the switches
that had been marked for decommissioning in the second quarter's restructuring
charge. Additionally, it was determined that the total period contemplated for
lease payments relating to an abandoned office would not be required.
Consequently, the second quarter's restructuring charge was reduced by $1.2
million during the third quarter related to decommissioning the switches and
$0.4 million related to a reduction in the lease pay off requirement. These
restructuring activities were substantially complete at December 31, 2000 and
are expected to be finalized by September 30, 2002.

    In the third quarter of 1999, the Company recorded a charge of approximately
$8 million relating to the restructuring of the organization and exiting certain
foreign operations. The plan was developed by the previous Chief Executive
Officer after reviewing the Company's operations. The workforce reduction of 15
employees included management, administrative and foreign sales personnel. The
employees were notified of this program during July and August of 1999.
Restructuring activities pertaining to contract obligations and the exit of
certain facilities were substantially complete at December 31, 2000. Remaining
amounts relate to severance, which should be complete by June 30, 2001.

    Other charges totaled $38 million in 1999 compared to $8 million in 1998.
The charges were a result of the Merger in 1999 and acquisitions in the prior
year.

    Interest expense of $44 million represented a $12 million, or 39%, increase
over the prior year due to higher average debt levels associated with the
continued construction of the fiber-optic network.

    Equity losses from unconsolidated subsidiaries declined 67% to $11 million
in 1999 as losses incurred in 1998 for Marca-Tel and PSINet did not recur in
1999. The Company's investment in Marca-Tel was written down to zero in 1998
with no further significant additional funding required; consequently, no losses
were recorded on this investment in 1999. Also, equity losses were not recorded
on the PSINet investment during 1999 because the Company began accounting for
this investment as an "available for sale" marketable security in the third
quarter of 1998. The Company changed its accounting method with regard to this
investment after it was determined that the Company could no longer exercise
significant influence over PSINet's operating and financial policies and it no
longer had a representative with a seat on PSINet's board of directors.

    The loss on investments totaled $24 million in 1999 versus $0 in 1998.
The 1999 losses are due to the $13 million writedown of DCI and the $11
million writedown of Unidial as the decline in value was considered "other
than temporary".

    Other income, which is primarily interest income, declined by $8 million in
1999 due to lower levels of cash on hand, as spending to build the network
depleted the funding received in the prior year from the issuance of preferred
stock and corporate bonds.

    The income tax benefit of $13 million in 1999 was $27 million more than the
$14 million expense in 1998. The change was due to larger operating losses
during 1999.

    In 1999, costs related to the early extinguishment of the Company's debt as
a result of the Merger resulted in an after-tax, extraordinary charge of
approximately $7 million. In 1998, the Company also recorded an after-tax
extraordinary charge of $67 million relating to the April 1998 redemption of its
12 1/2% Senior Notes that were due in 2005.

                                      -20-
<PAGE>

CAPITAL INVESTMENT

    The Company has spent significant amounts of capital to develop its
nationwide optical network. Capital expenditures were $592 million and $644
million in 2000 and 1999, respectively. The Company estimates that it will incur
nearly $500 million in capital spending in 2001 for fiber expansion and the
deployment of additional optronics and data switches required to increase
capacity on its network.

SEGMENT INFORMATION

    In accordance with Statement of Financial Accounting Standard No. 131,
"Disclosures About Segments of an Enterprise and Related Information," the
operations of the Company comprise a single segment and are reported as such to
the Chief Executive Officer of the Parent Company, who functions in the role of
chief operating decision maker for the Company.

LIQUIDITY AND CAPITAL RESOURCES

    Since the Merger, the Company has relied on the credit facility secured by
the Parent Company in order to support its cash deficit. In order to provide for
the Company's cash requirements, the Parent 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 Parent 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 Parent Company's
business needs. At December 31, 2000, the Parent 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.

CASH FLOW

    Cash used in operating activities totaled $33 million in 2000 compared to
cash provided by operating activities of $159 million in 1999. The decrease
in cash provided by operating activities is due to net cash fluctuations
resulting in an increase in receivables of $193 million combined with a
decrease in unearned revenue of $133 million, substantially offset by a lower
net loss after non-cash adjustments. The change in non-cash adjustments in
2000 included a loss on investments of $395 million in 2000 compared to $24
million in 1999 and an increase of $71 million in amortization expense versus
1999 offset by an increase of $150 million in deferred tax assets from 2000
to 1999.

    The Company's significant investing activities consisted of capital
expenditures of $592 million in 2000 compared to $644 million in 1999. The
majority of the expenditures relate to the continuing construction of the
Company's optical network. The Company expects to require significant amounts of
cash for capital spending in 2001 and thereafter. Capital spending in 2001 is
projected to be nearly $500 million, with an additional $800 million in capital
spending anticipated over the succeeding two-year period (excluding any
acquisitions that may occur).

                                      -21-
<PAGE>

    Cash provided by financing activities increased $238 million as the Parent
Company provided loans and capital contributions of approximately $1,045
million, which more than offset debt issued in the prior year. The Company
expects to satisfy future financing needs through the credit facility obtained
by the Parent Company.

    As of December 31, 2000, the Company had $30 million in cash and cash
equivalents. In addition to cash on hand, the primary sources for cash over the
next twelve months will be cash generated by operations, proceeds of fiber use
sales and proceeds from the Parent Company credit facility discussed above. The
primary uses of cash are expected to be expansion of the network and working
capital funding.

    Quarterly dividend payments on the 12 1/2% preferred stock and semi-annual
interest payments on the remaining 9% subordinated notes and 12 1/2% senior
notes totaling approximately $54 million per year, will also be required.

    The forward-looking statements set forth above with respect to the estimated
cash requirements relating to capital expenditures, the Company's ability to
meet such cash requirements and service debt are based on the following
assumptions as to future events: (i) there will be no significant delays with
respect to our network expansion; (ii) contractors and partners in cost-saving
arrangements will perform their obligations; (iii) rights-of-way can be obtained
in a timely, cost-effective basis; and (iv) the Company will continue to
increase traffic on its network. If these assumptions are incorrect, the
Company's ability to achieve satisfactory results could be adversely affected.

RECENTLY ISSUED ACCOUNTING STANDARDS

    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 be
recorded in the balance sheet as either an asset or liability, measured at its
fair value. SFAS 133 has been subsequently amended through the release of SFAS
137, which provides for a deferral of the effective date of SFAS 133 to 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 will have an immaterial effect on
the Company's results of operations, cash flows and financial position and will
adopt 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.

    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements". In SAB 101, the SEC Staff expressed its views
regarding the appropriate recognition of revenue with regard 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 service lives. The adoption of this accounting change had no effect
on earnings in the current year.

                                      -22-
<PAGE>

    In 2000, the Company recognized $4.2 million in additional revenues and
$4.2 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 $5.6 million in current year revenues and $5.6
million in incremental direct expenses that are being deferred to future
periods in accordance with SAB 101. This deferral process had no effect on
the Company's EBITDA or net income in the current year. However, the deferral
process associated with the adoption of SAB 101 had the effect of increasing
both other current and noncurrent assets and other current and long-term
liabilities by approximately $6.2 million at December 31, 2000.

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,
results of operations and cash flows.

    A total of twenty-six Equal Employment Opportunity Commission ("EEOC")
charges were filed beginning in September 1999 by current Broadwing
Communications Inc. employees located in the Houston office (formerly Coastal
Telephone, acquired by the Company 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Effective with the retirement of the revolving credit facility and with new
debt being assumed by the Parent Company, the Company is not currently subject
to market risk associated with changes 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.

    Significantly all of the Company's revenue is derived from domestic
operations, so risk related to foreign currency exchange rates is considered
minimal.

                                      -23-
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                 PAGE

Consolidated Financial Statements:

     Report of Management....................................................25

     Reports of Independent Accountants...................................26-27

     Consolidated Statements of Income and Comprehensive Income (Loss).......28

     Consolidated Balance Sheets.............................................29

     Consolidated Statements of Shareowners' Equity (Deficit)................30

     Consolidated Statements of Cash Flows...................................31

     Notes to Consolidated Financial Statements...........................32-53

    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.

                                      -24-
<PAGE>

REPORT OF MANAGEMENT                               BROADWING COMMUNICATIONS INC.

    The management of Broadwing Communications 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.


    RICHARD G. ELLENBERGER
    CHIEF EXECUTIVE OFFICER


    KEVIN W. MOONEY
    CHIEF FINANCIAL OFFICER

                                       -25-
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareowners
of Broadwing Communications Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and comprehensive income (loss), shareowners'
equity (deficit) and cash flows present fairly, in all material respects, the
financial position of Broadwing Communications Inc. and its subsidiaries (the
"Company") at December 31, 2000 and 1999, and the results of their operations
and their cash flows for the year ended December 31, 2000, the period from
November 10, 1999 to December 31, 1999 and for the period from January 1, 1999
to November 9, 1999 ("Predecessor"), in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements 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 financial statements, the Company adopted SEC
Staff Accounting Bulletin No. 101 in 2000 and changed its method of accounting
for certain revenues and related costs.


/s/ PricewaterhouseCoopers LLP
Austin, Texas
March 7, 2001

                                      -26-
<PAGE>

                  REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Broadwing Communications Inc.

    We have audited the accompanying consolidated statements of income and
comprehensive income, shareowners' equity (deficit), and cash flows of Broadwing
Communications Inc. (formerly IXC Communications, Inc.) and its subsidiaries for
the year ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The financial
statements of Marca-Tel S.A. de C.V. (Marca-Tel), a corporation in which the
Company has an indirect interest, have been audited by other auditors whose
reports have been furnished to us; insofar as our opinion on the consolidated
financial statements relates to data included for Marca-Tel, it is based solely
on their report. In the consolidated financial statements, the Company's equity
in the net loss of Marca-Tel is stated at ($15.9) million for 1998.

    We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit and the report of other
auditors provide a reasonable basis for our opinion.

    In our opinion, based on our audit and the report of other auditors for the
periods indicated, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations of Broadwing
Communications Inc. and its subsidiaries at December 31, 1998 and their cash
flows for the year ended December 31, 1998, in conformity with accounting
principles generally accepted in the United States.

                                                           /s/ ERNST & YOUNG LLP

Austin, Texas
February 28, 1999

                                      -27-
<PAGE>

                          BROADWING COMMUNICATIONS INC.

        CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
                              (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                     COMPANY                                PREDECESSOR
                                                        -----------------------------------       ------------------------------
                                                                               PERIOD FROM        PERIOD FROM
                                                         YEAR ENDED          NOVEMBER 10 TO        JANUARY 1         YEAR ENDED
                                                        DECEMBER 31,          DECEMBER 31,        TO NOVEMBER       DECEMBER 31,
                                                            2000                  1999              9, 1999             1998
                                                        ------------         --------------       -------------     ------------
<S>                                                     <C>                   <C>                 <C>               <C>
Revenues..........................................        $ 999.7               $ 99.0              $ 568.2           $ 668.6

Costs and expenses:
  Cost of providing services and products sold....          596.9                 60.7                366.4             433.3
  Selling, general and administrative.............          321.5                 38.1                210.6             144.5
  Depreciation and amortization...................          305.9                 46.7                147.6             113.6
  Restructuring...................................           --                    --                  19.8               --
  Merger and other infrequent costs...............           --                    --                  37.9               8.0
                                                        ---------             --------              -------           -------
     Operating loss...............................         (224.6)               (46.5)              (214.1)            (30.8)
Interest expense..................................           69.8                  6.7                 37.1              31.6
Equity loss in unconsolidated entities............           15.5                  1.5                  9.3              33.0
Loss on investments...............................          394.5                  --                  23.8               --
Other expense, (income), net......................            0.2                 (0.5)                (5.8)            (14.5)
                                                        ---------             --------              -------           -------
Loss before income taxes, minority
  interest and extraordinary loss.................         (704.6)               (54.2)              (278.5)            (80.9)
Income tax provision (benefit) ...................         (241.3)               (15.3)                 2.0              13.9
Minority interest.................................           --                    --                  (0.5)             (0.7)
                                                        ---------             --------              -------           -------
Loss before extraordinary item....................         (463.3)               (38.9)              (281.0)            (95.5)
Extraordinary loss on early extinguishment of debt,
  net of taxes....................................           --                   (6.6)                 --              (67.0)
                                                        ---------             --------              -------           -------
Net loss..........................................         (463.3)               (45.5)              (281.0)           (162.5)

Other comprehensive income:
   Unrealized gain on investments.................           --                   84.5                157.1               --
   Reclassification adjustment - marketable equity
   securities.....................................          (84.5)                                      --                --
                                                        ---------             --------              -------           -------
         Total other comprehensive income (loss)..          (84.5)                84.5                157.1               --
                                                        ---------             --------              -------           -------
Comprehensive income (loss).......................        $(547.8)               $39.0               (123.9)          $(162.5)
                                                        =========             ========              =======           =======
</TABLE>

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

                                      -28-
<PAGE>

                          BROADWING COMMUNICATIONS INC.

