EX-99.1 2 analsched3rdq07.txt PR AND ANALYST SCHEDULES 3Q07 Exhibit 99.1 Citizens Communications 3 High Ridge Park Stamford, CT 06905 203.614.5600 Web site: www.czn.net Contact: David Whitehouse Senior Vice President & Treasurer 203.614.5708 david.whitehouse@czn.com Citizens Communications Reports 2007 Third-Quarter Results * Revenues up 13.5% year over year * Continued strong operating income and cash flow margins * 17,900 high speed internet additions * 5,400 Dish Network video additions * Year-to-date dividend payout ratio of 60.1% * $250 million stock repurchase program completed * 2007 Free cash flow and capital spending expectations unchanged Stamford, Conn., November 6, 2007 -- Citizens Communications (NYSE:CZN) today reported third quarter 2007 revenues of $575.8 million, operating income of $165.9 million, and net income of $47.4 million. Third quarter 2007 results include a previously announced charge of approximately $12.1 million for severance and early retirement costs primarily related to ongoing initiatives to enhance customer service, streamline operations and reduce costs. This compares to severance and early retirement costs in the third quarter of 2006 of $0.5 million. "We delivered another quarter of strong financial results," said Maggie Wilderotter, Chairman and CEO of Citizens. "Continued customer product revenue growth along with disciplined expense control, realized synergies on our Commonwealth acquisition and other expense reduction initiatives generated a 52.8 percent operating cash flow margin. Excluding the $12.1 million severance and early retirement costs, our third quarter operating cash flow margin for the quarter would have been 54.9 percent. Our penetration levels increased on all bundled products. Our residential high speed penetration is 30 percent and high speed revenues continue to be over $40.00 per customer per month. Our wireless data initiative is now operating in nine municipalities, four colleges and universities and over 20 hot spots in our territory. We are also excited about our recently closed acquisition of Global Valley and remain confident in delivering on our results for the remainder of the year." Revenue for the third quarter of 2007 was $575.8 million, as compared to $507.2 million in the third quarter of 2006, a 13.5 percent increase. The third quarter 2007 increase of $68.6 million is primarily a result of $80.5 million of revenues related to the operations of Commonwealth Telephone Enterprises, which was acquired on March 8, 2007, and a $13.1 million increase in data and internet services revenue, offset by declines in Federal and state subsidies and lower local services revenues resulting from reduced access lines. Other operating expenses for the third quarter of 2007 were $215.3 million, as compared to $186.7 million in the third quarter of 2006, a 15.3 percent increase. The third quarter 2007 increase of $28.6 million is primarily a result of $23.8 million in other operating expenses related to the operations of Commonwealth Telephone Enterprises and the incremental charge for severance and early retirement costs, offset by lower compensation and benefit costs resulting from reduced number of employees and improved expense controls. The purchase of Commonwealth Telephone Enterprises has enabled the Company to leverage its centralized back office, customer service and administrative support functions over a larger asset base. Depreciation and amortization expense for the third quarter of 2007 was $138.1 million, as compared to $117.0 million in the third quarter of 2006, an 18 percent increase. Depreciation and amortization expense for the third quarter of 2007, excluding the impact of the acquisition, decreased $5.8 million or 5.0 percent as compared to the third quarter of 2006. The decrease is primarily due to a declining net asset base. The Company added approximately 17,900 high-speed internet customers during the third quarter of 2007 and had more than 497,200 high-speed internet customers at September 30, 2007. The Company added approximately 5,400 video customers during the third quarter of 2007 and had more than 86,400 video customers at September 30, 2007. Operating income for the third quarter of 2007 was $165.9 million and operating income margin was 28.8 percent, as compared to operating income of $160.7 million and operating income margin of 31.7 percent in the third quarter of 2006. The third quarter 2007 increase of $5.2 million is primarily a result of $18.9 million related to the operations of Commonwealth Telephone Enterprises and $5.8 million from a reduction in depreciation and amortization, offset by the incremental charge for severance and early retirement costs. Third quarter 2007 income from continuing operations and net income was $47.4 million as compared to third quarter 2006 income from continuing