-----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, CnKMfUzav52JRxlhPP2n0aoAf4tLwyniezD/2zPzKuw9BBzuN9+WkFUxMLO1QU5X JHStGISUNqqcWoG4t4oAUw== /in/edgar/work/20000628/0000020520-00-000013/0000020520-00-000013.txt : 20000920 0000020520-00-000013.hdr.sgml : 20000920 ACCESSION NUMBER: 0000020520-00-000013 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS COMMUNICATIONS CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: [4931 ] IRS NUMBER: 060619596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-11001 FILM NUMBER: 662457 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 FORMER COMPANY: FORMER CONFORMED NAME: CITIZENS UTILITIES CO DATE OF NAME CHANGE: 19920703 11-K 1 0001.txt 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, 1999 Citizens 401(k) Savings Plan (Full title of the Plan) Citizens Communications 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, 2000 By: Citizens Communications Company, Plan Administrator of the Citizens 401(k) Savings Plan By: /s/ Livingston E. Ross ----------------------------- Livingston E. Ross Vice President and Chief Accounting Officer Citizens 401(k) Savings Plan Index to Financial Statements and Schedules
Page Independent Auditors' Report 3 Financial Statements: Statements of Net Assets Available for Benefits December 31, 1999 and 1998 4 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1999 and 1998 5-6 Notes to Financial Statements 7-10 Supplemental Schedules:* Schedule of Assets Held for Investment Purposes at end of year December 31, 1999 11 Schedule of Reportable Transactions For the year ended December 31, 1999 12
*Schedules required by Form 5500 that are not applicable have not been included. Independent Auditors' Report Citizens Communications Company, Plan Administrator of the Citizens 401(k) Savings Plan: We have audited the accompanying statements of net assets available for benefits of the Citizens 401(k) Savings Plan as of December 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the year ended December 31, 1999. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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, 1999 and 1998 and the changes in net assets available for benefits for the year ended December 31, 1999 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 assets held for investment purposes at end of year and 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. These supplemental schedules are the responsibility of the Plan's management. These supplemental schedules 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. New York, New York June 26, 2000 Citizens 401(k) Savings Plan Statements of Net Assets Available for Benefits at December 31, 1999 and 1998
1999 1998 ---- ---- Assets Investments: Citizens Communications Company Common Stock $ 109,531,071 $ 60,836,981 Mutual Funds 46,072,312 22,427,719 Collective Trusts 83,182,993 60,032,075 Guaranteed Investment Contracts 16,665,355 20,105,851 Participant Loans 7,232,903 6,269,319 ------------ -------------- Total Investments 262,684,634 169,671,945 Employer's contribution receivable - 912,258 Participants' contributions receivable - 1,268,064 ------------ -------------- Net Assets Available for Benefits $ 262,684,634 $ 171,852,267 ============ ==============
See accompanying notes to financial statements Page 4 Citizens 401(k) Savings Plan Statements of Changes in Net Assets Available for Benefits Year ended December 31, 1999
1999 -------------------- Additions to net assets attributed to: Investment Income: Dividends $ 2,205,806 Interest 2,215,907 Net appreciation in fair value of investments 74,174,007 ------------------ 78,595,720 Contributions: Participants' Contributions 19,637,742 Employer Contributions 5,929,777 ------------------ 25,567,519 Transfer from GASCO 401(k) Plan 1,475,186 ------------------ Total additions 105,638,425 Deductions to net assets attributed to: Benefits paid to participants (14,781,753) Contributions used to pay life insurance premiums (9,638) Miscellaneous expenses (14,667) ------------------ Total deductions (14,806,058) ------------------ Net increase in assets available for benefits 90,832,367 Net assets available for benefits: Beginning of year 171,852,267 ------------------ End of year 262,684,634 ==================
