CITIZENS UTILITIESCOMMUNICATIONS COMPANY
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31,JUNE 30, 2000
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31,June 30, 2000
---------------------------
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________to__________
Commission file number 001-11001
---------
CITIZENS UTILITIESCOMMUNICATIONS COMPANY
________________________________________________________________________________- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-0619596
________________________________ ____________________________________- ------------------------------------ --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3 High Ridge Park
P.O. Box 3801
Stamford, Connecticut 06905
________________________________________ ____________________________________- ---------------------------------------- -------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 614-5600
______________________________
NONE
________________________________________________________________________________------------------------------
CITIZENS UTILITIES COMPANY
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
The number of shares outstanding of the registrant's class of common stock as of
April 28,July 31, 2000 were 263,679,242.was 264,792,632.
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements
Page No.
--------
Part I. Financial Information
Consolidated Balance Sheets at March 31,June 30, 2000 and December 31, 1999 2
Consolidated Statements of Income and Comprehensive Income (Loss)
for the Three Months Ended March 31,June 30, 2000 and 1999 3
Consolidated Statements of Income and Comprehensive Income (Loss)
for the Six Months Ended June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the ThreeSix Months
Ended March 31,June 30, 2000 and 1999 45
Notes to Consolidated Financial Statements 56
Management's Discussion and Analysis of Financial Condition
and Results of Operations 811
Quantitative and Qualitative Disclosures about Market Risk 1318
Part II. Other Information
Legal Proceedings 1419
Submission of Matters to a Vote of Security Holders 20
Other Information 20
Exhibits and Reports on Form 8-K 1520
Signatures 1621
1
PART I. FINANCIAL INFORMATION
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2000 1999
---------- ----------
ASSETS
- ------
Current assets:
Cash $ 43,992 $ 37,141
Accounts receivable, net 217,785 241,519
Other 30,038 29,964
---------- ----------
Total current assets 291,815 308,624
---------- ----------
Property, plant and equipment 4,567,876 4,458,654
Less accumulated depreciation 1,620,900 1,569,936
---------- ----------
Net property, plant and equipment 2,946,976 2,888,718
---------- ----------
Investments 546,652 591,386
Regulatory assets 183,895 184,942
Deferred debits and other assets 136,817 141,274
Assets of discontinued operations 1,652,310 1,656,414
---------- ----------
Total assets $ 5,758,465 $5,771,358
========== ==========
LIABILITIES AND EQUITY
- ----------------------
Current liabilities:
Long-term debt due within one year $ 33,005 $ 31,156
Accounts payable and other current liabilities 333,375 435,856
---------- ----------
Total current liabilities 366,380 467,012
Deferred income taxes 448,160 460,208
Customer advances for construction and contributions
in aid of construction 180,652 179,831
Deferred credits and other liabilities 70,827 87,668
Regulatory liabilities 26,419 27,000
Long-term debt 2,193,494 2,107,460
Liabilities of discontinued operations 394,861 310,269
---------- ----------
Total liabilities 3,680,793 3,639,448
---------- ----------
Company Obligated Mandatorily Redeemable Convertible
Preferred Securities * 201,250 201,250
Minority interest in subsidiary 6,930 11,112
Shareholders' equity:
Common stock issued, $.25 par value 65,811 65,519
Additional paid-in capital 1,589,621 1,577,903
Retained earnings 268,915 261,590
Accumulated other comprehensive income (13,122) 14,923
Treasury stock (41,733) (387)
---------- ----------
Total shareholders' equity 1,869,492 1,919,548
---------- ----------
Total liabilities and
shareholders' equity $ 5,758,465
June 30, 2000 December 31, 1999
------------- -----------------
ASSETS
- ------
Current assets:
Cash $ 49,150 $ 37,141
Accounts receivable, net 214,421 241,519
Other 35,286 29,964
---------- ---------
Total current assets 298,857 308,624
---------- ---------
Property, plant and equipment 4,986,687 4,458,654
Less accumulated depreciation 1,722,680 1,569,936
---------- --------
Net property, plant and equipment 3,264,007 2,888,718
---------- ---------
Investments 493,444 591,386
Regulatory assets 182,847 184,942
Deferred debits and other assets 154,346 141,274
Assets of discontinued operations 1,679,821 1,656,414
---------- ---------
Total assets $ 6,073,322 $ 5,771,358
==========
========== =========
LIABILITIES AND EQUITY
- ----------------------
Current liabilities:
Long-term debt due within one year $ 33,540 $ 31,156
Accounts payable and other current liabilities 305,422 435,856
---------- ---------
Total current liabilities 338,962 467,012
Deferred income taxes 445,661 460,208
Customer advances for construction and contributions
in aid of construction 182,470 179,831
Deferred credits and other liabilities 68,387 87,668
Regulatory liabilities 25,835 27,000
Long-term debt 2,530,370 2,107,460
Liabilities of discontinued operations 400,807 310,269
---------- ---------
Total liabilities 3,992,492 3,639,448
---------- ---------
Company Obligated Mandatorily Redeemable Convertible
Preferred Securities * 201,250 201,250
Minority interest in subsidiary - 11,112
Shareholders' equity:
Common stock issued, $.25 par value 66,116 65,519
Additional paid-in capital 1,606,107 1,577,903
Retained earnings 271,925 261,590
Accumulated other comprehensive income (loss) (25,470) 14,923
Treasury stock (39,098) (387)
---------- ---------
Total shareholders' equity 1,879,580 1,919,548
---------- ---------
Total liabilities and shareholders' equity $ 6,073,322 $ 5,771,358
========== =========
* Represents securities of a subsidiary trust, the sole assets of which are
securities of a subsidiary partnership, substantially all the assets of which
are convertible debentures of the Company.
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
2
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31,JUNE 30, 2000 AND 1999
(In thousands, except per-share amounts)
2000 1999
--------- ---------
Revenue $ 287,324 $ 273,946
--------- ---------
Operating Expenses:
Network access 25,851 35,984
Depreciation and amortization 74,474 59,763
Other operating expenses 155,814 163,228
Acquisition assimilation expense 7,617 -
--------- ---------
Total operating expenses 263,756 258,975
--------- ---------
Income from operations 23,568 14,971
Investment and other income, net 4,810 6,943
Minority interest 5,937 5,693
Interest expense 33,151 18,299
--------- ---------
Income before income taxes, dividends on convertible
preferred securities and discontinued operations 1,164 9,308
Income tax expense (benefit) (1) 250
--------- ---------
Income before dividends on convertible preferred
securities and discontinued operations 1,165 9,058
Dividends on convertible preferred securities,
net of income tax benefit 1,552 1,552
--------- ---------
Income (loss) before discontinued operations (387) 7,506
Income from discontinued operations, net of tax 3,399 247
--------- ---------
Net income 3,012 7,753
Other comprehensive loss, net of tax and
reclassification adjustments (12,348) (293)
--------- ---------
Total comprehensive income (loss) $ (9,336) $ 7,460
========= =========
Income (loss) before discontinued operations
per common share:
Basic $ - $ .03
Diluted $ - $ .03
Income from discontinued operations per common share:
Basic $ .01 $ -
Diluted $ .01 $ 282,455 $ 264,750
--------- ---------
Operating Expenses:
Network access 27,003 34,395
Depreciation and amortization 82,705 61,885
Other operating expenses 155,981 161,338
Acquisition assimilation expenses 3,974 -
--------- ---------
Total operating expenses 269,663 257,618
--------- ---------
Income from operations 12,792 7,132
Investment and other income, net 5,265 75,521
Minority interest 6,285 5,993
Interest expense 29,164 19,098
--------- ---------
Income (loss) before income taxes, dividends
on convertible preferred securities
and discontinued operations (4,822) 69,548
Income tax expense (benefit) (1,253) 26,606
--------- ---------
Income (loss) before dividends on convertible
preferred securities and discontinued operations (3,569) 42,942
Dividends on convertible preferred securities, net of
income tax benefit 1,552 1,552
--------- ---------
Income (loss) before discontinued operations (5,121) 41,390
Income from discontinued operations, net of tax 12,447 13,235
--------- ---------
Net income 7,326 54,625
Other comprehensive income (loss), net of tax and
reclassification adjustments (28,045) (14,118)
--------- ---------
Total comprehensive income (loss) $ (20,719) $ 40,507
========= =========
Income (loss) before discontinued operations per common share:
Basic $ (.02) $ .16
Diluted $ (.02) $ .16
Income from discontinued operations per common share:
Basic $ .05 $ .05
Diluted $ .05 $ .05
Net income per common share:
Basic $ .01 $ .03
Diluted $ .01 $ .03 $ .21
Diluted $ .03 $ .21
The accompanying Notes are an integral part of these Consolidated Financial Statements.
