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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
For Annual Report of Employee Stock Purchase, Savings and Similar Plans Pursuant
to Section 15 (d) of the Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number 0-30162
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
RECKSON MANAGEMENT GROUP, INC. 401(K) PLAN
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(631) 694-6900
B. Name of issuer of the securities held pursuant of the plan and the address
of its principal executive office:
FRONTLINE CAPITAL GROUP
1350 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 931-8000
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<PAGE>
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Reckson Management Group, Inc. 401(k) Plan
Years Ended December 31, 1999, 1998, 1997 (unaudited), and 1996 (unaudited) with
Report of Independent Auditors
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Financial Statements
and Supplemental Schedules
Years ended December 31, 1999, 1998, 1997 (unaudited), and 1996 (unaudited)
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors...........................................................................1
Financial Statements
Statements of Net Assets Available for Benefits as of
December 31, 1999, 1998, 1997 (unaudited), and 1996 (unaudited).....................................2
Statements of Changes in Net Assets Available for Benefits for the Years Ended
December 31, 1999, 1998, 1997 (unaudited), and 1996 (unaudited).....................................3
Notes to Financial Statements............................................................................4
Supplemental Schedules
Assets Held for Investment as of
December 31, 1999..................................................................................10
Assets Held for Investment as of December 31, 1998......................................................11
Schedule of Reportable Transactions for the Year Ended
December 31, 1998..................................................................................12
</TABLE>
<PAGE>
Report of Independent Auditors
Plan Administrator
Reckson Management Group Inc. 401(k) Plan
Retirement and Benefits Committee
We have audited the accompanying statements of net assets available for benefits
of Reckson Management Group, Inc. 401(k) Plan as of December 31, 1999 and 1998,
and the related statements of changes in net assets available for benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits of the 1999 and 1998 financial statements referred to above were
performed for the purpose of forming an opinion on those financial statements
taken as a whole. The accompanying supplemental schedules of assets held for
investment as of December 31, 1999 and 1998, and reportable transactions for
1998 are presented for purposes of additional analysis and are not a required
part of the basic financial statements but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan's management.
The supplemental schedules have been subjected to the auditing procedures
applied in our audits of the 1999 and 1998 financial statements and, in our
opinion, are fairly stated in all material respects in relation to those
financial statements taken as a whole.
/s/ Ernst & Young
New York, New York
June 28, 2000
1
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998 1997 1996
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited) (Unaudited)
ASSETS
Investments (Note 3) $ 3,386,260 $ 1,139,350 $ 924,988 $ 606,829
Receivables:
Participant contributions 46,883 40,602 31,592 4,315
Participant loans 56,527 9,512 26,593 5,445
Cash 235,329 220,727 165,165 123,400
-----------------------------------------------------------------------
Net assets available for benefits $ 3,724,999 $ 1,410,191 $ 1,148,338 $ 739,989
=======================================================================
</TABLE>
See accompanying notes.
2
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited) (Unaudited)
Additions:
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in
fair value of investments
(Note 3) $ 1,367,327 $ (156,320) $ 58,862 $ 84,351
Interest and dividends 104,241 51,432 76,430 39,501
-----------------------------------------------------------------------
1,471,568 (104,888) 135,292 123,852
Participant contributions 1,042,157 519,643 298,058 324,003
-----------------------------------------------------------------------
Total additions 2,513,725 414,755 433,350 447,855
-----------------------------------------------------------------------
Deductions:
Deductions from net assets attributed
to:
Benefits paid to participants (198,917) (152,902) (25,001) (20,202)
-----------------------------------------------------------------------
Total deductions (198,917) (152,902) (25,001) (20,202)
-----------------------------------------------------------------------
Net increase 2,314,808 261,853 408,349 427,653
Net assets available for benefits:
Beginning of year 1,410,191 1,148,338 739,989 312,336
-----------------------------------------------------------------------
End of year $ 3,724,999 $1,410,191 $1,148,338 $ 739,989
=======================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Notes To Financial Statements
Years ended December 31, 1999, 1998,
1997 (Unaudited) and 1996 (Unaudited)
1. DESCRIPTION OF THE PLAN
The following description of the Reckson Management Group, Inc. 401(k) Plan (the
"Plan") provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
GENERAL
The purpose of the Plan is to provide eligible employees of Reckson Management
Group, Inc. (the "Employer") and its related companies (known as "Affiliates")
that participate in the Plan (collectively, "Participating Employers") with an
opportunity to increase their savings on a tax-favored basis. Shares of the
Class A common stock of Reckson Associates Realty Corp. ("Reckson") and the
common stock of Frontline Capital Group ("FLCG") are among the investment
options offered to participants pursuant to the Plan.
The Plan is a defined contribution plan sponsored by the Employer covering all
eligible full-time employees of the following Participating Employers who have
completed six months of service and are age twenty-one or older. The following
Participating Employers participated in the Plan during the years ended December
31, 1999 and 1998:
Frontline Capital Group
Reckson Executive Centers, LLC
Reckson Management Group, Inc.