operations of $51.3 million and net income of $128.5 million. Excluding the severance and early retirement costs of $12.1 million and $0.5 million from third quarter 2007 and 2006, respectively, and excluding the income from discontinued operations in 2006, income from continuing operations in the third quarter of 2007 and 2006 would have been $54.9 million and $51.6 million, respectively. Capital expenditures were $90.9 million for the third quarter of 2007 and $202.6 million for the first nine months of 2007, including $24.2 million related to the acquired property since the date of acquisition. Free cash flow was $118.9 million for the third quarter of 2007 and $422.7 million for the first nine months of 2007. The Company's dividend represents a payout of 60.1 percent of free cash flow for the first nine months of 2007. -MORE- During the third quarter, the Company repurchased 10,472,000 shares of its common stock for $148.4 million. The Company completed its $250.0 million authorized stock repurchase program in mid-October 2007. In addition, during the third quarter, the Company redeemed $30.4 million principal amount of its industrial development revenue bonds. The Company continues to expect that its capital expenditures and free cash flow for the full year 2007 will be approximately $315 million to $325 million and approximately $500 million to $520 million, respectively. The Company uses certain non-GAAP financial measures in evaluating its performance. These include free cash flow and operating cash flow. A reconciliation of the differences between free cash flow and operating cash flow and the most comparable financial measures 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 and operating cash flow, as the Company defines them, 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. The Company has shown adjustments to its financial presentations to exclude the $12.1 million and $0.5 million of severance and early retirement costs in the third quarter of 2007 and 2006, respectively, because the Company believes that the magnitude of such costs in the third quarter of 2007 materially exceeds that which has been incurred by the Company in any other quarter during 2006 and 2007. The Company has shown adjustments to its financial presentations to exclude the effects of the acquisition of Commonwealth because of the magnitude of the acquisition and its impact on the Company's financial results in 2007. -MORE- 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 and dividends are not deducted in determining such measure. Operating cash flow has similar shortcomings as interest, income taxes, capital expenditures, debt repayments and dividends are not deducted in determining this 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 filed with the U.S. Securities and Exchange Commission. About Citizens Communications Citizens Communications Company (NYSE:CZN) operates under the brand name of Frontier and offers telephone, television and internet services in 24 states with approximately 6,100 employees. More information is available at www.czn.com, www.frontieronline.com and www.frontier.myway.com. 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: reductions in the number of our access lines and high-speed internet subscribers; competition from cable, wireless or other wireline carriers; greater than anticipated competition; our ability to successfully introduce new product offerings, including bundled service packages; our ability to sell enhanced and data services; the effects of ongoing changes in the regulation of the communications industry; our ability to effectively manage our operations, costs and capital spending; adverse changes in our debt ratings; effects of state regulatory cash management policies on our ability to transfer cash among our subsidiaries and parent company; our ability to pay a $1.00 per share dividend annually may be affected by our cash flow from operations, amount of capital expenditures, debt service requirements, cash paid for income taxes and our liquidity; increases in our cash taxes in 2007 and thereafter; and general and local economic and employment conditions. 