SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 1-8519
---------------------------
BROADWING
RETIREMENT SAVINGS PLAN
(formerly the Cincinnati Bell Inc.
Retirement Savings Plan)
---------------------------
BROADWING INC.
201 East Fourth Street
Cincinnati, Ohio 45202
BROADWING RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
Page
----
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 4-15
Schedules*:
Schedule of Assets Held for Investment Purposes at End of Year 16
Schedule of Reportable Transactions for the Year Ended December 30, 2000 17
*Other schedules are omitted because the information required is contained
in the financial statements.
Exhibits:
Consent of Independent Accountants
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Broadwing Retirement Savings 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 Retirement Savings 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 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.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes at End of Year and the Schedule of Reportable
Transactions are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are 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. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
June 15, 2001
1
BROADWING RETIREMENT SAVINGS 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 $215,447 $266,453
Employer contributions receivable 98 -
Employee contributions receivable 261 -
-------- --------
Net Assets Available for Benefits $215,806 $266,453
======== ========
See Notes to Financial Statements.
2
BROADWING RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 30, 2000
(THOUSANDS OF DOLLARS)
Net Assets Available for Benefits as of December 30, 1999 $266,453
ADDITIONS:
Employee contributions 7,290
Employer contributions 2,613
--------
Total contributions 9,903
Investment income:
Dividends 4,890
Interest 990
--------
Total additions 15,783
--------
DEDUCTIONS:
Benefits paid to participants 43,243
Transfers to other Company-sponsored plans and other transfers out, net 2,323
Net depreciation of investments 20,814
Administrative and other expenses paid by the Plan 50
--------
Total deductions 66,430
--------
Net decrease in Net Assets Available for Plan Benefits (50,647)
--------
Net Assets Available for Benefits as of December 30, 2000 $215,806
========
See Notes to Financial Statements.
3
BROADWING RETIREMENT SAVINGS PLANS
NOTES TO FINANCIAL STATEMENTS
(1) PLAN DESCRIPTION AND ACCOUNTING POLICIES:
a. GENERAL: On April 19, 2000, subsequent to completion of the merger
between Cincinnati Bell Inc. and IXC Communications, Inc., shareholders
of the former Cincinnati Bell Inc. voted to amend the company's
articles of incorporation in order to officially change the company's
name to Broadwing Inc. As such, any references in this Form 11-K to the
"Company" or "Broadwing" are considered to be references to either
Cincinnati Bell Inc. or Broadwing Inc. Also, during the 2000 Plan year,
the Company has changed the name of the plan to which this report
pertains (the "Plan") from the "Cincinnati Bell Inc. Retirement Savings
Plan" to the "Broadwing Retirement Savings Plan."
The Plan is, subject to certain exceptions, currently available to
salaried employees of the Company, Cincinnati Bell Telephone Company
and Cincinnati Bell Public Communications Inc., subsidiaries of the
Company, and to salaried and hourly employees of various other
subsidiary corporations of the Company, including Cincinnati Bell
Directory Inc., Cincinnati Bell Any Distance Inc., Cincinnati Bell
Telecommunications Services Inc., Cincinnati Bell Wireless LLC and
Zoomtown.com Inc.. Notwithstanding the foregoing, certain persons who
might be considered part of the above classes of employees are not
eligible for the Plan (including but not limited to co-op students,
interns, job bank employees and contingency employees). Employees who
are eligible for the Plan under the Plan's rules are called "eligible
employees" in this report.
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" ("SOP 99-3"). SOP 99-3, 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. Also during 1999, the Company
changed the Plan's fiscal year (the Plan's "plan year") from a calendar
year to a twelve month period that begins each December 31 and ends the
following December 30. The effect of these changes were not material to
the financial statements of the Plan.
The Plan is subject to the provisions of the Internal Revenue Code of
1986, as amended ("the Code"), and the Employee Retirement Income
Security Act of 1974, as amended.
The Plan is administered by the Company's Employees' Benefit Committee.
The Plan's trustee during the plan year that ended December 30, 2000
(the "2000 plan year") and the first two days of the plan year that
ends December 30, 2001 (the "2001 plan year") was T.