See accompanying notes to financial statements Page 5 Citizens 401(k) Savings Plan Notes to Financial Statements December 31, 1999 and 1998 (1) Description of the Plan ----------------------- The following brief description of the Citizens 401(k) Savings Plan (the "Plan") provides general information. Participants should refer to the Plan document for a more comprehensive description of the Plan's provisions. a. Background. The Plan is a voluntary defined contribution plan sponsored by Citizens Communications Company (the "Company"), formerly Citizens Utilities Company. Under the terms of the Plan, bargaining or non-bargaining unit employees who have attained six months of continuous service are eligible to participate in the Plan. At December 31, 1999 there were 6,430 employees eligible to participate in the Plan and 4,517 active employees participating in the Plan. On October 31, 1997, the Company purchased The Gas Company ("GASCO"). Effective September 30, 1999, the Plan merged with the GASCO Bargaining 401(k) Plan ("GASCO Union Plan"). The GASCO Union Plan was a defined contribution plan for the benefit of employees covered by collective bargaining agreements with GASCO. On October 1, 1999, $1,475,186 was transferred into the Plan related to this Plan merger. The Plan administrator believes the Plan merger was a tax-exempt transaction under the applicable provision of the Internal Revenue Code ("IRC") and, therefore, is not subject to Federal Income Tax. b. Contributions. Eligible employees may contribute, in 1% increments, up to 16% of their annual compensation through payroll deductions, subject to certain maximum contribution restrictions. Prior to January 1, 1992, participants had an option to elect life insurance coverage as an investment vehicle. Beginning January 1, 1992, such option was discontinued, except that participants who elected life insurance coverage prior to January 1, 1992 could continue to make specific dollar allocations to purchase additional life insurance coverage. Contributions may be apportioned in 5% increments to any combination of the six investment options specified below. Participants may change salary deferral percentages and investment options daily, by telephone, which generally become effective with the first payroll of the following month. At December 31, 1999, the number of accounts in each fund were as follows: Number of Accounts -------- Stock Fund 5,189 Putnam Income Fund 2,236 Putnam OTC & Emerging Growth Fund 3,055 Putnam Stable Value Fund 2,416 Putnam S & P 500 Index Fund 4,255 Putnam International Growth Fund 2,438 Loan Fund 1,112 Life Insurance 43 Page 6 Citizens 401(k) Savings Plan Notes to Financial Statements December 31, 1999 and 1998 The Company contribution is determined for each Plan year by the Board of Directors of the Company. The Company contribution for the 1999 Plan year 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. The Company contributions are invested entirely in the Stock Fund unless a participant is age 55 or older in which case the participant could elect to have the Company contribution invested proportionately in the same investments as his/her own contributions. In addition, at age 55 a participant can request to transfer previous Company contributions invested in the 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. 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. Participant Loans. Participants in the Plan may request to borrow up to the lesser of 50% of his/her vested account balance or $50,000. 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 processed and remains fixed at that rate for the term of the loan. Loan repayments are made through payroll deductions, after tax, and are credited to each Participant's account as the payments are made. A participant may repay a loan in full at anytime by remitting his/her payoff check directly to Putnam. In the event of termination of employment, a Participant's loan may be repaid in full or the loan will be canceled and the Participant's final distribution will be reduced by the amount of the outstanding loan balance. Page 7 Citizens 401(k) Savings Plan Notes to Financial Statements December 31, 1999 and 1998 f. Payment of Benefits. Distribution of benefits must begin either on or before April 1st of the year following the year the participant attains age 70 1/2. If the Participant is still employed by the Company at age 70 1/2 , he/she must take a minimum distribution of his/her balance on or before April 1st of the calendar year after the participant attains age 70 1/2. 