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

FORM 10-Q

(Mark One)

|      |                                                                                         
|----- | ----------------------------------------------------------------------------------------
|[X]   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|      |                                                                                         
|      | FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001                                       
|      |                                                                                         
|      | OR                                                                                      
|      |                                                                                         
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 0-30994

ASIA GLOBAL CROSSING LTD.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


|                                                                      |  |                                                
|--------------------------------------------------------------------- |  | -----------------------------------------------
|BERMUDA(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) |  | 98-022-4159(I.R.S. EMPLOYER IDENTIFICATION NO.)

WESSEX HOUSE
45 REID STREET
HAMILTON HM12, BERMUDA

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


(441) 296-8600

(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE)


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 [X] No [   ]

The number of shares of the Registrants Class A common stock, par value
$0.01 per share, outstanding as of November 12, 2001, was 68,500,000 and Class
B common stock, par value $0.01 per share, was 513,447,683.



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TABLE OF CONTENTS



|                              |                                                                                               |                                                         |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                  
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS   
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 2. Changes in Securities and Use of Proceeds                                            
|                              | Item 3. Defaults Upon Senior Securities                                                      
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                    
|Exhibit 10.1                 
|Exhibit 10.2                 
|Exhibit 10.3                 



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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES

FOR THE QUARTER ENDED SEPTEMBER 30, 2001

INDEX

|                              |                                                                                       |  |      |    | 
|----------------------------- | ------------------------------------------------------------------------------------- |  | ---- | -- | 
|                              |                                                                                       |  | Page
|                              |                                                                                       |  |     
|PART I. FINANCIAL INFORMATION
|Item 1.                       | Financial Statements:                                                                 |  |      |    | 
|                              | Condensed Consolidated Balance Sheets                                                 |  |      | 3  | 
|                              | Condensed Consolidated Statements of Operations                                       |  |      | 4  | 
|                              | Condensed Consolidated Statements of Cash Flows                                       |  |      | 5  | 
|                              | Condensed Consolidated Statements of Comprehensive Loss                               |  |      | 6  | 
|                              | Notes to Condensed Consolidated Financial Statements                                  |  |      | 7  | 
|Item 2.                       | Managements Discussion and Analysis of Financial Condition and Results of Operations |  |      | 13 | 
|Item 3.                       | Quantitative and Qualitative Disclosures about Market Risk                            |  |      | 22 | 
|PART II. OTHER INFORMATION   
|Item 1.                       | Legal Proceedings                                                                     |  |      | 23 | 
|Item 2.                       | Changes in Securities and Use of Proceeds                                             |  |      | 23 | 
|Item 3.                       | Defaults Upon Senior Securities                                                       |  |      | 23 | 
|Item 4.                       | Submission of Matters to A Vote of Security Holders                                   |  |      | 23 | 
|Item 5.                       | Other Information                                                                     |  |      | 23 | 
|Item 6.                       | Exhibits and Reports on Form 8-K                                                      |  |      | 24 | 
|                              | Signature                                                                             |  |      | 25 | 

2



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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS






ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share information)


|                      |                                                                                                                             |                                          |                                            |           |               |           |              |           |         |           | 
|--------------------- | --------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ------------------------------------------ | --------- | ------------- | --------- | ------------ | --------- | ------- | --------- | 
|                      |                                                                                                                             |                                          |                                            |           | September 30, |           | December 31,
|                      |                                                                                                                             |                                          |                                            |           | 2001          |           | 2000        
|                      |                                                                                                                             |                                          |                                            |           |               |           |             
|                      |                                                                                                                             |                                          |                                            |           | (Unaudited)   |           |              |           |        
|ASSETS:               |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      | Current assets:                                                                                                             |                                          |                                            |           |               |           |              |           |        
|                      |                                                                                                                             | Cash and cash equivalents                |                                            | $         | 523,221       |           |              | $         | 712,583 |          
|                      |                                                                                                                             | Restricted cash and cash equivalents     |                                            |           | 88,152        |           |              |           | 145,862 |          
|                      |                                                                                                                             | Accounts receivable, net                 |                                            |           | 17,341        |           |              |           | 16,006  |          
|                      |                                                                                                                             | Receivable from affiliates               |                                            |           | 47,974        |           |              |           | 109,538 |          
|                      |                                                                                                                             | Other assets and prepaid costs           |                                            |           | 81,994        |           |              |           | 11,554  |          
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      |                                                                                                                             |                                          | Total current assets                       |           |               | 758,682   |              |           |         | 995,543   | 
|                      | Property and equipment, net                                                                                                 |                                          |                                            | 2,612,871 |               |           |              | 1,929,747 |        
|                      | Goodwill and intangibles, net                                                                                               |                                          |                                            | 92,844    |               |           |              | 105,591   |        
|                      | Investments in affiliates                                                                                                   |                                          |                                            | 577,093   |               |           |              | 620,628   |        
|                      | Other assets                                                                                                                |                                          |                                            | 87,046    |               |           |              | 115,418   |        
|                      | Net assets of discontinued operations                                                                                       |                                          |                                            | 16,269    |               |           |              | 14,574    |        
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      |                                                                                                                             |                                          | Total assets                               |           | $             | 4,144,805 |              |           | $       | 3,781,501 | 
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|LIABILITIES:          |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      | Current liabilities:                                                                                                        |                                          |                                            |           |               |           |              |           |        
|                      |                                                                                                                             | Accrued construction costs               |                                            | $         | 208,299       |           |              | $         | 168,286 |          
|                      |                                                                                                                             | Accounts payable and accrued liabilities |                                            |           | 96,758        |           |              |           | 42,884  |          
|                      |                                                                                                                             | Current portion of long-term debt        |                                            |           | 82,406        |           |              |           | 41,630  |          
|                      |                                                                                                                             | Payable to affiliates                    |                                            |           | 42,810        |           |              |           |        |          
|                      |                                                                                                                             | Deferred revenue                         |                                            |           | 114,301       |           |              |           | 7,197   |          
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      |                                                                                                                             |                                          | Total current liabilities                  |           |               | 544,574   |              |           |         | 259,997   | 
|                      | Long-term debt                                                                                                              |                                          |                                            | 1,050,086 |               |           |              | 1,159,704 |        
|                      | Deferred revenue                                                                                                            |                                          |                                            | 717,350   |               |           |              | 282,443   |        
|                      | Other long-term liabilities                                                                                                 |                                          |                                            | 24,039    |               |           |              | 2,825     |        
|                      | Loans payable to affiliate                                                                                                  |                                          |                                            | 11,879    |               |           |              | 9,993     |        
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      |                                                                                                                             |                                          | Total liabilities                          |           |               | 2,347,928 |              |           |         | 1,714,962 | 
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|MINORITY INTEREST     |                                                                                                                             |                                          | 128,390                                    |           |               |           | 162,720      |          
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|SHAREHOLDERS EQUITY: |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      | Preferred stock, par value $0.01 per share, 120,000,000 shares authorized;
no shares issued and outstanding                 |                                          |                                            |          |               |           |              |          |        
|                      | Class A common stock, par value $0.01 per share, 1,200,000,000 shares authorized;
68,500,000 shares issued and outstanding  |                                          |                                            | 685       |               |           |              | 685       |        
|                      | Class B common stock, par value $0.01 per share, 1,200,000,000 shares authorized;
513,447,683 shares issued and outstanding |                                          |                                            | 5,134     |               |           |              | 5,134     |        
|                      | Additional paid-in capital                                                                                                  |                                          |                                            | 2,073,141 |               |           |              | 2,048,136 |        
|                      | Accumulated deficit                                                                                                         |                                          |                                            | (379,805  | )             |           |              | (147,924  | )      
|                      | Accumulated other comprehensive loss                                                                                        |                                          |                                            | (30,668   | )             |           |              | (2,212    | )      
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      |                                                                                                                             |                                          | Total shareholders equity                 |           |               | 1,668,487 |              |           |         | 1,903,819 | 
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          
|                      |                                                                                                                             |                                          | Total liabilities and shareholders equity |           | $             | 4,144,805 |              |           | $       | 3,781,501 | 
|                      |                                                                                                                             |                                          |                                            |           |               |           |              |          

See accompanying notes to condensed consolidated financial statements.

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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share information)
(Unaudited)


|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |             |         |  
|----------------------------------------------------------------- | -------------------------------------------------------------------- | -------------- | ------- | ------------------ | ------- | ----------------- | ------- | ------------- | ------- | ------------- | -------- | ----------- | -------- | - | -------- | ----------- | ------- | -
|                                                                  |                                                                      |                |         | Three Months Ended |         | Nine Months Ended
|                                                                  |                                                                      |                |         |                    |         |                  
|                                                                  |                                                                      |                |         | September 30,      |         | September 30,     |         | September 30, |         | September 30,
|                                                                  |                                                                      |                |         | 2001               |         | 2000              |         | 2001          |         | 2000         
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |              
|Revenues                                                          |                                                                      | $              | 33,584  |                    |         | $                 | 28,068  |               |         | $             | 74,840   |             |          | $ | 137,539  |            
|Operating expenses:                                               |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|                                                                  | Cost of access and maintenance                                       |                |         | 28,998             |         |                   |         | 17,866        |         |               |          | 77,357      |          |   |          | 42,064      |        
|                                                                  | Other operating expenses                                             |                |         | 36,574             |         |                   |         | 21,098        |         |               |          | 106,472     |          |   |          | 39,665      |        
|                                                                  | Depreciation and amortization                                        |                |         | 29,268             |         |                   |         | 23,210        |         |               |          | 79,480      |          |   |          | 116,086     |        
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|                                                                  |                                                                      |                | 94,840  |                    |         |                   | 62,174  |               |         |               | 263,309  |             |          |   | 197,815  |            
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|                                                                  |                                                                      | Operating loss |         |                    | (61,256 | )                 |         |               | (34,106 | )             |          |             | (188,469 | ) |          |             | (60,276 | )
|Other income (expense):                                           |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|                                                                  | Minority interest                                                    |                |         | 12,925             |         |                   |         | 2,486         |         |               |          | 44,534      |          |   |          | (9,632      | )      
|                                                                  | Equity in loss of affiliates                                         |                |         | (16,244            | )       |                   |         | (14,969       | )       |               |          | (48,834     | )        |   |          | (41,703     | )      
|                                                                  | Interest income                                                      |                |         | 6,647              |         |                   |         | 3,236         |         |               |          | 27,316      |          |   |          | 11,427      |        
|                                                                  | Interest expense                                                     |                |         | (12,823            | )       |                   |         | (463          | )       |               |          | (42,137     | )        |   |          | (1,551      | )      
|                                                                  | Loss on write-down of investment securities                          |                |         | (20,000            | )       |                   |         |              |         |               |          | (20,000     | )        |   |          |            |        
|                                                                  | Other income (expense), net                                          |                |         | 2,201              |         |                   |         | (497          | )       |               |          | (1,320      | )        |   |          | (1,117      | )      
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|Loss from continuing operations
before provision for income taxes |                                                                      |                | (88,550 | )                  |         |                   | (44,313 | )             |         |               | (228,910 | )           |          |   | (102,852 | )          
|                                                                  | Provision for income taxes                                           |                |         | (713               | )       |                   |         | (1,353        | )       |               |          | (3,712      | )        |   |          | (1,353      | )      
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|Loss from continuing operations                                   |                                                                      |                | (89,263 | )                  |         |                   | (45,666 | )             |         |               | (232,622 | )           |          |   | (104,205 | )          
|                                                                  | Income (loss) from discontinued operations, net of taxes             |                |         | 1,172              |         |                   |         | (267          | )       |               |          | 741         |          |   |          | (267        | )      
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|Net loss                                                          |                                                                      | $              | (88,091 | )                  |         | $                 | (45,933 | )             |         | $             | (231,881 | )           |          | $ | (104,472 | )          
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|Net loss per common share  basic and diluted                     |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|                                                                  | Loss from continuing operations                                      |                | $       | (0.15              | )       |                   | $       | (0.09         | )       |               | $        | (0.40       | )        |   | $        | (0.21       | )      
|                                                                  | Income (loss) from discontinued operations, net of taxes             |                |         | 0.00               |         |                   |         | (0.00         | )       |               |          | 0.00        |          |   |          | (0.00       | )      
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|                                                                  | Net loss per common share                                            |                | $       | (0.15              | )       |                   | $       | (0.09         | )       |               | $        | (0.40       | )        |   | $        | (0.21       | )      
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            
|                                                                  | Shares used in computing basic and diluted net loss
per common share |                |         | 581,947,683        |         |                   |         | 513,447,683   |         |               |          | 581,947,683 |          |   |          | 513,447,683 |        
|                                                                  |                                                                      |                |         |                    |         |                   |         |               |         |               |          |             |          |   |          |            

