<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
{X} ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
{ } TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file numbers 2-98306 and 33-13066
A. Full title of the plan:
THE COMMONWEALTH TELEPHONE COMPANY
BARGAINING EMPLOYEES 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Commonwealth Telephone Enterprises, Inc.
100 CTE Drive
Dallas, Pennsylvania, 18612-9774
<PAGE>
Commonwealth Telephone
Company Bargaining
Employees 401(k) Plan
Report on Audits of Financial Statements
As of December 31, 1999 and 1998 and for
the year ended December 31, 1999 and
Supplemental Schedules for the year
ended December 31, 1999
<PAGE>
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Index to the Financial Statements
and Supplemental Schedules
December 31, 1999 and 1998
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Pages
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Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-9
Supplemental Schedules:
Schedule H, Item 4(i)* - Assets Held for Investment Purposes 10
Schedule H, Item 4(j)* - Reportable Transactions 11
* Refer to item numbers in Form 5500 (Annual Return/Report of
Employee Benefit Plan) for the plan periods ended December 31,
1999, which items are incorporated herein by reference.
<PAGE>
Report of Independent Accountants
To the Participants and Administrator of
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Commonwealth Telephone Company Bargaining Employees 401(k) Plan (the "Plan")
at 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. 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 of these statements in accordance with auditing standards generally
accepted in the Unites States, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted 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 and Reportable Transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for 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.
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
June 28, 2000
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Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998
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1999 1998
Investments (see Note 4) $2,171,598 $1,338,675
Receivables:
Participant contributions 67,537 49,766
Dividends 495 -
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Net assets available for benefits $2,239,630 $1,388,441
========== ==========
The accompanying notes are an integral part of the financial statements.
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Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1999
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Additions:
Participant contributions $ 648,083
Interest 499
Dividends 115,062
Net appreciation in fair value of investments (see Note 4) 140,646
----------
Total additions 904,290
----------
Deductions:
Benefits paid to participants 52,551
Administrative fees 550
----------
Total deductions 53,101
----------
Increase in net assets available for benefits 851,189
Net assets available for benefits:
Beginning of year 1,388,441
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End of year $2,239,630
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The accompanying notes are an integral part of the financial statements.
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Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 1999 and 1998
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1. Description of Plan
The following brief description of Commonwealth Telephone Company
Bargaining Employees 401(k) Plan (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan agreement
for a more complete description of the Plan's provisions.
General
The Plan, established on July 1, 1996, is a defined contribution plan
covering all employees who are covered by collective bargaining agreements
of Commonwealth Telephone Company ("CTCo" or the "Company"), a subsidiary
of Commonwealth Telephone Enterprises, Inc. ("CTE"), and who have attained
the age of twenty-one and have three months of enlisted service. The Plan
is subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA).
Contributions
Participants in the Plan may contribute between 1% and 15% of their annual
compensation. Participants may change salary deferral elections as of each
of the following entry dates (January 1, April 1, July 1 and October 1).
Participant's may change investment elections on a daily basis.
Contributions are subject to certain limitations.
Participant's Account
Each participant's account is credited with the participant's contributions
and allocations of Plan earnings, and charged with an allocation of
administrative expenses. Allocations are made in direct proportion to the
respective amount in each participant's account. The benefit to which a
participant is entitled is the participant's account balance.
Vesting
Participants are immediately vested in their contributions plus earnings
thereon.
Plan Benefits
On termination of service due to death, disability or retirement, a
participant may elect to have a lump-sum distribution if the value of the
participant's account is less than or equal to $5,000. If the value of the
participant's account is greater than $5,000, the participant may elect to
have their benefit paid out in an annuity.
A participant may elect to have the lump-sum distribution be paid in cash,
CTE common stock or in-kind depending upon the elected fund within which
participant contributions were deposited. If a member elects to receive
stock, only whole shares are distributed with cash being distributed in
lieu of fractional shares.
