-----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, CylMGz0snxkSP6j9/1VqOp/bK89FuwvSn0Y/8KeJhAtllpTVKM1BLuMY+0tgimx8 eee+E+uVlgyws5YPqj/nTA== 0000020520-06-000020.txt : 20060503 0000020520-06-000020.hdr.sgml : 20060503 20060503084423 ACCESSION NUMBER: 0000020520-06-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060331 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060503 DATE AS OF CHANGE: 20060503 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: 06801615 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 analsched1stqtr2006.txt 1ST QTR. 2006 ANALYST SCHEDULES UNITED STATES 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): May 3, 2006 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition --------------------------------------------- On May 3, 2006, 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. Item 9.01 Financial Statements and Exhibits --------------------------------- (d) Exhibits 99.1 Press release of Citizens Communications Company released May 3, 2006 announcing the 2006 1st Quarter Results. 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 COMMUNICATIONS COMPANY Date: May 3, 2006 By: /s/ Donald R. Shassian -------------------------- Donald R. Shassian Chief Financial Officer EX-99.1 2 pressrelease1stqtr06.txt PRESS RELEASE AND ANALYST SCDULES Exhibit 99.1 Citizens Communications 3 High Ridge Park Stamford, CT 06905 203.614.5600 Web site: www.czn.net - -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE: Contact: Michael Bromley 203.614.5218 mbromley@czn.com Citizens Communications Reports 2006 First-Quarter Results Stamford, Conn., May 3, 2006 -- Citizens Communications (NYSE:CZN) today reported first quarter 2006 revenues of $506.9 million; operating income of $157.3 million; and net income of $50.5 million. The results of Electric Lightwave are classified as discontinued operations and therefore are not reflected in revenue or operating income. First quarter 2006 revenue increased 1.0 percent compared to the first quarter of 2005. The increase is due primarily to growth in data and internet services revenue and higher access service. Data and internet services revenue increased 30.4 percent compared to the first quarter of 2005. Operating expenses included a pre-tax charge of $3.7 million for severance payments associated with an early retirement program offered to certain employees during the first quarter of 2006. The program resulted in the reduction of 62 employees. The company expects to realize annualized cost savings of approximately $3.9 million from this headcount reduction. Depreciation expense for the first quarter of 2006 decreased $12.1 million as compared to the first quarter of 2005. The decrease is due to a declining asset base and changes in the remaining useful lives of certain assets as determined by an independent study. We expect that our depreciation expense will decline in 2006 to approximately $350.0 million or by 11 percent compared to 2005. The company added 19,400 high-speed internet customers during the quarter and had 330,800 high-speed data subscribers at March 31, 2006. The number of the company's high-speed internet subscribers has increased by more than 88,000 or 36.3 percent from a year ago. Operating income for the first quarter of 2006 was $157.3 million and operating income margin was 31.0 percent, compared to $144.5 million and 28.8 percent in the first quarter of 2005. Capital expenditures for the Frontier operations were $43.8 million for the first quarter of 2006. --MORE -- Free cash flow was $159.5 million during the first quarter of 2006. The company's dividend represents a payout of 51.8 percent of first quarter 2006 free cash flow. During the first quarter, the company repurchased $37.9 million or 2,802,900 shares of its common stock and exchanged $47.5 million of debt due in 2008 for debt that matures in 2031. The company received approximately $64.6 million in cash upon the liquidation of the Rural Telephone Bank during April 2006. In addition, the previously announced sale of Electric Lightwave, LLC (ELI) for $247.0 million (including $243.0 million in cash) is expected to close during the third quarter of 2006. 