PROSPECTUS
- ---------- $32,059,148
[COMPANY LOGO HERE]
Common Stock Series A
($.25 Par Value)
--------------------
This Prospectus may be used by Citizens Utilities Trust, a statutory
Delaware business trust (the "Trust"), in connection with the annual elections
by the holders of its 5% Equity Providing Preferred Income Convertible
Securities sm("Convertible Preferred Securities") to receive their distributions
on the Convertible Preferred Securities in shares of Common Stock Series A, par
value $.25 per share ("Common Stock Series A"), of Citizens Utilities Company
("Citizens" or the "Company"). Holders of the Convertible Preferred Securities
are entitled to receive cumulative distributions from the Trust, at an annual
rate of 5% of the liquidation preference of $50 per Convertible Preferred
Security (the "Rate") payable quarterly in arrears on each January 31, April 30,
July 31, and October 31 (each, a "Distribution Payment Date"). Distributions on
the Convertible Preferred Securities are payable in shares of Common Stock
Series A or, at the option of either Citizens or the holder, in cash. The
holders' elections may be made annually during the Election Period (as defined
herein). See "Distributions on Convertible Preferred Securities."
This Prospectus may also be used by Citizens Utilities Capital L.P., a
Delaware limited partnership (the "Partnership), which may receive the Common
Stock Series A covered by this Prospectus in connection with Citizens' interest
payments on the 5% Convertible Subordinated Debentures Due 2036 ("Convertible
Debentures") and which may sell such stock in the open market. See "Prospectus
Summary" and "Distributions on Convertible Preferred Securities." Such sales of
Common Stock Series A may be made from time to time in one or more transactions
(which may involve crosses or block transactions) on the New York Stock Exchange
("NYSE") or otherwise, pursuant to and in accordance with the rules of the NYSE,
in the over-the-counter market, in negotiated transactions, or a combination of
such methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The
Partnership will effect such transactions by selling shares of Common Stock
Series A to or through broker-dealers. Such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Partnership and/or purchasers of shares of Common Stock Series A for
whom they may act (which compensation may be in excess of customary
commissions). The Partnership and broker-dealers that participate with the
Partnership in the distributions of shares of Common Stock Series A may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933 (the "1933 Act"), and any commissions received by them
and any profit on the resale of shares of Common Stock Series A may be deemed to
be underwriting compensation. See "Plan of Distribution."
The Common Stock Series A is listed under the symbol "CZNA" on the NYSE.
See "Risk Factors" on page 6 for a discussion of certain material risks
to be considered in connection with an investment in the Common Stock Series A.
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------------------
The date of this Prospectus is December 20, 1996
sm EPPICS and Equity Providing Preferred Income Convertible Securities are
servicemarks of Citizens Utilities Company.
<PAGE>
AVAILABLE INFORMATION
Citizens is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and in accordance therewith files reports,
proxy and information statements and other information with the Securities and
Exchange Commission (the "SEC"). Such reports, proxy and information statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at its regional offices at Citicorp Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661 and Suite 1300, 7 World Trade Center,
New York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D. C.
20549, at prescribed rates. The SEC also maintains a web site
(htp://www.sec.gov.) that contains reports, proxy and information statements and
other information regarding Citizens. Certain securities of Citizens are listed
on the New York Stock Exchange, 20 Broad Street, New York, New York 10005, and
reports, proxy material and other information concerning Citizens may be
inspected at the office of that Exchange. Citizens will furnish to each person
to whom a copy of this Prospectus is delivered, upon written or oral request of
such person, a copy of any or all of such reports, proxy and information
statements and other information. Requests for such copies should be directed to
Office of the Secretary, Citizens Utilities Company, High Ridge Park, Stamford,
Connecticut 06905 (telephone (203) 329-8800).
No separate financial statements of either the Partnership or the Trust
have been included herein. Citizens, the Trust and the Partnership do not
consider that such financial statements would be material to holders of
Convertible Preferred Securities because the Trust and the Partnership are
special purpose entities and, have no independent operations. Further, Citizens
believes that financial statements of the Trust and the Partnership are not
material to the election of the holders of the Convertible Preferred Securities
pursuant to this Prospectus since the holders' election as to the nature of the
distribution hereby relates solely to Citizens' Common Stock.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the SEC pursuant to
the 1934 Act are incorporated into this Prospectus by reference:
The Company's Annual Report on Form 10-K for the year ended December
31, 1995.
The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30, and September 30, 1996.
The Company's Current Reports on Form 8-K filed on March 29, and May
28, 1996.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the termination of the
offering of the Common Stock shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents.
The Company hereby undertakes to provide, without charge, to each
person to whom a copy of this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents referred to above
which have been or may be incorporated by reference in this Prospectus, other
than exhibits to such documents not specifically incorporated by reference
herein. Requests for such copies should be directed to Office of the Secretary,
Citizens Utilities Company, High Ridge Park, Bldg. No. 3, Stamford, Connecticut
06905 (telephone 203-329-8800).
2
<PAGE>
PROSPECTUS SUMMARY
Background
Citizens Utilities Trust is a Delaware statutory business trust, the
undivided common beneficial interests of which are owned by Citizens Utilities
Company ("Citizens" or the "Company"). On January 16, 1996, the Trust offered
its Convertible Preferred Securities to the public. The Trust owns all of the
limited partnership interests (the "Partnership Preferred Securities") of the
Partnership, a special purpose Delaware limited partnership. All of the
Partnership's general partnership interests are beneficially owned by Citizens.
The Partnership owns Convertible Debentures of Citizens, which makes quarterly
interest payments, ordinarily, in its shares of Common Stock Series A, par value
$.25 per share ("Common Stock Series A"). The Partnership and the Trust in turn
make quarterly distributions of shares or cash as elected by each holder of the
Trust's Convertible Preferred Securities.
