-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, pP05r1AodbH072H4sC2f5fk437S4sd6Q6i+wtEhvBcxc0Y23ukyr2Q1/QhtHBe3j lIjxckpufqi/X4g0SUfzVw== 0000020520-94-000008.txt : 19940531 0000020520-94-000008.hdr.sgml : 19940531 ACCESSION NUMBER: 0000020520-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS UTILITIES CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 060619596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11001 FILM NUMBER: 94528628 BUSINESS ADDRESS: STREET 1: HIGH RIDGE PK BLDG 3 STREET 2: P O BOX 3801 CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2033298800 10-Q 1 FIRST QTR 10Q 1994 CITIZENS UTILITIES COMPANY -------------------------- FORM 10-Q --------- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) ------------------------------------------------ OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------------------------- FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1994 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1994 Commission file number 0-1291 -------------- ------ CITIZENS UTILITIES COMPANY - - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 06-0619596 - - -------------------------------- ------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) High Ridge Park P.O. Box 3801 Stamford, Connecticut 06905 - - -------------------------------- ------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 329-8800 ------------------------- NONE - - ----------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes X No ---- ---- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of April 29, 1994. Common Stock Series A 130,440,021 Common Stock Series B 53,848,532 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- INDEX ----- Page No. -------- Part I. Financial Information Consolidated Condensed Balance Sheets March 31, 1994 and December 31, 1993 2 Consolidated Condensed Statements of Income for the Three Months Ended March 31, 1994 and 1993 3 Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 1994 and 1993 4 Notes to Financial Statements 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Part II. Other Information 7 Signature 8 -1- PART I. FINANCIAL INFORMATION ------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------------------- (In thousands) March December 31, 1994 31, 1993 -------- -------- ASSETS ------ Current assets: Cash and cash equivalents $ 25,217 $ 21,738 Temporary investments 115,974 89,752 Accounts receivable 114,081 114,313 Other 25,115 14,934 ----------- ---------- 280,387 240,737 ----------- ---------- Property, plant and equipment 2,371,367 2,153,891 Less accumulated depreciation 665,357 461,924 ----------- ---------- 1,706,010 1,691,967 ----------- ---------- Investments 390,192 411,022 Regulatory assets 141,996 146,207 Deferred debits and other assets 150,552 137,185 ----------- ---------- $ 2,669,137 $2,627,118 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Long-term debt due within one year $ 1,620 $ 1,620 Short-term debt 341,270 380,000 Other 247,379 246,605 ----------- ---------- 590,269 628,225 Customer advances for construction and contributions in aid of construction 183,685 184,253 Deferred income taxes 223,911 213,471 Regulatory liabilities 27,911 28,376 Deferred credits and other liabilities 61,399 50,634 Long-term debt 563,819 547,673 ----------- ---------- 1,650,994 1,652,632 ----------- ---------- Shareholders' equity: Common stock issued, $.25 par value Series A 32,652 32,447 Series B 13,420 13,119 Additional paid-in capital 734,173 698,688 Retained earnings 226,580 230,232 Unrealized gain on securities classified as available for sale 11,318 0 ----------- ---------- 1,018,143 974,486 ----------- ---------- $ 2,669,137 $2,627,118 =========== ========== The accompanying Notes are an integral part of these Financial Statements. -2- PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES -------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF INCOME ------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993 -------------------------------------------------- (In thousands, except per-share amounts) 1994 1993 ---- ---- Revenues $223,896 $165,915 Expenses: Operating expenses 151,534 113,235 Depreciation 25,401 14,165 -------- --------- 176,935 127,400 -------- --------- Income from operations 46,961 38,515 Other income, net 11,906 9,116 Interest expense 13,137 10,222 -------- --------- Income before income taxes 45,730 37,409 Income taxes 14,075 9,170 -------- --------- Net income $ 31,655 $ 28,239 ======== ========= Earnings per share of common stock: Series A $ .17 $ .15* ===== ====== Series B $ .17 $ .15* ===== ====== Number of common shares outstanding at March 31: Series A Common Stock 130,615 129,105* Series B Common Stock 53,672 47,174* Dividends declared on common stock: In Series A shares on Series A Common Stock and in Series B shares on Series B Common Stock paid quarterly - rate 1.1% 1.2% ===== ===== *Adjusted for the August 1993 2-for-1 stock split. The accompanying Notes are an integral part of these Financial Statements. -3- PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES -------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ----------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993 -------------------------------------------------- (In thousands) 1994 1993 ---- ---- Net cash provided by operating activities $49,134 $20,140 ------- ------- Cash flows from investing activities: Construction expenditures (47,235) (25,401) Securities purchases (4,706) (71,127) Securities sales 7,972 70,004 Securities maturities 12,340 23,777 Other, net 2,382 6,359 ------- ------- (29,247) 3,612 -------- ------- Cash flows from financing activities: Long-term debt borrowings 22,476 33,936 Long-term debt principal payments (321) (9,408) Short-term debt payments (38,730) 0 Other 167 779 -------- ------- (16,408) 25,307 -------- ------- Increase (decrease) in cash and cash equivalents 3,479 49,059 Cash and cash equivalents at January 1, 21,738 19,752 -------- ------- Cash and cash equivalents at March 31, $25,217 $68,811 ======== ======= The accompanying Notes are an integral part of these Financial Statements. -4- PART I. FINANCIAL INFORMATION (Continued) ----------------------------------------- CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- (1) The consolidated financial statements include the accounts of Citizens Utilities Company and all subsidiaries after elimination of intercompany balances and transactions. All adjustments, which consist of only normal recurring accruals, necessary for a fair statement of the results for the interim periods have been made. (2) Earnings per share is based on the average number of outstanding shares, adjusted for intervening stock dividends and stock splits. Earnings per share is presented for each Series separately, with historical adjustment for stock dividends and stock splits for each Series. The effect on earnings per share of outstanding stock options is immaterial. (3) In accordance with applicable regulatory systems of account, an allowance for funds used during construction is included in the cost of additions to property, plant and equipment and is allowed in rate base for rate making purposes. The allowance is not a cash item. The amount relating to equity is included in Other income, net and the amount relating to borrowings is offset against Interest expense. (4) On December 22, 1993, Natural Gas Company of Louisiana ("NGL") was merged into the company in a transaction accounted for as a pooling of interests. The company's income statement and statement of cash flows at March 31, 1993 has been restated to include the results of NGLs' operations for the three months ended March 31, 1993. (5) Effective January 1, 1994, the company adopted Statements of Financial Accounting Standards ("SFAS") No. 112 "Employers' Accounting for Postretirement Benefits" and SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities". The company applied the provisions of these accounting standards prospectively. SFAS No. 112 requires the accrual of the expected costs of providing benefits, if any, to former or inactive employees after termination of employment for reasons other than retirement. Adoption of SFAS No. 112 did not have a material effect on the Consolidated Financial Statements. Adoption of SFAS No. 115 requires fair value reporting for certain investments in debt and equity securities. Pursuant to the provisions of SFAS 115, the company classified its investments into two categories, "held-to-maturity" ($445,876,000 at March 31, 1994) and "available-for-sale" ($42,581,000 at March 31, 1994). The company recorded unrealized holding gains on securities classified as available-for-sale as an increase to investments. Available for Sale Held to Maturity ------------------ ---------------- Aggregate fair value $ 60,290,000 $530,655,000 Gross unrealized holding gains 17,709,000 84,779,000 Amortized cost basis 42,581,000 445,876,000 Held to Maturity Securities --------------------------- Contractual Maturities Fair Value Amortized Cost - - ---------------------- ---------- -------------- Within 1 year $116,759,000 $115,974,000 2-5 years 239,447,000 236,563,000 6-10 years 19,752,000 19,249,000 Thereafter 154,697,000 74,090,000 There were no sales of securities classified as held-to-maturity. The change in the net unrealized gains on available-for-sale securities that was included in a separate component of shareholders' equity was $11,318,000. The company does not invest in securities classified as trading securities. The amortized cost and realized gains and losses on available-for-sale securities sold during the three months ended March 31, 1994 were $7,972,000, $150,000 and ($21,000), respectively. -5- PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- (a) Liquidity and Capital Resources ------------------------------- For the three months ended March 31, 1994, the primary source of funds was from operations. Funds requisitioned from the 1993, 1992 and 1991 Series Industrial Development Revenue Bond construction fund trust accounts were used to pay for construction of utility plant. Commercial paper notes payable in the amount of $400,223,000 were outstanding as of March 31, 1994, of which $341,270,000 is classified as short-term debt as it represents the balance of the amount that was issued to temporarily and partially fund the GTE Telephone Properties acquired on December 31, 1993. The $341,270,000 of commercial