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:
May 12, 1999
(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
May 12, 1999 announcing third quarter earnings.
99.2 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: May 13, 1999
Exhibit 99.1
Citizens Utilities
3 High Ridge Park
Stamford, CT 06905
203.614.5600
Web site: www.czn.net
FOR IMMEDIATE RELEASE
Contacts:
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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]
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CITIZENS UTILITIES REPORTS
FINANCIAL RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
o Revenue Increased 8%
o Citizens Communications Operating Income Grew 7%; Free Cash Flow Increased 21%
STAMFORD, Conn., May 12, 1999 -- Citizens Utilities (NYSE: CZN, CZNPr)
-----------------------------
today reported financial results for the quarter ended March 31, 1999.
Consolidated revenues were $ 438 million, 8% higher than last year's
first quarter. This increase was driven by strong revenue growth in the
company's telecommunications businesses. Net income was $55 million, a 104%
increase over the $27 million reported for the prior year quarter. First-quarter
earnings per share were 21 cents, up 110% from 10 cents for the comparable prior
year period.
Net income and earnings per share included the following special items:
a one time after-tax gain of $42.9 million, or 17 cents per share, from the sale
of Citizens' interest in Centennial Cellular Corp. (NASDAQ:CYCL) and $4.5
million, or 2 cents loss per share, related to Year 2000 and separation costs.
Commenting on the first-quarter results, Citizens' Chief Financial
Officer Robert J. DeSantis said, "Our consolidated financial results continue to
reflect our commitment to grow Electric Lightwave. We were pleased to have been
able to more than offset Electric Lightwave's planned losses for the quarter
with a substantial gain from the sale of our 16% interest in Centennial
Cellular.
"Citizens Communications revenues grew 11% over the comparable prior
year period to $227 million, operating income increased 7% to $41 million,
operating cash flow grew 15% to $96 million, and free cash flow increased 21% to
$57 million." DeSantis further stated, "These results were driven by increases
in all major revenue components and improvements in operating expenses and
capital utilization.
"Citizens Public Services' operating income of $31 million and
operating cash flow of $45 million were only slightly below the prior year
quarter despite a 4% decline in revenues, to $173 million, due to
warmer-than-normal weather. The Public Services sector successfully mitigated
this weather related-decline in revenue through improved operating
efficiencies," DeSantis said.
Regarding Electric Lightwave's impact on Citizens' results, DeSantis
said, "Electric Lightwave's growth continues to accelerate and Citizens remains
steadfast in its support of that growth. Revenues for the first quarter were $38
million, or 96% above the level of the prior year quarter. Electric Lightwave's
owned and leased gross property, plant and equipment as of March 31, 1999
totaled $694 million, up 52% from one year ago." Electric Lightwave reported its
first-quarter results on May 3.
Citizens Utilities provides telecommunications services and public
services including gas distribution, electric distribution, water distribution
and wastewater treatment services to approximately 1.8 million customers in 22
states. Citizens owns 83% of Electric Lightwave, Inc., a leading full-service,
facilities-based integrated communications services provider.
<PAGE>
This document contains forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied in the statements. These and all forward-looking
statements are only predictions or statements of current plans that are
constantly under review by the company. All forward-looking statements may
differ from actual results because of, but not limited to, the company's ability
to obtain the necessary regulatory and tax approvals and complete the separation
process, changes in the local and overall economy, changes in market conditions
for debt and equity securities, the nature and pace of technological changes,
the number and effectiveness of competitors in the company's markets, success in
overall strategy, weather conditions, changes in legal or regulatory policy,
changes in legislation, the company's ability to identify future markets and
successfully expand existing ones and the mix of products and services offered
in the company's target markets. Although Citizens continues to pursue its
separation plans, the increased opportunities that have recently become
available to acquire telecommunications properties which fit within Citizens'
acquisition criteria and long-term planning require it to consider the possible
advantages of other transactions, besides separation, to enhance security holder
value. Therefore, Citizens is continuing to investigate and review opportunities
for the acquisition of new telecommunications properties and the sale or other
disposition of public services properties. These important factors should be
considered in evaluating any statement contained herein and/or made by the
company or on its behalf. The foregoing information should be read in
conjunction with the company's filings with the U.S. Securities and Exchange
Commission including, but not limited to, reports on Forms 10-K and 10-Q. The
company has no obligation to update or revise these forward-looking statements
to reflect the occurrence of future events or circumstances.