Additionally, the Plan permits participants to withdraw a portion or all of
their vested account balance. These special distributions include in
service distributions and hardship withdrawals. An active participant may
request an in service distribution upon attaining age 59 1/2. A hardship
withdrawal may be granted to a participant for emergency circumstances as
defined by the Plan.
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Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 1999 and 1998
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Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum of 50% of their account balance or $50,000. Loan transactions are
treated as a transfer to (from) the investment fund from (to) the Loan
Fund. Loan terms range from 1-5 years unless the loan is for the purchase
of a primary residence, for which the term is 30 years. The loans are
secured by the balance in the participant's account and bear interest at
the prime rate plus one basis point. Principal and interest is paid ratably
through monthly payroll deductions.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method
of accounting.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices which represent the
net asset value of shares held by the Plan at year-end. The guaranteed
investment contracts held in the Merrill Lynch Retirement Preservation
Trust Fund are valued at fair value. The Company's stock is valued at its
quoted market price on the last day of the year. Participant loans are
valued at cost which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
Investments in Common Collective Trust
The Merrill Lynch Retirement Preservation Trust Fund (the "Trust Fund")
invests in various term guaranteed insurance contracts and maintains a cash
reserve balance with all excess funds. The average yield and the weighted
average crediting interest rate are based on the underlying contracts.
The Trust Fund's investment contracts are reported at their estimated fair
value. The investment contracts are nontransferable but provide for benefit
responsive withdrawals by plan participants at contract value. Benefit
responsive withdrawals are provided for on a proportional basis by the
issuers of the investment contracts. In determining fair value, the Plan's
trustee's valuation committee primarily considers such factors as the
benefit responsiveness of the investment contract and the ability of the
parties to the investment contract to perform in accordance with the terms
of the contract. Generally, fair value approximates contract value
(contributions made plus interest accrued at the current rate, less
withdrawals and fees). If, however, an event has occurred that may impair
the ability of the contract issuer to perform in accordance with the
contract terms, fair value may be less than contract value. The contract
value of the Trust Fund at December 31, 1999 and 1998 is $145,920 and
$100,176, respectively.
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Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 1999 and 1998
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The average yield and crediting interest rates were approximately 6.0% for
the years ended December 31, 1999 and 1998.
Expenses of the Plan
Fees and other costs incurred are paid by the Plan, then allocated to each
investment fund.
Payment of Benefits
Benefits are recorded when paid.
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 amounts of net assets and changes
therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as
interest rate, market and credit. Due to the level of risk associated with
certain investment securities and the level of uncertainty related to
changes in the value of investment securities, it is at least reasonably
possible that changes in risks in the near term could materially affect
participants' account balances and the amounts reported in the statement of
net assets available for benefits and the statement of changes in net
assets available for benefits.
3. Investment Options
The investment options of the Plan are as follows:
Merrill Lynch Retirement Preservation Trust
Seeks to provide preservation of capital, liquidity, and current income at
levels that are typically higher than those provided by money market funds.
The Trust invests primarily in a broadly diversified portfolio of
Guaranteed Investment Contracts and in obligations of the U.S. government
and government-agency securities. Participants purchase units that the
Trust seeks to maintain at $1.00 per unit, although this cannot be
guaranteed.
Merrill Lynch S&P 500 Index Fund
Seeks to provide investment results that, before expenses, replicate the
total return of the Standard & Poor's 500 Composite Stock Price Index (S&P
500). In seeking to replicate the total return of the S&P 500, management
generally will allocate investments among common stocks in approximately
the same weighting of the Index.
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Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
Merrill Lynch Growth Fund
Seeks growth of capital and, secondarily, income through a diversified
portfolio of primarily equity securities, with principal emphasis on issues
believed by Fund management to be undervalued. The Fund may invest up to
40% of its total assets in foreign securities.
Merrill Lynch Capital Fund
Seeks the highest total investment return consistent with prudent risk
primarily through a fully managed investment policy that permits management
of the Fund to vary investment in equity, debt, and convertible securities
based on evaluation of changes in economic and market trends. The Fund
invests in high-quality stocks, corporate bonds and cash equivalents, and
may invest up to 25% of its assets in foreign securities. It offers
investors three distinct advantages: Flexibility, Focus on Quality, and
Diversification.