paper is expected to be repaid from maturing temporary investments, funds from operations and proceeds from the planned issuance of securities. On April 20, 1994, the company issued $175,000,000 of debentures at par with an interest rate of 7.60% and maturing on June 1, 2006. The proceeds from the sale of the debentures were used to repay commercial paper notes outstanding at March 31, 1994. The company considers its operating cash flows and its ability to raise debt and equity capital as the principal indicators of its liquidity. Although working capital is not considered to be an indicator of the company's liquidity, the company experienced an increase in its working capital at March 31, 1994. The increase is primarily due to the partial repayment of short-term debt. The company has lines of credit with commercial banks under which it may borrow up to $1,200,000,000, there were no amounts outstanding under these lines at March 31, 1994. During the three months ended March 31, 1994, the company was authorized net increases in annual revenues for properties in California and Vermont totaling $2,246,000. The company has requests for increases in annual revenues pending before regulatory commissions in Arizona, California and Pennsylvania. (b) Results of Operations --------------------- Operating revenues for the three months ended March 31, 1994 increased compared to the like 1993 period primarily due to increased telecommunications and natural gas revenues. Telecommunications revenues totaled $84,731,000, a 94% increase over the 1993 amount of $43,640,000. This increase was primarily due to revenues derived from operating 189,000 local telephone access lines in Idaho, Tennessee, Utah and West Virginia acquired on December 31, 1993 from GTE Corp. Natural gas revenues totaled $82,012,000, a 20% increase over the 1993 amount of $68,617,000. The increase was primarily due to $4,989,000 from increased average revenue per MCF of gas sold to residential and commercial customers and $8,347,000 from increased consumption due to colder weather conditions. Operating expenses for the three months ended March 31, 1994 increased compared to the like 1993 period primarily due to increased natural gas purchased and telecommunications operating expenses. Natural gas purchased totaled $49,247,000, a 35% increase over the 1993 amount of $36,471,000 primarily due to higher supplier prices and increased volume to satisfy increased customer consumption. Operating and maintenance expenses, depreciation expense and taxes other than income for the three months ended March 31, 1994 increased compared to the like 1993 period primarily due to operation of the 189,000 local telephone access lines acquired from GTE Corp. on December 31, 1993. Other income, net for the three months ended March 31, 1994 increased compared to the like 1993 period primarily due to an increase in the allowance for funds used during construction as a result of increased property, plant and equipment and the gain on the sale of land. Interest expense for the three months ended March 31, 1994 increased compared with the like 1993 period primarily as a result of the interim financing of the acquisition of the 189,000 local telephone access lines acquired on December 31, 1993 with short-term debt, and an increase in industrial development revenue bond borrowings. The increase in Interest expense was partially offset by increased allowance for funds used during construction, which is related to borrowings, as a result of increased property plant and equipment. Income taxes for the three months ended March 31, 1994 increased compared to the like 1993 period primarily due to increased taxable income and an increase in the federal income tax rate. -6- PART II. OTHER INFORMATION --------------------------- CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- Item 1. Legal Proceedings ----------------- Reference is made to information describing certain legal matters under Item 3 "Legal Proceedings" in the Company's Form 10-K for the year ended December 31, 1993. In May, 1994, the Delaware Court of Chancery granted the defendants' motion for a stay of proceedings in the Thorpe and Biggs action referred to in the third paragraph of Legal Proceedings in the company's 1993 Annual Report, Form 10-K, pending resolution of the settlement proceedings referred to in the fourth paragraph of Legal Proceedings in the company's 1993 Annual Report, Form 10-K. In September 1992, the United States Environmental Protection Agency filed a complaint with the United States District Court for the Northern District of Illinois relating to alleged violations by the company's Illinois subsidiary with respect to National Pollutant Discharge Elimination System permit requirements. The parties are presently in settlement discussions. Item 6. Reports on Form 8-K ------------------- (b)No Form 8-K was required during the three months ended March 31, 1994. -7- CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CITIZENS UTILITIES COMPANY --------------------------- (Registrant) Date May 13, 1994 By: Livingston E. Ross ------------ ---------------------- Livingston E. Ross Vice President and Controller -8- -----END PRIVACY-ENHANCED MESSAGE-----