##
(Table Follows)
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Citizens Utilities Company and Subsidiaries
Consolidated Financial Data
(unaudited)
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For the quarter ended
March 31,
------------------------------
%
1999 1998 Change
---------------------------------------------
Income Statement Data
Revenues $ 437,514 $ 403,863 8%
Cost of services 107,682 108,032 0%
Depreciation and amortization 75,641 63,597 19%
Other operating expenses 211,449 175,556 20%
Operating income 42,742 56,678 -25%
Special items (1) (6,419) (400)
Operating income including special items 36,323 56,278 -35%
Investment and other income 11,686 12,722 -8%
Interest expense 29,813 26,806 11%
Special items (2) 69,499 (2,334)
Income taxes 31,518 11,529 173%
Convertible preferred dividends 1,552 1,552 0%
Net income 54,625 26,779 104%
Per-Share Data (3)
Basic net income per share of common stock $ 0.21 $ 0.10 110%
Weighted average shares outstanding 259,517 258,890 0%
(1) Special items consist of Y2K and separation costs.
(2) In the first quarter of 1999, the Company recorded a pre-tax gain of $69.5
million ($42.9 million, net of tax) on the sale of Centennial Cellular stock. In
the first quarter of 1998, Electric Lightwave, Inc. recorded a pre-tax charge to
earnings of $2.8 million ($2.3 million net of tax) for the cumulative effect of
a change in accounting principle.
(3) Adjusted for subsequent stock dividends and stock splits.
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Exhibit 99.2
Citizens Utilities Company and Subsidiaries
Consolidated Financial Data
(unaudited)
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For the quarter ended
March 31,
--------------------------
%
1999 1998 Change
------------------------------------
Income Statement Data
Revenues $ 437,514 $ 403,863 8%
Cost of services 107,682 108,032 0%
Depreciation and amortization 75,641 63,597 19%
Other operating expenses 211,449 175,556 20%
Operating income 42,742 56,678 -25%
Special items (1) (6,419) (400)
Operating income including special items 36,323 56,278 -35%
Investment and other income 11,686 12,722 -8%
Interest expense 29,813 26,806 11%
Special items (2) 69,499 (2,334)
Income taxes 31,518 11,529 173%
Convertible preferred dividends 1,552 1,552 0%
Net income as reported 54,625 26,779 104%
Net income excluding special items 16,195 27,067 -40%
Net income excluding special items and ELI 29,636 35,244 -16%
Cash Flow and Capital Expenditure Data (excluding special items)
EBITDA (3) $ 130,069 $ 132,997 -2%
EBITDA excluding ELI (3) 146,627 141,259 4%
Cash flow from operations 217,010 81,726 166%
Cash flow from operations excluding ELI 243,587 88,267 176%
Capital expenditures 120,096 74,334 62%
Capital expenditures excluding ELI 63,096 51,152 23%
Free cash flow (4) 96,914 7,392 1211%
Free cash flow excluding ELI (4) 180,491 37,115 386%
Select Balance Sheet Data
Cash and investments $ 452,004 $ 499,943 -10%
Total assets 5,313,453 4,939,831 8%
Net plant 4,083,346 3,675,289 11%
Long-term debt 1,972,390 1,789,683 10%
Equity (5) 2,037,702 1,919,835 6%
Shares of common stock outstanding 259,886 259,170 0%
Weighted average shares outstanding (6) 259,517 258,890 0%
Per-Share Data (6)
Basic net income per share of common stock as reported $ 0.21 $ 0.10 110%
Basic net income per share of common stock excluding
special items $ 0.06 $ 0.10 -40%
Basic net income per share of common stock excluding
special items and ELI $ 0.11 $ 0.14 -21%
Operating cash flow per share $ 0.82 $ 0.31 165%
Operating cash flow per share excluding special items $ 0.84 $ 0.32 163%
Operating cash flow per share excluding special items and ELI $ 0.94 $ 0.34 176%
Book value per share $ 7.08 $ 6.64 7%
Other Financial Data
Long-term debt to long-term debt and equity 49% 48%
Long-term debt to long-term debt and equity excluding ELI 44% 47%
Interest coverage (7) 4.4x 5.0x
Interest coverage excluding ELI (7) 4.9x 5.3x
Common equity market capitalization (in billions) $ 2.0 $ 2.7
Equity market capitalization (in billions) (8) $ 2.2 $ 2.9
Market capitalization (in billions) (9) $ 4.1 $ 4.7
ELI public enterprise value (in billions) (10) $ 0.9 $ 1.1
(1) Special items consist of Y2K and separation costs.
