SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
August 13, 1998
(Date of earliest event reported)
CITIZENS UTILITIES COMPANY
(Exact name of Registrant as specified in charter)
Delaware 001-11001 06-0619596
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3 High Ridge Park, P.O. Box 3801, Stamford, Connecticut 06905
- ------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(203) 614-5600
(Registrant's telephone number, including area code)
No change since last report
(Former name or address, if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 Press release of Citizens Utilities Company released
August 12, 1998 announcing second quarter earnings.
99.2 Press release of Citizens Utilities Company released
August 13, 1998 announcing separation strategy.
99.3 Financial and operating data
<PAGE>
SIGNATURES
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 hereunto duly authorized.
CITIZENS UTILITIES COMPANY
Registrant
By:/s/ Livingston E. Ross
Vice President and Controller
Date: August 13, 1998
EXHIBIT 99.1
<TABLE>
<S> <C>
Contacts:
Financial Community: Media:
- -------------------- ------
Alan H. Oshiki, Assistant Vice President Brigid M. Smith, Assistant Vice President
and Assistant Treasurer Corporate Communications
(203) 614-5629 (203) 614-5042
[email protected] [email protected]
</TABLE>
CITIZENS UTILITIES REPORTS
SECOND QUARTER 1998 FINANCIAL RESULTS
Earnings per share increased 20%
Citizens Communications operating income up 62%
Citizens Public Services revenue grew 25%
Stamford, Connecticut, August 12, 1998 - Citizens Utilities (NYSE: CZN,CZNPr)
- ----------------------------------------
announced today second quarter 1998 financial results. Robert J. DeSantis,
Citizens chief financial officer, reported that revenues for the three months
ended June 30, 1998 grew 11% to $366.3 million from the $329.6 million for the
corresponding 1997 quarter, excluding 1997 special items.
Net income for the second quarter 1998 increased 21% to $14.5 million
from $12 million for the prior year quarter, excluding 1997 special items.
Excluding the impact of Electric Lightwave losses, net income for the three
months ended June 30, 1998 increased 49% to $25.3 million from $17.0 million for
the second quarter 1997.
Earnings per share for the second quarter 1998 increased 20% to 6 cents
from 5 cents for the prior year quarter, excluding 1997 special items. Excluding
the impact of Electric Lightwave losses, earnings per share for the quarter
ended June 30, 1998 increased 43% to 10 cents from 7 cents for the prior year
period.
For the six months ended June 30, 1998, net income and earnings per
share were $43.6 million and 17 cents, respectively, as compared to $42.6
million and 17 cents, respectively, for the prior year period excluding special
items. Absent Electric Lightwave losses, net income for the six months ended
June 30, 1998 increased 21% to $64.8 million from $53.5 million for the prior
year period. Earnings per share for the six months ended June 30, 1998, absent
Electric Lightwave losses, increased 19% to 25 cents from 21 cents for the prior
year period.
Mr. DeSantis stated that "Citizens Communications second quarter
operating income of $39.6 million was up 62% over prior year and EBITDA margins
have improved from 34% for the prior year quarter to 42% for the second quarter
1998."
Commenting on Citizens Public Services, Mr. DeSantis noted that,
"Revenues grew 25% over the prior year quarter to $141.8 million driven
primarily by increases in gas revenues. Citizens Public Services second quarter
operating income decreased slightly to $18 million continuing to reflect the
impact of certain regulatory matters."
Mr. DeSantis stated that, "Electric Lightwave's 51% revenue growth over
prior year quarter was primarily due to increases in local dial tone services
and enhanced services revenue. Electric Lightwave's owned and leased gross
property, plant and equipment at quarter end totaled $504.6 million as compared
to $309.0 million a year earlier."
Citizens Utilities provides Telecommunications Services and Public
Services including natural gas distribution, electric distribution, water
distribution and wastewater treatment services to approximately 1.8 million
customers in 21 states. Citizens own 83% of Electric Lightwave, Inc., a leading
full-service, facilities-based integrated communications services provider, and
has a significant investment in Centennial Cellular Corp. (NASDAQ:CYCL), a
cellular telephone company. Citizens announced on May 18, 1998 that it intends
to separate its telecommunication businesses and public services businesses into
two stand-alone, publicly traded companies.