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 vested account balance exceeds $5,000, the Participant may elect to defer his/her distribution. g. Forfeitures. At December 31, 1999 forfeited nonvested Company contributions totaled $413,356. These amounts are used to reduce the future obligation of the Company to make contributions to the Plan. h. Administrative Costs. The majority of 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. In September 1999, the American Institute of Certified Public Accountants issued Statement of Position 99-3 "Accounting For and Reporting on Certain Deferred Contribution Plan Investments and Other Disclosure Matters" (SOP 99-3). SOP 99-3 simplifies disclosure for certain investments and is effective for plan years ended after December 15, 1999. The Plan adopted SOP 99-3 and as a result, information no longer required to be disclosed about participant fund investment programs is not presented in the Plan's financial statements. (b) Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, changes therein, and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from these estimates. (c) Investments ----------- The Plan's investments are stated at fair value, except for Guaran- teed Investment Contracts, which are valued at contract value. Shares of registered investment companies (mutual funds) are valued at quoted market prices, which represent the net asset value of shares held by the Plan. Shares of collective trusts are valued at the net asset value per share as determined by Putnam Investments ("Putnam"). The Company stock is valued at its quoted market price. Participant notes receivable are valued at cost, which approximates fair value. The net depreciation/appreciation in the fair value of investments consists of the net realized gains and losses on the disposal of investments and the unrealized appreciation/depreciation of the market value over their original cost for the investments remaining in the Plan. 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 ex-dividend date. Page 8 Citizens 401(k) Savings Plan Notes to Financial Statements December 31, 1999 and 1998 (d) Benefits -------- Benefits are recorded when paid. (e) Risks and Uncertainties ----------------------- Investment securities are exposed to various risks such as interest rate, market and credit. Due to uncertainties inherent in the esti- mates and assumptions process and in the value of investment securities, it is at least reasonably possible that changes in these estimates, and risk factors in the near term could be material to the financial statements. (3) Investment of 5% or more of the Net Assets Available for Plan Benefits ---------------------------------------------------------------------- The following presents investments that represent 5% or more of the Plan's net assets:
1999 1998 ---- ---- Citizens Communications Company Common Stock Participant Directed, 4,395,163 and 4,547,127 shares, $ 62,356,371 $ 36,592,184 respectively Non-participant Directed, 3,325,403 and 3,055,892 47,174,700 24,244,797 shares, respectively Putnam OTC & Emerging Growth Fund 25,302,536 - Putnam Income Fund - 8,666,098 Putnam S&P 500 Index Fund 69,229,723 52,976,513 During 1999, the Plan's investments (including gains and losses on investments bought and sold as well as held during the year) appreciated in value by $74,174,007 as follows: 1999 ---- Common Stock 47,634,250 Mutual Funds 14,955,855 Collective Trusts 11,583,902 ------------ $ 74,174,007 ============
Page 9 Citizens 401(k) Savings Plan Notes to Financial Statements December 31, 1999 and 1998 (4) Non Participant - Directed Investments -------------------------------------- Information about the net assets available for benefits and significant components of the changes in net assets available for benefits relating to the non-participant directed investments are as follows: 1999 ----------- Net assets: Common Stock $ 47,756,846 Changes in net assets: Net appreciation in fair value of investments 20,087,532 Employer Contributions 5,929,777 Benefits paid to participants (3,249,454) Other (744,194) ----------- Change in Net Assets 23,512,049 ----------- (5) Related Party Transactions -------------------------- Certain Plan assets are invested in shares of mutual funds that are managed by Putnam. As Putnam is the trustee as defined by the Plan, these trans- actions qualify as party-in-interest transactions. Fees paid by the Com- pany to Putnam for investment management services amounted to $106,753 in 1999. Fees