See accompanying notes to condensed consolidated financial statements.

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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |               |           |         |          |  
|------------------------------------------------------------------------ | ------------------------------------------------------------------------------- | ------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | -------- | ----------------- | -------- | ------------- | --------- | ------- | -------- | -
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          | Nine Months Ended
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                  
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          | September 30,     |          | September 30,
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          | 2001              |          | 2000         
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|CASH FLOWS FROM OPERATING ACTIVITIES:                                    |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         | Net loss                                                                        |                                             | $                                                        | (231,881                                            | )        |                   | $        | (104,472      | )        
|                                                                         | Adjustments to reconcile net loss to net cash
provided by operating activities: |                                             |                                                          |                                                     |          |                   |          |               |          
|                                                                         |                                                                                 |                                             | (Income) loss from discontinued operations, net of taxes |                                                     |          | (741              | )        |               |           | 267     |         
|                                                                         |                                                                                 |                                             | Depreciation and amortization                            |                                                     |          | 79,480            |          |               |           | 116,086 |         
|                                                                         |                                                                                 |                                             | Amortization of deferred finance fees                    |                                                     |          | 3,325             |          |               |           |        |         
|                                                                         |                                                                                 |                                             | Provision for doubtful accounts                          |                                                     |          | 3,879             |          |               |           | 846     |         
|                                                                         |                                                                                 |                                             | Loss on write-down of investment securities              |                                                     |          | 20,000            |          |               |           |        |         
|                                                                         |                                                                                 |                                             | Equity in loss of affiliates                             |                                                     |          | 48,834            |          |               |           | 41,703  |         
|                                                                         |                                                                                 |                                             | Minority interest                                        |                                                     |          | (44,534           | )        |               |           | 9,632   |         
|                                                                         |                                                                                 |                                             | Changes in operating assets and liabilities              |                                                     |          | 600,277           |          |               |           | 77,488  |         
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         |                                                                                 |                                             |                                                          | Net cash provided by operating activities           |          |                   | 478,639  |               |           |         | 141,550  |  
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|CASH FLOWS FROM INVESTING ACTIVITIES:                                    |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         | Cash acquired from consolidating Pacific Crossing Ltd.                          |                                             |                                                          |                                                    |          |                   |          | 606           |          
|                                                                         | Cash acquired (paid) in acquisitions                                            |                                             |                                                          | (1,265                                              | )        |                   |          | 3,068         |          
|                                                                         | Change in restricted cash and cash equivalents                                  |                                             |                                                          | 57,710                                              |          |                   |          | 80,299        |          
|                                                                         | Purchase of property and equipment                                              |                                             |                                                          | (683,485                                            | )        |                   |          | (459,349      | )        
|                                                                         | Acquisition of minority share in affiliate                                      |                                             |                                                          |                                                    |          |                   |          | (20,585       | )        
|                                                                         | Cash paid for investments                                                       |                                             |                                                          | (5,299                                              | )        |                   |          | (25,000       | )        
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         |                                                                                 |                                             |                                                          | Net cash used in investing activities               |          |                   | (632,339 | )             |           |         | (420,961 | )
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|CASH FLOWS FROM FINANCING ACTIVITIES:                                    |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         | Proceeds from capital contribution                                              |                                             |                                                          | 23,538                                              |          |                   |          | 292,936       |          
|                                                                         | Net repayments under Pacific Crossing -1 credit facility                        |                                             |                                                          | (69,154                                             | )        |                   |          |              |          
|                                                                         | Minority interest investment in affiliates                                      |                                             |                                                          | 10,204                                              |          |                   |          | 84,275        |          
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         |                                                                                 |                                             |                                                          | Net cash provided by (used in) financing activities |          |                   | (35,412  | )             |           |         | 377,211  |  
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|Exchange Rate Effect on Cash and Cash Equivalents                        |                                                                                 |                                             | (250                                                     | )                                                   |          |                   | 757      |              
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|Net Increase (Decrease) in Cash and Cash Equivalents                     |                                                                                 |                                             | (189,362                                                 | )                                                   |          |                   | 98,557   |              
|Cash and Cash Equivalents, beginning of period                           |                                                                                 |                                             | 712,583                                                  |                                                     |          |                   | 9,784    |              
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|Cash and Cash Equivalents, end of period                                 |                                                                                 | $                                           | 523,221                                                  |                                                     |          | $                 | 108,341  |              
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|SUPPLEMENTAL INFORMATION ON NON-CASH INVESTING
AND FINANCING ACTIVITIES: |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         |                                                                                 | Increase in accrued construction costs      |                                                          | $                                                   | 52,443   |                   |          | $             | 69,882    |        
|                                                                         |                                                                                 | Amortization of deferred finance costs      |                                                          |                                                     | 2,136    |                   |          |               | 3,409     |        
|                                                                         |                                                                                 | Increase in payable to affiliates           |                                                          |                                                     | 2,677    |                   |          |               |          |        
|                                                                         |                                                                                 | Increase in interest payable                |                                                          |                                                     | 15,553   |                   |          |               |          |        
|                                                                         |                                                                                 | Capital lease obligations                   |                                                          |                                                     | 6,454    |                   |          |               |          |        
|                                                                         |                                                                                 | Costs incurred for property and equipment   |                                                          |                                                     | (762,748 | )                 |          |               | (532,640  | )      
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         |                                                                                 | Cash paid for property and equipment        |                                                          | $                                                   | (683,485 | )                 |          | $             | (459,349  | )      
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                        |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         | Cash paid for interest and income taxes                                        
|                                                                         |                                                                                 | Interest paid and capitalized               |                                                          | $                                                   | 71,045   |                   |          | $             | 50,968    |        
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         |                                                                                 | Interest paid (net of capitalized interest) |                                                          | $                                                   | 38,031   |                   |          | $             | 1,162     |        
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         |                                                                                 | Cash paid for taxes                         |                                                          | $                                                   | 460      |                   |          | $             |          |        
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         | Details of consolidating Pacific Crossing Ltd.                                 
|                                                                         |                                                                                 | Assets consolidated                         |                                                          | $                                                   |         |                   |          | $             | 1,124,138 |        
|                                                                         |                                                                                 | Liabilities consolidated                    |                                                          |                                                     |         |                   |          |               | (945,903  | )      
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              
|                                                                         |                                                                                 | $                                           |                                                         |                                                     |          | $                 | 178,235  |              
|                                                                         |                                                                                 |                                             |                                                          |                                                     |          |                   |          |              

See accompanying notes to condensed consolidated
financial statements.


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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)


|                   |                                           |   |                    |         |                    |   |                    |        |                    |   |          |         |   |   |          |        |  
|------------------ | ----------------------------------------- | - | ------------------ | ------- | ------------------ | - | ------------------ | ------ | ------------------ | - | -------- | ------- | - | - | -------- | ------ | -
|                   |                                           |   | Three Months Ended |         | Nine Months Ended 
|                   |                                           |   |                    |         |                   
|                   |                                           |   | September 30, 2001 |         | September 30, 2000 |   | September 30, 2001 |        | September 30, 2000
|                   |                                           |   |                    |         |                    |   |                    |        |                   
|Net loss           |                                           | $ | (88,091            | )       |                    | $ | (45,933            | )      |                    | $ | (231,881 | )       |   | $ | (104,472 | )     
|                   | Unrealized loss on derivative instruments |   |                    | (12,647 | )                  |   |                    |       |                    |   |          | (14,854 | ) |   |          |       |  
|                   | Foreign currency translation adjustment   |   |                    | (3,280  | )                  |   |                    | (4,007 | )                  |   |          | (13,602 | ) |   |          | (2,424 | )
|                   |                                           |   |                    |         |                    |   |                    |        |                    |   |          |         |   |   |          |       
|Comprehensive loss |                                           | $ | (104,018           | )       |                    | $ | (49,940            | )      |                    | $ | (260,337 | )       |   | $ | (106,896 | )     
|                   |                                           |   |                    |         |                    |   |                    |        |                    |   |          |         |   |   |          |       

See accompanying notes to condensed consolidated financial statements.

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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Unaudited)

(1) Organization and Background

Nature of Business

Asia Global Crossing Ltd., a Bermuda company (together with its
consolidated subsidiaries, the Company or Asia Global Crossing), is a
leading pan-Asian telecommunications carrier providing telecommunications
services, including data and web-hosting services, to wholesale and business
customers. Asia Global Crossing owns 64.5% of Pacific Crossing-1, a 21,000
kilometer undersea cable that connects Japan and the United States. The Company
is constructing East Asia Crossing, a 19,500 kilometer undersea fiber optic
cable that connects Japan, Hong Kong, Taiwan and Korea. At September 30, 2001,
East Asia Crossing has landed and was lit in Korea, and is in service in Japan,
Hong Kong and Taiwan. The Company expects to extend East Asia Crossing to
Singapore in the fourth quarter of 2001, to the Philippines and Malaysia in
early 2002, and to China, if and when regulations permit. Both of these
systems will be seamlessly connected to the Global Crossing network, which,
when completed and when combined with Pacific Crossing-1 and East Asia
Crossing, will consist of 162,544 announced route kilometers which will serve
four continents, 27 countries and more than 200 major cities.