This news release 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, changes in the local
and overall economy, 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, the
company's ability to identify future markets and successfully expand existing
ones and the mix of products and services offered in the company's target
markets. These important factors should be considered in evaluating any
statement contained herein and/or made by the company or on its behalf. The
foregoing information should be read in conjunction with the company's filings
with the U.S. Securities and Exchange Commission including, but not limited to,
reports on Forms 10K and 10Q. The company has no obligation to update or revise
these forward-looking statements to reflect the occurrence of future events or
circumstances.
(table follows)
<PAGE>
<TABLE>
<S> <C>
Citizens Utilities Company and Subsidiaries
Consolidated Financial Data
(unaudited)
</TABLE>
<TABLE>
<S> <C> <C>
For the quarter ended For the six months ended
June 30, June 30,
----------------------------------- ------------------------------------
% %
(Dollars in thousands, except per share data) 1998 1997 Change 1998 1997 Change
---- ---- ------ ---- ---- ------
Income Statement Data
Revenues $ 366,347 $ 329,624 11% $ 770,210 $ 704,715 9%
Cost of services 80,695 74,557 8% 188,727 180,547 5%
Sales and marketing expenses 10,553 14,859 -29% 19,602 30,684 -36%
Depreciation and amortization 64,765 58,505 11% 128,362 115,520 11%
Other operating expenses 168,829 148,009 14% 335,736 281,439 19%
Operating income 41,505 33,694 23% 97,783 96,525 1%
Special items (1) - (191,090) - (191,090)
Operating income including special items 41,505 (157,396) 126% 97,783 (94,565) 203%
Investment and other income 10,736 11,198 -4% 23,847 23,348 2%
Interest expense 28,589 26,940 6% 55,395 53,949 3%
Special items (1) - (6,230) - (6,230)
Income taxes 7,638 (57,745) 113% 19,556 (41,909) 147%
Convertible preferred dividends 1,552 1,552 0% 3,104 3,104 0%
Income excluding cumulative effect of change in
accounting principle and special items (1) 14,462 11,989 21% 43,575 42,573 2%
Cumulative effect of change in accounting
principle for ELI, net of tax - - 2,334 -
Net income 14,462 (123,175) 112% 41,241 (92,591) 145%
Net income excluding ELI 25,331 17,004 49% 64,785 53,489 21%
Per-Share Data (2)
Basic and diluted net income per share of common
stock before cumulative effect of change in
accounting principle and excluding special items (1) $ .06 $ .05 20% $ .17 $ .17 0%
Basic and diluted net income per share of
common stock excluding special items (1) $ .06 $ .05 20% $ .16 $ .17 -6%
Basic net income per share of common stock
excluding ELI and special items (1) $ .10 $ .07 43% $ .25 $ .21 19%
Weighted average shares 255,768 256,691 0% 255,492 257,055 -1%
(1) In the second quarter 1997, the company recorded certain charges to earnings totaling approximately $197 million. The
charges relate primarily to certain assets deemed no longer recoverable, the effects of certain regulatory commission
orders and the cutback of certain long distance service operations.
(2) Adjusted for subsequent stock dividends and stock splits and used in the calculation of all per share data.
</TABLE>
Exhibit 99.2
Contacts:
Financial Community: Media:
- -------------------- ------
Alan H. Oshiki, Assistant Vice President Brigid M. Smith,
President and Assistant Treasurer Assistant Vice President
(203) 614-5629 Corporate Communications
[email protected] (203) 614-5042
[email protected]
CITIZENS UTILITIES DESCRIBES STRUCTURE AND STRATEGY OF NEW
TELECOMMUNICATIONS COMPANY
Stamford, Connecticut, August 13, 1998 - Citizens Utilities (NYSE: CZN, CZNPr)
- ----------------------------------------
President and Chief Operating Officer Daryl A. Ferguson made the following
statement today during a conference call with the financial community. The
statement pertained to the new telecommunications company to be created as a
result of the separation plan announced May 18, its structure and strategy, and
the impact of these on Electric Lightwave, Inc., (NASDAQ: ELIX) in which
Citizens has an 83% ownership stake.
