UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission File Number 001-16201
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
(Full name of plan)
GLOBAL CROSSING LTD.
(Name of issuer of securities held pursuant to the plan)
WESSEX HOUSE
45 REID STREET
HAMILTON HM12, BERMUDA
(Address of principal executive offices)
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
Page
----
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF
DECEMBER 31, 2000 AND 1999 2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE
YEAR ENDED DECEMBER 31, 2000 3
NOTES TO FINANCIAL STATEMENTS 4
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 2000 9
SIGNATURES 10
EXHIBIT INDEX 11
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrator of the
Frontier Group Employees' Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of Frontier Group Employees' Retirement Savings Plan (the Plan) as of December
31, 2000 and 1999, and the related statement of changes in net assets available
for benefits, for the year ended December 31, 2000. These financial statements
and the schedule referred to below are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2000 and 1999, and the changes in its net assets available for
benefits, for the year ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
accompanying index is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ ARTHUR ANDERSEN
- -------------------
Arthur Andersen
Rochester, New York
June 8, 2001
1
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2000 AND 1999
2000 1999
-------------- ----------------
Investments, at fair value:
Registered investment companies:
Putnam Income Fund $ 10,904,453 $ 10,360,302
Putnam Global Growth Fund 26,792,883 36,514,170
Putnam Voyager Fund 64,562,652 76,505,629
Putnam Fund for Growth & Income 7,228,389 5,565,976
Putnam Asset Allocation Fund Balanced Portfolio 2,352,245 1,736,067
Common/collective trust:
Putnam S&P 500 Index Fund 41,626,967 45,017,349
Stable Value Fund 40,791,370 44,038,661
Global Crossing Ltd. common stock 83,149,787 250,232,062
Participant loans 9,515,414 8,333,902
-------------- ----------------
Total investments 286,924,160 478,304,118
-------------- ----------------
Receivables:
Participant contributions 838,111 921,746
Employer contributions 326,980 337,689
-------------- ----------------
Total receivables 1,165,091 1,259,435
-------------- ----------------
Net assets available for benefits $ 288,089,251 $ 479,563,553
============== ================
The accompanying notes to financial statements are an integral part of these
statements.
2
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
Additions:
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 14,634,500
Realized gain, net 20,655,388
Participant loan interest income 694,843
Contributions:
Participant contributions 29,114,853
Employer contributions 10,158,834
-------------
Total additions 75,258,418
-------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 31,124,229
Excess contributions 29,843
Net depreciation in fair value
of investments 244,935,755
Loan fees 30,711
---------------
Total deductions 276,120,538
---------------
Net decrease prior to fund transfers (200,862,120)
Transfers from other Company sponsored plans 9,303,496
Transfers from non-Company sponsored plans 84,322
---------------
Net decrease (191,474,302)
Net assets available for benefits, beginning of year 479,563,553
---------------
Net assets available for benefits, end of year $ 288,089,251
===============
The accompanying notes to financial statements are an integral part of this
statement.
3
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
-----------------------
General
- -------
The following brief description of the Frontier Group Employees' Retirement
Savings Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the plan document for more complete information.
The Plan is a defined contribution plan established by the former Frontier
Corporation (now known as Global Crossing North America, Inc.) or ("the
Company") effective March 1, 1994. The Plan was amended and restated effective
January 1, 1999. The Plan is subject to the applicable provisions of the
Employee Retirement Income Security Act of 1974 (ERISA) as amended.
Participation
- -------------
All nonbargaining employees, except for temporary, summer, and leased employees
are eligible to participate in the Plan upon the first of the month after 30
days of employment.
The Plan allows the Company's Employee Benefit Committee to transfer participant
accounts from plans the participants are no longer eligible to participate into
a substantially similar 401(k) plan sponsored by the Company or any
corporation/business entity in which the Company has a 50 percent or more
ownership or profits interest. These transfers are included in the statement of
changes in net assets available for benefits, as transfers from other Company
sponsored plans.
Administration
- --------------
The Plan is administered by the Company's Employee Benefit Committee whose
members are appointed by the Company's Board of Directors. The Trustee of the
Plan is Putnam Fiduciary Trust Company (the Trustee).
Funding Policy
- --------------
The Plan provides participants the option of having their basic and supplemental
contributions to the Plan made on a salary reduction basis and on a deferred tax
basis. Upon enrollment in the Plan, a participant may direct contributions into
the following investment options.
. Putnam Income Fund - Funds are primarily invested in corporate bonds and U.S.
------------------
government and agency obligations.
. Putnam Global Growth Fund - Funds are primarily invested in foreign and
-------------------------
domestic common stocks.
. Putnam Voyager Fund - Funds are invested in emerging growth companies and
-------------------
opportunity stocks.
. Putnam Fund for Growth & Income - Funds are primarily invested in common
-------------------------------
stocks.
. Putnam Asset Allocation Fund Balanced Portfolio - Funds are invested in
-----------------------------------------------
stocks, bonds, and money market instruments.