(2) In the first quarter of 1999, the Company recorded a pre-tax gain of $69.5 million ($42.9 million net of tax) on the sale of
Centennial Cellular stock. In the first quarter of 1998, Electric Lightwave, Inc. recorded a pre-tax charge to earnings of
$2.8 million ($2.3 million net of tax) for the cumulative effect of a change in accounting principle.
(3) Earnings before interest expense, income taxes, depreciation and amortization (excludes special items).
(4) Cash flow from operations less capital expenditures.
(5) Includes convertible preferred securities.
(6) Adjusted for subsequent stock dividends and stock splits and used in the calculation of all per share data.
(7) EBITDA divided by interest expense excluding special items.
(8) Includes market value of convertible preferred securities.
(9) Equity market capitalization plus market value of long-term debt.
(10) Includes common equity market capitalization plus net debt.
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Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
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For the quarter ended
March 31,
---------------------------
%
1999 1998 Change
--------------------------------------
(Dollars in thousands, except operating data)
Citizens Communications
Select Income Statement Data
Revenues
Network access services $ 128,680 $ 103,886 24%
Local network services 69,913 63,418 10%
Long distance services 21,101 26,778 -21%
Directory services 8,397 7,783 8%
Other 9,794 11,296 -13%
Eliminations (1) (10,653) (7,803)
Total revenues 227,232 205,358 11%
Cost of services (network expenses) 20,522 26,560 -23%
Depreciation 54,891 45,155 22%
Other operating expenses 122,092 103,999 17%
Eliminations (1) (11,351) (8,678)
Operating income 41,078 38,322 7%
Special items (2) (3,770) (274)
Operating income including special items 37,308 38,048 -2%
Operating margin 18% 19%
Cash Flow and Capital Expenditure Data
Operating cash flow (3) $ 95,969 $ 83,477 15%
Capital expenditures 38,484 36,146 6%
Free cash flow (4) 57,485 47,331 21%
EBITDA margin (5) 42% 41%
Select Balance Sheet Data
Total assets $ 2,388,860 $2,229,491 7%
Net plant 2,084,400 1,999,457 4%
Operating Data
Access lines 964,634 906,358 6%
Long distance customers - in territory 235,219 231,000 2%
- out of territory 6,267 22,000 -72%
- total 241,486 253,000 -5%
Revenue per access line $ 236 $ 227 4%
In-territory billed access minutes of use (in millions) 1,240 1,191 4%
Citizens' long distance minutes of use (in millions)
- in territory 125 123 2%
- out of territory 28 82 -66%
- total long distance 153 205 -25%
Citizens' long distance in territory minutes of use market share 21% 18%
Citizens' long distance in territory customer market share 24% 25%
(1) Eliminations represent network access revenues received by the Company's local exchange operations from
its long-distance and competitive local exchange operations.
(2) Special items include Y2K and separation costs.
(3) Operating income excluding special items plus depreciation. This is the equivalent of sector EBITDA.
(4) Operating cash flow less capital expenditures.
(5) Operating cash flow divided by total revenues.
