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:
June 16, 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
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(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 5. Other Events.
Citizens Utilities Company entered into a series of definitive
agreements with U S West Communications, Inc., a wholly owned
subsidiary of U S West to purchase local-exchange telephone properties
serving approximately 530,000 telephone access lines in nine states for
$1.65 billion in cash. The transaction involves certain U S West local
-exchange properties in Arizona, Colorado, Idaho, Iowa, Minnesota,
Montana, Nebraska, North Dakota and Wyoming. The transaction does not
include the sale of U S West Dex directories serving these properties.
Approval of the sale is subject to review by federal and state
regulatory agencies. The transfer of ownership, which will occur on a
state-by-state basis, is expected to be completed in 2000. Citizens
expects to temporarily fund the transaction with either cash and
investment balances and bank credit facilities. Permanent funding of
these access line purchases will come from the sale or other
disposition of Citizens' public services properties.
Item 7. Financial Statements, Exhibits.
(c) Exhibits
99.1 Press release of Citizens Utilities Company released
June 16, 1999 announcing a series of definitive
agreements to purchase 530,000 telephone access lines
from U S West.
<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/ Robert J.DeSantis
----------------------------
Chief Financial Officer,
Vice President and Treasurer
Date: June 17, 1999
Exhibit 99.1
Logo Citizens Utilities
3 High Ridge Park
Stamford, CT 06905
203.614.5600
FOR IMMEDIATE RELEASE Web site: www.czn.net
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Citizens Utilities signs definitive agreements with U S WEST to purchase
approximately 530,000 telephone access lines in nine states
for $1.65 billion
STAMFORD, Conn., June 16, 1999 -- U S WEST Communications, Inc., a wholly owned
subsidiary of U S WEST (NYSE: USW) and Citizens Utilities (NYSE: CZN, CZNPr)
today announced that they have entered into a series of definitive agreements
for Citizens to purchase local-exchange telephone properties serving
approximately 530,000 telephone access lines -- representing about three percent
of U S WEST's total -- in nine states for approximately $1.65 billion in cash.
Both companies described the transaction as a move that will enable each to
provide better service and advanced products to customers in its core markets,
achieve operating synergies and create both immediate and long-term value for
shareholders. The transaction is part of U S WEST's previously announced
strategic effort to sell a small percentage of its local-exchange properties in
markets that may be of greater long-term strategic value to other
telephone-service providers.
The transaction involves certain U S WEST local-exchange properties in Arizona,
Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, North Dakota and Wyoming.
The transaction does not include the sale of U S WEST Dex directories serving
these properties. Approval of the sale is subject to review by federal and state
regulatory agencies. The transfer of ownership, which will occur on a
state-by-state basis, is expected to be completed in 2000.
"Our objective was to find a company with the financial and operational ability
to provide high-quality telecommunications services including the ability to
provide the advanced services that customers are demanding," said Al Spies,
executive vice president and chief financial officer, U S WEST. "Citizens
certainly fits that profile. We are pleased to enter this transaction with a
company that is able to provide excellent service to the customers in these
areas. Citizens is an outstanding organization with a top-flight management team
that offers quality opportunities for its employees."
"It will be a `win-win' for communications customers throughout our region,"
said Spies. "It will help U S WEST increase our investments in innovative
technologies and services to better meet the needs of our customers." Spies
noted that customers will win because Citizens can offer a full range of
services, including long-distance -- which U S WEST is not allowed to provide
today -- to meet customers' desire for one-stop shopping.
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<PAGE>
Citizens' Chairman and Chief Executive Officer, Leonard Tow, said that Citizens'
strategy is to acquire and operate telecommunications businesses in small and
medium-size cities and towns that are experiencing above-average economic and
population growth.
"Opportunities of this size and quality are rare," stated Tow. "These properties
are especially attractive to Citizens because they complement many of our
existing operations as well as many of the properties that are a part of our May
27, 1999 agreement with GTE Corporation to acquire 187,000 telephone access
lines." That agreement involves all of GTE's local exchange properties in
Arizona and Minnesota and a portion of GTE's properties in California.
"Providing small and medium-size cities and towns in America with the most
advanced technology, products and services is the key to superior growth in the
telecommunications business for Citizens in the new millennium," Tow said.
