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, 1993
LGS Employees' Savings and Investment 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)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan Administrator has caused this Annual Report to be signed by the duly
authorized undersigned.
March 31, 1994 LGS Employees' Savings and Investment Plan
By:__________________________________________
Frank C. Martinez, Company Representative
under the LGS Employees' Savings and
Investment Plan
<PAGE>
LGS EMPLOYEES' SAVINGS AND INVESTMENT PLAN
Index to Combined Financial Statements
Page
----
Independent Auditors' Report 3
Combined Financial Statements:
Combined Statements of Financial Condition
as of December 31, 1993 and 1992 4
Combined Statements of Income and Changes
in Participants' Equity for the
Three Years Ended December 31, 1993 5
Notes to Financial Statements 6-8
<PAGE>
Independent Auditors' Report
----------------------------
The LGS Employees' Savings and Investment Plan
and LGS Employees' Savings and Investment Trust
We have audited the accompanying combined statements of financial condition
of the LGS Employees' Savings and Investment Plan and the LGS Employees'
Savings and Investment Trust as of December 31, 1993 and 1992, and the related
combined statements of income and changes in participants' equity for each of
the years in the three year period ended December 31, 1993. These combined
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these combined 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 1993 and 1992 combined financial statements referred to
above present fairly, in all material respects, the combined financial
position of the LGS Employees' Savings and Investment Plan and the LGS
Employees' Savings and Investment Trust as of December 31, 1993 and 1992, and
the combined results of their operations for each of the years in the three
year period ended December 31, 1993, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK
New Orleans, Louisiana
March 11, 1994
<PAGE>
LGS EMPLOYEES' SAVINGS AND INVESTMENT PLAN
AND
LGS EMPLOYEES' SAVINGS AND INVESTMENT TRUST
COMBINED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1993 AND 1992
ASSETS
- ------
1993 1992
---- ----
Investment in Series B Common Stock of Citizens
Utilities Company (0 and 64,696 shares,
respectively) at quoted market (cost of $0
and $1,460,256, respectively) $ -- 1,859,997
Cash -- (968)
Due from Employer for reimbursement of expenses -- 4,857
--------- ---------
$ -- 1,863,886
========= =========
PARTICIPANTS' EQUITY
- --------------------
Participants' equity $ -- 1,863,886
========= =========
See notes to combined financial statements.
<PAGE>
LGS EMPLOYEES' SAVINGS AND INVESTMENT PLAN
AND
LGS EMPLOYEES' SAVINGS AND INVESTMENT TRUST
COMBINED STATEMENTS OF INCOME AND CHANGES IN PARTICIPANTS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
1993 1992 1991
---- ---- ----
Dividend income $ -- 17 --
Interest income 49 2,624 17,105
Participants' contributions -- -- 836,630
Employer's contributions, net of
forfeitures of $0, $0
and $2,033 in 1993,
1992 and 1991, respectively -- -- 1,233,171
Distributions of common stock of
Citizens Utilities Company
(0, 91,877 and 272,532
shares in 1993, 1992 and 1991,
respectively) including cash
payments in lieu of fractional
shares of $0, $5,628 and $4,557
in 1993, 1992 and 1991,
respectively -- (3,128,343) (7,577,368)
Net realized gain on disposition of
common stock of Citizens Utilities
Company -- 390,183 1,337,516
Unrealized appreciation of
investments held during the year 524,801 8,642,445 15,696,791
Interest expense -- -- (328,811)
Transfer of allocated shares to the
CUC 401(k) Employee Benefit Plan
(66,242 and 1,577,498 in 1993 and
1992, respectively) (2,388,736) (44,169,944) --
--------- ---------- ----------
Net increase (decrease) in participants'
equity (1,863,886) (38,263,018) 11,215,034
Participants' equity, beginning
of year 1,863,886 40,126,904 28,911,870
--------- ---------- ----------
Participants' equity, end of
year $ -- 1,863,886 40,126,904
========= ========== ==========
See notes to combined financial statements.
<PAGE>
LGS EMPLOYEES' SAVINGS AND INVESTMENT PLAN
AND
LGS EMPLOYEES' SAVINGS AND INVESTMENT TRUST
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
1. Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation -
At a special stockholders meeting held November 30, 1990, the stockholders
of Louisiana General Services, Inc. (LGS) voted to consummate a merger,
effective December 4, 1990, with Citizens Utilities Company ("CUC") (the
survivor company). The merger was effected through a stock swap of .8 shares
of Citizens Common Stock, Series B, for 1 share of LGS' Common Stock.
Effective January 1, 1992, Participants in the LGS Employees' Savings and
Investment Plan (the "Plan") became participants in the CUC 401(k) Employee
Benefit Plan. Assets in the LGS Employees' Savings and Investment Plan
consisted of CUC Series B Common Stock. On November 3, 1992, all allocated
shares of Citizens Utilities Series B Common Stock (1,577,498 shares) of the
Plan were transferred to the CUC 401(k) Employee Benefit Plan. Market value
and cost of the shares at the date of transfer were $44,169,844 and
$13,637,594, respectively.
During 1993, 66,243 unallocated shares remaining in the Plan were allocated
to the participants accounts proportionally, based on the post 1984
participants' share balances in the Plan at December 31, 1991. These shares
were transferred to the CUC 401(k) Employee Benefit Plan (the CUC Plan) on
June 7, 1993 and August 5, 1993. Market value and cost at the date of the
transfers were $2,388,736 and $1,464,171, respectively. Since all assets of
the Plan were transferred to the CUC Plan, an amendment terminating the LGS
Employees' Savings and Investment Trust was executed on December 31, 1993.