Business Strategy

The Company intends to use its competitive position, including its
connectivity to the Global Crossing network, to exploit the growing demand for
bandwidth, Internet services and other advanced communication services for
connectivity to Asia. To accomplish this goal, the Company is pursuing a
strategy which includes capitalizing on its early-mover advantage, expanding
its portfolio of services to meet its customers needs and forming strategic
alliances and joint ventures with strong local partners in Asia.

Joint Ventures

The Company currently has joint ventures in Hong Kong, Japan, Taiwan,
Korea, Singapore, and the Philippines. In Hong Kong, the Company owns 50% of
Hutchison Global Crossing, a joint venture with Hutchison Telecommunications
Ltd. (HTL), a wholly-owned subsidiary of Hutchison Whampoa. In September
2001, Hutchison Global Crossing was restructured into three separate companies:
Hutchison Global Crossing Holdings Limited (fixed-line business) and two other
affiliates. Each of these three companies (collectively HGC and affiliates)
is 50/50 owned by the Company and HTL. In Japan, the Company owns 49% of
Global Access Limited (GAL), a joint venture with Vectant, Inc.; in Taiwan,
the Company owns 60% of Asia Global Crossing Taiwan Inc., a joint venture with
Microelectronics Technology Inc.; in Korea, the Company owns 49% of Dacom
Crossing, a joint venture with DACOM Corporation; in Singapore, the Company
owns 50% of StarHub Crossing Pte Ltd., a joint venture with StarHub Pte Ltd.;
and in the Philippines, the Company owns 48% of Digitel Crossing Inc., a joint
venture with Digital Telecommunications Phils., Inc.

Initial Public Offering

In the fourth quarter of 2000, the Company completed its initial public
offering (IPO), in which it sold 68.5 million shares of its Class A common
stock at a price of $7.00 per share. The net proceeds of the IPO, after
deducting underwriting discounts, commissions and costs, were approximately
$455.1 million. Upon completion of the IPO, Global Crossing Ltd. (Global
Crossing), Softbank Corp. (Softbank) and Microsoft Corporation (Microsoft)
owned 56.9%, 15.4% and 15.4%, respectively, of the Company.

Concurrent with the Companys IPO, Global Crossing, Microsoft and Softbank
contributed to the Company their aggregate interest of 50% in HGC and
affiliates. HGC and affiliates offerings include international services, local
fixed network services, and multimedia services in Hong Kong. At the same time,
Global Crossing contributed its 49% interest in GAL to the Company. GAL
constructs and operates a terrestrial fiber optic cable system connecting
Tokyo, Osaka and Nagoya with Pacific Crossing-1, providing communication
network services.

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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Unaudited)

Acquisition

On July 10, 2001, the Company completed its acquisition of the Asian
operations of IXnet, Inc. (IXnet Asia) and IPC Information Systems, Inc.
(IPC Asia) as well as the territorial rights to conduct telecommunications
service businesses in Australia and New Zealand from its parent company Global
Crossing, in exchange for approximately 26.8 million shares of Class B common
stock of the Company. Currently, the Company is pursuing the sale of IPC Asia,
in conjunction with the sale of the rest of the IPC business by Global Crossing.

(2) Basis of Presentation

The accompanying unaudited interim condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles (GAAP) for interim financial reporting and Securities and Exchange
Commission (SEC) regulations. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with GAAP have
been condensed or omitted pursuant to such rules and regulations. The unaudited
interim consolidated financial statements reflect all adjustments, consisting
of normal recurring items, which are, in the opinion of management, necessary
to fairly present the results of operations, financial position and cash flows
for the periods presented. The results of operations for any interim period are
not necessarily indicative of results for the full year. These financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2000.

Concurrent with the IPO in October 2000, HGC and GAL were contributed to
the Company. These contributions were accounted for by the Company similar to
the pooling-of-interests method of accounting because HGC, GAL and the Company
were entities under common control of Global Crossing. Prior to these
contributions, Global Crossing accounted for its investments in HGC and GAL
under the equity method of accounting. In preparing these condensed
consolidated financial statements, GAL and HGCs statements of operations for
the three months and nine months ended September 30, 2000 have been
retroactively combined with the Companys consolidated statement of operations
for the three months and nine months ended September 30, 2000, respectively,
under the equity method of accounting.

The acquisition of the Asian operations of IXnet and IPC is accounted for
by the Company similar to the pooling-of-interests method of accounting because
IXnet, IPC and the Company are entities under common control of Global
Crossing. Accordingly, as required by GAAP, the Company has restated its
financial statements to reflect the operating results and financial positions
of the Asian operations of IXnet and IPC from the third quarter of 2000
forward, the date IXnet and IPC were acquired by Global Crossing. The
Companys Annual Report on Form 10-K for the year ended
December 31, 2000 does not reflect the acquisition of IXnet Asia
and IPC Asia.

(3) Reclassifications

Certain prior year amounts have been reclassified in the accompanying
condensed consolidated financial statements to conform to current year
presentation.

(4) Recent Accounting Pronouncements

In June 2001 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS
141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting. The adoption of SFAS 141
did not have an impact on the Companys financial position, results of
operations, earnings per share or cash flows. SFAS 142, requires goodwill and
certain intangible assets resulting from business combinations entered into
prior to June 30, 2001 no longer be amortized, but instead be reviewed for
impairment. Any write-down of goodwill would be charged to results of
operations in the periods in which the recorded value of goodwill and certain
intangibles is more than its fair value. As of September 30, 2001, the Company
has $92.8 million goodwill and intangibles, and $423.0 million embedded
goodwill in investments in affiliates, respectively. For the nine months ended
September 30, 2001, the Company recorded $9.4 million amortization expenses
related to goodwill and intangibles; and $13.6 million equity in loss of
affiliates related to the amortization of embedded goodwill. The amortization
of these existing goodwill and intangibles, and embedded goodwill will be
reduced upon adoption of SFAS 142, however, impairment reviews may result in
periodic write-down subsequent to the date of adoption.

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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Unaudited)

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. This Statement establishes common accounting practices
relating to legal obligations associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development,
or normal operation of a long-lived asset. The Company will adopt SFAS 143 on
January 1, 2003 and does not expect the implementation of this standard will
have a material effect on its financial position or results of operations.

In August 2001 the FASB issued SFAS No. 144 Accounting for the Impairment
or Disposal of Long-Lived Assets. This Statement addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of. This Statement supersedes SFAS No. 121
Accounting for the Impairment of Long-lived Assets and for Long-lived Assets
to be Disposed of, and certain accounting and reporting provisions of
Accounting Principles Board Opinion No. 30 Reporting the Results of
Operations. The provisions of this Statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001, and
interim periods within those fiscal years. Management is currently evaluating
the impact of the adoption of this Statement.

(5) Discontinued Operations

In October 2001, Global Crossing announced its planned sale of IPC, a
leading provider of desktop trading systems to the global financial community.
The Company will pursue the sale of its Asian operations of IPC, in conjunction
with the sale of the rest of the IPC business by Global Crossing. Due to this
anticipated sale, the Companys financial statements have reflected the Asian
operations of IPC as a discontinued operation. The Company does not anticipate
incurring any loss from the disposal of this business segment.

Net assets of
discontinued operations and income (loss) from discontinued operations
consist of the following (in thousands):

Balance Sheet Data:

|                                      |  |               |        |              |  |   |        |  
|------------------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | -
|                                      |  | September 30, |        | December 31,
|                                      |  | 2001          |        | 2000        
|                                      |  |               |        |             
|Assets                                |  | $             | 18,184 |              |  | $ | 16,074 |  
|Liabilities                           |  |               | (1,915 | )            |  |   | (1,500 | )
|                                      |  |               |        |              |  |   |        |  
|Net assets of discontinued operations |  | $             | 16,269 |              |  | $ | 14,574 |  
|                                      |  |               |        |              |  |   |        |  

Income Statement Data:

|                                                         |  |                    |       |                       |  |               |       |               |  |   |       |   |  |   |       |  
|-------------------------------------------------------- |  | ------------------ | ----- | --------------------- |  | ------------- | ----- | ------------- |  | - | ----- | - |  | - | ----- | -
|                                                         |  | Three Months Ended |       | Nine Months Ended (a)
|                                                         |  |                    |       |                      
|                                                         |  | September 30,      |       | September 30,         |  | September 30, |       | September 30,
|                                                         |  | 2001               |       | 2000                  |  | 2001          |       | 2000         
|                                                         |  |                    |       |                       |  |               |       |              
|Revenues                                                 |  | $                  | 6,255 |                       |  | $             | 1,266 |               |  | $ | 8,259 |   |  | $ | 1,266 |  
|Expenses                                                 |  |                    | 5,094 |                       |  |               | 1,533 |               |  |   | 7,513 |   |  |   | 1,533 |  
|                                                         |  |                    |       |                       |  |               |       |               |  |   |       |   |  |   |       |  
|Operating income (loss)                                  |  |                    | 1,161 |                       |  |               | (267  | )             |  |   | 746   |   |  |   | (267  | )
|Other income (expenses)                                  |  |                    | 11    |                       |  |               |      |               |  |   | (5    | ) |  |   |      |  
|                                                         |  |                    |       |                       |  |               |       |               |  |   |       |   |  |   |       |  
|Income (loss) from discontinued operations, net of taxes |  | $                  | 1,172 |                       |  | $             | (267  | )             |  | $ | 741   |   |  | $ | (267  | )
|                                                         |  |                    |       |                       |  |               |       |               |  |   |       |   |  |   |       |  



---

|(a) |  | The income statement data for the nine months ended September 30, 2000
included three-months of IPC Asias operating results as the Company
accounted for the acquisition of IPC Asia using as if
pooling-of-interests method of accounting and consolidated IPC Asias
financial statements from third quarter of 2000 forward, the date IPC was
acquired by Global Crossing.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Unaudited)

(6) Property and Equipment

Property and equipment consist of the following (in thousands):

|                                  |                              |   |               |           |              |   |           |           | 
|--------------------------------- | ---------------------------- | - | ------------- | --------- | ------------ | - | --------- | --------- | 
|                                  |                              |   | September 30, |           | December 31,
|                                  |                              |   | 2001          |           | 2000        
|                                  |                              |   |               |           |             
|Transmission equipment            |                              | $ | 1,958,387     |           |              | $ | 1,490,583 |          
|Leasehold improvements            |                              |   | 10,176        |           |              |   | 8,023     |          
|Furniture, fixtures and equipment |                              |   | 46,050        |           |              |   | 16,014    |          
|                                  |                              |   |               |           |              |   |           |          
|                                  | Total property and equipment |   |               | 2,014,613 |              |   |           | 1,514,620 | 
|Less: accumulated depreciation    |                              |   | (226,346      | )         |              |   | (151,056  | )        
|                                  |                              |   |               |           |              |   |           |          
|                                  |                              |   | 1,788,267     |           |              |   | 1,363,564 |          
|Construction in progress          |                              |   | 824,604       |           |              |   | 566,183   |          
|                                  |                              |   |               |           |              |   |           |          
|Property and equipment, net       |                              | $ | 2,612,871     |           |              | $ | 1,929,747 |          
|                                  |                              |   |               |           |              |   |           |          