                           CONSOLIDATED BALANCE SHEETS
                              (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
                                     ASSETS

                                                                                            DECEMBER 31,      DECEMBER 31,
                                                                                                2000              1999
                                                                                            ------------      ------------
<S>                                                                                          <C>              <C>
CURRENT ASSETS
Cash and cash equivalents..............................................................      $   30.4         $   56.2
Receivables, less of allowances of $32.2 and $36.0 ....................................         189.5             73.4
Deferred income tax benefits...........................................................          --               16.8
Prepaid expenses and other current assets..............................................          20.1             13.9
                                                                                             --------         --------
   Total current assets................................................................         240.0            160.3

Property, plant and equipment, net.....................................................       2,103.9          1,726.4
Goodwill and other intangibles, net ...................................................       2,467.6          2,561.3
Investments in other entities..........................................................          26.4            695.2
Noncurrent deferred income tax benefits................................................         152.8              --
Other non-current assets...............................................................           3.5              4.0
                                                                                             --------         --------
   Total assets........................................................................      $4,994.2         $5,147.2
                                                                                             ========         ========

                  LIABILITIES, REDEEMABLE PREFERRED STOCK AND
                            SHAREOWNERS' EQUITY

CURRENT LIABILITIES
Current portion of long-term debt......................................................      $    8.3         $    5.9
Accounts payable.......................................................................         180.6             95.6
Accrued service cost...................................................................          67.6             47.7
Accrued employee benefits..............................................................          24.0             19.4
Accrued taxes..........................................................................          48.5             61.1
Current portion of unearned revenue and customer deposits..............................          54.6             53.6
Deferred income tax liabilities........................................................           2.6               --
Other current liabilities..............................................................          50.0             57.1
                                                                                             --------         --------
   Total current liabilities...........................................................         436.2            340.4

Long-term debt, less current portion...................................................          54.0            597.4
Unearned revenue, less current portion.................................................         611.0            633.5
Noncurrent deferred income tax liabilities.............................................           --             178.4
Intercompany payable to Parent Company.................................................         994.8            442.9
Other long-term liabilities............................................................          83.2             72.8
                                                                                             --------         --------
   Total liabilities...................................................................       2,179.2          2,265.4

12 1/2% Junior Exchangeable Preferred Stock; $.01 par value;
  authorized -- 3,000,000 shares of all classes of Preferred Stock; 395,210
  shares issued and outstanding (aggregate liquidation preference of $401.4 and
  $401.8 including accrued dividends of $6.2 and of $6.6) at December 31, 2000
  and 1999, respectively...............................................................         421.0            418.2

Commitments and contingencies

SHAREOWNERS' EQUITY
Common Stock, $.01 par value; authorized -- 100,000,000 shares; 500,000 shares
     issued and outstanding at December 31, 2000 and 1999, respectively................           --               --
Additional paid-in capital.............................................................       2,902.8          2,424.6
Accumulated deficit....................................................................        (508.8)           (45.5)
Accumulated other comprehensive income.................................................           --              84.5
                                                                                             --------         --------
 Total shareowners' equity.............................................................       2,394.0          2,463.6
                                                                                             --------         --------
   Total liabilities, redeemable preferred stock and shareowners' equity...............      $4,994.2         $5,147.2
                                                                                             ========         ========
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                      -29-
<PAGE>

                          BROADWING COMMUNICATIONS INC.

            CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (DEFICIT)
                   (SHARES IN THOUSANDS, DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>

                                   6 3/4% CUMULATIVE
                                      CONVERTIBLE                                                    ACCUMULATED
                                    PREFERRED STOCK       COMMON STOCK      ADDITIONAL                OTHER COM-    SHAREOWNERS'
                                   -----------------   -------------------   PAID-IN    ACCUMULATED   PREHENSIVE       EQUITY
                                   SHARES     AMOUNT    SHARES      AMOUNT   CAPITAL      DEFICIT       INCOME        (DEFICIT)
                                   --------  -------   ---------  --------  ----------  -----------  ------------   ------------
<S>                                <C>        <C>      <C>          <C>      <C>        <C>           <C>            <C>
BALANCE AT JANUARY 1, 1998
  (PREDECESSOR)...................     --      $ --     35,575      $ 0.4    $  143.4    $ (162.4)     $   --         $  (18.6)
Effect of pooling of interests....     --        --         --         --          --        (1.5)         --             (1.5)
Redemption of Series 3
  Preferred Stock.................     --        --         --         --        (0.7)         --          --             (0.7)
Issuance of common stock for
  acquisitions....................     --        --        265         --        14.5          --          --             14.5
Stock option exercises............     --        --        594         --         6.4          --          --              6.4
Issuance of preferred stock.......  155.2        --         --         --       148.1          --          --            148.1
Preferred dividends paid in
  kind and accrued................     --        --         --         --       (58.2)         --          --            (58.2)
Net loss..........................     --        --         --         --          --      (162.5)         --           (162.5)
                                   ------      ----    -------      -----    --------    --------      ------         --------
BALANCE AT DECEMBER 31, 1998
  (PREDECESSOR)...................  155.2        --     36,434        0.4       253.5      (326.4)         --            (72.5)
                                   ======      ====    =======      =====    ========    ========      ======         ========
Issuance of common stock for
  acquisitions....................     --        --        699         --        25.0          --          --             25.0
Issuance of warrants for
  acquisitions....................     --        --         --         --         1.1          --          --              1.1
Stock option exercises............     --        --      1,036         --        22.1          --          --             22.1
Conversion of preferred stock
  to common stock.................     --        --         46         --          --          --          --
Unrealized gain on
  investments, net................     --        --         --         --          --          --       157.1            157.1
Preferred dividends paid in
  kind and accrued................     --        --         --         --       (55.4)         --          --            (55.4)
Other.............................     --        --         --         --        (0.1)         --          --             (0.1)
Net loss..........................     --        --         --         --          --      (281.0)         --           (281.0)
                                   ------      ----    -------      -----    --------    --------      ------         --------
BALANCE AT NOVEMBER 9, 1999
  (PREDECESSOR)...................  155.2      $ --     38,215      $ 0.4    $  246.2    $ (607.4)     $157.1         $ (203.7)
                                   ======      ====    =======      =====    ========    ========      ======         ========
BALANCE AT NOVEMBER 10, 1999
  (COMPANY).......................     --      $ --        500      $  --    $2,190.4    $     --      $   --         $2,190.4
Preferred dividends paid in
  kind and accrued................     --        --         --         --        (6.6)         --          --             (6.6)
Contributed capital from
Parent Company resulting from
payoff of debt....................     --        --         --         --       240.8          --          --            240.8
Unrealized gain on
  investments, net................     --        --         --         --          --          --        84.5             84.5
Net loss..........................     --        --         --         --          --       (45.5)         --            (45.5)
                                   ------      ----    -------      -----    --------    --------      ------         --------
BALANCE AT DECEMBER 31, 1999
  (COMPANY).......................     --        --        500         --     2,424.6       (45.5)       84.5          2,463.6
                                   ======      ====    =======      =====    ========    ========      ======         ========
Preferred dividends paid in
  kind and accrued................     --        --         --         --       (41.0)         --          --            (41.0)
Contributed capital from
Parent Company....................     --        --         --         --       519.2          --          --            519.2
Reclassification adjustment -
  marketable equity securities....     --        --         --         --          --          --       (84.5)           (84.5)
Net loss..........................     --        --         --         --          --      (463.3)         --           (463.3)
                                   ------      ----    -------      -----    --------    --------      ------         --------
BALANCE AT DECEMBER 31, 2000
  (COMPANY).......................     --      $ --        500      $  --    $2,902.8    $ (508.8)     $   --         $2,394.0
                                   ======      ====    =======      =====    ========    ========      ======         ========
</TABLE>

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

                                      -30-
<PAGE>

                          BROADWING COMMUNICATIONS INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
                                                                       COMPANY                                PREDECESSOR
                                                           -----------------------------------      -----------------------------
                                                                                 PERIOD FROM        PERIOD FROM
                                                            YEAR ENDED         NOVEMBER 10 TO        JANUARY 1        YEAR ENDED
                                                           DECEMBER 31,         DECEMBER 31,        TO NOVEMBER      DECEMBER 31,
                                                               2000                 1999              9, 1999            1998
                                                           ------------        --------------       -----------      ------------
<S>                                                        <C>                 <C>                  <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss..............................................      $ (463.3)            $ (45.5)            $ (281.0)         $ (162.5)
Adjustments to reconcile net loss to cash provided by
 (used in) operating activities:
  Depreciation........................................         196.0                30.3                125.3              91.7
  Amortization........................................         109.9                16.4                 22.3              21.9
  Provision for loss on receivables...................          52.0                 5.1                 75.1              55.1
  Equity loss in unconsolidated entities..............          15.5                 1.5                  9.3              33.0
  Loss on investments, net............................         394.5                  --                 23.8               --
  Deferred income taxes...............................        (182.6)              (32.7)                 --                --
  Other, net..........................................          (6.5)                 --                  4.1               2.5
  Extraordinary loss on early extinguishment of debt..            --                 6.6                  --               70.0
  Change in operating assets and liabilities, net of
   effects from Acquisitions:
    Receivables.......................................        (143.4)               27.5                 21.6              (5.7)
    Other current assets..............................          (8.6)               (2.3)                 4.4              (5.5)
    Accounts payable and accrued service costs........          80.1                (2.9)                79.7             (24.8)
    Other current liabilities.........................         (21.5)                --                 (37.0)              2.5
    Unearned revenue..................................         (25.1)               79.3                 28.9             131.1
    Other non-current assets and liabilities..........         (29.7)                4.5                 (5.0)             (7.0)
                                                            --------            --------             --------         ---------
         Net cash provided by (used in)
           operating activities.......................         (32.7)               87.8                 71.5             202.3
                                                            --------            --------             --------         ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................        (591.7)             (165.0)              (479.1)           (476.4)
Payments for investments/acquisitions, net of cash
  acquired............................................          (0.5)                --                 (79.5)            (54.2)
Other, net............................................          10.4                 4.2                  0.5               7.7
                                                            --------            --------             --------         ---------
         Net cash used in investing activities........        (581.8)             (160.8)              (558.1)           (522.9)
                                                            --------            --------             --------         ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from Parent......................         519.2               240.8                  --               --
Proceeds from loan from Parent........................         525.8               211.8                  --               --
Issuance of long-term debt............................           --                  --                 299.8             678.0
Net proceeds from sale of preferred stock.............           --                  --                  --               148.1
Repayment of long-term debt...........................        (404.0)             (387.1)               (25.9)           (367.8)
Debt issuance costs...................................           --                  --                  --               (18.1)
Preferred dividends paid..............................         (49.4)                --                 (10.4)            (13.7)
Issuance of common shares - exercise of stock options.           --                  --                  22.0               5.2
Other, net............................................          (2.9)                --                   --               (0.7)
                                                            --------            --------             --------         ---------
         Net cash provided by financing activities....         588.7                65.5                285.5             431.0
                                                            --------            --------             --------         ---------
Effect of change in year-end from merged entities.....           --                  --                   --               (1.5)
                                                            --------            --------             --------         ---------
Net increase (decrease) in cash and cash equivalents..         (25.8)               (7.5)             (201.1)             108.9
Cash and cash equivalents at beginning of period......          56.2                63.7               264.8              155.9
                                                            --------            --------             --------         ---------
Cash and cash equivalents at end of period............      $   30.4            $   56.2             $   63.7         $   264.8
                                                            ========            ========             ========         =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
  Income taxes, net of refunds........................      $    0.2            $   (1.0)            $    2.3         $     3.7
                                                            ========            ========             ========         =========
  Interest, net of amounts capitalized................      $   69.8            $    7.2             $   41.0         $    31.1
                                                            ========            ========             ========         =========
</TABLE>

