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 End December 31, 1994
Citizens Utilities 401(k) Savings 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 by the duly
authorized undersigned there unto duly authorized.
Date: March 31, 1995 By: Citizens Utilities Company,
Plan Administrator of the
Citizens Utilities 401(k)
Savings Plan
By: Livingston E. Ross
-----------------------------
Livingston E. Ross
Vice President and Controller
<PAGE>
Citizens Utilities 401(k) Savings Plan
Index to Financial Statements and Schedules
Page
----
Independent Auditors' Report 3
Financial Statements:
Statements of Plan Equity as of
December 31, 1994 and 1993 4
Statements of Income and Changes in Plan
Equity for the Years Ended
December 31, 1994, 1993 and 1992 5
Notes to Financial Statements 6-9
Schedules:
I - Investments as of December 31, 1994 10
II - Allocation of Plan Equity to Investment
Options as of December 31, 1994 and 1993 11-12
III - Allocations of Plan Income and Changes in
Plan Equity to Investment Options for the
Years Ended December 31, 1994, 1993 and 1992 13-15
Independent Auditors' Consent Exhibit 1
<PAGE>
Independent Auditors' Report
----------------------------
Citizens Utilities Company, Plan Administrator of the
Citizens Utilities 401(k) Savings Plan:
We have audited the financial statements of the Citizens Utilities 401(k)
Savings Plan as listed in the accompanying index. In connection with our
audits of the financial statements, we have also audited the supporting
schedules as listed in the accompanying index. These financial statements
and supporting schedules are the responsibility of the Plan Administrator.
Our responsibility is to express an opinion on these financial statements and
supporting schedules 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 the Plan Administrator, 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 plan equity of the Citizens Utilities 401(k)
Savings Plan at December 31, 1994 and 1993, and the income and changes in
plan equity for each of the years in the three-year period ended December
1994 in conformity with generally accepted accounting principles. Also in
our opinion, the related supporting schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
New York, New York
March 31, 1995
<PAGE>
Citizens Utilities 401(k) Savings Plan
Statements of Plan Equity
December 31,
Assets 1994 1993
- ------ ---- ----
Investments:
Stock Fund - at market value (Cost
$4,301,431 in 1994 and $1,296,264
in 1993) $ 4,035,479 $ 1,897,308
Guaranteed Income Fund - at
contract value 3,188,950 1,236,245
Equity Fund - at market value
(Cost $871,290 in 1994
and $102,782 in 1993) 853,531 113,092
Bond Fund - at market value
(Cost $144,216 in 1994
and $49,825 in 1993) 141,114 49,726
Cash and cash equivalents 3,282,253 19,945
Contributions receivable 528,199 212,746
Loans receivable 505,017 64,961
Other receivables 117,672 13,440
---------- ----------
Total Assets 12,652,215 3,607,463
---------- ----------
Liabilities and Plan Equity
- ---------------------------
Accounts Payable 36,293 120,998
Distributions payable to participants 12,644 13,002
---------- ----------
Total Liabilities 48,937 134,000
---------- ----------
Plan Equity $12,603,278 $3,473,463
========== ==========
See accompanying notes to financial statements<PAGE>
Citizens Utilities 401(k) Savings Plan
Statements of Income and Changes in Plan Equity
Year Ended December 31,
----------------------------------------
1994 1993 1992
---- ---- ----
Investment income:
Dividends $ 120 $ 0 $ 745
Interest 197,179 83,963 52,277
----------- ---------- ----------
Total Investment income 197,299 83,963 53,022
Realized gains (losses):
Stock Fund 39,604 29,334 1,302
Equity Fund 10,269 1,546 (1,829)
Bond Fund (159) 14 0
----------- ---------- ----------
Total realized gains
(losses) 49,714 30,894 (527)
Unrealized appreciation (depreciation):
Stock Fund (1,015,727) 341,686 164,972
Guaranteed Income Fund 195,220 0 0
Equity Fund (27,187) 6,527 5,611
Bond Fund (3,190) (355) 256
----------- ---------- ----------
Total unrealized appreciation
(depreciation) (850,884) 347,858 170,839
Transfer into Plan:
GTE Hourly Savings Plan Assets 7,601,749 0 0
Contributions:
Employees 2,226,148 1,053,460 978,241
Employer 46,874 0 0
----------- ---------- ----------
Total contributions 2,273,022 1,053,460 978,241
Distributions (133,008) (27,524) (68,416)
Participants' contributions used for
life insurance policy payments (8,077) (9,909) (10,598)
----------- ---------- ----------
Change in Plan Equity 9,129,815 1,478,742 1,122,561
Plan Equity, beginning of year 3,473,463 1,994,721 872,160
----------- ---------- ----------
Plan Equity, end of year $12,603,278 $3,473,463 $1,994,721
=========== ========== ==========
See accompanying notes to financial statements<PAGE>
Citizens Utilities 401(k) Savings Plan
Notes to Financial Statements
Years Ended December 31, 1994, 1993 and 1992
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of Presentation
---------------------
The Citizens Utilities 401(k) Savings Plan (the "Plan") provides
Participants with five investment options: a Citizens Utilities
Company (the "Company") Common Stock Series B Stock Fund a
Guaranteed Income Fund, an Equity Fund, a Bond Fund, and Life
Insurance.