Holders of the Convertible Preferred Securities are entitled to receive
cumulative distributions from the Trust at an annual rate of 5% of the
liquidation preference of $50 per Convertible Preferred Security (the "Rate")
payable quarterly in arrears on each January 31, April 30, July 31, and October
31 (each, a "Distribution Payment Date"). Each holder of Convertible Preferred
Securities may elect annually during the Election Period (as defined herein) to
receive its distributions on the Convertible Preferred Securities in shares of
Common Stock Series A of Citizens or in cash. Each quarter, the Partnership will
collect interest payments on the Convertible Debentures and, to the extent
necessary to satisfy cash distribution elections, will place orders with brokers
to sell shares of Common Stock received as such interest payments and pay the
required quarterly distributions on its Partnership Preferred Securities to the
Trust. The Trust will in turn pay to the holders of the Convertible Preferred
Securities the appropriate amount of cash and/or shares of Common Stock Series A
received by the Partnership to satisfy the elections made pursuant to this
Prospectus by the holders.
Distributions on Convertible Preferred Securities
Payable in Common Stock
Distributions on the Convertible Preferred Securities are cumulative
from the date of original issuance of the Convertible Preferred Securities at
the Rate. Distributions are paid quarterly in arrears on the Distribution
Payment Dates (which are January 31, April 30, July 31 and October 31 of each
year). Distributions on the Convertible Preferred Securities may not be made
unless the Trust receives corresponding distributions on the Partnership
Preferred Securities from the Partnership, which in turn may not make such
distributions unless it receives corresponding interest payments on the
Convertible Debentures from Citizens.
Holders of Convertible Preferred Securities may make an annual election
to receive their distributions in either Common Stock Series A or cash (a
"Distribution Election"). While Citizens has been paying, and intends to
continue to elect to pay, interest on the Convertible Debentures in Common Stock
Series A, Citizens may also elect to pay interest on the Convertible Debentures
in cash. If Citizens elects to pay cash, a holder which has elected to receive
stock shall instead receive cash. At Citizens' election, interest payments may
also be deferred. The coordination of these election opportunities require that
the elections be made within specific time periods. The following summary
describes this time-table.
~ Holders of Convertible Preferred Securities can make a Distribution
Election:
~ To receive stock (a "Stock Distribution Election"), or
3
<PAGE>
~ To receive cash (a "Cash Distribution Election").
~ If no Distribution Election is made, the holder is deemed to
have made a Cash Distribution Election.
~ Holders are not entitled to make a Distribution Election until an
Election Period (as defined below). Such holders, before such Election
Period, will be deemed to have made a Cash Distribution Election.
~ The "Distribution Declaration Date" will occur on or before December 9,
March 13, June 13 and September 12 of each year (which date will be at
least ten calendar days prior to the scheduled Record Date). On or
prior to such date, Citizens must declare by written notice (the
"Distribution Declaration Notice") whether it will:
~ Make the next interest payment, or
~ Defer the next interest payment.
~ If the scheduled Distribution Declaration Date falls on a day
which is not a Business Day, the Distribution Declaration Date
shall be the next preceding day that is a Business Day.
~ If the Distribution Declaration Notice states that interest will be
paid and not deferred on the next Distribution Payment Date:
~ Since Citizens has been paying, and intends to continue
paying, interest on the Convertible Debentures in the form of
Common Stock Series A, such notice will ordinarily state that
payment will be made in Common Stock Series A (a "Stock
Payment Election") having an Equivalent Value (as defined
hereafter) to the interest payment which has accrued for the
period at the Rate; however
~ Such notice can alternatively state that Citizens will pay
interest in cash (a "Cash Payment Election"). In such case, a
holder who makes a timely Stock Distribution Election will
instead receive cash.
~ Such notice will also state the Record Date and the Share
Transfer and Valuation Date (as defined hereafter). Such
notice, if it relates to the January 31 Distribution Payment
Date, will additionally inform holders of the Election Period
procedures.
~ The Record Date will occur on or before December 19, March 23, June 23
and September 22 of each year (which will be at least 10 calendar days
after the Distribution Declaration Date). As of this date, the official
list of holders entitled to payment will be generated from information
supplied by brokerage houses and nominees and others holding accounts
for investors and DTC.
~ During an "Election Period" (which will be the ten Business Days in
each year commencing at least two Business Days after the scheduled
Record Date relating to the January 31 Distribution Payment Date), a
holder can change his Distribution Election by submitting an election
form to the broker, nominee or other entity which holds such holders'
account. Elections will continue in effect until another election is
timely made in a subsequent annual Election Period. Late Distribution
Elections will not be effective.
4
<PAGE>
~ Election forms will be sent on or about the first day of the
Election Period to beneficial holders of Convertible Preferred
Securities by the brokers, nominees or other entities which
hold such holders' account.
~ If Citizens makes a Stock Payment Election, the Share Transfer and
Valuation Date will occur on or before January 18, April 17, July 18
and October 18 of each year (which date will be at least 9 Business
Days before the Distribution Payment Date).
~ On each Share Transfer and Valuation Date, the Equivalent
Value per share will be determined, and
~ Shares of Common Stock Series A with an Equivalent Value will
be delivered by Citizens to the Partnership.
~ In the period from the Share Transfer and Valuation Date to the
Distribution Payment Date:
~ The Partnership will sell Common Stock Series A in amounts
sufficient to pay cash to holders who have made a Cash
Distribution Election.
~ To the extent cash proceeds from the sale of Common Stock
Series A are insufficient to satisfy Cash Distribution
Elections, Citizens will provide the additional cash
requirement to the Partnership.