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

                                      -31-
<PAGE>

                          BROADWING COMMUNICATIONS INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

    Broadwing Communications Inc. and its subsidiaries (collectively referred
to as "the Company") is an Austin, Texas based provider of communications
services. The Company utilizes its advanced optical network to provide
broadband transport, Internet services and switched long distance. Broadwing
Communications also offers data collocation, information technology
consulting, network construction and other services. In addition, the Company
provides network capacity and fibers in the form of indefeasible right of use
("IRU") agreements.

BASIS OF PRESENTATION

    The Company is a wholly owned subsidiary of Broadwing Inc. ("Broadwing" or
"the Parent Company"). On November 9, 1999 the Company was merged with a wholly
owned subsidiary of Broadwing ("the Merger"). The Merger was accounted for as a
purchase business combination and, accordingly, the purchase accounting
adjustments, including goodwill, have been pushed down and are reflected in
these financial statements subsequent to November 9, 1999. The financial
statements for periods ended prior to November 9, 1999 were prepared using the
Company's historical basis of accounting and are designated as "Predecessor."
The financial statements for periods after the Merger are designated as
"Company." The comparability of operating results for the Predecessor and
Company periods are affected by the purchase accounting adjustments.

    The 2000 results presented include the results of Broadwing IT Consulting as
the Parent Company contributed the capital stock of the information technology
consulting business to the Company during the year. The 2000 results also
reflect an agreement with Cincinnati Bell Long Distance ("CBLD") to service its
customers outside of the Cincinnati, Ohio area. All revenues and expenses
associated with the former CBLD's customers outside the Cincinnati area were
assigned to Broadwing Communications. This change was further described in the
Company's Reports on each of the Forms 10-Q during 2000.

PRINCIPLES OF CONSOLIDATION

    The accompanying consolidated financial statements include accounts of the
Company and its wholly owned and 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 equity investee are amortized over
the expected life of the asset.

    On June 3, 1998, the Company acquired Eclipse in a transaction accounted for
as a pooling of interests (See Note 3). All prior period consolidated financial
statements were restated to include the combined results of operations,
financial position and cash flows of Eclipse as though it had been part of the
Company during the periods presented. On May 10, 1999, the Company acquired
Coastal

                                      -32-
<PAGE>

Telecom Limited Company and other related companies under common control
("Coastal") in a transaction accounted for as a purchase. The Company's results
subsequent to May 9, 1999 include Coastal.

CASH AND CASH EQUIVALENTS

    Cash and cash equivalents include cash on hand, money market funds and all
investments with original maturities of three months or less. All cash
equivalents are recorded at cost and classified as available for sale.

NOTES RECEIVABLE

    From time to time, Broadwing Communications accepts interest-bearing notes
from customers and other debtors when payments are expected to be received over
extended periods. Amounts due on notes classified as current are expected to be
received within one year.

UNBILLED RECEIVABLES

    Unbilled receivables arise from network construction revenues that are
recognized under the percentage-of-completion method. These amounts are billable
upon achievement of contractual milestones or upon completion of contracts.

PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment is recorded at cost (subject to fair market
value adjustments made as part of purchase accounting at the date of the
Merger). Depreciation is provided for using the straight-line method over the
estimated useful lives of the various assets, ranging from three to twenty
years. Maintenance and repairs are charged to operations as incurred. Property,
plant and equipment recorded under capital leases are included with the
Company's owned assets. Amortization of assets recorded under capital leases is
included in depreciation expense. Costs associated with uncompleted portions of
the network are classified as construction in progress in the accompanying
consolidated balance sheets.

    Interest is capitalized as part of the cost of constructing the Company's
optical network. Interest capitalized during construction periods is computed by
determining the average accumulated expenditures for each interim capitalization
period and applying an average interest rate. Total interest capitalized during
the years ended December 31, 2000, 1999, and 1998 was $22.4 million, $23.1
million and $16.2 million, respectively.

LONG-LIVED ASSETS, OTHER ASSETS AND GOODWILL

    Certain costs incurred with the connection and activation of customers are
amortized on a straight-line basis over the average customer life. The
acquisition cost of retail customer accounts obtained through an outside sales
organization, including certain transaction costs, are amortized over the
average customer life. Goodwill and other intangibles are recorded at cost and
amortized on a straight-line basis over 30 years.

    The Company reviews the carrying value of long-lived assets and goodwill for
impairment when events and circumstances indicate the carrying amount of the
assets may not be recoverable. An impairment loss would be recognized when
estimated future undiscounted cash flows estimated to be

                                      -33-
<PAGE>

generated by those assets are less than the related carrying amounts of the
assets, with the loss measured based upon discounted expected cash flow.

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

    Revenues (with the exception of those described below) are generally
recognized as services are provided and are presented net of provisions for
service credits and bad debts. Broadband transport revenues are generated
primarily by providing capacity on the Company's optical network at rates
established under long-term contractual arrangements or on a month-to-month
basis. Switched service revenues are generated primarily by providing voice and
data communication services; customers are billed monthly after services are
rendered. Data and Internet revenues are generated by providing a number of
services, including Internet service and web hosting. Customers are billed
monthly, generally after the service is 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.

    Sales of fiber or capacity 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. The revenue is recognized over the life of the agreement as
services are provided beginning on the date of customer acceptance.

    The Company modified its revenue recognition policies on January 1, 2000 to
be in conformity with the Securities and Exchange Commission's 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.

ADVERTISING

    Costs related to advertising are expensed as incurred and amounted to $27.2
million, $5.3 million and $4.2 million in 2000, 1999 and 1998, respectively.

                                      -34-
<PAGE>

FIBER EXCHANGE AGREEMENTS

    In connection with its fiber-optic network expansion, the Company has
entered into various agreements to purchase, sell or exchange fiber usage
rights. Purchases of fiber usage rights from other carriers are recorded at cost
as a separate component of property, plant and equipment. The recorded assets
are amortized over the lesser of the term of the related agreement or the
estimated life of the fiber optic cable. Sales of fiber usage rights are
recorded as unearned revenue. Revenue is recognized over the terms of the
related agreements. Non-monetary exchanges of fiber usage rights (swaps of fiber
usage rights with other long distance carriers) are recorded at the cost of the
asset transferred or, if applicable, the fair value of the asset received.
Agreements to exchange fiber IRUs for capacity are recorded by recognizing the
fair market value of the revenue earned and expense incurred under the
respective agreements. Exchange agreements account for non-cash revenue and
expense, in equal amounts, of $19.1 million in 2000, 1999 and 1998.

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

    The Company accounts for employee stock options under the intrinsic value
method. Pro forma disclosures of net income are presented as if the fair value
method had been applied.

USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

RECLASSIFICATIONS

    Certain amounts for prior years have been reclassified to conform to the
current year presentation.

RECENTLY ISSUED ACCOUNTING STANDARDS

    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 be recorded in
the balance sheet as either an asset or liability, measured at its fair value.
SFAS 133 has been subsequently amended through the release of SFAS 137, which
provides for a deferral of the effective date of SFAS 133 to all fiscal years
beginning after June 15, 2000. The Company does not anticipate a material effect
on its results of operations, 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.

                                      -35-
<PAGE>

    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements. In SAB 101, the SEC Staff expresses its views regarding the
appropriate recognition of revenue with regard 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.

    In 2000, the Company recognized $4.2 million in additional revenues and
$4.2 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 $5.6 million in current year revenues and $5.6
million in incremental direct expenses that are being deferred to future
periods in accordance with SAB 101. This deferral process had no effect on
the Company's EBITDA or net income in the current year. However, the deferral
process associated with the adoption of SAB 101 had the effect of increasing
both other current and noncurrent assets and other current and long-term
liabilities by approximately $6.2 million at December 31, 2000.

    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 $40.1 million of internal use software development costs in
2000 and $8.0 million for the period from November 10, 1999 to December 31,
1999 and $30.2 million for the period from January 1, 1999 to November 9,
1999. These costs are now being amortized over a three- to five-year period.

2. MERGER WITH BROADWING INC. AND RESTRUCTURING

    The Company was acquired by Broadwing Inc. on November 9, 1999, through the
merger of the Company and a wholly owned subsidiary of the Parent Company, with
the Company surviving as a wholly owned subsidiary of the Parent Company. The
Company, previously IXC Communications, Inc., ("IXC") was then renamed Broadwing
Communications Inc.

    As a result of the Merger, all of the then outstanding shares of IXC common
stock were converted in a tax-free exchange into approximately 69 million shares
of Broadwing common stock, based on a fixed exchange ratio of 2.0976 shares of
Broadwing stock for each share of IXC common stock. In addition, IXC's 7 1/4%
Convertible Preferred Stock and IXC's Depositary Shares representing 1/20th of a
share of IXC's 6 3/4% Convertible Preferred Stock were converted into 7 1/4%
Convertible Preferred Stock and Broadwing Depositary Shares representing 1/20th
of a share of 6 3/4% Convertible Preferred Stock, respectively. Approximately
five million shares of IXC common stock that were owned by the Parent Company at
the Merger Date are being accounted for as if retired and are not included in
the aforementioned total. All of the outstanding options, warrants and other
equity rights in IXC were converted into options, warrants and the rights to
acquire common shares according to 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 aggregate purchase price of $3.2 billion consisted of (all numbers
approximate): $0.3 billion in cash for the purchase of five million shares of
IXC stock from Trustees of General Electric Pension

                                      -36-
<PAGE>

Trust; the issuance of 69 million shares of the Parent Company's common stock
valued at $1.6 billion, 155,000 shares of 6 3/4% convertible preferred stock
issued by the Parent Company on the Company's behalf valued at $0.1 billion; the
issuance of 14 million options and warrants to purchase Parent Company common
stock valued at $0.2 billion and the assumption of $1.0 billion of the Company's
indebtedness by the Parent Company.

    The Parent Company accounted for the Merger according to the purchase method
of accounting, with the purchase price allocation being "pushed down" to the
Company's financial statements. The purchase price has been allocated to the
assets purchased and liabilities assumed based on estimated fair values and
adjusted during 2000 based on final valuation. Property, plant and equipment was
recorded at fair market value based on appraisal results, and useful lives were
assigned to the assets. The excess of cost over the fair value assigned to the
net assets acquired was recorded as goodwill and is being amortized using the
straight-line method over 30 years.

