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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

For the quarterly period ended March 31, 2003

OR

For the transition period from                               to                              

Commission File Number 1-8519

BROADWING INC.

Incorporated under the laws of the State of Ohio

201 East Fourth Street, Cincinnati, Ohio 45202

I.R.S. Employer Identification Number 31-1056105

Telephone—Area Code (513) 397-9900

        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 ý No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ý No o

        At April 30, 2003, there were 218,952,105 common shares outstanding.

TABLE OF CONTENTS

Form 10-Q Part I

Broadwing Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(dollars in millions, Except Per Share Amounts)
(Unaudited)

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

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Broadwing Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions, Except Per Share Amounts)
(Unaudited)

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

2

Broadwing Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(Unaudited)

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

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Broadwing, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business, Liquidity and Accounting Policies

        Description of Business—Broadwing Inc. ("the Company") provides diversified telecommunications services through businesses in four segments: Broadband, Local, Wireless, and Other. During the first quarter of 2002, the Company sold substantially all of the assets of Cincinnati Bell Directory ("CBD"), which was previously reported in the Other segment.

        On February 22, 2003, certain Broadwing Communications Inc. ("BCI") subsidiaries entered into a definitive agreement to sell substantially all of the assets of its Broadband segment for approximately $129.3 million in cash, subject to certain purchase price adjustments, and the assumption of certain liabilities and operating contractual commitments to C III Communications, LLC and CIII Communications Operations, LLC (collectively "C III"). After the completion of the sale the only remaining BCI subsidiaries with significant operating assets will be Broadwing Technology Solutions Inc., an information technology consulting subsidiary, and Broadwing Telecommunications Inc., a subsidiary whose assets service the Other segment long distance business. The sale is subject to certain closing conditions, including approval by the Federal Communications Commission ("FCC") and relevant state public utility commissions. The Company will retain a 3% interest in the new company. Accordingly, the assets to be sold have been classified as "Assets held for sale" and the liabilities to be assumed have been classified as "Liabilities to be assumed in sale" as of March 31, 2003 (refer to Note 2).

        Basis of Presentation—The Condensed Consolidated Financial Statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, include all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for each period presented.

        The adjustments referred to above are of a normal and recurring nature except for those outlined in Notes 2, 3, 4, 13, 14, and as outlined below. Certain prior year amounts have been reclassified to conform to the current classifications with no effect on financial results. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations.

        The December 31, 2002 Condensed Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the notes thereto included in the Company's 2002 Annual Report on Form 10-K.

        Basis of Consolidation—The consolidated financial statements include the consolidated accounts of Broadwing Inc. and its majority-owned subsidiaries over which it exercises control. Significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

        Liquidity and Financial Resources—As of March 31, 2003, the amount of available borrowings to the Company under its revolving credit facility was $268.9 million. On March 26, 2003, the Company received $350 million of gross cash proceeds from the issuance of Senior Subordinated Discount Notes Due 2009 (the "16% notes"). Proceeds from the 16% notes, net of fees, were used to pay down borrowings under the Company's credit facilities. In conjunction with the financing, the Company's credit facilities were also amended and restated ("Amended and Restated Credit Agreement") to, among other things, extend the revolving commitment, revise the financial covenants, accelerate a portion of the term debt, and allow for the sale of substantially all of the assets of the Broadband segment. As a result of the terms of the amendment, the total borrowing capacity decreased from

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$1.825 billion as of December 31, 2002 to approximately $1.604 billion as of March 31, 2003 due to $1 million of scheduled repayments of the term debt facilities and a $220 million permanent prepayment of the outstanding term debt and revolving credit facilities from the 16% note proceeds.

        The Company believes that its borrowing availability under the amended credit facilities and cash generated by its operations will provide sufficient liquidity until the first quarter of 2006. However, the terms of the 16% notes and the amended credit facilities limit the Company's ability to make future investments in or fund the operations of BCI and its subsidiaries. Specifically, the Company and its subsidiaries other than BCI may not make investments in or fund the operations of BCI and its subsidiaries beyond an aggregate amount of $118 million after October 1, 2002. As of March 31, 2003, the Company had the ability to invest an additional $51.2 million in BCI and its subsidiaries based on these provisions. In addition, BCI's cash balance as of March 31, 2003 was $7.1 million, for total BCI liquidity of $58.3 million. The uncertainty of BCI's available liquidity resulting from these funding constraints, prompted BCI's independent accountants to include a going concern explanatory paragraph in their audit report filed along with the stand alone annual financial statements of BCI for the year ended December 31, 2002. The going concern explanatory paragraph means that, in the opinion of BCI's independent accountants, there is substantial doubt about BCI's ability to continue to operate as a going concern. If BCI is unable to finance its operations through closing of the asset sale and meet its remaining obligations, or if a sale is not consummated, it may be forced to seek protection from its creditors through bankruptcy proceedings.

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

        Unbilled Receivables—Unbilled receivables arise from local, broadband and wireless services rendered but not yet billed, in addition to network construction revenue that is recognized under the percentage-of-completion method. Network construction receivables are billable upon achievement of contractual milestones or upon completion of contracts. As of March 31, 2003 and December 31, 2002, unbilled receivables totaled $89.5 million and $91.0 million, respectively. Unbilled receivables of $50.5 million at March 31, 2003 and December 31, 2002, include both claims and signed change orders related to a construction contract that was terminated during the second quarter of 2002. The Company believes such amounts are valid and collectible receivables. Refer to Note 14 for a detailed discussion of this construction contract.

        Allowance for Uncollectible Accounts Receivable—The Company establishes provisions for uncollectible accounts receivable using both percentages of aged accounts receivable balances to reflect the historical average of credit losses and specific provisions for certain large, potentially uncollectible balances. The Company believes that its allowance for potential losses is adequate based on the methods described above. However, if one or more of the Company's larger customers were to default on its accounts receivable obligations or general economic conditions in the United States of America deteriorated, the Company could be exposed to potentially significant losses in excess of the provisions established.