"In May, during its teleconference with investors the day after the separation
announcement, Citizens indicated that - in anticipation of the formation of the
new telecommunications company -- it was studying the possible integration of
Electric Lightwave with its incumbent local exchange carrier (ILEC) businesses.
I am here today to report the results of that study."
"Citizens' telecommunications businesses, which include over 900,000 rural
access lines and an 83% interest in Electric Lightwave, will reside under a
holding company as yet unnamed. For planning purposes, we refer to this holding
company as "NewCo.""
"While there are synergistic opportunities in purchasing, engineering and
financing, we have determined that the best strategy is to operate Electric
Lightwave and the ILEC businesses as separate and independent entities."
"NewCo's strategy will therefore be two-pronged: to grow both its ILEC and
competitive local exchange carrier (CLEC) businesses to their fullest potential.
The logic behind this strategy is very compelling."
"The existing ILEC businesses have the critical mass -- and will have the
financial resources -- to become one of the nation's largest rural and suburban
ILECs through aggressive internal and external growth. NewCo's ILEC businesses
will serve primarily residential and small business customers."
"Electric Lightwave will continue to expand its regional network and market its
data services nationally to medium and large businesses in urban areas. At this
early stage in the company's history, it is our view that there is a great deal
of value yet to be gained by further developing Electric Lightwave."
"At this time we see the ILEC businesses and Electric Lightwave as separate and
distinct entities with different cultures, business strategies, markets and
opportunities."
"As we have stated before, we believe that the separation will be a positive for
Electric Lightwave because it transfers ownership from a diversified, heavily
regulated utility company to a new company focused solely on telecommunications.
The separation distances Electric Lightwave from the restrictive strategies
historically imposed upon it."
"In fact - far from limiting Electric Lightwave in any way - the separation
actually enlarges its range of value-enhancing opportunities. The company will
be able to fully pursue its growth strategies and is in position to eventually
participate in the consolidating CLEC industry."
"Electric Lightwave is clearly undervalued by the market. For example, on an
enterprise value to revenue basis, the CLEC average is 5.6 times; the company is
trading at 3.3 times. On enterprise value to property, plant and equipment
(PP&E), the CLEC average is 6.9 times and the company is trading at 1.4 times.
If Electric Lightwave was traded at CLEC averages, it would be trading at $28 or
more, not $8.75."
"Electric Lightwave has all of the same options for achieving value as every
other developing CLEC. It is our view that there is no strategic limitation
whatsoever that should prevent the company from achieving a value comparable to
the best of its peers."
Citizens Utilities provides Telecommunications Services and Public Services
including natural gas distribution, electric distribution, water distribution
and wastewater treatment services to approximately 1.8 million customers in 21
states. Citizens owns 83% of Electric Lightwave, Inc., a leading full-service,
facilities-based integrated communications services provider, and has a
significant investment in Centennial Cellular Corp. (NASDAQ:CYCL), a cellular
telephone company. Citizens announced on May 18, 1998 that it intends to
separate its telecommunications businesses and public services businesses into
two stand-alone, publicly traded companies.
This news release 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, changes in the local
and overall economy, 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, the
company's ability to identify future markets and successfully expand existing
ones and the mix of products and services offered in the company's target
markets. These important factors should be considered in evaluating any
statement contained herein and/or made by the company or on its behalf. The
foregoing information should be read in conjunction with the company's filings
with the U.S. Securities and Exchange Commission including, but not limited to,
reports on Forms 10K and 10Q. The company has no obligation to update or revise
these forward-looking statements to reflect the occurrence of future events or
circumstances.
