CITIZENS UTILITIES COMPANY






                                   --------------------------





                                  FORM 10-Q
                                  ---------10-Q/A




             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

                  ------------------------------------------------

                   OF THE SECURITIES EXCHANGE ACT OF 1934



              --------------------------------------



                FOR THE QUARTERLY PERIOD ENDED MARCH 31, 19941995








             UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                          WASHINGTON, D.C.  20549

                                FORM 10-Q10-Q/A

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 19941995  Commission file number 0-1291
                              --------------                            ------001-11001

                                                                   
CITIZENS UTILITIES 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)       
                                  


          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) 329-8800 
       
                              ------------------------- 


                                    NONE
- - -----------------------------------------------------------------------------       
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     


----       ----


Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of April 29, 1994.28, 1995.

                                Common Stock Series A        130,440,021153,989,881
                                Common Stock Series B         53,848,53262,999,971









                        CITIZENS UTILITIES COMPANY AND SUBSIDIARIES

                                           -------------------------------------------

                                    INDEX
                                    -----




                                                                  Page No.
                                                          --------
                                                                     
Part I.  Financial Information                                   

    Consolidated Condensed Balance Sheets March 31, 19941995 and 
    December 31, 19931994                                                 2

    Consolidated Condensed Statements of Income for the Three 
    Months Ended March 31, 19941995 and 19931994                              3

    Consolidated Condensed Statements of Cash Flows for the Three 
    Months Ended March 31, 19941995 and 19931994                              4

    Notes to Financial Statements                                     5

    Management's Discussion and Analysis of Financial Condition and 
    Results of Operations                                             6

Part II.  Other Information                                           7

Signature                                                            810
    


                                -1-
                                   PART I.  FINANCIAL INFORMATION

                           ------------------------------

                 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES

                               -------------------------------------------

                    CONSOLIDATED CONDENSED BALANCE SHEETS
                    -------------------------------------
                                          (In thousands)
                                                        
          

                                                 March              December
                                                31, 1995            31, 1994
  
                                                          31, 1993
                                                 --------      --------
                                   ASSETS
                                   ------

Current assets:
  Cash and cash equivalents                  $     25,21719,481          $   21,73814,224 
  Temporary investments                            115,974         89,75225,910             108,818 
  Accounts receivable                             114,081        114,313155,886             166,795 
  Other                                            25,115         14,934 
                                             -----------31,054              24,217
                                             ------------          ----------
                                                  280,387        240,737 
                                             -----------     ----------232,331             314,054
     
  Property, plant and equipment                 2,371,367      2,153,8913,632,207           3,583,723 
  Less accumulated depreciation                 665,357        461,924 
                                             -----------1,055,467           1,014,068
                                             ------------          ----------
                                                1,706,010      1,691,967 
                                             -----------2,576,740           2,569,655
                                             ------------          ----------
      
  Investments                                     390,192        411,022329,301             325,011 
  Regulatory assets                               141,996        146,207178,009             177,414 
  Deferred debits and other assets                150,552        137,185 
                                             -----------185,515             190,432
                                             ------------          ----------
                                             $  2,669,137     $2,627,1183,501,896         $ 3,576,566
                                             ============         ===========     ========== 
 
                            LIABILITIES AND SHAREHOLDERS' EQUITY
                    ------------------------------------

Current liabilities:
  Long-term debt due within one year         $      1,6205,564         $    1,62013,986 
  Short-term debt                                 341,270        380,000164,300             515,200 
  Other                                           247,379        246,605317,200             349,991 
                                             ------------         -----------
                                                  ---------- 
                                                 590,269        628,225487,064             879,177
Customer advances for construction and                                       
   contributions in aid of construction           183,685        184,253219,594             216,730 
  Deferred income taxes                           223,911        213,471256,004             248,150 
  Regulatory liabilities                           27,911         28,37630,318              30,830 
  Deferred credits and other liabilities           61,399         50,63455,325              50,594 
  Long-term debt                                563,819        547,6731,002,138             994,189 
                                             ------------         -----------
                                                ---------- 
                                               1,650,994      1,652,6322,050,443           2,419,670
                                             ------------         -----------     ----------
                                                                      