~ Citizens may purchase from the Partnership some or all of the
Common Stock Series A transferred to the Partnership as an
interest payment. If all such Common Stock Series A is
purchased, holders making timely Stock Distribution Elections
will receive their distributions in cash.
~ The Distribution Payment Dates will be January 31, April 30, July 31
and October 31 of each year.
~ If Citizens has made a Stock Payment Election, on the
Distribution Payment Date the Partnership will transfer to the
Trust the appropriate number of shares of Common Stock Series
A and appropriate amount of cash to satisfy the Stock and Cash
Distribution Elections of the holders of the Convertible
Preferred Securities.
~ If Citizens has made a Cash Payment Election, Citizens will
transfer cash to the Partnership in payment of interest, at
the Rate, and the Partnership will transfer such cash to the
Trust, all on the Distribution Payment Date.
~ If the scheduled Distribution Payment Date falls on a day
which is not a Business Day, the Distribution Payment Date
shall be the next day that is a Business Day.
5
<PAGE>
RISK FACTORS
Prospective acquirers of Common Stock should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matter:
Market Risk on Distributions in Common Stock
The shares of Common Stock Series A that a holder of Convertible
Preferred Securities will receive as a result of making a Stock Distribution
Election will have an Equivalent Value (as determined on the Share Transfer and
Valuation Date on which they were deposited with the Partnership) equal to the
cash amount that would be payable to a holder who has made a Cash Distribution
Election. However, the value of such shares will be subject to market
fluctuations and there can be no assurance that the market price of such shares
will not thereafter decline.
CITIZENS UTILITIES COMPANY
Citizens Utilities Company is a diversified operating company which
provides, either directly or through subsidiaries, telecommunications, natural
gas transmission and distribution, electric distribution, water or wastewater
services to customers in areas of twenty states. Divisions of Citizens provide
electric distribution and natural gas transmission and distribution services,
purchasing most of the electric power needed and all gas supplies.
Telecommunications, water and wastewater services are provided either by
divisions of Citizens or by its subsidiaries. Citizens is the fifteenth largest
local telecommunications company in the nation. Citizens also holds a
significant investment interest in Centennial Cellular Corp., a cellular
telephone company, and owns Electric Lightwave, Inc., an alternative
telecommunications service provider operating in five western states, and
Citizens Long Distance. Beginning with 1945, Citizens has increased its
revenues, net income and earnings per share (adjusted for subsequent stock
dividends and stock splits) every year without interruption.
Citizens, with administrative offices at High Ridge Park, Stamford,
Connecticut 06905 (telephone 203-329-8800), was incorporated in Delaware in 1935
to acquire the assets and business of a predecessor corporation. Since then,
Citizens has grown as a result of investment in its own operations and the
acquisition of additional operations.
As a result of its diversification, Citizens is not dependent upon any
single geographic area or any one type of utility service for its revenues. No
single regulatory body regulates a utility service of Citizens accounting for
more than 11% of Citizens' revenues for the twelve months ended September 30,
1996. The Federal Communications Commission regulates interstate
telecommunications access services of Citizens under price cap regulation which
allows Citizens considerable flexibility in its pricing. Citizens is not aware
of any other utility company as fully diversified in both geographic areas
served and variety of services provided. Citizens' operations are conducted
principally in small and medium-sized communities. No material part of Citizens'
business is dependent upon a single customer or a small group of customers. The
loss of any single customer or a small group of customers would not have a
materially adverse
6
<PAGE>
effect upon Citizens. Citizens' customer connections have increased from 26,150
in 1945, to 225,389 in 1965, to 610,585 in 1985, and to over 1,800,000 as of
September 30, 1996.
Citizens continually considers and is carrying out expansion through
acquisitions and joint ventures in the rapidly evolving telecommunications and
cable television industries and in traditional public utility and related
businesses.
USE OF PROCEEDS
At its election, Citizens may issue the shares of Common Stock Series A
to the Partnership as payment of interest on its Convertible Debentures.
Proceeds from the sale by the Partnership of Common Stock Series A will be
deposited with the Trust to the extent necessary for the Trust to make its cash
distribution payments on the Convertible Preferred Securities. The Company will
receive no proceeds from the issuance of such shares except to the extent that
sales proceeds exceed the amount necessary for the Trust to make the cash
distribution payments or to the extent that Citizens elects to receive cash
distributions on its general partnership interests in the Partnership or its
common beneficial interests in the Trust. Such proceeds, if any, would be
incidental and would be used for general corporate purposes.
CAPITAL REQUIREMENTS AND FINANCING
Citizens carries out a continuous construction program to maintain
reliable and safe service and to meet future customer service requirements.
Citizens estimates that expenditures for construction, extension and improvement
of service will require approximately $463 million in 1997. Citizens'
construction program is under continuous review and may be revised depending on
business and economic conditions, regulatory action, governmental mandates,
customer demand and other factors. Capital requirements will be financed from
internally generated funds, offered securities, the issuance of taxable and
tax-exempt long-term debt, short-term borrowings, customer advances, and
contributions in aid of construction.
Citizens maintains $600 million of committed bank lines of credit for
general corporate purposes under which there were no amounts outstanding as of
December 13, 1996.