4
Rowe Price. On January 2, 2001, the Plan's trustee became Fidelity
Management Trust Company (together with its affiliates, "Fidelity") and
all Plan assets were transferred to the new trustee.
These notes provide a brief description of certain provisions of
the Plan and do not constitute a document under which the Plan is
operated, and, in the event of any conflict between these notes and the
Plan documents, the Plan documents shall control. Eligible employees
need to refer to the Plan documents and to the Plan's summary plan
description for details as to the Plan.
The financial statements of the Plan are presented under the accrual
method of accounting.
b. EMPLOYEE CONTRIBUTIONS: The Plan generally, under its current
provisions, permits each eligible employee to elect to contribute to
the Plan, in before-tax and after-tax dollars, any amount that is a
whole percent (up to 16%) of his or her compensation (as defined in and
subject to the rules of the Plan). An eligible employee's compensation
for each plan year (which is currently a 12-month period that ends each
December 30) is only considered under the rules of the Plan up to a
certain legal limit (such limit was approximately $160,000 for both the
plan year ending December 30, 2000 and the immediately preceding plan
year).
The amount of a Participant's before-tax contributions to the Plan for
any calendar year cannot in any event exceed a legal limit (which limit
was $10,500 and $10,000 for 2000 and 1999, respectively). Also, the
percentages of compensation saved as before-tax contributions by
certain highly compensated eligible employees for any plan year may be
further limited under legal rules so that on average they do not exceed
by too large a margin (as set by law) the average of the before-tax
savings contribution rates of the other eligible employees for such
plan year or the immediately preceding plan year. A similar limit
applies to certain highly compensated eligible employees with respect
to the combination of after-tax savings contributions and matching
contributions (as are described in Note (1)c below) made by or for them
under the Plan.
The savings contributions made by an eligible employee to the Plan are
allocated to an account of the employee under the Plan. An eligible
employee is always fully vested in the part of his or her Plan account
that is attributable to his or her own savings contributions (his or
her "Savings Account").
An eligible employee can specify the manner in which his or her Savings
Account shall be invested in the available funds under the Plan (see
Note (1)h below) and may elect to
5
change periodically the funds to which future savings contributions are
allocated and/or transfer amounts held under his or her Savings Account
from one fund to another.
An eligible employee is generally not subject to federal income tax on
the amount of his or her before-tax contributions to the Plan or on the
Plan's earnings that are allocated to his or her Savings Account until
and to the extent he or she receives such amounts from the Plan (and he
or she may then be able in certain circumstances to defer such tax
further by rolling such amounts over to an individual retirement
account or annuity (an "IRA") or another employer plan that accepts the
rollover).
c. EMPLOYER CONTRIBUTIONS: For employers whose employees participate in
the Plan ("the Employers"), matching contributions to the Plan are made
for any eligible employee who has been credited with at least one year
of eligibility service under the Plan in an amount equal to 66 2/3% of
the employee's basic savings contributions. An eligible employee's
basic savings contributions are, for this purpose, generally equal to
the portion of the employee's before-tax and after-tax savings
contributions for any applicable pay day that is not in excess of 6% of
his or her compensation (as defined in and subject to the rules of the
Plan). Such matching contributions are generally made on a bi-weekly
basis under the current policies of the Employers, and must be made at
a minimum on a monthly basis and could be pre-funded.
However, the rates of the combination of matching contributions and
after-tax savings contributions (measured as percentages of
compensation) made for or by certain highly compensated eligible
employees for any plan year may be limited under legal rules so that on
average they do not exceed by too large a margin (as set by law) the
average of the matching contribution and after-tax savings contribution
rates applicable to the other eligible employees for such plan year or
the immediately preceding plan year. Also, certain other legal limits
on the maximum amount of contributions that can be made by and for an
eligible employee with respect to any plan year may apply.
The Employers' matching contributions made to the Plan for an eligible
employee are allocated to the account of the employee under the Plan.
