SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
For the years ended December 31, 1999 and 1998
Commission File Number 000-24565
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
(Full name of plan)
GLOBAL CROSSING LTD.
(Name of issuer of securities
held pursuant to the plan)
WESSEX HOUSE
45 REID STREET
HAMILTON HM12, BERMUDA
(Address of principal executive offices)
REQUIRED INFORMATION
Report of Independent Accountant - Arthur Andersen LLP
Report of Independent Accountant - PricewaterhouseCoopers LLP
Index to Financial Statements and Schedules
Statements of Net Assets Available for Benefits
as of December 31, 1999 and 1998 Page 1
Statement of Changes in Net Assets Available for
Benefits, for the Year Ended December 31, 1999 Page 2
Notes to Financial Statements Pages 3-7
Schedule of Assets Held for Investment Schedule I
Purposes as of December 31, 1999
The following exhibits are filed as part of this Report.
Consent of Independent Accountants - Arthur Andersen LLP
Consent of Independent Accountants - PricewaterhouseCoopers LLP
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH AUDITORS' REPORT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrator of the
Upstate Cellular Network
Employees' Retirement Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of Upstate Cellular Network Employees' Retirement Savings Plan (the Plan) as of
December 31, 1999, and the related statement of changes in net assets available
for benefits, for the year ended December 31, 1999. These financial statements
and the schedule referred to below are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999, and the changes in its net assets available for benefits, for
the year then ended, in conformity with accounting principles generally accepted
in the United States.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule listed in the
accompanying index is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
Rochester, New York
June 1, 2000
Report of Independent Accountants
To the Participants and Administrator of the
Upstate Cellular Network
Employees' Retirement Savings Plan
In our opinion, the accompanying statement of net assets available for benefits
presents fairly, in all material respects, the net assets available for benefits
of the Upstate Cellular Network Employees' Retirement Savings Plan at December
31, 1998, in conformity with accounting principles generally accepted in the
United States. This financial statement is the responsibility of the Plan's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this statement in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
February 26, 1999
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
INDEX OF FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
PAGE
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31,
1999 AND 1998 1
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR
ENDED DECEMBER 31, 1999 2
NOTES TO FINANCIAL STATEMENTS 3
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1999 8
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
1999 1998
--------------- --------------
Investments, at fair value:
Registered investment companies-
Putnam Growth & Income Fund $ 304,618 $ 136,174
Putnam Global Growth Fund 2,002,845 1,110,768
Putnam Voyager Fund 3,787,651 2,196,248
Putnam Income Fund 430,525 427,868
Putnam Asset Allocation Fund Balanced Portfolio 58,759 23,317
Common trust-
Putnam S&P 500 Index Fund 1,955,766 1,276,317
Stable Value Fund 1,317,878 1,032,858
Frontier Corporation common stock - 1,779,142
Global Crossing Ltd. common stock 6,497,208 -
Participant loans 364,252 334,185
--------------- --------------
Total investments 16,719,502 8,316,877
--------------- --------------
Receivables:
Participants' contributions 25,169 66,338
Employer's contributions 589,004 280,082
--------------- --------------
Total receivables 614,173 346,420
--------------- --------------
Net assets available for benefits $ 17,333,675 $ 8,663,297
=============== ==============
The accompanying notes to financial statements are an integral part of this
statement.
1
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
Additions to net assets attributed to:
Investment income-
Interest and dividends $ 658,216
Realized gain, net 755,879
Net appreciation in fair value of investments 5,286,086
Participant loan interest income 26,082
Other income 69
Contributions-
Participants' contributions 2,019,832
Employer's contributions 889,231
---------------
Total additions 9,635,395
---------------
Deductions from net assets attributed to:
Benefits paid to participants 888,412
Excess contributions (1998 plan year) 29,628
Loan fees 1,909
Other expense 26,128
---------------
Total deductions 946,077
---------------
Net increase prior to fund transfers 8,689,318
Transfers to other Frontier sponsored plans (18,940)
---------------
Net increase 8,670,378
Net assets available for benefits, beginning of year 8,663,297
---------------
Net assets available for benefits, end of year $ 17,333,675
===============
The accompanying notes to financial statements are an integral part of this
statement.
