-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IEd5+IJk2JfBU2EWxDq9PQNt2P/FOnfM7vFtzdPBJQQS5z+aKqvEqJlqWH0e9DaW HySAdsWRFA4LlVoxNZmTIQ== 0000020520-95-000026.txt : 19951119 0000020520-95-000026.hdr.sgml : 19951119 ACCESSION NUMBER: 0000020520-95-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS UTILITIES CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [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: 95592304 BUSINESS ADDRESS: STREET 1: HIGH RIDGE PK BLDG 3 STREET 2: P O BOX 3801 CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2033298800 MAIL ADDRESS: STREET 1: HIGH RIDGE PARK BLDG NO 3 CITY: STAMFORD STATE: CT ZIP: 06905 10-Q 1 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 SEPTEMBER 30, 1995 ------------------------------------------------- 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 Commission file number 001-11001 September 30, 1995 --------- ------------------ 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 November 1, 1995 Common Stock Series A 155,265,269 Common Stock Series B 69,995,444 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- INDEX ----- Page No. -------- Part I. Financial Information Consolidated Condensed Balance Sheets September 30, 1995 and December 31, 1994 2 Consolidated Condensed Statements of Income for the Three Months Ended September 30, 1995 and 1994 3 Consolidated Condensed Statements of Income for the Nine Months Ended September 30, 1995 and 1994 4 Consolidated Condensed Statements of Cash Flows for the Nine Months Ended September 30, 1995 and 1994 5 Notes to Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information 9 Signature 10 PART I. FINANCIAL INFORMATION ------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------------------- (In thousands) September December 30, 1995 31, 1994 --------- -------- ASSETS - ------ Current assets: Cash $ 17,873 $ 14,224 Temporary investments 0 108,818 Accounts receivable 169,407 166,795 Other 37,467 24,217 ---------- ---------- 224,747 314,054 ---------- ---------- Property, plant and equipment 3,907,854 3,583,723 Less accumulated depreciation 1,176,918 1,014,068 ---------- ---------- 2,730,936 2,569,655 ---------- ---------- Investments 335,525 325,011 Regulatory assets 179,186 177,414 Deferred debits and other assets 196,534 190,432 ---------- ---------- $3,666,928 $3,576,566 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Long-term debt due within one year $ 4,003 $ 13,986 Short-term debt 153,650 515,200 Other 268,456 322,634 ---------- ----------- 426,109 851,820 Customer advances for construction and contributions in aid of construction 219,200 216,730 Deferred income taxes 273,137 248,150 Regulatory liabilities 29,294 30,830 Deferred credits and other liabilities 96,419 77,951 Long-term debt 1,071,943 994,189 ---------- ---------- 2,116,102 2,419,670 ---------- ---------- Shareholders' equity: Common stock issued, $.25 par value Series A 38,946 33,586 Series B 17,369 14,782 Additional paid-in capital 1,246,327 861,981 Retained earnings 235,429 237,417 Unrealized gain on securities classified as available for sale 12,755 9,130 ---------- ---------- 1,550,826 1,156,896 ---------- ---------- $3,666,928 $3,576,566 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 SEPTEMBER 30, 1995 AND 1994 ------------------------------------------------------ (In thousands, except per-share amounts) 1995 1994 ---- ---- Revenues $259,732 $241,005 Expenses: Operating expenses 147,155 144,880 Depreciation 39,637 33,640 -------- -------- 186,792 178,520 -------- -------- Income from operations 72,940 62,485 Other income, net 14,320 14,531 Interest expense 21,037 20,613 -------- -------- Income before income taxes 66,223 56,403 Income taxes 21,162 17,716 -------- -------- Net income $ 45,061 $ 38,687 ======== ======== Earnings per share of common stock Series A and Series B $.20 $.19 ==== ==== Number of common shares outstanding at September 30: Series A Common Stock 155,781 141,034* Series B Common Stock 69,476 60,762* Dividend rate declared on Common Stock: Paid in Series A shares on Series A Common Stock and in Series B shares on Series B Common Stock 1.6% 1.3% ==== ==== * Adjusted for subsequent stock dividends. 