Exhibit 99.1
For additional information contact: Arthur Dague
(203) 329-5094
adague@czn.com
CITIZENS UTILITIES ANNOUNCES 1997 SECOND-QUARTER
AND SIX-MONTH RESULTS
Stamford, Connecticut, August 7, 1997 -- Citizens Utilities' vice
----------------------------------------
president and treasurer, Robert J. DeSantis, announced today that earnings and
earnings per share for the three months and six months ended June 30, 1997 were
impacted by the company's telecommunications expansion strategy, which has
recently been modified, and by $135 million of non-recurring after-tax charges.
Mr. DeSantis explained that actions taken by Citizens in connection with the
modification of its telecommunications strategy have already reduced expenses
and improved earnings and earnings per share performance and will continue to do
so in the second half of this year.
Mr. DeSantis said that the actions already taken include a
restructuring expected to reduce operating expenses by approximately $70 million
annually and a significant $175 million reduction to the company's 1997 capital
expenditure program.
Mr. DeSantis explained that the operating expense savings associated
with the restructuring, which primarily affects the company's Communications
Sector, relate to workforce and benefit reductions, call center consolidations,
sales office closings and a reconfiguration of the company's network cost
structure through new carrier contracts and network design.
The capital expenditure reductions primarily affect the company's
Communications Sector resulting from a reconsideration of expenditure levels due
to the curtailment of certain long distance service operations and recent FCC
orders.
(more)
Page Two
Mr. DeSantis reported that for the three months ended June 30, 1997,
the company's net income, excluding non-recurring charges, was $11.6 million.
Including the charges, the company incurred a loss of $123.6 million. Earnings
per share, excluding the charges, were 5 cents. Including the charges, the
company's per share loss was 51 cents.
For the six months ended June 30, 1997, net income, excluding
non-recurring charges, was $41.8 million. Including the charges, the company
incurred a loss of $93.4 million. Earnings per share, excluding the charges, was
17 cents. Including the charges, the company's per share loss was 39 cents.
Mr. DeSantis summarized the $197.3 million of non-recurring charges as
follows: $34.6 million for curtailment of certain long distance service
operations; $36.9 million for benefit plan curtailments and related regulatory
assets no longer deemed recoverable; $63.8 million for telecommunications
information systems and software; $45 million for regulatory commission orders
issued in the second quarter; and $17 million for other miscellaneous items.
"Although earnings performance for the first half of 1997 was affected
by the company's expansion of long distance service into adjacent markets and by
non-recurring charges, the actions we commenced in the second quarter to reduce
expenses and improve earnings had a positive effect on the company's results for
the month of June," said Mr. DeSantis. "Based on improved operating income
trends experienced by our Communications Sector in the months of June and July,
the actions we have taken have already benefited Citizens' financial performance
and will become apparent to investors beginning with the company's third-quarter
financial results," Mr. DeSantis added. "It is management's expectation that
these upward trends will continue in both the third and fourth quarters of 1997
and beyond."
Additionally, Mr. DeSantis reiterated the company's intention to
monetize the value of its subsidiary, Electric Lightwave, Inc., through an
equity sale. Mr. DeSantis stated that "our expectation is that this will be
accomplished before year end and will not only generate significant capital
expenditure funding but also a non-recurring gain to offset the non-recurring
charge taken in the second quarter."
(more)
Page Three
Citizens Utilities (NYSE: CZNA, CZNB, CZNPr) provides
telecommunications and public utility services to approximately 1.6 million
customers in 20 states. Citizens Communications is an integrated communications
providers offering local telephone, long distance, cellular, paging, Internet,
network sales and other telecommunications products and services. Citizens also
has investments in Centennial Cellular Corp. (NASDAQ: CYCL) and Hungarian
Telephone and Cable Corp. (ASE: HTC) and owns Electric Lightwave, Inc., a
leading competitive provider of communications services for business and long
distance carriers in the western United States.
For more information about Citizens, please visit our web site at
http://www.czn.net.
This press release contains forward-looking statements relating to
future expenses, capital expenditures, revenues, charges and earnings. These
statements may differ from actual future results due to, but not limited to, the
actual effects of the restructuring, reduction in capital expenditures and other
actions described herein, changes in the local and overall economy, the nature
and pace of technological change, the number and effectiveness of competitors in
the company's markets, success in marketing and selling expenditures and
efforts, weather conditions, changes in legal and regulatory policy, name
recognition, and the mix of products and services offered in the company's
target markets. Investors may wish to consider these important factors in
evaluating any statements herein.
(table follows)
Page Four
Citizens Utilities Company and Subsidiaries
Consolidated Financial Data
(unaudited)
For the quarter For the six
ended months ended
June 30, June 30,
-----------------------------------------------------------------
(Dollars in thousands) 1997 1996 1997 1996
-----------------------------------------------------------------
Income Statement Data(1)
Revenues $ 326,908 $ 318,127 $ 699,400 $ 647,265
Natural gas, electric energy and fuel oil purchased 42,590 50,618 123,349 118,979
Sales and marketing expenses 16,571 12,212 30,705 17,548
Network expenses 28,110 14,360 57,204 22,139
Depreciation and amortization 58,013 47,199 114,579 94,229
Other operating expenses 148,655 119,656 278,513 249,296
Operating income 32,969 74,082 95,050 145,074
Non-recurring charges 191,090 -- 191,090 --
Operating income/(loss) including non-recurring charges (158,121) 74,082 (96,040) 145,074
Investment and other income 11,327 17,776 23,611 28,823
Interest expense 26,950 22,644 53,966 44,647
Other non-recurring charges 6,230 -- 6,230 --
Income taxes (57,949) 21,584 (42,322) 41,511
Convertible preferred dividends 1,552 1,379 3,104 2,632
Net income /(loss) (123,577) 46,251 (93,407) 85,107
Net income excluding non-recurring charges 11,587 46,251 41,757 85,107
Earnings/(loss) per share (2) $ (.51) $ .19 $ (.39) $ .35
Earnings per share excluding non-recurring charges $ .05 $ .19 $ .17 $ .35
Weighted average shares outstanding (2) 243,708 246,676 242,133 245,225
(1) In the second quarter of 1997, the company recorded certain charges to
earnings totaling approximately $197 million. The charges relate to curtailment
of certain long distance service operations, benefit plan curtailments and
related regulatory assets no longer deemed recoverable, telecommunications
information systems and software, regulatory commission orders issued in the
second quarter and other miscellaneous items.
(2) Adjusted for subsequent stock dividends.