On December 31, 1993, the Company acquired from GTE Corp. certain
telecommunications operations in Idaho, Tennessee, Utah and West
Virginia. On June 30, 1994, the Company acquired from GTE Corp.
telecommunications operations in New York. Effective January 1,
1994, participants in the GTE Hourly Savings Plan from the
acquired GTE properties in West Virginia, Tennessee and Utah
became participants in the Plan. Assets of the GTE Hourly Savings
Plan totalling $4,148,109, exclusive of loan balances, were
transferred to the Plan on August 30, 1994. Effective July 1,
1994, participants in the GTE Hourly Savings Plan from the
acquired GTE Property in New York became participants in the
Plan. Assets of the GTE Hourly Savings Plan totalling $3,015,450,
exclusive of loan balances, were transferred to the plan on
November 2, 1994.
(b) Stock Fund
----------
The stock fund invests in shares of the Company's Common Stock
Series B. Stock dividends are paid on the Common Stock Series B
in additional full and fractional shares. Stock dividends are not
reported as dividend income in the Statements of Income and
Changes in Plan Equity, rather, stock dividends are capital
transactions which have the effect of increasing plan shares and
decreasing per share cost. Shares received from stock dividends
in 1994, 1993 and 1992 were 8,688, 2,966 and 1,166, respectively.
<PAGE>
(c) Guaranteed Income Fund
----------------------
Annual
Compound
Guaranteed Income Contribution Maturity Rate of
Contract Issuer Period Date Return
- ----------------- ------------------ -------- ---------
New York Life Ins., Co. 9/8/94 6/30/99 7.11%
John Hancock Mutual Life Ins., Co. 7/1/94 to 6/30/95 6/30/98 6.94%
Principal Mutual Life Ins., Co. 7/1/93 to 6/30/94 6/30/99 5.60%
Pacific Mutual Life Ins., Co. 7/1/92 to 6/30/93 6/30/97 7.30%
The Guaranteed Income Fund pays a blended interest rate for
contracts purchased since July 1, 1992. This Blended Interest
Rate is 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.
Investments made in this Fund between July 1, 1991 and June 30,
1992 earn a rate of return determined under a guaranteed
insurance contract issued by the General American Life Insurance
Company. This contract matures on June 30, 1996 and bears an
annual compound rate of return of 8.30%.
(d) Equity Fund
-----------
Prior to June 30, 1994, contributions were invested in Capital
Initiatives Equity Total Return Account Contract ("Equity TRAC").
The return on the Equity Fund was linked to the performance of
the Standard and Poor's 500 Index. Contributions made after June
30, 1994 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. The Equity
Fund's balance as of June 30, 1994 was transferred to the
Vanguard Index Trust 500 Portfolio.<PAGE>
(e) Bond Fund
---------
Contributions are invested in the GNMA Bond Fund managed by the
Vanguard Group. The fund is comprised primarily of securities
backed by the "full faith and credit of the U.S. Government".
Dividends are received in cash and reinvested in additional Bond
Fund shares.
(f) Life Insurance
--------------
After January 1, 1992 the life insurance option is 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 Participants selecting this option and
insurance policies are issued to Participants upon their
retirement or termination.