In general, an eligible employee is fully vested in the part of his or
her Plan account that is attributable to the matching contributions
made on his or her behalf (his or her "Matching Account") only if he or
she is credited with at least five years of vesting service under the
Plan (or three years in the case of CBAD employees). However, an
eligible employee may become vested in his or her Matching Account in
certain other situations, including if he or she continues to be
employed by the Employers after attaining age 65, if he or she
terminates employment with the Employers by reason of his or her total
disability or death, if he or she began work for the Employers before
1994 or in certain other situations.
6
An eligible employee's Matching Account shall generally be invested
solely in the Plan's Broadwing Inc. Shares Fund. Also, under the
current rules of the Plan, an eligible employee who has met certain age
and/or service requirements specified by the Company's Employees'
Benefit Committee may be allowed to transfer the amounts allocated to
his or her Matching Account to other investment funds available under
the Plan over a five-year period and, after passage of such five-year
period, be able to direct the investment of future matching
contributions made to the Plan on his or her behalf in the same manner
as his or her own savings contributions to the Plan are invested.
An eligible employee is generally not subject to federal income tax on
the amount of the matching contributions made to the Plan on his or her
behalf or on the Plan's earnings that are allocated to his or her
Matching Account until and to the extent he or she receives such
amounts from the Plan (and he or she may then be able in certain
circumstances to defer such tax further by rolling such amounts over to
an IRA or another employer plan that accepts the rollover).
d. ROLLOVERS: An eligible employee may, under the current provisions of
the Plan, cause a rollover to be made to the Plan from another
employer's tax-qualified savings, profit sharing or other employer plan
of a distribution the employee is entitled to receive from such other
plan, if the distribution meets certain conditions set forth in the
Plan and the Code.
Any such rollover contributions made to the Plan by an eligible
employee are allocated to the account of the employee under the Plan.
An eligible employee is always fully vested in the part of his or her
Plan account that is attributable to his or her rollover contributions
(his or her "Rollover Account").
An eligible employee can specify the manner in which his or her
Rollover Account shall be invested in the available funds under the
Plan (see Note (1)h below) and may elect to transfer amounts held under
his or her Rollover Account from one fund to another.
An eligible employee is generally not subject to federal income tax on
the amount of his or her rollover contributions to the Plan or on the
Plan's earnings that are allocated to his or her Rollover Account until
and to the extent he or she receives such amounts from the Plan (and he
or she may then be able in certain circumstances to defer such tax
further by rolling such amounts over to an IRA or another employer plan
that accepts the rollover).
7
e. DISTRIBUTIONS TO PARTICIPANTS: An eligible employee may receive all or
a portion of his or her account under the Plan while he or she is
employed by the Employers only in certain circumstances.
In general, an eligible employee can withdraw for any reason (1) the
portion of his or her Savings Account that is attributable to his or
her after-tax savings contributions as to which no matching
contributions were made by the Employers, (2) the portion of his or her
Savings Account that is attributable to his or her after-tax savings
contributions made before the plan year of the withdrawal and the two
immediately preceding plan years and as to which matching contributions
were made by the Employers, (3) the entire portion of his or her
Rollover Account, (4) the portion of his or her Matching Account
attributable to matching contributions made before the plan year of the
withdrawal and the two immediately proceeding plan years (provided the
employee is vested in his or her Matching Account) and (5) the portion
of his or her Savings Account that is attributable to his or her
after-tax savings contributions made for the plan year of the
withdrawal and the two immediately preceding plan years and as to which
matching contributions were made by the Employers (except that, if he
or she withdraws any amount described in clause (5), he or she will be
suspended from making savings contributions to the Plan for six months
and, unless the employee has attained age 65 or has been credited with
at least five years of vesting service under the Plan or began work for
the Employers before 1994, he or she will generally forfeit his or her
Matching Account).
Further, an eligible employee can withdraw amounts from the portion of
his or her Savings Account that are attributable to his or her
before-tax savings contributions (not including earnings on such
contributions that have been allocated to such account after December
31, 1998) if the withdrawal is required by reason of the employee's
hardship situation (and such hardship withdrawal meets the rules set
forth in the Plan that concern hardship withdrawals).