        Property, Plant and Equipment—Property, plant and equipment is stated at cost. The Company's provision for depreciation of telephone plant is determined on a straight-line basis using the whole life and remaining life methods. Provision for depreciation of other property is based on the straight-line method over the estimated useful life. Repairs and maintenance expense items are charged to expense as incurred. The cost of removal for telephone plant is included in costs of products and services.

        Goodwill and Indefinite-Lived Intangible Assets—Goodwill represents the excess of the purchase price consideration over the fair value of assets acquired recorded in connection with purchase business combinations. Indefinite-lived intangible assets consist primarily of FCC licenses of the Wireless

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segment. Upon the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142") on January 1, 2002, the Company recorded a goodwill impairment charge of $2,008.7 million, net of tax, related to the Broadband segment and ceased amortization of remaining goodwill and indefinite-lived intangible assets as discussed in Note 3.

        Pursuant to SFAS 142, goodwill and intangible assets not subject to amortization are tested for impairment annually, or when events or changes in circumstances indicate that the asset might be impaired. For goodwill, a two-step impairment test is performed. The first step compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying value of a reporting unit exceeds its fair value, then the second step of the impairment test is performed to measure the amount of impairment loss. The second step compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The implied fair value is determined by allocating the fair value of a reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit goodwill is in excess of the implied fair value of that goodwill, then an impairment loss is recognized equal to that excess. For indefinite-lived intangible assets, the impairment test consists of a comparison of the fair value of the intangible asset with its carrying value. If the carrying value of an indefinite-lived asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

        Impairment of Long-lived Assets, Other than Goodwill and Indefinite lived Intangibles—The Company reviews the carrying value of long-lived assets, other than goodwill and indefinite lived assets discussed above, when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recognized when the estimated future undiscounted cash flows expected to result from the use of an asset (or group of assets) and its eventual disposition are less than its carrying amount. An impairment loss is measured as the amount by which the asset's carrying value exceeds its fair value.

        During the fourth quarter of 2002, the Company performed an impairment assessment of its Broadband segment assets as a result of the restructuring plan implemented during the quarter and the strategic alternatives being explored, including the potential sale of the Broadband business. This assessment considered all of the contemplated strategic alternatives for the Broadband segment, including a potential sale of assets, using a probability-weighted approach. Based on this assessment, it was determined that the long-lived assets of the Company's Broadband segment were impaired and the Company recorded a $2.2 billion non-cash impairment charge to reduce the carrying value of these assets. Of the total charge, $1,901.7 million related to tangible fixed assets and $298.3 million related to finite-lived intangible assets.

        Deferred Financing Costs—Deferred financing costs are costs incurred in connection with obtaining long-term financing; such costs are amortized as interest expense over the terms of the related debt agreements.

        Asset Retirement Obligations—The Company adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143") as of January 1, 2003. This statement requires entities to record the fair value of a legal liability for an asset retirement obligation in the period it is incurred. The removal cost is initially capitalized and depreciated over the remaining life of the underlying asset. The associated liability is accreted over the life of the underlying asset. Once the obligation is ultimately settled, any difference between the final cost and the recorded liability is recognized as income or loss on disposition. The Company determined the Local segment did not have a liability under SFAS 143, while the Wireless segment and Other segment did have a liability. The Company recorded a non-recurring increase to net income as a change in accounting principle as of January 1, 2003 of $85.9 million, net of tax. The Local segment recorded $86.3 million

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of income related to depreciation previously recorded for asset removal costs, offset by $0.4 million of expense recorded in the Wireless segment. Additionally, the Company recorded a liability for removal costs at fair value of approximately $2.6 million and an asset of approximately $2.3 million in the first quarter of 2003 related to the Wireless and Other segments. The asset will be depreciated straight line over the remaining lives of the assets, while the interest component of the liability will be accreted over the remaining lives of the assets.

        Revenue Recognition—Local, wireless and broadband transport service revenue is billed monthly, in advance, with revenue being recognized when earned. Both switched voice and data and Internet product revenue are billed monthly in arrears, while the revenue is recognized as the services are provided. Revenue from product sales and certain services is generally recognized upon performance of contractual obligations, such as shipment, delivery, installation or customer acceptance. Upfront fees for customer connection and activation are deferred and amortized into revenue on a straight-line basis over the average customer life. The related connection and activation costs, to the extent of the upfront fees, are deferred and amortized on a straight-line basis over the average customer life.

        Indefeasible right-of-use agreements ("IRU") represent the lease of network capacity or dark fiber and are recorded as unearned revenue at the earlier of the acceptance of the applicable portion of the network by the customer or the receipt of cash. The buyer of IRU services typically pays cash upon execution of the contract, and the associated IRU revenue is then recognized over the life of the agreement as services are provided, beginning on the date of customer acceptance. In the event the buyer of an IRU terminates a contract prior to the contract expiration and releases the Company from the obligation to provide future services, the remaining unamortized unearned revenue is recognized in the period in which the contract is terminated. IRU and related maintenance revenue are included in the broadband transport category of the Broadband segment.

        Construction revenue and estimated profits are recognized according to the percentage of completion method on a cost incurred to total costs estimated at completion basis. The method is used because the Company can make reasonably dependable estimates of revenue and costs applicable to various stages of a contract. As the financial reporting of these contracts depends on estimates that are continually assessed throughout the terms of the contracts, revenue recognized is subject to revision as the contracts near completion. Revisions in estimates are reflected in the period in which the facts that give rise to the revision become known and could impact revenue and costs of services and products. Construction projects are considered substantially complete upon customer acceptance. In November 2001, the Company announced its intention to exit the construction business upon completion of one remaining contract. That contract was terminated in 2002 and is currently in dispute as discussed in Note 14.

        Fiber Exchange Agreements—In connection with the development of its optical network, the Company entered into various agreements to exchange fiber usage rights. The Company accounts for agreements with other carriers to either exchange fiber asset service contracts for capacity or services by recognizing the fair value of the revenue earned and expense incurred. Exchange agreements accounted for non-cash revenue and expense, in equal amounts, of approximately $2 million in both the first quarter of 2003 and 2002.