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 --MORE -- not represent the residual cash flow available for discretionary expenditures, since items such as debt repayments and dividends 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. About Citizens Communications More information about Citizens can be found at www.czn.net. This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These statements are made on the basis of management's views and assumptions regarding future events and business performance. Words such as "believe," "anticipate," "expect," and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties are based on a number of factors, including but not limited to: our ability to effectively manage our operations, costs and capital spending; our ability to successfully introduce new product offerings, including bundled service packages; our ability to sell enhanced services; our ability to comply with federal and state regulations; changes in the number of our revenue generating units; general and local economic and employment conditions; the effects of ongoing changes in the regulation of the communications industry; overall changes in the telecommunications market; and greater than anticipated competition from wireless or wireline carriers. In addition, we may be unable to implement some of our current business initiatives if we fail to recognize the benefits we expect to receive from certain transactions, including but not limited to, the anticipated sale of ELI and the liquidation of Rural Telephone Bank. These and other uncertainties related to our business are described in greater detail in our filings with the Securities and Exchange Commission, including our reports on Forms 10-K and 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement or to make any other forward-looking statements, whether as a result of new information, future events or otherwise unless required to do so by securities laws. ### TABLES TO FOLLOW
Citizens Communications Company Consolidated Financial Data (1) (unaudited) For the quarter ended ----------------------------------------------------- March 31, March 31, % (Amounts in thousands, except per-share amounts) 2006 2005 Change --------------- --------------- ---------------- Income Statement Data Revenue $ 506,861 $ 502,334 1% Cost of services (exclusive of depreciation and amortization) 40,218 39,722 1% Other operating expenses 184,624 181,772 2% Stock based compensation 2,677 2,265 18% Depreciation and amortization 122,004 134,094 -9% Operating income 157,338 144,481 9% Investment and other income (loss), net (1,351) 3,968 -134% Interest expense (includes interest on convertible debt) 85,393 83,725 2% Income tax expense 26,607 25,216 6% Income from discontinued operations, net of tax 6,496 3,126 108% Net income attributable to common shareholders 50,483 42,634 18% Weighted average shares outstanding 327,132 338,450 -3% Basic net income per share attributable to common shareholders (2) $ 0.15 $ 0.13 15% Other Financial Data Capital expenditures $ 43,765 $ 49,414 -11% Free cash flow (3) 159,490 152,686 4%
(1) In February 2006, we entered into a definitive agreement to sell Electric Lightwave, LLC (ELI), our competitive local exchange carrier business. Additionally, our conferencing business was sold on March 15, 2005. Prior periods have been restated to present ELI and our conferencing business as discontinued operations and to reflect the consolidation of Mohave Cellular Limited Partnership in accordance with EITF No. 04-5. (2) Calculated based on weighted average shares outstanding. (3) A reconciliation to the most comparable GAAP measure is presented at the end of these tables.
Citizens Communications Company Financial and Operating Data (1) (unaudited) For the quarter ended ---------------------------------------------- March 31, March 31, % (Amounts in thousands, except operating data) 2006 2005 Change --------------- -------------- --------- TELECOMMUNICATIONS Select Income Statement Data Revenue Access services $ 160,968 $ 156,824 3% Local services 203,566 209,957 -3% Long distance services 39,158 43,750 -10% Data and internet services 50,358 38,609 30% Directory services 28,797 27,963 3% Other 24,014 25,231 -5% Total revenue 506,861 502,334 1% Expenses Network access expense 40,218 39,722 1% Other operating expenses 184,624 181,772 2% Stock based compensation 2,677 2,265 18% Depreciation and amortization 122,004 134,094 -9% Total expenses 349,523 357,853 -2% Operating Income Frontier $ 157,338 $ 144,481 9% Other Financial and Operating Data Frontier capital expenditures $ 43,758 $ 49,357 -11% Frontier access lines 2,192,265 2,298,510 -5% Frontier high-speed internet subscribers 330,832 242,768 36% Frontier switched access minutes of use (in millions) 2,654 2,882 -8% Frontier average monthly revenue per average access line $ 76.62 $ 72.49 6% Frontier average monthly revenue per average RGU (2) $ 66.86 $ 66.00 1%
(1) See footnote (1) on the first page. (2) RGUs are access lines plus high-speed internet subscribers.