Other than for the above-described in-employment withdrawals, the
distribution of an eligible employee's account under the Plan will
generally occur only after the employee has terminated his or her
employment with the Employers for any reason, including a retirement,
discharge, quit, disability or death. Only the portion of the
employee's account under the Plan in which he or she is vested may be
distributed; the non-vested portion of such account is forfeited in
accordance with rules set forth in the Plan.
8
f. EMPLOYEE LOANS: Loans are available from the Plan to eligible employees
under the current provisions and policies of the Plan. Such loans are
subject to several conditions, certain of which are described below.
An eligible employee cannot have more than two outstanding loans from
the Plan at any time, and the employee may not be allowed to originate
more than two loans from the Plan during a single plan year.
The minimum amount of any loan to an eligible employee from the Plan is
$1,000, while the maximum amount of such a loan cannot exceed the
lesser of (1) 50% of the vested balance of the employee's account under
the Plan (exclusive of the amounts attributable to the employee's
savings contributions which were matched to some extent for the plan
year of the loan and the two immediately preceding plan years, the
matching contributions of the Employers made for his or her behalf with
respect to the plan year of the loan and the two immediately preceding
plan years and income earned after 1988 on the employee's before-tax
savings contributions to the Plan, all of which amounts are not
available for a loan) or (2) $50,000 (reduced by the highest
outstanding balance of loans made to the employee from the Plan and
other plans of the Employers during the one year period ending on the
day before the new loan is made). The Company's Employees' Benefit
Committee determines the interest rate charged by the Plan on a loan
made to an eligible employee, which must be a reasonable rate of
interest. In general, a loan rate is currently determined by adding 1%
to a prime lending rate in effect as of the first day of the calendar
quarter in which the loan is made.
During the plan year ending December 30, 2000 and the immediately
preceding plan year, interest rates on loans made under the Plan varied
between 8.75% and 10% per annum.
In general, any loan to an eligible employee must be repaid through
payroll deductions and be collateralized by the portion of the
employee's account under the Plan that is loaned to the employee. The
minimum term of any loan from the Plan to an eligible employee is 6
months, and the maximum term of a Plan loan is 59 months.
g. TEMPORARY CASH INVESTMENTS: Temporary cash investments include all cash
balances and highly liquid investments with maturities of three months
or less at the time of purchase. Temporary cash investments may be held
in any investment funds used by the Plan in order to meet the cash
needs of the Plan.
9
h. INVESTMENTS: There are currently nine investment funds available for
the investment of future contributions made by or for eligible
employees under the Plan: the Broadwing Stable Value Fund, the Spectrum
Income Fund, the Balanced Fund, the Equity Income Fund, the Equity
Index Fund, the Capital Appreciation Fund, the International Stock
Fund, the New America Growth Fund and the Broadwing Inc. Shares Fund.
During the 2000 plan year, all of the above funds were administered,
trusteed and/or advised by T. Rowe Price or a related subsidiary.
In addition, during the 1999 and 2000 plan years, the Plan held a
Convergys Corporation Stock Fund, which reflects common shares
of Convergys Corporation ("Convergys") that were received by the Plan
by reason of the Company's distribution of Convergys shares as of
December 31, 1998. Eligible employees who have interests in the
Convergys Corporation Stock Fund may transfer the balances they have in
such fund to other funds available under the Plan but cannot direct
future contributions made by or for their behalf to the Convergys
Corporation Stock Fund.
Each fund held under the Plan (except for the Broadwing Stable Value
Fund and the Broadwing Inc. Shares Fund) has always been, and is
currently, quoted in shares. Such shares generally represent the net
asset value of shares in the applicable mutual or other fund.
The Broadwing Stable Value Fund has always been quoted in units. These
units represented a proportional interest in the investment fund that
was held by the Plan and the Cincinnati Bell Inc. Savings and Security
Plan. The Broadwing Stable Value Fund initially had a unit value of
1.0000 established on July 1, 1992 and maintained a unit value of
1.0000 at all times. Any income, gains, losses, contributions or
withdrawals under the fund resulted in more or less units being
credited to the fund.
