-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VkVUSrn4sRslCXFSf//6jIITsFWTc+P4VS9kyqv5F7fkpVdJekGsecTJXYAENE3T Q79aA/2/ULsvrdRG9aFrfA== 0000020520-97-000009.txt : 19970630 0000020520-97-000009.hdr.sgml : 19970630 ACCESSION NUMBER: 0000020520-97-000009 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970627 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS UTILITIES CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 060619596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11001 FILM NUMBER: 97631244 BUSINESS ADDRESS: STREET 1: HIGH RIDGE PK BLDG 3 STREET 2: P O BOX 3801 CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2033298800 MAIL ADDRESS: STREET 1: HIGH RIDGE PARK BLDG NO 3 CITY: STAMFORD STATE: CT ZIP: 06905 11-K 1 FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 1996 CUC 401(k) Employee Benefit Plan (Full title of the Plan) Citizens Utilities Company High Ridge Park, Stamford, Connecticut 06905 (Name of issuer of the securities held pursuant to the Plan and address of its principal executive office) Commission File Number 001-11001 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has caused this Annual Report to be signed on its behalf by the duly undersigned thereunto duly authorized. Date: June 26, 1997 By: Citizens Utilities Company, Plan Administrator of the CUC 401(k) Employee Benefit Plan By: Livingston E. Ross ---------------------- Livingston E. Ross Vice President and Controller CUC 401(k) Employee Benefit Plan Index to Financial Statements and Schedules Page ---- Independent Auditors' Report 3 Financial Statements: Statements of Net Assets Available for Benefits December 31, 1996 and 1995 4 Statement of Changes in Net Assets Available for Benefits with Fund Information for the Year Ended December 31, 1996 5 Notes to Financial Statements 6-10 Schedules:* I - Item 27a - Schedule of Assets Held for Investment Purposes 11 II - Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1996 12 Independent Auditors' Consent Exhibit 23 *Certain schedules omitted due to absence of conditions under which they are required. Page 2 Independent Auditors' Report ---------------------------- Citizens Utilities Company, Plan Administrator of the CUC 401(k) Employee Benefit Plan: We have audited the accompanying Statements of Net Assets Available for Benefits of the CUC 401(k) Employee Benefit Plan as of December 31, 1996 and 1995, the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1996 and the supplemental schedules. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1996 and 1995 and the changes in net assets available for benefits for the year ended December 31, 1996 in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of Items 27a-Schedule of Assets Held for Investment Purposes and Item 27d-Schedule of Reportable Transactions are presented for the purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor Rules and Regulations of Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The Fund Information is presented for the purpose of additional analysis and is not a required part of the basic financial statements. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. KPMG PEAT MARWICK LLP New York, New York June 26, 1997 Page 3 CUC 401(k) Employee Benefit Plan Statements of Net Assets Available for Benefits at December 31, 1996 and 1995 Assets 1996 1995 - ------ ---- ---- Investment: Stock Fund - at market value (Cost $49,611,354 in 1996 and $41,969,019 in 1995) $ 66,163,785 $69,716,659 Guaranteed Income Fund - at contract value 23,632,971 19,950,741 Equity Fund - at market value (Cost $13,272,985 in 1996 and $8,331,326 in 1995) 17,404,943 10,231,636 Bond Fund - at market value (Cost $2,972,237 in 1996 and $2,059,493 in 1995) 3,048,696 2,190,353 Loans receivable 4,258,639 3,325,563 Cash and cash equivalents 514,214 575,941 Employer's contribution receivable 243,164 225,478 Participants' contribution receivable 662,873 612,130 Other receivables 370,409 245,127 ------------ ------------ Total Assets $116,299,694 $107,073,628 ------------ ------------ Liabilities - ----------- Account Payable -- -- ------------- ------------- Total Liabilities -- -- ------------- ------------- Net Assets Available for Benefits $116,299,694 $107,073,628 ============ ============ See accompanying notes to financial statements Page 4 CUC 401(k) Employee Benefit Plan Statement of Changes in Net Assets Available for Benefits with Fund Information Year Ended December 31, 1996
