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CITIZENS UTILITIES COMPANY
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FORM 10-Q/A
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1993
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1993
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Commission file number 0-1291
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CITIZENS UTILITIES COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 06-0619596
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
High Ridge Park
P.O. Box 3801
Stamford, Connecticut 06905
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 329-8800
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NONE
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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
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Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of November 5, 1993
Common Stock Series A 129,271,738
Common Stock Series B 50,279,075
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
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INDEX
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Page No.
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Part I. Financial Information
Consolidated Condensed Balance Sheets September 30, 1993
and December 31, 1992 2
Consolidated Condensed Statements of Income for the Three
Months Ended September 30, 1993 and 1992 3
Consolidated Condensed Statements of Income for the Nine
Months Ended September 30, 1993 and 1992 4
Consolidated Condensed Statements of Cash Flows for the
Nine Months Ended September 30, 1993 and 1992 5
Notes to Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information 9
Signature 10
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PART I. FINANCIAL INFORMATION
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
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CONSOLIDATED CONDENSED BALANCE SHEETS
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(In thousands)
September December
30, 1993 31, 1992
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ASSETS
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Current assets:
Cash and cash equivalents $ 42,410 $ 19,752
Accounts receivable 76,819 91,245
Other 10,379 12,194
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129,608 123,191
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Property, plant and equipment 1,589,022 1,503,471
Less accumulated depreciation 448,743 406,833
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1,140,279 1,096,638
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Investments 589,910 561,062
Regulatory assets 147,842 0
Deferred debits and other assets 103,088 107,090
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$2,110,727 $1,887,981
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Long-term debt due within one year $ 1,680 $ 10,850
Other 174,503 213,638
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176,183 224,488
Customer advances for construction and
contributions in aid of construction 188,075 179,858
Deferred income taxes 193,725 95,222
Regulatory liabilities 43,587 0
Deferred credits and other liabilities 41,825 28,443
Long-term debt 530,466 522,699
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1,173,861 1,050,710
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Shareholders' equity:
Common stock issued, $.25 par value
Series A 32,457 16,039
Series B 12,426 5,651
Additional paid-in capital 660,144 582,299
Retained earnings 231,839 233,282
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936,866 837,271
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$2,110,727 $1,887,981
========== ==========
The accompanying Notes are an integral part of these Financial Statements.
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PART I. FINANCIAL INFORMATION (Continued)
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF INCOME
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FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1993 AND 1992
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(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
1993 1992
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Revenues $144,288 $139,384
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Expenses:
Operating expenses 89,272 85,181
Depreciation 13,005 13,057
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102,277 98,238
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Income from operations 42,011 41,146
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Other income, net 14,472 11,098
Income before interest expense
and income taxes 56,483 52,244
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Interest expense 9,070 9,838
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Income before income taxes 47,413 42,406
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Income taxes 13,074 10,683
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Net income $ 34,339 $ 31,723
======== =========
Earnings per share of common stock:
Series A $.19 $.18*
==== ====
Series B $.19 $.18*
==== ====
Weighted average number of common shares outstanding:
Series A Common Stock 129,852 132,910*
Series B Common Stock 48,659 45,179*
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 1.1% 1.2%
======= =======
</TABLE>
*Adjusted for the August 1993 2-for-1 stock split.
The accompanying Notes are an integral part of these Financial Statements.
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PART I. FINANCIAL INFORMATION (Continued)
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF INCOME
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1993 AND 1992
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(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
1993 1992
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Revenues $451,995 $426,212
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Expenses:
Operating expenses 285,759 267,232
Depreciation 41,096 39,256
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326,855 306,488
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Income from operations 125,140 119,724
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Other income, net 36,322 35,495
Income before interest expense
and income taxes 161,462 155,219
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Interest expense 28,596 32,149
Income before income taxes 132,866 123,070
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Income taxes 36,151 33,521
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Net income $ 96,715 $ 89,549
======== ========
Earnings per share of common stock:
Series A $ .55 $ .51*
======== ========
Series B $ .55 $ .51*
======== ========
Weighted average number of common shares outstanding:
Series A Common Stock 129,072 131,357*
Series B Common Stock 47,456 43,643*
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 - compound rate 3.34% 4.36%
========= =========
*Adjusted for the August 1993 2-for-1 stock split.
