-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, l66tgWHFKXkmYxOFKUVKBnSRTj+5HnX5kvGylCPgBxXd9gKfbhk8PB/E9EmWAkxG +3bd5RnX1MBOvTO0n6+cdQ== 0000020520-94-000015.txt : 19940812 0000020520-94-000015.hdr.sgml : 19940812 ACCESSION NUMBER: 0000020520-94-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS UTILITIES CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 060619596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11001 FILM NUMBER: 94542821 BUSINESS ADDRESS: STREET 1: HIGH RIDGE PK BLDG 3 STREET 2: P O BOX 3801 CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2033298800 10-Q 1 CITIZENS UTILITIES COMPANY 6/30/94 FORM 10-Q 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 JUNE 30, 1994 -------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1994 Commission file number 0-1291 ------ CITIZENS UTILITIES COMPANY -------------------------- (Exact name of registrant as specified in its charter) Delaware 06-0619596 - -------------------------------- ------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) High Ridge Park P.O. Box 3801 Stamford, Connecticut 06905 - ------------------------------- ----------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 329-8800 ------------------------ NONE - ---------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes X No ---- ---- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of August 3, 1994 Common Stock Series A 131,538,400 Common Stock Series B 55,204,705 CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- INDEX ----- Page No. -------- Part I. Financial Information Consolidated Condensed Balance Sheets June 30, 1994 and December 31, 1993 2 Consolidated Condensed Statements of Income for the Three Months Ended June 30, 1994 and 1993 3 Consolidated Condensed Statements of Income for the Six Months Ended June 30, 1994 and 1993 4 Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 1994 and 1993 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)
June December 30, 1994 31, 1993 -------- -------- ASSETS ------ Current assets: Cash and cash equivalents $ 15,258 $ 21,738 Temporary investments 116,633 89,752 Accounts receivable 130,943 114,313 Other 34,542 14,934 ---------- ---------- 297,376 240,737 Property, plant and equipment 3,151,033 2,153,891 Less accumulated depreciation 893,143 461,924 ---------- ---------- 2,257,890 1,691,967 Investments 367,145 411,022 Regulatory assets 145,198 146,207 Deferred debits and other assets 194,656 137,185 ---------- ----------- $3,262,265 $2,627,118 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Long-term debt due within one year $ 10,345 $ 1,620 Short-term debt 655,270 380,000 Other 260,411 246,605 ---------- ----------- 926,026 628,225 Customer advances for construction and contributions in aid of construction 188,845 184,253 Deferred income taxes 233,308 213,471 Regulatory liabilities 27,409 28,376 Deferred credits and other liabilities 97,979 50,634 Long-term debt 731,453 547,673 ---------- ----------- 2,205,020 1,652,632 ---------- ----------- Shareholders' equity: Common stock issued, $.25 par value Series A 32,909 32,447 Series B 13,741 13,119 Additional paid-in capital 770,267 698,688 Retained earnings 231,180 230,232 Unrealized gain on securities classified as available for sale 9,148 0 --------- -------- 1,057,245 974,486 --------- -------- $3,262,265 $2,627,118 ========= ========= The accompanying Notes are an integral part of these Financial Statements. PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF INCOME ------------------------------------------- FOR THE THREE MONTHS ENDED JUNE 30, 1994 AND 1993 ------------------------------------------------- (In thousands, except per-share amounts) 1994 1993 ---- ---- Revenues $188,674 $146,170 Expenses: Operating expenses 105,464 86,536 Depreciation 24,618 14,115 -------- -------- 130,082 100,651 Income from operations 58,592 45,519 Other income, net 11,455 12,754 Interest expense 14,825 9,373 -------- -------- Income before income taxes 55,222 48,900 Income taxes 17,206 14,218 -------- -------- Net income $ 38,016 $ 34,682 ======== ======== Earnings per share of common stock: Series A $.21 $.19 ==== ==== Series B $.21 $.19 ==== ==== Number of common shares outstanding at June 30: Series A Common Stock 131,643 129,876 Series B Common Stock 54,954 48,184 Dividends declared on common stock: In Series A shares on Series A Common Stock and in Series B shares on Series B Common Stock paid quarterly - rate 1.15% 1.0% The accompanying Notes are an integral part of these Financial Statements. PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF INCOME ------------------------------------------- FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993 ----------------------------------------------- (In thousands, except per-share amounts) 1994 1993 ---- ---- Revenues $412,570 $312,085 Expenses: Operating expenses 256,998 199,771 Depreciation 50,019 28,280 -------- -------- 307,017 228,051 -------- -------- Income from operations 105,553 84,034 Other income, net 23,361 21,870 Interest expense 27,962 19,595 -------- ------- Income