Reckson Construction Group, Inc.
RANY Management Group, Inc.
Reckson Strategic Venture Partners, LLC
Additionally, the Plan is subject to the provisions of the Employee Retirement
Income Security Act ("ERISA"). FLCG and Reckson Strategic Venture Partners, LLC
ceased to be affiliates of the Employer under ERISA, at the time they were
spun-off by Reckson, in June, 1998.
4
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS
Each year, participants may contribute up to 15 percent of pretax annual
compensation, as defined in the Plan (subject to the limitations of section
401(k) of the Internal Revenue Code). Participants may also contribute amounts
representing distributions from other qualified benefit or defined contribution
plans. Participants direct the investment of their contributions into various
investment options offered by the Plan. As of December 31, 1999, the Plan
offered 17 mutual funds, the Class A common stock of Reckson and the common
stock of FLCG as investment options for participants. Additional profit sharing
amounts may be contributed at the option of the Participating Employers.
Contributions are subject to certain limitations.
For the years ended December 31, 1999, 1998, 1997 (unaudited) and 1996
(unaudited), the Participating Employers have not made any contributions to the
Plan.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of Plan earnings, and charged with an allocation of administrative
expenses. Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that can
be provided from the participant's vested account.
VESTING
Participants are immediately 100% vested in their contributions. Additionally, a
participant vests ratably in employer contributions, if any, based on five years
of continuous and credited service.
PARTICIPANT LOANS
Participants may borrow from their fund accounts up to 50 percent of their
vested account balance. The loans are secured by the balance in the
participant's account and bear interest at the U.S. prime lending rate plus
one-half percentage point.
5
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Notes To Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PAYMENT OF BENEFITS
On termination of service due to death, disability, or retirement, a participant
may elect to receive either a lump-sum amount equal to the value of the
participant's vested interest in his or her account, or receive annual
installments. For termination of service for other reasons, a participant may
receive the value of the vested interest in his or her account as a lump-sum
distribution.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Employer has the right
under the Plan to terminate the Plan subject to the provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan are prepared under the accrual basis of
accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Quoted market prices are used
to value investments. Shares of mutual funds are valued at the net asset value
of shares held by the Plan at year end. The participant loans are valued at
their outstanding balances, which approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that effect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
6
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Notes To Financial Statements (continued)
3. INVESTMENTS
The following investments represent 5% or more of the Plan's net assets
available for benefits:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998 1997 1996
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited) (Unaudited)
Merrill Lynch Capital Fund, Inc. $ * $ 138,761 $ 121,051 $ 76,387
Merrill Lynch Global Allocation Fund 252,979 142,560 83,171 49,065
Merrill Lynch Growth Fund 786,996 428,047 479,482 348,694
Merrill Lynch S&P 500 Index Fund 299,053 * * *
Reckson Associates Realty Corp.
Class A Common Stock 200,627 287,721 214,735 108,976
Frontline Capital Group
Common Stock 1,357,477 * * *
</TABLE>
* Investment was less than 5% of the Plan's net assets available for benefits.
7
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Notes To Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
During the years ending December 31, 1999, 1998, 1997 (unaudited) and 1996
(unaudited), the investments of the Plan appreciated (depreciated) in fair value
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998 1997 1996
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited) (Unaudited)
Merrill Lynch Capital Fund, Inc. $ (13,594) $ (900) $ 8,726 $ 979
Merrill Lynch Corp. Bond Fund/ Invest.
Grade (7,309) 425 343 (405)
Merrill Lynch Fundamental Growth CI 18,435 772 -- --
Merrill Lynch Global Allocation Fund 17,281 (16,235) (4,297) (469)
Merrill Lynch Growth Fund 155,807 (124,673) 26,396 60,805
Merrill Lynch S&P 500 Index Fund 34,090 2,939 -- --
Merrill Lynch Technology Fund 11 -- -- --
Merrill Lynch Global Growth 343 -- -- --
Merrill Lynch Global Technology 6,654 -- -- --
AIM Balanced Fund 57 -- -- --
AIM Blue Chip 333 -- -- --
Alliance Premium 2,083 -- -- --
Alliance Technology 6,514 -- -- --
Reckson Associates Realty Corp.
Class A Common Stock (10,740) (39,649) 27,694 23,441
Frontline Capital Group
Common Stock 1,157,362 21,001 -- --
--------------------------------------------------------------------
Net appreciation (depreciation) in
fair value of investments $ 1,367,327 $ (156,320) $ 58,862 $ 84,351
====================================================================
</TABLE>
8
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Notes To Financial Statements (continued)
4. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The Form 5500 of the Plan was prepared on a cash basis. The following is a
reconciliation of net assets available for benefits per the financial statements
to Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Unaudited) (Unaudited)
Net assets available for benefits
per the financial statements $ 3,724,999 $ 1,410,191 $ 1,148,338 $ 739,989
Participant contribution
receivables (46,883) (40,602) (31,592) (4,315)
-----------------------------------------------------------------------
Net assets available for benefit
per Form 5500 $ 3,678,116 $ 1,369,589 $ 1,116,746 $ 735,674
=======================================================================
</TABLE>
5. RELATED PARTY TRANSACTIONS
During the years ended December 31, 1999, 1998, 1997 (unaudited) and 1996
(unaudited), the Plan received $18,438, $11,487, $10,673 (unaudited) and $2,046
(unaudited) , respectively, in common stock dividends from Reckson.