Stock Guaranteed Equity Bond Fund Income Fund Fund Fund Loans Total Investment Income: Dividends $ -- $ -- $ 364,913 $ -- $ -- $ 364,913 Interest 179,075 186,732 37,705 195,020 8,427 606,959 Net (Depreciation) Appreciation in Fair Value of Investments (4,882,872) 1,189,402 2,580,163 (47,722) -- (1,161,029) Contributions: Participants' 3,673,941 2,135,540 2,738,671 472,676 -- 9,020,828 Employer 2,986,191 34,267 34,667 6,851 -- 3,061,976 ---------- ---------- ----------- --------- --------- ------------ Total Contributions 6,660,132 2,169,807 2,773,338 479,527 12,082,804 ---------- ---------- ----------- --------- --------- ------------ Net transfers-other (2,097,287) (222,978) 1,240,138 (8,540) 1,088,667 -- Net transfers-loans (1,854) 25,149 4,061 (1,249) (26,107) -- Distribution: Benefits Paid to Participants (5,938,900) (2,222,389) (691,064) (151,286) (137,911) (9,141,550) Participants' contributions used for life insurance premium payments (6,427) (1,898) (1,387) (361) -- (10,073) ---------- ---------- ----------- --------- --------- ----------- Total Distributions (5,945,327) (2,224,287) (692,451) (151,647) (137,911) (9,151,623) ---------- ---------- ----------- --------- --------- ----------- Change in Net Assets before Transfers (6,088,133) 1,123,825 6,307,867 465,389 933,076 2,742,024 ---------- ---------- ----------- --------- --------- ------------ Transfers into Plan: ALLTEL Savings Plan 2,463,167 2,592,730 1,032,257 395,888 -- 6,484,042 Net Assets Available for Benefits: Beginning of year 70,884,689 20,127,733 10,509,460 2,226,183 3,325,563 107,073,628 ----------- ----------- ----------- ---------- ---------- ------------ End of year $67,259,723 $23,844,288 $17,849,584 $3,087,460 $4,258,639 $116,299,694 =========== =========== =========== ========== ========== ============
Page 5 CUC 401(k) Employee Benefit Plan Notes to Financial Statements Years Ended December 31, 1996 and 1995 (1) Description of the Plan - --- ----------------------- The following brief description of the Citizens Utilities Company (the "Company") 401(k) Employee Benefit Plan (the "Plan") provides general information. Participants should refer to the Plan document for a more comprehensive description of the Plan's provisions. a. General. The plan is a voluntary defined contribution plan. Under the terms of the Plan, non-bargaining unit employees who have attained 30 days of service are eligible to participate in the Plan. Enrollment dates are on January 1 and July 1 of each year. At December 31, 1996 there were 3,312 employees eligible to participate in the Plan and 3,194 are participating in the Plan. b. Contributions. Eligible employees may contribute up to 16% of their annual compensation through payroll deductions, subject to certain maximum contribution restrictions. Participants who maintained life insurance coverage after January 1, 1992 may elect to continue to make specific dollar allocations to purchase life insurance coverage. Contributions may be apportioned in 5% increments to any combination of the four investment options specified below. At December 31, 1996 the number of accounts in each fund was as follows: Number of Accounts -------- Investment Option: Stock Fund 3,119 Guaranteed Income Fund 1,764 Equity Fund 1,581 Bond Fund 668 Loan Fund 672 Life Insurance 40 The Company contribution is determined for each Plan year by the Board of Directors of the Company. The Company contribution for the 1996 and 1995 Plan years amounted to 50% of the first 6% of each Participant's annual base compensation (as defined by the Plan) that a participant contributes to the Plan. Effective July 1, 1993 the Company contributions are invested entirely in the Stock Fund unless a participant is age 55 or older in which case they may elect to have the Company contribution invested in the same investments as their own contributions and may transfer previous Company contributions invested in Citizens Series B Common Stock Fund to other investment options. c. Participant accounts. Each participant's account is credited with the participant's contribution and an allocation of the Company contribution and plan earnings or losses. Allocations are based on each participant's contribution, as defined. The benefit to which a participant is entitled is the amount which can be provided from the participant's account. Page 6 CUC 401(k) Employee Benefit Plan Notes to Financial Statements Years Ended December 31, 1996 and 1995 d. Vesting. Participants are at all times fully vested in their own contributions and the allocated earnings thereon. Participants