2
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. PLAN DESCRIPTION
----------------
General
- -------
The following brief description of the Upstate Cellular Network Employees'
Retirement Savings Plan (the Plan) is provided for general information purposes
only. Participants should refer to the plan document for more complete
information. The Plan is a defined contribution plan originally established by
the Board of Directors of the Upstate Cellular Network (the "Company"), a 50/50
joint venture partnership between Frontier Corporation and Bell Atlantic Mobile,
effective July 1, 1994. The Plan was amended and restated effective January 1,
1999. Pursuant to the restated plan, Plan sponsorship transferred from Upstate
Cellular Network to Frontier Corporation, a subsidiary of Global Crossings,
Ltd., on November 30, 1999. The Plan is subject to the applicable provisions of
the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Participation
- -------------
The Plan covers all employees of Upstate Cellular Network except temporary or
summer employees, leased employees, and employees in any unit covered by a
collective bargaining agreement. Eligibility begins on the first of the month
following 30 days of employment.
The Plan allows the Company's Employee Benefit Committee to transfer participant
accounts from plans the participants are no longer eligible to participate in to
a substantially similar 401(k) plan sponsored by Frontier Corporation or any
corporation/business entity in which Frontier Corporation has a 50 percent or
more ownership or profits interest. These transfers are included in the
statement of changes in net assets available for benefits, as transfers to other
Frontier sponsored plans.
Plan Administration
- -------------------
The Plan is administered by the Employee Benefit Committee whose members are
appointed by the sponsor company's Board of Directors. The trustee of the Plan
is Putnam Fiduciary Trust Company.
Funding Policy
- --------------
The Plan provides participants the option of having their basic and supplemental
contributions to the Plan made on a salary reduction basis and on a deferred tax
basis. Upon enrollment in the Plan, a participant may direct contributions into
the following investment options.
. Putnam Growth & Income Fund - Funds are primarily invested in common
---------------------------
stocks.
. Putnam Global Growth Fund - Funds are primarily invested in foreign and
-------------------------
domestic common stocks.
. Putnam Voyager Fund - Funds are invested in emerging growth companies and
-------------------
opportunity stocks.
. Putnam Income Fund - Funds are primarily invested in corporate bonds and
------------------
U.S. government and agency obligations.
. Putnam Asset Allocation Fund Balanced Portfolio - Funds are invested in
-----------------------------------------------
stocks, bonds, and money market instruments.
. Putnam S&P 500 Index Fund - Funds are primarily invested in stocks that
-------------------------
are listed in the S&P 500 Index.
. Stable Value Fund - Funds are invested in a diversified portfolio of
-----------------
high-quality stable value investments offering price stability and
liquidity.
3
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
. Frontier Corporation Common Stock Fund - Funds invested in common stock of
--------------------------------------
Frontier Corporation. All investments in this fund were transferred to the
Global Crossing Common Stock Fund upon acquisition of Frontier Corporation
by Global Crossing, Ltd. Each share of Frontier Corporation common stock was
exchanged for 2.05 shares of Global Crossing Ltd. common stock pursuant to
the acquisition of Frontier Corporation by Global Crossing Ltd. effective
September 28, 1999.
. Global Crossing Common Stock Fund - Funds are invested in common stock of
---------------------------------
Global Crossing, Ltd., parent company of Frontier Corporation.
The shares of stock in the Global Crossing Common Stock Fund are qualified
employer securities as defined by ERISA. Each individual's investment in this
fund is recorded in his or her account on a per share basis. All other funds are
tracked on a dollar value basis with each fund's activity allocated to
participants on a pro rata basis. Therefore, the Plan does not record activity
on a unit value basis.
The Plan provides that each participant may voluntarily make contributions
through a salary reduction agreement for whatever whole percentage a participant
chooses, up to a maximum of 16 percent, subject to maximum contribution
provisions imposed by the Internal Revenue Code ("IRC") under Section 401(k).
Individual accounts, which record the participant's contributions, the earnings
on all contributions, and the amount of the participant's interest in each fund,
are maintained for each participant. The participant's contributions during a
month are allocated directly to his or her individual account when the Trustee
receives contributions. Participants have the option to invest contributions in
any of the funds and may change their allocations between funds at any time.
