-----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, Wm+yihFo1fYD0CzR5MN5HJYypzO0J0G7VJvh+T/NxTX+Am9FSEZ7DmlbAweDv02x VFakgmCbwixG1U8jbVeu0w== 0000020520-04-000026.txt : 20040803 0000020520-04-000026.hdr.sgml : 20040803 20040803083942 ACCESSION NUMBER: 0000020520-04-000026 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040630 ITEM INFORMATION: FILED AS OF DATE: 20040803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS COMMUNICATIONS CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 060619596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11001 FILM NUMBER: 04946626 BUSINESS ADDRESS: STREET 1: HIGH RIDGE PK BLDG 3 CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2036145600 MAIL ADDRESS: STREET 1: THREE HIGH RIDGE PARK CITY: STAMFORD STATE: CT ZIP: 06905 FORMER COMPANY: FORMER CONFORMED NAME: CITIZENS UTILITIES CO DATE OF NAME CHANGE: 19920703 8-K 1 analystsched2ndqtr2004.txt 2ND QUARTER 2004 ANALYST SCHEDULES 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 (date of earliest event reported): August 3, 2004 CITIZENS COMMUNICATIONS COMPANY (Exact name of registrant as specified in its charter) Delaware 001-11001 06-0619596 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 3 High Ridge Park Stamford, Connecticut 06905 (Address of Principal Executive Offices) (203) 614-5600 (Registrant's Telephone Number, Including Area Code) No Change Since Last Report --------------------------- (Former name or former address, if changed since last report) ITEM 12. Disclosure of Results of Operations and Financial Condition ----------------------------------------------------------- On August 3, 2004, Citizens Communications Company issued a press release. A copy of the press release is attached hereto as Exhibit 99.1. The information in this Form 8-K and the Exhibits attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing. 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 COMMUNICATIONS COMPANY (Registrant) By: /s/ Jerry Elliott ---------------------------- Jerry Elliott Executive Vice President and Chief Financial Officer Date: August 3, 2004 Exhibit 99.1 Citizens Communications 3 High Ridge Park Stamford, CT 06905 203.614.5600 Web site: www.czn.net - -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE Contacts: Brigid M. Smith Michael A. Zarrella Assistant Vice President Vice President Corporate Communications Corporate Development 203.614.5042 203.614.5179 bsmith@czn.com mzarrell@czn.com Citizens Communications Reports 2004 Second-Quarter Results Stamford, Conn., August 3, 2004 -- Citizens Communications (NYSE:CZN) today reported second quarter 2004 consolidated revenues of $544.1 million; consolidated operating income of $128.2 million; and consolidated net income of $23.8 million. Consolidated operating income and net income reflect $11.6 million of pre-tax expense related to our review of financial and strategic alternatives and management succession. Second quarter 2004 revenue from the company's ILEC operations was $505.8 million, compared to $510.2 million in the second quarter of 2003. The decrease is due primarily to lower access services revenues, reduced long distance revenue and loss of access lines. These decreases were partially offset by continued increases in data and enhanced service revenues. Average revenue per month per average number of access lines increased 2% to $71.17 in the second quarter of 2004 from $70.07 in the year ago period. The company added a record 22,200 DSL customers during the quarter and had 164,200 DSL subscribers at June 30, 2004. The company's primary access line count, which does not take into account DSL subscriptions, decreased 13,300 lines during the quarter. ILEC operating income for the second quarter of 2004 was $127.2 million and operating income margin was 25.2 percent. Capital expenditures for the ILEC were $73.7 million for the second quarter of 2004. In July 2004 we retired $300 million principal amount of Senior Notes that are part of our Equity Units, which will result in a pre-tax charge of approximately $15 million in the third quarter of 2004, and means that only the remaining outstanding $160 million of such notes will be remarketed. We expect to save approximately $20 million per year in interest expense as a result of this retirement. --MORE -- As previously reported, the company has declared a special dividend of $2 per share and is instituting a regular annual dividend of $1 per share that will be payable quarterly. The special dividend and the first quarterly dividend will both be paid on September 2, 2004 to stockholders of record on August 18, 2004. We expect that all of the dividends paid to stockholders in 2004 will be treated as dividends for federal income tax purposes. Shareholders are encouraged to consult with their tax advisors. The company uses certain non-GAAP financial measures in evaluating its performance. These include free cash flow. A reconciliation of the differences between free cash flow and the most comparable financial measure calculated and presented in accordance with GAAP is included in the tables that follow. The non-GAAP financial measures are by definition not measures of financial performance under generally accepted accounting principles and are not alternatives to operating income or net income reflected in the statement of operations or to cash flow as reflected in the statement of cash flows and are not necessarily indicative of cash available to fund all cash flow needs. The non-GAAP financial measures used by the company