DESCRIPTION OF COMMON STOCK SERIES A AND SERIES B
Citizens' common stock consists of two series: Common Stock Series A
and Common Stock Series B. Citizens has authorized 250,000,000 shares of Common
Stock Series A and 350,000,000 shares of Common Stock Series B.As of December 6,
1996 Citizens had outstanding 154,292,360 shares of Common Stock Series A and
82,965,198 shares of Common Stock Series B. The holders of Common Stock Series A
and Common Stock Series B are entitled to one vote for each share on all matters
voted on by stockholders. Pursuant to Citizens' Restated Certificate of
Incorporation, the holders of Common Stock Series A and the holders of Common
Stock Series B vote together as a single class on all matters to be voted on by
stockholders, unless otherwise expressly required by applicable law. Common
Stock Series A is
7
<PAGE>
convertible, on a share-for-share tax-free basis and at no cost to stockholders,
into Common Stock Series B at all times. Common Stock Series B is not
convertible into Common Stock Series A. The Board of Directors of Citizens may,
in its sole discretion and at any time, require all of the holders of Common
Stock Series A to exchange all of their shares of Common Stock Series A for
shares of Common Stock Series B on a share-for-share basis. The holders of
Common Stock Series A and Common Stock Series B participate ratably in
liquidation. The holders of Common Stock Series A and Common Stock Series B have
no preemptive rights.
DIVIDENDS ON COMMON STOCK SERIES A AND SERIES B
The holders of Common Stock Series A and Common Stock Series B are
entitled to receive dividends when and as declared by the Board of Directors of
Citizens out of funds legally available therefor. Dividends have been paid to
holders of common stock every year without interruption beginning in 1939 and,
although there can be no assurances as to the amount of any future dividends,
Citizens has increased cash dividends and/or cash value equivalents every year
without interruption beginning in 1946. Beginning in 1956, when the two-series
common stock capitalization of Citizens was initiated, through 1989, only stock
dividends were paid on Common Stock Series A and only cash dividends were paid
on Common Stock Series B. Commencing in 1990, Citizens has declared and paid
quarterly stock dividends at the same rate on shares of both Common Stock Series
A and Common Stock Series B. The stock dividend rate is based on an underlying
cash equivalent. Citizens expects that under present United States federal tax
law, stock dividends on Common Stock Series A and Common Stock Series B, if paid
and received pro-rata and otherwise in the same manner as they have been since
1990, will be free of current federal income taxation on receipt. Such stock
dividends are treated as capital transactions when and if sold. Gain or loss is
based on the difference between sales price and adjusted basis per share.
To the extent that stock dividends are declared on the Common Stock
Series B, the same stock dividend must be declared on the Common Stock Series A.
To the extent that cash dividends are paid out of funds that are legally
available on the Common Stock Series B, stock dividends with an equivalent fair
value must be paid during the same calendar year on the Common Stock Series A,
unless cash dividends are declared on the Common Stock Series A at the same time
and in an equal amount as on the Common Stock Series B.
STOCK DIVIDEND SALE PLAN AND CONVERSION OF
COMMON STOCK SERIES A INTO COMMON STOCK SERIES B
Citizens has a Stock Dividend Sale Plan (the "Plan") which enables
Common Stock Series B stockholders to elect to have their future stock dividends
sold and the cash proceeds of the sale (minus a per share commission, currently
2 cents) distributed to them quarterly. If a Common Stock Series B stockholder's
account is held by a broker or custodial institution participating in the Plan,
the cash proceeds are sent to the broker or custodial institution. Generally,
for United States federal income tax purposes, the differences between the
proceeds from the sale of the stock dividends (the net cash received) and the
adjusted basis of the shares
8
<PAGE>
sold are treated as a capital transaction. Holders of Common Stock Series A may
at any time convert, on a share-for-share tax-free basis and at no cost, their
Common Stock Series A shares into Common Stock Series B shares. A registered
stockholder may give instructions to Citizens' Common Stock Transfer Agent and
street name holders may give instructions to their brokers to accomplish such
conversion from Common Stock Series A into Common Stock Series B, and in
conjunction with said conversion, or after such conversion, may enroll in the
Plan.
Common Stock Series B stockholders may enroll throughout the year in
the Plan. After a Common Stock Series B stockholder's account has been enrolled
in the Plan, future stock dividends in that account will be sold quarterly,
unless Citizens' Common Stock Transfer Agent receives written notification from
a Series B stockholder to withdraw that account from the Plan. Stockholders who
withdraw an account from the Plan will then receive quarterly stock dividends
and are not eligible to re-enroll that account in the Plan for 12 months.
COMMON STOCK TRANSFER AGENT
The transfer agent for the Company's Common Stock Series A and Common
Stock Series B is Illinois Stock Transfer Company.
CITIZENS UTILITIES CAPITAL L.P.
Citizens Utilities Capital L.P. is a special purpose limited
partnership formed under the laws of the State of Delaware. All of its
partnership interests (other than the Partnership Preferred Securities, which
are owned by the Trust, and any interest of any special representative) are
beneficially owned by Citizens. Citizens is the sole general partner and the
Trust is a limited partner in the Partnership. The Partnership owns the
Convertible Debentures and will collect quarterly interest payments on the
Convertible Debentures, place orders with brokers to sell shares of Common Stock
received as such interest payments and pay the required quarterly distributions
on its Partnership Securities.
CITIZENS UTILITIES TRUST
Citizens Utilities Trust is a statutory business trust formed under the
Delaware Business Trust Act pursuant to a declaration of trust (the
"Declaration"). The Trust was formed to issue its Trust Securities and acquire
the Partnership Preferred Securities.
The Trust's business and affairs are conducted by the trustees of the
Trust ("Trustees") appointed by Citizens. There are four Trustees, two of whom
("Regular Trustees") are persons who are employees or officers of Citizens. The
third Trustee is The Chase Manhattan Bank, a New York banking corporation, which
acts as property trustee under the Declaration (the "Property Trustee"). The
fourth Trustee is Chase Manhattan Bank Delaware.
The Property Trustee maintains exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all payments
made in cash or securities in respect
9
<PAGE>
of the Partnership Preferred Securities for the benefit of the holders of the
Trust Securities. The Property Trustee makes payments of distributions to the
holders of the Convertible Preferred Securities out of funds from or securities
held in the Property Account.