Merrill Lynch Basic Value Fund
Seeks capital appreciation, and secondarily, income, by investing primarily
in equities that appear to be undervalued. The Fund's value-oriented
approach is based on the conviction that certain stocks may, at times, be
at the variance with their fundamental strength and potential for long-term
appreciation. The Fund offers diversification, spreading risk across a
range of companies and industries. The Fund may invest up to 25% of its
total assets in foreign securities.
Merrill Lynch Corporate Bond Fund
Seeks a high level of current income consistent with the investment
policies of the Fund and prudent management. The Fund may invest primarily
in bonds rated in the four highest rating categories with a maximum
remaining maturity not to exceed 10 years. The Fund may invest up to 25% of
its total assets in foreign securities.
Van Kampen American Value Fund
As value investors, the Fund managers are bargain hunters in every sense of
the word, looking for stocks of well-run companies that are trading at
prices below what they believe are below their intrinsic values. The
managers believe the small- and mid-cap stocks in which they invest are
only temporarily underpriced. Eventually, market forces may close the
valuation gap, lifting the stock's price to a level that fully reflects the
company's true worth.
Van Kampen Emerging Growth Fund
The Fund offers long-term capital appreciation potential by investing at
least 65% of its total assets in equity securities issued by small- and
medium-sized companies.
Van Kampen Common Stock Fund
The Fund managers' approach has been to invest in well-established
companies that they believe are undervalued by the stock market. The Fund
offers potential for capital growth and income.
PIMCO High Yield Fund
Seeks maximum total return through investment in an intermediate-term
portfolio of higher yielding bonds with an average duration of 2 to 6
years.
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<PAGE>
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
Alliance Premier Growth Fund
Seeks long-term growth of capital by investing in a limited number of
large, carefully selected, high quality U.S. companies. Alliance's research
team analyzes a universe of 600 large cap stocks and the Fund's managers
distill that list into the "favored" 25 holdings, which normally comprise
approximately two-thirds of the Fund.
Ivy International Fund
The Fund's principal investment objective is to provide long-term capital
growth, primarily through investment in equity securities traded in
European, Pacific Basin and Latin American markets.
John Hancock Small Cap Growth Fund
Seeks to identify small-sized companies that are growing faster than their
overall business segment for long-term capital appreciation.
Commonwealth Telephone Enterprises Stock Fund
Seeks long-term capital appreciation by investing in CTE common stock.
Loan Fund
The Fund represents the outstanding principal balance for all participants.
4. Investments
The following presents investments that represent 5 percent or more of the
Plan's net assets:
<TABLE>
<CAPTION>
December 31,
1999 1998
<S> <C> <C>
Investments at fair value:
Merrill Lynch Retirement Preservation Trust $ 145,920 $ 100,176
Merrill Lynch Growth Fund 556,473 314,150
Merrill Lynch Capital Fund 444,952 325,196
Merrill Lynch Basic Value Fund 611,129 414,280
Shares of CTE Common Stock 175,239 79,787
</TABLE>
-8-
<PAGE>
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
During 1999, the Plan's investments, including gains and losses on
investments sold, as well as held during the year, appreciated in value by
$140,646 as follows:
Merrill Lynch Retirement Preservation Trust $ 197
Merrill Lynch S&P 500 Index Fund 1,650
Merrill Lynch Growth Fund 118,510
Merrill Lynch Capital Fund (30,996)
Merrill Lynch Basic Value Fund (7,252)
Merrill Lynch Corporate Bond Fund (6,281)
Van Kampen American Value Fund 33
Van Kampen Emerging Growth Fund 3,375
Van Kampen Common Stock Fund (153)
Alliance Premier Growth Fund 3,784
Ivy International Fund 2,080
John Hancock Small Cap Growth Fund 207
CTE Common Stock 55,492
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$ 140,646
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5. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to terminate the Plan, subject to the provisions of
ERISA.
6. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Merrill
Lynch. Merrill Lynch is the Trustee as defined by the Plan and, therefore,
these transactions qualify as party-in-interest. Fees paid by the Plan for
the investment management services amounted to $550 for the year end
December 31, 1999.
As described in Note 1, participants may elect to purchase common stock of
CTE, the Plan Sponsor. During 1999, purchases of $54,804 were made, and
proceeds of $14,717 were received from sales of CTE's common stock.
7. Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated June 29, 1993, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The
Plan Administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC.
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<PAGE>
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Schedule H, Item 4(i) - Assets Held for Investment Purposes
December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(b) (c) (d) (e)
(a) Identity of Issue Description of Asset Cost Current Value
<S> <C> <C> <C> <C>
* Merrill Lynch Merrill Lynch Retirement Preservation Trust $ 145,919 $ 145,920
Merrill Lynch S&P 500 Index Fund 16,578 18,228
Merrill Lynch Growth Fund 500,603 556,473
Merrill Lynch Capital Fund 472,504 444,952
Merrill Lynch Basic Value Fund 602,617 611,129
Merrill Lynch Corporate Bond Fund 114,613 109,968
Van Kampen American Value Fund 1,129 1,162
Van Kampen Emerging Growth Fund 9,714 13,089
Van Kampen Common Stock Fund 62 60
PIMCO High Yield Fund 58 58
Alliance Premier Growth Fund 34,678 38,463
Ivy International Fund 22,625 24,521
John Hancock Small Cap Growth Fund 2,069 2,276
* CTE Common Stock Shares of Commonwealth Telephone
Enterprises, Inc. Common Stock 110,231 175,239
* Participants' Notes Participants' loans with interest rates from
7.75% to 9.50% with maturity dates from
2000 to 2028 - 30,060
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Total $ 2,033,400 $ 2,171,598
================ ==================
</TABLE>
* Party-in-interest
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<PAGE>
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Schedule H, Item 4(j) - Reportable Transactions
For the year ended December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a) (b) Number of (c) Purchase (d) Selling (e) (f) Current (g) Net
Identity of Party Description of Asset Transactions Price Price Cost Value Gain (Loss)
<S> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch* Merrill Lynch Retirement
Preservation Trust 65 $ 67,953 - $ 67,953 $ 67,953 -
Merrill Lynch Retirement
Preservation Trust 15 - $ 22,210 22,210 - -
Merrill Lynch Growth Fund 45 176,884 - 176,884 176,884 -
Merrill Lynch Growth Fund 42 - 52,963 63,910 - $ (10,947)
Merrill Lynch Capital Fund 45 196,600 - 196,600 196,600 -
Merrill Lynch Capital Fund 27 - 45,801 44,748 - 1,053
Merrill Lynch Basic Value Fund 49 251,911 - 251,911 251,911 -
Merrill Lynch Basic Value Fund 31 - 47,765 42,941 - 4,824
Commonwealth Telephone Shares of Commonwealth Telephone
Enterprises, Inc.* Enterprises, Inc. Common Stock 44 54,804 - 54,804 54,804 -
Shares of Commonwealth Telephone
Enterprises, Inc. Common Stock 18 - 14,717 10,298 - 4,419
</TABLE>
* Party-in-interest
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE COMMONWEALTH TELEPHONE COMPANY
BARGAINING EMPLOYEES 401(k) PLAN
DATE: June 28, 2000 By: /s/ Donald P. Cawley
--------------------
Donald P. Cawley
Vice President and
Chief Accounting Officer
<PAGE>
FORM 11-K
EXHIBIT INDEX
EXHIBIT NO.
DESCRIPTION
20(a) Consent of PricewaterhouseCoopers LLP
REQUIRED INFORMATION
Table of Contents
Report of Independent Certified Public Accountants
Statement of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits
Notes to Financial Statements
Schedules