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 and the foregoing information should be read in conjunction with these filings. We do 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 (1) (unaudited) For the quarter ended For the nine months ended September 30, September 30, --------------------------- % -------------------------------- % (Amounts in thousands, except per share amounts) 2007 2006 Change 2007 2006 Change ----------------------------------- ----------------------------------------- Income Statement Data Revenue $575,814 $507,198 14% $1,710,787 $1,520,971 12% ------------- ----------- --------------- ------------- Network access expenses 56,566 42,791 32% 159,237 121,411 31% Other operating expenses 215,266 186,678 15% 620,325 553,479 12% Depreciation and amortization 138,057 117,008 18% 400,700 358,564 12% ------------- ----------- --------------- ------------- Total operating expenses 409,889 346,477 18% 1,180,262 1,033,454 14% ------------- ----------- --------------- ------------- Operating income 165,925 160,721 3% 530,525 487,517 9% Investment and other income, net (2) 7,172 4,361 64% 10,672 68,373 -84% Interest expense 95,158 82,186 16% 287,771 252,920 14% ------------- ----------- --------------- ------------- Income from continuing operations before income taxes 77,939 82,896 -6% 253,426 302,970 -16% Income tax expense 30,524 31,562 -3% 97,785 112,903 -13% ------------- ----------- --------------- ------------- Income from continuing operations 47,415 51,334 -8% 155,641 190,067 -18% Income from discontinued operations, net of tax (3) - 77,125 -100% - 90,577 -100% ------------- ----------- --------------- ------------- Net income attributable to common shareholders $ 47,415 $128,459 -63% $ 155,641 $ 280,644 -45% ============= =========== =============== ============= Weighted average shares outstanding 334,128 319,891 4% 332,397 323,160 3% Basic net income per share attributable to common shareholders (4) Income from continuing operations $ 0.14 $ 0.16 -13% $ 0.47 $ 0.59 -20% Income from discontinued operations - 0.24 -100% - 0.28 -100% ------------- ----------- --------------- ------------- Net income per common share $ 0.14 $ 0.40 -65% $ 0.47 $ 0.87 -46% ============= =========== =============== ============= Other Financial Data Capital expenditures $ 90,872 $ 65,072 40% $ 202,641 $ 163,356 24% Operating cash flow (5) 303,982 277,729 9% 931,225 846,081 10% Free cash flow (5) 118,862 137,167 -13% 422,712 460,436 -8% Dividends paid 83,243 80,342 4% 254,084 243,115 5% Dividend payout ratio (6) 70% 59% 19% 60% 53% 13%
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc. (CTE) for approximately $1.1 billion, and have included the historical results of CTE from the date of acquisition. (2) In April 2007, we redeemed $495.2 million principal amount of our 7.625% Senior Notes due 2008. The debt retirement generated a pre-tax loss on the early extinguishment of approximately $16.3 million. In April 2006, we received $64.6 million upon the liquidation of the Rural Telephone Bank. (3) On July 31, 2006, we sold our CLEC business, Electric Lightwave, LLC (ELI), for $247.0 million in cash plus the assumption of approximately $4.0 million in capital lease obligations. We recognized an after-tax gain on the disposal of ELI of $72.1 million. (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. (6) Represents dividends paid divided by free cash flow. 1
Citizens Communications Company Consolidated Financial and Operating Data (1) (unaudited) For the quarter ended For the nine months ended September 30, September 30, -------------------------------- % ----------------------------- % (Amounts in thousands, except operating data) 2007 2006 Change 2007 2006 Change ---------------------------------------- -------------------------------------- TELECOMMUNICATIONS Select Income Statement Data Revenue Local services $ 231,237 $ 203,035 14% $ 669,901 $ 609,855 10% Data and internet services 133,945 109,283 23% 382,355 312,831 22% Access services 113,127 104,964 8% 365,581 320,812 14% Long distance services 47,732 38,929 23% 135,213 116,779 16% Directory services 28,342 28,371 0% 85,676 85,715 0% Other 21,431 22,616 -5% 72,061 74,979 -4% -------------- ------------- --------------- -------------- Total revenue 575,814 507,198 14% 1,710,787 1,520,971 12% -------------- ------------- --------------- -------------- Expenses Network access expenses 56,566 42,791 32% 159,237 121,411 31% Other operating expenses (3) 215,266 186,678 15% 620,325 553,479 12% Depreciation and amortization 138,057 117,008 18% 400,700 358,564 12% -------------- ------------- --------------- -------------- Total operating expenses 409,889 346,477 18% 1,180,262 1,033,454 14% -------------- ------------- --------------- -------------- Operating Income $ 165,925 $ 160,721 3% $ 530,525 $ 487,517 9% ============== ============= =============== ============== Other Financial and Operating Data Employees 6,077 5,611 8% 6,077 5,611 8% Access lines 2,461,617 2,158,001 14% 2,461,617 2,158,001 14% Long distance subscribers 1,622,423 1,376,693 18% 1,622,423 1,376,693 18% High-speed internet (HSI) subscribers 497,241 373,489 33% 497,241 373,489 33% Video subscribers 86,446 52,664 64% 86,446 52,664 64% Switched access minutes of use (in millions) 2,711 2,560 6% 7,987 7,793 2% Average monthly revenue per average access line (2) $ 77.31 $ 77.79 -1% $ 81.37 $ 76.83 6%