(7) Investments in Affiliates

The Companys investments in affiliates consist of the following (in
thousands):

|                                   |                           |   |               |         |              |   |         |         | 
|---------------------------------- | ------------------------- | - | ------------- | ------- | ------------ | - | ------- | ------- | 
|                                   |                           |   | September 30, |         | December 31,
|                                   |                           |   | 2001          |         | 2000        
|                                   |                           |   |               |         |             
|Investment in GAL                  |                           | $ | 8,026         |         |              | $ | 14,454  |        
|Investment in HGC and affiliates   |                           |   | 563,946       |         |              |   | 606,174 |        
|Investment in other joint ventures |                           |   | 5,121         |         |              |   |        |        
|                                   |                           |   |               |         |              |   |         |        
|                                   | Investments in affiliates |   | $             | 577,093 |              |   | $       | 620,628 | 
|                                   |                           |   |               |         |              |   |         |        

The summarized combined statements of operations data of GAL are as
follows (the average exchange rates of approximately JPY¥123=$1.00 and
JPY¥108=$1.00 have been used to translate GALs financial information in
Japanese yen into U.S. dollars for the three months ended September 30, 2001
and 2000, respectively) (in thousands):

|               |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|-------------- |  | ------------------ | ------ | ------------------ |  | ------------------ | ------ | ------------------ |  | - | ------- | - |  | - | ------- | -
|               |  | Three Months Ended |        | Nine Months Ended 
|               |  |                    |        |                   
|               |  | September 30, 2001 |        | September 30, 2000 |  | September 30, 2001 |        | September 30, 2000
|               |  |                    |        |                    |  |                    |        |                   
|Revenues       |  | $                  | 11,946 |                    |  | $                  | 6,936  |                    |  | $ | 29,870  |   |  | $ | 15,024  |  
|Operating loss |  |                    | (4,568 | )                  |  |                    | (4,253 | )                  |  |   | (11,895 | ) |  |   | (11,673 | )
|Net loss       |  | $                  | (5,001 | )                  |  | $                  | (4,996 | )                  |  | $ | (13,199 | ) |  | $ | (13,125 | )

The summarized combined statements of operations data of HGC and
affiliates are as follows (the average exchange rate of approximately
HK$7.80=$1.00 has been used to translate HGCs financial information in Hong
Kong dollars into U.S. dollars) (in thousands):

|               |  |                    |         |                    |  |                    |         |                    |  |   |         |   |  |   |         |  
|-------------- |  | ------------------ | ------- | ------------------ |  | ------------------ | ------- | ------------------ |  | - | ------- | - |  | - | ------- | -
|               |  | Three Months Ended |         | Nine Months Ended 
|               |  |                    |         |                   
|               |  | September 30, 2001 |         | September 30, 2000 |  | September 30, 2001 |         | September 30, 2000
|               |  |                    |         |                    |  |                    |         |                   
|Revenues       |  | $                  | 37,333  |                    |  | $                  | 32,192  |                    |  | $ | 103,557 |   |  | $ | 91,987  |  
|Operating loss |  |                    | (11,492 | )                  |  |                    | (10,360 | )                  |  |   | (36,478 | ) |  |   | (27,531 | )
|Net loss       |  | $                  | (12,677 | )                  |  | $                  | (10,693 | )                  |  | $ | (39,887 | ) |  | $ | (27,510 | )

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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Unaudited)

(8) Loss on Write-down of Investment Securities

In the third quarter of 2001, the Company recorded a one-time charge of
$20.0 million related to its available-for-sale investment securities of a
minority strategic investment under the provision of SFAS No. 115 Accounting
for Certain Investments in Debt and Equity Securities. This charge
represented a decline in the market value of such investment securities that
was deemed to be other than temporary.

(9) Derivative Instruments and Hedging Activities

Effective January 1, 2001, the Company adopted SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities, as amended. The statement
requires that an entity recognize all derivatives as either assets or
liabilities measured at fair value. The accounting for the changes in fair
value of a derivative depends on the use of the derivative. The cumulative
effect of adopting these new accounting standards did not have a material
effect on the Companys results of operations or its financial position for the
periods presented in the financial statements included herein.

The Company utilizes certain derivative financial instruments to enhance
its ability to manage risk, including interest rate risk and foreign currency
exchange risk, which exist as part of ongoing business operations. Derivative
instruments are entered into for periods consistent with related underlying
exposures and do not constitute positions independent of those exposures. These
derivative financial instruments take the form of interest rate swap agreements
and foreign currency forward contracts. The fair value of the interest rate
swap agreement was a loss of $14.9 million at September 30, 2001. The fair
value of the foreign currency forward contract was not material as of September
30, 2001. The Company designates derivatives as either fair value hedges or
cash flow hedges. If the derivative is designated as a fair value hedge, the
changes in the fair value of the derivative and of the hedged item attributable
to the hedged risk are recognized in earnings. If the derivative is designated
as a cash flow hedge, the effective portions of changes in the fair value of
the derivative are recorded in other comprehensive income or loss (OCI or
OCL) and are recognized in the income statement when the hedged item affects
earnings. Ineffective portions of changes in the fair value of cash flow hedges
are recognized in earnings. At September 30, 2001, the Company only utilized
cash flow hedges. No amounts were recorded into earnings for the three and nine
months ended September 30, 2001. The Company also does not expect any net
derivative losses included in OCI that will be reclassified into earnings
within the next twelve months.

(10) Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the reporting
period. Diluted net loss per share is computed similar to basic net loss per
share while giving effect to all potentially diluted common shares that were
outstanding during the period. Dilutive options did not have an effect on the
computation of diluted net loss per share for the three and nine months ended
September 30, 2001 and 2000, respectively, since they were anti-dilutive.

(11) Related Party Transactions

During the normal course of business, the Company has entered into various
transactions with certain related parties. The following information should be
read in conjunction with the footnote 10  Related Party Transactions in the
audited consolidated financial statements and notes thereto contained in the
Companys Annual Report on Form 10-K for the year ended December 31, 2000.

Revenues generated from sales to third-party customers through Global
Crossing were approximately $14.4 million and $14.9 million for the three
months ended September 30, 2001 and 2000, respectively. Such sales were
approximately $24.1 million and $89.5 million for the nine months ended
September 30, 2001 and 2000, respectively.

For the three months ended September 30, 2001 and 2000, the Company
purchased network capacity of approximately $0.9 million and $8.8 million,
respectively, from its non-consolidated joint ventures. During the nine months
ended September 30, 2001 and 2000, such capacity purchases were $26.2 million
and $44.1 million, respectively. During the three months ended September 30,
2001 and 2000, the Company also purchased network capacity of approximately
$3.7 million and $6.6 million, respectively, from Global Crossing. During the
nine months ended September 30, 2001 and 2000, such purchases were $6.8 million
and $25.1 million, respectively.

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ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Unaudited)

On October 4, 2001, the Company announced in a joint press release with
Global Crossing that John J. Legere, currently Chief Executive Officer and a
director of the Company, would assume the chief executive officer position of
Global Crossing. In connection with Mr. Legeres new role as CEO of both the
Company and Global Crossing, the Company, Global Crossing and Mr. Legere
entered into an employment agreement pursuant to which, among other things, (1)
Mr. Legere is permitted to serve simultaneously as the chief executive officer
of the Company and Global Crossing and use his discretion to allocate his time
and efforts between the two companies, (2) Mr. Legeres combined salary is $1.1
million per year and his annual target bonus for 2002 and thereafter will be
equal to 125% of his base salary, (3) Mr. Legere received a sign-on bonus from
Global Crossing equal to $3.5 million, net of taxes, (4) Mr. Legere became
entitled to an income tax gross-up by Global Crossing in respect of the existing $15 million loan
made by the Company to Mr. Legere under the Unsecured Promissory Note dated on
or about February 12, 2000 (the Legere Note), and (5) the
Company and Global Crossing agree that they will pay Mr. Legere cash compensation on a pro rata
basis to be agreed upon from time to time by the Compensation Committees of the
Company and Global Crossing after taking into consideration the time commitment
of Mr. Legere to each of the two companies and such other factors as such
committees shall deem appropriate. Also, it was agreed that Global Crossing or
a subsidiary thereof would assume, in whole or in part, the approximately $10
million outstanding loan amount under the Legere Note.

12



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This information should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes thereto included in
this Quarterly Report on Form 10-Q, and the audited consolidated financial
statements and notes thereto and Managements Discussion and Analysis of
Financial Condition and Results of Operations contained in our Annual Report on
Form 10-K for the year ended December 31, 2000.

General

In the fourth quarter of 2000, we completed our initial public offering
(IPO) in which we sold 68.5 million shares of our Class A common stock at a
price of $7.00 per share. Upon completion of the IPO, Global Crossing, Ltd.
(Global Crossing), Softbank Corp. (Softbank) and Microsoft Corporation
(Microsoft) owned 56.9%, 15.4% and 15.4%, respectively, of us.

Concurrent with our IPO, Global Crossing, Microsoft and Softbank
contributed their aggregate interest of 50% in Hutchison Global Crossing
Holdings Limited and subsidiaries (HGC) to us. At the same time, Global
Crossing contributed its 49% interest in Global Access Limited (GAL) to us.

Concurrent with the closing of the IPO, the Company issued a series of
senior unsecured notes (Senior Notes). The Senior Notes were issued in an
original principal amount of $408 million, mature on October 15, 2010 and bear
interest at the rate of 13.375% per annum. Interest on the Senior Notes is
payable on April 15 and October 15 of each year.

On July 10, 2001, we completed our acquisition of the Asian operations of
IXnet and IPC as well as the territorial rights to conduct telecommunications
service businesses in Australia and New Zealand. Currently, we are pursuing
the sale of the Asian operation of IPC, in conjunction with the sale of the
rest of IPC business by Global Crossing.

In December 1999, the first segment of Pacific Crossing-1 commenced
service, and the full ring was completed in December 2000. In January 2001, the
first segment of East Asia Crossing connecting Hong Kong and Japan commenced
service. During the quarter, the northern ring of East Asia Crossing was
completed. Currently, East Asia Crossing has landed and was lit in Korea, and
is in service in Japan, Hong Kong and Taiwan.

Our revenue through the end of year 2000 was primarily derived from the
sale of wholesale bandwidth capacity on Pacific Crossing-1. In year 2001, our
revenue is derived from the sale of data and maintenance services to wholesale
and business customers and the sale of wholesale bandwidth capacity on Pacific
Crossing-1 and East Asia Crossing.

Since Pacific Crossing-1 and East Asia Crossing commenced service,
wholesale bandwidth pricing in the trans-Pacific and pan-Asia market has
significantly declined. We expect that wholesale bandwidth pricing in the
trans-Pacific and pan-Asia market will continue to decline in future years, as
the supply of trans-Pacific and pan-Asia bandwidth capacity increases.
Likewise, we expect prices to decline in other markets in which we will
operate.

