EX-99.1 2 dex991.htm PRESENTATION TO INVESTORS Presentation to Investors
Citizens Communications
2008
-
Investor
Presentation
Maggie
Wilderotter
–
Chairman
&
Chief
Executive
Officer
Don
Shassian
–
EVP
and
Chief
Financial
Officer
May 28, 2008
Exhibit 99.1

2
Safe Harbor Statement
This
presentation
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;
the
effects
of
competition
from
cable,
wireless
and
other
wireline
carriers
(through
voice
over
internet
protocol
(VOIP)
or
otherwise);
the
effects
of
greater
than
anticipated
competition
requiring
new
pricing,
marketing
strategies
or
new
product
offerings
and
the
risk
that
we
will
not
respond
on
a
timely
or
profitable
basis;
the
effects
of
general
and
local
economic,
business,
industry
and
employment
conditions
on
our
revenues;
our
ability
to
effectively
manage
service
quality;
our
ability
to
successfully
introduce
new
product
offerings,
including
our
ability
to
offer
bundled
service
packages
on
terms
that
are
both
profitable
to
us
and
attractive
to
our
customers;
our
ability
to
sell
enhanced
and
data
services
in
order
to
offset
ongoing
declines
in
revenue
from
local
services,
switched
access
services
and
subsidies;
changes
in
accounting
policies
or
practices
adopted
voluntarily
or
as
required
by
generally
accepted
accounting
principles
or
regulators;
the
effects
of
ongoing
changes
in
the
regulation
of
the
communications
industry
as
a
result
of
federal
and
state
legislation
and
regulation,
including
potential
changes
in
state
rate
of
return
limitations
on
our
earnings,
access
charges
and
subsidy
payments,
and
regulatory
network
upgrade
and
reliability
requirements;
our
ability
to
effectively
manage
our
operations,
operating
expenses
and
capital
expenditures,
to
pay
dividends
and
to
reduce
or
refinance
our
debt;
adverse
changes
in
the
credit
markets
and/or
in
the
ratings
given
to
our
debt
securities
by
nationally
accredited
ratings
organizations,
which
could
limit
or
restrict
the
availability
and/or
increase
the
cost
of
financing;
the
effects
of
bankruptcies
in
the
telecommunications
industry,
which
could
result
in
potential
bad
debts;
the
effects
of
technological
changes
and
competition
on
our
capital
expenditures
and
product
and
service
offerings,
including
the
lack
of
assurance
that
our
ongoing
network
improvements
will
be
sufficient
to
meet
or
exceed
the
capabilities
and
quality
of
competing
networks;
the
effects
of
increased
medical,
retiree
and
pension
expenses
and
related
funding
requirements;
changes
in
income
tax
rates,
tax
laws,
regulations
or
rulings,
and/or
federal
or
state
tax
assessments;
the
effects
of
state
regulatory
cash
management
policies
on
our
ability
to
transfer
cash
among
our
subsidiaries
and
to
the
parent
company;
our
ability
to
successfully
renegotiate
union
contracts
expiring
in
2008
and
thereafter;
our
ability
to
pay
a
$1.00
per
common
share
dividend
annually,
which
may
be
affected
by
our
cash
flow
from
operations,
amount
of
capital
expenditures,
debt
service
requirements,
cash
paid
for
income
taxes
(which
will
increase
in
the
future)
and
our
liquidity;
the
effects
of
fully
utilizing
our
federal
net
operating
loss
carryforwards
and
alternative
minimum
tax
credit
carryforwards
that
were
generated
in
prior
years,
which
has
significantly
increased
our
cash
taxes
in
2007
and
will
continue
to
do
so
in
2008
and
2009;
the
effects
of
any
future
liabilities
or
compliance
costs
in
connection
with
worker
health
and
safety
matters;
and
the
effects
of
any
unfavorable
outcome
with
respect
to
any
of
our
current
or
future
legal,
governmental,
or
regulatory
proceedings,
audits
or
disputes.
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

3
Non-GAAP Financial Measures
The
Company
uses
certain
non-GAAP
financial
measures
in
evaluating
its
performance.
These
include
free
cash
flow
and
EBITDA
or
“operating
cash
flow”
which
we
define
as
operating
income
plus
depreciation
and
amortization.
A
reconciliation
of
the
differences
between
EBITDA
and
free
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
EBITDA,
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
severance
and
early
retirement
costs
in
2004,
2005,
2006,
2007
and
the
first
quarter
of
2008,
a
pension
curtailment
gain
in
2007
and
management
succession
and
strategic
alternatives
expenses
in
2004
because
the
Company
believes
that
the
magnitude
of
such
costs
incurred
in
any
one
period
materially
exceeds
that
which
has
been
incurred
by
the
Company
in
any
other
period
during
2004
through
2008.
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.
EBITDA
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
presentation
should
be
read
in
conjunction
with
the
financial
statements
and
footnotes
contained
in
our
documents
filed
with
the
U.S.
Securities
and
Exchange
Commission.