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc. (CTE) for approximately $1.1 billion, and have included the historical results of CTE from the date of acquisition. (2) For the nine months ended September 30, 2007, the calculation excludes CTE data and includes the $38.7 million favorable impact from the first quarter 2007 settlement of a switched access dispute. The amount is $79.30 without the $38.7 million favorable impact from the settlement. (3) For the quarter and nine months ended September 30, 2007, includes severance and early retirement costs of $12.1 million and $13.9 million, respectively. For the quarter and nine months ended September 30, 2006, includes severance and early retirement costs of $0.5 million and $4.0 million, respectively. 2
Citizens Communications Company Condensed Consolidated Balance Sheet Data (1) (Amounts in thousands) (Unaudited) September 30, 2007 December 31, 2006 --------------------- -------------------- ASSETS ------ Current assets: Cash and cash equivalents $ 247,438 $ 1,041,106 Accounts receivable and other current assets 286,360 231,887 --------------------- -------------------- Total current assets 533,798 1,272,993 Property, plant and equipment, net 3,305,281 2,983,504 Other long-term assets 3,498,344 2,541,039 --------------------- -------------------- Total assets $ 7,337,423 $ 6,797,536 ===================== ==================== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Long-term debt due within one year $ 2,436 $ 39,271 Accounts payable and other current liabilities 404,371 386,372 --------------------- -------------------- Total current liabilities 406,807 425,643 Deferred income taxes and other liabilities 1,156,128 846,775 Long-term debt 4,725,376 4,467,086 Shareholders' equity 1,049,112 1,058,032 --------------------- -------------------- Total liabilities and shareholders' equity $ 7,337,423 $ 6,797,536 ===================== ====================
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc. (CTE) for approximately $1.1 billion, and have included the historical results of CTE from the date of acquisition. 3
Citizens Communications Company Consolidated Cash Flow Data (1) (unaudited) (Amounts in thousands) For the nine months ended September 30, ---------------------------------------- 2007 2006 ----------------- ------------------ Cash flows provided by (used in) operating activities: Net income $ 155,641 $ 280,644 Deduct: Income from discontinued operations - (18,498) Gain on sale of discontinued operations - (72,079) Adjustments to reconcile income to net cash provided by operating activities: Depreciation and amortization expense 400,700 358,564 Stock based compensation expense 7,809 7,960 Loss on debt exchange - 2,433 Losses on extinguishment of debt 20,186 - Investment gain - (61,428) Other non-cash adjustments 12,605 5,100 Deferred income taxes 54,124 103,893 Legal settlement (7,905) - Change in accounts receivable (5,581) 13,091 Change in accounts payable and other liabilities (81,493) (39,923) Change in other current assets (2,822) (791) ----------------- ------------------ Net cash provided by continuing operating activities 553,264 578,966 Cash flows provided from (used by) investing activities: Capital expenditures (202,641) (163,356) Cash paid for Commonwealth acquisition, net (661,081) - Proceeds from sale of discontinued operations - 247,284 Other assets (purchased) distributions received, net 4,401 63,757 ----------------- ------------------ Net cash (used by) provided from investing activities (859,321) 147,685 Cash flows provided from (used by) financing activities: Long-term debt borrowings 950,000 - Financing costs paid (11,727) - Premium paid to reitre debt (20,186) - Long-term debt payments (945,466) (227,461) Issuance of common stock 13,349 21,394 Dividends paid (254,084) (243,115) Common stock repurchased (219,111) (135,239) Other (386) (114) ----------------- ------------------ Net cash used by financing activities (487,611) (584,535) Cash flows of discontinued operations: Operating activities - 17,833 Investing activities - (6,593) Financing activities - - ----------------- ------------------ Net cash provided by discontinued operations - 11,240 (Decrease) increase in cash and cash equivalents (793,668) 153,356 Cash and cash equivalents at January 1, 1,041,106 263,749 ----------------- ------------------ Cash and cash equivalents at September 30, $ 247,438 $ 417,105 ================= ================== Cash paid during the period for: Interest $ 295,463 $ 264,621 Income taxes $ 53,670 $ 8,330
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc. (CTE) for approximately $1.1 billion, and have included the historical results of CTE from the date of acquisition. 4