may not be comparable to similarly titled measures of other companies. The company believes that presentation of non-GAAP financial measures provides useful information to investors regarding the company's financial condition and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) together provide a more comprehensive view of the company's core operations and ability to generate cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) presents measurements that investors and rating agencies have indicated to management are useful to them in assessing the company and its results of operations. Management uses these non-GAAP financial measures to plan and measure the performance of its core operations and its divisions measure performance and report to management based upon these measures. In addition, the company believes that free cash flow, as the company defines it, can assist in comparing performance from period to period, without taking into account factors affecting cash flow reflected in the statement of cash flows, including changes in working capital and the timing of purchases and payments. Management uses these non-GAAP financial measures to (i) assist in analyzing the company's underlying financial performance from period to period, (ii) evaluate the financial performance of its business units, (iii) analyze and evaluate strategic and operational decisions, (iv) establish criteria for compensation decisions; and (v) assist management in understanding the company's ability to generate cash flow and, as a result, to plan for future capital and operational decisions. Management uses these non-GAAP financial measures in conjunction with related GAAP financial measures. The company believes that the non-GAAP financial measures are meaningful and useful for the reasons outlined above. While the company utilizes these non-GAAP financial measures in managing and analyzing its business and financial condition and believes they are useful to management and to investors for the reasons described above, these non-GAAP financial measures have certain shortcomings. In particular, free cash flow does not represent the residual cash flow available for discretionary expenditures, since items such as debt repayments are not deducted from such measure. Management compensates for the shortcomings of these measures by utilizing them in conjunction with their comparable GAAP financial measures. The information in this press release should be read in conjunction with the financial statements and footnotes contained in our documents to be filed with the U.S. Securities and Exchange Commission. --MORE -- About Citizens Communications More information about Citizens can be found at www.czn.net. 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 (including oral representations) 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. 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 does not intend to update or revise these forward-looking statements to reflect the occurrence of future events or circumstances. ### TABLES TO FOLLOW
Citizens Communications Company Consolidated Financial Data (unaudited) For the quarter ended For the six months ended June 30, June 30, -------------------------- % ---------------------------- % (Amounts in thousands - except per-share amounts) 2004 2003 Change 2004 2003 Change ----------------------------------- -------------------------------------- Income Statement Data (1) Continuing operations Revenue $544,091 $643,954 -16% $1,102,559 $1,295,816 -15% Cost of services (exclusive of depreciation and amortization) 48,295 113,537 -57% 105,359 226,756 -54% Other operating expenses 210,157 227,985 -8% 420,678 462,428 -9% Strategic alternatives and management succession expenses 10,527 - 100% 14,873 - 100% Restricted stock based compensation (2) 2,525 4,508 -44% 5,398 5,886 -8% Depreciation and amortization 144,412 150,359 -4% 288,270 288,907 0% Reserve for telecommunications bankruptcies - 2,260 -100% - 2,260 -100% Restructuring and other expenses - 10,113 -100% - 10,092 -100% Operating income 128,175 135,192 -5% 267,981 299,487 -11% Investment and other income, net 5,213 31,237 -83% 30,507 79,409 -62% Interest expense (includes dividends on preferred securities) 97,652 107,988 -10% 195,434 218,817 -11% Income tax expense 11,944 24,384 -51% 36,394 64,360 -43% Cumulative effect of change in accounting principle (3) - - - - 65,769 -100% Net income attributable to common shareholders 23,792 34,057 -30% 66,660 161,488 -59% Weighted average shares outstanding 284,782 282,180 1% 284,378 281,934 1% Net income attributable to common shareholders (4) $ 0.08 $ 0.12 -33% $ 0.23 $ 0.57 -60% Other Financial Data Total capital expenditures $ 78,246 $ 67,850 15% $ 133,434 $ 115,602 15% Free cash flow (5) 98,315 113,288 -13% 231,655 258,618 -10%
(1) Our Vermont distribution facilities were sold on April 1, 2004. The Gas Company in Hawaii division was sold on August 8, 2003, our Arizona gas and electric divisions were sold on August 11, 2003 and our Vermont transmission facilities were sold on December 1, 2003. The sales of these properties affect the comparability of data presented. (2) Includes $1,034 and $1,619 related to strategic alternatives and management succession for the three and six months ended June 30 2004, respectively. (3) Represents the effect of adoption of SFAS No. 143, net of tax. (4) Calculated based on weighted average shares outstanding. (5) A reconciliation to the most comparable GAAP measure is presented at the end of these tables.
