UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACTS OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACTS OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO _____________ .
A. FULL TITLE OF THE PLAN AND THE ADDRESS OF THE PLAN,
IF DIFFERENT FROM THAT OF THE ISSUER NAMED BELOW:
BROADWING COMMUNICATIONS INC. 401(K) PLAN
B. NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE
PLAN AND THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE:
BROADWING COMMUNICATIONS INC.
1122 CAPITAL OF TEXAS HIGHWAY SOUTH, AUSTIN, TEXAS 78746-6426
(512) 328-1112
BROADWING COMMUNICATIONS INC. 401(K) PLAN
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
FOR THE FISCAL YEAR ENDED DECEMBER 30, 2000
TABLE OF CONTENTS
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits
As of December 30, 2000 and 1999 2
Statement of Changes in Net Assets Available for
Benefits for the year ended December 30, 2000 3
Notes to Financial Statements 4-8
Supplemental Schedule:
Schedule of Assets Held for Investment Purposes
at End of Year 9
Consent of Independent Accountants 10
Report of Independent Accountants
To the Trustees and Participants of the
Broadwing Communications Inc. 401(K) Plan
In our opinion, the accompanying statements of net assets available for
benefits and the related statement of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of the Broadwing Communications Inc. 401(K) Plan ("the Plan") at
December 30, 2000 and 1999 and the changes in net assets available for
benefits for the year ended December 30, 2000, in conformity with accounting
principles generally accepted in the United States of America. These
financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit 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 audit
provides a reasonable basis for our opinion.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Supplemental Schedule of Assets
Held for Investment Purposes at End of Year is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
June 28, 2001
1
Broadwing Communications Inc. 401(K) Plan
Statements of Net Assets Available for Benefits
As of December 30, 2000 and 1999
(Thousands of Dollars)
2000 1999
--------- ---------
ASSETS:
Investments at fair value $31,674 $25,047
Cash - 7
Employer contributions receivable 200 2,867
Employee contributions receivable 400 270
--------- ---------
Net assets available for plan benefits $32,274 $28,191
========= =========
The accompanying notes are an integral part of these financial statements.
2
Broadwing Communications Inc. 401(K) Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 30, 2000
(Thousands of Dollars)
ADDITIONS
Contributions:
Employee $11,010
Employer 2,528
--------
Total contributions 13,538
Interest and dividends 2,468
--------
Total additions 16,006
--------
DEDUCTIONS
Benefits paid to participants 5,623
Net depreciation in fair value of investments 6,300
--------
Total deductions 11,923
--------
Net increase in net assets available for benefits 4,083
Net assets available for benefits - beginning of year 28,191
--------
Net assets available for benefits - end of year $32,274
========
The accompanying notes are an integral part of these financial statements
3
BROADWING COMMUNICATIONS INC 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN MERGER
Effective at the end of December 30, 2000, the Broadwing Communications
Inc. 401(K) Plan (the "Plan") merged into the Broadwing Retirement Savings
Plan (the "Broadwing Retirement Savings Plan"), which was originally named
the Cincinnati Bell Inc. Retirement Savings Plan and which is sponsored by
Broadwing Inc. As a result, the last fiscal year of the Plan was the year
ended December 30, 2000. After the end of such year, the prior assets and
liabilities of the Plan became assets and liabilities of the Broadwing
Retirement Savings Plan.
The trustee of the Plan during 2000 was Morgan Stanley Dean Witter Trust
FSB ("Morgan Stanley"), and the trustee of the Broadwing Retirement Savings
Plan for the 2001 plan year is Fidelity Management Trust Company (together
with its affiliates, "Fidelity"). Assets of the Plan invested in Morgan
Stanley fund options were transferred into Fidelity fund options with
similar investment strategies. The following matrix identifies the Morgan
Stanley fund option and the corresponding Fidelity fund option:
----------------------------------------------- ----------------------------------------------------------------
Morgan Stanley Fund Option Corresponding Fidelity Fund Option
----------------------------------------------- ----------------------------------------------------------------
----------------------------------------------- ----------------------------------------------------------------
Enterprise Fund Fidelity Growth Company Fund
----------------------------------------------- ----------------------------------------------------------------
Emerging Growth Fund Fidelity Mid Cap Stock Fund
----------------------------------------------- ----------------------------------------------------------------
Corporate Bond Fund Fidelity U.S. Bond Index Fund
----------------------------------------------- ----------------------------------------------------------------
Reserve Fund Fidelity Managed Income Portfolio II
----------------------------------------------- ----------------------------------------------------------------
Equity Income Fund Fidelity U.S. Equity Index Commingled Pool Fund
----------------------------------------------- ----------------------------------------------------------------
Real Estate Fund Fidelity Freedom 2020 Fund
----------------------------------------------- ----------------------------------------------------------------
American Value Fund Manager's Special Equity Fund
----------------------------------------------- ----------------------------------------------------------------
Emerging Markets Fund American Funds Europacific Growth Fund
----------------------------------------------- ----------------------------------------------------------------
International Magnum Fund American Funds Europacific Growth Fund
----------------------------------------------- ----------------------------------------------------------------
Value Fund Strong Opportunity Fund
----------------------------------------------- ----------------------------------------------------------------
Broadwing Inc. Common Stock Broadwing Stock Fund
----------------------------------------------- ----------------------------------------------------------------
This report only describes the financial activities of the Plan and its
provisions to December 30, 2000 and does not describe in any manner the
financial activities or provisions of the Broadwing Retirement Savings
Plan after December 30, 2000.