    The purchase price was allocated to assets and liabilities based on their
respective 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 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:

<TABLE>
<CAPTION>

<S>                                                      <C>
Property, Plant and Equipment.........................   $   124.0
Other intangibles.....................................       423.0
Debt..................................................      (174.0)
Deferred tax liabilities..............................       (33.0)
Other.................................................        42.3
                                                         ---------
Subtotal .............................................       382.3
Assumption of debt....................................       963.7
Goodwill .............................................     2,155.2
                                                         ---------
    Total                                                $ 3,501.2
                                                         =========
</TABLE>

    Included in the allocation of the cost to acquire the Company are
restructuring costs associated with initiatives to integrate operations of the
Company with its Parent Company. The total restructuring costs accrued in 1999
of $7.7 million included the costs of involuntary employee separation benefits
related to 263 employees of the Company, 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
1999 approximately $0.2 million was paid out in severance. As of December 31,
2000, all of the employee separations had been completed.

                                      -37-
<PAGE>

    A summary of the exit liabilities recorded at December 31, 1999 and 2000 is
as follows:

<TABLE>
<CAPTION>

                                    ACCRUED AT                                                      ACCRUED AT
MILLIONS OF DOLLARS             DECEMBER 31, 1999          UTILIZATIONS         ADJUSTMENTS         DECEMBER 31, 2000
---------------------------------------------------------------------------------------------------------------------

<S>                                 <C>                     <C>                    <C>                 <C>
Employee separations                $ 2.0                   $ (2.5)                $ 0.5               $ --
Facility closure costs                2.1                     (0.3)                  --                  1.8
Relocation                            0.2                       --                  (0.1)                0.1
Other exit costs                      3.2                     (1.9)                  0.2                 1.5
                                    -----                   ------                 ------              -----
Total accrued restructuring costs   $ 7.5                   $ (4.7)                $ 0.6               $ 3.4
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

    Amounts in the "Adjustments" column above were applied to goodwill as
part of the purchase price allocation recorded in the Merger. The Company
expects that these restructuring actions will be substantially complete by
June 30, 2001, and will result in cash outlays of $3.4 million in 2001.

3. ACQUISITIONS

COASTAL TELECOM LIMITED COMPANY ACQUISITION

    On May 10, 1999, the Company acquired Coastal Telecom Limited Company and
other related companies under common control ("Coastal"). Coastal is a retail
long distance reseller. The purchase price amounted to approximately $110
million and was paid for with a combination of $73.2 million of cash
(including approximately $10 million paid for working capital items), $10
million of notes payable, $25.0 million of former IXC common stock, and
warrants to purchase 75,000 shares of former IXC common stock. Assets
acquired included approximately $103 million of goodwill, subsequently
eliminated in the Merger, and approximately $7 million of property and
equipment. In connection with the acquisition the Company completed a credit
facility with a commercial bank pursuant to which Eclipse, a wholly owned
subsidiary, borrowed $27 million and used the proceeds to fund a portion of
the Coastal purchase price. All amounts due under this facility were
satisfied, and this credit facility was terminated, coincident with the
Merger. The $10 million note payable was adjusted, resulting in a reduction
of goodwill in the amount of $4.4 million and $2.2 million in 2000 and 1999,
respectively, due to disputes that arose from the transaction.

ECLIPSE MERGER

    On June 3, 1998, the Company completed the acquisition of Eclipse through a
merger of a Company subsidiary with Eclipse by exchanging approximately 4.1
million shares of its former common stock for all of the outstanding common
stock of Eclipse. Each share of Eclipse common stock was exchanged for .2998
shares of the Company's common stock. In addition, outstanding Eclipse stock
options were converted at the same exchange factor into options to purchase
shares of the Company's common stock.

                                      -38-
<PAGE>

    The merger constituted a tax-free reorganization and has been accounted for
as a pooling of interests. Accordingly, all prior period consolidated financial
statements have been restated to include the combined results of operations,
financial position and cash flows of Eclipse as though it had always been a part
of the Company. Prior to the merger, Eclipse utilized a March 31 fiscal year
end. For purposes of the combined results of operations for the year ended
December 31, 1997, the amounts include Eclipse's historical results of
operations for the years ended March 31, 1998. In order to report cash flow for
1998, a $1.5 million adjustment is included in the 1998 statements of
stockholders' equity (deficit) and cash flows, representing Eclipse's first
quarter 1998 net income, which is in both the beginning retained earnings
balance and the fiscal 1998 net income amount. There were no transactions
between Eclipse and the Company prior to the merger. However, certain
reclassifications, primarily related to the presentation of certain excise taxes
and bad debt provisions, were made to conform Eclipse's accounting policies to
those of the Company.

    In connection with the merger, the Company recorded in 1998 a charge of $8.0
million for merger related costs, including professional services associated
with the merger, termination costs associated with duplicate functions, costs of
exiting excess office space, and the write-off of duplicate equipment and
software.

4.   INVESTMENTS IN OTHER ENTITIES

PSINET INVESTMENT

    The Company's investment in PSINet consisted 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. After considering all of the facts and
circumstances surrounding the decrease in market value of the shares at December
31, 2000, the Company made the determination that this impairment was "other
than temporary". Accordingly, the Company recognized additional net pretax
losses of $342 million on the PSINet investment and related forward sale,
representing the difference between the market value and the Company's cost
basis in these investments at December 31, 2000. In January, 2001, the Company
began selling its shares of PSINet. The sale of all of the Company's shares in
PSINet was completed in the first quarter of 2001, and the Company no longer
maintains an ownership or investment position in PSINet.

APPLIED THEORY, INC.

    The Company holds a 22.5% ownership interest in Applied Theory
Communications Inc., a New York-based internet service provider. The Company
made the determination at the beginning of 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 pretax charge to earnings in the fourth quarter of
2000. The book value and market value of this investment at December 31, 2000
was approximately $12 million.

    In 2000, the Company also 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 Statement of Income and Comprehensive Income
(Loss) under the caption "Equity Loss in Unconsolidated Entities".

                                      -39-
<PAGE>

STORM TELECOMMUNICATIONS,LTD.

    In October 1997, Storm Telecommunications, Ltd. ("Storm") was formed. Storm
was a joint venture with Telenor Global Services AS ("Telenor"), a subsidiary of
the Norwegian national telephone company, to provide communication services to
carriers and resellers in Europe. The joint venture was owned 40% by Telenor,
40% by the Company and 20% by Clarion Resources Communications Corporation, a
U.S.-based telecommunications company in which Telenor owned a controlling
interest. In February 2000, the Company sold its investment in Storm, plus
amounts due it relating to the joint venture, for $14.4 million. The Company's
investment in Storm had been written down to zero prior to the Merger because
the Company did not expect to realize any amounts pertaining to this investment.
The subsequent recovery of this investment resulted in an $8.2 million
adjustment to the purchase price allocation.

DCI TELECOMMUNICATIONS

    In November 1998, the Company entered into an agreement to acquire 4.25
million shares of common stock of DCI Telecommunications, Inc. ("DCI") as
consideration for payment of amounts due from one of the Company's customers
that was also a vendor of DCI. The agreement provided that DCI was to issue
additional shares of common stock to the Company if the market value of the
shares the Company owned did not reach $17.7 million by June 1, 1999. As of June
1, 1999, and subsequent thereto, the market value of the shares the Company
owned was significantly less than the $17.7 million guaranteed in the November
1998 agreement. The Company has continued to pursue the remedies to which it is
entitled under the November 1998 agreement, but has written this investment down
to zero due to a decline in the financial condition of DCI that is considered
other than temporary.

MARCA-TEL

    As of December 31, 2000, the Company holds an indirect investment equal to
28.8% of Grupo Marca-Tel S.A. de C.V. ("Marca-Tel") as a result of its ownership
of 65.4% of Progress International, LLC ("Progress") which, in turn, owns 44.0%
of Marca-Tel. The remaining 56.0% of Marca-Tel is owned by a Mexican individual,
Marca Beep, S.A. de C.V. and Siemens. The other owner of Progress is Westel
International, Inc. This investment was previously written down to zero and is
being carried on the Company's books at that amount at December 31, 2000.

5.  PREDECESSOR RESTRUCTURING CHARGE

    In the second quarter of 1999, the Company recorded a charge of
approximately $13.9 million to exit certain operations in the switched wholesale
business. The restructuring charge consisted of severance and various other
costs associated with workforce reduction, network decommissioning, and various
terminations. The workforce reduction of 94 people included employees
contributing to the sales function and employees contributing to the network
operations. These restructuring activities are expected to be substantially
complete by June 30, 2001. Due to the Merger, it was determined that the
combined companies would need the switches that had been marked for
decommissioning in the second quarter's restructuring charge. Additionally, it
was determined that the total period contemplated for lease payments relating to
an abandoned office would not be required. As a result, the second quarter's
restructuring charge was reduced by $1.2 million during the third quarter of
1999 related to decommissioning the switches and $0.4 million related to a
reduction in the lease pay off requirement.

                                      -40-
<PAGE>

    During 2000, adjustments to the second quarter restructuring charge totaled
a reduction of $2.8 million. The $2.4 million reduction to contractual
obligations is due to lower lease termination costs than originally estimated.
The $0.7 million severance reduction is due to lower than expected costs
incurred upon completion of severance payments. The additional $0.3 million for
network decommissioning is related to higher than expected costs for demolition
of microwave towers.

    In the third quarter of 1999, the Company recorded a charge of
approximately $8.3 million relating to the restructuring of the organization
and to exit certain foreign operations. The plan was developed prior to the
Merger, by the previous Chief Executive Officer, after reviewing the
Company's operations. The workforce reduction of 15 employees included
management, administrative and foreign sales personnel. The employees were
notified of this program during July and August of 1999. During 2000 the
severance reserve was increased by $1.9 million due to higher than expected
outplacement costs and higher than expected benefits for certain employees.
The reduction of $0.4 million for exiting facilities is due lower than
expected costs upon completion of those activities.

    The remaining severance and network decommissioning reserves of $0.7 million
and $2.0 million, respectively, are expected to be paid by September 30, 2002.

    Activity in the accrued restructuring liabilities recorded in the second and
third quarters of 1999 are as follows (in millions):

<TABLE>
<CAPTION>


                                    1999                                  ACCRUED AT                                ACCRUED AT
                                RESTRUCTURING                             DECEMBER 31,                              DECEMBER 31,
                                   CHARGE     UTILIZATIONS  ADJUSTMENTS      1999       UTILIZATIONS   ADJUSTMENTS      2000
                                ------------- ------------  -----------   ------------  ------------   -----------  ------------
<S>                             <C>           <C>           <C>           <C>           <C>            <C>          <C>
SECOND QUARTER:
Severance......................    $  2.8         (1.6)       $  --         $  1.2       $  (0.5)        $ (0.7)       $   --
Network Decommissioning........       3.9         (0.4)        (1.2)           2.3          (1.9)           0.3           0.7
Terminate contractual
  obligations and
  exit facilities..............       6.4         (1.8)        (0.4)           4.2          (1.8)          (2.4)           --
                                   ------        -----        -----         ------       -------         ------        ------
Total Restructuring Costs......    $ 13.1        $(3.8)       $(1.6)        $  7.7       $  (4.2)        $ (2.8)       $  0.7
                                   ======        =====        =====         ======       =======         ======        ======

THIRD QUARTER:
Severance......................    $  7.5         (4.6)       $  --         $  2.9       $  (2.8)        $  1.9        $  2.0
Terminate contractual
   obligations and
   exit facilities.............       0.8         (0.3)          --            0.5          (0.1)          (0.4)           --
                                   ------        -----        -----         ------       -------         ------        ------
Total Restructuring Costs......    $  8.3        $(4.9)       $  --         $  3.4       $  (2.9)        $  1.5        $  2.0
                                   ======        ======       =====         ======       =======         ======        ======
</TABLE>

                                      -41-
<PAGE>

6. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

    Long-term debt and capital lease obligations consist of the following at
December 31, 2000 and 1999 (in millions):
<TABLE>
<CAPTION>

                                                           2000           1999
                                                           ----           ----

<S>                                                     <C>            <C>
9% Senior Subordinated Notes.........................   $   46.0       $   450.0
12 1/2% Senior Notes.................................        0.8             0.8
Capital lease obligations............................        9.1            11.3
PSINet Forward Sale .................................        3.0           133.9
Intercompany payable to Parent Company, net..........      994.8           442.9
Other debt...........................................        3.4             7.3
                                                        --------       ---------
     Total long-term debt and capital
       lease obligations.............................   $1,057.1       $ 1,046.2
Less current portion.................................        8.3             5.9
                                                        --------       ---------
Long-term debt and capital lease obligations.........   $1,048.8       $ 1,040.3
                                                        ========       =========
</TABLE>

9% SENIOR SUBORDINATED NOTES

     In 1998, the Company 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 the 9% senior subordinated notes
were redeemed through a tender offer due to the change of control terms in the
bond indenture. Accordingly, $46 million of the 9% notes remain outstanding at
December 31, 2000.

