EXHIBIT 99.1
CITIZENS UTILITIES REPORTS
1998 YEAR-END AND FOURTH-QUARTER
FINANCIAL RESULTS
Revenues Increased 9% in 1998
1998 EPS of 33 Cents, Excluding Special Items
Citizens Communications 1998 Operating Income Grew 18%
STAMFORD, Conn., March 10, 1999 -- Citizens Utilities (NYSE: CZN, CZNPr)
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today reported results for the year and quarter ended December 31, 1998.
Full year 1998 consolidated revenues were $1.54 billion, up 9% from
last year's level, driven by the continued strong growth of the company's
facilities-based integrated communications provider subsidiary, Electric
Lightwave Inc. (NASDAQ: ELIX) and increased natural gas revenues. Revenues for
the fourth quarter were $393.9 million, a 6% increase over the 1997 level
despite warmer than normal weather affecting Citizens Public Services'
operations.
Reported net income for the year was $57.1 million, or $.22 per share,
compared to $10.1 million, or $.04 per share, in 1997. These reported figures
were impacted by several special items in both years. Excluding special items,
net income decreased to $85.7 million or $.33 per share, in 1998 from $94.1
million, or $.36 per share, in 1997 primarily due to increased losses of
Electric Lightwave, which were expected. Absent Electric Lightwave's losses, net
income increased to $120.4 million, or $.47 per share, from $117.9 million, or
$.45 per share, for 1997.
Reported net income for the fourth quarter 1998 was $1.4 million, or
$.01 per share. Excluding special items, net income was $23.7 million, or $.09
per share, and absent Electric Lightwave's losses, net income was $31.9 million,
or $.12 per share for the quarter.
Reported results for 1998 include the following special items: $6.6
million of after-tax Year 2000 and separation costs; a $2.3 million after-tax
charge related to a change in accounting principle at Electric Lightwave; and a
$19.7 million after-tax write-down of the company's investment in Hungarian
Telephone and Cable Corp. (AMEX: HTC). Reported results for 1997 included the
following special items: an after-tax gain of $51.2 million from the sale of
subsidiary stock and a $135.2 million after-tax charge primarily related to the
restructuring of the company's communications business.
Commenting on the 1998 results, Citizens' chief financial officer
Robert J. DeSantis said, "We met our objective of near double-digit operating
income growth for Citizens Communications and Citizens Public Services combined.
Excluding special items, the combined operating income of these sectors
increased to $264 million, up 8% in 1998.
"Citizens Communications performed to plan with 18% operating income
growth despite the unfavorable impact of Price Cap, Access Charge and Universal
Service Fund reforms. Excluding special items, Citizens Communications operating
income was $164.8 million.
"Results for Citizens Public Services also were within expectations,"
DeSantis continued. "Sector revenues, led by strong growth in our gas
distribution businesses, surged 13% to $610 million in 1998. Excluding special
items, the operating income of our Public Services sector totaled $99.6
million."
Regarding Electric Lightwave's impact on Citizens' results, Mr.
DeSantis said, "Electric Lightwave's growth continues to accelerate and Citizens
remains steadfast in its support of that growth. Revenues in 1998 were $97.8
million, or 69% above 1997 levels. Electric Lightwave's owned and leased gross
property, plant and equipment at year-end 1998 totaled $637 million, up 53% from
one year ago." Electric Lightwave reported its 1998 fourth quarter and year-end
results on March 4.
DeSantis said that 1999 reported results would also be affected by
special items. "This year we can expect to incur Year 2000 expenses of
approximately $28 million as our program to address this issue proceeds on
schedule. In addition, the company will incur expenses related to its previously
announced separation plan. In January 1999, we recorded a pre-tax gain of
about $70 million on the sale of Citizens' 16% stake in Centennial Cellular
Corp. (NASDAQ:CYCL). This represented a 15% annualized return on Citizens
initial investment. In addition, the recently-announced merger between Century
Communications Corp. (NASDAQ:CTYA) and Adelphia Communications should result
in substantial gains in the third quarter relating to Citizens' holdings in
Century and in a cable television joint venture with Century," DeSantis
continued.
Commenting on the Company's previously announced separation plan,
DeSantis said, "the separation is proceeding on schedule toward completion
during the second half of 1999. 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;
approval to proceed with the separation plan from state
regulatory agencies representing approximately 24% of the
Company's local access lines; and
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 22
states. Citizens owns 83% of Electric Lightwave, Inc., a leading full-service,
facilities-based integrated communications services provider. 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 in
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, Y2K issues and the effects of the separation. 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 year ended
December 31, December 31,
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(Dollars in thousands) % %
Income Statement Data 1998 1997 Change 1998 1997 Change
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Revenues $ 393,883 $ 370,868 6% $ 1,542,372 $1,414,386 9%
Cost of services 91,101 84,840 7% 359,762 333,561 8%
Sales and marketing expenses 13,529 7,301 85% 47,325 46,073 3%
Depreciation and amortization 64,365 61,465 5% 257,844 235,812 9%
Other operating expenses 180,495 159,103 13% 688,624 592,008 16%
Operating income 44,393 58,159 -24% 188,817 206,932 -9%
Special items (1) (4,343) - (10,648) (191,090)
Operating income including special items 40,050 58,159 -31% 178,169 15,842 1025%
Investment and other income 18,580 8,789 111% 53,916 42,931 26%
Interest expense 27,666 27,995 -1% 112,239 107,584 4%
Special items (2) (31,905) 78,734 (34,239) 72,504
Income taxes (3,852) 36,950 -110% 22,337 7,383 203%
Convertible preferred dividends 1,553 1,553 - 6,210 6,210 -
Net income as reported 1,358 79,184 -98% 57,060 10,100 465%
Net income excluding special items 23,730 28,007 -15% 85,658 94,087 -9%
Net income excluding special items and ELI 31,926 36,014 -11% 120,376 117,912 2%
Per-Share Data (3)
Basic and diluted net income per share of common stock
as reported $ .01 $ .31 -97% $ .22 $ .04 450%
Basic net income per share of common stock
excluding special items $ .09 $ .11 -18% $ .33 $ .36 -8%
Basic net income per share of common stock
excluding special items and ELI $ .12 $ .14 -14% $ .47 $ .45 4%
Weighted average shares outstanding 259,679 258,868 258,879 260,226
(1) For 1998, special items include Y2K and separation costs. For 1997, special
items include the charges to earnings for certain assets deemed no longer
recoverable, the effects of certain regulatory commission orders and the
cutback of certain long distance service operations.
(2) For 1998, special items include the write down of the Company's investment
in HTCC and the cumulative effect in accounting principle at ELI. For 1997,
special items include the nonoperating gain on sale of subsidiary stock
offset by charges to earnings for certain regulatory commission orders.
(3) Adjusted for subsequent stock dividends and stock splits and used in the
calculation of all per share data.