  Shareholders' equity:
    Common stock issued, $.25 par value
      Series A                                     32,652         32,44738,546              33,586 
      Series B                                     13,420         13,11915,667              14,782 
    Additional paid-in capital                  734,173        698,6881,158,118             861,981 
    Retained earnings                             226,580        230,232229,152             237,417 
    Unrealized gain on securities
     classified as available for sale               11,318              09,970               9,130 
                                             ------------         -----------
                                                ---------- 
                                               1,018,143        974,4861,451,453           1,156,896
                                             ------------         -----------
                                             ---------- 
                                             $  2,669,137     $2,627,1183,501,896         $ 3,576,566
                                             ============         ===========     ==========
                                                             

The accompanying Notes are an integral part of these Financial Statements.


                                          -2-

                    PART I.  FINANCIAL INFORMATION (Continued)

                     ------------------------------------------

                 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
                     --------------------------------------------

                 CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                 -------------------------------------------

                 FOR THE THREE MONTHS ENDED MARCH 31, 19941995 AND 1993
             --------------------------------------------------1994
                      (In thousands, except per-share amounts)

                
                                                    1995               1994 

1993
                                                      ----         ----

      Revenues                                          $269,534           $223,896      $165,915

Expenses:
  Operating expenses                               171,239            151,534
  113,235
       Depreciation                                      39,393             25,401
                                                  14,165
                                                   --------           -----------------
                                                   210,632            176,935
                                                  127,400
                                                   --------           -----------------

   Income from operations                           58,902             46,961        38,515
          
     Other income, net                              12,855             11,906         9,116
     Interest expense                               22,697             13,137
                                                  10,222
                                                   --------           -----------------

   Income before income taxes                       49,060             45,730        37,409


     Income taxes                                   15,156             14,075
                                                  9,170
                                                   --------           -----------------
     Net income                                   $ 33,904           $ 31,655
                                                  $ 28,239
                                                   ========           =================


Earnings per share of common stock:stock Series A 
 $ .17        $ .15*
                                                      =====        ======and Series B                                        $ .17        $ .15*
                                                      =====        ======$.16               $.16*
                                                     ====               ====


Number of common shares outstanding at March 31:
        Series A Common Stock                     130,615      129,105*154,188           137,744*
        Series B Common Stock                      53,672       47,174*62,658            57,133*

Dividends declared on common stock:
        In Series A shares on Series A 
        Common Stock and in Series B shares 
        on Series B Common Stock 
        paid quarterly - rate                       1.5%                1.1% 
                                                    1.2% 
                                                    =====          =========                ====
          




          *Adjusted for the August 1993 2-for-1subsequent stock split.dividends


The accompanying Notes are an integral part of these Financial Statements.

                                        -3-
  
                  PART I.  FINANCIAL INFORMATION (Continued)

                  ------------------------------------------

                 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
                --------------------------------------------

                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
               -----------------------------------------------

              FOR THE THREE MONTHS ENDED MARCH 31, 19941995 AND 1993
             --------------------------------------------------1994
                                (In thousands)



                
                                              1995               1994         1993
                                                        ----         ----           
           
 
Net cash provided by operating activities   $58,722            $49,134 
                                            $20,140 
                                                      -------      -------=======            =======
Cash flows from investing activities:
  Construction expenditures                 (45,441)           (47,235)     (25,401)
  Securities purchases                            -             (4,706)     (71,127)
  Securities sales                           51,086              7,972       70,004 
  Securities maturities                      34,423             12,340 
  23,777Business Acquisitions                      (4,597)                 - 
  Customer Advances for construction an
   contributions in aid of construction       1,918               (568)
  Other, net                                    2,382        6,359758              2,950 
                                            -------            -------
                                             38,147            (29,247)       3,612 
                                                     --------      -------        
Cash flows from financing activities:
  Long-term debt borrowings                  12,277             22,476       33,936 
  Long-term debt principal payments         (12,247)              (321)      (9,408)
  Short-term debt payments                 (350,900)           (38,730)
  0Issuance of common stock                  258,823                  - 
  Other                                         435                167 
                                            779 
                                                     --------      -------            -------
                                            (91,612)           (16,408)
                                            25,307 
                                                     ---------------            -------

Increase (decrease) in cash and cash equivalents         5,257              3,479       49,059 
Cash and cash equivalents at January 1,      14,224             21,738 
                                            19,752 
                                                     ---------------            -------
Cash and cash equivalents at March 31,      $19,481            $25,217 
                                            $68,811 
                                                     ===============            =======

The accompanying Notes are an integral part of these Financial Statements.