INTERCOMPANY PAYABLE TO PARENT COMPANY

    The Company relies on the Parent Company for funding its cash requirements.
The Parent Company advances the Company cash to fund its operating and investing
needs. The Company also provides services to unconsolidated subsidiaries of the
Parent Company. The amounts due to the Parent Company of $994.8 at December 31,
2000 are presented net of these receivables.

PSINET FORWARD SALE

    In June and July 1999, Broadwing Communications received approximately
$111.8 million from a financial institution in connection with two prepaid
forward sale contracts on six million shares of 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 pretax gain of $0.5 million.

                                      -42-
<PAGE>

OTHER

Pursuant to the Company's May 10, 1999 acquisition of Coastal Telecom Limited
Company, the Company assumed $10 million in notes payable, of which $3.4 million
due in 2001 remains outstanding at December 31, 2000.

In addition, $0.8 million remains outstanding on the 12 1/2% senior notes
(original indebtedness of $285.0 million) that were largely eliminated through a
tender offer in 1998.

Amounts previously outstanding on the revolving credit facility and the NTFC
credit facility were retired as part of the Merger. This early extinguishment of
debt resulted in an extraordinary charge of $6.6 million, net of tax, during the
post-Merger period of November 10, 1999 to December 31, 1999.

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

<TABLE>
<CAPTION>
                                                     LONG-TERM       CAPITAL
                                                        DEBT         LEASES           TOTAL
                                                     -----------   ------------    ------------
<S>                                                 <C>             <C>            <C>
2001............................................... $     3.4       $   5.4        $    8.8
2002...............................................       3.0           3.0             6.0
2003...............................................       --            1.5             1.5
2004...............................................       --             --              --
2005...............................................       0.8            --             0.8
Thereafter.........................................   1,040.8            --         1,040.8
                                                    ---------       -------        --------
                                                      1,048.0           9.9         1,057.9
Less amounts related to interest...................       --           (0.8)           (0.8)
                                                    ---------       -------        --------
                                                      1,048.0           9.1         1,057.1
Less Current Portion..............................       (3.4)         (4.9)           (8.3)
                                                    ---------       -------        --------
                                                    $ 1,044.6       $   4.2        $1,048.8
                                                    =========       =======        ========
</TABLE>

7.   REDEEMABLE PREFERRED STOCK

     In 1997, the Company issued 300,000 shares of 12 1/2% Junior Exchangeable
Preferred Stock due 2009. This redeemable preferred stock issue had liquidation
preference of $1,000 per share and amounted to a carrying value of $421 million
at December 31, 2000. This preferred stock was not included in shareowners
equity because it is mandatorily redeemable.

8.   SHAREOWNERS' EQUITY

COMMON STOCK

     The Company's common shares that were outstanding at the date of the Merger
were retired on the Merger Date and were replaced by 500,000 shares of the
Company's common stock that are entirely owned by the Parent Company.

ADDITIONAL PAID-IN CAPITAL AND ACCUMULATED DEFICIT

     The Company's pre-Merger additional paid-in capital and accumulated deficit
were eliminated at the Merger Date. At December 31, 2000 and 1999, the
additional paid-in capital balance includes approximately $2.4 billion
representing consideration paid by the Parent Company for Broadwing
Communications in the Merger. Additional amounts of approximately $500 million
at December 31, 2000 relate primarily to the retirement of $404 million of the
Company's 9% Notes and $49 million in

                                      -43-
<PAGE>

preferred stock dividends on the 12 1/2% Junior Exchangeable Preferred Stock.
The accumulated deficit balance of $509 million at December 31, 2000 reflects
the activities of the Company subsequent to the November 9, 1999 Merger Date.

STOCK BASED COMPENSATION

     Prior to the Merger, the Company maintained incentive plans for selected
employees. The Company's plans included incentive stock options and
non-qualified stock options issued at prices equal to the fair market value of
the Company's common stock at the date of grant which expire upon the earlier of
10 years from the date of grant or termination of employment, death, or
disability. Effective with the Merger, options outstanding under the Company's
plans were converted into options to acquire Broadwing common stock, with the
number of shares and exercise price being adjusted in accordance with the
exchange ratio of 2.0976 established in the Merger Agreement. All outstanding
options under the Company's plans became exercisable and fully vested upon the
change in control except for those options issued under the 1998 Plan. The
majority of options issued under the 1998 Plan maintained the original vesting
schedule. A few selected option grants to executives became exercisable and
fully vested according to their agreements.

     In 1996 the Company adopted a phantom stock plan ("the Directors Plan"),
pursuant to which $20,000 per year of outside director's fees for certain
directors was deferred and treated as if it were invested in shares of the
Company's common stock. Compensation expense was determined based on the market
price of the shares deemed to have been purchased and was charged to expense
over the related period. In 1999, and 1998, the Company recognized $0.3 million,
and $0.1 million, respectively, as compensation expense related to the
Director's Plan. The Company amended the Directors' Plan in 1998 to allow
benefits to be paid in either cash or shares of common stock. At the Merger
Date, this plan was eliminated and all amounts due were paid.

     The Company follows the disclosure-only provisions of SFAS 123, "Accounting
for Stock-Based Compensation," but applies Accounting Principles Board Opinion
25 and related interpretations in accounting for its plans. The fair value
disclosures assume that fair value of option grants was calculated at the date
of grant using the Black-Scholes option pricing model with the following
assumptions: risk-free interest rates of 5.1% in 2000, 6.4% in 1999, and 5.6% in
1998; no dividend yield; volatility of .489 in 2000, .874 in 1999 and .804 in
1998; and expected option lives of 4 years.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. Pro forma loss
information is as follows (in millions except for weighted average exercise
price):

<TABLE>
<CAPTION>
                                                                        COMPANY                        PREDECESSOR
                                                                -------------------------      ---------------------------
                                                                                  YEAR ENDED DECEMBER 31,
                                                                ----------------------------------------------------------
                                                                              PERIOD FROM      PERIOD FROM
                                                                                NOV 10 -         JAN 1 -
                                                                                 DEC 31,          NOV 9,
                                                                   2000           1999            1999             1998
                                                                ---------       ---------      ----------       ----------
<S>                                                             <C>             <C>            <C>              <C>
     Net loss as reported............................           $ (463.3)       $  (45.5)      $  (281.0)       $  (162.5)
     Pro forma compensation expense,
         net of tax benefits.........................              (22.9)           (0.6)          (12.5)           (74.5)
                                                                --------        --------       ---------         --------
     Pro forma loss..................................           $ (486.2)       $  (46.1)      $  (293.5)        $ (237.0)
                                                                ========        ========       =========         ========
</TABLE>

                                      -44-
<PAGE>

Stock option activity and related information for the year ended December 31,
2000, the period from November 10, 1999 to December 31, 1999, January 1, 1999 to
November 9, 1999 and the year ended December 31, 1998 are as follows:

<TABLE>
<CAPTION>
                                                      COMPANY                                   PREDECESSOR
                                      ------------------------------------------    ----------------------------------------
                                                                 DECEMBER 31,          NOVEMBER 9,
                                             2000                   1999                  1999                  1998
                                      ---------------      ---------------------    ------------------   -------------------
                                                 WEIGHTED               WEIGHTED              WEIGHTED              WEIGHTED
                                                 AVERAGE                AVERAGE                AVERAGE              AVERAGE
                                       OPTIONS   EXERCISE     OPTIONS   EXERCISE    OPTIONS   EXERCISE    OPTIONS   EXERCISE
                                      (MILLIONS)  PRICE      (MILLIONS)  PRICE     (MILLIONS)  PRICE     (MILLIONS)  PRICE
                                      ---------  -------     ---------  --------   ---------  --------   ---------  --------
<S>                                      <C>       <C>         <C>      <C>           <C>   <C>           <C>      <C>
Outstanding at beginning of period.....   14.4     $18.00      15.7     $  16.63      5.4   $ 27.50       3.1      $  17.12
Granted................................    3.1     $30.20       1.2     $  28.96      3.5   $ 37.79       3.2      $  34.34
Exercised..............................   (3.7)    $33.03      (2.1)    $  14.03     (0.5)  $ 15.90      (0.6)     $   8.87
Forfeited..............................   (2.7)    $23.36      (0.4)    $  11.58     (1.0)  $ 29.93      (0.3)     $  25.01
                                        -------                -----                ------              ------
Outstanding at end of period...........   11.1     $20.90      14.4     $  18.00      7.4   $ 32.76       5.4      $  22.71
                                        =======                =====                ======              ======
Weighted average fair value of
options granted during the period...... $12.75                $ 8.40               $ 25.08             $ 21.96
                                        =======                =====                ======              ======
</TABLE>

     The following table summarizes outstanding options at December 31, 2000 by
price range:

<TABLE>
<CAPTION>

                                            OUTSTANDING                          EXERCISABLE
                              ---------------------------------------     -----------------------
                                             WEIGHTED      WEIGHTED                      WEIGHTED
                                             AVERAGE       AVERAGE                       AVERAGE
       RANGE OF                 OPTIONS      EXERCISE     CONTRACTUAL      OPTIONS       EXERCISE
   EXERCISE PRICES            (MILLIONS)      PRICE          LIFE         (MILLIONS)       PRICE
   ---------------            ----------     --------     -----------     ----------     --------
<S>                           <C>            <C>          <C>             <C>            <C>
$ 1.4400 to $17.7100               3.5        $13.19          7.64           2.5          $13.04
$18.3438 to $26.9375               5.2        $21.00          8.59           1.6          $19.95
$27.0000 to $28.9688               1.0        $28.28          8.39           0.1          $27.79
$29.0625 to $38.4063               1.4        $34.24          8.99            --          $   --
                                  ----                                       ---
               Total              11.1        $20.90          8.33           4.2          $16.20
                                  ====        ======          ====           ===          ======
</TABLE>

9. CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

    Financial instruments that subject the Company to concentrations of credit
risk consist primarily of cash equivalents and trade receivables. The Company
places its cash equivalents in quality investments with reputable financial
institutions.

    The Company may be subject to credit risk due to concentrations of
receivables from companies that are communications providers, internet service
providers and cable television companies. The Company performs ongoing credit
evaluations of customers' financial condition and typically does not require
significant collateral.

    A relatively small number of customers account for a significant amount of
the Company's total revenues. Revenues from the Company's ten largest customers
accounted for approximately 33%, 38% and 42% of total revenues in 2000, 1999 and
1998, respectively.