EXHIBIT 99.3
Citizens Utilities Company and Subsidiaries
Consolidated Financial Data
(unaudited)
<TABLE>
<S> <C> <C>
For the quarter ended For the six months ended
June 30, June 30,
--------------------- --------------------
% %
(Dollars in thousands) 1998 1997 Change 1998 1997 Change
---------------------------- -----------------------------
Income Statement Data
Revenues $ 366,347 $ 329,624 11% $ 770,210 $ 704,715 9%
Cost of services 80,695 74,557 8% 188,727 180,547 5%
Sales and marketing expenses 10,553 14,859 -29% 19,602 30,684 -36%
Depreciation and amortization 64,765 58,505 11% 128,362 115,520 11%
Other operating expenses 168,829 148,009 14% 335,736 281,439 19%
Operating income 41,505 33,694 23% 97,783 96,525 1%
Special items (1) - (191,090) - (191,090)
Operating income including special items 41,505 (157,396) 126% 97,783 (94,565) 203%
Investment and other income 10,736 11,198 -4% 23,847 23,348 2%
Interest expense 28,589 26,940 6% 55,395 53,949 3%
Special items (1) - (6,230) - (6,230)
Income taxes 7,638 (57,745) 113% 19,556 (41,909) 147%
Convertible preferred dividends 1,552 1,552 0% 3,104 3,104 0%
Income excluding cumulative effect of change in accounting principle
and special items (1) 14,462 11,989 21% 43,575 42,573 2%
Cumulative effect of change in accounting principle for ELI, net of tax - - 2,334 -
Net income 14,462 (123,175) 112% 41,241 (92,591) 145%
Net income excluding ELI 25,331 17,004 49% 64,785 53,489 21%
Cash Flow and Capital Expenditure Data
EBITDA (2) $ 117,006 $ 103,397 13% $ 249,992 $ 235,393 6%
Cash flow from operations 74,944 38,279 96% 156,382 102,371 53%
Capital expenditures 127,069 119,764 6% 201,403 193,532 4%
Free cash flow (52,125) (81,485) 36% (45,021) (91,161) 51%
EBITDA excluding ELI (2) 129,317 111,293 16% 272,649 249,182 9%
Cash flow from operations excluding ELI 81,425 37,562 117% 169,404 107,216 58%
Capital expenditures excluding ELI 70,454 90,396 -22% 121,606 158,469 -23%
Free cash flow excluding ELI 10,971 (52,834) 121% 47,798 (51,253) 193
Select Balance Sheet Data
Cash and investments $ 504,434 $ 461,528 9%
Total assets 4,967,067 4,439,595 12%
Net plant 3,736,533 3,278,372 14%
Long-term debt 1,776,918 1,557,155 14%
Equity (3) 1,958,754 1,769,859 11%
Shares of common stock outstanding (4) 256,211 256,152 0%
Weighted average shares outstanding (4) 255,768 256,691 0% 255,492 257,055 -1%
Per-Share Data (4)
Basic and dilutive net income per share of common stock
before cumulative effect of change in accounting
principle and excluding special items (1) $ .06 $ .05 20% $ .17 $ .17 0%
Basic and diluted net income per share of common
stock before special items (1) $ .06 $ .05 20% $ .16 $ .17 -6%
Basic net income per share of common stock excluding ELI
and special items (1) $ .10 $ .07 43% $ .25 $ .21 19%
Operating cash flow per share $ .29 $ .15 93% $ .61 $ .40 53%
Operating cash flow per share excluding ELI $ .32 $ .15 113% $ .66 $ .42 57%
Book value per share $ 6.88 $ 6.10 13%
Other Financial Data
Long-term debt to long-term debt and equity 48% 47%
Long-term debt to long-term debt and equity excluding ELI 45% 47%
Interest coverage (5) 4.1x 3.8x 4.5x 4.3x
Interest coverage excluding ELI (5) 4.5x 4.1x 4.9x 4.6x
Common equity market capitalization (in billions) $ 2.4 $ 2.3
Equity market capitalization (in billions) (6) $ 2.6 $ 2.4
Market capitalization (in billions) (7) $ 4.4 $ 4.0
ELI public enterprise value (in billions) (8) $ 0.7 n/a
(1) In the second quarter of 1997, the company recorded certain charges to earnings totaling approximately $197 million.
The charges relate primarily to certain assets deemed no longer recoverable, the effects of certain regulatory
commission orders and the cutback of certain long distance service operations.