</TABLE>
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Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
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For the quarter ended
March 31,
-----------------------------
%
1999 1998 Change
-------------------------------------------
(Dollars in thousands, except operating data)
Electric Lightwave, Inc. (1)
Select Income Statement Data
Revenues
Dedicated services $ 10,424 $ 9,107 14%
Local dial tone services 14,308 6,024 138%
Long distance service 8,530 1,822 368%
Enhanced services 4,954 3,104 60%
Eliminations (1) (698) (875)
Total revenues 37,518 19,182 96%
Cost of services (network expenses) 25,224 9,212 174%
Gross margin 12,294 9,970 23%
Depreciation 6,994 3,884 80%
Other operating expenses 34,845 20,316 72%
Operating loss (29,545) (14,230) -108%
Special items (2) (631) -
Operating loss including special items (30,176) (14,230) -112%
Cash Flow and Capital Expenditure Data
Operating cash flow (3) $ (22,551) $ (10,346) -118%
Capital expenditures 57,000 23,182 146%
Free cash flow (4) (79,551) (33,528) -137%
Select Balance Sheet Data
Total assets $ 574,418 $ 373,374 54%
Gross plant - owned 585,533 352,062 66%
- leased 108,541 105,226 3%
- total 694,074 457,288 52%
Operating Data
Route miles 3,098 2,525 23%
Fiber miles 181,816 145,350 25%
Customers 1,843 1,226 50%
Buildings connected 783 631 24%
Employees 1,200 670 79%
Revenue per employee $ 31,265 $ 28,630 9%
(1) The Company's facilities based Competitive Local Exchange Carrier (CLEC) subsidiary, Electric Lightwave, Inc (ELI).
Eliminations reflect intercompany activity between the Company's CLEC and communications operations.
(2) Special items include Y2K and separation costs.
(3) Operating loss excluding special items plus depreciation. This is the equivalent of sector EBITDA.
(4) Operating cash flow less capital expenditures.
</TABLE>
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Citizens Utilities Company and Subsidiaries
Sector Financial and Operating Data
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For the quarter ended
March 31,
-----------------------------
%
1999 1998 Change
-----------------------------------------
(Dollars in thousands, except operating data)
Citizens Public Services
Select Income Statement Data
Revenues
Residential distribution $ 89,894 $ 99,295 -9%
Commercial distribution 48,421 51,850 -7%
Industrial distribution 24,530 17,719 38%
Municipal distribution 3,244 3,740
Total distribution 166,089 172,604 -4%
Transportation / transmission 1,932 1,523 27%
Other 4,743 5,196 -9%
Total revenues 172,764 179,323 -4%
Cost of services (1) 73,287 80,938 -9%
Gross margin 99,477 98,385 1%
Depreciation 13,756 14,558 -6%
Other operating expenses 54,512 51,241 6%
Operating income 31,209 32,586 -4%
Special items (2) (2,018) (126)
Operating income including special items 29,191 32,460 -10%
Cash Flow and Capital Expenditure Data
Operating cash flow (3) $ 44,965 $ 47,144 -5%
Capital expenditures 23,501 9,864 138%
Free cash flow (4) 21,464 37,280 -42%
Select Balance Sheet Data
Total assets $ 1,641,922 $ 1,627,873 1%
Net plant 1,351,467 1,261,850 7%
Operating Data
Customers 871,287 851,230 2%
Employees 1,802 1,714 5%
Customers per employee 484 497 -3%
Gross margin (net revenue) per employee $ 55,204 $ 57,401 -4%
(1) Natural gas, electric energy and fuel oil purchased.
(2) Special items include Y2K and separation costs.
(3) Operating income excluding special items plus depreciation. This is the equivalent of sector EBITDA.
(4) Operating cash flow less capital expenditures.
</TABLE>
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Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
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<S> <C> <C> <C>
For the quarter ended
March 31,
----------------------
%
1999 1998 Change
--------------------------------------
(Dollars in thousands, except operating data)
Citizens Public Services
Gas
- ---
Select Income Statement Data
Revenues
Residential distribution $ 51,974 $ 62,103 -16%
Commercial distribution 31,686 35,778 -11%
Industrial distribution 15,039 7,432 102%
Municipal distribution 1,266 1,845 -31%
Total distribution 99,965 107,158 -7%
Transportation 1,027 952 8%
Other 2,964 3,473 -15%
Total revenues 103,956 111,583 -7%
Cost of services (gas purchased) 52,704 59,194 -11%
Gross margin 51,252 52,389 -2%
Depreciation 4,280 5,507 -22%
Other operating expenses 27,299 24,978 9%
Operating income 19,673 21,904 -10%
Special items (1) (837) (62)
Operating income including special items 18,836 21,842 -14%
Cash Flow and Capital Expenditure Data
Operating cash flow (2) $ 23,953 $ 27,411 -13%
Capital expenditures 15,865 5,384 195%
Free cash flow (3) 8,088 22,027 -63%
Select Balance Sheet Data
Total assets $ 565,950 $ 566,795 0%
Net plant 456,555 409,621 11%
Operating Data
Customers 461,104 448,886 3%
Employees 968 924 5%
Customers per employee 476 486 -2%
Gross margin (net revenue) per employee $ 52,946 $ 56,698 -7%
Billion Cubic Feet of gas throughput (BCF) 34.8 29.7 17%
(1) Special items include Y2K and separation costs.
