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
BARGAINING UNIT 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 BARGAINING UNIT
EMPLOYEES' RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBTS
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 Bargaining Unit
Employees' Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of Frontier Group Bargaining Unit 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 BARGAINING UNIT
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 $ 2,085,305 $ 1,869,294
Putnam Global Growth Fund 4,195,816 6,182,295
Putnam Voyager Fund 10,126,149 13,036,784
Putnam Fund for Growth & Income 1,267,776 1,113,352
Putnam Asset Allocation Fund Balanced Portfolio 622,705 601,435
Common/collective trust:
Putnam S&P 500 Index Fund 6,829,410 7,520,242
Stable Value Fund 10,149,638 10,150,583
Global Crossing Ltd. common stock 22,415,179 66,654,834
Participant loans 3,577,210 2,842,254
------------ ------------
Total investments 61,269,188 109,971,073
------------ ------------
Receivables:
Participant contributions 107,148 264,638
Employer contributions 48,757 90,870
------------ ------------
Total receivables 155,905 355,508
------------ ------------
Net assets available for benefits $ 61,425,093 $110,326,581
============ ============
The accompanying notes to financial statements are an integral part of these
statements.
2
FRONTIER GROUP BARGAINING UNIT
EMPLOYEES' RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 2,573,198
Realized gain, net 4,447,399
Participant loan interest income 266,310
Contributions:
Participant contributions 7,252,742
Employer contributions 3,286,916
-------------
Total additions 17,826,565
-------------
Deductions from net assets attributed to:
Benefits paid to participants 3,998,231
Excess contributions 290,024
Net depreciation in fair value of investments 61,386,493
Loan fees 20,227
-------------
Total deductions 65,694,975
-------------
Net decrease prior to fund transfers (47,868,410)
Transfers to other Company sponsored plans (1,033,078)
-------------
Net decrease (48,901,488)
Net assets available for benefits, beginning of year 110,326,581
-------------
Net assets available for benefits, end of year $ 61,425,093
=============
The accompanying notes to financial statements are an integral part of this
statement.
3
FRONTIER GROUP BARGAINING UNIT
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
-----------------------
General
- -------
The following brief description of the Frontier Group Bargaining Unit 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 bargaining unit employees covered by a collective bargaining agreement,
except for temporary, summer, and leased employees, are eligible to participate
in the Plan based upon respective collective bargaining agreements.
The Plan allows the Company's Employee Benefit Committee to transfer participant
accounts from plans the participants are no longer eligible to participate in to
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 to 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 that are
-------------------------
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 BARGAINING UNIT
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 this fund 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 contribution
provisions 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 allocations between funds
at any time.
Employer matching and nonmatching contributions are made in accordance with each
participating employer's bargaining unit agreement.
Vesting
- -------
Participants are immediately 100 percent vested in their voluntary contributions
and actual earnings thereon. Vesting in the remainder of their accounts is based
on years of continuous service. Participants should refer to their respective
bargaining agreements for vesting requirements of employer contributions.
Forfeited nonvested accounts are used to reduce future employer contributions.
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 vested 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.
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.
5
FRONTIER GROUP BARGAINING UNIT
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
Plan Termination
- ----------------
Although it has not expressed any intention 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.
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.
6
FRONTIER GROUP BARGAINING UNIT
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
As of December 31, 2000, the Plan held 1,566,126 shares of Global Crossing Ltd.
common stock at a fair market value of $22,415,179. As of December 31, 1999, the
Plan held 1,333,096 shares of Global Crossing common stock at a fair market
value of $66,654,834.
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 letter, 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 $39,390 and $158,704 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 $ 4,195,816 $ 6,182,295
Putnam Voyager Fund 10,126,149 13,036,784
Putnam S&P 500 Index Fund 6,829,410 7,520,242
Stable Value Fund 10,149,638 10,150,583
Global Crossing Ltd. common stock 22,415,179 66,654,834
------------ -------------
$ 53,716,192 $ 103,544,738
============ =============
During 2000, the Plan's investments (including realized and unrealized gains and
losses on investments bought and sold, as well as held during the year)
depreciated in value by $56,939,094 as follows:
Mutual funds $ 5,556,360
Common stock 50,664,326
Common/collective trust 718,408
-------------
$ 56,939,094
=============
7. 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 $ 61,425,093
Less: Benefit obligations payable 39,390
----------------
Net assets available for benefits per the Form 5500 $ 61,385,703
================
7
FRONTIER GROUP BARGAINING UNIT
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
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 $ 3,998,231
Add: Amounts payable at December 31, 2000 39,390
Less: Amounts payable at December 31, 1999 158,704
----------------
Benefits paid to participants per Form 5500 Schedule H $ 3,878,917
================
8
FRONTIER GROUP BARGAINING UNIT
EMPLOYEES' RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2000
EIN: 16-0613330
PN: 022
Current
Number Value
of December 31,
Shares 2000
---------------- ---------------
Interests in registered investment companies:
* Putnam Income Fund 326,850 $ 2,085,305
* Putnam Global Growth Fund 384,937 4,195,816
* Putnam Voyager Fund 434,599 10,126,149
* Putnam Fund for Growth & Income 64,914 1,267,776
* Putnam Asset Allocation Fund Balanced Portfolio 57,551 622,705
-----------
* Total interests in registered investment companies 18,297,751
-----------
Common/collective trust:
* Putnam S&P 500 Index Fund 215,575 6,829,410
Stable Value Fund 10,149,638 10,149,638
-----------
16,979,048
-----------
Common stock:
* Global Crossing Ltd. 1,566,126 22,415,179
-----------
Participant loans:
Participant loan accounts (rate 8.5% - 9.5%) 3,577,210
-----------
(Maturities range from 2001 to 2025)
Total investments $61,269,188
===========
* 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
Bargaining Unit Employees'
Retirement Savings Plan
By: /s/ LINDA A. DEBALSO
---------------------------------------
Linda A. DeBalso
Dated: June 29, 2001 Vice President Compensation and Benefits
10
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -------
23 Consent of Arthur Andersen (filed herewith).
11