(2) Earnings before interest expense, income taxes, depreciation and amortization.
(3) Includes convertible preferred securities.
(4) Adjusted for subsequent stock dividends and stock splits and used in the calculation of all per share data.
(5) EBITDA divided by interest expense.
(6) Includes market value of convertible preferred securities.
(7) Equity market capitalization plus market value of long-term debt.
(8) Includes common equity market capitalization plus net debt.
Note: Quarter ended information is not presented where it is the same as year to date.
1
</TABLE>
<PAGE>
Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
<TABLE>
<S> <C> <C>
For the quarter ended For the six months ended
June 30, June 30,
-------------------- --------------------
% %
(Dollars in thousands, except operating data) 1998 1997 Change 1998 1997 Change
---------------------------- ---------------------------------
Citizens Communications
Select Income Statement Data
Revenues
Network access services $ 104,121 $ 98,313 6% $ 208,007 $ 200,383 4%
Local network services 64,896 63,678 2% 128,314 124,472 3%
Long distance services 21,409 24,585 -13% 48,187 49,573 -3%
Directory services 8,025 7,986 0% 15,808 15,569 2%
Other 12,980 13,323 -3% 24,276 25,739 -6%
Eliminations (1) (7,623) (4,954) (15,426) (10,393)
Total revenues 203,808 202,931 0% 409,166 405,343 1%
Cost of services (network expenses) 20,131 29,664 -32% 46,691 56,134 -17%
Sales and marketing expenses 4,818 11,169 -57% 8,927 24,089 -63%
Depreciation 46,120 43,891 5% 91,275 85,759 6%
Other operating expenses 100,780 98,742 2% 200,944 190,138 6%
Eliminations (1) (7,623) (4,954) (16,301) (11,189)
Operating income 39,582 24,419 62% 77,630 60,412 29%
Special items - (142,723) - (142,723)
Operating income/(loss) including special items 39,582 (118,304) 133% 77,630 (82,311) 194%
Operating margin 19% 12% 19% 15%
Cash Flow and Capital Expenditure Data
Operating cash flow (2) $ 85,702 $ 68,310 25% $ 168,905 $ 146,171 16%
Capital expenditures 45,207 59,903 -25% 81,353 110,055 -26%
Free cash flow (3) 40,495 8,407 382% 87,552 36,116 142%
EBITDA margin 42% 34% 41% 36%
Select Balance Sheet Data
Total assets $ 2,266,081 $ 2,309,286 -2%
Net plant 2,007,050 1,878,446 7%
Operating Data
Access lines 895,231 858,654 4%
Long distance customers - in territory 236,691 211,806 12%
- out of territory 16,233 26,552 -39%
- total 252,924 238,358 6%
Revenue per access line $ 228 $ 227 0% $ 457 $ 472 -3%
In-territory access minutes of use (in millions) 1,126 1,077 5% 2,317 2,184 6%
Citizens' long distance minutes of use (in millions)
- in territory 119 106 12% 242 199 22%
- out of territory 61 103 -41% 143 206 -31%
- total 180 209 -14% 385 405 -5%
Citizens' long distance in territory minutes of use market share 22% 18%
Citizens' long distance in territory customer market share 26% 25%
(1) Eliminations represent network access revenues received by the Company's local exchange operations from its
long-distance operations.
(2) Operating income plus depreciation. This is the equivalent of sector EBITDA.
(3) Operating cash flow less capital expenditures.
Note: Quarter ended information is not presented where it is the same as year to date.