                                      -45-
<PAGE>

10. INCOME TAXES

    Significant components of the provision (benefit) for income taxes
attributable to current operations are as follows (in millions):

<TABLE>
<CAPTION>
                                                                  COMPANY                        PREDECESSOR
                                                       ---------------------------        -----------------------
                                                                     PERIOD FROM          PERIOD FROM
                                                                    NOVEMBER 10 TO        JANUARY 1 TO
                                                                     DECEMBER 31,          NOVEMBER 9,
                                                       2000               1999                1999           1998
                                                       ----         --------------        ------------       ----
<S>                                                  <C>            <C>                   <C>               <C>
CURRENT:
  Federal....................................        $ (58.8)          $  12.9              $  --            $  7.1
  State......................................            0.1               4.5                2.0               6.8
                                                     -------           -------              -----            ------
     Total Current...........................          (58.7)             17.4                2.0              13.9
                                                     -------           -------              -----            ------
DEFERRED:
  Federal....................................         (151.7)            (28.7)                --                --
  State......................................          (30.9)             (4.0)                --                --
                                                     -------           -------              -----            ------
     Total deferred..........................         (182.6)            (32.7)                --                --
                                                     -------           -------              -----            ------
Total........................................        $(241.3)          $ (15.3)             $ 2.0            $ 13.9
                                                     =======           =======              =====            ======
</TABLE>

    The income tax benefit of $241 million represented a $226 million increase
in comparison to the $15 million tax benefit recorded in the prior year. This
was primarily the result of the losses from continuing operations, which
includes the realized losses on minority-owned investments previously discussed,
partially offset by the effect of certain non-deductible expenses such as
goodwill amortization and preferred stock dividends treated as minority interest
expense.

    The following is a reconciliation of the income tax provision (benefit)
attributable to continuing operations computed at the U.S. federal statutory tax
rate to the income tax provision (benefit) computed using the Company's
effective tax rate for each respective period (in millions):

<TABLE>
<CAPTION>
                                                             COMPANY                        PREDECESSOR
                                                  ------------------------------    -------------------------
                                                                   PERIOD FROM       PERIOD FROM
                                                                  NOVEMBER 10 TO    JANUARY 1 TO
                                                                   DECEMBER 31,      NOVEMBER 9,
                                                   2000               1999              1999           1998
                                                   ----           --------------    ------------       ----
<S>                                               <C>             <C>               <C>              <C>
  Tax benefit at federal statutory rate.......    $(246.6)           $(19.0)           $(97.4)       $(28.3)
  State and local income taxes, net of
    federal benefit...........................      (28.8)              0.3             (11.3)          0.3
  Change in valuation allowance...............        8.8               --              108.6          39.7
  Goodwill amortization.......................       24.3               3.2               --            --
  Other differences...........................        1.0               0.2               2.1           2.2
                                                  -------            ------            ------        ------
  Provision (benefit) for income taxes........    $(241.3)           $(15.3)           $  2.0        $ 13.9
                                                  ========           =======           ======        ======
</TABLE>

    The income tax provision (benefit) relating to other comprehensive income
components was ($56.3) million in 2000, $56.4 million for the period from
November 10, 1999 to December 31, 1999 and $93.2 million for the period from
January 1 to November 9, 1999. There was no other comprehensive income in 1998.

    Deferred income taxes reflect the tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

                                      -46-
<PAGE>

Significant components of the Company's deferred tax assets and liabilities are
as follows (in millions):

<TABLE>
<CAPTION>
                                                              2000          1999
                                                              ----          ----
<S>                                                           <C>       <C>
DEFERRED TAX ASSETS:
  Net operating loss carryforwards........................    $143.0    $ 126.2
  Investments.............................................      48.8      (72.4)
  Deferred revenue........................................     189.2      193.9
  Other...................................................      55.6       39.7
                                                              ------    -------
       Total deferred tax assets..........................     436.6      287.4
       Valuation allowance................................     (8.8)        --
                                                              ------    -------
  Net deferred tax asset..................................    $427.8    $ 287.4
                                                              ------    -------
DEFERRED TAX LIABILITIES:
  Depreciation and amortization...........................    $272.6    $ 384.4
  Unrealized gain on investments..........................        --       56.4
  Other  .................................................       5.0        8.2
                                                                 ---       ---
  Total deferred tax liability............................     277.6    $ 449.0
                                                              ------    -------
       Net deferred tax asset (liability).................    $150.2    $(161.6)
                                                              ======    =======
</TABLE>

     The Company recorded a net decrease in its deferred tax liabilities of
$129.2 million in 2000 to account for the tax effect of certain purchase
accounting adjustments resulting from the Merger and unrealized losses on
investments (net). The corresponding tax benefits associated with such
adjustments were accounted for as credits to goodwill and other comprehensive
income, and not as a reduction of the deferred 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 carrryforwards 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 as of
December 31, 2000 related to certain tax loss carryforwards due to uncertainty
of the ultimate realization of such future benefits in certain state and local
taxing jurisdictions.

11. RELATED PARTY TRANSACTIONS

    A law firm, of which a former director and shareowner of the Company was a
principal, provided certain legal services to the Company in the amount of
approximately $0.6 million in 2000, $4.1 million in 1999 and $3.3 million in
1998.

    The Company pays interest on amounts borrowed from its Parent Company at a
rate based on the weighted average borrowing rate of the credit facility of the
Parent. As of December 31, 2000 and 1999, the Company had net outstanding loans
of $994.8 million and $442.9 million, respectively, from its Parent Company.

    In the ordinary course of business, the Company provides and receives
certain services from wholly owned subsidiaries of the Parent Company. The
Company's transactions with these entities totaled $34.1 million in revenue and
$8.1 million in costs during 2000.

                                      -47-
<PAGE>

12. 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 sheet for accounts receivable and accounts payable approximate fair
value.

    NOTES RECEIVABLE: The carrying amounts reported in the balance sheet for
notes receivable approximate fair value because of the short-term nature of the
notes and because their interest rates are comparable to current rates.

    MARKETABLE SECURITIES: The fair values of marketable securities are based on
    quoted market prices.

    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, including the intercompany payable to the Parent
Company, were $1,048.8 million and $1,040.3 million, respectively, which
approximates fair market value. Long-term debt also includes the forward sale of
six million shares of PSINet common stock, as further described in Note 6. The
Company is adjusting the carrying amount of this liability as required by the
forward sale agreement. The carrying amount of this obligation at December 31,
2000 was $3.0 million.

    CONVERTIBLE PREFERRED STOCK: The fair value of the 12 1/2% Exchangeable
Preferred Stock is $379.4 million and $435.5 million, and is based on the
trading value of this instrument at December 31, 2000, and 1999, respectively.

    INTEREST RATE RISK MANAGEMENT: Effective with the retirement of the
revolving credit facility and with new debt being assumed by the Parent Company,
the Company is not currently subject to market risk associated with changes 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.

                                      -48-
<PAGE>

13. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

         Lease expense relating to facilities and equipment, excluding
amortization of fiber exchange agreements, was approximately $23.5 million,
$19.1 million and $10.3 million for the years ending December 31, 2000, 1999,
and 1998, respectively.

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

<TABLE>
<CAPTION>
                                    OPERATING
MILLIONS OF DOLLARS                   LEASES                 CAPITAL LEASES
--------------------------------------------------------------------------------
<S>                                 <C>                          <C>
2001                                $   16.5                     $  5.4
2002                                    14.6                        3.0
2003                                    13.5                        1.5
2004                                    12.5                        -
2005                                    11.4                        -
Thereafter                              46.2                        -
--------------------------------------------------------------------------------
Total                               $  114.7                        9.9

Amount representing interest                                       (0.8)
--------------------------------------------------------------------------------

Present value of net minimum lease payments                      $  9.1
--------------------------------------------------------------------------------
</TABLE>

COMMITMENTS

    In order to satisfy the contractual commitments that the Company 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 has entered into a purchase commitment with Corvis
Corporation ("Corvis") a Columbia, Maryland-based manufacturer of optical
network equipment. The agreement specifies that the Company will purchase $200
million worth of optical network equipment from Corvis over a two-year period
beginning in July 2000. As of December 31, 2000, the Company has 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 current Broadwing
Communications Inc. employees located in the Houston office (formerly Coastal
Telephone, acquired by the Company 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

                                      -49-
<PAGE>

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.

    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,
results of operations and cash flows.

14. VALUATION AND QUALIFYING ACCOUNTS

    Activity in the Company's valuation and qualifying accounts was as follows
(in millions):

<TABLE>
<CAPTION>
                                                            BALANCE
                                                           BEGINNING    CHARGED TO                             BALANCE
ALLOWANCE FOR DOUBTFUL ACCOUNTS                            OF PERIOD     REVENUE        DEDUCTIONS           END OF PERIOD
--------------------------------------------               ---------    ----------      ----------           ------------
<S>                                                        <C>          <C>             <C>                  <C>
 Year ended December 31, 2000...................           $ 36.0         $ 52.0           $ 55.8              $ 32.2
 Period from November 10 to December 31, 1999...           $ 45.3         $  5.1           $ 14.4              $ 36.0

 Period from January 1 to November 9, 1999......           $ 16.7         $ 75.1           $ 46.5              $ 45.3
 Year ended December 31, 1998...................           $ 13.1         $ 55.1           $ 51.5              $ 16.7
</TABLE>

<TABLE>
<CAPTION>
                                                            BALANCE
                                                           BEGINNING    CHARGED TO                             BALANCE
DEFERRED TAX VALUATION ALLOWANCE                           OF PERIOD      EXPENSE       DEDUCTIONS           END OF PERIOD
--------------------------------------------               ---------    ----------      ----------           ------------
<S>                                                        <C>          <C>             <C>                  <C>
 Year ended December 31, 2000...................           $   --         $  8.8           $   --              $  8.8
 Period from November 10 to December 31, 1999...           $   --         $   --           $   --              $   --

 Period from January 1 to November 9, 1999......           $   --         $   --           $   --              $   --
 Year ended December 31, 1998...................           $   --         $   --           $   --              $   --
</TABLE>

15. QUARTERLY RESULTS (UNAUDITED)

The following table presents certain unaudited quarterly financial information
for each quarter in 1999 and 2000. This information was prepared on the same
basis as the audited financial statements appearing elsewhere in this Form 10-K.
The operating results for any quarter are not necessarily indicative of results
for any future period. The Company may experience substantial fluctuations in

                                      -50-
<PAGE>

quarterly results in the future as a result of various factors, including
customer turnover, price competition and the success of the Company's customers.

<TABLE>
<CAPTION>

                                                 PREDECESSOR                                      COMPANY
                           ------------------------------------------------------    ------------------------------------
                                            1999 QUARTER ENDED                                 2000 QUARTER ENDED
                           ------------------------------------------------------    ------------------------------------
                                                           OCT 1 -       NOV 10 -
                           MAR 31     JUN 30     SEP 30    NOV 9         DEC 31      MAR 31    JUN 30    SEP 30    DEC 31
                           ------     ------     ------    -----         ------      ------    ------    ------    ------

                                                              (DOLLARS IN MILLIONS)
<S>                        <C>        <C>        <C>       <C>           <C>         <C>       <C>       <C>      <C>
STATEMENT OF OPERATIONS
DATA:

Revenues                   $161.4     $ 157.9    $170.1    $ 78.8        $  99.0     $212.0    $ 239.5   $264.2   $ 284.0

Operating expenses:
Cost of providing services
   And products sold        104.8       108.3     106.4      46.9           60.7      125.2      139.2    158.9     173.6

Selling, general and
   administrative            51.8        61.0      66.3      31.5           38.1       89.0       74.2     78.3      80.0

Depreciation and
   amortization              36.3        39.5      50.7      21.1           46.7       74.7       72.2     78.1      80.9

Restructuring                 -          13.1       6.7       -              -         -           -        -         -

Merger and other
   infrequent costs           0.1        12.8       1.1      23.9            -         -           -        -         -

   Operating loss           (31.6)      (76.8)    (61.1)    (44.6)         (46.5)     (76.9)     (46.1)   (51.1)    (50.5)

Net loss from
   operations before
   extraordinary items      (42.2)     (114.2)    (69.1)    (55.5)         (38.9)     (61.2)     (47.3)   (52.7)   (302.1)

Extraordinary items           -           -         -         -             (6.6)      -           -        -         -

Net loss                   $(42.2)    $(114.2)   $(69.1)   $(55.5)       $ (45.5)    $(61.2)   $ (47.3)  $(52.7)  $(302.1)
</TABLE>

    In the fourth quarter of 2000, the Company incurred a pretax charge of $395
million in order to write down its portfolio of equity investments to market
value on December 31, 2000.