        Income Taxes—The income tax provision consists of an amount for taxes currently payable and an expense (or benefit) for tax consequences deferred to future periods. In evaluating the carrying value of its deferred tax assets, the Company considers prior operating results, future taxable income projections, expiration of tax loss carryforwards and ongoing prudent and feasible tax planning strategies.

        Stock-Based Compensation—The Company accounts for stock-based compensation plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to

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Employees" ("APB 25"), and related interpretations. Compensation cost is measured under the intrinsic value method. Stock-based employee compensation cost is not reflected in net income (loss), as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income (loss) and earnings (loss) per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), to stock-based employee compensation in all periods presented.

        The weighted average fair values at the date of grant for the Company options granted to employees were $1.02 and $4.09 for the three months ended March 31, 2003 and 2002, respectively. Such amounts were estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

        Recently Issued Accounting Standards—In December 2002, the Financial Accounting Standards Board ("FASB") issued Financial Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). This interpretation of Accounting Research Bulletin No. 51, "Consolidated Financial Statements" ("ARB 51"), addresses consolidation by business enterprises of variable interest entities. ARB 51 requires that an enterprise's consolidated financial statements include subsidiaries in which the enterprise has a controlling financial interest. FIN 46 requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. FIN 46 is effective in the first fiscal year or interim period beginning after June 15, 2003, for variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. As the Company does not have any variable interest entities, FIN 46 is expected to have no impact on the Company's consolidated financial statements.

        In March 2003, the Emerging Issues Task Force ("EITF") reached consensus on EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables"("EITF 00-21"). This guidance addresses the determination of whether an arrangement involving multiple deliverables contains more than one unit of accounting. EITF 00-21 is effective for revenue arrangements entered into in fiscal

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periods beginning after June 15, 2003. EITF 00-21 is not expected to have a material impact on the Company's financial statements.

2. Assets Held for Sale and Liabilities to be Assumed in Sale

        On February 22, 2003, certain of Broadwing Communications' subsidiaries entered into a definitive agreement to sell substantially all of the assets of the Broadband segment to C III, for approximately $129.3 million in cash, subject to certain purchase price adjustments, and the assumption of certain liabilities and operating contractual commitments. After the completion of the sale the only remaining BCI subsidiaries with significant operating assets will be Broadwing Technology Solutions Inc., an information technology consulting subsidiary, and Broadwing Telecommunications Inc., a subsidiary whose assets service the Other segment long distance business. The sale is subject to certain closing conditions, including approval by the FCC and relevant state public utility commissions. The Company will retain a 3% interest in the new company. The Company anticipates the first stage closing of the sale to be completed during the third quarter of 2003.

        The Company classified the assets to be sold to C III as "Assets held for sale" and the liabilities to be assumed by C III as "Liabilities to be assumed in sale" as of the measurement date of March 1, 2003 and presented such amounts in the Condensed Consolidated Balance Sheet as of March 31, 2003, accordingly. The carrying value of the current and long-lived assets to be purchased totaled $94.4 million and $54.8 million, respectively as of March 31, 2003. The carrying value of the current and long-term liabilities to be assumed totaled $133.7 million and $284.8 million, respectively, as of March 31, 2003. The contractual commitments to be assumed include certain operating contractual commitments that are not included in the balance sheets. In accordance with Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), the property, plant, and equipment of $48.0 million that has been classified as assets held for sale are no longer being depreciated as of March 1, 2003.

        In connection with the purchase agreement, Broadwing Inc. agreed to deliver a parent guaranty in favor of the buyers, guaranteeing (1) all payments required to be made by the BCI selling subsidiaries under the purchase agreement and (2) the performance and observance and compliance with all covenants, agreements, obligations, liabilities, representations and warranties of the BCI selling subsidiaries under the purchase agreement. Also, Broadwing Inc. agreed to be jointly and severally liable with the BCI selling subsidiaries for their covenant to (1) (a) retire the 9% Notes and the 12¹/2% Notes or (b) to obtain a consent and/or waiver from holders of the 9% Notes and the 12¹/2% Notes with respect to the sale of its broadband business, in either case on or prior to the first stage closing date and (2) retire or exchange the 12¹/2% Preferred Stock or to obtain any necessary consents and/or waivers from the holders of the 12¹/2% Preferred Stock with respect to the sale of its broadband business, in either case on or prior to the first stage closing date. The Company's liability under its guaranty will not exceed the BCI selling subsidiaries' underlying liability pursuant to the purchase agreement.

        In addition, the Company entered into agreements with C III whereby the Company will continue to market BCI's broadband products to business customers and purchase capacity on the national network in order to sell long distance services, under the Cincinnati Bell Any Distance ("CBAD") brand, to residential and business customers in the Greater Cincinnati area market after the closing of the sale. Due to the ongoing cash flows under these arrangements, the sale of the Broadband business does not meet the criteria for presentation as a discontinued operation under SFAS 144.

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        Assets held for sale and liabilities to be assumed in sale consist of the following at March 31, 2003:

3. Goodwill and Intangible Assets

        On June 29, 2001 the FASB issued SFAS 142, which required cessation of the amortization of goodwill and indefinite-lived intangible assets and annual impairment testing of those assets. Intangible assets that have finite useful lives continue to be amortized. The Company adopted SFAS 142 on January 1, 2002, as required. The Company completed the initial impairment test for its Wireless and Broadband segments, during the first quarter of 2002, which indicated that goodwill of its Broadband segment was impaired as of January 1, 2002 and recorded an impairment charge of $2,008.7 million, net of taxes, effective as of January 1, 2002. The impairment charge is reflected as a cumulative effect of change in accounting principle, net of taxes, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). As of March 31, 2003 and December 31, 2002 goodwill totaled $40.9 million, of which $40.1 related to the Wireless segment and the remaining $0.8 million related to the Other segment.