                                          -4-
                    
PART I. FINANCIAL INFORMATION (Continued)
                   -----------------------------------------
                 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
                           -------------------------------------------
                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------

(1)  The consolidated financial statements include the accounts of 
Citizens Utilities Company and all subsidiaries after elimination of 
intercompany balances and transactions.  All adjustments, which consist of 
only normal recurring accruals, necessary for a fair statement of the 
results for the interim periods have been made.

(2)  Earnings per share is based on the average number of outstanding
shares, adjusted for interveningsubsequent stock dividends and stock splits.  Earnings
per share is presented for each Series separately, with historical adjustment for stock dividends and
stock splits for each Series.splits.  The effect on earnings per share of outstanding stock options
is immaterial.

(3)  In accordance with applicable regulatory systems of account, an
allowance for funds used during construction is included in the cost of
additions to property, plant and equipment and is allowed in rate base for
rate making purposes.  The allowance is not a cash item.  The amount relating
to equity is included in Other income, net and the amount relating to
borrowings is offset against Interest expense.

(4)  On December 22, 1993, Natural Gas Company of Louisiana ("NGL") was
merged into the company in a transaction accounted for as a pooling of
interests. The company's income statement and statement of cash flows at March
31, 1993 has been restated to include the results of NGLs' operations for the
three months ended March 31, 1993.

(5)    Effective January 1, 1994, the company adopted Statements of Financial
Accounting Standards ("SFAS") No. 112 "Employers' Accounting for
Postretirement Benefits" and SFAS No. 115 "Accounting for Certain Investments
in Debt and Equity Securities".  The company applied the provisions of these
accounting standards prospectively.
   SFAS No. 112 requires the accrual of the expected costs of providing
benefits, if any, to former or inactive employees after termination of
employment for reasons other than retirement.  Adoption of SFAS No. 112 did
not have a material effect on the Consolidated Financial Statements.
   Adoption of SFAS No. 115 requires fair value reporting for certain
investments in debt and equity securities.  Pursuant to the provisions of SFAS 115, the company classifiedCompany classifies its
investments into two categories, "held-to-maturity" ($445,876,000 at March 31, 1994) and "available-for-sale"
($42,581,000 at March 31, 1994).
The company recordedCompany records unrealized holding gains on securities classified as
available-for-sale as an increase to investments. AvailableThe following summarizes 
the cost, unrealized gains and fair market value for Sale    Held to Maturity 
                                   ------------------    ----------------

Aggregate fair value                 $ 60,290,000         $530,655,000
Gross unrealized holding gains         17,709,000           84,779,000
Amortized cost basis                   42,581,000          445,876,000


                         Held to Maturity Securities
                         ---------------------------

Contractual Maturities         Fair Value          Amortized Cost
- - ----------------------         ----------          --------------

Within 1 year                $116,759,000           $115,974,000
2-5 years                     239,447,000            236,563,000
6-10 years                     19,752,000             19,249,000
Thereafter                    154,697,000             74,090,000