DISTRIBUTIONS ON
CONVERTIBLE PREFERRED SECURITIES
Distributions
Recipients of this Prospectus are encouraged to also review carefully
the section above entitled "Prospectus Summary - Distributions on Convertible
Preferred Securities Payable in Common Stock".
For United States federal income tax purposes, Convertible Preferred
Security holders will recognize interest income as it accrues. So long as
interest periods are not deferred, the distributions will approximately equal
the accruals of such quarterly interest. Capital, income and distributions on
Convertible Preferred Securities are not eligible for the corporate
dividends-received deduction for United States federal income tax purposes.
How Distributions are Computed. Holders of the Convertible Preferred
Securities are entitled to receive cumulative distributions from the Trust in
the forms of payment described below, accruing at the Rate and payable quarterly
in arrears on the scheduled Distribution Payment Dates. When, as and if
available for payment, distributions will be made by the Property Trustee. The
amount of distributions payable for any period will be computed on the basis of
twelve 30-day months and a 360-day year and, for any period shorter than a full
quarter, will be computed on the basis of the actual number of days elapsed in
such 90-day quarter.
10
<PAGE>
Holders Can Elect Distributions in Common Stock Series A or Cash. In
anticipation of the continuing use of Citizens' shares of Common Stock Series A
to satisfy the interest requirements on the Convertible Debentures, each holder
of a Convertible Preferred Security may elect annually during a designated
period of ten Business Days how distributions from the Trust will be paid to him
(a "Distribution Election"). If he makes an election to receive distributions in
Common Stock Series A (a "Stock Distribution Election"), he will receive his
distributions in Common Stock Series A, unless the Trust only has cash available
for making distributions 1.If he makes an election to receive distributions in
cash (a "Cash Distribution Election"), he will receive his distribution in cash.
If a holder makes no Distribution Election, he will automatically be deemed by
the Trust to have made a Cash Distribution Election. Once made, Distribution
Elections will stand as long as a holder owns his Convertible Preferred Security
unless and until he makes a new Distribution Election by completing an election
form and delivering the same to the broker, nominee or other entity which holds
such holder's account during the annual Election Period (the procedures for
which will be specified in the Distribution Declaration Notice). If a holder
does not deliver a new election form within this period, then such holder's new
election will not be effective. Any election by a holder of Convertible
Preferred Securities will be canceled by a transfer of the Convertible Preferred
Securities and the new holder will be entitled to make an election in the next
Election Period. Prior to such Election Period, such new holder will be deemed
to have made a Cash Distribution Election. In the event that the Partnership is
dissolved or liquidated by reason of the occurrence of certain partnership
events described in the Limited Partnership Agreement, the right of a holder to
make a Stock Distribution Election, and Citizens to make Stock Payment Elections
will terminate. In such event, interest payments and distributions will be made
only in cash.
Distributions Flow From Citizens to Holders. Citizens has been and
intends to continue making interest payments on the Convertible Debentures in
shares of Common Stock Series A with a fair market value on the Share Transfer
and Valuation Date equivalent to the interest payment due on the next scheduled
Interest Payment Date ("Equivalent Value"). The "Share Transfer and Valuation
Date" will be the date specified by Citizens in a written notice (the
"Distribution Declaration Notice") to the Trust, the Partnership and the holders
of the Convertible Preferred Securities, which Share Transfer and Valuation Date
shall also be the date on which shares of Common Stock Series A are transferred
by Citizens to the Partnership (as the holder of the Convertible Debentures) to
satisfy the interest payment obligation on the Convertible Debentures.
Currently, Citizens contemplates that the Share Transfer and Valuation Date will
be at least nine Business Days before the Distribution Payment Date, but such
time-frame may be subject to change to reflect evolving market practices and
settlement procedures. If Citizens fails to make a timely declaration, Citizens
shall be deemed to have elected to pay interest in the form of shares of Common
Stock Series A.
- ------------------------------------
1 As noted above, Citizens may make a Cash Payment Election and pay
interest on the Convertible Debentures in cash to the Partnership and,
as General Partner of the Partnership, would then cause such cash to be
distributed by the Partnership to the Trust. In such event, even though
a holder may have made a Stock Distribution Election, he will receive
cash as the Trust will only have cash with which to pay him.
11
<PAGE>
How Distributions are Made. If Citizens pays interest on the
Convertible Debentures in shares of its Common Stock Series A and delivers the
same to the Partnership in payment of its interest obligations on the
Convertible Debentures, holders of Trust Securities who have not made a Stock
Distribution Election or who have revoked their Stock Distribution Election will
receive cash at the Rate because the Partnership will sell sufficient shares of
Common Stock Series A on the open market (or otherwise raise cash) so that the
Partnership can pay the Trust (i) such number of shares and (ii) such amount of
cash as will satisfy the Trust's obligation to make payments in stock and cash
to holders in accordance with their elections. Pursuant to the Indenture under
which the Convertible Debentures are issued, if shares are sold by the
Partnership for less than the Equivalent Value, Citizens will pay any shortfall
to insure that each holder of the Convertible Preferred Securities who has an
effective Cash Distribution Election receives cash distributions in an amount
equal to the Rate.
Citizens also has the right on the Distribution Declaration Date to
elect to make interest payments on the Convertible Debentures in whole or in
part by check or bank wire in immediately available funds. Also, after a
Distribution Declaration Date on which it had elected to pay interest to the
Partnership in shares of Common Stock Series A for the next succeeding interest
payment, Citizens may exercise its right to thereafter substitute cash for such
payment. In such case, all holders will receive cash distributions at the Rate.