2. DESCRIPTION OF PLAN
As a result of its merger with Broadwing Inc. (then named Cincinnati Bell
Inc.) on November 9, 1999, IXC Communications, Inc. ("IXC") became a wholly
owned subsidiary of Broadwing Inc. Subsequent to the merger date, IXC was
renamed Broadwing Communications Inc. (the "Company") and the IXC
Communications, Inc. 401(K) Plan was renamed the Broadwing Communications
Inc. 401(K) Plan ("the Plan").
The following brief description of the Plan is provided for general
purposes only. Participants should refer to the Plan agreement for more
complete information.
4
BROADWING COMMUNICATIONS INC 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
GENERAL
The Plan is a defined contribution profit sharing plan covering
substantially all employees of Broadwing Communications Inc. and its
subsidiaries. It is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") and is intended to qualify as a
tax-favored plan under Section 401(a) of the Internal Revenue Code ("the
Code"), as amended.
CONTRIBUTIONS
Eligible employees may contribute to the Plan an elected portion of their
eligible compensation, as defined in the Plan Agreement, up to the
statutory annual deferral limit. The Company matches 100% of participant
contributions to the Plan up to the first 3% of eligible compensation of
the employee.
Employer profit sharing contributions in excess of the required matching
contributions are permitted under the Plan and are made at the discretion
of the Company.
ELIGIBILITY
Employees of the Company who have both attained age 20-1/2 and completed
500 hours of service within six months are eligible to participate in the
Plan. An employee may enter the Plan on January 1, April 1, July 1 or
October 1, whichever occurs first after the employee satisfies the
eligibility requirements.
VESTING
Each participant is fully vested in his/her own savings contribution and
shall become fully vested in his/her employer contribution account on
his/her normal retirement date, death or permanent disability.
Prior to April 1, 1998, Plan participants were 40% vested in employer
contributions after two years of service and continued to vest 20% per year
until they were fully vested. Effective April 1, 1998, participants are 20%
vested in employer contributions after one year of service and continue to
vest 20% per year until they are fully vested.
PAYMENT OF BENEFITS
Participants are entitled to receive benefit payments at the normal
retirement age of 65, in the event of the participant's death or
disability, or in the event of termination under certain circumstances
other than normal retirement, disability or death. Benefits may be paid in
a lump-sum distribution or by an annuity.
5
BROADWING COMMUNICATIONS INC 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
PARTICIPANT ACCOUNTS
Discretionary employer profit sharing contributions are allocated annually
to participant accounts based upon the percentage of the individual
participant's eligible compensation to total participants' eligible
compensation.
Investment earnings or losses are allocated among the participants'
accounts based upon the percentage of the balance of each such account to
the total balance of all such accounts within each investment option.
PARTICIPANT LOANS
Participants are allowed to borrow a maximum amount of the lesser of (i)
50% of the participants vested account balance or (ii) $50,000. Loans are
amortized over a maximum of 60 months and repayment is generally made
through payroll deductions. The amount of the loan is deducted from the
participant's investment accounts, with repaid interest and principal being
credited to the participant's individual plan account according to the
current investment options selected by the participant.
FORFEITURES
Forfeited amounts under the Plan are applied to the Company's matching
contribution to the Plan for the Plan year in which the forfeitures occur.
During 2000, employer contributions were reduced by $866,000 from forfeited
nonvested accounts.
ADMINISTRATION
In 1999 and 2000, the Plan was administered on behalf of the Company by a
committee appointed by the Company. The Plan's trustee during such years
was Morgan Stanley Dean Witter Trust FSB. Administrative expenses of the
Plan were paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION
The Plan's financial statements have been prepared on the accrual basis of
accounting.
