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
<PAGE>
Citizens 401(k) Savings Plan
Index to Financial Statements and Schedules
<TABLE>
<CAPTION>
Page
<S> <C>
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
</TABLE>
*Schedules required by Form 5500 that are not applicable have not been included.
<PAGE>
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
<PAGE>
Citizens 401(k) Savings Plan
Statements of Net Assets Available for Benefits
at December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
Assets
Investments:
<S> <C> <C>
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
============ ==============
</TABLE>
See accompanying notes to financial statements
Page 4
<PAGE>
Citizens 401(k) Savings Plan
Statements of Changes in Net Assets Available for Benefits
Year ended December 31, 1999
<TABLE>
<CAPTION>
1999
--------------------
<S> <C>
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
==================
</TABLE>
See accompanying notes to financial statements
Page 5
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
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
============
</TABLE>
Page 9
<PAGE>
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
<PAGE>
Citizens 401(k) Savings Plan
Schedule of Assets Held for Investment Purposes at end of year
December 31, 1999
<TABLE>
<CAPTION>
Identity of Issuer, Market or
Borrowers, Lessor, Number of Contract
or Similar Party Description of Assets Shares Value
---------------- --------------------- ----------- ------------
<S> <C> <C> <C>
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
</TABLE>
Guaranteed Investment Contracts:
<TABLE>
<CAPTION>
Annual
Compound
Maturity Rate of
Date Return
---- ------
<S> <C> <C> <C> <C>
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
</TABLE>
* Party-in-interest as defined by ERISA
See Independent Auditors' Report
Page 11
<PAGE>
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:
<TABLE>
<CAPTION>
Current Value
Purchase Selling Cost of of Asset on
Issuer Description of Asset Price Price Asset Transaction Date Net Gain
--------------- -------------------- -------- --------- --------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
Page 12
<PAGE>
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