Results of Operations

We monitor our financial performance using certain metrics which reflect
our performance and liquidity on a consolidated basis, and on a proportionate
ownership basis, reflecting our interests in consolidated and non-consolidated
joint ventures. These metrics should not be considered as an alternative to any
measure of performance as promulgated under generally accepted accounting
principles (GAAP).

We conduct our business through a number of entities, many of which are
not consolidated since we do not exercise effective control of these entities.
We present certain proportionate financial metrics which we believe reflect the
economic results of the business in this context. In calculating the
proportionate metrics, we apply our legal ownership percentage of joint
ventures, even though we do not have direct access to the underlying cash flows
belonging to such ventures. These proportionate metrics should not be
considered as an alternative to any measure of performance as promulgated under
GAAP. In calculating Proportionate Cash Revenue, cash received by Asia Global
Crossing and its affiliates for capacity purchases on specific systems are
treated as cash received by the companies which provide the capacity. In
addition, management makes certain estimates and assumptions since, among other
things, Cash Revenue may be associated with capacity selections that the
customer may make at a later time. Actual amounts and results could differ from
those estimates.

13



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We define Cash Revenue as revenue plus the cash portion of the change in
deferred revenue. We present Cash Revenue because it is a financial indicator
used by investors and analysts to compare companies on the basis of cash
receipts from sales of capacity and services.

We define Adjusted EBITDA as operating income (loss) plus goodwill and
intangible amortization, depreciation and amortization, which includes non-cash
cost of capacity sold, stock-related expenses and the cash portion of the
change in deferred revenue. We track Adjusted EBITDA because it is a financial
indicator used by investors and analysts to analyze and compare companies on
the basis of operating performance and because we believe that Adjusted EBITDA
is an additional, meaningful measure of our performance and liquidity. Our
definition and calculation of Adjusted EBITDA may be different from the
definitions and calculations used by other companies and, therefore,
comparability may be limited.

We define Proportionate Cash Revenue as the sum of the Cash Revenue
allocated to us and our joint ventures, plus incremental Cash Revenue
contributions from these joint ventures, in each case multiplied by our
ownership of each entity.

We define Proportionate Adjusted EBITDA as Proportionate Cash Revenue
less the Cash Operating Expenses of us and our joint ventures, in each case
multiplied by our ownership percentage of such entities. We define Cash
Operating Expense as operating expenses excluding goodwill and intangible
amortization, depreciation and amortization including non-cash cost of capacity
sold, and stock-related expenses.

Three months ended September 30, 2001 compared to the three months ended September 30, 2000

The following table represents the selected unaudited consolidated
financial data for the three months ended September 30, 2001 and 2000,
respectively (in thousands):

|                                                             |                                                |                                                               |                                                                    |         |                        |        |                    |         |         |        | 
|------------------------------------------------------------ | ---------------------------------------------- | ------------------------------------------------------------- | ------------------------------------------------------------------ | ------- | ---------------------- | ------ | ------------------ | ------- | ------- | ------ | 
|                                                             |                                                |                                                               |                                                                    |         | Three Months Ended (1)
|                                                             |                                                |                                                               |                                                                    |         |                       
|                                                             |                                                |                                                               |                                                                    |         | September 30, 2001     |        | September 30, 2000
|                                                             |                                                |                                                               |                                                                    |         |                        |        |                   
|Revenues                                                     |                                                | $                                                             | 33,584                                                             |         |                        | $      | 28,068             |        
|Proportionate Cash Revenue                                   |                                                |                                                               | 128,945                                                            |         |                        |        | 63,945             |        
|Proportionate Adjusted EBITDA                                |                                                |                                                               | 41,381                                                             |         |                        |        | 6,694              |        
|Revenues:                                                    |                                                |                                                               |                                                                    |         |                        |        |                    |        
|                                                             | Sales-type leases                              |                                                               | $                                                                  |        |                        |        | $                  | 17,013  |        
|                                                             | Services (2)                                   |                                                               |                                                                    | 29,056  |                        |        |                    | 10,197  |        
|                                                             | Amortization of prior period IRUs             |                                                               |                                                                    | 4,528   |                        |        |                    | 858     |        
|                                                             |                                                |                                                               |                                                                    |         |                        |        |                    |        
|                                                             | Total Revenues                                 |                                                               | $                                                                  | 33,584  |                        |        | $                  | 28,068  |        
|                                                             |                                                |                                                               |                                                                    |         |                        |        |                    |        
|Adjusted EBITDA:                                             |                                                |                                                               |                                                                    |         |                        |        |                    |        
|                                                             | Operating loss                                 |                                                               | $                                                                  | (61,256 | )                      |        | $                  | (34,106 | )      
|                                                             | Depreciation and amortization                  |                                                               |                                                                    | 29,268  |                        |        |                    | 23,210  |        
|                                                             | Cash portion of the change in deferred revenue |                                                               |                                                                    | 49,466  |                        |        |                    | 50,791  |        
|                                                             |                                                |                                                               |                                                                    |         |                        |        |                    |        
|                                                             | Adjusted EBITDA                                |                                                               | $                                                                  | 17,478  |                        |        | $                  | 39,895  |        
|                                                             |                                                |                                                               |                                                                    |         |                        |        |                    |        
|Proportionate Cash Revenue and Proportionate Adjusted EBITDA |                                                |                                                               |                                                                    |         |                        |        |                    |        
|                                                             | Cash Revenue                                   |                                                               | $                                                                  | 83,050  |                        |        | $                  | 78,859  |        
|                                                             | Adjustments:                                   |                                                               |                                                                    |         |                        |        |                    |         |        
|                                                             |                                                | Cash Revenue proportionately allocated to other companies (3) |                                                                    |         | 25,595                 |        |                    |         | (31,992 | )     
|                                                             |                                                |                                                               | Incremental contributions from non-consolidated joint ventures (4) |         |                        | 20,300 |                    |         |         | 17,078 | 
|                                                             |                                                |                                                               |                                                                    |         |                        |        |                    |        
|                                                             | Proportionate Cash Revenue                     |                                                               | $                                                                  | 128,945 |                        |        | $                  | 63,945  |        
|                                                             | Less: Proportionate cash operating expense (5) |                                                               |                                                                    | (87,564 | )                      |        |                    | (57,251 | )      
|                                                             |                                                |                                                               |                                                                    |         |                        |        |                    |        
|                                                             | Proportionate Adjusted EBITDA                  |                                                               | $                                                                  | 41,381  |                        |        | $                  | 6,694   |        
|                                                             |                                                |                                                               |                                                                    |         |                        |        |                    |        

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---

|(1) |  | The amounts reflected IXnet Asias results and the discontinued operation
treatment of IPC Asia business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Services revenue for the quarter ended September 30, 2001 includes OA&M
revenue of $7.5 million and International Private Line lease revenue from
carriers of $4.7 million. For the quarter ended September 30, 2000, $2.6
million of OA&M revenue and $0 of International Private Line lease revenue
from carriers were included.                                                                                                                                                                                                                                                          
|   
|   
|   
|   
|(3) |  | This amount represents other companies ownership percentage of joint
ventures multiplied by the Cash Revenue allocated to such entities. The
calculation of this amount requires management to make certain estimates
and assumptions since, among other things, Cash Revenue may be associated
with capacity selections that the customer may make at a later time.
Actual amounts and results could differ from those estimates. During the
current quarter, $36.6 million of Proportionate Cash Revenue was
attributed to the capacity selection associated with previous cash
receipts.
|   
|   
|   
|   
|(4) |  | This amount represents Cash Revenue generated by business between the
Companys non-consolidated joint ventures and third parties multiplied by
the Companys ownership percentage.                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|   
|   
|   
|(5) |  | This amount represents the Companys ownership percentage in cash
operating expenses of the Company and its affiliates. Cash operating
expense is defined as operating expense plus goodwill and intangible
amortization, depreciation and amortization, which includes non-cash cost
of capacity sold, and stock-related expenses.                                                                                                                                                                                                                                                         

Revenues. Revenues for the current quarter were $33.6 million, compared to
$28.1 million in the same quarter of 2000, an increase of $5.5 million, or
19.6%. Revenue in the third quarter of 2000 included $17.0 million of
sales-type lease revenue. In accounting for a sales-type lease, revenue is
recognized upon payment and activation of the circuits rather than amortized
over the life of the lease. We have de-emphasized such type of transactions
with our customers. Excluding the impact of $17.0 million of sales-type lease
revenue in the third quarter of 2000, revenues for the third quarter of 2001
increased $22.5 million. The growth was primarily due to an $18.8 million
increase in recurring services revenue and a $3.7 million increase in the
amortization of Indefeasible Right to Use (IRU) deferred revenues. The
increase of recurring services revenue was primarily due to a $4.9 million
increase in OA&M revenue as a result of the increasing number of activated
IRUs, and the growth in data service business as we gained a larger customer
base in the market.

Proportionate Cash Revenue.Proportionate Cash Revenue for the third
quarter of 2001 increased to $128.9 million from $63.9 million in the same
quarter of 2000, an increase of $65.0 million, or 101.7%, primarily
attributable to the increased contribution from our subsea cable systems and
increased services revenue. The contribution from our subsea cable systems
increased $30.8 million, or 131.6% as compared to the same quarter of prior
year. During the current quarter, a $36.6 million of Proportionate Cash
Revenue was a result of capacity selection made by a customer associated with
cash received in prior quarters. The services revenue increased $39.9 million
in the current quarter as compared to the same period in 2000. In the current
quarter, we continued to roll out our suite of IP services throughout the Asia
region and now we offer services in nine major cities in Asia. During the same
quarter of last year, we were in the early phase of our IP services offering in
limited cities in Asia. Included in Proportionate Cash Revenue was $32.7
million received from carrier customers to whom Global Crossing or we made
purchase commitments during the quarter. Payments made by us to such carriers
during the quarter totaled approximately $34.8 million. See Liquidity and
Capital Resources.

Cost of access and maintenance. For the three months ended September 30,
2001, cost of access and maintenance increased to $29.0 million from $17.9
million in the same period of 2000, an increase of $11.1 million, or 62.0%, due
primarily to the increased cost of access associated with the continued growth
in sales of our international data services and increased maintenance costs for
our expanding network. The cost of access increased approximately $8.2 million
in the current quarter as compared to the same quarter in the prior year. The
slight increase in maintenance costs of our network was because East Asia
Crossing segments became operational since the first quarter of this year. In
the third quarter of 2000, only Pacific Crossing - 1 was in operation.

Other operating expenses.Other operating expenses increased to $36.6
million for the quarter ended September 30, 2001 from $21.1 million in the
comparable 2000 period, an increase of $15.5 million, or 73.5%, primarily due
to the continued expansion of our business and operations throughout the year.
As our business continued to grow, costs of sales and marketing, customer
support, internal network support and operation, and general administration
increased accordingly.