become 100% vested in the Company contributions and the related earnings on the Company contributions upon disability, death, attainment of normal retirement age or after five years of service. For any other termination of employment, the vesting schedule is as follows: Vested Percentage of Company Contribution Years of Service and Related Earnings ---------------- -------------------- Less than 2 years 0% 2 years but less than 3 years 40% 3 years but less than 4 years 60% 4 years but less than 5 years 80% 5 years or more 100% e. Investment Options. The Plan provides participants with the following investment options: the Company's Common Stock Series B Stock Fund, a Guaranteed Income Fund, an Equity Fund, a Bond Fund and Life Insurance. A description of each fund follows: Stock Fund: The Stock Fund invests in shares of the Company's Common Stock Series B. Stock dividends are paid on Common Stock Series B shares in additional full and fractional shares. Stock dividends are not reported as dividend income in the Statement of Changes in Net Assets Available for Benefits, rather, stock dividends are capital transactions which have the effect of increasing plan shares and decreasing per share cost. Shares received from stock dividends were 366,476 in 1996 and 339,132 in 1995. Guaranteed Income Fund: Contributions to the Guaranteed Income Fund have been invested in the following Guaranteed Income Contracts:
Annual Compound Contribution Period Guaranteed Income Contract Issuer Maturity Rate of Date Return Various PNC Bank Guaranteed Investment Contract Fund N/A Various 7/1/96 to 6/30/97 Principal Mutual Life Insurance Company 6/29/02 7.16% 7/1/96 CIGNA 6/30/01 7.14% 3/6/96 Life of Virginia 6/30/01 6.11% 11/1/95 to 6/30/96 Allstate Life Insurance Company 6/30/00 6.14% 1/18/95 Allstate Life Insurance Company 6/30/00 8.11% 9/08/94 New York Life Insurance Company 6/30/99 7.11% 7/1/94 to 6/30/95 John Hancock Mutual Life Insurance Company 6/30/98 6.94% 7/1/93 to 6/30/94 Principal Mutual Life Insurance Company 6/30/99 5.60% 7/1/92 to 6/30/93 Pacific Mutual Life Insurance Company 6/30/97 7.30% Prior to 12/31/93 AUSA Life Insurance Company 6/10/97 5.00% 7/1/91 to 6/30/92 General American Life Insurance Company 6/30/96 8.30%
Page 7 CUC 401(k) Employee Benefit Plan Notes to Financial Statements Years Ended December 31, 1996 and 1995 Participants in the Guaranteed Income Fund receive a blended interest rate calculated using a weighted average of contract assets and the above annual compound rates of return. The blended interest rate is projected using assets in the above contracts and varies as contracts mature, as new contracts are purchased and with deposit and withdrawal experience. Equity Fund: Contributions to the Equity Fund are invested in the Index Trust 500 Portfolio managed by the Vanguard Group. This fund is a passive equity management vehicle which seeks to replicate the total return of the Standard and Poor's 500 stock index with dividends reinvested. Prior to June 30, 1994, contributions were invested in Capital Initiatives Equity Total Return Account Contract ("Equity TRAC"). The Equity TRAC's balance was transferred to the Vanguard Index Trust 500 Portfolio as of June 30, 1994. Bond Fund: Contributions to the Bond Fund are invested in the GNMA Bond Fund managed by Vanguard Group. The GNMA Bond Fund is primarily comprised of securities backed by the full faith and credit of the U.S. Government. Dividends are received in cash and are reinvested in additional Bond Fund shares. Life Insurance: Effective January 1, 1992 the life insurance option was no longer offered to existing and newly eligible participants. Prior to 1992, life insurance which may cover the participant, his/her spouse and dependent children was provided by Inter-American Life Insurance Company ("Inter-American"). Participants who maintained life insurance policies prior to January 1, 1992 had their coverage remain intact. These Participants may continue to have up to 25% of their contributions used to pay premiums on a selected amount of life insurance coverage. Insurance certificates are issued to all Participants selecting this option and insurance policies are issued to Participants upon their retirement or termination. f. Participant Loans. Participants in the Plan for two years or more may request to borrow up to the lesser of 50% of his/her vested account balance or $50,000, in both cases limited to the Participant's salary deferral account balance on the valuation date preceding the