   There were no salesinvestments.
Unrealized Aggregate Fair Investment Classification Amortized Cost Holding Gains Value As of March 31, 1995 Held-To-Maturity $289,061,000 $79,353,000 $368,414,000 Available-For-Sale 50,574,000 15,576,000 66,150,000 As of December 31, 1994 Held-To-Maturity $368,302,000 $77,355,000 $445,657,000 Available-For-Sale 50,809,000 14,718,000 65,527,000
Held-to-Maturity Securities Amortized Cost Fair Value Investment Maturities March 31, 1995 December 31, 1994 March 31, 1995 December 31, 1994 Within 1 year $79,297,000 $108,818,000 $ 79,521,000 $108,935,000 2-5 years 98,780,000 141,030,000 98,796,000 139,567,000 6-10 years 23,042,000 34,171,000 23,532,000 33,656,000 Thereafter 87,942,000 84,283,000 166,565,000 163,499,000 $289,061,000 $368,302,000 $368,414,000 $445,657,000
The Company sold $48,406,000 of securities classified as held-to-maturity. The changeheld-to-maturity during 1995 for the purpose of permanently financing the acquisition of the GTE Telephone Properties; gains and losses of $358,000 and $295,000, respectively, were realized on such sales. This decrease in securities is presented in the net unrealized gains on available-for-sale securities that was included inattached Balance Sheet as a separate component of shareholders' equity was $11,318,000. The company does not invest in securities classified as trading securities.reduction to Temporary Investments. The amortized cost and realizedrelated gains and losses on available-for-sale securities sold during the three months ended March 31, 19941995 were $7,972,000, $150,000$235,000 and ($21,000),$2,445,000, respectively. -5- PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- (a) Liquidity and Capital Resources ------------------------------- For the three months ended March 31, 1994,1995, the primary source of funds was from operations. Funds requisitioned from the 1994, 1993 1992 and 1991 Series Industrial Development Revenue Bond construction fund trust accounts were used to pay for construction of utility plant. On May 3, 1995, the Company arranged for the issuance of $13,550,000 of Industrial Development Revenue Bonds; the bonds were issued as demand purchase bonds bearing interest at 6.2% and mature on May 1, 2030. Commercial paper notes payable in the amount of $400,223,000$349,800,000 were outstanding as of March 31, 1994,1995, of which $341,270,000$164,300,000 is classified as short-term debt as it represents the balance of the amount that was issued to temporarily and partially fund the acquired GTE Telephone Properties acquired on December 31, 1993.Properties. The $341,270,000$164,300,000 of commercial paper is expected to be repaid from maturing temporary investments, funds from operations and proceeds from the planned issuance of securities. On April 20, 1994,January 30, 1995, the companyCompany, pursuant to an underwritten public offering, issued $175,000,00019,000,000 shares of debenturesits Common Stock Series A at par with an interest rateissuance price of 7.60%$13 3/8 per share and maturing on June 1, 2006. Therealized $244,200,000 in net proceeds. These proceeds from the sale of the debentures were used to repay commercial paper notes outstanding atshort-term debt. An additional 914,000 shares of Series A and Series B were issued pursuant to shareholder and employee stock plans in the first quarter of 1995. The Company realized $11,770,000 in proceeds from these issuances. On March 31, 1994.1995, $8,600,000 of 11% Subordinated Investment Notes matured. The companyCompany considers its operating cash flows and its ability to raise debt and equity capital as the principal indicators of its liquidity. Although working capital is not considered to be an indicator of the company'sCompany's liquidity, the companyCompany experienced an increase in its working capital at March 31, 1995 as compared to December 31, 1994. The increase is primarily due to the partial repayment of short-term debt. The companyCompany has lines of credit with commercial banks under which it may borrow up to $1,200,000,000, there were no amounts outstanding under these lines at March 31, 1994. During1995. The Company has entered into certain agreements whereby it has the three months ended March 31, 1994,right to acquire shares of, and to provide certain management services to, Hungarian Telephone & Cable Corp., a Delaware corporation (NASDAQ: HTCC). Such arrangements are conditioned upon, among other things, the company was authorized net increases in annual revenues for properties in California and Vermont totaling $2,246,000.parties entering into definitive agreements. The companyCompany has requests for increases in annual revenues pending before regulatory commissions in Arizona, California, Illinois, Hawaii, Ohio and Pennsylvania.Vermont. (b) Results of Operations --------------------- Operating revenues for the three months ended March 31, 19941995 increased $45,638,000 or 20% compared to the like 19931994 period primarily due to increased telecommunications and natural gas revenues. Telecommunications revenues totaled $84,731,000,$142,949,000, a 