before income taxes 100,952 86,309 Income taxes 31,281 23,388 -------- -------- Net income $ 69,671 $ 62,921 ======== ========= Earnings per share of common stock: Series A $.38 $.34 ==== ==== Series B $.38 $.34 ==== ==== Number of common shares outstanding at June 30: Series A Common Stock 131,643 129,876 Series B Common Stock 54,954 48,184 Dividends declared on common stock: In Series A shares on Series A Common Stock and in Series B shares on Series B Common Stock paid quarterly - compounded rate 2.26% 2.21% The accompanying Notes are an integral part of these Financial Statements. PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ----------------------------------------------- FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993 ----------------------------------------------- (In thousands) 1994 1993 Net cash provided by operating activities $77,846 $85,182 ------- ------- Cash flows from investing activities: Construction expenditures (90,025) (64,522) Securities purchases (19,482) (151,882) Securities sales 20,136 116,304 Securities maturities 30,657 25,228 Business acquisitions (501,995) -- Other, net (4,702) 9,932 -------- ------- (565,411) (64,940) Cash flows from financing activities: Long-term debt borrowings 232,709 23,653 Long-term debt principal payments (29,764) (25,621) Short-term debt borrowings 275,270 -- Other, net 2,870 949 -------- -------- 481,085 (1,019) Increase (decrease) in cash and cash equivalents (6,480) 19,223 Cash and cash equivalents at January 1, 21,738 19,752 -------- ------- Cash and cash equivalents at June 30, $15,258 $38,975 ======== ======= The accompanying Notes are an integral part of these Financial Statements.
PART I. FINANCIAL INFORMATION (Continued) ----------------------------------------- CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- (1) The consolidated financial statements include the accounts of Citizens Utilities Company and all subsidiaries after elimination of intercompany balances and transactions. All adjustments, which consist of only normal recurring accruals, necessary for a fair statement of the results for the interim periods have been made. (2) Earnings per share is based on the average number of outstanding shares, adjusted for intervening stock dividends and stock splits. Earnings per share is presented for each Series separately, with historical adjustment for stock dividends and stock splits for each Series. The effect on earnings per share of outstanding stock options is immaterial. (3) In accordance with applicable regulatory systems of account, an allowance for funds used during construction is included in the cost of additions to property, plant and equipment and is allowed in rate base for rate making purposes. The allowance is not a cash item. The amount relating to equity is included in Other income, net and the amount relating to borrowings is offset against Interest expense. (4) On December 22, 1993, Natural Gas Company of Louisiana ("NGL") was merged into the company in a transaction accounted for as a pooling of interests. The company's income statements and statement of cash flows at June 30, 1993 has been restated to include the results of NGL's operations for the three and six months ended June 30, 1993. The following pro forma financial information for the six months ended June 30, 1994 and 1993, presents the combined results of operations of the Company and the New York GTE Telephone property acquired on June 30, 1994 and the Idaho, Tennessee, Utah and West Virginia properties acquired on December 31, 1993 as if the acquisitions had occurred at the beginning of the respective periods. The pro forma financial information does not necessarily reflect the results of operations that would have occurred had the Company and the GTE Telephone properties constituted a single entity during such periods.
June 30, 1994 June 30, 1993 ------------- ------------- Revenues $507,347,000 $483,157,000 Net Income $ 78,339,000 $ 73,599,000 Earnings Per Share $ .39 $ .36
(5) Effective January 1, 1994, the company adopted Statements of Financial Accounting Standards ("SFAS") No. 112 "Employers' Accounting for Postretirement Benefits" and SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities". The company applied the provisions of these accounting standards prospectively. SFAS No. 112 requires the accrual of the expected costs of providing benefits, if any, to former or inactive employees after termination of employment for reasons other than retirement. Adoption of SFAS No. 112 did not have a material effect on the Consolidated Financial Statements. Adoption of SFAS No. 115 requires fair value reporting for certain investments in debt and equity securities. Pursuant to the provisions of SFAS 115, the company classified its Temporary investments and Investments into two categories, "held-to-maturity" ($426,882,000 at June 30, 1994) and "available-for-sale" ($42,581,000 at June 30, 1994). The company recorded unrealized holding gains on securities classified as available-for-sale as an increase to investments.