date on which the loan is made. The loans are allocated to a Loan Fund. The interest rate paid by the participant is equal to the prime interest rate in effect at the beginning of the month in which the loan is approved and remains fixed at that rate for the term of the loan. Loan repayments are made through payroll deductions and are credited to the Participants' accounts as the payments are made. In the event of termination of employment, a Participant's loan note may be repaid in full or will be canceled and the Participant's distribution reduced by the amount of the outstanding loan balance. g. Payment of Benefits. Upon termination of employment, a Participant is entitled to receive payment in full of the vested portion of his/her account. If the value of the terminating Participant's account exceeds $3,500, the Participant may elect to defer distribution. Prior to January 1, 1997, the distribution must have begun on or before April 1st of the calendar year following the year the Participant attained age 70 1/2. After December 31, 1996, the distribution must begin either on or before April 1st of the year following the year the participant attains age 70 1/2 or if the Participant is still employed by the Company, on or before April 1st of the calendar year after the year in which the participant retires. Page 8 CUC 401(k) Employee Benefit Plan Notes to Financial Statements Years Ended December 31, 1996 and 1995 h. Forfeitures. At December 31, 1996 and 1995, forfeited nonvested Company contributions totaled $128,812 and $76,954, respectively. These amounts are used to reduce the future obligation of the Company to make contributions to the Plan. i. Administrative Costs. Plan administration costs are paid by the Company. (2) Summary of Accounting Policies ------------------------------ (a) Basis of Accounting ------------------- The financial statements of the Plan are prepared under the accrual method of accounting. The Fund Information reflected in the Statement of Changes in Net Assets includes the application of assets to the applicable funds as directed by the participants as of December 31, 1996 and 1995. (b) Use of Estimate --------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of additions and deductions during the reporting period. Actual results could differ from these estimates. (c) Investment Valuation, Income Recognition and Payment of Benefits --------------------------------------------------------------- The Plan's investments are stated at fair value, except for investment contracts in the Guaranteed Income Fund, which are valued at contract value. Shares of registered investment companies are valued at quoted market prices, which represent the net asset value of shares held by the Plan. The Company stock is valued at its quoted market price. Participant notes receivable are valued at cost, which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the payment date. Benefits are recorded when paid. (d) Reclassifications ----------------- Certain 1995 balances have been reclassified to conform to the 1996 presentation. (3) Investment of 5% or more of the Net Assets Available for Plan Benefits ---------------------------------------------------------------------- At December 31, 1996 the Plan had $66,163,785, $23,632,971 and $17,404,943 invested in Stock Fund, Guaranteed Income Fund and Equity Fund, respectively, which represents an Investment of 5% or more of the Net Assets Available for Plan Benefits. Page 9 CUC 401(k) Employee Benefit Plan Notes to Financial Statements Years Ended December 31, 1996 and 1995 (4) Related Party Transactions -------------------------- Certain Plan investments are shares of mutual funds managed by PNC. PNC is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest. Fees paid by the Company for investment management services amounted to $123,094 in 1996. (5) Transfer from Other Plans ------------------------- Effective November 1, 1995, participants in the ALLTEL Savings Plan from the acquired ALLTEL properties in Arizona, New Mexico, Utah and California became participants in the Plan. Effective January 1, 1996, participants in the ALLTEL Savings Plan from the acquired ALLTEL properties in California became participants in the Plan. Effective April 1, 1996, participants in the acquired ALLTEL property in Nevada became participants in the Plan. Assets in the ALLTEL Savings Plan totaling $6,484,042 in 1996 were transferred to the Plan. (6) Termination of Plan ------------------- The Company's Board of Directors has the right under the terms of the Plan to discontinue Company contributions at any time and may terminate the Plan, subject to the terms of the Employee Retirement Income Security Act of 1974 ("ERISA"). (7) Tax Status ---------- The Plan has received a favorable determination letter from the Internal Revenue Service dated October 26, 1994, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and the related trust is tax exempt under Section 501(a) of the Code. Page 10 Schedule I CUC 401(k) Employee Benefit Plan Item 27a- Schedule of Assets Held for Investment Purposes December 31, 1996