"Citizens' quality balance sheet, the strong accretive cash flow that these
assets will generate, and the staggered closings of this transaction provide us
with exceptional flexibility to structure the acquisition financing in a form
that will ensure that Citizens maintains strong credit ratings.
"We expect to temporarily fund the transaction with either our cash and
investment balances or bank credit facilities. Permanent funding of these and
previously announced access line purchases will come from the sale or other
disposition of the company's public services properties.
"By realizing the hidden value of our public service properties and using the
proceeds to expand our telecommunications footprint, we expect to be able to
significantly grow our inventory of access lines while maintaining a strong
investment grade balance sheet."
Citizens currently operates fully digital, local-exchange properties serving
approximately one million access lines in 13 states. Upon completion of both the
GTE and U S WEST transactions, Citizens will serve approximately 1.7 million
access lines in 19 states. More information about Citizens can be found at
www.czn.net.
U S WEST Dex, the directory and Internet advertising division for U S WEST,
plans to continue publishing its print and on-line directories serving the
local-exchange properties involved in this transaction. "Businesses that
advertise in our Dex products will not be affected by this change," Spies said.
"We are working with Citizens to ensure businesses and consumers will continue
to receive the high-quality directories they have come to expect."
Lehman Brothers acted as U S WEST's financial advisor in connection with the
sales.
U S WEST provides a full range of telecommunications services -- including
wireline, wireless PCS, data networking, directory and information services --
to more than 25 million customers nationally and in 14 western and midwestern
states. More information about U S WEST can be found on the Internet at
www.uswest.com.
-MORE-
<PAGE>
This document contains statements about expected future events and financial
results that are forward-looking and subject to risks and uncertainties. For
these statements, we claim the safe harbor for "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Factors that could cause actual results to differ from expectations include: (i)
greater than anticipated competition from new entrants into the local exchange,
intraLATA toll, wireless, data and directories markets, causing loss of
customers and increased price; (ii) changes in demand for U S WEST's products
and services, including optional custom calling features; (iii) higher than
anticipated employee levels, capital expenditures and operating expenses (such
as costs associated with interconnection and year 2000 remediation); (iv) the
loss of significant customers; (v) pending and future state and federal
regulatory changes affecting the telecommunications industry, including changes
that could have an impact on the competitive environment in the local exchange
market; (vi) a change in economic conditions in the various markets served
by U S WEST's operations; (vii) higher than anticipated start-up costs
associated with new business opportunities; (viii) delays in U S WEST's ability
to begin offering interLATA long-distance services; (ix) consumer acceptance of
broadband services, including telephony, data and wireless services; and
(x) delay in the development of anticipated technologies, or the failure of
such technologies to perform according to expectations. These cautionary
statements by U S WEST should not be construed as exhaustive or as any
admission regarding the adequacy of disclosures made by U S WEST. U S WEST
cannot always predict or determine after the fact what factor would cause
actual results to differ materially from those indicated by the forward-looking
statements or other statements. In addition, readers are urged to consider
statements that include the terms "believes," "belief," "expects," "plans,"
"objectives," "anticipates," "intends," or the like to be uncertain and
forward-looking. All cautionary statements should be read as being applicable
to all forward-looking statements wherever they appear. U S WEST does not
undertake any obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
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 Citizens Utilities ("Citizens"). All forward-looking statements may
differ from actual results because of, but not limited to, 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 Citizens' markets, success in overall strategy,
weather conditions, changes in legal or regulatory policy, changes in
legislation, Citizens' ability to identify future markets and successfully
expand existing ones and the mix of products and services offered in Citizens'
target markets. These important factors should be considered in evaluating any
statement contained herein and/or made by Citizens or on its behalf. The
foregoing information should be read in conjunction with Citizens' filings with
the U.S. Securities and Exchange Commission including, but not limited to,
reports on Forms 10-K and 10-Q. Citizens does not intend to update or revise
these forward-looking statements to reflect the occurrence of future events or
circumstances.
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CONTACTS:
Financial Community: Media:
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Alan H. Oshiki Brigid M. Smith
Citizens Utilities Company Citizens Utilities Company
Assistant Vice President Assistant Vice President,
and Assistant Treasurer Corporate Communications
(203) 614-5629 (203) 614-5042
[email protected] [email protected]
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Emily Harrison
U S WEST
Director, Public Relations
(303) 896-8094
[email protected]
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