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 INCOME ------------------------------------------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 ----------------------------------------------------- (In thousands, except per-share amounts) 1995 1994 ---- ---- Revenues $778,444 $650,291 Expenses: Operating expenses 467,337 398,594 Depreciation 117,134 83,659 -------- -------- 584,471 482,253 -------- -------- Income from operations 193,973 168,038 Other income, net 42,099 37,892 Interest expense 64,741 48,575 -------- ------- Income before income taxes 171,331 157,355 Income taxes 50,428 48,997 -------- -------- Net income $120,903 $108,358 ======== ======== Earnings per share of common stock Series A and Series B $.56 $.55 ==== ==== Number of common shares outstanding at September 30: Series A Common Stock 155,781 141,034 * Series B Common Stock 69,476 60,762 * Dividend rate (compounded) declared on Common Stock: Paid in Series A shares on Series A Common Stock and in Series B shares on Series B Common Stock 4.67% 3.59% ===== ===== * Adjusted for subsequent stock dividends. The accompanying Notes are an integral part of these Financial Statements. -4- PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ----------------------------------------------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 ----------------------------------------------------- (In thousands) 1995 1994 ---- ---- Net cash provided by operating activities $ 193,571 $ 164,729 --------- --------- Cash flows from investing activities: Construction expenditures (150,461) (143,265) Securities purchases (31,689) (39,194) Securities sales 88,341 39,577 Securities maturities 68,869 65,842 Business acquisitions (112,394) (558,710) Other, net (2,809) (30,946) -------- -------- (140,143) (666,696) ======== ======== Cash flows from financing activities: Issuance of common stock 269,233 10,672 Long-term debt borrowings 171,793 227,776 Long-term debt principal payments (128,438) (13,177) Short-term debt payments (361,550) 272,270 Other, net (817) 827 -------- -------- (49,779) 498,368 -------- -------- Increase (decrease) in cash and cash equivalents 3,649 (3,599) Cash and cash equivalents at January 1, 14,224 21,738 -------- -------- Cash and cash equivalents at September 30, $17,873 $18,139 ======== ======== The accompanying Notes are an integral part of these Financial Statements. -5- 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. Certain reclassifications of balances previously reported have been made to conform to current presentation. (2) Earnings per share is based on the weighted average number of outstanding shares, adjusted for subsequent stock dividends and stock splits. 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) Pursuant to the provisions of SFAS 115, the Company classifies its investments into two categories, "held-to-maturity" and "available-for-sale". The Company records unrealized holding gains on securities classified as available-for-sale as an increase to investments. The following summarizes the cost, unrealized gains and fair market value for investments. Unrealized Aggregate Fair Investment Classification Amortized Cost Holding Gains Value - ------------------------- -------------- ------------- -------------- As of September 30, 1995 - ------------------------ Held-To-Maturity $268,073,000 $79,605,000 $347,678,000 Available-For-Sale 48,950,000 18,502,000 67,452,000 As of December 31, 1994 - ----------------------- Held-To-Maturity $368,302,000 $77,355,000 $445,657,000 Available-For-Sale 50,809,000 14,718,000 65,527,000
Held-to-Maturity Securities --------------------------- Amortized Cost Fair Value -------------- ---------- Investment Maturities Sept. 30, 1995 December 31, 1994 Sept. 30, 1995 December 31, 1994 - --------------------- -------------- ----------------- -------------- ----------------- Within 1 year $71,862,000 $108,818,000 $72,168,000 $108,935,000 2-5 years 70,013,000 141,030,000 70,944,000 139,567,000 6-10 years 19,376,000 34,171,000 20,169,000 33,656,000 Thereafter 106,822,000 84,283,000 184,397,000 163,499,000 ------------ ------------ ------------ ------------ $268,073,000 $368,302,000 $347,678,000 $445,657,000 ============ ============ ============ ============