3
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWSINCOME AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREESIX MONTHS ENDED MARCH 31,JUNE 30, 2000 AND 1999
(In thousands)
2000 1999
----------- -----------
Net cash provided by continuing operating activities $ 77,329 $ 217,671
----------- -----------
Cash flows used for investing activities:
Construction expenditures (138,466) (145,581)
Securities purchased (23,886) (394,037)
Securities sold 17,054 398,414
Securities matured 6,400 -
Other (6,901) (297)
----------- -----------
(145,799) (141,501)
Cash flows from financing activities:
Short-term debt repayments - (110,000)
Long-term debt borrowings 88,543 68,686
Long-term debt principal payments (10,814) (1,998)
Issuance of common stock 12,009 8
Common stock buybacks (41,346) (131)
Other 822 (12,522)
----------- ----------
49,214 (55,957)
Cash from (used for) discontinued operations 26,107 (30,485)
Increase (decrease) in cash 6,851 (10,272)
Cash at January 1, 37,141 31,922
----------- ----------
Cash at March 31, $ 43,992 $ 21,650
=========== ==========thousands, except per-share amounts)
2000 1999
--------- ---------
Revenue $ 569,779 $ 538,696
--------- ---------
Operating Expenses:
Network access 56,796 64,579
Depreciation and amortization 157,179 121,648
Other operating expenses 307,853 330,366
Acquisition assimilation expense 11,591 -
--------- ---------
Total operating expenses 533,419 516,593
--------- ---------
Income from operations 36,360 22,103
Investment and other income, net 10,075 82,464
Minority interest 12,222 11,686
Interest expense 62,315 37,397
--------- ---------
Income (loss) before income taxes, dividends on
convertible preferred securities and
discontinued operations (3,658) 78,856
Income tax expense (benefit) (1,254) 26,856
--------- ---------
Income (loss) before dividends on convertible
preferred securities and discontinued operations (2,404) 52,000
Dividends on convertible preferred securities,
net of income tax benefit 3,104 3,104
--------- ---------
Income (loss) before discontinued operations (5,508) 48,896
Income from discontinued operations, net of tax 15,846 13,482
--------- ---------
Net income 10,338 62,378
Other comprehensive loss, net of tax and
reclassification adjustments (40,393) (14,411)
--------- ---------
Total comprehensive income (loss) $ (30,055) $ 47,967
========= =========
Income (loss) before discontinued operations
per common share:
Basic $ (.02) $ .19
Diluted $ (.02) $ .19
Income from discontinued operations per common share:
Basic $ .06 $ .05
Diluted $ .06 $ .05
Net income per common share:
Basic $ .04 $ .24
Diluted $ .04 $ .24
The accompanying Notes are an integral part of these Consolidated Financial Statements.
4
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In thousands)
2000 1999
----------- -----------
Net cash provided by continuing operating activities $ 114,233 $ 220,733
----------- -----------
Cash flows from investing activities:
Capital expenditures (253,642) (265,356)
Securities purchased (48,590) (629,546)
Securities sold 49,684 652,986
Securities matured 10,400 -
Acquisitions (205,404) -
Other (233) 223
----------- -----------
Net cash (used by) investing activities (447,785) (241,693)
Cash flows from financing activities:
Short-term debt repayments - (110,000)
Long-term debt borrowings 363,997 321,301
Long-term debt principal payments (18,719) (157,695)
Issuance of common stock 30,660 4,088
Common stock buybacks (40,959) (3,719)
Other 2,640 (4,883)
----------- -----------
Net cash provided by financing activities 337,619 49,092
Cash provided by (used by) discontinued operations 7,942 (32,458)
Increase (decrease) in cash 12,009 (4,326)
Cash at January 1, 37,141 31,922
----------- -----------
Cash at June 30, $ 49,150 $ 27,596
=========== ===========
Supplemental cash flow information:
Non-cash increase in capital lease asset $ 96,510 $ 45,195
The accompanying Notes are an integral part of these Consolidated Financial Statements.
5
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies:
------------------------------------------
(a)Basis of Presentation:
Citizen UtilitiesCitizens Communications Company and its subsidiaries are referred to as
"we", "us" or "our" in this report. The unaudited consolidated financial
statements include our accounts and have been prepared in conformity with
generally accepted accounting principles and should be read in conjunction
with the consolidated financial statements and notes included in our 1999
Annual Report on Form 10-K. These unaudited consolidated financial
statements include all adjustments, which consist of normal recurring
accruals necessary to present fairly the results for the interim periods
shown. Certain information and footnote disclosures have been condensed
pursuant to Securities and Exchange Commission rules and regulations. The
results of the interim periods are not necessarily indicative of the
results for the full year. Certain reclassifications of balances
previously reported have been made to conform to current presentation.
(b)Regulatory Assets and Liabilities:
Our regulated operations are subject to the provisions of Statement of
Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects
of Certain Types of Regulation." SFAS 71 requires regulated entities to
record regulatory assets and liabilities as a result of actions of
regulators.
(c)Net Income Per Common Share:
Basic net income per common share is computed using the weighted average
number of common shares outstanding during the period being reported on.
Diluted net income per common share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock at the beginning of the period
being reported on (see Note 5).
(d)Minority Interest and Minority Interest in Subsidiary:
Minority interest, as presented on the statements of income, represents
the minority's share of Electric Lightwave, Inc.'s (ELI) net loss for
the periods being reported on. Minority interest in subsidiary, as pre-
sented on the balance sheet, represents the minority's share of ELI's
equity capital.
Since ELI's public offering, we have been recording minority interest on
our income statement and reducing minority interest on our balance sheet
by the amount of the minority interests' share of ELI's losses. As of June
30, 2000, the minority interest on the balance sheet has been reduced to
zero, therefore, from this point going forward, we have discontinued
recording minority interest income on our income statement as there is no
obligation for the minority interests to make good on any additional
losses of ELI. Therefore, beginning in the third quarter 2000, we will
record ELI's entire loss in our consolidated results. When ELI becomes
profitable, we will recognize ELI's earnings in full until the cumulative
losses of the minority interests previously absorbed by us are recovered.
After such recovery, we will begin to record minority interest on our
income statement and minority interest in subsidiary on our balance sheet
based on the percentage of ELI owned by third parties.
(2)Acquisitions:
-------------------------
From May 27, 1999 through July 12, 2000 we have entered into several
agreements to acquire approximately 2,011,000 telephone access lines (as of
December 31, 1999) for approximately $6,471,000,000 in cash. These
transactions have been/will be accounted for using the purchase method of
accounting and the results of operations have been/will be included in the
accompanying financial statements from the date of acquisition. These
agreements are described as follows:
On May 27, September 21, and December 16, 1999, we announced that we had
entered into definitive agreements to purchase from GTE approximately
366,000 telephone access lines (as of December 31, 1999) in Arizona,
California, Illinois, Minnesota and Nebraska for approximately
$1,171,000,000 in cash. We expect that theseThe acquisitions which are subject to various state and
federal regulatory approvals,approvals. The first of these transactions, in
Nebraska, closed on June 30, 2000. We expect that the remainder of these
transactions will occurclose on a state-by-state basis and will begin closing inthroughout the third quarter 2000.next 12
months.
On June 16, 1999, we announced that we had entered into a series of
definitive agreements to purchase from Qwest Communications, formerly US
West, approximately 545,000 telephone access lines (as of December 31,
1999) in Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska,
6
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
North Dakota and Wyoming for approximately $1,650,000,000 in cash. We
expect that these acquisitions, which are subject to various state and
federal regulatory approvals, will occur on a state-by-state basis and
will begin closing in the third quarter 2000.
On July 12, 2000, we announced that we had entered into a definitive
agreement to purchase from Global Crossing Ltd. 100% of the stock of
Frontier Corp. which holds approximately 1,100,000 access lines in
Alabama, Georgia, Illinois, Indiana, Iowa, Michigan, Minnesota,
Mississippi, New York, Pennsylvania and Wisconsin for approximately
$3,650,000,000 in cash. We expect that this transaction, which is subject
to various state and federal regulatory approvals, will be completed in
the second half of 2001.
(3)Discontinued Operations:
----------------------------------------------------
On August 24, 1999, our Board of Directors approved a plan of divestiture by
sale of our public services properties, which include gas, electric and water
and wastewater businesses. The proceeds from the sales of public services
businesses will be used to partially fund the telephone access line purchases.purchases
discussed in Note 2.