Employer matching contributions equal 100 percent of participant contributions
up to the first 3 percent of compensation. In addition, each payroll period, the
Company contributes 0.5 percent of the payroll period compensation for each of
its employees that is a participant in the Plan. The Plan also has a profit
sharing contribution potential based on the Company's performance. An additional
2.5 percent and 1.5 percent of employee compensation was contributed under the
profit sharing terms in 1999 and 1998, respectively. Employer contributions are
made in cash and invested based on employee elections.
Vesting
- -------
Pursuant to the restated Plan document, all Participants became 100 percent
vested in their account balances effective December 1, 1999.
Payment of Benefits
- -------------------
Payment of benefits generally begins upon termination of service and attainment
of normal retirement age (65). A participant may elect to receive either a
lump-sum amount equal to the value of his or her vested account balance, or a
participant may elect to receive installments over a period not to exceed 20
years. However, a participant who has reached age 59 1/2 but who has not yet
terminated employment may withdraw all or a portion of his or her vested
accumulated account balance in accordance with the terms of the Plan.
If upon termination of service, a participant does not attain normal retirement
age and the participant's vested account balance is greater than $5,000, the
participant may elect to receive a lump-sum amount, a direct rollover to a
qualified plan under Section 401 of the Internal Revenue Code, or a direct
rollover to a qualified Individual Retirement Account equal to the value of his
or her vested account balance. If the vested account balance is less than
$5,000, the balance will be distributed to the participant as soon as
administratively feasible.
4
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Individual Participant Loans
- ----------------------------
Loans are available to participants in the Plan on a nondiscriminatory basis.
Participant loans cannot exceed the lesser of 50 percent of the vested amounts
in the participant's account or $50,000. A participant may only have two loans
outstanding, and they are treated as directed investments by the borrower with
respect to his or her account. The interest rate on loans is established based
on the prime rate, under current plan provisions. Interest paid on the loan is
credited to the borrower's account and the participant does not share in the
income of the Plan's assets with respect to the amounts outstanding. Loans have
a term of no more than five years except that a loan may be granted for a period
not to exceed 25 years if the proceeds are used to purchase the participant's
principal residence.
Plan Termination
- ----------------
The Company has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA.
Subsequent to the financial statement date, as noted in Footnote 8, effective
January 13, 2000, Frontier Corporation, the Plan sponsor, has elected to freeze
the Plan as provided for under the Plan Document. All participants become fully
vested in their account balances determined as of January 13, 2000, and no
further Participant or Employer contributions are permitted after that date.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Basis of Accounting
- -------------------
The financial statements have been prepared on the accrual basis of accounting.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Plan's management to make estimates and
assumptions that affect the accompanying financial statements and disclosures.
Actual results could differ from those estimates.
Contributions and Benefits Paid
- -------------------------------
Contributions are recorded by the Plan when withheld from employees and accrued
by the Company. Benefits are recorded when paid.
Participants may receive distributions in cash or in common stock of Global
Crossing Ltd. for amounts invested in the Global Crossing Common Stock Fund.
Purchases and sales of securities are recorded on the trade date.
Investments and Investment Income
- ---------------------------------
Investments in registered investment companies and employer securities are
stated at fair value, measured by quoted market prices. Investments in common
trust funds are stated at estimated fair values, which represent the net asset
value of shares held by the Plan at year-end. Adjustments for unrealized
appreciation or depreciation of such values are included in the operating
results of the Plan. Funds invested in the Stable Value Fund are stated at
contract value, measured as cost plus earned interest income. Contract value
approximates fair value at December 31, 1999 and 1998. Participant loans are
valued at cost, which approximates fair value.
Interest and dividend income is recorded as earned on an accrual basis.
Administrative Expenses
- -----------------------
Significant expenses associated with the Plan are paid by the Plan sponsor.
5
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. PARTY-IN-INTEREST TRANSACTIONS
------------------------------
The Plan's holdings of Frontier Corporation common stock, Global Crossing Ltd.
common stock, the Putnam Investment, Inc. common trust, and the five Putnam
Investment, Inc. registered investment company funds are party-in-interest
investments.