Available for Sale Held to Maturity ------------------ ---------------- Aggregate fair value $ 56,896,000 $506,049,000 Gross unrealized holding gains 14,315,000 79,167,000 Amortized cost basis 42,581,000 426,882,000 Held to Maturity Securities --------------------------- Contractual Maturities Fair Value Amortized Cost - ---------------------- ---------- -------------- Within 1 year $118,007,000 $117,459,000 2-5 years 217,584,000 216,763,000 6-10 years 15,615,000 15,042,000 Thereafter 154,843,000 77,618,000
There were no sales of securities classified as held-to-maturity. The change in the net unrealized gains on available-for-sale securities that was included in a separate component of shareholders' equity was $9,148,000. The company does not invest in securities classified as trading securities. The amortized cost and realized gains and losses on available-for-sale securities sold during the six months ended June 30, 1994 were $20,136,000, $155,000 and ($21,000), respectively. 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 (update) For the six months ended June 30, 1994, the primary source of funds was from operations. Funds requisitioned from the 1993, 1992 and 1991 Series Industrial Development Revenue Bond construction fund trust accounts were used to pay for construction of utility plant. Commercial paper notes payable in the amount of $702,000,000 were outstanding as of June 30, 1994, of which $655,270,000 is classified as short-term debt as it represents the balance of the amount that was issued to temporarily and partially fund the GTE Telephone Properties acquired on December 31, 1993 and June 30, 1994. The $655,270,000 of commercial paper is expected to be repaid from maturing temporary investments, funds from operations and proceeds from the planned issuance of securities. On April 20, 1994, the company issued $175,000,000 of debentures at par with an interest rate of 7.60% and a maturity date of June 1, 2006. The proceeds from the sale of the debentures were used to repay commercial paper notes outstanding. 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 a decrease in its working capital at June 30, 1994. The decrease is primarily due to the issuance of additional short-term debt to temporarily and partially fund the acquisition of the GTE Telephone properties acquired on December 31, 1993 and June 30, 1994. The company has lines of credit with commercial banks under which it may borrow up to $1,200,000,000. There were no amounts outstanding under these lines at June 30, 1994. On June 16, 1994, Citizens Utilities Rural Company, Inc., a subsidiary of the company, was advanced $2,394,000 under the subsidiary's Rural Telephone Bank Loan Contract; these funds bear an initial interest rate of 5.31% with an ultimate maturity date of December 31, 2027. During the six months ended June 30, 1994, the company was authorized net increases in annual revenues for properties in Arizona, California, Pennsylvania, and Vermont totaling $6,376,000. The company has requests for increases in annual revenues pending before regulatory commissions in California and Hawaii. (b) Results of Operations --------------------- Operating revenues for the three month period ended June 30, 1994 increased compared to the same period last year primarily due to increased telecommunications revenues. Telecommunications revenues for the second quarter of 1994 totaled $88,754,000, a 97% increase over the $45,051,000 earned in the 1993 second quarter. Operating revenues for the six month period ended June 30, 1994 increased compared to the same period in 1993 primarily due to increased telecommunications and natural gas revenues. Telecommunications revenues for the six months totaled $173,485,000, a 96% increase over the 1993 amount of $88,691,000. The increases in telecommunications revenues for both the quarter and six months ended June 30, 1994 were primarily due to revenues derived from operating 189,000 local telephone access lines in Idaho, Tennessee, Utah and West Virginia acquired on December 31, 1993 from GTE Corp. Natural gas revenues for the six months totaled $122,780,000, a 10% increase over the 1993 amount of $112,089,000. The increase was primarily due to $6,037,000 from increased average revenue per MCF of gas sold to residential and commercial customers and $4,527,000 from increased consumption as a result of colder weather conditions. Operating expenses for the three months ended June 30, 1994 increased compared to the like 1993 period primarily due to increased telecommunications operating expenses. Operating expenses for the six months ended June 30, 1994 increased compared to the like 1993 period primarily due to increased natural gas purchased and telecommunications