Citizens Communications Company Financial and Operating Data (unaudited) For the quarter ended For the six months ended June 30, June 30, --------------------------- % -------------------------- % (Amounts in thousands, except operating data) 2004 2003 Change 2004 2003 Change ------------------------------------- ------------------------------------ TELECOMMUNICATIONS Select Income Statement Data Revenue Access services $ 155,224 $ 167,025 -7% $ 316,707 $ 336,196 -6% Local services 213,417 213,889 0% 426,159 428,162 0% Long distance services 45,546 50,102 -9% 92,877 103,023 -10% Data services 33,624 26,385 27% 65,298 51,147 28% Directory services 28,201 26,736 5% 55,675 53,779 4% Other 29,777 26,016 14% 58,041 51,455 13% ILEC revenue 505,789 510,153 -1% 1,014,757 1,023,762 -1% Electric Lightwave 38,302 43,719 -12% 78,067 84,812 -8% Total revenue 544,091 553,872 -2% 1,092,824 1,108,574 -1% Expenses Network access expense 48,295 58,168 -17% 99,836 114,683 -13% Other operating expenses 209,138 204,515 2% 414,145 415,369 0% Strategic alternatives and management succession expenses 10,527 - 100% 14,873 - 100% Restricted stock based compensation (1) 2,525 4,293 -41% 5,398 5,649 -4% Depreciation and amortization 144,412 150,359 -4% 288,270 288,907 0% Reserve for telecommunications bankruptcies - 2,260 -100% - 2,260 -100% Restructuring and other expenses - 10,113 -100% - 10,092 -100% Total expenses 414,897 429,708 -3% 822,522 836,960 -2% Operating Income ILEC $ 127,237 $ 121,814 4% $ 265,955 $ 268,729 -1% ELI 1,957 2,350 -17% 4,347 2,885 51% Other Financial and Operating Data ILEC capital expenditures $ 73,678 $ 56,415 31% $ 126,531 $ 94,292 34% ELI capital expenditures 4,397 2,254 95% 6,159 3,401 81% ILEC depreciation and amortization 138,467 144,374 -4% 276,490 276,729 0% ELI depreciation and amortization 5,945 5,985 -1% 11,780 12,178 -3% ILEC access lines 2,362,285 2,418,819 -2% 2,362,285 2,418,819 -2% DSL subscribers 164,184 92,201 78% 164,184 92,201 78% ILEC switched access minutes of use (in millions) 2,917 2,995 -3% 5,917 6,040 -2% ILEC average monthly revenue per average line $ 71.17 $ 70.07 2% $ 71.24 $ 70.16 2% (1) See footnote (2) first page.
Citizens Communications Company Financial and Operating Data (unaudited) For the quarter ended For the six months ended June 30, June 30, ---------------------------- % ------------------------------- % (Amounts in thousands) 2004 2003 Change 2004 2003 Change ----------------------------------------- -------------------------------------------- GAS AND ELECTRIC SECTORS (1) Select Income Statement Data Revenue $ - $ 90,082 -100% $ 9,735 $ 187,242 -95% Gas, electric energy and fuel oil purchased - 55,369 -100% 5,523 112,073 -95% Other operating expenses 1,019 23,470 -96% 6,533 47,059 -86% Restricted stock based compensation - 215 -100% - 237 -100% Operating income (loss) (1,019) 11,028 -109% (2,321) 27,873 -108% Other Financial Data Capital expenditures - 9,123 -100% 573 17,437 -97% (1) See footnote (1) first page.