Depreciation and amortization. Depreciation and amortization expense for
the third quarter of 2001 increased to $29.3 million from $23.2 million in the
same quarter of 2000, an increase of $6.1 million, or 26.3%. Depreciation and
amortization expense

15



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##### Table of Contents



includes non-cash cost of capacity sold resulting from capacity sales that
meet the qualifications of sales-type lease accounting. For the quarter ended
September 30, 2001, there was no non-cash cost of capacity sold because we have
de-emphasized sales-type leases with customers. For the third quarter of 2000,
the non-cash cost of capacity sold included in depreciation and amortization
expense was approximately $13.3 million. Excluding the impact of non-cash cost
of capacity sold, depreciation and amortization expense for the third quarter
of 2001 would have increased $19.4 million, due primarily to additional
depreciation expense incurred for Pacific Crossing-1, of which the full ring
became fully operational at the end of 2000, but only the first segment was
operational in the first quarter of 2000. In 2001, depreciation began on
certain segments of East Asia Crossing, which became operational during the
year. The depreciation of capacity purchased from affiliates also contributed
to a small portion of the increase.

Minority interest. Minority interest represents the minority partners
interest in the income or loss of our consolidated joint ventures, primarily
Pacific Crossing Ltd. For the third quarter of 2001, minority interest was
$12.9 million, compared to $2.5 million in the comparable prior year period.
Pacific Crossing Ltd. incurred larger losses in the third quarter of 2001, due
primarily to the decrease in sales-type lease revenue, and increases of
depreciation and amortization, and interest expense as a result of the
completion of PC-1 construction at the end of 2000. Upon completion of system
construction, interest costs are no longer capitalized and depreciation
commences.

Equity in loss of affiliates.Equity in loss of affiliates for the three
months ended September 30, 2001 increased to $16.2 million from $15.0 million
in the comparable prior year period, an increase of $1.2 million, or 8%,
primarily due to a larger loss incurred by HGC and affiliates.

Interest income. Interest income increased to $6.6 million in the third
quarter of 2001 from $3.2 million for the third quarter of 2000, an increase of
$3.4 million, or 106.3%. The significant increase was primarily due to
investment returns on cash received from our initial public offering and senior
notes offering in October 2000 and capacity sales.

Interest expense. For the third quarter of 2001, interest expense
increased to $12.8 million from $0.5 million in the comparable prior year
period, an increase of $12.3 million, due primarily to interest incurred under
the Pacific Crossing-1 credit facility not being capitalized in the third
quarter of 2001.

Loss on write-down of investment securities.For the third quarter of
2001, we recorded a one-time charge of $20.0 million related to our
available-for-sale investment securities of a minority strategic investment
under the provision of SFAS No. 115 Accounting for Certain Investments in Debt
and Equity Securities. This charge represented a decline in the market value
of such investment securities that was deemed to be other than temporary.

Provision for income taxes. Bermuda does not impose a statutory income tax
and consequently the provision for income taxes of $0.7 million recorded in the
third quarter of 2001 related to income earned by certain subsidiaries which
are located in jurisdictions which impose or may impose income taxes.

Proportionate Adjusted EBITDA. For the three months ended September 30,
2001, Proportionate Adjusted EBITDA increased to $41.4 million from $6.7
million in the same period of 2000, an increase of $34.7 million, due primarily
to a $65.0 million increase in Proportionate Cash Revenue, partially offset by
a $30.3 million increase in proportionate operating expenses due to growing
operating activities.

Nine months ended September 30, 2001 compared to the nine months ended September 30, 2000

The following table represents the selected unaudited consolidated
financial data for the nine months ended September 30, 2001 and 2000,
respectively (in thousands):

16



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##### Table of Contents



|                                                             |                                                |                                                               |                                                                    |          |                       |        |                    |          |         |        | 
|------------------------------------------------------------ | ---------------------------------------------- | ------------------------------------------------------------- | ------------------------------------------------------------------ | -------- | --------------------- | ------ | ------------------ | -------- | ------- | ------ | 
|                                                             |                                                |                                                               |                                                                    |          | Nine Months Ended (1)
|                                                             |                                                |                                                               |                                                                    |          |                      
|                                                             |                                                |                                                               |                                                                    |          | September 30, 2001    |        | September 30, 2000
|                                                             |                                                |                                                               |                                                                    |          |                       |        |                   
|Revenues                                                     |                                                | $                                                             | 74,840                                                             |          |                       | $      | 137,539            |         
|Proportionate Cash Revenue                                   |                                                |                                                               | 540,296                                                            |          |                       |        | 215,683            |         
|Proportionate Adjusted EBITDA                                |                                                |                                                               | 300,179                                                            |          |                       |        | 84,299             |         
|Revenues:                                                    |                                                |                                                               |                                                                    |          |                       |        |                    |         
|                                                             | Sales-type leases                              |                                                               | $                                                                  |         |                       |        | $                  | 123,165  |        
|                                                             | Services (2)                                   |                                                               |                                                                    | 67,522   |                       |        |                    | 12,994   |        
|                                                             | Amortization of prior period IRUs             |                                                               |                                                                    | 7,318    |                       |        |                    | 1,380    |        
|                                                             |                                                |                                                               |                                                                    |          |                       |        |                    |         
|                                                             | Total Revenues                                 |                                                               | $                                                                  | 74,840   |                       |        | $                  | 137,539  |        
|                                                             |                                                |                                                               |                                                                    |          |                       |        |                    |         
|Adjusted EBITDA:                                             |                                                |                                                               |                                                                    |          |                       |        |                    |         
|                                                             | Operating loss                                 |                                                               | $                                                                  | (188,469 | )                     |        | $                  | (60,276  | )      
|                                                             | Depreciation and amortization                  |                                                               |                                                                    | 79,480   |                       |        |                    | 116,086  |        
|                                                             | Cash portion of the change in deferred revenue |                                                               |                                                                    | 542,551  |                       |        |                    | 116,904  |        
|                                                             |                                                |                                                               |                                                                    |          |                       |        |                    |         
|                                                             | Adjusted EBITDA                                |                                                               | $                                                                  | 433,562  |                       |        | $                  | 172,714  |        
|                                                             |                                                |                                                               |                                                                    |          |                       |        |                    |         
|Proportionate Cash Revenue and Proportionate Adjusted EBITDA |                                                |                                                               |                                                                    |          |                       |        |                    |         
|                                                             | Cash Revenue                                   |                                                               | $                                                                  | 617,391  |                       |        | $                  | 254,443  |        
|                                                             | Adjustments:                                   |                                                               |                                                                    |          |                       |        |                    |          |        
|                                                             |                                                | Cash Revenue proportionately allocated to other companies (3) |                                                                    |          | (133,135              | )      |                    |          | (85,735 | )     
|                                                             |                                                |                                                               | Incremental contributions from non-consolidated joint ventures (4) |          |                       | 56,040 |                    |          |         | 46,975 | 
|                                                             |                                                |                                                               |                                                                    |          |                       |        |                    |         
|                                                             | Proportionate Cash Revenue                     |                                                               | $                                                                  | 540,296  |                       |        | $                  | 215,683  |        
|                                                             | Less: Proportionate cash operating expense (5) |                                                               |                                                                    | (240,117 | )                     |        |                    | (131,384 | )      
|                                                             |                                                |                                                               |                                                                    |          |                       |        |                    |         
|                                                             | Proportionate Adjusted EBITDA                  |                                                               | $                                                                  | 300,179  |                       |        | $                  | 84,299   |        
|                                                             |                                                |                                                               |                                                                    |          |                       |        |                    |         



---

|(1) |  | The amounts reflected IXnet Asias results and the discontinued operation
treatment of IPC Asia business.                                                                                                                                                                                                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Services revenue for the nine months ended September 30, 2001 includes
OA&M revenue of $14.8 million and International Private Line lease revenue
from carriers of $8.1 million. For the nine months ended September 30,
2000, $5.4 million of OA&M revenue and $0 of International Private Line
lease revenue from carriers were included.                                                                                        
|   
|   
|   
|   
|(3) |  | This amount represents other companies ownership percentage of joint
ventures multiplied by the Cash Revenue allocated to such entities. The
calculation of this amount requires management to make certain estimates
and assumptions since, among other things, Cash Revenue may be associated
with capacity selections that the customer may make at a later time.
Actual amounts and results could differ from those estimates.
|   
|   
|   
|   
|(4) |  | This amount represents Cash Revenue generated by business between the
Companys non-consolidated joint ventures and third parties multiplied by
the Companys ownership percentage.                                                                                                                                                                                                                                                
|   
|   
|   
|   
|(5) |  | This amount represents the Companys ownership percentage in cash
operating expenses of the Company and its affiliates. Cash operating
expense is defined as operating expense plus goodwill and intangible
amortization, depreciation and amortization, which includes non-cash cost
of capacity sold, and stock-related expenses.                                                                                                

Revenues. Revenues for the nine months ended September 30, 2001 were $74.8
million, compared to $137.5 million in the same period of 2000, a decrease of
$62.7 million, or 45.6%. Revenue in the nine months ended September 30, 2000
included $123.2 million of sales-type lease revenue. In accounting for a
sales-type lease, revenue is recognized upon payment and activation of the
circuits

17



---



##### Table of Contents



rather than amortized over the life of the lease. We have de-emphasized
such type of transactions with our customers. Excluding the impact of $123.2
million of sales-type lease revenue in the nine months ended September 30,
2000, revenues for the nine months ended September 30, 2001 increased $60.5
million. The growth was primarily due to a $54.5 million increase in recurring
services revenue and a $5.9 million increase in the amortization of IRU
deferred revenues. The increase of recurring services revenue was primarily
due to a $9.5 million increase in OA&M revenue as a result of the increasing
number of activated IRUs, and the growth in data service business as we gained
a larger customer base in the market.

Proportionate Cash Revenue.Proportionate Cash Revenue for the nine months
ended September 30, 2001 increased to $540.3 million from $215.7 million in the
same period of 2000, an increase of $324.6 million, or 150.5%, primarily
attributable to the increased contribution from our subsea cable systems and
increased services revenue. The contribution from our subsea cable systems
increased $156.8 million, or 155.1% as compared to the same quarter of the
prior year. The increase was primarily due to an increase of capacity sales
on our network. The services revenue increased $ 126.7 million in the current
period as compared to comparable 2000 period. In 2001, we continued to roll
out our suite of IP services throughout the Asia region and now we offer
services in nine major cities in Asia. During last year, we were in the early
phase of our IP services offering in limited cities in Asia. Included in
Proportionate Cash Revenue was $307.7 million received from carrier customers
to whom Global Crossing or we made purchase commitments during the nine months
ended September 30, 2001. Payments made by us to such carriers for the three
months ended September 30, June 30, and March 31, 2001 totaled $0, $82.0
million and $34.8 million, respectively. See Liquidity and Capital Resources.

Cost of access and maintenance. For the nine months ended September 30,
2001, cost of access and maintenance increased to $77.4 million from $42.1
million in the same period of 2000, an increase of $35.3 million, or 83.8%,
primarily due to the increased cost of access associated with the continued
growth in our international data products and the increased maintenance costs
for our expanding network. The cost of access increased approximately $26.9
million in the nine months ended September 30, 2001 as compared to the same
period in the prior year. The maintenance costs of our network increased $6.9
million as East Asia Crossing segments became operational since first quarter
of 2001. In the first nine months of 2000, only Pacific Crossing - 1 was in
operation.