As of December 31, 1999, the Plan held 129,944 shares of Global Crossing Ltd.
common stock at a fair market value of $6,497,208. As of December 31, 1998, the
Plan held 52,328 shares of Frontier Corporation common stock at a fair market
value of $1,779,142. On September 29, 1999, all shares of Frontier Corporation
common stock were acquired by Global Crossing Ltd. and exchanged for Global
Crossing Ltd. common stock at a ratio of 2.05 shares of Global Crossing common
stock for each share of Frontier Corporation common stock. During the plan year
ended December 31, 1999, the fair market value of Company stock contributions
into the Frontier Corporation Stock Fund and Global Crossing Stock Fund totaled
$249,437. During the plan year ended December 31, 1999, the fair market value of
Frontier Corporation and Global Crossing Ltd. common stock distributed to
participants was $16,896.
4. FEDERAL INCOME TAX STATUS
-------------------------
The Plan obtained its latest determination letter on November 8, 1995, in which
the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the IRC. The plan administrator
and the Plan's tax counsel believe the Plan is currently designed and being
operated in compliance with the applicable requirements of the IRC. Therefore,
they believe that the Plan was qualified and the related trust was tax exempt as
of the financial statement date.
5. BENEFITS PAYABLE
----------------
In accordance with generally accepted accounting principles, obligations to
terminated employees for claims approved but not yet paid are not shown as a
plan liability (nor as a reduction of net assets available for benefits) and
totaled $61,461 at December 31, 1999.
6. INVESTMENTS
-----------
The fair market value of the individual investments that represent 5 percent or
more of the net assets available for plan benefits at December 31, 1999 and 1998
is as follows:
1999 1998
------------- ------------
Putnam Global Growth Fund $ 2,002,845 $ 1,110,768
Putnam Voyager Fund 3,787,651 2,196,248
Putnam S&P 500 Index Fund 1,955,766 1,276,317
Putnam Stable Value Fund 1,317,878 1,032,858
Frontier Corporation common stock N/A 1,779,142
Global Crossing Ltd. common stock 6,497,208 N/A
7. CHANGE OF PLAN SPONSOR
----------------------
Pursuant to the provisions of the plan document as restated September 24, 1999,
the Plan's sponsorship changed from Upstate Cellular Network to Frontier
Corporation, a division of Global Crossing Ltd., effective one day prior to the
closing date of the sale of Frontier Corporation's partnership interest in
Upstate Cellular Network. This change of sponsor became effective November 30,
1999.
6
UPSTATE CELLULAR NETWORK
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
8. SUBSEQUENT EVENTS
-----------------
Subsequent to the Plan year-end, the Plan sponsor amended the Upstate Cellular
Network Employees' Retirement Savings Plan. Effective January 13, 2000, the Plan
was frozen, and all Participants in the Plan as of that date become fully vested
in their account balances determined as of that date. No further participant or
employer contributions shall be made to the Plan after the freeze date.
Effective March 6, 2000, the certificate of incorporation of Frontier
Corporation, the Plan's sponsor, was amended, changing the name of the
corporation to Global Crossing North America, Inc.
7
UPSTATE CELLULAR NETWORK SCHEDULE I
EMPLOYEES' RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
Current
Number Value
of December 31,
Shares 1999
------------ ----------------
Interests in registered investment companies:
* Putnam Income Fund 67,693 $ 430,525
* Putnam Global Growth Fund 107,738 2,002,845
* Putnam Voyager Fund 122,340 3,787,651
* Putnam Fund for Growth and Income 16,246 304,618
* Putnam Asset Allocation Fund Balanced Portfolio 4,534 58,759
---------------
Total interests in registered investment companies 6,584,398
---------------
Common trust:
* Putnam S&P 500 Index Fund 55,975 1,955,766
----------------
Common stock:
* Global Crossing 129,944 6,497,208
---------------
Participant loans:
Participant loan accounts (rate 6.0% - 9.0%)
(maturities range from 2000 to 2024) 364,252
---------------
Insurance company pooled separate account:
Stable Value Fund 1,317,878
---------------
Total investments $ 16,719,502
===============
* Denotes party-in-interest
The accompanying notes to financial statements are an integral part of this
schedule.
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
Upstate Cellular Network
Employees' Retirement Savings Plan
Date: June 27, 2000 /s/ Kenneth P. Schirmuhly
-------------------------
Kenneth P. Schirmuhly,
Vice President, Human Resources