(2) Operating income excluding special items plus depreciation. This is the equivalent of sector EBITDA.
(3) Operating cash flow less capital expenditures.
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Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
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For the quarter ended
March 31,
----------------------------
%
1999 1998 Change
----------------------------------------
(Dollars in thousands, except operating data)
Citizens Public Services
Electric
- --------
Select Income Statement Data
Revenues
Residential distribution $ 20,326 $ 20,779 -2%
Commercial distribution 13,593 13,164 3%
Industrial distribution 9,259 10,077 -8%
Municipal distribution 1,978 1,895 4%
Total distribution 45,156 45,915 -2%
Transmission 905 571 58%
Other 13 788 -98%
Total revenues 46,074 47,274 -3%
Cost of services (electric energy and fuel oil purchased) 20,583 21,744 -5%
Gross margin 25,491 25,530 0%
Depreciation 5,981 5,867 2%
Other operating expenses 13,253 13,084 1%
Operating income 6,257 6,579 -5%
Special items (1) (3) (26)
Operating income including special items 6,254 6,553 -5%
Cash Flow and Capital Expenditure Data
Operating cash flow (2) $ 12,238 $ 12,446 -2%
Capital expenditures 5,596 1,153 385%
Free cash flow (3) 6,642 11,293 -41%
Select Balance Sheet Data
Total assets $ 472,206 $ 489,883 -4%
Net plant 377,056 382,479 -1%
Operating Data
Customers 115,093 112,900 2%
Employees 300 309 -3%
Customers per employee 384 365 5%
Gross margin (net revenue) per employee $ 84,970 $ 82,621 3%
Megawatt hours sold 423,838 419,366 1%
Megawatt hours generated 93,529 99,260 -6%
Megawatt hours purchased 350,186 341,374 3%
(1) Special items include Y2K and separation costs.
(2) Operating income excluding special items plus depreciation. This is the equivalent of sector EBITDA.
(3) Operating cash flow less capital expenditures.
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Citizens Utilities Company and Subsidiaries
Financial and Operating Data by Service
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For the quarter ended
March 31,
-------------------------
%
1999 1998 Change
--------------------------------------
(Dollars in thousands, except operating data)
Citizens Public Services
Water/Wastewater
- ----------------
Select Income Statement Data
Revenues
Residential distribution $ 17,594 $ 16,413 7%
Commercial distribution 3,142 2,908 8%
Industrial distribution 232 210 10%
Other 1,766 935 89%
Total revenues 22,734 20,466 11%
Depreciation 3,495 3,184 10%
Other operating expenses 13,960 13,179 6%
Operating income 5,279 4,103 29%
Special items (1) (1,178) (38)
Operating income including special items 4,101 4,065 1%
Cash Flow and Capital Expenditure Data
Operating cash flow (2) $ 8,774 $ 7,287 20%
Capital expenditures 2,040 3,327 -39%
Free cash flow (3) 6,734 3,960 70%
Select Balance Sheet Data
Total assets $ 603,766 $ 571,195 6%
Net plant 517,856 469,750 10%
Operating Data
Customers 295,090 289,444 2%
Employees 364 347 5%
Customers per employee 811 834 -3%
Revenue per employee $ 62,456 $ 58,980 6%
Billions of gallons of water delivered 4.1 5.5 -25%
Billions of gallons of wastewater treated 1.1 1.5 -27%
(1) Special items include Y2K and separation costs.
(2) Operating income excluding special items plus depreciation. This is the equivalent
of sector EBITDA.
(3) Operating cash flow less capital expenditures.
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, 1998 and Form 10-Q for the three months ended March 31, 1999 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 primvary 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 competitiors 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.
</TABLE>