Citizens Communications Company Condensed Consolidated Balance Sheet Data (unaudited) (Amounts in thousands) June 30, 2004 December 31, 2003 --------------------- -------------------- ASSETS ------ Current assets: Cash and cash equivalents $ 740,359 $ 583,671 Accounts receivable and other current assets 262,593 289,457 Assets held for sale - 23,130 --------------------- -------------------- Total current assets 1,002,952 896,258 Property, plant and equipment, net 3,437,099 3,525,640 Other long-term assets 3,200,547 3,267,212 --------------------- -------------------- Total assets $ 7,640,598 $ 7,689,110 ===================== ==================== LIABILITIES AND EQUITY ---------------------- Current liabilities: Long-term debt due within one year $ 6,490 $ 88,002 Accounts payable and other current liabilities 453,403 484,445 Liabilities related to assets held for sale - 11,128 --------------------- -------------------- Total current liabilities 459,893 583,575 Deferred income taxes and other liabilities 841,208 833,473 Equity units 460,000 460,000 Long-term debt (1) 4,378,131 4,195,629 Mandatorily Redeemable Convertible Preferred Securities (1) - 201,250 Shareholders' equity 1,501,366 1,415,183 --------------------- -------------------- Total liabilities and equity $ 7,640,598 $ 7,689,110 ===================== ====================
(1) In accordance with FASB Interpretaion No. 46R, the Mandatorily Redeemable Convertible Preferred Securities are classified as debt effective January 1, 2004.
Citizens Communications Company Condensed Consolidated Cash Flow Data (unaudited) (Amounts in thousands) For the six months ended June 30, ------------------------------------ 2004 2003 ----------------- ----------------- Income before cumulative effect of change in accounting principle $ 66,660 $ 95,719 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 288,270 288,907 Gain on expiration/settlement of customer advances (25,345) (6,165) Gain on capital lease termination/restucturing - (65,724) Other 35,070 31,023 ----------------- ----------------- Net cash provided by continuing operating activities 364,655 343,760 Cash flows from investing activities: Proceeds from sales of assets, net of selling expenses 13,992 54,900 Capital expenditures (133,434) (115,602) Other - (605) ----------------- ----------------- Net cash used by investing activities (119,442) (61,307) Cash flows from financing activities: Long-term debt payments (99,786) (301,583) Other 11,261 10,991 ----------------- ----------------- Net cash used by financing activities (88,525) (290,592) Increase (decrease) in cash and cash equivalents 156,688 (8,139) Cash and cash equivalents at January 1, 583,671 393,177 ----------------- ----------------- Cash and cash equivalents at June 30, $ 740,359 $ 385,038 ================= =================
Schedule A Reconciliation of Non-GAAP Financial Measures For the quarter ended June 30, For the six months ended June 30, --------------------------------- -------------------------------------- (Amounts in thousands) 2004 2003 2004 2003 ------------- ------------------ ---------------- ------------------- Net Income to Free Cash Flow; - ----------------------------- Net Cash Provided by Operating Activities ----------------------------------------- Net income $ 23,792 $ 34,057 $ 66,660 $ 161,488 Add back: Depreciation and amortization 144,412 150,359 288,270 288,907 Income taxes 11,944 24,384 36,394 64,360 Restricted stock based compensation 2,525 4,508 5,398 5,886 Subtract: Cash paid for income taxes 899 933 1,126 1,243 Investment and other income, net 5,213 31,237 30,507 79,409 Cumulative effect of change in accounting principle - - - 65,769 Capital expenditures 78,246 67,850 133,434 115,602 ------------- ------------------- --------------- ------------------- Free cash flow 98,315 113,288 231,655 258,618 Add back: Deferred income taxes 14,616 24,782 35,607 104,591 Other non-cash adjustments 4,895 (25,328) (16,417) (77,006) Investment and other income/(loss) 5,213 31,237 30,507 79,409 Cash paid for income taxes 899 933 1,126 1,243 Capital expenditures 78,246 67,850 133,434 115,602 Subtract: Changes in current assets and liabilities 30,242 33,791 9,465 68,451 Income tax expense 11,944 24,384 36,394 64,360 Restricted stock based compensation 2,525 4,508 5,398 5,886 ------------- ------------------- --------------- ------------------- Net cash provided by operating activities $ 157,473 $ 150,079 $ 364,655 $ 343,760 ============= =================== =============== ===================
Schedule B Citizens Communications Company Long Distance and Data Services Revenue For the quarters ended --------------------------------------------------------------------------- (Amounts in thousands) 6/30/04 3/31/04 12/31/03 9/30/03 6/30/03 3/31/03 --------------------------------------------------------------------------- Long Distance and Data Services Revenue Long distance services $ 45,546 $ 47,331 $ 47,705 $ 48,654 $ 50,102 $ 52,921 Data services 33,624 31,674 28,814 27,491 26,385 24,762 --------------------------------------------------------------------------- Total long distance and data services revenue $ 79,170 $ 79,005 $ 76,519 $ 76,145 $ 76,487 $ 77,683 ===========================================================================
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