Identity of Issuer, Number Cost or Market or Borrowers, Lesser, of Contract Contract or Similar Party Description of Assets Shares Value Value ---------------- ------------------- ------ ------ ----- Stock Fund ---------- Citizens Utilities Company CitizensUtilities Company Common Stock Series B $5,947,307 $49,611,354 $66,163,785 ========== =========== =========== Guaranteed Income Fund ---------------------- Allstate Life Insurance Company Guaranteed Income Contract 2,088,624 2,088,624 Allstate Life Insurance Company Guaranteed Income Contract 1,435,798 1,435,798 AUSA Life Insurance Company Guaranteed Income Contract 1,513,814 1,513,814 CIGNA Guaranteed Income Contract 2,884,147 2,884,147 John Hancock Mutual Life Insurance Company Guaranteed Income Contract 2,759,311 2,759,311 Life of Virginia Guaranteed Income Contract 3,540,651 3,540,651 New York Life Insurance Company Guaranteed Income Contract 560,519 560,519 Pacific Mutual Life Insurance Insurance Company Guaranteed Income Contract 2,599,125 2,599,125 PNC Bank Guaranteed Investment Fund 1,711,834 1,711,834 Principal Mutual Life Insurance Company Guaranteed Income Contract 1,980,326 1,980,326 Principal Mutual Life Insurance Company Guaranteed Income Contract 2,558,822 2,558,822 ----------- ----------- Total Guaranteed Income 2,064,266 $23,632,971 $23,632,971 ========= =========== =========== Equity Fund ----------- Vanguard Group Vanguard Index Trust Fund 251,662 $13,272,985 $17,404,943 ======= =========== =========== Bond Fund --------- Vanguard Group Vanguard GNMA Fund 298,303 $ 2,972,237 $ 3,048,696 ======== ============ ========== Loan Fund --------- Participants'Loans Receivable $ 4,258,639 $ 4,258,639 =========== ========== Cash ---- Compass Capital Compass Capital Money Market Fund $ 514,214 $ 514,214 =========== ==========
See Independent Auditors' Report Page 11 Citizens Utilities 401(k) Benefits Plan Item 27d - Schedule of Reportable Transactions For Plan Year Ended December 31, 1996
Expenses Current Value Incurred of Asset on Purchase Selling Lease with Cost of Transaction Net Gain Issuer Description of Asset Price Price Rental Transaction Asset Date /(Loss) - ------------------ ------------------------ ---------- ---------- -------- ----------- ---------- ------------ ---------- Citizens Utilities Citizens Utilities Company Company Series B Common Stock $5,813,475 $ -- $ -- $ -- $5,813,475 $5,813,475 $ -- Citizens Utilities Citizens Utilities Company Company Series B Common Stock -- 1,987,677 -- -- 1,248,917 1,987,677 738,760 PNC Bank Investment Contract Fund 7,866,830 -- -- -- 7,866,830 7,866,830 -- PNC Bank Investment Contract Fund -- 9,688,617 -- -- 9,582,246 9,688,617 106,371 Life of Virginia Life of Virginia 4,163,668 -- -- -- 4,163,668 4,163,668 -- Life of Virginia Life of Virginia -- 640,965 -- -- 640,965 640,965 -- Vanguard Group Vanguard GNMA 1,325,061 -- -- -- 1,325,061 1,325,061 -- Vanguard Group Vanguard GNMA -- 419,124 -- -- 413,848 419,124 5,276 Vanguard Group Vanguard Index Trust 6,587,272 -- -- -- 6,587,272 6,587,272 -- Vanguard Group Vanguard Index Trust -- 1,994,874 -- -- 1,811,623 1,994,874 183,251
See Independent Auditors' Report Page 12 EX-23 2 EXHIBIT 23 Independent Auditors' Consent The Board of Directors Citizens Utilities Company: We consent to incorporation by reference in the registration statement (No. 33-48683) on Form S-8 of Citizens Utilities Company of our report dated June 26, 1997, relating to the statements of Net Assets Available for Benefits of the CUC 401 (k) Employee Benefit Plan as of December 31, 1996 and 1995 and the related Statement of Changes in Net Assets Available for Benefits and the supplemental schedules for the year then ended December 31, 1996, which report appears in the December 31, 1996 annual report on Form 11-K of the CUC 401(k) Employee Benefit Plan. KPMG PEAT MARWICK LLP New York, New York June 26, 1997 -----END PRIVACY-ENHANCED MESSAGE-----