94%69% increase over the 19931994 amount of $43,640,000. This increase was$84,731,000 primarily due to revenues derived from operating 189,000 local telephone access linesthe GTE Telephone Properties acquired on June 30, November 30 and December 30, 1994; partially offset by a $9,944,000 decrease in Idaho, Tennessee, Utah and West Virginia acquiredrevenues of the Company's California Telephone Operations due to the expiration of the Pacific Bell contract on December 31, 1993 from GTE Corp.1994. Natural gas revenues totaled $82,012,000, a 20% increase over the 1993 amount of $68,617,000. The increase wasdecreased 16% primarily due to $4,989,000 from increased$6,100,000 of decreased average revenue per MCF of gas sold to residential and commercial customers and $8,347,000 from increased$5,510,000 of decreased consumption due to colderas a result of mild weather conditions.conditions in the first quarter of 1995. Operating expenses of $171,239,000 for the three months ended March 31, 1995 increased 13% over the 1994 increased compared to the like 1993 periodamount of $151,534,000 primarily due to increased telecommunications operating expenses. The increase in operating expenses was partially offset by a 23% decrease in natural gas purchased and telecommunications operating expenses. Natural gas purchased totaled $49,247,000, a 35% increase over the 1993 amount of $36,471,000 primarily due to higher supplierlower commodity prices and increased volume to satisfy increaseddecreased customer consumption. Operating and maintenance expenses, depreciationDepreciation expense and taxes other than incomeof $39,393,000 for the three months ended March 31, 19941995 increased 55% compared to the like 19931994 period primarily due to operationincreased depreciable plant as a result of the 189,000 local telephone access lines acquired fromacquisitions of the GTE Corp. on December 31, 1993.Telephone Properties. Other income, net for the three months ended March 31, 19941995 increased 8% compared to the like 1993 period primarilyamount reported last year due to an increaseincreases of $1,046,000 in the allowance for funds used during construction as a result of increased property, plant and equipment and the gainequipment. In addition, there was a net increase of $1,244,000 in investment income primarily due to net gains on the sale of land.securities sold, partially offset by a decrease in tax exempt income. Interest expense for the three months ended March 31, 1995 increased $9,560,000 or 73% over the 1994 increased compared with the like 1993 periodamount of $13,137,000 primarily as a result of the interim financing ofdebentures issued to finance the acquisition of the 189,000 local telephone access linesGTE Telephone Properties acquired on December 31, 1993 with short-term debt, and an increase in industrial development revenue bondIndustrial Development Revenue Bond borrowings. The increase in Interestinterest expense was partially offset by increased allowance for funds used during construction, which is related to borrowings, as a result of increased property plant and equipment. Income taxes for the three months ended March 31, 19941995 increased compared to the like 19931994 period primarily due to increased taxable income and an increase in the federal income tax rate.income. -6- PART II. OTHER INFORMATION --------------------------- CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- Item 1. Legal Proceedings ----------------- Reference is made to information describing certain legal matters under Item 3 "Legal Proceedings" in the Company's Form 10-K for the year ended December 31, 1993. In May, 1994, the Delaware Court of Chancery granted the defendants' motion for a stay of proceedings in the Thorpe and Biggs action referred to in the third paragraph of Legal Proceedings in the company's 1993 Annual Report, Form 10-K, pending resolution of the settlement proceedings referred to in the fourth paragraph of Legal Proceedings in the company's 1993 Annual Report, Form 10-K. In September 1992, the United States Environmental Protection Agency filed a complaint with the United States District Court for the Northern District of Illinois relating to alleged violations by the company'sCompany's Illinois subsidiary with respect to National Pollutant Discharge Elimination System permit requirements. The partiesCompany settled this action on March 23, 1995. Under the settlement, the Company paid a fine of $501,000 and it will also make certain plant improvements with an estimated cost of $2,200,000. These improvements are presently under design. Construction is expected to begin later in 1995 and be completed before the end of 1996. The improvements are required in order to comply with new discharge limits reached under the settlement. As a regulated entity, the Company is entitled to earn a fair rate of return on these improvements that are placed in service for the benefit of its customers. The Company believes that the cost of these improvements will be recovered through customer rates. On February 19, 1993, the Company was served