Prior to May 1, 2000, the Broadwing Inc. Shares Fund was quoted in
units, which represented a proportional interest in the fund that was
held by the Plan and the Cincinnati Bell Inc. Savings and Security
Plan. The Broadwing Inc. Shares Fund initially had a value of 1.0000
established on July 1, 1992, and its unit value fluctuated with the
performance of the underlying investments of such fund, which has
consisted primarily of Broadwing common shares and a small amount of
temporary cash investments. Effective May 1, 2000, the Broadwing Inc.
Shares Fund was changed so that it is quoted in shares (and not units).
At December 30, 1999, investments of the Broadwing Stable Value Fund
consisted in part of investment contracts that were reported at
estimated fair value, which approximated contract value (contributions
made plus interest accrued at the current rate,
10
less withdrawals and fees). These investment contracts were
nontransferable but provided for benefit-responsive withdrawals by Plan
participants at contract value. Benefit-responsive withdrawals were
provided for on a proportional basis by the issuers of the investment
contracts. The Plan trustee's valuation committee determined fair value
for these investments after considering such factors as the benefit
responsiveness of the investment contract and the ability of the
parties to the investment contract to perform in accordance with
contract terms. Transactions for the fund were accounted for on the
trade date. Interest income was accrued as earned. Realized and
unrealized gains and losses from security transactions were recorded on
an identified cost basis. At December 30, 2000, funds invested in the
Broadwing Stable Value Fund were invested solely in the T. Rowe Price
Stable Value Common Trust Fund.
The values of the Plan's investments on December 30, 2000 and 1999 were
determined as follows: 2000 and 1999 share value of the Broadwing
shares in the Broadwing Inc. Shares Fund and Convergys shares in the
Convergys Corporation Stock Fund, on the basis of the last published
sales price on December 30, 2000 and 1999 on the New York Stock
Exchange; shares in the Spectrum Income Fund, Balanced Fund, Equity
Income Fund, Equity Index Fund, Capital Appreciation Fund,
International Stock Fund, New America Growth Fund and any mutual fund
held under the Broadwing Stable Value Fund, on the basis of the last
published net asset value on December 30, 2000 and 1999; contracts with
insurance companies in the Broadwing Stable Value Fund, at principal
plus accrued earnings on December 30, 2000 and 1999; and loans to
participants made by the Plan, at the principal amount owed by the
participants on December 30, 2000 and 1999.
As presented in the Statement of Changes in Net Assets Available for
Benefits, the net depreciation in the value of Plan investments
consists of realized gains or losses, and the unrealized depreciation
of those same investments.
i. ADMINISTRATIVE EXPENSES: The administrative expenses of the Plan that
are not clearly related to a specific investment fund are generally
paid from Plan assets. These expenses are generally allocated and
charged to each eligible employee's account based on the proportion
that such employee's account balance under the Plan bears to all
account balances under the Plan.
j. FORFEITURES: Any amounts forfeited by employees under the Plan are
generally valued as of the end of the month in which the event causing
the forfeiture occurs and are applied to reduce subsequent
contributions of the Employers to the Plan. During 2000, employer
contributions were reduced by $144,000 from forfeited nonvested
amounts.
11
k. USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management of
the Plan to make estimates and assumptions that affect the reported
amounts of Net Assets Available for Benefits as of the date of the
Plan's financial statements and the reported Changes in Net Assets
Available for Benefits during the reporting period. Actual results
could differ from these estimates.
(2) AMENDMENT OR TERMINATION OF THE PLAN: While the Company has not expressed
any intent to terminate the Plan, it reserves the right to amend or
terminate the Plan at any time. In the event of the termination of the
Plan, all affected participants' accounts would become 100% vested.
