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, 2000
{_} TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file numbers 2-98306, 33-13066, and 333-37953
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
Commonwealth Telephone
Company Bargaining
Employees 401(k) Plan
Financial Statements as of December 31, 2000 and 1999
and for the Year Ended December 31, 2000 and
Supplemental Schedule for the Year Ended
December 31, 2000
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Index to Financial Statements
and Supplemental Schedule
December 31, 2000 and 1999
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Page(s)
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 4-8
Supplemental Schedule:
Schedule H, Item 4(i)* - Schedule of Assets (Held at End of Year) 9
* Refers to item number in Form 5500 (Annual Return/Report of Employee Benefit
Plan) for the plan period ended December 31, 2000, which item is incorporated
herein by reference.
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, 2000 and 1999, and the changes in net assets available for
benefits for the year ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. 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 of America, 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 our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
at End of Year is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is 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. This
supplemental schedule is the responsibility of the Plan's management. This
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers LLP
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PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
June 28, 2001
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999
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ASSETS 2000 1999
Investments (see Note 3) $ 2,631,919 $ 2,171,598
Receivables:
Participant contributions 28,267 67,537
Dividends - 495
------------ ------------
Net assets available for benefits $ 2,660,186 $ 2,239,630
------------ ------------
The accompanying notes are an integral part of the financial statements.
-2-
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2000
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Additions to net assets attributed to:
Investment income:
Net depreciation in fair market value of investments $ (263,547)
Interest/dividends 52,271
Contributions:
Participants 732,919
----------
Total additions 521,643
----------
Deductions:
Benefits paid to participants 101,087
----------
Total deductions 101,087
----------
Increase in net assets available for benefits 420,556
Net assets available for benefits:
Beginning of year 2,239,630
----------
End of year $2,660,186
----------
The accompanying notes are an integral part of the financial statements.
-3-
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 2000 and 1999
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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. Effective
July 1, 2000, the Plan changed trustees from Merrill Lynch to Dreyfus
Retirement Services. 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 with their
applicable payroll cycle. Participant's may change investment elections on
a daily basis. Contributions are subject to certain limitations.
Participants may direct the investment of their contribution into various
investment options offered by the Plan. The Plan currently offers ten
mutual funds and a CTE Common Stock fund as investment options for
participants.
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.
-4-
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 2000 and 1999
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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.
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 (see Note 3) 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 and the Dreyfus Certus Value Fund Class I 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") for
the period January 1, 2000 through June 30, 2000 and the Dreyfus Certus
Stable Value Fund Class I (the "Trust Fund") for the period July 1, 2000
through December 31, 2000 invest in various term guaranteed insurance
contracts and maintain a cash reserve balance with all excess funds. The
average yield and the weighted average crediting interest rate are based on
the underlying contracts.
-5-
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 2000 and 1999
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The Trust Funds' 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, 2000 and 1999 is $219,829 and
$145,920, respectively.
The average yield and crediting interest rates were approximately 6.0% for
the years ended December 31, 2000 and 1999.
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 in the United States of America 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 statements
of net assets available for benefits and the statement of changes in net
assets available for benefits.
-6-
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 2000 and 1999
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3. Investments
The following presents investments that represent 5 percent or more of the
Plan's net assets:
December 31,
2000 1999
Investments at fair value:
Merrill Lynch Retirement Preservation Trust - $145,920
Merrill Lynch Growth Fund - 556,473
Merrill Lynch Capital Fund - 444,952
Merrill Lynch Basic Value Fund - 611,129
Dreyfus Certus Stable Value Fund Class I $219,829 -
Dreyfus Premier Third Century Fund 657,919 -
Dreyfus Lifetime Growth & Income 499,122 -
Dreyfus Disciplined Stock Fund 597,972 -
Dreyfus Emerging Leaders Fund 137,329 -
PIMCO Total Return Bond Fund 136,461 -
Shares of CTE Common Stock 195,480 175,239
During 2000, the Plan's investments, including gains and losses on
investments bought and sold, as well as held during the year, depreciated in
value by $263,547 as follows:
Common Collective Trust $ 10
Mutual Funds (232,562)
CTE Common Stock (30,995)
---------
$(263,547)
=========
4. 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.
5. Related Party Transactions
The Plan invests in shares of mutual funds and a collective trust managed by
an affiliate of Dreyfus Retirement Services. Effective July 1, 2000, Dreyfus
Retirement Services acts as a trustee for investments in the Plan.
Transactions in such investments qualify as party-in-interest transactions
and are exempt from the prohibited transaction rules.
-7-
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Notes to Financial Statements
December 31, 2000 and 1999
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Prior to July 1, 2000, certain Plan assets were invested in shares of
separate accounts managed by Merrill Lynch. Merrill Lynch was a custodian and
recordkeeper as defined by the Plan and, therefore, these investments
qualified as party-in-interest and were exempt from the prohibited
transaction rules.
As described in Note 1, participants may elect to purchase common stock of
CTE, the Plan Sponsor. During 2000, purchases of $113,970 were made, and
proceeds of $59,342 were received from sales of CTE's common stock.
6. 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 believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
-8-
Commonwealth Telephone Company
Bargaining Employees 401(k) Plan
Schedule H, Item 4(i) - Schedule of Assets (Held at End of Year)
December 31, 2000
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Current
Identity of Issue Investment Type Value
*Dreyfus Certus Stable Value Fund Collective Trust $ 219,829
*Dreyfus S&P 500 Index Fund Registered Investment Company 50,943
*Dreyfus Emerging Leaders Fund Registered Investment Company 137,329
*Dreyfus Premier Third Century Fund Registered Investment Company 657,919
*Dreyfus Lifetime Growth & Income Registered Investment Company 499,122
*Dreyfus Disciplined Stock Fund Registered Investment Company 597,972
*Dreyfus Lifetime Growth Fund Registered Investment Company 2,633
*Dreyfus Lifetime Income Fund Registered Investment Company 59
Janus Overseas Fund Registered Investment Company 64,664
PIMCO Total Return Bond Fund Registered Investment Company 136,461
*CTE Common Stock Shares of Commonwealth Telephone
Enterprises, Inc. Common Stock 195,480
*Participants' Notes Participants' loans with interest rates from
7.75% to 9.50% with maturity dates
from 2000 to 2028 69,508
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Total $2,631,919
==========
________
* Party-in-interest
-9-
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 29, 2001 By: /s/ Donald P. Cawley
--------------------
Donald P. Cawley
Senior Vice President and
Chief Accounting Officer
FORM 11-K
EXHIBIT INDEX
EXHIBIT NO.
DESCRIPTION
23 Consent of PricewaterhouseCoopers LLP
REQUIRED INFORMATION
Table of Contents
Report of Independent Accountants
Statements of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits
Notes to Financial Statements
Supplemental Schedule