Citizens Communications Company Condensed Consolidated Balance Sheet Data (1) (Dollars in thousands) (unaudited) March 31, 2006 December 31, 2005 ------------------- ------------------- ASSETS ------ Current assets: Cash and cash equivalents $ 284,437 $ 268,917 Accounts receivable and other current assets 233,608 253,634 Assets of discontinued operations 159,868 162,716 ------------------- ------------------- Total current assets 677,913 685,267 Property, plant and equipment, net 3,011,649 3,058,312 Other long-term assets 2,654,554 2,689,156 ------------------- ------------------- Total assets $ 6,344,116 $ 6,432,735 =================== =================== LIABILITIES AND EQUITY ---------------------- Current liabilities: Long-term debt due within one year $ 227,695 $ 227,693 Accounts payable and other current liabilities 321,099 372,968 Liabilities of discontinued operations 43,065 46,266 ------------------- ------------------- Total current liabilities 591,859 646,927 Deferred income taxes and other liabilities 782,902 748,869 Long-term debt 3,975,470 3,995,130 Shareholders' equity 993,885 1,041,809 ------------------- ------------------- Total liabilities and equity $ 6,344,116 $ 6,432,735 =================== ===================
(1) See footnote (1) on the first page.
Citizens Communications Company Condensed Consolidated Cash Flow Data (1) (unaudited) (Dollars in thousands) For the three months ended March 31, --------------------------------------- 2006 2005 ----------------- -------------------- Cash flows provided by (used in) operating activities: Net income $ 50,483 $ 42,634 Deduct: Gain on sale of discontinued operations - (1,167) Income from discontinued operations (6,496) (1,959) Adjustments to reconcile income to net cash provided by operating activities: Depreciation and amortization expense 122,004 134,094 Gain on expiration/settlement of customer advances - (80) Stock based compensation 2,677 2,265 Other (4,055) 20,809 ----------------- -------------------- Net cash provided by continuing operating activities 164,613 196,596 Cash flows from investing activities: Proceeds from sales of assets, net of selling expenses - 1,112 Proceeds from sale of discontinued operations - 43,565 Capital expenditures (43,765) (49,414) Other assets (purchased) distributions received, net 324 (1,103) ----------------- -------------------- Net cash used by investing activities (43,441) (5,840) Cash flows from financing activities: Debt issuance costs - (385) Long-term debt payments (240) (259) Issuance of common stock 9,452 5,552 Dividends paid (82,633) (85,081) Shares repurchased (37,916) - Other (473) (1,237) ----------------- -------------------- Net cash used by financing activities (111,810) (81,410) Cash flows of discontinued operations: Operating activities 8,580 8,458 Investing activities (2,422) (2,776) Financing activities - (48) ----------------- -------------------- 6,158 5,634 Increase in cash and cash equivalents 15,520 114,980 Cash and cash equivalents at January 1, 268,917 171,797 ----------------- -------------------- Cash and cash equivalents at March 31, $ 284,437 $ 286,777 ================= ==================== Cash paid during the period for: Interest $ 95,079 $ 71,336 Income taxes (refunds) $ (133) $ (1,859) (1) See footnote (1) on the first page.
Schedule A Reconciliation of Non-GAAP Financial Measures (1) (unaudited) For the quarter ended March 31, ----------------------------------------- (Dollars in thousands) 2006 2005 ------------------- ------------------ Net Income to Free Cash Flow; ----------------------------- Net Cash Provided by Operating Activities ----------------------------------------- Net income $ 50,483 $ 42,634 Add back: Depreciation and amortization 122,004 134,094 Income tax expense 26,607 25,216 Stock based compensation 2,677 2,265 Subtract: Cash refunded for income taxes (133) (1,859) Investment and other income (loss), net (1,351) 3,968 Capital expenditures 43,765 49,414 ------------------- ------------------ Free cash flow 159,490 152,686 Add back: Deferred income taxes 24,163 25,109 Noncash (gains)/losses, net 7,039 2,564 Investment and other income (loss), net (1,351) 3,968 Cash refunded for income taxes (133) (1,859) Capital expenditures 43,765 49,414 Subtract: Changes in current assets and liabilities 32,580 4,679 Income tax expense 26,607 25,216 Stock based compensation 2,677 2,265 Gain on sale of discontinued operations - 1,167 Income from discontinued operations 6,496 1,959 ------------------- ------------------ Net cash provided by operating activities $ 164,613 $ 196,596 =================== ==================
(1) See footnote (1) on the first page. -----END PRIVACY-ENHANCED MESSAGE-----