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
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PART I. FINANCIAL INFORMATION (Continued)
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1993 AND 1992
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(In thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
1993 1992
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Net cash provided by operating activities $ 125,534 $ 101,529
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Cash flows from investing activities:
Construction expenditures (96,778) (69,902)
Securities purchases (255,406) (226,967)
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Securities sales and maturities 233,686 154,849
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Other 7,788 1,500
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(110,710) (140,520)
=====================
Cash flows from financing activities:
Long-term debt borrowings 33,290 138,662
Long-term debt principal payments (26,440) (105,688)
Other 984 700
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7,834 33,674
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Increase (decrease) in cash and cash equivalents 22,658 (5,317)
Cash and cash equivalents at January 1, 19,752 42,229
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Cash and cash equivalents at September 30, $ 42,410 $ 36,912
========= =========
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
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PART I. FINANCIAL INFORMATION (Continued)
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS
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(Dollars in thousands, except per-share amounts)
(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 intervening stock dividends and stock splits. Earnings per share
is presented for each Series separately, with historical adjustment for
intervening stock dividends and stock splits for each Series. 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.
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PART I. FINANCIAL INFORMATION (Continued)
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
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Item 2. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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(a) Liquidity and Capital Resources
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The primary source of funds was from operations. The company considers
operating cash flows and its ability to raise debt and equity capital as
the principal indicators of its liquidity. Although the level of working
capital is not considered to be an indicator of the company's liquidity,
the company experiences an improvement in working capital at September 30,
1993 as compared to December 31, 1992 primarily due to funds from
operations which were partially applied against the accounts payable
balance at December 31, 1992 resulting from Hurricane Inicki. The company
used funds from operations, from 1993, 1992 and 1991 Industrial
Development Revenue Bond construction fund trust accounts and from
customer advances to pay for the construction of utility plant.
Commercial paper notes payable in the amount of $46,730,000 were
outstanding as of September 30, 1993. The company has committed lines of
credit with commercial banks under which it may borrow up to $200,000,000.
On May 19, 1993, the company and GTE Corporation announced the signing
of ten definitive agreements in which the company will purchase from GTE
Corporation, for $1.1 billion in cash, telephone operations serving
approximately 500,000 access lines in nine states. These transactions are
consistent with the company's growth strategy, will enable the company to
achieve operating economies of scale and increase the company's annual
revenues to more than $1 billion. These transactions require the approval
of the Federal Communications Commission and the regulatory commissions of
the nine states in which the properties are located. The transfers of
operations are expected to take place state by state and be completed in
part during 1993, with the remaining closings expected to be concluded in
1994.
The company has received approval from the Federal Energy Regulatory
Commission to issue up to $1.25 billion in various forms of securities
over the next two years to fund the acquisition of the GTE properties and
for other corporate requirements. In addition, the company anticipates
filing a shelf-registration statement with the Securities Exchange
Commission to offer, from time to time, up to $1 billion in securities to
fund the acquisition of GTE telephone operations and for other corporate
requirements.
On October 6, 1993 the company announced that it has entered into a
definitive merger agreement with Natural Gas Company of Louisiana (NGL).
Under the terms of the agreement, each of NGL's almost 60,000 outstanding
shares will be exchanged for approximately 10.4 shares of Citizens' Series
B common stock, for an aggregate value of $10.6 million. The completion
of the merger is subject to, among other things, receipt of regulatory and
NGL shareholder approvals. The approval of Citizens shareholders is not
required. NGL is a local gas distribution company serving approximately
15,500 customers in Louisiana. Upon completion of the merger, NGL will
operate as part of Citizens' Louisiana gas division.
During the nine months ended September 30, 1993, the company was
authorized net increases in annual revenues for properties in California,
Hawaii, Illinois, Ohio, Pennsylvania, Arizona and Vermont totaling
$10,368,000. The company has requests for increases in annual revenues
pending before regulatory commissions in Arizona, California, Pennsylvania
and Vermont.