        The following table details the components of the carrying amount of other intangible assets. Indefinite-lived intangible assets consist primarily of FCC licenses of the Wireless segment. Intangible assets subject to amortization expense consist primarily of licensed trademarks, acquired customer relationships and intangible assets associated with pension plans. In the fourth quarter of 2002, the

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Company recorded a non-cash intangible asset impairment charge of $298.3 million, related to its Broadband segment (refer to Note 1):

        The estimated intangible asset amortization expense for each of the fiscal years 2003 through 2007 is less than $1.0 million.

4. Restructuring and Other Charges

October 2002 Restructuring Charge

        In October 2002, the Company initiated a restructuring of BCI that is intended to reduce annual expenses by approximately $200 million compared to 2002 and enable the broadband business to become cash flow positive. The plan included initiatives to reduce the workforce by approximately 500 positions; reduce line costs by approximately 25% through network grooming, optimization, and rate negotiations; and exit the international wholesale voice business. In addition, Cincinnati Bell Telephone ("CBT"), a wholly owned subsidiary of the Company, initiated a restructuring to realign sales and marketing to better focus on enterprise customers. The CBT plan included initiatives to reduce the workforce by approximately 38 positions. The Company recorded restructuring charges of $14.7 million, consisting of $9.4 million related to employee separation benefits and $5.3 million related to contractual terminations. As of March 31, 2003, 461 employee separations had been completed which utilized reserves of $8.7 million, of which all was cash expended. Total cash expenditures in the first quarter of 2003 amounted to $3.1 million. The Company expects to substantially complete the restructuring plan for both CBT and BCI by June 30, 2003.

        The following table illustrates the activity in this reserve since December 31, 2002:

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November 2001 Restructuring Plan

        In November 2001, the Company adopted a restructuring plan which included initiatives to consolidate data centers, reduce the Company's expense structure, exit the network construction business, eliminate other nonstrategic operations and merge the digital subscriber line ("DSL") and certain dial-up Internet operations into the Company's other operations. Total restructuring and impairment costs of $232.3 million were recorded in 2001 related to these initiatives. The $232.3 million consisted of restructuring liabilities in the amount of $84.2 million and related non-cash asset impairments in the amount of $148.1 million. The restructuring charge was comprised of $21.4 million related to involuntary employee separation benefits, $62.5 million related to lease and other contractual terminations and $0.3 million relating to other exit costs.

        During the first quarter of 2002, the Company recorded additional restructuring charges of $16.5 million resulting from employee separation benefits and costs to terminate contractual obligations, which were actions contemplated in the original plan for which an amount could not be reasonably estimated at that time. During fourth quarter of 2002, a $1.0 million reversal was made to the restructuring reserve due to a change in estimate related to the termination of contractual obligations. In total, the Company expects this restructuring plan to result in cash outlays of $94.7 million and non-cash items of $153.1 million. The Company completed the plan as of December 31, 2002, except for certain lease obligations, which are expected to continue through December 31, 2005.

        The restructuring costs include the cost of involuntary employee separation benefits, including severance, medical and other benefits, related to 863 employees across all areas of the Company. As of December 31, 2002, all employee separations had been completed which utilized reserves of $22.4 million, $17.6 million of which was cash expended. Total cash expenditures in the first quarter of 2002 amounted to $2.6 million and related to the termination of contractual obligations.

        In connection with the restructuring plan, the Company performed a review of its long-lived assets to identify any potential impairments in accordance with Statement of Financial Accounting Standard No. 121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121"). The Company recorded a $148.1 million charge as an expense of operations according to SFAS 121, resulting from the write-off of certain assets related to the closing of data centers, consolidation of office space and curtailment of other Company operations.

        The following table illustrates the activity in this reserve since December 31, 2002:

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5. Debt

        The Company's debt consists of the following:

Credit Facilities (Broadwing Inc.)

General

        In November 1999, the Company obtained credit facilities totaling $1.8 billion from a group of lending institutions. The credit facilities were increased to $2.1 billion in January 2000 and again to $2.3 billion in June 2001. Total availability under the credit facilities decreased to $1.825 billion as of December 31, 2002, following a $335 million prepayment of the outstanding term debt facilities in the first quarter of 2002 (resulting from the sale of substantially all of the assets of Cincinnati Bell Directory), $5 million in scheduled repayments of the term debt facilities and $135 million in scheduled commitment reduction of the revolving credit facility. On March 26, 2003, the Company permanently prepaid $220 million in borrowings under its term and revolving credit facilities and made a $90 million payment under its revolving credit facility with the net cash proceeds from the 16% notes and amended certain terms of its credit facilities.

        As of March 31, 2003, the credit facilities consisted of $644 million in revolving credit maturing on March 1, 2006, having four equal quarterly scheduled commitment reductions during 2005 in an aggregate amount equal to $200 million; $516 million in Term Loan A, maturing in various amounts during 2003 and 2004; and $444 million in Term Loans B and C, maturing in various amounts between 2003 and 2007.

Use of Credit Facilities

        At March 31, 2003, Broadwing had drawn approximately $1,322 million from the credit facilities' capacity of $1,604 million, and had outstanding letters of credit totaling $13.1 million, leaving

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$268.9 million in additional borrowing capacity under its revolving credit facility. Borrowings under the credit facilities have been used to refinance debt and debt assumed as part of the merger with IXC in November 1999 and to fund capital expenditures and other working capital needs.

        Prior to December 2001, BCI relied solely on advances from Broadwing for funding of its operations and capital program in excess of cash provided by its operating activities. In December 2001, BCI's subsidiary, Broadwing Communications Services Inc., began borrowing funds directly from the credit facilities. As of March 31, 2003, Broadwing Communications Services Inc. had $223.0 million of borrowings under the Company's credit facilities. The amended terms of the credit facilities prohibit any additional credit facility borrowing by BCI and its subsidiaries.

Interest Rates

        Borrowings under the credit facilities bear interest, at LIBOR plus 425 basis points for the revolving credit facility and LIBOR plus 375 basis points for the term facilities.