We have signed agreements to date for all our water and wastewater
operations, all our electric operations and one of our natural gas
operations. The proceeds from these divestitures will total $1,745,000,000
plus the assumption of certain liabilities. These agreements are described as
follows:
On October 18, 1999, we announced that we had agreed to sell our water and
wastewater operations to American Water Works, Inc. for $835,000,000 plus
the assumption of certain liabilities. The transaction isThese transactions are expected to
closebegin closing in the fourth quarter of 2000 following regulatory
approvals.
On February 15, 2000, we announced that we had agreed to sell our electric
utility operations for $535,000,000 plus the assumption of certain
liabilities. The Arizona and Vermont electric divisions will be sold to
Cap Rock Energy Corp. and the Kauai (Hawaii) electric division will be
sold to Kauai Island Electric Co-op. TheThese transactions are expected to
close in 2000early 2001 following regulatory approvals.
On April 13, 2000, we announced that we had agreed to sell our Louisiana
Gas operations to Atmos Energy Corporation for $375,000,000 plus the
assumption of certain liabilities. TheThis transaction is expected to close
in 2001the fourth quarter of 2000 following regulatory approvals.
5
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
We have accounted for the planned divestiture of the public services
properties as a discontinued operation.operations. Discontinued operations in the
consolidated statements of income and comprehensive income (loss) reflect the
results of operations of the public services properties including allocated
interest expense for the periods presented. Interest expense was allocated to
the discontinued operations based on the outstanding debt issued forspecifically
identified with these businesses. The debt presented in liabilities of
discontinued operations represents only debt to be transferred pursuant to
the asset sale agreements described above.
Summarized financial information for the discontinued operations is set forth
below:
June 30, December 31,
2000 1999
---------- -----------
($ in thousands)
Current assets $ 109,925 $ 109,250
Net property, plant and
equipment 1,498,169 1,459,958
Other assets 71,727 87,206
---------- -----------
Total assets $ 1,679,821 $ 1,656,414
========== ===========
Current liabilities $ 97,946 $ 18,040
Long-term debt 134,420 133,817
Other liabilities 168,441 158,412
---------- -----------
Total liabilities $ 400,807 $ 310,269
========== ===========
7
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, December 31,
2000 1999
-------------------------
($ in thousands)
Current assets $ 107,177 $ 109,250
Net property, plant and equipment 1,465,689 1,459,958
Other assets 79,444 87,206
--------- ---------
Total assets $ 1,652,310 $ 1,656,414
========= =========
Current liabilities $ 97,629 $ 18,040
Long-term debt 134,542 133,817
Other liabilities 162,690 158,412
--------- ---------
Total liabilities $ 394,861 $ 310,269
========= =========
For the three months For the six months
ended March 31,
--------------------------June 30, ended June 30,
--------------------------- ------------------------
2000 1999 --------------------------2000 1999
--------------------------- ------------------------
($ in thousands) ($ in thousands)
Revenue $ 190,312157,859 $ 172,764140,901 $ 348,171 $ 313,665
Operating income $ 28,96117,406 $ 29,19116,450 $ 46,367 $ 45,641
Income taxes $ 5,9422,120 $ 4,9123,350 $ 8,062 $ 8,262
Net income $ 12,4473,399 $ 13,235247 $ 15,846 $ 13,482
In July 2000, the Arizona Corporate Commission (the Commission) gave final
approval for a reduction in rates and a one-time refund for our Arizona
electric customers totaling $3,750,000. The March 31,refund will be based on billed
consumption from May 1999 through April 2000 and will appear as a credit on
customer bills. As a result of the Commission's decision, we have recorded an
accrued liability and have reduced revenue in our discontinued operations as
of June 30, 2000 in the amount of $3,750,000. Net income in the second
quarter 2000 has been reduced by the after-tax amount of approximately
$2,311,000.
We have classified certain balance sheet items as discontinued operations in
the June 30, 2000 balance sheet has been adjusted for changesthat were previously classified as continuing
operations in assets and
liabilities of discontinued operations as well as for new agreements that
have been signed since the December 31, 1999 balance sheet was published.as a result of the
finalization of certain divestiture agreements and updates to our estimates.
(4)1999 Restructuring Charges:
---------------------------
In the fourth quarter of 1999, we approved a plan to restructure our
corporate office activities. In connection with this plan, we recorded a
pre-tax charge of $5,760,000 in other operating expenses in the fourth
quarter of 1999. The restructuring resultsresulted in the reduction of 49 corporate
employees. All affected employees were communicated with in the early part of
November 1999.
As of March 31,June 30, 2000, approximately $2,677,000$3,900,000 of the costs had been paid and
2238 employees were terminated. The remaining employees will be terminated
during 2000. The remaining accrual of approximately $3,083,000$1,860,000 is included in
other current liabilities. These costs are expected to be paid during 2000.
6
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
(5)Net Income Per Common Share:
---------------------------------------------------------
The reconciliation of the net income per common share calculation for the
three and six months ended March 31,June 30, 2000 and 1999, respectively, is as
follows:
For the three months ended June 30,
-----------------------------------------------
2000 1999
-----------------------------------------------
(In thousands, except for per share amounts)
Income Shares Per Share Income Shares Per Share
------ ------ --------- ------ ------ ---------
Net income per common share:
Basic $ 3,012 263,762 $ .01 $ 7,753 260,059 $ .03
Effect of dilutive options - 6,259 - - 1,412 -
Diluted $ 3,012 270,021 $ .01 $ 7,753 261,471 $ .03
For the six months ended June 30,
-----------------------------------------------
2000 1999
----------------------------- -------------------------
($ in-----------------------------------------------
(In thousands, except for per share amounts)
Income Shares Per Share Income Shares Per Share
------ ------ --------- ------ ------ ---------
Net income per common share:
Basic $10,338 263,246 $ 7,326 262,718.04 $62,378 259,879 $ .03 $ 54,625 259,701 $.21.24
Effect of dilutive sharesoptions - 4,5484,315 - - 6511,714 -
Diluted $10,338 267,561 $ 7,326 267,266.04 $62,378 261,593 $ .03 $ 54,625 260,352 $.21.24
8
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
All share amounts represent weighted average shares outstanding for each
respective period. The diluted net income per common share calculation
excludes the effect of potentially dilutive shares when their effect is
antidilutive. At March 31,June 30, 2000 and 1999, we have 4,025,000 shares of
potentially dilutive Mandatorily Redeemable Convertible Preferred Securities (Convertible
Preferred)
which are convertible into common stock at a 3.76 to 1 ratio at an exercise
price of $13.30 per share and certain potentially dilutive stock options that
are not included in the calculation as their effect isthey are antidilutive.
At March 31, 1999, these Convertible
Preferred shares and certain potentially dilutive stock options were not
included in the calculation as their effect was antidilutive at that time.
(6)Segment Information:
-------------------
We operate in two segments, telecommunications and ELI. The
telecommunications segment provides both regulated and competitive
communications services to residential, business and wholesale customers. ELI
is a facilities based integrated communications provider providingoffering a broad
range of communications services throughout the United States. We own 83% of
ELI and we guarantee all of ELI's long-term debt, one of its capital leases
and one of its operating leases.
EBITDA is earnings (operating income (loss)) before interest, income taxes,
depreciation and amortization. EBITDA is a measure commonly used to analyze
companies on the basis of operating performance. It is not a measure of
financial performance under generally accepted accounting principles and
should not be considered as an alternative to net income as a measure of
performance nor as an alternative to cash flow as a measure of liquidity and
may not be comparable to similarly titled measures of other companies.
For the three months ended June 30, 2000
----------------------------------------
($ in thousands)
Consolidated
Telecommunications ELI Eliminations Total
------------------ --- ------------ -----
Revenue $ 227,396 $ 60,620 $ (692)(1) $ 287,324
Depreciation 59,763 14,721 (10)(2) 74,474
Operating Income
(Loss) 39,393 (16,156) 331 (2,3) 23,568
EBITDA 99,156 (1,435) 321 (3) 98,042
For the three months ended March 31, 2000
-----------------------------------------June 30, 1999
----------------------------------------
($ in thousands)
Consolidated
Telecommunications ELI Eliminations Total
------------------ --- ------------ -----
Revenue $ 226,312228,621 $ 56,77846,095 $ (635)(770)(1) $ 282,455273,946
Depreciation 69,950 12,755 82,70551,613 8,150 - 59,763
Operating Income
32,020 (19,420) 192(2) 12,792(Loss) 39,315 (24,837) 493 (3) 14,971
EBITDA 101,970 (6,665) 192(2) 95,49790,928 (16,687) 493 (3) 74,734
For the threesix months ended March 31, 1999
-----------------------------------------June 30, 2000
--------------------------------------
($ in thousands)
Consolidated
Telecommunications ELI Eliminations Total
------------------ --- ------------ -----
Revenue $ 227,232453,708 $117,398 $ 38,216 $ (698)(1,327)(1) $ 264,750569,779
Depreciation 54,891 6,994 61,885129,770 27,476 (67)(2) 157,179
Operating Income
36,610 (29,803) 325(2) 7,132(Loss) 71,356 (35,576) 580 (2,3) 36,360
EBITDA 91,501 (22,809) 325(2) 69,017
201,126 (8,100) 513 (3) 193,539
For the six months ended June 30, 1999
--------------------------------------
($ in thousands)
Consolidated
Telecommunications ELI Eliminations Total
------------------ --- ------------ -----
Revenue $ 455,853 $ 84,311 $ (1,468)(1) $ 538,696
Depreciation 106,504 15,144 - 121,648
Operating Income
(Loss) 75,925 (54,640) 818 (3) 22,103
EBITDA 182,429 (39,496) 818 (3) 143,751
(1) Represents revenue received by ELI from our telecommunications operations.