2
</TABLE>
<PAGE>
Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
<TABLE>
<S> <C> <C>
For the quarter ended For the six months ended
June 30, June 30,
------------------------ -------------------------
% %
(Dollars in thousands, except operating data) 1998 1997 Change 1998 1997 Change
--------------------------------- --------------------------------
Electric Lightwave, Inc. (1)
Select Income Statement Data
Revenues
Dedicated services $ 8,371 $ 8,034 4% $ 17,478 $ 14,116 24%
Local dial tone services 7,769 1,998 289% 13,793 3,243 325%
Long distance service 1,899 2,033 -7% 3,721 3,711 0%
Enhanced services 3,404 2,186 56% 6,508 4,029 62%
Eliminations (2) (740) (894) (1,615) (1,690)
Total revenues 20,703 13,357 55% 39,885 23,409 70%
Cost of services (network expenses) 9,860 8,151 21% 19,072 13,147 45%
Eliminations (2) (740) (894) (740) (894)
Gross margin 11,583 6,100 90% 21,553 11,156 93%
Sales and marketing expenses 5,735 3,690 55% 10,675 6,595 62%
Depreciation 3,780 2,091 81% 7,664 4,613 66%
Other operating expenses 18,159 10,306 76% 33,535 18,350 83%
Operating loss (16,091) (9,987) 61% (30,321) (18,402) 65%
Special items - (10,765) - (10,765)
Operating loss including special items (16,091) (20,752) -22% (30,321) (29,167) 4%
Cash Flow and Capital Expenditure Data
Operating cash flow (3) $ (12,311) $ (7,896) -56% $ (22,657) $ (13,789) -64%
Capital expenditures 56,615 29,368 93% 79,797 35,063 128%
Free cash flow (4) (68,926) (37,264) -85% (102,454) (48,852) -110%
Select Balance Sheet Data
Total assets $ 418,710 $ 233,835 79%
Gross plant- owned 396,080 235,953 68%
- leased 108,541 73,042 49%
- total 504,621 308,995 63%
Operating Data
Route miles 2,656 1,773 50%
Fiber miles 153,002 99,908 53%
Customers 1,330 1,005 32%
Buildings connected 682 521 31%
Employees 841 485 73%
Revenue per employee $ 24,617 $ 27,540 -11% $ 47,426 $ 48,266 -2%
(1) The Company's facilities based Competitive Local Exchange Carrier ("CLEC") subsidiary, Electric Lightwave, Inc ("ELI").
(2) Eliminations reflect intercompany activity between the Company's ELI and communications operations.
(3) Operating loss plus depreciation. This is the equivalent of sector EBITDA.
(4) Operating cash flow less capital expenditures.
Note: Quarter ended information is not presented where it is the same as year to date.
3
</TABLE>
<PAGE>
Citizens Utilities Company and Subsidiaries
Sector Financial and Operating Data
<TABLE>
<S> <C> <C>
For the quarter ended For the six months ended
June 30, June 30,
------------------------ -------------------------
% %
(Dollars in thousands, except operating data) 1998 1997 Change 1998 1997 Change
--------------------------------- ----------------------------------
Citizens Public Services
Select Income Statement Data
Revenues
Residential distribution $ 68,813 $ 60,608 14% $ 168,108 $ 157,896 6%
Commercial distribution 42,586 27,351 56% 94,436 64,570 46%
Industrial distribution 22,008 16,990 30% 39,727 36,337 9%
Total distribution 133,407 104,949 27% 302,271 258,803 17%
Transportation / transmission 1,357 1,068 27% 2,880 2,693 7%
Other 7,072 7,319 -3% 16,008 14,467 11%
Total revenues 141,836 113,336 25% 321,159 275,963 16%
Cost of services (1) 59,067 42,590 39% 140,005 123,349 14%
Gross margin 82,769 70,746 17% 181,154 152,614 19%
Depreciation 14,865 12,523 19% 29,423 25,148 17%
Other operating expenses 49,890 38,961 28% 101,257 72,951 39%
Operating income 18,014 19,262 -6% 50,474 54,515 -7%
Special items - (37,602) - (37,602)
Operating income including special items 18,014 (18,340) 198% 50,474 16,913 198%
Cash Flow and Capital Expenditure Data
Operating cash flow (2) $ 32,879 $ 31,785 3% $ 79,897 $ 79,663 0%
Capital expenditures 20,204 23,447 -14% 30,068 32,687 -8%
Free cash flow (3) 12,675 8,338 52% 49,829 46,976 6%
Select Balance Sheet Data
Total assets $ 1,600,326 $ 1,366,748 17%
Net plant 1,269,837 1,103,478 15%
Operating Data
Customers 854,339 767,860 11%
Employees 1,712 1,474 16%
Gross margin per employee $ 48,346 $ 47,996 1% $ 105,814 $ 103,537 2%
(1) Natural gas, electric energy and fuel oil purchased.