Maturity and Amortization

        Loans under the Term Loan A facility mature on November 9, 2004, and require payments under a schedule providing for quarterly installments in aggregate annual amounts of $258 million and $258 million in 2003 and 2004, respectively. Loans under the Term Loan B facility mature on December 30, 2006 and require payments under a schedule providing for quarterly installments in aggregate annual principal amounts of $3.1 million, $3.1 million, $3.1 million and $298.5 million in 2003, 2004, 2005 and 2006, respectively. Loans under the Term Loan C facility mature on June 29, 2007 and require payments under a schedule providing for quarterly installments in aggregate annual principal amounts of $1.4 million, $1.4 million, $1.4 million, $67.0 million and $66.3 million in 2003, 2004, 2005, 2006 and 2007, respectively. The revolving credit facility matures on March 1, 2006, with a commitment reduction under a schedule providing for four equal quarterly reductions of $50 million each in 2005 in an aggregate amount equal to $200 million.

Fees

        The Company pays commitment fees to the lenders on the undrawn portions of its commitments at rates payable quarterly at a rate of 62.5 basis points of the unused amount of borrowing of the revolving credit facility. In the first quarter of 2003, these commitment fees were immaterial.

        In connection with the March 26, 2003 amendment of the terms of the credit facilities, the Company agreed to pay an amendment fee in an amount equal to 75 basis points for the revolving credit facility and 37.5 basis points for each of the Term Loan A, B and C credit facilities.

Prepayments

        Subject to certain limited exceptions, borrowings under the credit facilities are required to be prepaid in an amount equal to: (1) 75% of excess cash flow (as defined in the Amended and Restated Credit Agreement) for each fiscal year commencing with the fiscal year ended December 31, 2003; (2) 100% of net cash proceeds of certain sales, leases, transfers or other dispositions of assets by the Company or its subsidiaries subject to reinvestment rights in certain cases; (3) 100% of net cash proceeds from the issuance of certain debt obligations by the Company or any Subsidiary Guarantor (as defined in the credit facilities) and (4) 50% of the net cash proceeds from issuances of Broadwing Common Stock or preferred stock to the extent such net cash proceeds exceed $50 million. Voluntary prepayments of borrowings under the credit facilities and voluntary reductions of the unutilized parts of the credit facilities' commitments are, subject to proper notice, permitted at any time.

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Guarantees

        The Company and its non-BCI subsidiaries (other than Cincinnati Bell Telephone and certain Cincinnati Bell Wireless subsidiaries) guarantee borrowings made by Broadwing Inc. and Broadwing Communications Services Inc. under the credit facilities. BCI and its subsidiaries (other than the Mutual Signal subsidiaries) guarantee borrowings by Broadwing Communications Services Inc., but not borrowings by Broadwing Inc., under the credit facilities.

Security

        Obligations under the financing documents governing the credit facilities are collateralized by perfected first priority pledges and security interests in (1) substantially all of the equity interests of the Company's subsidiaries (other than Cincinnati Bell Wireless LLC and the Company's Mutual Signal subsidiaries) and (2) substantially all of the Company's and each of the Company's subsidiaries, (other than Cincinnati Bell Telephone, Broadwing Communications Real Estate Services, certain Cincinnati Bell Wireless subsidiaries and the Mutual Signal subsidiaries), other tangible and intangible assets, including, without limitation, real property and fixtures, accounts receivable, inventory, contract rights, equipment, intellectual property, general intangibles, investment property and proceeds of the foregoing; except that the assets of BCI and its subsidiaries only secure borrowings by Broadwing Communications Services, Inc., but not borrowings by Broadwing Inc., under the credit facilities.

Covenants

        The financing documents governing the credit facilities contain financial covenants that require certain debt to EBITDA (as defined in the Amended and Restated Credit Agreement), senior secured debt to EBITDA and interest coverage ratios, as well as limit its capital expenditures. The credit facilities also contain restrictive covenants that, among other things, limit the Company's ability to: incur additional debt or liens; pay dividends; repurchase Broadwing Common Stock; sell, lease, transfer or dispose of assets; make investments; and merge with another company. As of March 31, 2003 the Company was in compliance with all of the covenants of the credit facilities.

Events of Default

        The credit facilities provide for events of default customary to facilities of this type, including non-payment of principal, interest or other amounts; incorrectness of representations and warranties in any material respect; violation of covenants; cross-default and cross-acceleration; certain events of bankruptcy or insolvency; certain material judgments; invalidity of any loan or security document; change of control and certain ERISA events.

        The Company's amended and restated credit facilities provide that a bankruptcy or insolvency of BCI or any of its subsidiaries, a judgment against BCI or any of its subsidiaries and breaches by BCI or any of its subsidiaries of the negative covenants would not constitute an event of default with respect to Broadwing. These terms continue to allow remedies to be exercised against BCI and are treated as BCI events of default, but not events of default of the Company.

BCI Arrangements

        Pursuant to the amendment obtained in March 2003, future net cash investments or other cash infusions in BCI and its subsidiaries after October 1, 2002, will be limited (subject to certain exceptions) to an aggregate amount not to exceed the sum of (a) $118.0 million plus (b) the aggregate amount of net cash dividends and distributions paid by BCI and its subsidiaries to the Company after October 1, 2002 plus or minus (c) the net position of BCI and its subsidiaries under the Company's centralized cash management system. As of March 31, 2003, the Company had the ability to invest or otherwise provide an additional $51.2 million in funding to BCI. Also, corporate separateness covenants

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require the Company to maintain legal and operational separation between BCI and its subsidiaries, on the one hand, and Broadwing and its other subsidiaries, on the other hand.