with a summons and complaint in an action brought by the Sun City Taxpayers' Association in the United States District Court for the District of Connecticut. The plaintiff alleged that the Company, through its Sun City Water Company and Sun City Sewer Company subsidiaries, misrepresented rate-base investment in rate applications submitted to the Arizona Corporation Commission ("ACC") between 1968 and 1978 and claimed damages of $65,000,000 before trebling. The plaintiff made substantially the same allegations in a regulatory proceeding before the ACC in 1986 and the ACC rejected those allegations. On February 1, 1994, the Company's motion to dismiss this action was granted and the complaint was dismissed by an opinion and order of the District Court. On February 9, 1994, plaintiff filed a notice of appeal seeking review of the court's ruling by the United States Court of Appeals for the Second Circuit. The Second Circuit denied the appeal on January 23, 1995 and the Plaintiff filed a Writ of Certiorari to the United States Supreme Court on February 14, 1995. The Supreme Court denied Plaintiff's motion on April 17, 1995, thus extinguishing all avenues of further appeal and bringing the case to a close. In June 1993, several stockholders commenced purported derivative actions in the Delaware Court of Chancery against the Company's Board of Directors. These actions have since been consolidated (the "Consolidated Action"). These stockholders allege that the compensation approved by the Board of Directors for the Company's Chairman is excessive and seek, among other things, an accounting for alleged corporate waste and a declaration that the Chairman's employment agreement and existing stock options are invalid. These stockholders further allege that certain corporate transactions involving the Company and Century Communications Corp. ("Century") benefitted Century to the detriment of the Company and that the Company's Chairman was granted stock options in the Company's Subsidiary, Citizens Cellular, which benefitted him when the Subsidiaries subsequently merged. In February 1994, a memorandum of understanding was executed among counsel for the stockholders in the Consolidated Action and counsel for the Company's Board of Directors. The memorandum of understanding contemplates that the parties will attempt to agree upon and execute a stipulation of settlement discussions.resolving all of the claims in the Consolidated Action. Consummation of the proposed settlement will be subject to: (a) the completion by plaintiffs of appropriate confirmatory discovery in the Consolidated Action; (b) the drafting and execution of a stipulation of settlement; (c) notice to all stockholders of the Company of the terms of the proposed settlement; and (d) final approval of the stipulation of settlement by the Delaware Court of Chancery and dismissal of the Consolidated Action with prejudice. It is contemplated that the stipulation of settlement will provide for certain modifications to the Chairman's compensation arrangements and Company by-laws and for the complete release and settlement of all claims of the plaintiffs and all derivative claims of the Company against the Company's Board of Directors arising out of the allegations in the Consolidated Action. The plaintiffs in the Consolidated Action have completed their confirmatory discovery, and the terms of the stipulation of settlement are being negotiated. Plaintiffs' counsel will seek an award of attorneys' fees and expenses in connection with the settlement. No understanding has been reached with respect to the amount of fees and expenses to be sought, but the Company expects to recover substantially all of the fees and expenses, if any, to be awarded by the Delaware Court of Chancery to plaintiffs' counsel under the Company's Directors' and Officers' liability insurance policy. -7- PART II. OTHER INFORMATION CITIZENS UTILITIES COMPANY AND SUBSIDIARIES Another action ("Thorpe") was filed in June 1993 in the Delaware Court of Chancery. Like the plaintiffs in the Consolidated Action, plaintiffs in Thorpe allege derivative claims challenging the Chairman's compensation as excessive and the validity of certain stock options granted to the Chairman and other members of the Company's Board of Directors. The plaintiffs in Thorpe also assert derivative claims challenging the fairness of the 1991 merger between the cellular subsidiaries of the Company and Century. In addition, these plaintiffs have alleged that the Chairman and Century paid a premium to purchase control of the Company from the former Chairman, Richard L. Rosenthal, and others. The plaintiffs in Thorpe have also asserted individual and purported class claims challenging the disclosures made by the defendants relating to the above matters and the allegedly improper accounting treatment with respect to the Company's investment in Centennial Cellular Corp. These plaintiffs seek, among other things, an accounting for alleged corporate waste, a declaration that the Chairman's employment agreement and existing stock options are invalid and