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(b) Results of Operations
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Operating revenues for the three months and nine months ended September
30, 1993 increased compared with the like 1992 periods primarily due to
increased natural gas, electric and water/wastewater revenues. Natural
gas revenues for the quarter totaled $33,772,000, a 7% increase over the
1992 amount of $31,422,000. The increase was primarily due to $253,000 of
increased average revenue per MCF of gas sold to industrial customers and
$2,097,000 of increased volume of natural gas sold to industrial
customers. Natural gas revenues for the nine months totaled $141,483,000,
a 10% increase over the 1992 amount of $128,052,000. The increase was
primarily due to $6,168,000 of increased average revenue per MCF of gas
sold to industrial customers and $9,407,000 of pass-ons of increases in
the wholesale costs of commodities purchased to residential and commercial
customers. Electric revenues for the quarter totaled $46,175,000, a 18%
increase over the 1992 amount of $39,094,000. The increase was primarily
due to $2,858,000 of rate increases, $548,000 of pass-ons to customers of
increases in the wholesale costs of commodities purchased, $779,000 of
customer growth and increased customer usage. Electric revenues for the
nine months totaled $126,720,000, a 18% increase over the 1992 amount of
$107,510,000. The increase was primarily due to $9,250,000 of rate
increases, $414,000 of pass-ons to customers of increases in the wholesale
costs of commodities purchased, $284,000 of customer growth and increased
customer usage. Pass-ons are required under tariff provisions and do not
affect net income. Water/wastewater revenues for the quarter totaled
$18,082,000, a 12% increase over the 1992 amount of $16,205,000. The
increase was primarily due to $704,000 of rate increases, $824,000 of
customer growth and increased usage per customer; in addition to $340,000
of revenues received from water/wastewater properties acquired in December
1992. Water/wastewater revenues for the nine months totaled $48,843,000,
a 10% increase over the 1992 amount of $44,423,000. The increase was
primarily due to $1,506,000 of rate increases, $1,973,000 of customer
growth and increased usage per customer; in addition to $955,000 of
revenues received from water/wastewater properties acquired in December
1992. Telecommunications revenues for the quarter totaled $45,616,000, a
12% decrease compared to the 1992 amount of $51,658,000. The decrease was
primarily due to $7,485,000 of regulatory changes in the state of
California, as referenced in the company's 1992 Annual Report, Form 10-K;
partially offset by $617,000 of increased local revenues as a result of
customer growth and $907,000 of increased toll revenues as a result of
increased toll calls completed. Telecommunications revenues for the nine
months totaled $133,091,000, a 7% decrease compared to the 1992 amount of
$143,147,000. The decrease was primarily due to $12,216,000 from the
company exiting the toll settlement pools, as referenced in the company's
1992 Annual Report, Form 10-K; partially offset by $2,166,000 of increased
local revenues as a result of customer growth and $854,000 of increased
toll revenues as a result of increased toll calls completed.
Operating expenses for the three months and nine months ended September
30, 1993 increased compared with the like 1992 periods primarily due to
increased commodities purchased for resale offset in part by decreases in
telecommunications operating expenses. Natural gas purchased increased
due to higher supplier prices for the three months and nine months ended
September 30, 1993 and increased customer demand for the three months
ended September 30, 1993. Electric energy and fuel oil purchased
increased primarily due to increased supplier prices and customer demand.
Depreciation expense for the nine months ended September 30, 1993
increased compared to the like 1992 period primarily due to increased
investment in plant in service.
Other income, net for the three months and nine months ended September
30, 1993 increased compared with the like 1992 periods primarily due to an
increase in the allowance for funds used during construction as a result
of increased property, plant and equipment, as well as, an increase in
investment income from the Company's Centennial investment.
Interest expense for the three months and nine months ended September
30, 1993 decreased compared with the like 1992 periods primarily due to
the refinancing of higher-coupon First Mortgage Bonds with lower cost
debentures and increased allowance for funds used during construction
which is related to borrowings; partially offset by an increase in
industrial development revenue bond borrowings. Income taxes for the
three months and nine months ended September 30, 1993 increased compared
with the like 1992 periods primarily due to increased taxable income.
-8-
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PART II. OTHER INFORMATION
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
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Item 1. Legal Proceedings
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Reference is made to Item 1, Legal Proceedings, in Registrant's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1993 and June 30, 1993.
Status of cases reported remain unchanged.
Item 6. Reports on Form 8-K
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(b) No Form 8-K was required during the three months ended September 30,
1993.
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CITIZENS UTILITIES COMPANY AND SUBSIDIARIES
SIGNATURE
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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
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(Registrant)
Date November 15, 1993 By:_____________________________
------------------------------- Livingston E. Ross
Vice President and Controller
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