Further, at any time after the Share Transfer and Valuation Date, Citizens will
also have the right to purchase some or all of the shares of Common Stock Series
A deposited with the Partnership for cash at a price equal to the Equivalent
Value. In such case, holders who have made a Stock Distribution Election may
receive their distributions in cash at the Rate. If a Distribution Declaration
Notice has specified that the distribution will be made in Common Stock Series
A, and Citizens thereafter expects either to pay the distribution entirely in
cash or to purchase some or all of the shares deposited with the Partnership,
Citizens shall notify the Partnership, the Trust and the holders of the
Convertible Preferred Securities in writing (which writing is also referred to
herein as a "Cash Payment Election").
Distributions on the Convertible Preferred Securities must be paid to
the extent that the Trust has funds or securities, as the case may be, available
for and on hand to make the payment of such distributions. It is anticipated
that the Trust's funds and securities on hand will be limited to funds and
securities received from distributions on the Partnership Preferred Securities.
If Citizens fails to make interest payments on the Convertible Debentures, the
Partnership would not have funds or securities, as the case may be, to pay
distributions to the Trust on the Partnership Preferred Securities, and the
Trust would not have funds or securities, as the case may be, to pay
distributions on the Convertible Preferred Securities.
12
<PAGE>
Record Dates. Distributions declared (as opposed to deferred) on the
Convertible Preferred Securities will be payable to the holders thereof as they
appear on the books and records of the Trust on the relevant Record Dates. Such
distributions will be paid through the Property Trustee who will hold funds and
securities received in respect of the Partnership Preferred Securities in the
Property Account for the benefit of the holders of the Trust Securities. Subject
to any applicable laws and regulations and the Declaration, each such payment
will be made as described under "-Book-Entry-Only Issuance - The Depository
Trust Company" below. In the event that any date on which distributions are
payable on the Convertible Preferred Securities is not a Business Day, then
payment of the distributions will be made on the next succeeding Business Day
(and without any additional interest in respect of such delay). If such Business
Day is in the next succeeding calendar year, however, the payment will be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. A "Business Day" means any day other than a
Saturday or a Sunday or a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close.
Other. The Election Period will commence on or before December 21 of
each year (a date which will be at least two Business Days after the scheduled
Record Date relating to the January 31 distribution payment), and will end at
the close of business ten Business Days later. Election forms and prospectuses
will be sent to beneficial holders of Convertible Preferred Securities on the
Record Date relating to the January 31 distribution payment each year on or
about the first day of the Election Period. Timely Distribution Election forms
should be delivered by beneficial holders of the Convertible Preferred
Securities to the broker, nominee or other entity which holds such holder's
account so that they are received by such broker, nominee or other entity on or
before the close of business on the last day of the Election Period. The
brokerage houses holding accounts for holders, nominees and other participants
in DTC will transmit the same to DTC to the extent reasonably required to
implement such elections. The Trust will be relying on information supplied
through these procedures in determining how many shares of Common Stock Series A
or how much cash to distribute on each Distribution Payment Date. While the
Company, the Partnership and the Trust believe that such procedures are not
dissimilar from those used in similar situations, each purchaser and holder of a
Convertible Preferred Security is urged to consult with his broker to insure
that his election is properly recorded. Questions may be addressed to the
Company at the phone number and address appearing elsewhere herein.
13
<PAGE>
Deferrals
Unless deferred, interest and distributions are payable in arrears on
the Interest Payment Date and the Distribution Payment Date, respectively. Under
the Indenture, Citizens has the right, at any time and from time to time, to
elect to defer the date on which one or more of the quarterly interest payments
on the Convertible Debentures would otherwise become due and payable by the
giving of notice of deferral; provided that no such deferral, including any
extension thereof, may exceed 20 consecutive quarters nor extend beyond the
stated maturity date of the Convertible Debentures; and, provided, further, that
in the event of such deferral, any interest so deferred shall not be deemed to
have become due and payable until after such deferral period has ended. As a
consequence, distributions on the Convertible Preferred Securities would be
deferred by the Trust during any such deferral of interest payments. If Citizens
exercises this deferral right, it will be restricted from making certain
distributions and payments (other than in shares of its capital stock) to
holders of its capital stock, or to holders of indebtedness where such
indebtedness ranks junior to the Convertible Debentures, and from making certain
guarantee payments. Upon any such deferrals, interest will be compounded on each
Interest Payment Date and accrued until paid at the Rate on any interest so
deferred until the amount of such deferred interest (including compounded
interest thereon) is paid in full. Citizens shall give the Regular Trustees
written notice of its election to defer an interest payment on or before the
Distribution Declaration Date. Citizens shall also give written notice of any
deferred interest payment (and the consequential deferral of their
distributions) to the holders of the Convertible Preferred Securities. If
interest payments are deferred, the resulting deferred distributions and accrued
and accumulated distributions thereon shall be paid to holders of record of the
Convertible Preferred Securities as they appear on the books and records of the
Trust on the record date established for payment, as opposed to any record date
for purposes of any notice relating to the deferral of interest payments or
distributions. As a result, any holder who sells Convertible Preferred
Securities during a deferral period will transfer to the buyer his entitlement
to any payment made at the end of any such deferral period. Any failure by
Citizens to make interest payments on the Convertible Debentures in the absence
of a deferral would constitute an Indenture event of default. Citizens may not
elect to defer interest payments while an Indenture event of default has
occurred and is continuing.
Book-Entry-Only Issuance - The Depository Trust Company
DTC acts as securities depository for the Convertible Preferred
Securities. The information in this section concerning DTC and DTC's book-entry
system is based upon information obtained from DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with
14
<PAGE>
DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
DTC is owned by a number of its Direct Participants and by the NYSE, the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants").
Purchases of Convertible Preferred Securities within the DTC system
must be made by or through Direct Participants, which will receive a credit for
the Convertible Preferred Securities on DTC's records. The ownership interest of
each actual purchaser of a Convertible Preferred Security ("Beneficial Owner")
is in turn to be recorded on the Direct or Indirect Participants' records.