(2) Represents amortization of the capitalized portion of intercompany interest.
(3) Represents administrative fees charged to ELI by the Company.
79
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(7) Capital Stock:
-------------
In December 1999, our Board of Directors authorized the purchase, from time
to time, of up to $100,000,000 worth of shares of our common stock. This
share purchase program was completed in early April 2000 and resulted in the
acquisition or contract to acquire approximately 6,165,000 shares of our
common stock. Of those shares, 2,500,000 shares were purchased for
approximately $40,959,000 in cash. We entered into an equity forward contract
for the acquisition of the remaining 3,665,000 shares.
In April 2000, our Board of Directors authorized the purchase, from time to
time, of up to an additional $100,000,000 worth of shares of our common
stock. Through June 30, 2000, this share purchase program has resulted in the
contract to acquire approximately 4,483,000 additional shares of our common
stock. These shares were also contracted for by entering into equity forward
transactions.
In addition to our share purchase programs described above, in April 2000,
our Board of Directors authorized the purchase, from time to time, of up to
$25,000,000 worth of shares of Class A common stock of ELI, our 83% owned
subsidiary, on the open market or in negotiated transactions. The ELI share
purchase program was completed in July 2000 and resulted in the acquisition
of approximately 1,221,000 shares of ELI common stock for approximately
$23,960,000 in cash. In August 2000, our Board of Directors authorized the
purchase, from time to time, of up to an additional 1,000,000 shares of ELI
on the open market or in negotiated transactions.
10
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
------------------------------------------------------------------------
of Operations
- -------------
This quarterly report on Form 10-Q contains forward-looking statements that are
subject to risks and uncertainties which could cause actual results to differ
materially from those expressed or implied in the statements. All
forward-lookingForward-looking
statements (including oral representations) are only predictions or statements
of current plans, which we review continuously. All
forward-lookingForward-looking statements may
differ from actual future results due to, but not limited to, any of the
following possibilities:
o changes in the economy of our markets,
o the nature and pace of technological changes,
o the number and effectiveness of competitors in our markets,
o changes in legal and regulatory policy,
o success in overall strategy,
o our ability to identify future markets and successfully expand existing ones,
o the mix of products and services offered in our target markets, and
o the effects of acquisitions and dispositions and the ability to effectively
integrate businesses acquired.
You should consider these important factors in evaluating any statement in this
Form 10-Q or otherwise made by us or on our behalf. The following information is
unaudited and should be read in conjunction with the consolidated financial
statements and related notes to consolidated financial statements included in this report and as presented in our
1999 Annual Report on Form 10-K previously
filed.10-K. We have no obligation to update or revise these
forward-looking statements.
(a)Liquidity and Capital Resources
-------------------------------
We consider our operating cash flows and our ability to raise debt and equity
capital as the principal indicators of our liquidity. For the threesix months ended
March 31,June 30, 2000, we used cash flow from operations and proceeds from net
financings and parties desiring utility services to fund capital expenditures. Funds requisitioned from the Industrial
Development Revenue Bond construction fund trust accounts and advances and
contributions from parties desiring utility services were used to partially fund
the construction of certain public services plant.
We have $3,200,000,000In June 2000, we arranged for the issuance of $19,600,000 of 2000 Series special
purpose revenue bonds as money market bonds with an initial interest rate of
4.6% and a maturity date of December 1, 2020. The proceeds were used to fund
and/or prefund expenditures for construction, extension, improvement and
purchase of facilities of the gas division in Hawaii.
In June 2000, we completed the purchase of 37 telephone exchanges in Nebraska
from GTE. This transaction totaled approximately $205,000,000 and was funded
from cash balances, commercial paper and proceeds from sales of investments.
In July 2000, we arranged for a committed $3,500,000,000 revolving bank credit
facilitiesfacility for the purpose of purchasing from Global Crossing Ltd. 100% of the
stock of Frontier Corp. which holds approximately 1,100,000 access lines. This
credit facility is in addition to a credit commitmentcommitments under which wethe Company may
borrow up to $200,000,000.$3,400,000,000. There were no amounts outstanding under these
commitments at March 31,June 30, 2000. ELI has committed revolving lines of credit with
commercial banks under which it may borrow up to $400,000,000. As of March 31,June 30,
2000, $300,000,000$354,000,000 was outstanding under ELI's revolving lines of credit. We
have guaranteed all of ELI's obligations under these revolving lines of credit.
Acquisitions
- ------------
From May 27, 1999 through July 12, 2000 we have entered into several agreements
to acquire approximately 2,011,000 telephone access lines (as of December 31,
1999) for approximately $6,471,000,000 in cash. These transactions have
been/will be accounted for using the purchase method of accounting and the
results of operations have been/will be included in the accompanying financial
statements from the date of acquisition. These agreements are described as
follows:
On May 27, September 21, and December 16, 1999, we announced that we had
entered into definitive agreements to purchase from GTE approximately 366,000
telephone access lines (as of December 31, 1999) in Arizona, California,
Illinois, Minnesota and Nebraska for approximately $1,171,000,000 in cash.
We expect that
theseThe acquisitions which are subject to various state and federal regulatory
approvals,approvals. The first of these transactions, in Nebraska, closed on June 30,
2000. We expect that the remainder of these transactions will occurclose on a
state-by-state basis and will begin closing inthroughout the third quarter 2000.next 12 months.
11
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
On June 16, 1999, we announced that we had entered into a series of
definitive agreements to purchase from Qwest Communications, formerly US
West, approximately 545,000 telephone access lines (as of December 31, 1999)
in Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, North Dakota
and Wyoming for approximately $1,650,000,000 in cash. We expect that these
acquisitions, which are subject to various state and federal regulatory
approvals, will occur on a state-by-state basis and will begin closing in the
third quarter 2000.
On July 12, 2000, we announced that we had entered into a definitive
agreement to purchase from Global Crossing Ltd. 100% of the stock of Frontier
Corp. which holds approximately 1,100,000 access lines in Alabama, Georgia,
Illinois, Indiana, Iowa, Michigan, Minnesota, Mississippi, New York,
Pennsylvania and Wisconsin for approximately $3,650,000,000 in cash. We
expect that this transaction, which is subject to various state and federal
regulatory approvals, will be completed in the second half of 2001.
We expect to temporarily fund these telephone access line purchases with cash
and investment balances and proceeds from commercial paper issuances, backed by
the credit commitments described above. Permanent funding is expected to be from
cash and investment balances, and the proceeds from the divestiture of our public
services businesses.
8
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIES COMPANY AND SUBSIDIARIESbusinesses, and direct drawdowns from the credit facilities described
above.
Divestiture
- -----------
On August 24, 1999, our Board of Directors approved a plan of divestiture for
our public services properties, which include gas, electric and water and
wastewater businesses. The proceeds from the sales of public services businesses
will be used to partially fund the telephone access line purchases.purchases discussed
above.
We have signed agreements to date for all our water and wastewater operations,
all our electric operations and one of our natural gas operations. The proceeds
from these divestitures will total $1,745,000,000 plus the assumption of certain
liabilities. These agreements are described as follows:
On October 18, 1999, we announced that we had agreed to sell our water and
wastewater operations to American Water Works, Inc. for $835,000,000 plus the
assumption of certain liabilities. The transaction isThese transactions are expected to closebegin
closing in the fourth quarter of 2000 following regulatory approvals.
On February 15, 2000, we announced that we had agreed to sell our electric
utility operations for $535,000,000 plus the assumption of certain
liabilities. The Arizona and Vermont electric divisions will be sold to Cap
Rock Energy Corp. and the Kauai (Hawaii) Electric Divisionelectric division will be sold to
Kauai Island Electric Co-op. TheThese transactions are expected to close in
2000early 2001 following regulatory approvals.