(2) Operating income plus depreciation. This is the equivalent of sector EBITDA.
(3) Operating cash flow less capital expenditures.
Note: Quarter ended information is not presented where it is the same as year to date.
4
</TABLE>
<PAGE>
Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
<TABLE>
<S> <C> <C>
For the quarter ended For the six months ended
June 30, June 30,
------------------------ ------------------------
% %
(Dollars in thousands, except operating data) 1998 1997 Change 1998 1997 Change
--------------------------------- --------------------------------
Citizens Public Services
Natural Gas
Select Income Statement Data
Revenues
Residential distribution $ 33,297 $ 23,829 40% $ 95,400 $ 84,225 13%
Commercial distribution 25,970 9,704 168% 61,748 30,767 101%
Industrial distribution 12,138 6,008 102% 19,570 14,298 37%
Total distribution 71,405 39,541 81% 176,718 129,290 37%
Transportation 440 302 46% 1,392 1,382 1%
Other 3,773 2,871 31% 9,091 6,825 33%
Total revenues 75,618 42,714 77% 187,201 137,497 36%
Cost of services (natural gas purchased) 38,973 19,610 99% 98,167 78,179 26%
Gross margin 36,645 23,104 59% 89,034 59,318 50%
Depreciation 5,752 3,968 45% 11,259 7,908 42%
Other operating expenses 24,124 13,461 79% 49,164 25,263 95%
Operating income 6,769 5,675 19% 28,611 26,147 9%
Special items - (12,707) - (12,707)
Operating income/(loss) including special items 6,769 (7,032) 196% 28,611 13,440 113%
Cash Flow and Capital Expenditure Data
Operating cash flow (1) $ 12,521 $ 9,643 30% $ 39,870 $ 34,055 17%
Capital expenditures 8,538 12,657 -33% 13,922 14,482 -4%
Free cash flow (2) 3,983 (3,014) 232% 25,948 19,573 33%
Select Balance Sheet Data
Total assets $ 545,836 $ 376,574 45%
Net plant 415,634 288,696 44%
Operating Data
Customers 449,690 372,686 21%
Employees 1,066 792 35%
Customers per employee 422 471 -10%
Gross margin per employee $ 34,376 $ 29,172 18% $ 83,522 $ 74,896 12%
Billion Cubic Feet of gas throughput (BCF) 34.2 13.7 150% 71.4 40.5 76%
(1) Operating income plus depreciation. This is the equivalent of sector EBITDA.
(2) Operating cash flow less capital expenditures.
Note: Quarter ended information is not presented where it is the same as year to date.
5
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<PAGE>
Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
<TABLE>
<S> <C> <C>
For the quarter ended For the six months ended
June 30, June 30,
----------------------- -----------------------
% %
(Dollars in thousands, except operating data) 1998 1997 Change 1998 1997 Change
-------------------------------- --------------------------------
Citizens Public Services
Electric
Select Income Statement Data
Revenues
Residential distribution $ 17,732 $ 19,156 -7% $ 38,511 $ 39,810 -3%
Commercial distribution 13,269 14,268 -7% 26,433 27,705 -5%
Industrial distribution 9,633 10,758 -10% 19,710 21,606 -9%
Total distribution 40,634 44,182 -8% 84,654 89,121 -5%
Transmission 917 766 20% 1,488 1,311 14%
Other 2,248 3,582 -37% 4,931 6,000 -18%
Total revenues 43,799 48,530 -10% 91,073 96,432 -6%
Cost of services (electric energy and
fuel oil purchased) 20,094 22,980 -13% 41,838 45,170 -7%
Gross margin 23,705 25,550 -7% 49,235 51,262 -4%
Depreciation 5,880 5,589 5% 11,747 11,179 5%
Other operating expenses 12,869 13,034 -1% 25,979 23,928 9%
Operating income 4,956 6,927 -28% 11,509 16,155 -29%
Special items - (22,054) - (22,054)
Operating income/(loss) including special items 4,956 (15,127) 133% 11,509 (5,899) 295%
Cash Flow and Capital Expenditure Data
Operating cash flow (1) $ 10,836 $ 12,516 -13% $ 23,256 $ 27,334 -15%
Capital expenditures 6,527 4,314 51% 7,680 7,765 -1%
Free cash flow (2) 4,309 8,202 -47% 15,576 19,569 -20%
Select Balance Sheet Data
Total assets $ 489,769 $ 472,224 4%
Net plant 383,413 385,660 -1%
Operating Data
Customers 113,532 110,435 3%
Employees 296 312 -5%
Customers per employee 384 354 8%
Gross margin per employee $ 80,084 $ 81,891 -2% $ 166,334 $ 164,301 1%
Megawatt hours sold 375,328 375,353 0% 794,694 774,762 3%
Megawatt hours generated 86,195 82,326 5% 185,455 174,228 6%
Megawatt hours purchased 358,693 373,308 -4% 700,067 707,812 -1%
(1) Operating income plus depreciation.