Schedule A Reconciliation of Non-GAAP Financial Measures (1) For the quarter ended For the nine months ended September 30, September 30, ------------------------------ --------------------------------- (Amounts in thousands) 2007 2006 2007 2006 -------------- --------------- ------------- ---------------- Net Income to Free Cash Flow; ----------------------------- Net Cash Provided by Operating Activities ------------------------------------------ Net income $ 47,415 $ 128,459 $ 155,641 $ 280,644 Add back: Depreciation and amortization 138,057 117,008 400,700 358,564 Income tax expense 30,524 31,562 97,785 112,903 Stock based compensation 2,364 2,625 7,809 7,960 Subtract: Cash paid for income taxes 6,244 5,459 53,670 8,330 Investment and other income (loss), net of interest income 2,382 (123) (17,088) 55,870 Capital expenditures 90,872 65,072 202,641 163,356 Gain on sale of discontinued operations - 72,079 - 72,079 -------------- --------------- ------------ -------------- Free cash flow 118,862 137,167 422,712 460,436 Add back: Deferred income taxes 25,548 25,740 54,124 103,893 Non-cash (gains)/losses, net 30,395 5,093 40,600 15,493 Investment and other income (loss), net of interest income 2,382 (123) (17,088) (5,558) Cash paid for income taxes 6,244 5,459 53,670 8,330 Capital expenditures 90,872 65,072 202,641 163,356 Subtract: Changes in current assets and liabilities 37,521 5,846 97,801 27,623 Income tax expense 30,524 31,562 97,785 112,903 Stock based compensation 2,364 2,625 7,809 7,960 Income from discontinued operations - 5,046 - 18,498 -------------- --------------- ------------ -------------- Net cash provided by operating activities $ 203,894 $ 193,329 $ 553,264 $ 578,966 ============== =============== ============= ==============
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc. (CTE) for approximately $1.1 billion, and have included the historical results of CTE from the date of acquisition. 5
Schedule B Reconciliation of Non-GAAP Financial Measures (1) For the quarter ended September 30, 2007 For the quarter ended September 30, 2006 ------------------------------------------------ ---------------------------------------------- (Amounts in thousands) As Adjusted As Adjusted Operating Cash Flow and Excluding Excluding ----------------------- Severance and Severance and Severance and Severance and Operating Cash Flow Margin As Early Retirement Early Retirement As Early Retirement Early Retirement -------------------------- Reported Costs Costs Reported Costs Costs ------------------------------------------------- ----------------------------------------------- Operating Income $ 165,925 $ (12,098) $ 178,023 $ 160,721 $ (541) $ 161,262 Add back: Depreciation and amortization 138,057 - 138,057 117,008 - 117,008 ----------- -------------- ------------------ --------------- ----------------- -------------- Operating cash flow $ 303,982 $ (12,098) $ 316,080 $ 277,729 $ (541) $ 278,270 =========== ============== ================== =============== ================= ============== Revenue $ 575,814 $ 575,814 $ 507,198 $ 507,198 =========== ================== =============== ============== Operating income margin (Operating income divided by revenue) 28.8% 30.9% 31.7% 31.8% =========== ================== =============== ============== Operating cash flow margin (Operating cash flow dividend by revenue) 52.8% 54.9% 54.8% 54.9% =========== ================== =============== ============== For the nine months ended September 30, 2007 For the nine months ended September 30, 2006 ---------------------------------------------- ---------------------------------------------------- As Adjusted As Adjusted Operating Cash Flow and Excluding Excluding ----------------------- Severance and Severance and Severance and Severance and Operating Cash Flow Margin As Early Retirement Early Retirement As Early Retirement Early Retirement -------------------------- Reported Costs Costs Reported Costs Costs ---------------------------------------------- ---------------------------------------------------- Operating Income $ 530,525 $ (13,874) $ 544,399 $ 487,517 $ (3,956) $ 491,473 Add back: Depreciation and amortization 400,700 - 400,700 358,564 - 358,564 ----------- ------------- --------------- ------------ ----------------- ----------------- Operating cash flow $ 931,225 $ (13,874) $ 945,099 $ 846,081 $ (3,956) $ 850,037 =========== ============= =============== ============ ================= ================= Revenue $ 1,710,787 $ 1,710,787 $ 1,520,971 $ 1,520,971 =========== =============== ============ ================= Operating income margin (Operating income divided by revenue) 31.0% 31.8% 32.1% 32.3% =========== =============== ============ ================= Operating cash flow margin (Operating cash flow dividend by revenue) 54.4% 55.2% 55.6% 55.9% =========== =============== ============ =================
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc.(CTE) for approximately $1.1 billion, and have included the historical results of CTE from the date of acquisition. 6