Other operating expenses.Other operating expenses increased to $106.5
million for the nine months ended September 30, 2001 from $39.7 million in the
comparable prior year period, an increase of $66.8 million, or 168.3 %,
primarily due to the continued expansion of our business and operations
throughout the year. As our business continued to grow, costs of sales and
marketing, customer support, internal network support and operation, and
general administration increased accordingly.

Depreciation and amortization. Depreciation and amortization expense for
the nine months ended September 30, 2001 decreased to $79.5 million from $116.1
million, a decrease of $36.6 million, or 31.5%. Depreciation and amortization
expense includes non-cash cost of capacity sold resulting from capacity sales
that meet the qualifications of sales-type lease accounting. For the nine
months ended September 30, 2001, there was no non-cash cost of capacity sold
because we have de-emphasized sales-type leases with customers. For the nine
months ended September 30, 2000, the non-cash cost of capacity sold included in
depreciation and amortization expense was $98.2 million. Excluding the impact
of non-cash cost of capacity sold, depreciation and amortization expense for
the nine months ended September 30, 2001 would have increased $61.6 million,
due primarily to additional depreciation expense incurred for Pacific
Crossing-1, of which the full ring became fully operational at the end of 2000,
but only the first segment was operational in the first quarter of 2000. In
2001, depreciation began on certain segments of East Asia Crossing, which
became operational during the year. The depreciation of capacity purchased from
affiliates also contributed to a small portion of the increase.

Minority interest. Minority interest represents the minority partners
interest in the income or loss of our consolidated joint ventures, primarily
Pacific Crossing Ltd. For the nine months ended September 30, 2001, minority
interest was $44.5 million, compared to $(9.6) million in the comparable prior
year period. Pacific Crossing Ltd. recorded net loss in the first nine months
of 2001, due primarily to the decrease in sales-type lease revenue, and
increase in depreciation and amortization, and interest expense as a result of
the completion of PC-1 construction at the end of 2000. Upon completion of
system construction, interest costs are no longer capitalized and depreciation
commences. In the first nine months of 2000, Pacific Crossing Ltd. recorded
net income.

Equity in loss of affiliates.Equity in loss of affiliates for the nine
months ended September 30, 2001 increased to $48.8 million from $41.7 million
in the comparable prior year period, an increase of $7.1 million, or 17%,
primarily due to a larger loss incurred by HGC and affiliates.

Interest income. Interest income increased to $27.3 million in the first
nine months of 2001 from $11.4 million for the same period of 2000, an increase
of $15.9 million, or 139.5%. The significant increase was primarily due to
investment returns on cash received from our initial public offering and senior
notes offering in October 2000 and capacity sales.

18



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##### Table of Contents



Interest expense. For the nine months ended September 30, 2001, interest
expense increased to $42.1 million from $1.6 million in the comparable prior
year period, an increase of $40.5 million, due primarily to interest incurred
under the Pacific Crossing-1 credit facility not being capitalized in 2001.

Loss on write-down of investment securities.For the nine months ended
September 30, 2001, we recorded a one-time charge of $20.0 million related to
our available-for-sale investment securities of a minority strategic investment
under the provision of SFAS No. 115 Accounting for Certain Investments in Debt
and Equity Securities. This charge represented a decline in the market value
of such investment securities that was deemed to be other than temporary.

Provision for income taxes. Bermuda does not impose a statutory income tax
and consequently the provision for income taxes of $3.7 million recorded in the
nine months ended September 30, 2001 related to income earned by certain
subsidiaries which are located in jurisdictions which impose or may impose
income taxes.

Proportionate Adjusted EBITDA. For the nine months ended September 30,
2001, Proportionate Adjusted EBITDA increased to $300.2 million from $84.3
million in the same period of 2000, an increase of $215.9 million, due
primarily to a $324.6 million increase in Proportionate Cash Revenue, partially
offset by a $108.7 million increase in proportionate operating expenses due to
growing operating activities.

Liquidity and Capital Resources

The Companys
principal sources of capital and liquidity are expected to be existing cash balances, cash flows from
operations, the Pacific Crossing-1 credit facility
and a $400 million subordinated stand-by credit facility provided by Global
Crossing (the Parent Credit Facility).

Under the Parent Credit Facility, Global Crossing has agreed to lend us up
to $400 million on a subordinated basis. Global Crossing has committed to keep
half of this facility available for borrowings until December 31, 2002, and has
committed to keep the remainder of this facility available for borrowings until
we achieve certain financial performance targets. We are permitted to use the
proceeds of the Parent Credit Facility to build out our network, to pay
operating expenses, interest on the Senior Notes, the Parent Credit Facility
and other indebtedness and for general corporate purposes. Borrowings under the
Parent Credit Facility will bear interest at a rate of 14.875%. The Parent
Credit Facility will mature six months after the maturity date of the Senior
Notes, and no principal will be payable until maturity. As of September 30,
2001, there was no outstanding balance under the Parent Credit Facility.

As of September 30, 2001, we had $523.5 million in cash and cash
equivalents and $88.2 million in restricted cash and cash equivalents. In
addition, we had $45.6 million in unused borrowing capacity under the Pacific
Crossing-1 credit facility and $400 million in unused borrowing capacity under
the Parent Credit Facility.

Net cash provided by operating activities was $478.6 million for the nine
months ended September 30, 2001, compared to $141.6 million for the comparable
period of 2000. The $337.0 million increase in cash flow from operating
activities is mainly attributable to cash received from capacity sales,
partially offset by increased cash operating expenses and prepayments for
purchased capacity. Cash flow from operating activities during the first and
second quarters of 2001 was $211.2 million and $217.7 million, respectively,
and in the third quarter was $49.7 million. This decrease in the third quarter
is primarily attributable to a decrease of cash revenue from capacity sales.
It is unlikely that capacity sales in the fourth quarter of 2001 will return to
levels similar to those in the first two quarters, and there can be no
assurance as to when or if capacity sales will return to these levels. In
addition, you should consider that a significant portion of cash flows from
capacity sales may be required to be used to purchase associated
capacity from
joint ventures in which the Company is an investor and from Global Crossing,
and such purchases may be shown as capital expenditures rather than
reductions in cash flow from operations. Cash paid to such affiliated companies
is not directly available to the Company.

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Net cash used in investing activities was $632.3 million for the nine
months ended September 30, 2001, compared to $421.0 million for the same period
of 2000. The increase of $211.3 million was primarily due to construction of
East Asia Crossing and capacity purchases.

We entered into several agreements with various carrier customers for the
purchase or lease of capacity and co-location space. These transactions were
implemented in order to acquire cost-effective local network expansions; to
provide for cost-effective alternatives to new construction in certain markets
in which the Company anticipates shortage of capacity; and to provide
additional levels of physical diversity in the network. Payments made by us to
such carriers totaled $34.8 million, $82.0 million and $0 for the three months
ended September 30, June 30 and March 31, 2001, respectively.

Net cash provided by (used in) financing activities was $(35.4) million and $
377.2 million for the nine months ended September 30, 2001 and 2000,
respectively. The decrease was primarily due to capital contributions in the
first nine months of 2000 from our founding shareholders prior to our IPO in
October 2000 and repayments of the PC-1 credit facility during the first nine
months of 2001.

As of September 30, 2001, the remaining committed construction cost for
East Asia Crossing was approximately $195.5 million through the end of 2002 and
the remaining committed construction cost for the upgrade of Pacific Crossing-1
was approximately $5.1 million.

Our consolidated cash paid for capital expenditures for 2001 is expected
to be $900.0 million to $1.0 billion, of which $683.5 million was incurred
during the first nine months of 2001.

Pacific Crossing Ltd. is a party to an OA&M agreement with Global Crossing
Network Center, Ltd. The agreement is for an initial term of eight years with
two renewal periods of five years each at Pacific Crossing Ltd.s option. The
amounts payable under the agreement are $43.0 million and $42.2 million for
year 2001 and 2002, respectively. These fees will increase by 3.0% each year
starting in the year ended December 31, 2003, through the end of the agreement
in 2007.

Under another OA&M agreement, Pacific Crossing Ltd. is committed to paying
GAL JPY600 million (approximately $5.1 million based on the exchange rate at
September 30, 2001) each year through 2002, increasing by 3.0% thereafter
through 2007.

The OA&M services on East Asia Crossing are provided by Global Crossing.
For the nine months ended September 30, 2001, the aggregate OA&M expense was
approximately $9.6 million. We expect this expense will increase as more
segments of East Asia Crossing are completed.

We have formed a joint venture company, Exodus Asia Pacific, owned 33% by
us and 67% by Exodus, to offer a full range of Internet operations outsourcing
services to customers in Asia, including web-hosting services, managed service
offerings, professional services and content distribution. Pursuant to the
joint venture agreement, we can be required to contribute $33 million in cash
and all of our data center and related assets to the joint venture. In
addition, the board of directors of the joint venture may require us to make
additional capital contributions of up to $167 million over the three-year
period following formation of the joint venture. To date, neither we nor Exodus
has contributed capital or data center or related assets to the joint venture.

We have a substantial amount of indebtedness. Based upon managements
current expectations, we believe that our existing cash balances, cash flows
from operations, and unused borrowing capacity under the Pacific Crossing-1 credit
facility and the Parent Credit Facility (the "Facilities) will be adequate to
meet our anticipated requirements for working capital, capital expenditures,
discretionary investments, interest payments and scheduled principal payments
for the foreseeable future. There is a reasonable probability that a
financial covenant relating to the credit facility for Pacific Crossing Ltd., a 64.5%-owned
subsidiary of the Company, will not, as of January 1, 2002, be
satisfied. Failure to satisfy this covenant is not an
event of default under the Pacific Crossing-1 credit facility, and does not
limit the ability to draw any remaining amounts under the facility. Such
failure would, however, require Pacific Crossing Ltd. to pay 100% of excess
cash flow, as defined under the facility, to the lenders thereunder instead of
50% of excess cash flow as required when the borrower is in compliance with
this covenant.

In any case, there can be no assurance that our business will continue to
generate cash flow at or above current levels or that funds will be available
under the Facilities. Also, there can be no assurance that our business and our
continued ability to raise capital will be adequate to meet our anticipated
requirements for working capital, capital expenditures, discretionary
investments, interest payments and scheduled principal payments. If we believe that we will be unable to meet current
capital needs, we may be required to reduce capital expenditures, including
through suspension or termination of network constructions contracts; refinance all or a portion of our existing debt; or obtain additional
financing. There can be no assurance that such refinancing or additional
financing will be available to us.

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Inflation

We do not believe that our business is impacted by inflation to a
significantly different extent than the general economy.