. Putnam S&P 500 Index Fund - Funds are primarily invested in stocks listed in
-------------------------
the S&P 500 Index.
. Stable Value Fund - Funds are invested in a diversified portfolio of high-
-----------------
quality stable value investments offering price stability and liquidity.
. Global Crossing Ltd. common stock - Funds are invested in common stock of
---------------------------------
Global Crossing Ltd., parent company of Global Crossing North America, Inc.
4
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS-(Continued)
The shares of common stock in Global Crossing Ltd. are qualified employer
securities as defined by ERISA. Each individual's investment in these funds is
recorded in his or her account on a per share basis. All other funds are
tracked on a dollar value basis with each fund's activity allocated to
participants on a pro rata basis. Therefore the plan does not record activity
on a unit value basis.
The Plan provides that each participant may voluntarily make contributions
through a salary reduction agreement for whatever whole percentage a participant
chooses, up to a maximum of 16 percent, subject to maximum contributions imposed
by the Internal Revenue Code under Section 401(k).
Individual accounts which record the participant's contributions, the earnings
on all contributions, and the amount of the participant's interest in each fund,
are maintained for each participant. The participant's contributions during a
month are allocated directly to his or her individual account when the Trustee
receives contributions. Participants have the option to invest their
contributions in any of the funds and may change their allocation between funds
at any time.
Employer contributions consist of three components:
. Company Fixed Contributions - Each payroll period, the Company contributes
---------------------------
0.5 percent of the payroll period compensation for each of its employees who
is a participant in the Plan.
. Company Matching Contributions - Each payroll period, the Company contributes
------------------------------
an amount equal to 100 percent of participant contributions, up to the first
3 percent of compensation.
. Company Profit Sharing Contributions - Each plan year, the Company may elect
------------------------------------
to make a profit sharing contribution to participant accounts based on the
Company's performance.
There were no profit sharing contributions for 2000.
All employer contributions will be invested initially in Global Crossing Ltd.
common stock. All employer contributions invested in this fund must remain for
five years, while an active participant, after which time the participant may
elect to transfer the amounts to any of the other funds or retain the amounts in
this fund. If the participant terminates service with the Company, he or she
may elect to transfer the amounts in Global Crossing Ltd. common stock to any
other funds or retain the amounts in Global Crossing Ltd. stock.
Vesting
- -------
Participants are immediately 100 percent vested in their individual accounts and
all employer matching contributions and earnings thereon.
Payment of Benefits
- -------------------
Payment of benefits generally begins upon termination of service and attaining
normal retirement age (65). A participant may elect to receive either a lump-
sum amount equal to the value of his or her vested account balance, or a
participant may elect to receive installments over a period not to exceed 20
years. However, a participant who has reached age 59 1/2 , but who has not yet
terminated employment, may withdraw all or a portion of his or her accumulated
account balance in accordance with the terms of the Plan.
If upon termination of service, a participant does not attain normal retirement
age and the participant's vested account balance is greater than $5,000, the
participant may elect to receive a lump-sum amount, a direct rollover to a
qualified plan under Section 401 of the Internal Revenue Code(IRC), or a direct
rollover to a qualified Individual Retirement Account equal to the value of his
or her vested account balance. If the vested account balance is less than
$5,000, the balance will be distributed to the participant as soon as
administratively feasible.
5
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS-(Continued)
Individual Participant Loans
- ----------------------------
Loans are available to participants in the Plan on a nondiscriminatory basis.
Participant loans cannot exceed the lesser of 50 percent of the vested amounts
in the participant's account or $50,000. A participant may only have two loans
outstanding, and they are treated as directed investments by the borrower with
respect to his or her account. The interest rate on loans is established based
on the prime rate, under current plan provisions. Interest paid on the loan is
credited to the borrower's account and the participant does not share in the
income of the Plan's assets with respect to the amounts outstanding. Loans have
a term of no more than five years except that a loan may be granted for a period
not to exceed 25 years if the proceeds are used to purchase the participant's
principal residence.
Plan Termination
- ----------------
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of plan termination,
participants will become 100 percent vested in their accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Basis of Accounting
- -------------------
The financial statements have been prepared on the accrual basis of accounting.
Contributions and Benefits Paid
- -------------------------------
Contributions are recorded by the Plan when withheld from employees and accrued
by the Company. Benefits are recorded when paid.
Participants may receive distributions in cash or in common stock for amounts
invested in Global Crossing Ltd. common stock. Purchases and sales of
securities are recorded on the trade date.
Investments and Investment Income
- ---------------------------------
Investments in registered investment companies and employer securities are
stated at fair value, measured by quoted market prices. Investments in
common/collective trust funds are stated at estimated fair values, which
represent the net asset value of shares held by the Plan at year-end.
Adjustments for unrealized appreciation or depreciation of such values are
included in the operating results of the Plan. Participant loans are valued at
cost, which approximates fair value.
Interest and dividend income is recorded as earned on an accrual basis.