On April 13, 2000, we announced that we had agreed to sell our Louisiana Gas
operations to Atmos Energy Corporation for $375,000,000 plus the assumption
of certain liabilities. TheThis transaction is expected to close in 2001the fourth
quarter of 2000 following regulatory approvals.
We have accounted for the planned divestiture of the public services properties
as a discontinued operation.operations. Discontinued operations in the consolidated
statements of income and comprehensive income (loss) reflect the results of
operations of the public services properties including allocated interest
expense for the periods presented. Interest expense was allocated to the
discontinued operations based on the outstanding debt specifically identified
with these businesses.
Share Purchase Program
- ----------------------
In December 1999, our Board of Directors authorized the purchase, from time to
time, of up to $100,000,000 worth of shares of our common stock. This share
purchase program was completed in early April 2000 and resulted in the
acquisition or contract to acquire approximately 6,165,000 shares of our common
stock. Of those shares, 2,500,000 shares were purchased for approximately
$40,959,000 in cash. We entered into an equity forward contract for the
acquisition of the remaining 3,665,000 shares.
In April 2000, our Board of Directors authorized the purchase, from time to
time, of up to an additional $100,000,000 worth of shares of our common stock.
Through June 30, 2000, this share purchase program has resulted in the contract
to acquire approximately 4,483,000 additional shares of our common stock. These
12
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
shares were also contracted for by entering into equity forward transactions.
In addition to our share purchase programs described above, in April 2000, our
Board of Directors authorized the purchase, from time to time, of up to
$25,000,000 worth of shares of Class A common stock of ELI, our 83% owned
subsidiary, on the open market or in negotiated transactions. The ELI share
purchase program was completed in July 2000 and resulted in the acquisition of
approximately 1,221,000 shares of ELI common stock for approximately $23,960,000
in cash. In August 2000, our Board of Directors authorized the purchase, from
time to time, of up to an additional 1,000,000 shares of ELI on the open market
or in negotiated transactions.
New Accounting Pronouncement
- ----------------------------
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". This
statement establishes accounting and reporting standards for derivative
instruments and hedging activities and, as amended, is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. The statement requires
balance sheet recognition of derivatives as assets or liabilities measured at
fair value. Accounting for gains and losses resulting from changes in the values
of derivatives is dependent on the use of the derivative and whether it
qualifies for hedge accounting. Management has not yet assessed the impact SFAS
No. 133 will have on our financial statements.
(b)Results of Operations
---------------------
REVENUE
-------
For the three months ended March 31,
-----------------------------------------June 30, For the six months ended June 30,
------------------------------------ ---------------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
Telecommunications revenue 2000 1999 (Decrease) -2000 1999 (Decrease)
-------------------------- ---- ------------- --------- ---------- --------- --------- ----------
Network access services $ 121,656124,977 $ 128,680 (5%127,429 (2%) $ 246,410 $ 254,797 (3%)
Local network 73,180 69,405 5% 143,705 136,689 5%
services 73,555 69,913 5%
Long distance and data 17,988 20,048 (10%) 38,053 41,391 (8%)
services 20,066 21,101 (5%)
Directory services 8,819 8,3977,449 7,033 6% 14,620 13,959 5%
Other 12,649 9,794 29%15,938 17,075 (7%) 33,489 32,039 5%
Eliminations (10,433) (10,653)(12,136) (12,369) N/A --------- ----------(22,569) (23,022) N/A
-------- -------- -------- --------
$ 226,312227,396 $ 227,232228,621 (1%) $ 453,708 $ 455,853 -
========= ================== ======== ======== ========
Network access services revenue for the three months ended June 30, 2000
decreased $2.5 million, or 2%, as compared with the prior year period primarily
due to a decrease in intralata toll revenue and the price effect of a July 1999
Federal Communications Commission (FCC) tariff adjustment. Network access
services revenue for the six months ended June 30, 2000 decreased $8.4 million,
or 3%, as compared with the prior year period primarily due to a non-recurring
$10.4 million interstate universal service fund (USF) settlement received in the
first quarter of 1999, a decrease in intralata toll revenue and the price effect
of a July 1999 FCC tariff adjustment. Before taking into account the USF
settlement, network access revenue increased by $2 million, or 1%, which is
due to growth in minutes of use and special access revenue.
Local network services revenue for the three months ended June 30, 2000
increased $3.8 million, or 5%, as compared with the prior year period. Access
line growth of 42,809 contributed $2 million, enhanced services increased $1.5
million, frame relay increased $.5 million, internet revenue increased $.5
million and white pages directory revenue increased $.1 million. These increases
were partially offset by a $.8 million reduction in a subsidy payment.
Local network services revenue for the six months ended June 30, 2000 increased
$7 million, or 5%, as compared with the first quarterprior year period. Access line growth of
1999 primarily due to a non-recurring $1042,809 contributed $4.5 million, interstate universal service fund settlement received in the first quarter of
1999. The decrease wasenhanced services increased $3.4 million and
frame relay increased $.7 million. These increases were partially offset by access line and switched access
minutesa
reduction in a subsidy payment of use growth and increased special access revenue in the first quarter
of 2000.
Local network$1.6 million.
Long distance services revenue increased $3.6for the three and six months ended June 30, 2000
decreased $2.1 million, or 5%10%, and $3.3 million, or 8%, respectively, as
compared with the first quarter of 1999 primarily due to access line growth, increased custom
calling features and higher private line sales.
Long distance and data services revenue decreased $1 million, or 5%, as compared
with the first quarter of 1999prior year periods primarily due to a decrease in long
distance revenue of $2.8 million for the three months ended June 30, 2000 and
$5.1 million for the six months ended June 30, 2000, partially offset by
13
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
increases in internet revenue of $.7 million for the three months ended June 30,
2000 and $1.8 million for the six months ended June 30, 2000. The long distance
decreases were due to decreased minutes of use byof 8.5 million and 21 million for
the three and six month periods, respectively, as compared with the prior year
periods as we continued to exit the out-of-territory customers, partially offset by an increase in long distance minutesmarket. In
addition, the average rate per minute for long distance service declined from
$.126 in the six months ended June 30, 1999 to $.113 in the six months ended
June 30, 2000, or 10%, as a result of use by in-territory customers.offering discounted calling plans.
Directory services revenue for the three and six months ended June 30, 2000
increased $.4 million, or 6%, and $.7 million, or 5%, respectively, as compared
with the first quarter of 1999prior year periods primarily due to increased directory advertising and
listing sales.
Other revenue increased $2.9for the three months ended June 30, 2000 decreased $1.1 million,
or 29%7%, as compared with the first quarter
of 1999prior year period primarily due to a reduction in
interexchange carrier billing and collections revenue and lower equipment sales,
partially offset by an increase in conference call revenue. Other revenue for
the six months ended June 30, 2000 increased equipment sales.$1.5 million, or 5%, as compared
with the prior year period primarily due to an increase in conference call
revenue, partially offset by the reduction in interexchange billing and
collections revenue.
Eliminations represent network access revenue received by our local exchange
operations from our long distance operations.
9
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
For the three months ended March 31,
-----------------------------------------June 30, For the six months ended June 30,
-------------------------------------- ------------------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
ELI revenue 2000 1999 (Decrease) -2000 1999 (Decrease)
----------- ---- ------------ -------- ---------- --------- -------- ----------
Network services $ 16,00417,173 $ 10,424 54%12,983 32% $ 33,177 $ 23,407 42%
Local telephone services 24,274 14,308 70%25,951 18,600 40% 50,225 32,908 53%
Long distance services 4,596 8,530 (46%4,265 9,245 (54%) 8,862 17,775 (50%)
Data services 11,904 4,954 140%
---------- ----------
56,778 38,216 49%13,231 5,267 151% 25,134 10,221 146%
-------- -------- --------- --------
60,620 46,095 32% 117,398 84,311 39%
Intersegment revenue (635) (698)(692) (770) N/A ---------- ----------(1,327) (1,468) N/A
-------- -------- --------- --------
$ 56,14359,928 $ 37,518 50%
========== ==========45,325 32% $ 116,071 $ 82,843 40%
======== ======== ========= ========
Network services revenue for the three and six months ended June 30, 2000
increased $5.6$4.2 million, or 54%32%, and $9.8 million, or 42%, respectively, as
compared with the first quarter 1999prior year periods primarily due to continued growth in our
network expansion and sales of additional circuits to new and existing customers.
Local telephone services revenue for the three and six months ended June 30,
2000 increased $10$7.4 million, or 70%40%, and $17.3 million, or 53%, respectively, as
compared with the first quarter of 1999prior year periods primarily due to increased dial tone and
integrated service digital network (ISDN) revenue as a result of an increase in
the average access line equivalents installed.installed of 74,742 or 62% and 78,336 or 71%
for the three and six months ended June 30, 2000, respectively. Carrier access
billings and reciprocal compensation revenue also increased.contributed to the increase.