9% Senior Subordinated Notes (Broadwing Communications)

        In 1998, Broadwing Communications Inc. (then known as IXC) issued $450.0 million of 9% senior subordinated notes due 2008 ("the 9% notes"). In January 2000, $404.0 million of these 9% notes were redeemed through a tender offer as a result of the change of control provision of the related indenture. Accordingly, $46.0 million of the 9% notes remain outstanding at March 31, 2003. The 9% notes are general unsecured subordinated obligations of Broadwing Communications Inc. and are not guaranteed by the Company. The 9% notes are subordinate in right of payment to all existing and future senior indebtedness of Broadwing Communications Inc. and its subsidiaries. The 9% notes indenture includes a limitation on the amount of indebtedness that Broadwing Communications Inc. can incur based upon the maintenance of either debt to operating cash flow or debt to capital ratios. The 9% indenture also provides that if Broadwing Communications Inc. incurs any additional indebtedness secured by liens on its property or assets that are subordinated to or equal in right of payment with the 9% notes, then Broadwing Communications Inc. must secure the outstanding 9% notes equally and ratably with such indebtedness. As of March 31, 2003, Broadwing Communications Inc. had the ability to incur additional debt under the terms of the 9% indenture. Interest on the 9% notes is payable semi-annually on each of April 15 and October 15.

        In March 2003, the Company reached an agreement with holders of more than two-thirds of the 9% notes to exchange these instruments for common stock of the Company. In order to consummate the exchange offer, the Company expects to issue approximately 11.1 million new shares of Broadwing Inc. common stock assuming 100% redemption of the outstanding notes.

Convertible Subordinated Notes (Broadwing Inc.)

        In July 1999, the Company issued $400 million of 10-year, convertible subordinated debentures to Oak Hill Capital Partners, L.P. These notes are convertible into common stock of the Company at a price of $29.89 per common share at the option of the holder. In March 2003, the Company entered into a supplemental indenture amending certain terms governing the Convertible Subordinated Notes. The supplemental indenture increased the paid-in-kind interest by 2¹/4% from March 2003 through redemption in July 2009, resulting in a per annum interest rate of 9%. Interest expense will be paid in cash semi-annually on January 21 and July 21 of each year at a rate of 6³/4% per annum, commencing on January 21, 2005. The additional 2¹/4% will accrete, or be added to the principal balance, through the redemption date in July 2009. The supplemental indenture also allows for the sale of substantially all of the assets of the Company's Broadband segment, provides that a bankruptcy of Broadwing Communications would not constitute an event of default, amends the definition of change in control by increasing the ownership threshold deemed to be a change in control from 20% of outstanding shares to 45% of outstanding shares and includes covenants restricting the ability of the Company to incur debt and consummate certain asset dispositions. Through March 31, 2003 and since inception, the Company has recorded $111.3 million in cumulative, non-cash interest expense and has adjusted the carrying amount of the debt accordingly. The Company incurred $8.5 million of non-cash interest expense related to these notes in the first quarter of 2003.

Cincinnati Bell Telephone Notes

        CBT has $270 million in corporate notes outstanding that are guaranteed by Broadwing Inc. These notes, which are guaranteed by Broadwing Inc. but no other subsidiaries of Broadwing Inc., have original maturities of up to 30 years and mature at various intervals between 2003 and 2028. As of March 31, 2003, $249.5 million ($250 million face amount, net of unamortized discount of $0.5 million) was considered long-term indebtedness. Interest rates on this indebtedness range from 6.24% to 7.27%.

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These notes also contain a covenant that provides that if CBT incurs certain liens on its property or assets, CBT must secure the outstanding notes equally and ratably with the indebtedness or obligations secured by such liens.

7¹/4% Senior Secured Notes (Broadwing Inc.)

        In 1993, the Company issued $50 million of 7¹/4% senior secured notes due 2023 (the "7¹/4% notes"). The indenture related to these 7¹/4% notes does not subject the Company to restrictive financial covenants. However, the 7¹/4% notes do contain a covenant that provides that if the Company incurs certain liens on its property or assets, the Company must secure the outstanding 7¹/4% notes equally and ratably with the indebtedness or obligations secured by such liens. The 7¹/4% notes are secured with assets by virtue of the lien granted under the Company's credit facilities. As of March 31, 2003, $49.6 million ($50 million face amount, net of unamortized discount of $0.4 million) of the 7¹/4% notes remain outstanding.

16% Senior Subordinated Discount Notes (Broadwing Inc.)

        On March 26, 2003, the Company received $350 million of gross cash proceeds from the issuance of the 16% notes. Proceeds from the 16% notes, net of fees, were used to pay down borrowings under the Company's credit facilities. Interest on the 16% notes will be payable semi-annually on each of June 30 and December 31 of 2003 through 2006 and then on each of June 30, 2007, January 20, 2008 and on the maturity date on January 20, 2009, whereby 12% is paid in cash and 4% is accreted on the aggregate principal amount. In addition, purchasers of the 16% notes received 17.5 million common stock warrants, each to purchase one share of Broadwing Common Stock at $3.00 each, which expire in March 2013. Of the total proceeds received, $47.5 million was allocated to the fair market value of the warrants using the Black-Scholes option-pricing model and was recorded as a discount on the 16% notes.

        The indenture governing the 16% notes restricts the Company's ability to make investments or other cash infusion in BCI and its subsidiaries. Specifically, the Company may not, among other things, (1) make any restricted payments to, (2) issue capital stock to, (3) make any investment in (including guaranteeing obligations or purchasing assets for BCI or making any payments in respect of operating expenses or net operating losses of BCI), or (4) allow any tax reimbursement for the benefit of BCI beyond an aggregate amount of $118.0 million (plus net cash dividends or net cash distributions made by BCI to the Company) after October 1, 2002. As of March 31, 2003, the Company had the ability to invest or otherwise provide an additional $51.2 million in BCI. This restriction does not apply to certain items permitted in the indenture.

        The indenture governing the 16% notes contains customary covenants for notes of this type, including, limitations on dividends and other restricted payments, dividend and other payment restrictions affecting its subsidiaries, indebtedness, asset dispositions, transactions with affiliates, liens, issuances and sales of capital stock of subsidiaries, issuances of senior subordinated debt, restrictions on dealing with BCI and its subsidiaries, and mergers and consolidations.