paid by the Plan to Putnam for administrative services in 1999 amounted to $14,667. (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 ---------- As of January 2, 1998, the assets of the Citizens Utilities 401(k) Savings Plan were transferred into the Citizens CUC 401(k) Employee Benefit Plan. The name of the CUC 401(k) Employee Benefit Plan was then changed to Citizens 401(k) Savings Plan. Both the Citizens Utilities 401(k) Savings Plan and the CUC 401(k) Employee Benefit Plan received determination letters from the Internal Revenue Service dated January 25, 1995 and October 26, 1994, respectively, stating that the plans were qualified under Section 401(a) of the Internal Revenue Code (the "Code") and the related trusts were tax exempt under Section 501(a) of the Code. The Company has not yet applied for a determination letter for the Citizens 401(k) Savings Plan, however, the Company intends to file and fully expects the plan to qualify under Section 401(a) of the Code and the related trusts to be tax exempt under Section 501(a) of the Code. The Plan Administrator and the Plan's tax counsel believe that the Plan is currently designed and being operated in compliance with the Code. Page 10 Citizens 401(k) Savings Plan Schedule of Assets Held for Investment Purposes at end of year December 31, 1999
Identity of Issuer, Market or Borrowers, Lessor, Number of Contract or Similar Party Description of Assets Shares Value ---------------- --------------------- ----------- ------------ Citizens Communications Company * Citizens Communications Company Common Stock - Cost of $79,015,947 7,720,252 $ 109,531,071 Putnam Investments * Putnam Income Fund - Mutual Fund 1,410,959 $ 8,973,697 Putnam Investments * Putnam OTC & Emerging Growth Fund - Mutual Fund 683,668 $ 25,302,536 Putnam Investments * Putnam International Growth Fund - Mutual Fund 397,442 $ 11,796,079 Putnam Investments * Putnam S&P 500 Index Fund - Collective Trust 1,981,389 $ 69,229,723 Putnam Investments * Putnam Stable Value Fund - Collective Trust 13,953,270 $ 13,953,270
Guaranteed Investment Contracts:
Annual Compound Maturity Rate of Date Return ---- ------ Allstate Life Insurance Company GIC 6/30/00 8.11% $ 460,299 Allstate Life Insurance Company GIC 6/30/00 8.11% 1,059,870 Allstate Life Insurance Company GIC 6/30/00 6.14% 1,529,675 Allstate Life Insurance Company GIC 6/30/00 6.14% 821,691 GE Life & Annuity Assurance Company GIC 6/30/01 6.11% 3,010,809 CIGNA GIC 6/30/01 7.14% 2,526,297 CIGNA GIC 6/30/01 7.14% 505,883 Principal Mutual Life Ins. Company GIC 6/29/02 7.16% 852,993 Principal Mutual Life Ins. Company GIC 6/29/02 7.16% 1,578,915 Travelers Life and Annuity GIC 3/31/03 6.81% 3,494,766 Travelers Life and Annuity GIC 3/31/03 6.81% 824,157 ------------ Total Guaranteed Investment Contracts $ 16,665,355 Plan Participants * Participants' Loans Receivable - Interest Rate from 6% to 9% $ 7,232,903
* Party-in-interest as defined by ERISA See Independent Auditors' Report Page 11 Citizens 401(k) Savings Plan Schedule of Reportable Transactions Year Ended December 31, 1999 Series of transactions with respect to securities of the same issue aggregating over 5% of current value of Plan assets at the beginning of the Year:
Current Value Purchase Selling Cost of of Asset on Issuer Description of Asset Price Price Asset Transaction Date Net Gain - --------------- -------------------- -------- --------- --------- -------------- -------- Citizens Communications Citizens Communications Company Company Common Stock 5,929,777 - 5,929,777 5,929,777 - Citizens Communications Citizens Communications Company Company Common Stock - 3,249,454 3,042,051 3,249,454 207,403 See Independent Auditors' Report
Page 12 Independent Auditors' Consent ----------------------------- The Board of Directors Citizens Communications Company: We consent to incorporation by reference in the registration statement (No. 33- 48683) on Form S-8 of Citizens Communications Company of our report dated June 26, 2000, with respect to the Statements of Net Assets Available for Benefits of the Citizens 401(k) Savings Plan as of December 31, 1999 and 1998 and the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1999, and supplemental schedules as of and for the year ended December 31, 1999, which report appears in the annual report on Form 11-K of the Citizens 401(k) Savings Plan dated December 31, 1999. KPMG LLP New York, New York June 26, 2000 -----END PRIVACY-ENHANCED MESSAGE-----