Long distance services revenue for the three and six months ended June 30, 2000
decreased $3.9$5 million, or 46%54%, and $8.9 million, or 50%, respectively, as
compared with the first quarter of 1999prior year periods primarily due to our decision to exit the
prepaid services market in the third quarter of 1999, partially offset by
increased retail minutes of use as a result of new customers and expanded services to existing
customers.use.
Data services revenue for the three and six months ended June 30, 2000 increased
$7$8 million, or 140%151%, and $14.9 million, or 146%, respectively, as compared with
the first
quarter of 1999prior year periods primarily due to increased sales from Internet services
as a result of an increase in Internet routers installed from 42 to 63, or 50%
and an 18 month take-or-pay contract that commenced in September 1999. The
take-or-pay contract provides $20 million in revenue for 2000. There is no
assurance this take-or-pay contract will be renewed in 2001.
Intersegment revenue reflects revenue received by ELI from our telecommunicationstelecommunica-
tions operations.
14
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
NETWORK ACCESS EXPENSE
----------------------
For the three months ended March 31,
-----------------------------------------June 30, For the six months ended June 30,
------------------------------------- ------------------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
2000 1999 (Decrease) ---- ----2000 1999 (Decrease)
-------- -------- --------- --------- -------- ----------
Network access $ 38,07138,679 $ 45,746 (17%49,123 (21%) $ 80,692 $ 89,069 (9%)
Eliminations (11,068) (11,351)(12,828) (13,139) N/A ---------- ----------(23,896) (24,490) N/A
--------- -------- -------- --------
$ 27,00325,851 $ 34,395 (21%35,984 (28%) ========== ==========$ 56,796 $ 64,579 (12%)
======== ======== ========= ========
Network access expenses for the three and six months ended June 30, 2000
decreased $7.7$10.4 million, or 17%21%, and $8.4 million, or 9%, respectively, as
compared with the first quarter of 1999prior year periods primarily due to a decrease in long
distance minutes of use by out-of-territory customers of 8.5 million and 21 million minutes for the three and
six month periods, respectively, related to our telecommunications long distance
operations and ELI's decisiona reduction in costs related to the exit theof ELI's prepaid
services market in the third
quarter of 1999.business.
Eliminations represent expenses incurred by our long distance operations related
to network access services provided by our local exchange operations and
expenses incurred by our telecommunications operations related to network
services provided by ELI.
10
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIES COMPANY AND SUBSIDIARIES DEPRECIATION AND AMORTIZATION EXPENSE
-------------------------------------
For the three months ended March 31,
-----------------------------------------For the six months ended
June 30, June 30,
------------------------------- ----------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
2000 1999 (Decrease) ---- ----2000 1999 (Decrease)
-------- -------- ---------- -------- -------- ----------
Depreciation and
amortization $ 82,70574,474 $ 61,885 34%59,763 25% $ 157,179 $ 121,648 29%
Depreciation expense for the three and amortization expensesix months ended June 30, 2000 increased
$20.8$14.7 million, or 34%25%, and $35.5 million, or 29%, respectively, as compared with
the first quarter of 1999prior year periods primarily due to $15.1higher plant in service balances for
newly completed communications network facilities and electronics at ELI and $4
million and $19.1 million, respectively, of accelerated depreciation related to
the change in useful life of an operating system in the telecommunications
sector and increased property, plant and
equipment.sector.
OTHER OPERATING EXPENSES
------------------------
For the three months ended March 31,
------------------------------------------June 30, For the six months ended June 30,
------------------------------------- -----------------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
2000 1999 (Decrease) ---- ---- ----------2000 1999 (Decrease)
-------- -------- --------- -------- -------- ---------
Operating expenses $ 122,594122,647 $ 128,678 (5%131,264 (7%) $ 243,014 $ 266,358 (9%)
Taxes other than
income 16,573 16,422 1%taxes 17,649 16,033 10% 34,222 32,455 5%
Sales and marketing 17,006 16,563 3%15,839 16,424 (4%) 31,130 32,371 (4%)
Eliminations (192) (325)(321) (493) N/A ---------- ---------(513) (818) N/A
-------- -------- -------- --------
$ 155,981155,814 $ 161,338 (3%163,228 (5%) ========== =========$ 307,853 $ 330,366 (7%)
======== ======== ======== ========
Operating expenses for the three months ended June 30, 2000 decreased $6.1$8.6
million, or 5%7%, as compared with the first
quarter of 1999prior year period primarily due to
decreased Y2K, separationYear 2000 (Y2K) expenses of $4.3 million, decreased corporate office
expense of $1.5 million and rent expense,prior year consulting, severance and benefits
payments totaling $2.9 million. The decreases were partially offset by an increase inincreased
operating expenses to support the expanded delivery of services.
Taxes other than income remained consistent withOperating expenses for the first quarter of 1999.
Sales and marketing expenses increased $.4six months ended June 30, 2000 decreased $23.3
million, or 3%9%, as compared with the first quarter of 1999prior year period primarily due to
an increase in personneldecreased Y2K expenses of $7.3 million, decreased corporate office expense of
$2.4 million, prior year consulting, severance and relatedbenefits payments totaling
$7.3 million and prior year costs of $3.1 million associated with information
technology projects that have been completed. The decreases were partially
offset by increased operating expenses to support the expanded delivery of
servicesservices.
15
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Taxes other than income taxes for the three and six months ended June 30, 2000
increased $1.6 million, or 10%, and $1.8 million or 5%, respectively, as
compared with the prior year periods primarily due to an increase in existingpayroll and
new
markets.property taxes.
Eliminations represent the elimination of administrative fees chargedcharges to ELI.
ACQUISITION ASSIMILATION EXPENSES
---------------------------------
ACQUISITION ASSIMILATION EXPENSE
--------------------------------
For the three months ended March 31,
------------------------------------------June 30, For the six months ended June 30,
------------------------------------- ----------------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
2000 1999 (Decrease) ---- ----2000 1999 (Decrease)
-------- ------ ----------- --------- ------- ----------
Acquisition
assimilation expensesexpense $ 3,9747,617 $ - 100%N/A $ 11,591 $ - N/A
Acquisition assimilation expenses wereexpense of $7.6 million and $11.6 million for the three
and six months ended June 30, 2000, respectively, was incurred by us related to
the pending acquisition of approximately 12 million telephone access lines.lines (as of
December 31, 1999). We anticipate that we will continue to incur such
assimilation costs through the remainder of the fiscal
year as we prepare to integrate the pending acquisitions.2000 and into 2001.
INCOME FROM OPERATIONS
----------------------
For the three months ended March 31,
-----------------------------------------June 30, For the six months ended June 30,
------------------------------------- ----------------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
2000 1999 (Decrease) ---- ----2000 1999 (Decrease)
-------- ------- ----------- --------- ------- ----------
Income from operations $ 12,79223,568 $ 7,132 79%14,971 57% $ 36,360 $ 22,103 65%
11
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
Income from operations for the three and six months ended June 30, 2000
increased $5.7$8.6 million, or 79%57%, and $14.3 million, or 65%, respectively, as
compared with the first
quarter of 1999prior year periods primarily due to decreased ELI operating losses
and decreased Y2K and separation expenses, partially offset by increased depreciation expense
related to the change in useful life of an operating system in the
telecommunications sector andsector. The income from operations for the six months ended
June 30, 1999 non-recurringalso included the $10.4 million universal service fund revenue.settlement.
INVESTMENT AND OTHER INCOME, NET / NET/MINORITY INTEREST/INTEREST / INTEREST EXPENSE / EXPENSE/INCOME TAXES
----------------------------------------------------------------------------------------------------------------------------------------------------------------------
For the three months ended March 31,
-----------------------------------------June 30, For the six months ended June 30,
------------------------------------- -----------------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
2000 1999 (Decrease) ---- ----2000 1999 (Decrease)
-------- ------ ---------- -------- ------- ----------
Investment and other
income, net $ 5,2654,810 $ 75,521 (93%6,943 (31%) $ 10,075 $ 82,464 (88%)
Minority interest $ 5,937 $ 5,693 4% $ 12,222 $ 11,686 5%
Interest expense $ 33,151 $ 18,299 81% $ 62,315 $ 37,397 67%
Income taxes (benefit) $ (1) $ 250 (100%) $ (1,254) $ 26,856 (105%)
Investment and other income, net for the three months ended June 30, 2000
decreased $70.3$2.1 million, or 93%31%, as compared with the first quarter ofprior year period primarily
due to a $1 million settlement in May 1999 with Hungarian Telephone and Cable
Corp. Investment income for the six months ended June 30, 2000 decreased $72.4
million, or 88%, as compared with the prior year period primarily due to the
$69.5 million gain on the sale of our investment in Centennial Cellular Corp. in
January 1999.