(2) Operating cash flow less capital expenditures.
Note: Quarter ended information is not presented where it is the same as year to date.
6
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<PAGE>
Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
<TABLE>
<S> <C> <C>
For the quarter ended For the six months ended
June 30, June 30,
----------------------- -----------------------
% %
(Dollars in thousands, except operating data) 1998 1997 Change 1998 1997 Change
-------------------------------- --------------------------------
Citizens Public Services
Water/Wastewater
Select Income Statement Data
Revenues
Residential distribution $ 17,784 $ 17,623 1% $ 34,197 $ 33,861 1%
Commercial distribution 3,347 3,379 -1% 6,255 6,098 3%
Industrial distribution 237 224 6% 447 433 3%
Other 1,051 866 21% 1,986 1,642 21%
Total revenues 22,419 22,092 1% 42,885 42,034 2%
Depreciation 3,233 2,966 9% 6,417 6,061 6%
Other operating expenses 12,897 12,466 3% 26,114 23,760 10%
Operating income 6,289 6,660 -6% 10,354 12,213 -15%
Special items - (2,841) - (2,841)
Operating income including special items 6,289 3,819 65% 10,354 9,372 10%
Cash Flow and Capital Expenditure Data
Operating cash flow (1) $ 9,522 $ 9,626 -1% $ 16,771 $ 18,274 -8%
Capital expenditures 5,139 6,476 -21% 8,466 10,440 -19%
Free cash flow (2) 4,383 3,150 39% 8,305 7,834 6%
Select Balance Sheet Data
Total assets $ 564,721 $ 517,950 9%
Net plant 470,790 429,122 10%
Operating Data
Customers 291,117 284,739 2%
Employees 350 370 -5%
Customers per employee 832 770 8%
Revenue per employee $ 64,054 $ 59,708 7% $ 122,529 $ 113,605 8%
Billions of gallons of water delivered 6.7 8.7 -23% 12.1 14.2 -15%
Billions of gallons of wastewater treated 1.3 1.3 0% 2.8 2.8 0%
(1) Operating income plus depreciation. This is the equivalent of sector EBITDA.
(2) Operating cash flow less capital expenditures.
Note: Quarter ended information is not presented where it is the same as year to date.
The foregoing information is unaudited and should be read in conjunction with the financial statements and footnotes included in the
Company's Form 10-K for the three years ended December 31, 1997 and Form 10-Q for the six months ended June 30, 1998 filed with
the Securities and Exchange Commission. Allocations of expense and other items among services and sources of revenues are derived
from the Company's books with certain adjustments. The information is not necessarily that which would be presented for a single
service on a stand-alone basis. The Company believes its primary risk factors include, but are not limited to: changes in the local
and overall economy, the nature and pace of technological change, the number and effectiveness of competitors in the Company's
markets, success in marketing and selling expenditures and efforts, weather conditions, changes in legal and regulatory policy,
name recognition, and the mix of products and services offered in the Company's target markets. Any and all Company information
should be evaluated in light of these important risk factors.
7
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