The Company sold $66,685,000 of securities classified as held-to-maturity during 1995 for the purpose of permanently financing the acquisition of certain of the GTE and Alltel Telephone Properties; gains and losses of $500,000 and $296,000, respectively, were realized on such sales. The amortized cost and related gains on available-for-sale securities sold during 1995 were $8,969,000 and $12,687,000, respectively. -6- 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 nine months ended September 30, 1995, the primary source of funds was from operations. Funds requisitioned from the 1995, 1994, 1993 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 $230,300,000 were outstanding as of September 30, 1995, of which $153,650,000 is classified as short-term debt as it represents the balance of the amount that was issued to temporarily and partially fund the acquisition of certain GTE and Alltel Telephone Properties and which the Company intends to repay with proceeds from the issuance of equity securities and the maturity of investments. On May 3, 1995, the Company arranged for the issuance of $13,550,000 of Industrial Development Revenue Bonds; the bonds were issued as demand purchase bonds bearing interest at 6.2% and maturing on May 1, 2030. On May 12, 1995, Citizens Utilities Rural Telephone Company, Inc., a subsidiary of the Company, under it's Rural Telephone Bank Loan Contract, was advanced $8,793,000. These funds bear an initial interest rate of 6.52% and have an ultimate maturity date of December 31, 2027. On June 15, 1995 the Company issued $125,000,000 of debentures at a price of 99.918% with an interest rate of 7.45% and a maturity date of July 1, 2035. On October 20, 1995, the Company issued $150,000,000 of debentures at a price of 99.125% with an interest rate of 7% and a maturity date of November 1, 2025. The proceeds from the sale of the debentures were and will be used to repay commercial paper classified as long-term debt, permanently fund a portion of the ALLTEL telecommunications properties to be acquired, refund long-term debt due within one year and for other general corporate purposes. On April 28, 1995, 31,900 shares of Series B Common Stock were issued to effect the merger of Douglasville Water Company into a subsidiary of the Company. On July 17, 1995, Flex Communications was merged into the Company requiring the issuance of 855,953 shares of Citizens Series B Common Stock. On June 30, 1995, the Company acquired approximately 35,662 telephone access lines in West Virginia and Oregon from ALLTEL Corporation ("ALLTEL"). On October 2, 1995, the Company acquired approximately 19,000 telephone access lines in Tennessee from ALLTEL. On October 31, 1995, the Company acquired approximately 18,000 telephone access lines in Arizona, Utah and New Mexico and approximately 7,000 cable television lines in Arizona, New Mexico and California from ALLTEL. 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 September 30, 1995 as compared to December 31, 1994. The increase is primarily due to the repayment of commercial paper. The Company has lines of credit with commercial banks under which it may borrow up to $600,000,000. There were no amounts outstanding under these lines at September 30, 1995. Electric Lightwave, Inc., a subsidiary of the Company, has entered into an arrangement to lease $28.9 million of metropolitan area fiber optic cable systems through April 30, 2002. On May 31, 1995, the Company acquired 300,000 common shares or 10% of Hungarian Telephone and Cable Corp. ("HTCC"), a Delaware Corporation, with the option to purchase shares of up to 51% of HTCC Common Stock. On September 28, 1995, the Company and HTCC, entered into an agreement in which the Company agreed to provide up to $33,200,000 of interim financial support to HTCC. In consideration of such financial support, HTCC has granted to the Company, additional shares of its Common Stock which increases the Company's ownership in HTCC to 14%. During the nine months ended September 30, 1995, the Company was authorized net increases in annual revenues for properties in Hawaii, Illinois and Ohio totaling $11,246,000. The Company has requests of $57,168,000 for increases in annual revenues pending before regulatory commissions in Arizona, California, Hawaii, Louisiana, Pennsylvania and Vermont. -7- Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------------------------- (b) Results of Operations --------------------- REVENUES The revenue increases for both the quarter and the nine months ended September 30, 1995 were primarily due to growth in telecommunications revenues. Telecommunications revenues for the three and nine months ended September 30, 1995 increased 13% and 44%, to $156,160,000 and $447,698,000, respectively, over the same periods last year. These