    Revenues and expenses appearing in the above table have been restated to
reflect the adoption of SAB 101 on January 1, 2000. There was no effect on
operating or net income.

16. SEGMENT REPORTING

    In accordance with Statement of Financial Accounting Standard No. 131,
"Disclosures About Segments of an Enterprise and Related Information", the
operations of the Company comprise a single segment and are reported as such to
the Chief Executive Officer of the Parent Company, who functions in the role of
chief operating decision maker for the Company.

                                      -51-
<PAGE>

         The table below presents revenues for groups of similar products and
services (in millions):

<TABLE>
<CAPTION>

                                        COMPANY                          PREDECESSOR
                                 -----------------------            --------------------
                                              NOV 10 -              JAN 1 -
                                               DEC 31               NOV 9,
YEAR ENDED DECEMBER 31,            2000         1999                 1999         1998
----------------------------------------------------------------------------------------
<S>                             <C>          <C>                   <C>          <C>
Broadband Transport              $ 393.2      $   42.6              $ 258.5      $ 225.4
Switched Services                  408.6          43.3                263.7        414.4
Data and Internet                   64.8           4.8                 18.7          9.0
Other                              133.1           8.3                 27.3         19.8
                                 -------      --------              -------      -------
                                 $ 999.7      $  99.0               $ 568.2      $ 668.6
                                 =======      ========              =======      =======
</TABLE>

17. ADDITIONAL FINANCIAL INFORMATION

         The Company's property, plant and equipment consisted of the following
(in millions):

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,                             2000            1999
--------------------------------------------------------------------------------
<S>                                              <C>             <C>
Land and rights of way                           $  152.0        $  150.3
Buildings and leasehold improvements                226.3           253.8
Transmission systems                              1,503.7         1,081.5
Furniture, vehicles and other                        26.2            20.9
Fiber usage rights                                   40.5            40.6
Construction in process                             449.6           207.1
                                                 --------        --------
Subtotal                                          2,398.3         1,754.2
Less:  Accumulated depreciation                    (294.4)          (27.8)
                                                 --------        --------
Property, plant and equipment, net               $2,103.9        $1,726.4
                                                 ========        ========
</TABLE>




    The Company's goodwill and other intangibles consisted of the following (in
millions):

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,                            2000          1999
---------------------------------------------------------------------------
<S>                                           <C>            <C>
Goodwill                                      $  2,168.5       $  2,180.0
Other intangibles                                  428.2            397.2
                                                --------         --------
Subtotal                                         2,596.7          2,577.2
Less:  Accumulated amortization                   (129.1)           (15.9)
                                                --------         --------
Goodwill and other intangibles,net            $  2,467.6       $  2,561.3
                                                ========         ========
</TABLE>

                                      -52-
<PAGE>

    The Company's receivables consisted of the following (in millions):

<TABLE>
<CAPTION>

DECEMBER 31,                                        2000        1999
-------------------------------------------------------------------------
<S>                                                 <C>          <C>
Trade receivables                                   174.1        84.6
Unbilled receivables                                 47.6        24.8
                                                   ------      ------
Subtotal                                            221.7       109.4
Less:  Allowance for doubtful accounts              (32.2)      (36.0)
                                                   ------      ------
Receivables, net                                    189.5        73.4
                                                   ======      ======
</TABLE>

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

    The Company has had no disagreements with its accountants on any accounting
or financial disclosure, auditing scope or procedure during the periods reported
in these financial statements.

                                      -53-
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth in the table below are the names, ages (as of March 20, 2001)
and current offices held by all executive officers and the sole director of the
Company.

<TABLE>
<CAPTION>

                                                                                              EXECUTIVE
NAME                       AGE          POSITION WITH COMPANY                               OFFICER SINCE

<S>                          <C>                                                                 <C>
Richard G. Ellenberger       48        Chief Executive Officer and Director                      1999
Richard S. Pontin            47        President and Chief Operations Officer                    1999
Kevin W. Mooney              42        Chief Financial Officer                                   1999
Thomas Schilling             37        Senior Vice President-Finance                             1999
Jeffrey C. Smith (b)         49        Chief Legal/Administrative Officer                        1997
David A. Torline             51        Chief Information Officer                                 1999
Mark W. Peterson             46        Treasurer                                                 1999
Thomas E. Taylor (a)         54        Secretary                                                 1999
Dominick J. DeAngelo         58        President, Internet Data Services                              1999
</TABLE>


    (a)    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 on February 21, 2001. This change was
           further discussed in the Parent 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.

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

    Executive officers of the Company are elected by and serve at the discretion
of the Board. None of the executive officers has any family relationship to any
nominee for director or to any other executive officer of the Company. Set forth
below is a brief description of the business experience for the previous five
years of all non-director executive officers.

RICHARD G. ELLENBERGER, Chief Executive Officer and sole Director of the Company
since November 9, 1999; President and Chief Executive Officer of Broadwing Inc.
since March 1, 1999; Chief Operating Officer of Broadwing Inc. from July 1, 1998
to March 1, 1999; President and Chief Executive Officer of Cincinnati Bell
Telephone from 1997-1998; 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.

RICHARD S. PONTIN, President and Chief Operating Officer of the Company 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 to 1999; Vice

                                      -54-

<PAGE>

President, National Accounts, MCI Communications, 1996; Vice President Data
Services, MCI Communications, 1994-1996; Vice President, Global Alliances, MCI
Communications, 1992-1994.

KEVIN W. MOONEY, Chief Financial Officer of the Company since November 9, 1999;
Executive Vice President and Chief Financial Officer of Broadwing Inc. since
September 1, 1998; Senior Vice President and Chief Financial Officer of
Cincinnati Bell Telephone since January 1998; Vice President and Controller of
Cincinnati Bell Inc., September 1996 to January 1998; Vice President of
Financial Planning and Analysis of Cincinnati Bell Inc., January 1994 to
September 1996; Director of Financial Planning and Analysis of Cincinnati Bell
Inc., 1990-1994.

THOMAS SCHILLING, Senior Vice President of Finance of the Company since December
1999; Chief Financial Officer of AutoTrader.com from November 1998 to December,
1999; Managing Director of MCI Systemhouse from March 1997, to November 1998;
Director of Finance of MCI Business Markets Division from November 1995 to March
1997.

JEFFREY C. SMITH, 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.

DAVID A. TORLINE, Chief Information Officer of Broadwing Communications and
Broadwing Inc. since November 1999; Vice President., Information Technology of
Cincinnati Bell Telephone from January 1995 to November 1999; President,
Cincinnati Bell Supply, a subsidiary of Broadwing Inc., from October 1992 to
January 1995; Director, Corporate Development of Cincinnati Bell Inc., from
October 1989 to October 1992.

MARK W. PETERSON, Vice President and Treasurer of Broadwing Inc. and Treasurer
of Broadwing Communications since March 1999; Vice President and Assistant
Treasurer of Sprint Corporation from July 1996 to February 1999; Senior Advisor
of Barents Group LLC, a subsidiary of KPMG Peat Marwick from August 1994 to
June1996; Vice President-Risk Management of Enron Corporation from July 1991 to
July 1994.

THOMAS E. TAYLOR, General Counsel and Secretary of the Company from November 9,
1999 to February 21, 2001; General Counsel and Secretary of Broadwing Inc. from
September 1998 to February 21, 2001; Senior Vice President and General Counsel
of Cincinnati Bell Telephone from August 1996 to February 21, 2001; Partner at
law firm of Frost & Jacobs from July 1987 to August 1996.

DOMINICK J. DEANGELO, President, Internet Data Services of Broadwing
Communications Services, Inc. since November 1999; Senior Vice President,
Product Management of IXC Communications from April 1999 until November, 1999;
Senior Vice President, Marketing, Data Products and Services of IXC
Communications, Inc. from July 1998 to April 1999; Vice President, Internet
Services of Sprint Corporation ("Sprint") from January 1997 to May 1998; Vice
President, Data Voice Product Management at Sprint from December 1995 to January
1997; Assistant Vice President, Data Service at Sprint from January 1993 to
December 1995.

                                      -55-
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

         The information required by this item will be contained in the
Company's Information Statement to be filed with the Commission within 120 days
after December 31, 2000, and is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

         The information required by this item will be contained in the
Company's Information Statement to be filed with the Commission within 120 days
after December 31, 2000, and is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item will be contained in the
Company's Information Statement to be filed with the Commission within 120 days
after December 31, 2000, and is incorporated herein by reference.

                                      -56-
<PAGE>

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

    Exhibits identified in parenthesis below, on file with the Securities and
Exchange Commission ("Commission") are incorporated herein by reference as
exhibits hereto:

EXHIBIT
NUMBER                        DESCRIPTION
-------                       -----------
2.1      Agreement and Plan of Merger dated as of July 20, 1999, among
         Cincinnati Bell Inc., IXC Communications, Inc. and Ivory Merger Inc.
         (incorporated by reference to Exhibit 2.1 of Cincinnati Bell Inc.'s
         Form 8-K dated July 22, 1999 and filed with the Commission on July 23,
         1999).

2.2      Amendment No. 1 dated as of October 13, 1999, among Cincinnati Bell
         Inc., IXC Communications, Inc. and Ivory Merger Inc. (incorporated by
         reference to Exhibit 2.1 of Form 8-K dated October 14, 1999 and filed
         with the Commission on October 14, 1999).

3.1      Restated Certificate of Incorporation of IXC Communications, Inc., as
         amended.

3.2      Bylaws of Broadwing Communications Inc., as amended (incorporated by
         reference to Exhibit 3.2 of Form 10-Q for the quarter ended September
         30, 1999 and filed on January 7, 2000, file number 1-5367).

4.1      Indenture dated as of October 5, 1995, by and among IXC Communications,
         Inc., on its behalf and as successor-in-interest to I-Link Holdings,
         Inc. and IXC Carrier Group, Inc., each of IXC Carrier, Inc., on its
         behalf and as successor-in-interest to I-Link, Inc., CTI Investments,
         Inc., Texas Microwave Inc. and WTM Microwave Inc., Atlantic States
         Microwave Transmission Company, Central States Microwave Transmission
         Company, Telecom Engineering, Inc., on its behalf and as
         successor-in-interest to SWTT Company and Microwave Network, Inc.,
         Tower Communication Systems Corp., West Texas Microwave Company,
         Western States Microwave Transmission Company, Rio Grande Transmission,
         Inc., IXC Long Distance, Inc., Link Net International, Inc.
         (collectively, the "Guarantors"), and IBJ Schroder Bank & Trust
         Company, as Trustee (the "Trustee"), with respect to the 12 1/2% Series
         A and Series B Senior Notes due 2005 (incorporated by reference to
         Exhibit 4.1 of IXC Communications, Inc.'s and each of the Guarantor's
         Registration Statement on Form S-4 filed with the Commission on April
         1, 1996 (File No. 333-2936) (the "S-4")).