In 1999, the Plan adopted AICPA Statement of Position 99-3, "Accounting for
and Reporting of Certain Defined Contribution Plan Investments and Other
Disclosure Matters," which, among other things, eliminated for purposes of
reports on Form 11-K previous requirements for defined contribution plans
to present plan investments by general type for participant-directed
investment programs and to disclose participant-directed investment
programs. Accordingly, the accompanying financial statements do not include
details of the Plan's participant-directed investment programs.
6
BROADWING COMMUNICATIONS INC 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
VALUATION OF INVESTMENTS
Investments are stated in the Plan's financial statements at fair value,
which is determined based on quoted market prices in an active market. The
investment in the money market fund is stated at cost, which approximates
fair value. Participant loans are stated at cost which approximates fair
value.
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 amounts reported in the financial statements
and the accompanying schedule. Actual results could differ from those
estimates.
3. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue
Service dated April 6, 1998, stating that the Plan is qualified under
Section 401(a) of the Internal Revenue Code and, therefore, the related
trust is exempt from taxation. Once qualified, the Plan is required to
operate in conformity with the Code to maintain its qualification. Although
the Plan has been amended since receiving the determination letter, the
Plan administrator and the Plan's tax counsel believe that the Plan is
designed and currently being operated in compliance with applicable
requirements of the Internal Revenue Code.
4. INVESTMENTS
The following investments represent 5% or more of the Plan's net assets
(dollars in thousands):
December 30, December 30,
2000 1999
Morgan Stanley Dean Witter Funds:
Enterprise Fund, 194,017 and
115,061 shares, respectively $ 3,289 $ 2,604
Emerging Growth Fund, 102,634 and
62,844 shares, respectively 6,443 5,405
Reserve Fund, 4,181,742 and
2,314,056 shares, respectively 4,182 2,314
Equity Income Fund, 341,940 and
239,093 shares, respectively 2,759 1,822
American Value Fund, 133,712 and
97,027 shares, respectively 2,590 2,257
International Magnum Fund, 120,432 and
105,247 shares, respectively 1,694 1,673
Value Fund, 187,798 and
193,001 shares, respectively 2,139 1,803
Common stock of Broadwing Inc., 231,390 and
132,028 shares, respectively 5,279 4,877
7
BROADWING COMMUNICATIONS INC 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
During 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value as follows (dollars in thousands):
Morgan Stanley Dean Witter Mutual Funds $ (3,884)
Broadwing Inc. Common Stock (2,416)
---------
$ (6,300)
=========
All Plan investments during 2000 and 1999 were participant-directed.
5. PLAN AMENDMENTS EFFECTIVE DURING 1999 AND 2000
A Plan amendment that became effective on December 30, 1999 changed the
year-end of the Plan to a 12-month period ending each December 30. Prior to
this change, the Plan's year was a calendar year. The effect of this change
was not considered material to the Plan's financial statements. In
addition, because of this change, the Plan had a "short" year that began on
January 1, 1999 and ended on December 30, 1999.
8
Broadwing Communications Inc. 401(K) Plan
Schedule of Assets Held for Investment Purposes at End of Year
EIN: 74-2644120 Plan Number 002
As of December 30, 2000
IDENTITY OF ISSUE DESCRIPTION OF ASSET CURRENT VALUE
- -----------------------------------------------------------------------------------------------------------------
The Morgan Stanley Dean Witter Group:
Enterprise Fund Mutual Fund $ 3,288,592
194,017 shares
Emerging Growth Fund Mutual Fund 6,443,347
102,634 shares
Corporate Bond Fund Mutual Fund 1,130,295
173,093 shares
Reserve Fund Money Market Fund 4,181,742
4,181,742 shares
Equity Income Fund Mutual Fund 2,759,465
341,940 shares
Real Estate Securities Fund Mutual Fund 596,874
44,246 shares
American Value Fund Mutual Fund 2,590,009
133,712 shares
Emerging Markets Fund Mutual Fund 711,633
82,270 shares
International Magnum Fund Mutual Fund 1,694,474
120,432 shares
Value Fund Mutual Fund 2,139,022
187,798 shares
Broadwing Inc.* Company Stock 5,278,584
231,390 shares
Participants' Loans Loans secured by vested
account balances with
interest rates ranging from
9.50% to 10.50% 860,284
------------
$ 31,674,321
============
* Party-in-interest
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the members of the Employees' Benefit Committee have duly caused this annual
report to be signed by the undersigned, thereunto duly authorized.
BROADWING COMMUNICATIONS INC.
401(K) PLAN
By /s/ Virginia Neill
Virginia Neill
Secretary
Employees' Benefit Committee
June 28, 2001