increases are attributable to the operation of the telecommunications properties acquired. The increases in telecommunications revenues were partially offset by a $9,500,000 and a $28,500,000 decline in revenues for the quarter and nine month periods, respectively, from the Company's California telephone operation due to the expiration of the Pacific Bell contract on December 31, 1994. Natural gas revenues decreased 9% and 10%, respectively, for the quarter and nine months ended September 30, 1995 compared to the same periods last year. The decreases are primarily due to lower average revenue per MCF of gas sold for both periods which resulted from increases in pass-ons to customers of lower average gas costs from suppliers. The decrease in revenues due to pass-ons of lower average gas costs was partially offset by increased consumption for the three and nine months ended September 30, 1995. Electric revenues increased 7% and 3%, to $50,294,000 and $131,930,000, for the quarter and nine months ended September 30, 1995, respectively, when compared to the same periods in 1994. The increases for both periods are due primarily to rate increases and customer growth. Water and Wastewater revenues increased 2% and 7%, respectively, for the quarter and nine months ended September 30, 1995 when compared to the same periods last year. The increases in revenues are due to increased consumption. EXPENSES AND OTHER INCOME The increases in operating expenses for the quarter and nine month periods are due primarily to increased telecommunications operating expenses. As of September 30, 1995, natural gas purchased decreased 12% and 14%, to $15,547,000 and $75,326,000, for the three months and nine months ended September 30, 1995, respectively, over the same periods last year. The decreases are due to lower supplier prices partially offset by increased consumption for the three and nine months ended. Fuel oil purchased increased 19% for both the quarter and nine month periods due to increased power generated to satisfy higher electric consumption. Depreciation expense for the three and nine month periods ended September 30, 1995 increased 18% and 40%, respectively, over the corresponding prior year periods primarily due to increased telecommunications property, plant and equipment acquired. Other income increased 11% for the nine month period ended September 30, 1995 when compared to the same period last year. This increase is due to a $5,825,000 increase in investment income. Interest expense for the three months and nine months ended September 30, 1995 increased 2% and 33%, respectively, as compared to the like 1994 periods. The increase for the nine month period is due to interest paid on the additional debt securities issued to finance the acquisitions as well as increased Industrial Development Revenue Bonds. Income taxes for the three and nine months ended September 30, 1995 increased 19% and 3%, respectively, as compared to the same periods last year due to increased taxable income which was partially offset by a decrease in the effective income tax rates for both periods primarily as a result of lower state income tax rates. -8- PART II. OTHER INFORMATION --------------------------- CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- Item 1. - Legal Proceedings ----------------- On September 28, 1995, the Delaware Court of Chancery (the "Court") approved the stipulation of settlement in the Consolidated Action, the Thorpe Action and the Biggs Action, and the award of counsel fees. The stipulation of settlement bars further action by the plaintiffs and members of the Class as determined by the Court on the subject matter of these Actions. The fees and expenses awarded to the plaintiff's counsel were substantively paid by the Company's Directors' and Officers' liability insurance carrier. Item 6. - Reports on Form 8-K ------------------- (b) No Form 8-K was required during the three months ended September 30, 1995. -9- 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 November 14, 1995 By: /s/ Livingston E. Ross ----------------- ----------------------- Vice President and Controller -10- EX-27 2
5 3-MOS DEC-31-1995 SEP-30-1995 17,873 335,525 169,407 0 0 224,747 3,907,854 1,176,918 3,666,928 426,109 1,071,943 56,315 0 0 1,494,511 3,666,928 259,732 259,732 0 186,792 0 0 21,037 66,223 21,162 45,061 0 0 0 45,061 .20 0
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