operating expenses. PART I. FINANCIAL INFORMATION (Continued) ------------------------------------------ CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- Item 2 (b) - (continued) ----------------- Natural gas purchased for the six months ended June 30, 1994 totaled $70,496,000 and 18% increase over the 1993 amount of $59,608,000 primarily due to higher supplier prices and increased volume to satisfy increased customer consumption. Depreciation expense and taxes other than income for the three and six months ended June 30, 1994 increased compared to the like 1993 period primarily due to operation of the 189,000 local telephone access lines acquired from GTE Corp. on December 31, 1993. Other income, net for the three months ended June 30, 1994 decreased compared to the like 1993 period primarily due to the liquidation of investment balances to partially fund the purchase of the 189,000 local telephone access lines acquired on December 31, 1993. The decrease was partially offset by an increase in investment income from the company's Centennial investment and the allowance for funds used during construction; a direct result of increased construction of utility property, plant and equipment. Other income, net for the six months ended June 30, 1994 increased compared to the like 1993 period primarily due to an increase in the allowance for funds used during construction, a gain on the sale of land and an increase in investment income from the company's Centennial investment. The increase was partially offset by the liquidation of investment balances to partially fund the purchase of the 189,000 local telephone access lines acquired on December 31, 1993. Interest expense for the three and six months ended June 30, 1994 increased compared with the like 1993 periods primarily as a result of the issuance of debt securities, the proceeds of which were used to temporarily and partially finance the acquisition of the 189,000 local telephone access lines acquired on December 31, 1993, and an increase in industrial development revenue bond borrowings. The increase in Interest expense was partially offset by increased allowance for funds used during construction related to borrowings. Income taxes for the three and six months ended June 30, 1994 increased compared to the like 1993 period primarily due to increased taxable income. PART II. OTHER INFORMATION --------------------------- CITIZENS UTILITIES COMPANY AND SUBSIDIARIES ------------------------------------------- Item 1. Legal Proceedings ----------------- Reference is made to information describing certain legal matters under Item 3 "Legal Proceedings" in the company's Form 10-K for the year ended December 31, 1993. In May, 1994, the Delaware Court of Chancery granted the defendants' motion for a stay of proceedings in the Thorpe and Biggs action referred to in the third paragraph of Legal Proceedings in the company's 1993 Annual Report, Form 10-K, pending resolution of the settlement proceedings referred to in the fourth paragraph of Legal Proceedings in the company's 1993 Annual Report, Form 10-K. Discovery to confirm the reasonableness of the settlement terms reflected in the Memorandum of Understanding has been substantially completed. In September 1992, the United States Environmental Protection Agency filed a complaint with the United States District Court for the Northern District of Illinois relating to alleged violations by the company's Illinois subsidiary with respect to National Pollutant Discharge Elimination System permit requirements. The parties are presently in settlement discussions. Item 4. Submission of Matter to a Vote of Security Holders -------------------------------------------------- (a) The Registrant held its 1994 Annual Meeting of the Stockholders on May 20, 1994. (b) Proxies for the Annual Meeting were solicited pursuant to Regulation 14; there was no solicitation in opposition to management's nominees for directors as listed in the Proxy Statement and all such nominees were elected. The stockholder's voted 80% of total outstanding shares in the affirmative to elect all the nominees as directors. Directors elected were N.I. Botwinik, A.I. Fleischman, S. Harfenist, A.N. Heine, E.A. Rickless, J.L. Schroeder, R.D. Siff, R.A. Stanger, E. Tornberg, C.L. Tow and L. Tow. Stockholders voted only 2% of outstanding shares in the negative for one or more of the nominees. Item 6. Reports on Form 8-K ------------------- (b) No Form 8-K was required during the three months ended June 30, 1994. 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 August 10, 1994 By:/s/ Livingston E. Ross ---------------------- ---------------------- Vice President and Controller -----END PRIVACY-ENHANCED MESSAGE-----