All the Convertible Preferred Securities deposited by Participants with
DTC are registered in the name of DTC's nominee, Cede & Co. DTC has no knowledge
of the actual Beneficial Owners of the Convertible Preferred Securities; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Convertible Preferred Securities are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
All distributions of cash and shares of Common Stock Series A, and
conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Cash distribution payments and distribution payments in shares of
Common Stock Series A on the Convertible Preferred Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and will be the responsibility of such Participant and not of DTC, the Trust,
the Partnership or Citizens, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of distributions to DTC is the
responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
15
<PAGE>
A Beneficial Owner in a global Convertible Preferred Security must rely
on the procedures of DTC to exercise any rights under the Convertible Preferred
Securities, including elections as to form of payment.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Citizens and the Trust believe to be
reliable, but neither Citizens nor the Trust takes responsibility for the
accuracy thereof.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
General
In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special tax
counsel to the Company, the following are the material United States federal
income tax consequences relating to the receipt by holders of shares of Common
Stock Series A as distributions on Convertible Preferred Securities. Unless
otherwise stated, this summary deals only with Convertible Preferred Securities
held as capital assets. The tax treatment of a holder may vary depending on its
particular situation. This summary does not address all the tax consequences
that may be relevant to holders who may be subject to special tax treatment such
as, for example, banks, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or foreign taxpayers. This summary does not include any description
of any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to the
Common Stock Series A. This summary is based on the Code, Treasury regulations
thereunder and administrative and judicial interpretations thereof, as of the
date hereof, all of which are subject to change, possibly on a retroactive
basis.
On March 19, 1996, President Clinton proposed legislation (the
"Proposed Legislation") which, among other things, would generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations, such as the Convertible Debentures, if such debt obligations have
maximum term in excess of twenty years and are not shown as indebtedness on the
issuer's applicable consolidated balance sheet. While it is expected that, if
the Proposed Legislation were to be enacted, such legislation would not apply to
the Convertible Debentures, there can be no assurances that the Proposed
Legislation, if enacted, or other legislation enacted after the date hereof will
not otherwise adversely affect the ability of Citizens to deduct the interest
payable on the Convertible Debentures.
16
<PAGE>
Potential Deferral of Interest Payments and Original Issue Discount
Because Citizens has the option, under the terms of the Convertible
Debentures, to defer payments of interest for up to 20 quarters, all of the
stated interest payments on the Convertible Debentures (whether made in cash or
Common Stock) will be treated as "original issue discount". Holders of debt
instruments issued with OID must include that discount in income on an economic
accrual basis without regard to the receipt of cash or Common Stock attributable
to the interest, regardless of their method of tax accounting. The OID accrual
rules may also accelerate the timing of a holder's recognition of income in
certain situations. Actual payments and distributions of stated interest
(whether made in cash or Common Stock) will not, however, be separately reported
as taxable income. The amount of OID that accrues in any quarter and is
allocated to the holders of the Trust Securities will approximately equal the
amount of the interest that accrues on the Convertible Debentures in that
quarter at the stated interest rate. Accordingly, unless Citizens exercises its
option to defer interest payments on the Convertible Debentures, a holder of
Convertible Preferred Securities (whether it makes a Cash Distribution Election
or Stock Distribution Election) should have approximately the same adjusted tax
basis in its Convertible Preferred Securities at the beginning of each quarterly
interest payment period.
In the event that the interest payments on the Convertible Debentures
are deferred, holders will continue to accrue OID with respect to their
Convertible Preferred Securities on an economic accrual basis. During such
period, OID will accrue at the stated interest rate on both the principal amount
of the Convertible Debentures, and any accrued, but unpaid, interest.
Because income on the Convertible Preferred Securities will constitute
interest (in the form of OID), corporate holders of Convertible Preferred
Securities will not be entitled to a dividends-received deduction with respect
to any income recognized with respect to the Convertible Preferred Securities.
Holders Making a Stock Distribution Election
A holder that makes a Stock Distribution Election will recognize the
same amount of OID with respect to its Convertible Preferred Securities as a
holder who makes a Cash Distribution Election. In addition, a holder that
receives Common Stock will not recognize gain or loss on the receipt of such
Common Stock from the Trust even if the fair market value of the Common Stock on
the interest payment date differs from the cash equivalent amount of the
interest payment. Furthermore, a holder will not recognize any additional income
or loss with respect to cash it may receive in lieu of a fractional share of
Common Stock.
A holder's tax basis in the Common Stock it receives in lieu of a cash
interest payment generally will equal the Partnership's tax basis in such Common
Stock. The Partnership's tax basis in the Common Stock it receives as interest
on the Convertible Debentures should equal the fair market value of the Common
Stock on the Share Transfer and Valuation Date. It is anticipated that the fair
market value of the Common Stock on the Share Transfer and Valuation Date will
equal the cash equivalent amount of such interest payment. Accordingly, a holder
who
17
<PAGE>
makes a Stock Distribution Election generally should have a tax basis in the
shares of Common Stock it receives in lieu of a cash interest payment equal to
the cash equivalent amount of such interest payment (less any cash received in
lieu of a fractional share of Common Stock). In light of the fact that the value
of a share of Common Stock can be expected to vary among interest payment dates,
holders who make Stock Distribution Elections may have different tax bases in
shares of Common Stock they receive on different payment dates. Holders should
consult their tax advisors regarding the tax consequences of the ownership and
disposition of shares of Common Stock with different tax bases.
Disposition of Convertible Preferred Securities
A holder that sells Convertible Preferred Securities will recognize
gain or loss equal to the difference between the amount realized on the sale of
the Convertible Preferred Securities and the holder's adjusted tax basis in such
Convertible Preferred Securities. Such gain or loss will be a capital gain or
loss and will be a long-term capital gain or loss if the Convertible Preferred
Securities have been held for more than one year at the time of sale.