On December 23, 1991, the Circuit Court of Cook County, Illinois
entered an Order of Liquidation with a Finding of Insolvency
against Inter-American. The Order of Liquidation has no effect
on Plan assets as the Participants' contributions used to
purchase life insurance policies are not assets of the Plan. The
face values of the policies and cash surrender values of the
InterAmerican policies have been assumed by Jackson National Life
Insurance Company and Commonwealth Life Insurance Company.
(g) Loans
-----
A Participant 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 on the loans is equal to the prime
interest rate in effect at the beginning of the month in which
loans are approved and remains fixed at that rate. 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 is
generally canceled and the Participant's distribution is reduced
by the amount of the outstanding loan balance.<PAGE>
(2) Administration of the Plan
--------------------------
Plan contributions are deposited with PNC Bank, the Plan Trustee. Plan
administration costs are paid by the Company, the Plan Sponsor.
(3) Eligibility
-----------
Employees of the Company or its subsidiaries whose terms and conditions
of employment are determined under collective bargaining agreements are
entitled to participate in the Plan. Enrollment dates are on January
1 and July 1 of each year. At December 31, 1994 there were 1,640
employees eligible to participate in the Plan and 1,370 participants
in the Plan.
(4) 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 continue to elect 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, 1994 the number
of accounts in each fund option was as follows:
Number of
Accounts
---------
Investment Option:
Stock Fund 1,079
Guaranteed Income Fund 1,037
Equity Fund 479
Bond Fund 202
Life Insurance 28
Loan Fund 129
Beginning July 1, 1994, certain bargaining units are entitled to
receive a Company contribution equal to 50% of the first 6% of each
Participant's compensation (as defined by the Plan). Company
contributions are invested entirely in the Stock fund.
<PAGE>
(5) Vesting
-------
Participants are at all times fully vested in their own contributions
and the allocated earnings thereon. Participants eligible for Company
contributions become 100% vested in the Company's contributions and the
related earnings on the Company's 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's
Contributions and
Years of Service 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%
Non-vested forfeited employer contributions are used to reduce future
Company contributions.
(6) Termination of Plan
-------------------
The Company's Board of Directors has the right under the terms of the
Plan to discontinue contributions at any time and to terminate the
Plan, subject to any limitations under collective bargaining agreements
and the terms of the Employee Retirement Income Security Act of 1974
("ERISA").
(7) Distribution 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. The distribution must
begin on or before April 1st of the calendar year following the year
the Participant attains age 70 1/2.
(8) Federal Income Tax
------------------
The Plan is considered to be a qualified plan as described in Sections
401(a) and 401(k) of the Internal Revenue Code, as amended and, as
such, the Trust established thereunder is exempt from payment of
federal income taxes under provisions of Section 501(a) of the Internal
Revenue Code. A determination letter has been requested from the
Internal Revenue service confirming such status.<PAGE>
Schedule I
Citizens Utilities 401(k) Savings Plan
Investments
December 31, 1994
Cost or Market or
Number Contract Contract
of Shares Value Value
--------- -------- ---------
Stock Fund
- ----------
Citizens Utilities Company
Common Stock Series B 319,642 $4,301,431 $4,035,479
======= ========== ==========
Guaranteed Income Fund
- -----------------------
Guaranteed Income Fund $3,188,950 $3,188,950