Capital Lease Obligations

        The Company leases facilities and equipment used in its operations, some of which are required to be capitalized in accordance with Statement of Financial Accounting Standard No. 13, "Accounting for Leases" ("SFAS 13"). SFAS 13 requires the capitalization of leases meeting certain criteria, with the related asset being recorded in property, plant and equipment and an offsetting amount recorded as a liability. The Company had $36.6 million in total indebtedness relating to capitalized leases as of March 31, 2003, $29.4 million of which was considered long-term.

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12¹/2% Senior Notes (Broadwing Communications)

        As of March 31, 2003, Broadwing Communications had outstanding $0.8 million of 12¹/2% senior notes maturing in 2005. These notes are not guaranteed by Broadwing Inc. The Company intends to call the $0.8 million aggregate principal amount outstanding on or prior to the completion of the sale of the assets to CIII.

Other Short-Term Debt

        The Company maintains a short-term revolving vendor financing arrangement for its IT Consulting business, which had an outstanding balance of $2.0 million as of March 31, 2003. The Company has the ability to borrow up to $6.0 million under this arrangement, which is secured by an irrevocable $2.0 million letter of credit against its revolving credit facility. The interest rate charged on the borrowings is variable based on the prime rate and was 6.0% as of March 31, 2003. The agreement expires on June 21, 2003.

Debt Maturity Schedule

        The following table summarizes the Company's annual maturities of debt and minimum payments under capital leases for the five years subsequent to March 31, 2003, and thereafter:

6. Financial Instruments

        Statement of Financial Accounting Standard SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") requires that all derivative instruments be recognized on the balance sheet at fair value. Fair values are determined based on quoted market prices of comparable instruments, if available, or on pricing models using current assumptions. On the date the financial instrument is entered into, the Company designates it as either a fair value or cash flow hedge.

        As of March 31, 2003, the Company's derivative contracts consisting solely of interest rate contracts have been determined to be highly effective cash flow hedges. In accordance with SFAS 133, unrealized gains and losses of highly effective cash flow hedges are recorded in other comprehensive income (loss) until the underlying transaction is executed.

Interest Rate Contracts

        From time to time the Company enters into interest rate swap agreements with the intent of limiting its exposure to movements in interest rates. Interest rate swap agreements are contractual agreements between two parties for the exchange of interest payment streams on a notional principal

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amount at an agreed upon fixed or floating rate, for a defined time period. These agreements are hedges against movements in the LIBOR rate, which determines the rate of interest paid by the Company on debt obligations under its credit facilities (refer to Note 5). Realized gains and losses from the interest rate swaps are recognized as an adjustment to interest expense in each period. The interest rate swap agreements in place as of March 31, 2003 expire throughout the remainder of 2003. At March 31, 2003, the interest rate swaps on notional amounts of $315 million were a liability with a fair value of $4.5 million, resulting in inception-to-date, after-tax net losses in other comprehensive (loss) income ("OCI") of $2.8 million. During the first quarter of 2003, the fair value of the interest rate swaps increased, causing a decrease to the associated liability carried on the balance sheet to $4.5 million from a liability of $7.2 million at December 31, 2002. Accordingly, a year-to-date, after-tax net gain of $1.7 million was recognized in OCI.

7. Concentration of Credit Risk and Major Customers

        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.

        Revenue from the Company's ten largest customers accounted for approximately 16% and 20% of total revenue in the first quarter of 2003 and 2002, respectively. One of the Company's ten largest customers was in Chapter 11 bankruptcy proceedings as of March 31, 2003. Total revenue from this customer approximated 2% and 4% of consolidated revenue during the first quarter in 2003 and 2002, respectively. In addition, a significant portion of the Company's revenue is derived from telecommunications carriers. Revenue from telecommunications carriers accounted for 25% and 33% of total revenue in the first quarter of 2003 and 2002, respectively.

        As discussed in Note 1 and Note 14, the Company had unbilled accounts receivable of $50.5 million, at March 31, 2003, from a single customer that was in dispute.

8. Earnings (Loss) Per Common Share from Continuing Operations

        Basic earnings (loss) per common share from continuing operations ("EPS") is based upon the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that would occur if common stock equivalents were exercised, but only to the extent that they are considered dilutive to the Company's earnings. The following table is a reconciliation of

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the numerators and denominators of the basic and diluted EPS computations for earnings (loss) from continuing operations for the following periods:

        The inclusion in the diluted shares calculation of 0.2 million shares related to unvested restricted stock and 0.8 million shares related to vested "in-the-money" stock options and warrants during the first quarter of 2003 had an immaterial impact on the diluted EPS calculation. The total number of potential additional shares outstanding related to stock options, warrants, restricted stock, and the assumed conversion of the Company's 6³/4% convertible preferred stock and 6³/4% convertible subordinated debentures was approximately 75 million and 55 million at March 31, 2003 and 2002, respectively, if all stock options and warrants currently outstanding were exercised, restrictions on restricted stock were to lapse and all convertible securities were to convert.

9. Minority Interest

        As of March 31, 2003, BCI had 395,210 shares of 12¹/2% Junior Exchangeable Preferred Stock ("12¹/2% Preferreds") that were carried on the Company's balance sheet at $413.7 million. The 12¹/2% Preferreds are mandatorily redeemable on August 15, 2009 at a price equal to their liquidation

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preference of $1,000 a share, plus accrued and unpaid dividends, which amounted to $438.4 million at March 31, 2003 including accrued dividends of $43.2 million. Through November 15, 1999, dividends on the 12¹/2% Preferreds were being effected through additional shares of the 12¹/2% Preferreds. On November 16, 1999, the Company converted to a cash pay option for these dividends. Dividends on the 12¹/2% Preferreds are classified as "Minority interest expense" in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and were approximately $12.4 million in the first quarter of 2003 and 2002. The 12¹/2% Preferreds are being accreted from their fair market value at the time of acquisition, to the redemption value. As such, the accretion of the difference between the carrying value and the mandatory redemption value is treated as an offsetting reduction to minority interest expense over the remaining life of the preferred stock.