(3) INVESTMENTS: The interest of an eligible employee in each type of
investment of the Plan on December 30, 2000 and 1999 is represented by
units or shares. The following investments represent five percent or more
of the Plan's net assets (dollars in thousands):
December 30,
-------------------------------------
2000 1999
---- ----
Broadwing Stable Value Fund, 13,926,592 and
15,268,680 units, respectively $ 13,927 $ 15,269
Equity Income Fund, 665,246 and
732,609 shares, respectively 16,412 18,073
Equity Index Fund, 319,385 and
350,548 shares, respectively 11,338 13,822
New America Growth Fund, 260,529 and
236,163 shares, respectively 9,319 11,284
Broadwing Inc. Shares Fund*, 3,262,173 shares and
25,491,966 units, respectively 76,082 124,013
Convergys Corporation Stock Fund, 1,554,466 and
2,051,777 shares, respectively 70,661 64,631
*The Broadwing Inc. Shares Fund consists of $43,592 and $71,547 in
nonparticipant-directed investments at December 30, 2000 and 1999,
respectively. Remaining amounts are participant-directed.
12
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 by $20,814 as follows (dollars in thousands):
Mutual funds $ (5,130)
Common Shares of the Company (43,047)
Common Shares of Convergys Corporation 27,363
----------
Total $ (20,814)
==========
(4) NONPARTICIPANT-DIRECTED INVESTMENTS: Information about the net assets and
the significant components of the changes in net assets relating to the non
participant-directed investments is as follows (dollars in thousands):
December 30, December 30,
Description 2000 1999
----------- ---- ----
Net Assets:
Company common shares $43,523 $68,707
Cash 69 2,826
Interest receivable - 14
------- --------
Total $43,592 $71,547
======= ========
Year Ended
December 30, 2000
-----------------
Changes in Net Assets:
Employee contributions $ 2,345
Employer contributions 1,378
Interest income 52
Net depreciation on Company common shares (26,394)
Transfers from other Company plans 29,093
Benefits paid to participants (9,135)
Transfers to participant-directed investments (25,294)
-----------
Total $ (27,955)
===========
13
(5) TAX STATUS: The Internal Revenue Service has issued a determination that
the Plan meets the requirements of Section 401(a) of the Code and is exempt
from federal income taxes under Section 501(a) of the Code. Such
determination letter did not involve a review of the effect on the Plan of
certain recent tax laws, and the Company currently intends to request a
further determination from the Internal Revenue Service that addresses the
effect of such laws.
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.
(6) PLAN AMENDMENTS: Plan amendments that were adopted, approved or became
effective subsequent to December 30, 1999:
o Change the name of the Plan to the "Broadwing Retirement Savings
Plan."
o Provide that no minimum period of service shall be required of any
eligible employee in order to participate in all aspects of the Plan.
o Reserve the right of the Employers to make nonelective contributions
to the Plan for any plan year beginning on or after December 31, 2000.
o Provide that the matching contributions to be made for any eligible
employee for any pay day occurring in a plan year that begins on or
after December 31, 2000 shall be equal to the sum of (1) 100% of the
portion of the employee's before-tax and after-tax savings
contributions to the Plan for such pay day that are not in excess of
3% of his or her plan compensation for such pay day and (2) 50% of the
portion of his or her before-tax and after-tax savings contributions
to the Plan for such pay day that are in excess of 3% but not in
excess of 5% of the employee's plan compensation for such pay day.
o Provide that any eligible employee who is credited with at least one
hour of service with the Employers on or after December 31, 2000 shall
be fully vested in his or her accounts under the Plan.
14
(7) SUBSEQUENT EVENTS: Effective as of January 2, 2001, all Plan assets and
Plan obligations were transferred to the Plan's new trustee, Fidelity.
Assets of individual funds administered, trusteed, and/or advised by T.