For the three months ended March 31,
-----------------------------------------
($ in thousands)
%
Increase/
2000 1999 (Decrease)
---- ---- ----------
Minority interest $ 6,285 $ 5,993 5%
Minority interest, as presented on the income statement, represents the
minority's share of ELI's net loss. Minority interest in subsidiary, as
presented on the balance sheet, represents the minority's share of ELI's equity
capital.
Since ELI's public offering, we have been recording minority interest on our
income statement and reducing minority interest on our balance sheet by the
amount of the minority interests' share of ELI's losses. As of June 30, 2000,
16
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
the minority interest on the balance sheet has been reduced to zero, therefore,
from this point going forward, we have discontinued recording minority interest
income on our income statement as there is no obligation for the minority
interests to make good on any additional losses of ELI. Therefore, beginning in
the third quarter 2000, we will record ELI's entire loss beforein our consolidated
results. When ELI becomes profitable, we will recognize ELI's earnings in full
until the cumulative losses of the minority interests previously absorbed by us
are recovered. After such recovery, we will begin to record minority interest on
our income tax.
For the three months ended March 31,
-----------------------------------------
($ in thousands)
%
Increase/
2000 1999 (Decrease)
---- ---- ---------
Interest expense $ 29,164 $ 19,098 53%
statement and minority interest in subsidiary on our balance sheet
based on the percentage of ELI owned by third parties.
Interest expense for the three months ended June 30, 2000 increased $10.1$14.9
million, or 53%81%, as compared with the first
quarter of 1999prior year period primarily due to a $5.5
million increase in ELI's interest expense related to increased ELI borrowings and
thehigher interest rates, $1.6 million increase due to an increase in our
commercial paper outstanding and $3.2 million for amortization of costs
associated with our committed bank credit facilities. A reduction in capitalized
interest of $1.7 million due to lower average capital work in process balances
at ELI also contributed to the increase. During the three months ended June 30,
2000, we had average long-term debt outstanding of $2,361,932,000 compared to
$2,039,452,000 during the three months ended June 30, 1999.
Interest expense for the six months ended June 30, 2000 increased $24.9 million,
or 67%, as compared with the prior year period primarily due to a $12.8 million
increase in ELI's interest expense related to increased borrowings and higher
interest rates and $6.4 million for amortization of costs associated with our
committed bank credit facilities. A reduction in capitalized interest of $2.9
million due to lower average capital work in process balances at ELI also
contributed to the increase. During the six months ended June 30, 2000, we had
average long-term debt outstanding of $2,318,915,000 compared to $1,940,926,000
during the six months ended June 30, 1999.
Income taxes for the three and six months ended June 30, 2000 decreased $.3
million, or 100%, and $28.1 million, or 105%, respectively, as compared with the
prior year periods primarily due to changes in taxable income. The estimated
annual effective tax rate for 2000 is 34% as compared with 35% for 1999. Income
tax expense for the three months ended June 30, 2000 and 1999 includes true-
ups to arrive at these rates.
DISCONTINUED OPERATIONS
-----------------------
For the three months ended March 31,
-----------------------------------------June 30, For the six months ended June 30,
------------------------------------ ----------------------------------
($ in thousands) ($ in thousands)
% Increase/ 2000 1999 (Decrease)
---- ---- ---------
Income taxes $ (1,253) $ 26,606 (105%)
Income taxes decreased $27.9 million, or 105%, as compared with the first
quarter of 1999 primarily due to the $26.6 million of income taxes on the sale
of our investment in Centennial Cellular Corp. in January 1999.
DISCONTINUED OPERATIONS
-----------------------
For the three months ended March 31,
-----------------------------------------
($ in thousands)
% Increase/
2000 1999 (Decrease) ---- ----2000 1999 (Decrease)
--------- -------- ---------- --------- --------- ----------
Revenue $ 190,312157,859 $ 172,764 10%140,901 12% $ 348,171 $ 313,665 11%
Operating income 28,961 29,191 (1%)$ 17,406 $ 16,450 6% $ 46,367 $ 45,641 2%
Net income 12,447 13,235 (6%)$ 3,399 $ 247 1,276% $ 15,846 $ 13,482 18%
12
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
Revenue from discontinued operations for the three and six months ended June 30,
2000 increased $17.5$17 million, or 10%12%, and $34.5 million, or 11%, respectively, as
compared with the first quarter of 1999prior periods primarily due to customer growth in the public
services sector, increased consumption in the electric and water and wastewater
sectors due to favorable weather conditions and increased purchased fuel costs
and purchased power costs passed on to customers, partially offset by $3,750,000
of customer refunds recorded in the second quarter of 2000 in Arizona in the
electric sector and decreased consumption in the gas sector.
Operating income from discontinued operations decreased $.2for the three and six months ended
June 30, 2000 increased $1 million, or 1%6%, and net$.7 million, or 2%, respectively,
as compared with prior periods primarily due to increased revenue, decreased Y2K
expenses and decreased sales and marketing expenses, partially offset by
increased costs related to the data conversion of a new geographical information
system for the gas sector and increased depreciation expense due to increased
property, plant and equipment.
Net income from discontinued operations decreased $.8for the three and six months ended June
30, 2000 increased $3.2 million, or 6%1,276%, and $2.4 million, or 18%, as comparedcom-
pared with the first quarter of 1999prior periods primarily due to increased depreciation
expense, maintenance expense and payroll related costs,operating income, partially
offset by increased consumption in the electric and water and wastewater sectors.
Increased income taxes also contributed to the decrease in net income.interest expense.
17
PART I. FINANCIAL INFORMATION (Continued)
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
NET INCOME / NET INCOME PER COMMON SHARE/
---------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX AND RECLASSIFICATION ADJUSTMENTS
------------------------------------------------------------------------- --------------------------------------------------------------------------------
For the three months ended March 31,
-------------------------------------------June 30, For the six months ended June 30,
------------------------------------ ----------------------------------
($ in thousands) ($ in thousands)
% Increase/ % Increase/
2000 1999 (Decrease) ---- ----2000 1999 (Decrease)
--------- -------- ---------- -------- ------- -----------
Net income $ 7,3263,012 $ 54,625 (87%7,753 (61%) $ 10,338 $ 62,378 (83%)
Net income per common share $ .01 $ .03 (67%) $ .21 (86%.04 $ .24 (83%)
Other comprehensive income (loss),loss, net
of tax and reclassification
adjustments $ (28,045)(12,348) $ (14,118)(293) N/A $ (40,393) $(14,411) N/A
Net income and net income per share for the three months ended June 30, 2000
decreased $47.3$4.7 million, or 87%61%, and 18(cent)2(cent), or 86%67%, respectively, as compared
with the prior year period primarily due to accelerated depreciation related to
the change in useful life of an operating system in the telecommunications
sector and increased ELI interest expense, partially offset by decreased Y2K
expenses. Net income and net income per share for the six months ended June 30,
2000 decreased $52 million, or 83%, and 20(cent), or 83%, respectively, as
compared with the prior year period primarily due to the $42.9 million, or
16(cent) per share, after tax gain on the sale of our investment in Centennial
Cellular Corp.Corporation in January 1999,
and the 1999 non-recurring universal service
fund revenue,settlement, accelerated depreciation related to the change in useful life
of an operating system in the telecommunications sector and increased ELI
interest expense, partially offset by increased operating income and decreased
Y2K and separation expenses.
Other comprehensive income (loss),loss, net of tax and reclassification adjustments decreased $28 million during the
three and six months ended June 30, 2000 and the three months ended March 31, 2000June 30,
1999 are primarily due
to increasedthe result of higher unrealized losses on our investment
portfolio. Other comprehensive income (loss),loss, net of tax and reclassification adjustments
decreased $14.1
million during the threesix months ended March 31,June 30, 1999 is primarily due tothe result of the
realization of the gain on the sale of our investment in Centennial Cellular
Corp. in January 1999, partially offset by increasedhigher unrealized gains on our
investment portfolio.portfolio during the first quarter 1999.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
--------------------------------------------------------------------------------------------------------------------------
We are exposed to the impact of interest rate and market risks. In the normal
course of business, we employ established policies, procedures and internal processespro-
cesses to manage our exposure to interest rate and market risks. Our objective
in managing our interest rate risk is to limit the impact of interest rate
changes on earnings and cash flows and to lower our overall borrowing costs.