4.2      Form of 12 1/2% Series A Senior Notes due 2005 (incorporated by
         reference to Exhibit 4.6 of the S.4)

4.3      Form of 12 1/2% Series B Senior Notes due 2005 and Subsidiary Guarantee
         (incorporated by

                                      -57-
<PAGE>

         reference to Exhibit 4.8 of IXC Communications, Inc.'s Amendment No. 1
         to Registration Statement on Form S-1 filed with the Commission on June
         13, 1996 (File No. 333-4061) (the "S-1 Amendment").

4.4      Amendment No. 1 to Indenture and Subsidiary Guarantee dated as of June
         4, 1996, by and among IXC Communications, Inc., the Guarantors and the
         Trustee (incorporated by reference to Exhibit 4.11 of the S-1
         Amendment).

4.5      Indenture dated as of August 15, 1997, between IXC Communications, Inc.
         and The Bank of New York (incorporated by reference to Exhibit 4.2 of
         IXC Communications, Inc.'s Current Report on Form 8-K dated August 20,
         1997, and filed with the Commission on August 28, 1997 (the "8-K").

4.6      First Supplemental Indenture dated as of October 23, 1997, among IXC
         Communications, Inc., the Guarantors, IXC International, Inc. and IBJ
         Shroder Bank & Trust Company (incorporated by reference to Exhibit 4.13
         of IXC Communications, Inc.'s Annual Report on Form 10-K for the year
         ended December 31, 1997, and filed with the Commission on March 16,
         1998 (the "1997 10-K").

4.7      Second Supplemental Indenture dated as of December 22, 1997, among IXC
         Communications, Inc., the Guarantors, IXC Internet Services, Inc., IXC
         International, Inc. and IBJ Schroder Bank & Trust Company (incorporated
         by reference to Exhibit 4.14 of the 1997 10-K).

4.8      Third Supplemental Indenture dated as of January 6, 1998, among IXC
         Communications, Inc., the Guarantors, IXC Internet Services, Inc., IXC
         International, Inc. and IBJ Schroder Bank & Trust Company (incorporated
         by reference to Exhibit 4.15 of the 1997 10-K).

4.9      Fourth Supplemental Indenture dated as of April 3, 1998, among IXC
         Communications, Inc., the Guarantors, IXC Internet Services, Inc., IXC
         International, Inc., and IBJ Schroder Bank & Trust Company
         (incorporated by reference to Exhibit 4.15 of IXC Communications,
         Inc.'s Registration Statement on Form S-3 filed with the Commission on
         May 12, 1998 (File No. 333-52433).

4.10     Purchase Agreement dated as of April 16, 1998, by and among IXC
         Communications, Inc., CS First Boston, Merrill, Morgan Stanley and
         Nations bank Montgomery Securities LLC (incorporated by reference to
         Exhibit 4.1 of IXC Communications, Inc.'s Current Report on Form 8-K
         dated April 21, 1998, and filed with the Commission on April 22, 1998
         (the "April 22, 1998 8-K").

4.11     Indenture dated as of April 21, 1998, between IXC Communications, Inc.
         and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by
         reference to Exhibit 4.3 of the April 22, 1998 8-K).

10.1     Office Lease dated as of June 21, 1989 with USAA Real Estate Company,
         as amended (incorporated by reference to Exhibit 10.1 of the S-4).

                                      -58-
<PAGE>

10.2     Equipment Lease dated as of December 1, 1994, by and between DSC
         Finance Corporation and Switched Services Communications, L.L.C.;
         Assignment Agreement dated as of December 1,1994, by and between
         Switched Services Communications, L.L.C. and DSC Finance Corporation;
         and Guaranty dated December 1, 1994, made in favor of DSC Finance
         Corporation by IXC Communications, Inc. (incorporated by reference to
         Exhibit 10.2 of the S-4).

10.3     Amended and Restated Development Agreement by and between Intertech
         Management Group, Inc. and IXC Long Distance, Inc. (incorporated by
         reference to Exhibit 10.7 of IXC Communications, Inc.'s and the
         Guarantors' Amendment No. 1 to Registration Statement on FormS-4 filed
         with the Commission on May 20, 1996 (File No. 333-2936) ("Amendment No.
         1 toS-4").

10.4     Third Amended and Restated Service Agreement dated as of April 16,
         1998, among IXC Long Distance, Inc., IXC Carrier, Inc., IXC Broadband,
         Inc. and Excel Telecommunications, Inc. (incorporated by reference to
         Exhibit 10.6 of IXC Communications, Inc.'s quarterly Report on Form
         10-Q for the quarter ended June 30, 1998, filed with the Commission on
         May 15, 1998 (the "June 30, 1998 10-Q").

10.5     Equipment Purchase Agreement dated as of January 16, 1996, by and
         between Siecor Corporation and IXC Carrier, Inc. (incorporated by
         reference to Exhibit 10.9 of the S-4).

10.6     IRU Agreement dated as of November 1995 between WorldCom, Inc. and IXC
         Carrier, Inc. (incorporated by reference to Exhibit 10.11 of Amendment
         No. 1 to the S-4).

10.7     Lease dated as of June 4, 1997, between IXC Communications, Inc. and
         Carramerca Realty, L.P. (incorporated by reference to Exhibit 10.17 of
         the June 30, 1997 10-Q).

10.8     IRU and Stock Purchase Agreement dated as of July 22, 1997, between IXC
         Internet Services, Inc. and PSINet Inc. (incorporated by reference to
         Exhibit 10.19 of IXC Communications, Inc.'s Amendment No. 1 to Form
         10-Q/A for the quarter ended September 30, 1997 filed with the
         Commission on December 12, 1997 (the "September 30, 1997 10-Q/A").

10.9     Joint Marketing and Services Agreement dated as of July 22, 1997,
         between IXC Internet Services, Inc. and PSINet Inc. (incorporated by
         reference to Exhibit 10.20 of the September 30,1997 10-Q/A).

10.10    Employment Agreement dated April 8, 1999, by and between IXC
         Communications, Inc. and Valerie G. Walden (incorporated by reference
         to Exhibit 10.24 of IXC Communications, Inc.'s Form 10-Q dated August
         16, 1999 and filed with the Commission on August 16, 1999).

10.11    Contract for Services dated June 28, 1999, by and between IXC
         Communications, Inc. and American Business Development Corp.
         (incorporated by reference to Exhibit 10.27 of IXC

                                      -59-
<PAGE>

         Communications, Inc.'s Form 10-Q dated August 16, 1999 and filed with
         the Commission on August 16, 1999).

10.12    Joint Reporting Agreement dated June 15, 1999 among the Filing Persons
         (incorporated by reference to Exhibit 1 of IXC Communications, Inc.'s
         Amendment No. 1 to Form 13D dated June 15, 1999 and filed with the
         Commission on June 17, 1999).

10.13    Master Agreement dated as of June 2, 1999 between MLI and Internet
         (incorporated by reference to Exhibit 2 of IXC Communications, Inc.'s
         Amendment No. 1 to Form 13D dated June 15, 1999 and filed with the
         Commission on June 17, 1999).

10.14    Securities Loan Agreement dated as of June 2, 1999 between MLI and
         Internet (incorporated by reference to Exhibit 3 of IXC Communications,
         Inc.'s Amendment No. 1 to Form 13D dated June 15, 1999 and filed with
         the Commission on June 17, 1999).

10.15    Confirmation of OTC Transaction dated as of June 3, 1999 between
         Merrill Lynch International and IXC Internet Services, Inc.
         (incorporated by reference to Exhibit 4 of IXC Communications, Inc.'s
         Amendment No. 2 to Form 13D dated June 25, 1999 and filed with the
         Commission on June 29, 1999).

10.16    Confirmation of OTC Transaction dated as of July 6, 1999 between
         Merrill Lynch International and IXC Internet Services, Inc.
         (incorporated by reference to Exhibit 1 of IXC Communications, Inc.'s
         Amendment No. 4 to Form 13D dated July 31, 1999 and filed with the
         Commission on August 5, 1999).

10.17    Lease Agreement dated October 1, 1998, between The Prudential Insurance
         Company of America (as successor in interest to Kramer 34 HP, Ltd.), as
         Landlord, and IXC Communications Services, Inc., as Tenant, as amended
         by the First Amendment to Lease Agreement dated December 29, 1998, the
         Second Amendment to Lease Agreement dated May 13, 1999, the Third
         Amendment to Lease Agreement dated June 1999, the Fourth Amendment to
         Lease Agreement dated August 16, 1999, and the Fifth Amendment to Lease
         Agreement dated October 1, 1999, relating to certain space in the
         building commonly known as Kramer 3 in Austin, Texas (incorporated by
         reference to Exhibit 10.21 of IXC Communication, Inc.'s Form 10-Q/A for
         the quarter ended September 30, 1999 filed with the Commission on
         January 7, 2000 (the "January 7, 2000 10-Q/A").

10.18    Lease Agreement dated May 13, 1999, between Kramer 34 HP, Ltd., as
         Landlord, and IXC Communications Services, Inc., as Tenant, as amended
         by the First Amendment to Lease Agreement dated June 1999, relating to
         certain space in the building commonly known as Kramer 2 in Austin,
         Texas (incorporated by reference to Exhibit 10.22 to the January 7,
         2000 10-Q/A).

                                      -60-
<PAGE>

10.19    Credit Agreement dates as of November 9, 1999, among Cincinnati Bell
         Inc. and IXC Communications Services, Inc. as Borrowers, Cincinnati
         Bell Inc. as Parent Guarantor, the Initial Lenders, Initial Issuing
         Banks and Swing Line Banks named therein, 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 (incorporated by
         reference to Exhibit 10.1 of Cincinnati Bell Inc.'s Form 8-K dated
         November 9, 1999 and filed with the Commission on November 12, 1999).

10.20    Employment Agreement dated as of September 9, 1997, between Benjamin L.
         Scott and IXC Communications, Inc. (incorporated by reference to
         Exhibit 10.21 of IXC Communications Inc.'s Amendment No. 1 to
         Registration Statement on S-4 filed with the Commission on December 15,
         1997 (File No. 333-37157).

10.21    Employment Agreement dated May 27, 1999, by and between IXC
         Communications, Inc. and John M. Zrno (incorporated by reference to
         Exhibit 10.26 of IXC Communications Inc.'s Form 10-Q dated August 16,
         1999 and filed with the Commission on August 16, 1999).

10.22    Employment Agreement dated as of December 7, 1998, by and between IXC
         Communications, Inc. and Michael W. Vent (incorporated by reference to
         Exhibit 10.25 of IXC Communications Inc.'s Form 10-K dated March 26,
         1999 and filed with the Commission on March 31, 1999).

10.23    Letter regarding termination of employment of Benjamin Scott dated
         August 24, 1999.

10.24    Employment Agreement dated as of November 9, 1999, by and between
         Broadwing Communications, Inc. and Dominick J. DeAngelo.

21.1     Subsidiaries of Broadwing Communications Inc.

24.1     Powers of Attorney

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

    (b)  REPORTS ON FORM 8-K.

         No reports on Form 8-K were filed during the quarter ended December 31,
2000.


                                      -61-
<PAGE>

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 COMMUNICATIONS INC.
March 9, 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

                               Principal Executive Officer;   March 9, 2001
RICHARD G. ELLENBERGER         Chief Executive Officer
----------------------         and Director
Richard G. Ellenberger


                               Chief Financial Officer;       March 9, 2001
KEVIN W. MOONEY                Principal Financial and
---------------                Accounting Officer
Kevin W. Mooney

                                      -62-