Nature of the Plan -
The accompanying combined financial statements include the accounts of the
LGS Employees' Savings and Investment Plan and the LGS Employees' Savings and
Investment Trust (hereinafter collectively referred to as the Plan). All
common stock transactions were recorded at market value on the date of the
transactions.
<PAGE>
The Plan was an Employee Stock Ownership Plan (ESOP) which also met the
requirements as a stock bonus plan, a Payroll Stock Ownership Plan and had
features of Section 401(k) of the Internal Revenue Code. Prior to January 1,
1992, the Plan provided, among other things, that employer and employee
contributions be invested through the Trustee in common stock of Citizens
Utilities Company (the Company). At December 31, 1993, 1992 and 1991, the
Plan participants numbered 0, 569, and 587, respectively. Substantially all
assets of the Plan were invested in common stock of the Company. Unallocated
investment in common stock of the Company, at cost, was $0 and $1,460,256 at
December 31, 1993 and 1992, respectively.
Prior to January 1, 1992, the Plan provided for contributions by the
Company on behalf of participating employees. A participating employee could
contribute up to 9% of his earnings in pre-tax contributions but not exceed
the limit set by Section 401(k) of the Internal Revenue Code. Additional
after-tax contributions by the participating employee up to 10% were allowed
by the Plan, with a total employee maximum contribution of 17%. The
Employer's matching contribution ranged from 1% to a maximum of 8% of the
employees' earnings based upon the percentage contributed by the employee.
Dividend Income -
Dividend income represented dividends paid on shares held by the Plan net
of distributions to participants electing not to reinvest dividends in the
Plan. Effective January 1, 1991, the Company elected to issue stock dividends
in lieu of cash dividends.
Expenses -
All expenses of administration of the Plan and interest expense (net of
dividends received on unallocated shares and interest income) were paid by the
Employer. The expense of administration included the fees and expenses of the
Trustee.
Withdrawals -
Distributions to withdrawing participants were based on the quoted market
value of each participant's equity. Withdrawals by participants prior to
actual termination from the Plan were subject to certain limitations and
holding period requirements.
Forfeitures -
If a participant's employment terminated for any reason before he had
completed three years of continuous employment, the participating employee
forfeited the portion of the Employer's contribution allocated to the ESOP,
but remained entitled to receive the amount of employee contributions in his
participant account plus all Employer contributions allocated to Section
401(k) of the Internal Revenue Code feature of the Plan. Any amounts so
forfeited were applied to reduce the amount of Employer contributions to the
Plan. Participating employees that completed three years of continuous
service became fully vested in Employer contributions.
2. Guaranteed ESOP Debt
--------------------
In March 1985, the ESOP purchased 166,667 shares of Company common stock
through long-term bank loans at an interest rate equal to 86% of the bank's
prime interest rate. During 1991, the Plan made the decision to pay down the
debt in anticipation of a merger of the Plan with Citizens Utilities Company's
401(k) Plan. In 1991, the ESOP made additional loans of $1,422,000 at an
interest rate equal to 100% of the bank's prime interest rate, which was 6.5%
at December 31, 1991. This debt was guaranteed by the Company. In January
of 1992, the ESOP Loan was paid in full. Interest expense on the loan was
reimbursed to the Plan by the Company through an additional contribution and
by dividends paid on unallocated shares.
3. Income Taxes
------------
The Plan has received a favorable determination from the Internal Revenue
Service that it met the requirements of a "qualified plan", that the Trust was
exempt from Federal income taxes and that Employer's contributions to the Plan
were deductible for Federal income tax purposes.
Participants paid no Federal income taxes on their tax deferred
contributions, employer contributions or on any earnings on their accounts
until withdrawals or distributions were made from their accounts. The
transfer to the CUC Plan was not considered to be a taxable distribution.
In April of 1993, a favorable determination letter was received from the
Internal Revenue Service. This allowed the Plan's unallocated shares to be
distributed to plan participants on the accounting date coincident with the
date of the repayment of the ESOP Loan. The amount of unallocated shares
received by each participant was in proportion to that portion of their
account balances attributable to contributions made to the Plan after January
1, 1985.
4. Net Realized Gain on Sale of Common Stock
-----------------------------------------
Aggregate proceeds on the sale of the Company's common stock totaled $0 and
$2,002,689 during 1993 and 1992, respectively. The aggregate cost of these
shares, computed using the average cost method, totalled $0 and $1,612,506
during 1993 and 1992. These sales resulted in net realized gains of $0 and
$390,183 during 1993 and 1992.
<PAGE>
5. Unrealized Appreciation of Investments
--------------------------------------
The following is an analysis of unrealized appreciation of investments:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Unrealized appreciation, beginning
of year $ 399,741 24,246,010 12,740,648
Add: Appreciation of investments held
during the year 524,801 8,642,445 15,696,791
Less: Appreciation on shares
transferred to CUC Employee
401(k) Benefit Plan (924,542) (30,532,350) --
Appreciation applicable to
withdrawals -- (1,956,364) (4,191,429)
--------- --------- ---------
Unrealized appreciation, end of
year $ -- 399,741 24,246,010
========= ========== ===========
</TABLE>
At December 31, 1993, the market value of the common stock of the Company
was $18.00 per share.