To achieve these objectives, we maintain fixed rate debt on a majority of our
borrowings and refinance debt when advantageous. We maintain a portfolio of
investments consisting of both equity and debt financial instruments. Our
equity portfolio is comprised of investments in communications companies. Our
bond portfolio consists of government, corporate and municipal fixed-income securities.se-
curities. We do not hold or issue derivative or other financial instruments
for trading purposes. We purchase monthly gas futures contracts to manage well-definedwell-
defined commodity price fluctuations, caused by weather and other unpredictable
factors, associated with our commitments to deliver natural gas to certain industrialin-
dustrial customers at fixed prices. This derivative financial instrument activityac-
tivity relates to the discontinued operations and is not material to our
consolidated financial position, results of operations or cash flows.
1318
PART II. OTHER INFORMATION
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
Item 1. Legal Proceedings
-----------------
In November 1995, our Vermont electric division was permitted an 8.5% rate
increase. Subsequently, the Vermont Public Service Board (VPSB) called into
question the level of rates awarded us in connection with its formal review of
allegations made by the Department of Public Service (the DPS), the consumer
advocate in Vermont and a former Citizens employee. The major issues in this
proceeding involved classification of certain costs to property, plant and
equipment accounts and our Demand Side Management program. In addition, the DPS
believed that we should have sought and received regulatory approvals prior to
construction of certain facilities in prior years. On June 16, 1997, the VPSB
ordered us to reduce our rates for Vermont electric service by 14.65%
retroactive to November 1, 1995 and to refund to customers, with interest, all
amounts collected since that time in excess of the rates then authorized by the
VPSB. In addition, the VPSB assessed statutory penalties totaling $60,000 and
placed us on regulatory probation for a period of at least five years. During
this probationary period, we could lose our franchise to operate in Vermont if
we violate the terms of probation prescribed by the VPSB. The VPSB prescribed
final terms of probation in its final order issued September 15, 1998. In
October 1998, we filed an appeal in the Vermont Supreme Court challenging
certain of the penalties imposed by the VPSB. The appeal has been fully briefed
and argued and we are awaiting the Court's decision.
In August 1997, a lawsuit was filed in the United States District Court for the
District of Connecticut (Leventhal vs. Tow, et al.) against us and five of our
officers, one of whom is also a director, on behalf of all persons who purchased
or otherwise acquired Series A and Series B shares of our Common Stock between
September 5, 1996 and July 11, 1997, inclusive. On February 9, 1998, the
plaintiffs filed an amended complaint. The complaint alleged that we and the
individual defendants, during such period, violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 based upon certain public statements made by
us, which are alleged to be materially false or misleading, or are alleged to
have failed to disclose information necessary to make the statements made not
false or misleading. The plaintiffs sought to recover unspecified compensatory
damages. We and the individual defendants believe the allegations are unfounded
and filed a motion to dismiss on March 27, 1998 and on March 30, 1999 the Court
dismissed the action. On April 29, 1999 the plaintiffs filed a notice of appeal
with the Court of Appeals for the Second Circuit. The parties have entered into
a settlement stipulation which is subject to the District Court's approval.
In March 1998, a lawsuit was filed in the United States District Court for the
District of Connecticut (Ganino vs. Citizens Utilities Company, et al.), against
us and three of our officers, one of whom is also a director, on behalf of all
purchasers of our Common Stock between May 6, 1996 and August 7, 1997,
inclusive. The complaint alleges that we and the individual defendants, during
such period, violated Sections 10(b) and 20(a) of the Securities Exchange Act of
1934 by making materially false and misleading public statements concerning our
relationship with a purported affiliate, Hungarian Telephone and Cable Corp.
(HTCC), and by failing to disclose material information necessary to render
prior statements not misleading. The plaintiff seeks to recover unspecified
compensatory damages. We and the individual defendants believe that the
allegations are unfounded and filed a motion to dismiss. The plaintiff requested
leave to file an amended complaint and an amended complaint was served on us on
July 24, 1998. Our motion to dismiss the amended complaint was filed on October
13, 1998 and the Court dismissed the action with prejudice on June 28, 1999. The
Plaintiffsplaintiffs filed a notice of appeal with the Court of Appeals for the Second
Circuit, briefing has been completed and oral argument took place April 10,
2000.
In November 1998, a class action lawsuit was filed in state District Court for
Jefferson Parish, Louisiana, against us and our subsidiary LGS Natural Gas
Company. The lawsuit alleges that we and the other named defendants passed
through in rates charged to Louisiana customers certain costs that plaintiffs
contend were unlawful. The lawsuit seeks compensatory damages in the amount of
the alleged overcharges and punitive damages equal to three times the amount of
any compensatory damages, as allowed under Louisiana law. In addition, the
Louisiana Public Service Commission has opened an investigation into the
allegations raised in the lawsuit. We believe that the allegations made in the
lawsuit are unfounded and we will vigorously defend our interests in both the
lawsuits and the related Commission investigation.
In addition, we are party to proceedings arising in the normal course of
business. The outcome of individual matters is not predictable. However,
management believes that the ultimate resolution of all such matters, including
those discussed above, after considering insurance coverages, will not have a
material adverse effect on our financial position, results of operations, or our
cash flows.
1419
PART II. OTHER INFORMATION (Continued)
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a)The Registrant held its 2000 Annual Meeting of the Stockholders on May 18,
2000.
(b)Proxies for the Annual Meeting were solicited pursuant to Regulation 14;
there was no solicitation in opposition to management's nominees for
directors as listed in the Proxy Statement. All such nominees were elected
pursuant to the following votes:
Number of Votes
Directors For Abstain
--------- --- -------
N. I. Botwinik 221,831,432 6,497,403
A. I. Fleischman 219,244,957 9,083,878
S. Harfenist 222,499,416 5,829,420
A. N. Heine 222,307,264 6,021,571
J. L. Schroeder 222,516,298 5,812,538
R. D. Siff 222,029,203 6,299,633
R. A. Stanger 222,662,219 5,666,616
C. H. Symington, Jr. 222,633,374 5,695,461
E. Tornberg 222,294,061 6,034,774
C. Tow 218,586,328 9,742,507
L. Tow 220,384,326 7,944,509
(c) At the 2000 Annual Meeting of the Stockholders, the shareholders approved
the proposal to change the Company's name from Citizens Utilities Company to
Citizens Communications Company. The following sets forth the number of votes on
this proposal.
For Against Abstain
--- ------- -------
223,693,116 3,067,632 1,568,087
Item 5. Other Information
-----------------
As disclosed in our proxy statement for the 2000 Annual Meeting, under our
bylaws, if any stockholder intends to propose any matter at the 2001 annual
meeting, the proponent must give written notice to us not earlier than January
1, 2001 nor later than February 15, 2001. Furthermore, in accordance with the
proxy rules and regulations of the Securities and Exchange Commission, if a
stockholder does not notify us by February 14, 2001 of a proposal, then our
proxies would be able to use their discretionary voting authority when the
stockholder's proposal is raised at the meeting.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits:
3.200.1 Restated Certificate of Incorporation of Citizens
Communications Company, as restated May 19, 2000.
10.31 Asset Purchase Agreement between Citizens Utilities Company
and Atmos Energy Corporation dated April 13, 2000.
27 Financial data schedule for the periods ended June 30, 2000
and restated June 30, 1999.
b) Reports on Form 8-K:
We filed on Form 8-K dated April 13, 2000 under Item 5 "Other Events"
and Item 7 "Exhibits," a press release announcing that we will sell
our Louisiana gas operations.
We filed on Form 8-K dated May 16, 2000 under Item 7 "Exhibits," a
press release announcing financial results for the quarter ended
March 31, 2000 and restated March 31, 1999.
b) Reports on Form 8-K:
We filed on Form 8-K dated February 15, 2000 under Item 5 "Other
Events" and Item 7 "Exhibits," a press release announcing that we
will sell all of our electric utility operations.
We filed on Form 8-K dated March 22, 2000 under Item 7 "Exhibits,"
a press release announcing financial results for the year ended
December 31, 1999 and certain operating data.
1520
PART II. OTHER INFORMATION (Continued)
CITIZENS UTILITIESCOMMUNICATIONS COMPANY AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CITIZENS UTILITIESCOMMUNICATIONS COMPANY
---------------------------------------------------------
(Registrant)
By: /s/ Robert J. DeSantis
--------------------------------------------
Robert J. DeSantis
Vice President and Chief Financial Officer
By: /s/ Livingston E. Ross
--------------------------------------------
Livingston E. Ross
By: /s/ Robert J. Larson
-------------------------
Robert J. Larson
Vice President and Chief Accounting Officer
By: /s/ Livingston E. Ross
---------------------------
Livingston E. Ross
Vice President, Reporting and Audit
Date: May 12,August 10, 2000
1621