========== ==========
Equity Fund
- -----------
Vanguard Index Trust Fund 19,863 $ 871,290 $ 853,531
======= ========== ==========
Bond Fund
- ----------
Vanguard GNMA Fund 14,730 $ 144,216 $ 141,114
======= ========== ==========
<TABLE>
<CAPTION>
Schedule II
Citizens Utilities 401(k) Savings Plan
Allocation of Plan Equity to Investment Options
December 31, 1994
Insurance or
Guaranteed Disbursement Loan
Stock Fund Income Fund Equity Fund Bond Fund Fund Fund
---------- ------------ ----------- --------- ------------ -------
Assets:
Investment in Stock
Fund - at market value
<S> <C> <C> <C> <C> <C> <C>
$4,035,479 $ -- $ -- $ -- $ -- $ --
Investment in Guaranteed
Income Fund - at
contract value -- 3,188,950 -- -- -- --
Investment in Equity
Fund - at market value -- -- 853,531 -- -- --
Investment in Bond Fund -
at market value -- -- -- 141,114 -- --
Cash and cash
equivalents 1,557,752 810,346 728,312 185,843 -- --
Contributions
receivable 282,448 154,119 71,108 20,524 -- --
Loans receivable -- -- -- -- -- 505,017
Other receivables 25,215 39,808 17,378 1,332 -- 33,939
---------- ---------- -------- ------- -------- -------
Total Assets 5,900,894 4,193,223 1,670,329 348,813 -- 538,956
---------- ---------- -------- ------- -------- -------
Liabilities:
Accounts payable -- 2,354 33,939
Distributions payable
to participants 66 12,578 -- --
---------- ---------- -------- ------- -------- -------
Total Liabilities 66 12,578 2,354 33,939
---------- ---------- -------- ------- -------- -------
Plan Equity $5,900,828 $4,180,645 $1,670,329 $348,813 $(2,354) $505,017
========== ========== ======== ======= ======== =======<PAGE>
Schedule II-1
</TABLE>
<TABLE>
<CAPTION>
Citizens Utilities 401(k) Savings Plan
Allocation of Plan Equity to Investment Options
December 31, 1993
Insurance or
Guaranteed Disbursement Loan
Stock Fund Income Fund Equity Fund Bond Fund Fund Fund
---------- ------------ ----------- --------- ------------ -------
Assets:
Investment in Stock
Fund - at market value
<S> <C> <C> <C> <C> <C> <C>
$1,897,308 $ -- $ -- $ -- $ -- $ --
Investment in Guaranteed
Income Fund - at
contract value -- 1,236,245 -- -- -- --
Investment in Equity
Fund - at market value -- -- 113,092 -- -- --
Investment in Bond
Fund - at market value -- -- -- 49,726 -- --
Cash and cash equivalents -- -- -- -- 5,035 14,910
Contributions
receivable 97,557 -- 7,887 2,182 105,120 --
Loans receivable -- -- -- -- -- 64,961
Other receivables 1,351 9,412 80 268 30 2,299
---------- ---------- -------- ------- -------- -------
Total Assets 1,996,216 1,245,657 121,059 52,176 110,185 82,170
---------- ---------- -------- ------- -------- -------
Liabilities:
Accounts payable 11,992 82,322 -- 234 9,254 17,196
Distributions payable
to participants 4,098 8,112 654 138 -- --
---------- ---------- -------- ------- -------- -------
Total Liabilities 16,090 90,434 654 372 9,254 17,196
---------- ---------- -------- ------- -------- -------
Plan Equity $1,980,126 $1,155,223 $120,405 $51,804 $100,931 $64,974
========== ========== ======== ======= ======== =======<PAGE>
Schedule III
</TABLE>
<TABLE>
<CAPTION>
Citizens Utilities 401(k) Savings Plan
Allocation of Plan Income and Changes in Plan Equity
To Investment Options
Year Ended December 31, 1994
Guaranteed Insurance
Stock Fund Income Funds Equity Fund Bond Fund Fund Loan Fund
---------- ------------ ----------- --------- ------------ ---------
Investment Income:
<S> <C> <C> <C> <C> <C> <C>
Dividends $ -- $ -- $ 120 $ -- $ -- $ --
Interest 21,977 105,415 22,272 4,332 28,764 14,419
Realized gains (losses) 39,604 -- 10,269 (159) -- --
Unrealized appreciation
(depreciation) (1,015,727) 195,220 (27,187) (3,190) -- --
Transfer into Plan:
GTE Hourly Savings
Plan Assets 3,475,215 2,131,620 1,313,457 243,266 -- 438,191
Contributions:
Employees 1,192,647 708,752 251,258 65,414 8,077 --
Employer 46,874 -- -- -- -- --
------------ ----------- --------------------- --------- --------
Total Contributions 1,239,521 708,752 251,258 65,414 8,077 --