Rowe Price were transferred into fund options administered, trusteed,
and/or advised by Fidelity with similar investment strategies. The
following matrix identifies the T. Rowe Price administered, trusteed,
and/or advised fund option and the corresponding Fidelity administered,
trusteed, and/or advised fund option:
---------------------------------------- ---------------------------------------------------
T. Rowe Price Fund Option Corresponding Fidelity Fund Option
---------------------------------------- ---------------------------------------------------
---------------------------------------- ---------------------------------------------------
Stable Value Fund Fidelity Managed Income Portfolio II
---------------------------------------- ---------------------------------------------------
Spectrum Income Fund Fidelity U.S. Bond Index Fund
---------------------------------------- ---------------------------------------------------
Balanced Fund Fidelity Freedom 2020 Fund
---------------------------------------- ---------------------------------------------------
Equity Income Fund American Funds Fundamental Investors
---------------------------------------- ---------------------------------------------------
Equity Index 500 Fund Fidelity U.S. Equity Index Commingled Pool Fund
---------------------------------------- ---------------------------------------------------
Capital Appreciation Fund Strong Opportunity Fund
---------------------------------------- ---------------------------------------------------
International Stock Fund American Funds Europacific Growth Fund
---------------------------------------- ---------------------------------------------------
New America Growth Fund Fidelity Mid Cap Growth Fund
---------------------------------------- ---------------------------------------------------
Broadwing Inc. Shares Fund Broadwing Inc. Shares Fund
---------------------------------------- ---------------------------------------------------
Convergys Corp. Stock Fund Convergys Corp. Stock Fund
---------------------------------------- ---------------------------------------------------
On July 24, 2000, the Broadwing Inc. Board of Directors and Compensation
Committee adopted a corporate resolution to merge a plan maintained by a
subsidiary corporation of the Company, the Broadwing Communications Inc. 401(k)
Plan (the "BCI Plan"), with the Plan, as of December 31, 2000. Between December
31, 2000 and January 2, 2001, assets of the BCI Plan which totaled $32,274,321
were transferred from the BCI Plan's trustee, Morgan Stanley Dean Witter, to the
Plan's trustee, Fidelity.
15
BROADWING RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
AS OF DECEMBER 30, 2000
(dollars in thousands)
Number of
Shares or
Name of Issuer and Title of Issue Units Value
--------------------------------- ---------- -----
BROADWING INC. SHARES FUND:*
Participant-directed temporary cash investments $ 25
Participant-directed Broadwing Inc. shares # 1,393,735 shares 32,465
Nonparticipant-directed temporary cash investments 69
Nonparticipant-directed Broadwing Inc. shares # 1,868,438 shares 43,523
--------
TOTAL BROADWING INC. SHARES FUND 76,082
CONVERGYS CORPORATION STOCK FUND
Temporary cash investments 63
Convergys shares 1,554,466 shares 70,598
--------
TOTAL CONVERGYS CORPORATION STOCK FUND 70,661
T. ROWE PRICE SPECTRUM INCOME FUND 281,139 shares 3,026
T. ROWE PRICE BALANCED FUND 170,479 shares 3,268
T. ROWE PRICE EQUITY INCOME FUND 665,246 shares 16,412
T. ROWE PRICE EQUITY INDEX FUND 319,385 shares 11,338
T. ROWE PRICE CAPITAL APPRECIATION FUND 315,025 shares 4,395
T. ROWE PRICE INTERNATIONAL STOCK FUND 363,980 shares 5,285
T. ROWE PRICE NEW AMERICA GROWTH FUND 260,529 shares 9,319
BROADWING STABLE VALUE FUND:
T. Rowe Price Stable Value Common Trust Fund 13,926,592 units 13,927
LOAN FUND:
Loans to Participants 1,734
--------
GRAND TOTAL $215,447
========
# Party-in-interest to the Plan
* The cost basis associated with nonparticipant-directed accounts within
the Broadwing Inc. Shares Fund was $22,375 at December 30, 2000.
16
BROADWING RETIREMENT SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 30, 2000
Current
Value on
Identity of Purchase Selling Cost of Date of Net Gain
Party Involved Description of Asset Price Price Asset Transactions or (Loss)
--------------------------- -------------------- ------------- --------------- -------------- ---------------- ---------------
Broadwing Inc. Shares Fund Company Stock $ 30,903,369 $ 30,903,369 $ 30,903,369
Broadwing Inc. Shares Fund Company Stock $ 49,164,971 $ 76,179,361 $ 49,164,971 $ 76,179,361 $27,014,390
* The above totals reflect the net activity of 227 purchase and sale
transactions during the plan year.
17
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 RETIREMENT
SAVINGS PLAN
By /s/ Virginia Neill
Virginia Neill
Secretary
Employees' Benefit Committee
June 15, 2001