Information Regarding Forward-Looking Statements

We have included forward-looking statements throughout this Quarterly
Report on Form 10-Q. These forward-looking statements describe managements
intentions, beliefs, expectations or predictions for the future. We use the
words believe, anticipate, expect, intend and similar expressions to
identify forward-looking statements. Such forward-looking statements are
subject to a number of risks, assumptions and uncertainties that could cause
our actual results to differ materially from those projected in such
forward-looking statements. These risks, assumptions and uncertainties include:



| |  |  | the ability to complete systems within the currently estimated time frames and budgets;               
| | - |  | ------------------------------------------------------------------------------------------------------
|
| |  |  | the ability to compete effectively in a rapidly evolving and price competitive marketplace;           
|
| |  |  | changes in business strategy;                                                                         
|
| |  |  | changes in the nature of telecommunications regulation in the United States, Asia and other countries;
|
| |  |  | the successful integration of newly-acquired businesses;                                              
|
| |  |  | the ability of the Company to continue to have access to capital; and                                 
|
| |  |  | the impact of technological change.                                                                   

This list is only an example of some of the risks, uncertainties and
assumptions that may affect our forward-looking statements. We undertake no
obligation to update any forward-looking statements made by it.

Reference is made to our Annual Report on Form 10-K for a more complete
discussion of the risks, uncertainties and other factors that may affect our
business.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The table below provides information about our market sensitive financial
instruments and constitutes a forward-looking statement. Our major market
risk exposure is changing interest rates. Our policy is to manage interest
rates through the use of a combination of fixed and floating rate debt.
Interest rate swaps may be used to adjust interest rate exposures when
appropriate, based upon market conditions, and we do not engage in transactions
for speculative or trading purposes.

|                                      |                                    |   |                           |    |               |   |        |    |      |   |         |    |            |   |         |    |      |   |        |         |   |   |         |       |   |   |         |         |  |   |         |         |  
|------------------------------------- | ---------------------------------- | - | ------------------------- | -- | ------------- | - | ------ | -- | ---- | - | ------- | -- | ---------- | - | ------- | -- | ---- | - | ------ | ------- | - | - | ------- | ----- | - | - | ------- | ------- |  | - | ------- | ------- | -
|                                      |                                    |   | Expected Year of Maturity |    | Fair Value   
|                                      |                                    |   |                           |    | September 30,
|                                      |                                    |   | 2001                      |    | 2002          |   | 2003   |    | 2004 |   | 2005    |    | Thereafter |   | Total   |    | 2001
|                                      |                                    |   |                           |    |               |   |        |    |      |   |         |    |            |   |         |    |     
|                                      |                                    |   | (In thousands)           
|DEBT:                                 |                                    |   |                           |    |               |   |        |    |      |   |         |    |            |   |         |    |      |   |        |         |   |   |         |       |   |   |         |         |  |   |         |        
|Pacific Crossing - 1 Credit Facility  |                                    | $ | 71,229                    |    |               | $ | 81,776 |    |      | $ | 103,260 |    |            | $ | 115,760 |    |      | $ | 94,207 |         |   | $ | 266,066 |       |   | $ | 732,298 |         |  | $ | 732,298 |        
|                                      | Average interest rates  variable  |   |                           | (1 | )             |   |        | (1 | )    |   |         | (1 | )          |   |         | (1 | )    |   |        | (1      | ) |   |         | (1    | ) |   |         |         |  |   |         |         |  
|Senior Notes due 2010                 |                                    |   |                          |    |               |   |       |    |      |   |        |    |            |   |        |    |      |   |       |         |   | $ | 408,000 |       |   | $ | 408,000 |         |  | $ | 219,980 |        
|                                      | Average interest rates  fixed     |   |                           |    |               |   |        |    |      |   |         |    |            |   |         |    |      |   |        |         |   |   |         | 13.38 | % |   |         |         |  |   |         |         |  
|DERIVATIVE INSTRUMENTS:               |                                    |   |                           |    |               |   |        |    |      |   |         |    |            |   |         |    |      |   |        |         |   |   |         |       |   |   |         |         |  |   |         |        
|Interest rate swap floating for fixed |                                    |   |                           |    |               |   |        |    |      |   |         |    |            |   |         |    |      |   |        |         |   |   |         |       |   |   |         |         |  |   |         |        
|                                      | Contract notional amount           |   |                           |   |               |   |        |   |      |   |         |   |            |   |         |   |      |   | $      | 500,000 |   |   |         |      |   |   | $       | 500,000 |  |   | $       | (14,855 | )
|                                      | Fixed rate paid by the Company     |   |                           |    |               |   |        |    |      |   |         |    |            |   |         |    |      |   |        | 5.00    | % |   |         |       |   |   |         |         |  |   |         |         |  
|                                      | Floating rate paid by counterparty |   |                           |    |               |   |        |    |      |   |         |    |            |   |         |    |      |   |        | (2      | ) |   |         |       |   |   |         |         |  |   |         |         |  



---

|(1) |  | The interest rates are one-month US dollar LIBOR + 2.00  2.25%, which
were 4.7  4.9% as of September 30, 2001.
|--- |  | ----------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The interest rate is one-month United States dollar LIBOR, which was 2.7%
as of September 30, 2001.             

A hypothetical 10% change in interest rate would result in an increase or
decrease of approximately $2.7 million to the fair value of financial
instruments with exposures to interest rate risk as of September 30, 2001.

Foreign Currency Risk

We transact business in various foreign currencies, and are subject to
certain foreign exchange risks. We have established a foreign currency hedging
program utilizing foreign currency forward exchange contracts to hedge certain
of our foreign currency transaction exposures. Under this program, we seek to
offset foreign currency transaction gains and losses with gains and losses on
the forward contracts, so as to mitigate our overall risk of foreign currency
transaction gains and losses. We do not enter into forward contracts for
speculative or trading purposes. In April 2001, we entered into a foreign
exchange forward contract in Japanese yen. The contract has a notional value of
$23.8 million and matures in October 2001. Notional amounts do not quantify
market or credit exposure or represent our assets or liabilities, but are used
in the calculation of cash settlements under the contracts.

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

The Company is not presently subject to any material legal claims or
proceedings.




Item 2. Changes in Securities and Use of Proceeds

Not applicable.




Item 3. Defaults Upon Senior Securities

Not applicable.




Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.




Item 5. Other Information

After giving effect to changes occurring during the year 2001 in the
composition of the Board of Directors and the committees thereof, the following
table sets forth the names, ages and positions (including Board committee
memberships) of the directors of the Company as of November 14, 2001.

|                       |  |     |    |                                     |  |                                                                                                          
|---------------------- |  | --- | -- | ----------------------------------- |  | ---------------------------------------------------------------------------------------------------------
|Name                   |  | Age |    | Positions with Asia Global Crossing
|                       |  |     |    |                                    
|Gary Winnick           |  |     | 54 |                                     |  | Chairman of the Board and Director; Chairman of Executive Committee                                      
|Lodwrick M. Cook       |  |     | 73 |                                     |  | Co-Chairman of the Board and Director; Chairman of Nominating
Committee and member of Executive Committee
|Mark Attanasio         |  |     | 44 |                                     |  | Director; Chairman of Audit Committee and member of Compensation
Committee                               
|Norman Brownstein      |  |     | 58 |                                     |  | Director; Member of Nominating Committee                                                                 
|Joseph P. Clayton      |  |     | 52 |                                     |  | Director                                                                                                 
|William S. Cohen       |  |     | 61 |                                     |  | Director; Member of Compensation Committee                                                               
|Steven J. Green        |  |     | 56 |                                     |  | Director; Member of Nominating Committee                                                                 
|Eric Hippeau           |  |     | 50 |                                     |  | Director; Member of Executive and Nominating Committees                                                  
|Pieter Knook           |  |     | 43 |                                     |  | Director; Member of Executive Committee                                                                  
|Geoffrey J.W. Kent     |  |     | 59 |                                     |  | Director; Chairman of Compensation Committee and member of Audit
Committee                               
|Maria Elena Lagomasino |  |     | 52 |                                     |  | Director; Member of Audit Committee                                                                      
|John J. Legere         |  |     | 43 |                                     |  | Director; Member of Executive Committee; Chief Executive Officer                                         
|John M. Scanlon        |  |     | 59 |                                     |  | Director; Vice Chairman of the Board                                                                     

On October 4, 2001, the Company announced in a joint press release with
Global Crossing that John J. Legere, currently Chief Executive Officer and a
director of the Company, would assume the chief executive officer position of
Global Crossing. In connection with Mr. Legeres new role as CEO of both the
Company and Global Crossing, the Company, Global Crossing and Mr. Legere
entered into an employment agreement pursuant to which, among other things, (1)
Mr. Legere is permitted to serve simultaneously as the chief executive officer
of the Company and Global Crossing and use his discretion to allocate his time
and efforts between the two companies, (2) Mr. Legeres combined salary is $1.1
million per year and his annual target bonus for 2002 and thereafter will be
equal to 125% of his base salary, (3) Mr. Legere received a sign-on bonus from
Global Crossing equal to $3.5 million, net of taxes, (4) Mr. Legere became
entitled to an income tax gross-up by Global Crossing in respect of the existing $15 million loan
made by the Company to Mr. Legere under the Unsecured Promissory Note dated on
or about February 12, 2000 (the Legere Note), and (5) the
Company and Global Crossing agree that they will pay Mr. Legere cash compensation on a pro rata
basis to be agreed upon from time to time by the Compensation Committees of the
Company and Global Crossing after taking into consideration the time commitment
of Mr. Legere to each of the two companies and such other factors as such
committees shall deem appropriate. Also, it was agreed that Global Crossing or a subsidiary thereof would assume, in
whole or in part, the approximately $10 million outstanding loan amount under
the Legere Note.

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On October 9, 2001, the Company announced that the Board of Directors
elected William Barney President, Business Services of the Company. Mr. Barney
will be responsible for all aspects of sales and service delivery to enterprise
customers including customer care, product development and management, and
network deployment and operations.




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

|        |  |                                                                                                                                                                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                  
|Number  |  | Description                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                  
|10.1    |  | Employment Agreement, dated as of October 3, 2001, among Global Crossing Ltd., Asia Global
Crossing Ltd. and John J. Legere (filed herewith).                                                                                                                                                    
|10.2    |  | Employment Agreement, dated as of October 1, 2001, between Asia Global Crossing Ltd. and
William Barney and Asia Global Crossing Ltd. (filed herewith).                                                                                                                                          
|10.3    |  | Shareholders Agreement relating to Hutchison Global Crossing Holdings Limited, dated
September 24, 2001, among Hutchison Telecommunications Limited, Hutchison Whampoa
Limited, Global Crossing Ltd., Asia Global Crossing Ltd. and Hutchison Global Crossing
Holdings Limited (filed herewith).

(b)  Reports on Form 8-K.

None.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| |                                                           |                         
| | --------------------------------------------------------- | ------------------------
| | ASIA GLOBAL CROSSING LTD.                                
|
| | By:                                                       | /s/ Stefan C. Riesenfeld
| |                                                          
| | Name: Stefan C. Riesenfeld
Title: Chief Financial Officer

November 14, 2001

25