6. INCOME TAX STATUS
The Internal Revenue Service issued an opinion dated June 29, 1993, stating that
the written form of the underlying prototype plan document is qualified under
Section 401(a) of the Internal Revenue Code (the "Code"), and that any employer
adopting this form of the Plan will be considered to have a plan qualified under
Section 401(a) of the Code. Therefore, the related trust is exempt from
taxation. Once qualified, the Plan is required to operate in conformity with the
Code to maintain its qualification. The Plan Sponsor has indicated that it will
take the necessary steps, if any, to maintain the Plan's qualified status.
9
<PAGE>
Supplemental Schedules
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Schedule H, Line 4(i) - Assets Held for Investment
December 31, 1999
<TABLE>
<CAPTION>
FAIR MARKET
INVESTMENT VALUE
--------------------------------------------------------------------------------------------
<S> <C>
Merrill Lynch Capital Fund, Inc. $ 186,005
Merrill Lynch Corp. Bond Fund/Invest. Grade 95,754
Merrill Lynch Fundamental Growth CI 124,434
Merrill Lynch Global Allocation Fund 252,979
Merrill Lynch Growth Fund 786,996
Merrill Lynch S&P 500 Index Fund 299,053
Reckson Associates Realty Corp. Class A Common Stock 200,627
Frontline Capital Group Common Stock(*) 1,357,477
Merrill Lynch Global Growth 3,900
Merrill Lynch Global Technology 22,884
AIM Balanced Fund 620
AIM Blue Chip 4,579
Alliance Premium 23,284
Alliance Technology 27,668
----------------
$ 3,386,260
================
Loans to Participants at Interest Rates between 8.21% and 9.02% $ 56,527
================
</TABLE>
(*) Indicates party-in-interest to the Plan.
10
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Line 27a - Assets Held for Investment
December 31, 1998
<TABLE>
<CAPTION>
FAIR MARKET
INVESTMENT COST VALUE
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch Capital Fund, Inc. $ 141,014 $ 138,761
Merrill Lynch Corp. Bond Fund/Invest. Grade 33,898 34,307
Merrill Lynch Fundamental Growth CI 6,014 6,716
Merrill Lynch Global Allocation Fund 159,672 142,560
Merrill Lynch Growth Fund 543,565 428,047
Merrill Lynch S&P 500 Index Fund 63,680 66,540
Reckson Associates Realty Corp. Class A Common Stock 323,502 287,721
Frontline Capital Group Common Stock(*) 13,805 34,698
-------------------------------
$ 1,285,150 $ 1,139,350
===============================
Loans to Participants at Interest Rates between 8.97% and 9.02% $ 9,512
=============
</TABLE>
(*) Indicates party-in-interest to the Plan.
11
<PAGE>
Reckson Management Group, Inc. 401(k) Plan
Line 27d - Schedule of Reportable Transactions
Category (iii) Series of Transactions in excess of 5% of Plan Assets
For the year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT
VALUE OF ASSET
PURCHASE ON NET
DESCRIPTION/UNITS PRICE SALES PRICE COST OF ASSETS TRANSACTION GAIN/LOSS
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchased units of Merrill Lynch
Capital Fund, Inc $ 67,015 $ -- $ 67,015 $ 67,015 $ --
Purchased units of Merrill Lynch
Global Allocation Fund 99,641 -- 99,641 99,641 --
Purchased units of Merrill Lynch
Growth INV & RET CL B 174,935 -- 174,935 174,935 --
Sold units of Merrill Lynch Growth
Growth INV & RET CL B -- 101,697 110,857 101,697 (9,154)
Purchased units of Merrill Lynch
Retirement Preservation Trust 64,063 -- 64,063 64,063 --
Purchased units of Merrill Lynch
S&P 500 Index Fund 64,198 -- 64,198 64,198 --
Purchased shares of Reckson
Associates Realty Corp. Class A
Common Stock 147,264 -- 147,264 147,264 --
</TABLE>
Note: There were no category (i), (ii) or (iv) reportable transactions during
the year ended December 31, 1998. Reportable transactions are defined in ERISA
section 103(b)(3)(H).
12
<PAGE>
RECKSON MANAGEMENT GROUP, INC. 401(K) PLAN
Exhibits
--------
23.0 Consent of Independent Accountants
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other person who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Reckson Management Group, Inc. 401(k) Plan
By: Reckson Management Group, Inc., as Plan Administrator
Date: June 28, 2000 By: /s/ Michael Maturo
---------------------------
Michael Maturo
Executive Vice President and Chief
Financial Officer