Net transfers - other
189,232 39,675 (22,380) (13,873) (132,049) (60,605)
Net transfers - loans
18,596 (71,642) 3,598 1,410 -- 48,038
Distributions (47,716) (83,618) (1,483) (191) -- --
Participants'
contributions used
for life insurance
policy payments -- -- -- -- (8,077) --
---------- ---------- -------- ------- -------- --------
Changes in Plan Equity 3,920,702 3,025,422 1,549,924 297,009 (103,285) 440,043
---------- ---------- -------- ------- -------- --------
Plan Equity,beginning
of year 1,980,126 1,155,223 120,405 51,804 100,931 64,974
---------- ---------- -------- ------- -------- --------
Plan Equity, end
of year $5,900,828 $4,180,645 $1,670,329 $348,813 $(2,354) $505,017
========== ========== ======== ======= ======== ========<PAGE>
Schedule III-1
</TABLE>
<TABLE>
<CAPTION>
Citizens Utilities 401(k) Savings Plan
Allocation of Plan Income and Changes in Plan Equity to Investment Options
December 31, 1993
Guaranteed Insurance
Stock Fund Income Fund Equity Fund Bond Fund Fund Loan Fund
---------- ------------ ----------- --------- ------------ ---------
Investment Income:
<S> <C> <C> <C> <C> <C> <C>
Dividends $ -- $ -- $ -- $ -- $ -- $ --
Interest -- 79,392 175 2,348 69 1,979
Realized gains 29,334 -- 1,546 14 -- --
Unrealized appreciation
(depreciation) 341,686 -- 6,527 (355) -- --
Employee contributions 550,024 410,270 65,244 22,392 5,530 --
Net transfers - other
79,077 (64,278) (12,474) (2,325) -- --
Net transfers - loans
(18,569) (42,445) (2,058) 77 -- 62,995
Distributions (6,026) (19,368) (1,992) (138) -- --
Participants'
contributions used
for life insurance
policy payments -- -- -- -- (9,909) --
---------- ---------- -------- ------- -------- --------
Changes in Plan Equity 975,526 363,571 56,968 22,013 (4,310) 64,974
---------- ---------- -------- ------- -------- --------
Plan Equity,beginning
of year 1,004,600 791,652 63,437 29,791 105,241 --
---------- ---------- -------- ------- -------- --------
Plan Equity, end
of year $1,980,126 $1,155,223 $120,405 $51,804 $100,931 $ 64,974
========== ========== ======== ======= ======== ========<PAGE>
Schedule III-2
</TABLE>
<TABLE>
<CAPTION>
Citizens Utilities 401(k) Savings Plan
Allocation of Plan Income and Changes in Plan Equity to Investment Options
December 31, 1992
Guaranteed Insurance
Stock Fund Income Fund Equity Fund Bond Fund Fund
---------- ------------ ----------- --------- -----------
Investment Income:
<S> <C> <C> <C> <C> <C>
Dividends $ -- $ -- $ 745 $ -- $ --
Interest -- 50,889 -- 1,353 35
Realized gains (losses) 1,302 -- (1,829) -- --
Unrealized appreciation 164,972 -- 5,611 256 --
Employee contributions 413,861 415,021 53,078 18,361 77,920
Net Transfers - other 35,631 327 (45,779) 9,821 --
Distributions (25,665) (42,719) (32) -- --
Participants'
contributions used
for life insurance
policy payments -- -- -- -- (10,598)
---------- -------- ------- ------- --------
Changes in Plan Equity 590,101 423,518 11,794 29,791 67,357
---------- -------- ------- ------- --------
Plan Equity,beginning
of year 414,499 368,134 51,643 -- 37,884
---------- -------- ------- ------- --------
Plan Equity, end
of year $1,004,600 $791,652 $63,437 $29,791 $105,241
========== ======== ======= ======= ========
</TABLE>
Independent Auditors' Consent
-----------------------------
The Board of Directors
Citizens Utilities Company:
We consent to incorporation by reference in the registration statement
(No. 33-37602) on Form S-8 of Citizens Utilities Company of our report dated
March 31, 1995, relating to the statements of plan equity of Citizens Utilities
401(k) Savings Plan as of December 31, 1994 and 1993, and the related statements
of income and changes in plan equity and related schedules for each of the years
in the three-year period ended December 31, 1994, which report appears in the
December 31, 1994 annual report on Form 11-K of Citizens Utilities 401(k)
Savings Plan.
KPMG PEAT MARWICK LLP
New York, New York
June 27, 1995
