EXHIBIT 99.1
CITIZENS UTILITIES REPORTS
THIRD QUARTER 1998 FINANCIAL RESULTS
Revenues increased 12%
Citizens Public Services operating income grew 15%
Citizens Communications free cash flow grew 56%
Stamford, Connecticut, November 9, 1998 -- Citizens Utilities (NYSE: CZN, CZNPr)
announced today third quarter 1998 financial results. Revenues for the three
months ended September 30, 1998 grew 12% to $378.3 million from the $338.8
million for the corresponding 1997 quarter.
Net income for the third quarter 1998 decreased to $14.5 million from
$23.5 million for the prior year quarter, primarily due to increased losses from
Citizens' 83% interest in Electric Lightwave, Inc., (NASDAQ: ELIX). Excluding
the impact of Electric Lightwave's losses, net income for the three months ended
September 30, 1998 increased 6% to $30.2 million from $28.4 million for the
third quarter 1997.
Earnings per share for the third quarter 1998 decreased to 6 cents from
9 cents for the prior year quarter. Excluding the impact of Electric Lightwave
losses, earnings per share for the quarter ended September 30, 1998 increased 9%
to 12 cents from 11 cents for the prior year period.
For the nine months ended September 30, 1998, net income and earnings
per share were $55.7 million and 22 cents, respectively, as compared to $66.1
million and 26 cents, respectively, for the prior year period excluding 1997
special items. Absent Electric Lightwave losses, net income for the nine
months ended September 30, 1998 increased 16% to $95.0 million from $81.9
million for the prior year period. Earnings per share for the nine months ended
September 30, 1998, absent Electric Lightwave losses, increased 16% to 37 cents
from 32 cents for the prior year period.
Robert J. DeSantis, Citizens' Chief Financial Officer, stated that
"Citizens Public Services revenues grew 24% over the prior year quarter to $142
million, driven primarily by increases in gas revenues. Citizens Public Services
third quarter operating income increased by 15% to $21.3 million."
Commenting on Citizens Communications, Mr. DeSantis noted that
"operating income for the third quarter decreased slightly to $39.5 million from
the prior year period primarily due to the continuing unfavorable impact of
universal service fund reform as well as Year 2000 and other information systems
upgrade expenses. For the nine months ended September 30, 1998 operating income
grew 16% to $117.1 million and the sector's EBITDA margin was 41% versus 38% for
the prior year period. Year to date free cash flow improved 109% to $122.8
million."
"Electric Lightwave's 55% revenue growth over the prior year quarter
was primarily due to increases in local dial tone services and enhanced services
revenue. Electric Lightwave's owned and leased gross property plant and
equipment at quarter end totaled $571.4 million as compared to $336.9 million a
year earlier."
"The Company's previously announced separation is proceeding on
schedule," DeSantis said. Progress made to date includes:
- an order from the Federal Energy Regulatory Commission (which
became final in September) that granted an approval necessary to
proceed with the separation plan.
- petitions filed with five state regulatory agencies, representing
more than half of the company's local access lines, for approval
to proceed with the separation plan.
- a request to the Internal Revenue Service for a private letter
ruling that the separation is not subject to federal income tax.
Citizens Utilities provides Telecommunications Services and Public
Services including gas distribution, electric distribution, water distribution
and wastewater treatment services to approximately 1.8 million customers in 21
states. Citizens owns 83% of Electric Lightwave, Inc., a leading full-service,
facilities-based integrated communications services provider, and has a
significant investment in Centennial Cellular Corp. (NASDAQ:CYCL), a cellular
telephone company. Citizens announced on May 18, 1998 that it intends to
separate its telecommunications businesses and public services businesses into
two stand-alone, publicly traded companies.
This document contains forward-looking statements that are subject
to risks and uncertainties that could cause actual results to differ materially
from those expressed or implied in the statements. These and all forward-
looking statements are only predictions or statements of current plans that are
constantly under review by the company. All forward-looking statements may
differ from actual results because of, but not limited to, the company's ability
to obtain the necessary regulatory and tax approvals and complete the separation
process, changes in the local and overall economy, changes in market conditions
for debt and equity securities, the nature and pace of technological changes,
the number and effectiveness of competitors in the company's markets, success in
overall strategy, weather conditions, changes in legal or regulatory policy,
changes on legislation, the company's ability to identify future markets and
successfully expand existing ones and the mix of products and services offered
in the company's target markets. These important factors should be considered in
evaluating any statement contained herein and/or made by the company or on its
behalf. The foregoing information should be read in conjunction with the
company's filings with the U.S. Securities and Exchange Commission including,
but not limited to, reports on Forms 10-K and 10-Q. The company has no
obligation to update or revise these forward-looking statements to reflect the
occurrence of future events or circumstances. (table follows)
Citizens Utilities Company and Subsidiaries
Consolidated Financial Data
(unaudited)
For the quarter ended For the nine months ended
September 30, September 30,
--------------------- -------------------------
% %
(Dollars in thousands, except per share data) 1998 1997 Change 1998 1997 Change
------------------------------- -------------------------------
Income Statement Data
Revenues $ 378,279 $ 338,803 12% $1,148,489 $ 1,043,518 10%
Cost of services 79,934 68,174 17% 268,661 248,721 8%
Sales and marketing expenses 14,194 8,088 75% 33,796 38,772 -13%
Depreciation and amortization 65,117 58,827 11% 193,479 174,347 11%
Other operating expenses 178,698 151,466 18% 514,434 432,905 19%
Operating income 40,336 52,248 -23% 138,119 148,773 -7%
Special items (1) - - - (191,090)
Operating income including special items 40,336 52,248 -23% 138,119 (42,317) 426%
Investment and other income 11,489 10,794 6% 35,336 34,142 3%
Interest expense 29,178 25,640 14% 84,573 79,589 6%
Special items (1) - - - (6,230)
Income taxes 6,633 12,342 -46% 26,189 (29,567) 189%
Convertible preferred dividends 1,553 1,553 0% 4,657 4,657 0%
Income excluding cumulative effect of change
in accounting principle and special items (1) 14,461 23,507 -38% 58,036 66,080 -12%
Cumulative effect of change in accounting principle
for ELI, net of tax - - 2,334 -
Net income 14,461 23,507 -38% 55,702 (69,084) 181%
Net income excluding ELI 30,177 28,409 6% 94,962 81,898 16%
Per-Share Data (2)
Basic and diluted net income per share of common stock before
cumulative effect of change in accounting principle and
excluding special items (1) $ .06 $ .09 -33% $ .23 $ .26 -12%
Basic and diluted net income per share of common stock
excluding special items (1) $ .06 $ .09 -33% $ .22 $ .26 -15%
Basic net income per share of common stock excluding
ELI and special items (1) $ .12 $ .11 9% $ .37 $ .32 16%
Weighted average shares outstanding 258,202 257,635 0% 257,478 258,545 0%
(1) In the second quarter of 1997, the Company recorded certain charges to earnings totaling approximately $197 million. The charges
relate primarily to certain assets deemed no longer recoverable, the effects of certain regulatory commission orders and the
cutback of certain long distance service operations.
(2) Adjusted for subsequent stock dividends and stock splits and used in the calculation of all per share data.