A holder's tax basis in its Convertible Preferred Securities will be
(i) increased by the amount of OID accrued with respect to its Convertible
Preferred Securities and (ii) reduced by (x) the amount of cash and (y) the tax
basis of any shares of Common Stock received with respect to its Convertible
Preferred Securities. It is expected that the amount of OID accrued with respect
to a quarterly interest payment period will approximately equal the amount of
cash and the tax basis of the Common Stock, if any, received as interest with
respect to such interest payment period.
The Convertible Preferred Securities may trade at a price that does not
accurately reflect the value of accrued but unpaid distributions and interest
with respect to the underlying Limited Partnership Securities and Convertible
Debentures, respectively. A holder who disposes of or converts its Convertible
Preferred Securities between record dates for payments of distributions thereon
will be required to include accrued but unpaid interest on the Convertible
Debentures through the date of disposition in income as ordinary income, and to
add such amount to the adjusted tax basis in its Convertible Preferred
Securities. To the extent the selling price is less than the holder's adjusted
tax basis (which basis will include, in the form of OID, all accrued but unpaid
interest), a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
18
<PAGE>
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE STOCK ELECTION AND THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE COMMON STOCK SERIES A AND THE CONVERTIBLE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Holders of the Convertible Preferred Securities are entitled to receive
cumulative distributions from the Trust at the Rate payable quarterly in arrears
on each Distribution Payment Date. Distributions are payable in shares of Common
Stock Series A or, at the election of either Citizens or the holder, in cash.
The holders' elections may be made annually during the Election Period.
For the procedure to be followed by the Partnership and Trust in making
this election available to the holders of Convertible Preferred Securities
during the Election Period and to be followed by such holder in making his or
her election, please see "Prospectus Summary" and "Distributions on Convertible
Preferred Securities."
Citizens may issue the shares of Common Stock Series A to the
Partnership as payment of interest on its Convertible Debentures. The
Partnership may sell such stock in the open market in order to satisfy the
election requests, as described herein and in the next paragraph.
Sales of Common Stock Series A by the Partnership may be made from time
to time in one or more transactions (which may involve crosses or block
transactions) on the NYSE or otherwise, pursuant to and in accordance with the
rules of the NYSE, in the over-the-counter market, in negotiated transactions,
or a combination of such methods of sale, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Partnership will effect such transactions by selling
shares of Common Stock Series A to or through broker-dealers. Such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Partnership and/or purchasers of shares of
Common Stock Series A for whom they may act (which compensation may be in excess
of customary commissions). [There is currently no agreement of arrangement or
understanding between the Partnership and any particular broker-dealer and the
name of any particular broker-dealer which will participate in the offering is
not yet known.] The Partnership and broker-dealers that participate with the
Partnership in the distributions of shares of Common Stock Series A may be
deemed to be "underwriters" within the meaning of Section 2(11) of the 1933 Act,
and any commissions received by them and any profit on the resale of shares of
Common Stock Series A may be deemed to be underwriting compensation. The Company
has
19
<PAGE>
agreed to indemnify the Partnership against certain liabilities, including
certain liabilities under the Securities Act. Any expenses of any sales of
shares of Common Stock Series A will be borne by the Company.
LEGAL OPINIONS
Certain United States federal income taxation matters relating to the
issuance of Common Stock as distributions on the Convertible Preferred
Securities were passed upon for Citizens, the Partnership and the Trust by
Skadden, Arps, Slate, Meagher & Flom LLP. At the time of the issuance of the
Convertible Preferred Securities, the validity of the Common Stock was passed
upon by Boulanger, Hicks & Churchill, P.C., 135 East 57th Street, New York, New
York, counsel for the Company. Legal matters relating to required authorization,
if any, of the Common Stock by the public utilities commissions in the various
states were passed upon by local counsel to Citizens in the states of Arizona,
Colorado, Hawaii, Louisiana, and Vermont. Boulanger, Hicks & Churchill, P.C.,
relied upon such counsel as to certain matters governed by the laws of such
states.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1995, 1994, and 1993, and for each of the years then ended, incorporated by
reference in this Prospectus from the Company's Annual Report on Form 10-K have
been so incorporated by reference in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
20
<PAGE>
===============================================================
No dealer, salesman or other person has been
authorized to give any information or to make any representation
other than those contained in this Prospectus, in connection
with the offer made by this Prospectus, and, if given
or made, such information or representations must not be
relied upon as having been authorized by the Company.
Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the
Company since the date hereof or thereof. This Prospectus does
not constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation.
------------------
TABLE OF CONTENTS
Prospectus PAGE
----
Available Information................................... 2
Incorporation of Certain Documents
by Reference.......................................... 2
Prospectus Summary...................................... 3
Risk Factors............................................ 6
Citizens Utilities Company.............................. 6
Use of Proceeds......................................... 7
Capital Requirements and Financing...................... 7
Description of Common Stock Series A
and Series B.......................................... 7
Dividends on Common Stock Series A
and Series B.......................................... 8
Stock Dividend Sale Plan and Conversion of Common
Stock Series A into Common Stock Series B............. 8
Common Stock Transfer Agent............................. 9
Citizens Utilities Capital L.P.......................... 9
Citizens Utilities Trust................................. 9
Distributions on Convertible Preferred Securities....... 9
Certain Federal Income Tax Considerations............... 14
Plan of Distribution.................................... 17
Legal Opinions.......................................... 18
Experts................................................. 18
===========================================================
<PAGE>
===========================================================
$32,059,148
[LOGO]
Common Stock Series A
-----------------
PROSPECTUS
-----------------
December 20, 1996
===========================================================