        BCI deferred the August 15, 2002, November 15, 2002, February 15, 2003 and May 15, 2003 cash dividend payments on its 12¹/2% preferred stock, in accordance with the terms of the security. Due to the deferred cash dividend payment, the Company conserved approximately $12.4 million in cash during the first quarter of 2003 compared to the first quarter of 2002. The dividend will accrue, and therefore will continue to be presented as minority interest expense. The status of future quarterly dividend payments on the 12¹/2% preferred stock will be determined quarterly by the BCI's board of directors, but the board of directors does not anticipate paying a cash dividend in the foreseeable future.

        In March 2003, the Company reached an agreement with holders of more than two-thirds of BCI's 12¹/2% Preferreds to exchange this preferred stock for common stock of the Company. In order to consummate the exchange offer, the Company expects to issue approximately 14.1 million new shares of Broadwing Inc. common stock assuming 100% redemption of the outstanding instruments. Pursuant to the exchange offer, holders of the 12¹/2% preferred stock who tender their shares will not be paid any accumulated or unpaid dividends.

        AT&T Wireless Services Inc. ("AWS") maintains a 19.9% ownership in Cincinnati Bell Wireless LLC ("CBW"). The minority interest balance on the Condensed Consolidated Balance Sheets is adjusted as a function of AWS's 19.9% share of the net income (or loss) of CBW, with an offsetting amount being reflected in the Consolidated Statements of Operations and Comprehensive Income (Loss) under the caption "Minority interest expense."

10. Employee Stock Option Plan

        During 2003 and in prior years, certain employees and directors of the Company were granted stock options and other stock-based awards under the Company's Long-Term Incentive Plan ("Company LTIP"). In addition, during 2001, the Company converted a special equity bonus plan to stock appreciation rights to be granted under the Company LTIP. Under the Company LTIP, options are granted with exercise prices that are no less than market value of the stock at the grant date. Generally, stock options and stock appreciation rights have ten-year terms and vesting terms of three to five years. The number of shares authorized and available for grant under the Company LTIP were approximately 50.0 million and 14.7 million, respectively, at March 31, 2003.

        The Company granted 94,650 and 593,300 options to purchase Broadwing stock during the three months ended March 31, 2003 and 2002, respectively.

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        The following table summarizes the status of stock options granted to employees of the Company, outstanding at March 31, 2003:

11. Business Segment Information

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

        The Local segment provides local telephone service, network access, DSL and dial-up Internet access, data transport services and switched long distance, as well as other ancillary products and services to customers in southwestern Ohio, northern Kentucky and southeastern Indiana. This market consists of approximately 2,400 square miles located within an approximately 25-mile radius of Cincinnati, Ohio. Services are provided through the Company's CBT subsidiary.

        The Wireless segment includes the operations of the CBW subsidiary; a venture in which the Company owns 80.1% and AWS owns the remaining 19.9%. This segment provides advanced wireless digital personal communications and sales of related communications equipment to customers in the Greater Cincinnati and Dayton, Ohio operating areas.

        The Other segment combines the operations of CBAD and Cincinnati Bell Public Communications ("Public"). CBAD resells voice long distance service and Public provides public payphone services.

        The Broadband segment provides data and voice telecommunication services nationwide through the Company's Broadwing Communications ("BCI") subsidiary. These services are provided over approximately 18,700 route miles of fiber-optic transmission facilities. Broadband segment revenue is generated by broadband transport through private line and IRU agreements, Internet services utilizing technology based on Internet protocol ("IP"), and switched voice services provided to both wholesale and retail customers. The Broadband segment also offers data collocation, web hosting, information technology consulting ("IT consulting") and other services.

        On February 22, 2003, certain of Broadwing Communications' subsidiaries entered into a definitive agreement to sell substantially all of the assets of its Broadband segment to C III for approximately $129.3 million in cash, subject to certain purchase price adjustments, and the assumption of certain liabilities and operating contractual commitments. After the completion of the sale the only remaining BCI subsidiaries with significant operating assets will be Broadwing Technology Solutions Inc., an information technology consulting subsidiary, and Broadwing Telecommunications Inc., a subsidiary whose assets service the Other segment long distance business. The sale is subject to certain closing conditions, including approval by the Federal Communications Commission ("FCC") and relevant state public utility commissions. The Company will retain a 3% interest in the new company. Accordingly, the Company classified the assets to be sold to C III as "Assets held for sale" and the liabilities to be

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assumed by C III as "Liabilities to be assumed in sale" as of the measurement date of March 1, 2003 and the Company ceased depreciation, in accordance with SFAS 144 (refer to Note 2).

        For segment reporting purposes, the Local segment reports revenue for services provided by the Broadband segment in the Greater Cincinnati area. The Local segment records a corresponding cost of service related to such broadband revenue equal to approximately 80% of the revenue. The Broadband segment records revenue equal to the cost recorded in the Local segment. The cost recorded by the Local segment and revenue recorded by the Broadband segment are eliminated in consolidation.

        For segment reporting purposes, the Other segment reports revenue for long distance switched voice minutes provided by the Broadband segment to customers in the Greater Cincinnati area. The Other segment records a corresponding cost of service based on the market rate margins for the resale of long distance switched voice minutes to third parties. The Broadband segment records revenue equal to the cost recorded in the Other segment. The cost recorded by the Other segment and revenue recorded by the Broadband segment are eliminated in consolidation.

        Certain corporate administrative expenses have been allocated to segments based upon the nature of the expense and the relative size of the segment. The Company's business segment information is as follows:

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12. Supplemental Guarantor Information

        CBT, a wholly owned subsidiary of the Parent Company, has registered debt outstanding that is guaranteed by the Parent Company but not by other subsidiaries of the Parent Company. Substantially all of the Parent Company's income and cash flow is generated by its subsidiaries. Generally, funds necessary to meet the Parent Company's debt service obligations are provided by distributions or advances from its subsidiaries.

        The following information sets forth the condensed consolidating balance sheets of the Company as of March 31, 2003 and December 31, 2002 and the condensed consolidating statements of operations and cash flows for the periods ended March 31, 2003 and 2002.

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Condensed Consolidating Statements of Operations
(dollars in millions)