unspecified monetary damages from the director defendants. In November 1993, another purported derivative action ("Biggs") was filed in the Delaware Court of Chancery against the Company's Board of Directors and Century. The plaintiffs in Biggs challenge the Chairman's compensation, the grant of stock options to the Chairman and other members of the Company's Board of Directors and the 1991 cellular subsidiary merger and the service agreement between Century and Centennial. The Company's Board of Directors has moved to dismiss the complaints in these derivative actions for failure to state a claim and for failure to comply with the demand requirements applicable to a derivative suit. The motions were never decided. In May 1994, the Delaware Court of Chancery stayed proceedings in the Thorpe and Biggs actions pending presentation of the proposed stipulation of settlement of the Consolidated Action for approval by the Court. In April 1995, the Delaware Court of Chancery vacated the stay of proceedings in the Thorpe and Biggs actions, and in May 1995, plaintiffs in these actions filed supplemental and amended complaints. In addition to the claims previously asserted, the supplemental and amended complaints challenge certain stock options granted to the Chairman in 1993 and certain of the terms of the Chairman's employment agreement. In June 1993, a stockholder of the Company ("Berlin") commenced a purported class action in the United States District Court for the District of Delaware against the Company and the Company's Board of Directors. The stockholder's complaint, amended in July 1993, alleged that the proxy statements disseminated by the Company from 1990 to 1993 failed to disclose material information regarding, among other things, the Chairman's compensation and certain purported related-party transactions and thereby violated federal and state disclosure requirements. The relief sought included a declaration that the results of the 1993 Annual Meeting of the stockholders are null and void, a declaration that the Chairman's Employment Agreement is invalid and unspecified damages. In September 1994, the District Court granted in part and denied in part defendants' motion to dismiss the amended complaint and denied defendants' motion for summary judgment. In October 1994, defendants moved for summary judgment dismissing the remainder of the claim. In November 1994, plaintiff moved to supplement her amended complaint to add a claim seeking to invalidate the results of the 1994 Annual Meeting of Citizens stockholders on the grounds that the Company's 1994 proxy statement allegedly failed to disclose the amount of the management fee then proposed to be paid to Century in connection with a proposed cable television joint venture. The proposed supplemental complaint also seeks unspecified monetary damages. In April 1995, the Delaware federal district court granted defendant's motion for summary judgement dismissing the remainder of the complaint and denied Berlin's motion for leave to supplement her complaint. In October 1994, the Company and eight other companies were served with a Summons and Complaint by the Town of Walkill, New York ("the Town") in the United States District Court for the Southern District of New York. The Town seeks to recover an unspecified amount representing response costs resulting from the release or threatened release of hazardous substances at the Town's Landfill, and damages and restitution under common law theories for other costs associated with environmental conditions at the Town's Landfill. The Town also seeks a declaratory judgement under CERCLA that the Defendants are strictly, jointly and severally liable for future necessary response costs. The Company notified GTE Corporation of this action since any potential liability for this matter has been retained by GTE Corporation pursuant to the Asset Purchase Agreement dated May 18, 1993. GTE Corporation has assumed the Company's defense in this action. The Company believes the risk of material loss from the above actions is remote. -8- PART II. OTHER INFORMATION CITIZENS UTILITIES COMPANY AND SUBSIDIARIES Item 6. Reports on Form 8-K ------------------- (b)No The Company filed on Form 8-K was required duringdated January 3, 1995, under Item 5 "Other Events", the three months endedFourth Supplemental Indenture, supplemental to the Indenture dated as of August 15, 1991 between Citizens Utilities Company and Chemical Bank (Trustee). The Company filed on Form 8-K dated February 8, 1995, under Item 5 "Other Events" and Item 7 "Financial Statements and Exhibits", notice of the sale of shares to the underwriters identified in the Prospectus Supplement dated January 23, 1995 to the Prospectus dated March 31,28, 1994. -7--9- CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- SIGNATURE --------- 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 UTILITIES COMPANY --------------------------- (Registrant) Date May 13, 1994June 20, 1995 By: Livingston E. Ross ------------ ----------------------/s/ Livingston E. Ross Vice President and Controller -8--10-