The plan provides for investments which, in general, are exposed to various
risks, such as interest rate, credit, and overall market volatility. Due to the
level of risk associated with certain investment securities, it is reasonably
possible that changes in the values of investment securities will occur in the
near term, and such changes could materially affect the amounts reported in the
statement of net assets available for benefits.
Administrative Expenses
- -----------------------
Significant expenses associated with the Plan are paid by the Company.
6
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS-(Continued)
Management's Use of Estimates
- -----------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.
3. PARTY-IN-INTEREST TRANSACTIONS
------------------------------
The Plan's holdings of Global Crossing Ltd. common stock, the Putnam Investment,
Inc. common/collective trust, and the Putnam Investment, Inc. registered
investment company funds are party-in-interest investments.
As of December 31, 2000, the Plan held 5,808,912 shares of Global Crossing Ltd.
common stock at a fair market value of $83,149,787. As of December 31, 1999,
the Plan held 5,004,641 shares of Global Crossing Ltd. common stock at a fair
market value of $250,232,062.
4. FEDERAL INCOME TAX STATUS
-------------------------
The Plan obtained its latest determination letter on February 14, 1995, in which
the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the IRC. The Plan has been
amended since receiving the determination, however, the plan administrator and
the Plan's tax counsel believe the Plan is currently designed and being operated
in compliance with the applicable requirements of the IRC. Therefore, they
believe that the Plan was qualified and the related trust was tax-exempt as of
the financial statement date.
5. BENEFITS PAYABLE
----------------
In accordance with generally accepted accounting principles, obligations to
terminated employees for claims approved but not yet paid are not shown as a
plan liability (nor as a reduction of net assets available for benefits) and
totaled $855,286 and $674,590 at December 31, 2000 and 1999, respectively.
6. INVESTMENTS
-----------
The fair market value of the individual investments that represent 5 percent or
more of the net assets available for plan benefits at December 31, 2000 and 1999
is as follows:
2000 1999
------------ ------------
Putnam Global Growth Fund $ 26,792,883 $ 36,514,170
Putnam Voyager Fund 64,562,652 76,505,629
Putnam S&P 500 Index Fund 41,626,967 45,017,349
Stable Value Fund 40,791,370 44,038,661
Global Crossing Ltd. common stock 83,149,787 250,232,062
------------ ------------
$256,923,659 $452,307,871
============ ============
During 2000, the Plan's investments (including unrealized and realized gains and
losses on investments bought and sold, as well as held during the year)
depreciated in value by $224,280,367 as follows:
Mutual funds $ 33,736,960
Common stock 186,647,439
Common/collective trust 3,895,968
------------
$224,280,367
------------
7
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS-(Continued)
7. SUBSEQUENT EVENT
----------------
Effective January 1, 2001, the Plan was amended and restated as the Global
Crossing Employees' Retirement Savings Plan to include all eligible employees on
the U.S. payroll of Global Crossing Ltd. and its participating affiliates. This
includes all employees who were already participating in the Frontier Group
Employees' Retirement Savings Plan.
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
---------------------------------------------------
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500 Schedule H at December 31, 2000:
Net assets available for benefits per the financial statements $288,089,251
Less: Benefit obligations payable 855,286
------------
Net assets available for benefits per the Form 5500 $287,233,965
============
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 Schedule H for the year ended December 31,
2000:
Benefits paid to participants per the financial statements $31,124,229
Add: Amounts payable at December 31, 2000 855,286
Less: Amounts payable at December 31, 1999 674,590
-----------
Benefits paid to participants per Form 5500 Schedule H $31,304,925
===========
8
FRONTIER GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2000
EIN: 16-0613330
PN: 021
Current
Number Value
of December 31,
Shares 2000
--------------- ----------------
Interests in registered investment companies:
* Putnam Income Fund 1,709,162 $ 10,904,453
* Putnam Global Growth Fund 2,458,063 26,792,883
* Putnam Voyager Fund 2,770,929 64,562,652
* Putnam Fund for Growth & Income 370,117 7,228,389
* Putnam Asset Allocation Fund Balanced Portfolio 217,398 2,352,245
----------------
Total interests in registered investment companies 111,840,622
---------------
Common/collective trust:
* Putnam S&P 500 Index Fund 1,313,983 41,626,967
Stable Value Fund 40,791,370 40,791,370
---------------
82,418,337
---------------
Common stock:
* Global Crossing Ltd. 5,808,912 83,149,787
---------------
Participant loans:
Participant loan accounts (rate 6.0% - 9.0%)
(maturities range from 2001 to 2026) 9,515,414
---------------
Total investments $ 286,924,160
===============
* Denotes party-in-interest
The accompanying notes to financial statements are an integral part of this
schedule.
9
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Employee Benefit Committee has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
Frontier Corporation
Employees' Retirement Savings Plan
Dated: June 29, 2001 By: /s/ LINDA A. DEBALSO
--------------------------------------------------
Linda A. DeBalso
Vice President Compensation and Benefits
10
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -------
23 Consent of Arthur Andersen (filed herewith).
11