Schedule C Citizens Communications Company Consolidating Financial and Operating Data Support (1) (unaudited) For the quarter ended September 30, 2007 ----------------------------------------------- Citizens For the (excluding quarter ended % (Amounts in thousands, except operating data) As Reported (1) CTE (1) CTE) (1) September 30, 2006 Change ----------------------------------------------- ----------------------------- TELECOMMUNICATIONS Select Income Statement Data Revenue Local services $ 231,237 $ 36,190 $ 195,047 $ 203,035 -4% Data and internet services 133,945 11,545 122,400 109,283 12% Access services 113,127 20,269 92,858 104,964 -12% Long distance services 47,732 8,334 39,398 38,929 1% Directory services 28,342 277 28,065 28,371 -1% Other 21,431 3,921 17,510 22,616 -23% ------------- -------------- -------------- ----------------- Total revenue 575,814 80,536 495,278 507,198 -2% ------------- -------------- -------------- ----------------- Expenses Network access expenses 56,566 10,981 45,585 42,791 7% Other operating expenses 215,266 (4) 33,916 (2) 181,350 (4) 186,678 -3% Depreciation and amortization 138,057 26,866 (3) 111,191 117,008 -5% ------------- -------------- -------------- ----------------- Total operating expenses 409,889 71,763 338,126 346,477 -2% ------------- -------------- -------------- ----------------- Operating Income $ 165,925 $ 8,773 $ 157,152 $ 160,721 -2% ============= ============== ============== ================= Other Financial and Operating Data Capital expenditures $ 90,872 $ 11,334 $ 79,538 $ 65,072 22% Access lines 2,461,617 425,632 2,035,985 2,158,001 -6% Long distance subscribers 1,622,423 239,168 1,383,255 1,376,693 0% High-speed internet (HSI) subscribers 497,241 56,739 440,502 373,489 18% Video subscribers 86,446 8,561 77,885 52,664 48% Switched access minutes of use (in millions) 2,711 366 2,345 2,560 -8% Average monthly revenue per average access line $ 77.31 $ 62.64 $ 80.37 $ 77.79 3%
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc. (CTE) for approximately $1.1 billion, and have included the historical results of CTE from the date of acquisition. (2) Includes $10.1 million of common corporate costs allocated to the CTE operations. (3) Includes amortization expense of $15.8 million regarding the customer base acquired in the Commonwealth acquisition. (4) Includes $12.1 million charge for severance and early retirement costs. 7
Schedule D Citizens Communications Company Consolidating Financial and Operating Data Support (1) (unaudited) For the nine months ended September 30, 2007 ----------------------------------------------- Citizens For the (excluding nine months ended % (Amounts in thousands, except operating data) As Reported (1) CTE (1) CTE) (1) September 30, 2006 Change ------------------------------------------------ ----------------------------- TELECOMMUNICATIONS Select Income Statement Data Revenue Local services $ 669,901 $ 81,255 $ 588,646 $ 609,855 -3% Data and internet services 382,355 24,724 357,631 312,831 14% Access services 365,581 48,637 316,944 320,812 -1% Long distance services 135,213 18,412 116,801 116,779 0% Directory services 85,676 621 85,055 85,715 -1% Other 72,061 10,530 61,531 74,979 -18% -------------- ------------- -------------- ------------------ Total revenue 1,710,787 184,179 1,526,608 1,520,971 0% -------------- ------------- -------------- ------------------ Expenses Network access expenses 159,237 21,667 137,570 121,411 13% Other operating expenses 620,325 (5) 84,954 (2) 535,371 (5) 553,479 -3% Depreciation and amortization 400,700 60,834 (3) 339,866 358,564 -5% -------------- ------------- -------------- ------------------ Total operating expenses 1,180,262 167,455 1,012,807 1,033,454 -2% -------------- ------------- -------------- ------------------ Operating Income $ 530,525 $ 16,724 $ 513,801 $ 487,517 5% ============== ============= ============== ================== Other Financial and Operating Data Capital expenditures $ 202,641 $ 24,211 $ 178,430 $ 163,356 9% Switched access minutes of use (in millions) 7,987 828 7,159 7,793 -8% Average monthly revenue per average access line (4) N/A N/A $ 81.37 $ 76.83 6%
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc. (CTE) for approximately $1.1 billion, and have included the historical results of CTE from the date of acquisition. (2) Includes $23.5 million of common corporate costs allocated to the CTE operations. (3) Includes amortization expense of $35.3 million for the 23 days of March and full second and third quarters regarding the customer base acquired in the Commonwealth acquisition. (4) For the nine months ended September 30, 2007, the calculation includes the $38.7 million favorable impact from the first quarter 2007 settlement of a switched access dispute. The amount is $79.30 without the $38.7 million favorable impact from the settlement. (5) Includes $13.9 million charge for severance and early retirement costs. 8