4
Our Mission & Values:
Our Mission:
Be the leader in providing communications services to residential and
business customers in our markets
Our Values:
Put the customer first
Keep our commitments; Be
accountable
Be ethical in all of our dealings
Be innovative; Practice continuous
improvement
Be active in our communities
Take the initiative
Use resources wisely
Do it right the first time
Be team players
Have a positive attitude
Treat one another with
respect

5
What You Can Expect From Us
Provide a Unique Customer Experience
Annual Growth in Customer Revenue
New Products and Innovative Marketing
Consistently Strong EBITDA Margins
Continuous Achievement of Cost Reduction Initiatives
Efficient Execution of Our Operating Strategy
“Competitively
Fit”
–
Lean
&
Flexible
Shareholder Friendly Actions
Sustainable, Consistent Dividend & Share Repurchases

6
Keys to Success
Great Assets
Unique Customer Experience
Proven Ability to Integrate New Properties
Consistent Delivery of “Best in Class”
Results
Focus on Shareholder Friendly Actions

7
Great Assets
Diverse Geographic Mix
Rural Footprint (17 Lines / Sq Mile)
Mature
Cable
VOIP
Competition
(58%
of
Our
Footprint
1
)
Diverse Revenue Base
24 States; 285
counties; 70 Local Market Clusters
Reliable, Robust Networks
Diverse, High Capacity Data Backbone
12,060 Route Miles / Avg. 65% Utilized
Extensive HSI Availability
87% Availability
(1Mb-87%
/
3Mb-63%
/
6Mb-41%
/
20Mb-14%)
2
Notes
1. As of 12/31/07
2. Based on Product Availability View as of 03/31/08

8
Great Assets (continued)
Efficient Operating Structure
Centralized Common Support Functions
Standardized Field Organizations
Flexible Work Rules
Dedicated and Experienced Workforce
Hiring and Retaining “Great Athletes”
Motivated, Results Oriented Culture
Innovative Solutions to Increase Workforce Efficiency
Work-at-Home Program

9
A Unique Customer Experience
Big Company Advantages, Small Company Feel,
Delivering A “Peace
of Mind”
Experience
Local Manager Structure Cultivates Local Relationships
State Call Center Queues
Full HSI Installations
Unique Welcome Process
PC Data Back up and Restoration
Value Bundles: Voice, Data, Video
Exceptional Service Levels
24 hour Customer Service; 2 Hour Appointment Windows;
Strong Secure Customer Index Results

10
A Unique Customer Experience (continued)
Broad Spectrum of Products & Services
Simple Double Play & Triple Play Bundles
Good, Better, Best Choices for Voice, Video, Data
Peace of Mind Product Suite
Directory Advertising
Wireless Data
Home Security Monitoring (Trial)
Innovative Marketing Programs
Multi-Year Price Protection Plans
Loyalty Programs
Aspirational Gifts
Community Connections
Take The Lead

11
Integrating New Properties
Well Positioned for Continued Industry Consolidation
Clearly Established Acquisition Criteria
Commonwealth Telephone
Global Valley Networks
Proven Integration Process Provides Confidence in
Achieving Synergy Targets
Commonwealth Integration
4.8%
Growth
in
Average
Customer
Revenue
Per
Line
1
26.2%
Growth
in
HSI
Subscribers
2
>95%
of
New
HSI
Adds
on
Price
Protection
Plans
3
Expense Synergy Target of $40M
$29M
in
Annual
Synergies
Realized
4
Notes
1.
Compares
Q1
2008
versus
Q1
2007
average
customer
revenue
per
line.
Q1
2007
is
ProForma
to
include
an
additional
2.25
months
of
CTE
and
the
sale
of
the
CTE
Equipment
Co.
Also
, access
line
counts
were
restated
to
conform
to
Citizens
reporting
methodology.
2. Compares ending units at 3/31/08 versus ending units as of 3/31/07
3. As
a
percentage
of
all
additions
made
post
acquisition
4. Represents
annual value of synergies released through 12/31/07
through
12/31/07

12
“Best -
in -
Class”
Results
Maintaining Stable Revenues and Margins

13
“Best
–
In
–
Class”
Results
(continued)
Consistent Growth in Customer Revenue
22 New Products Rolled Out in past 3 years
Approximately $100 Million in New Product Revenue
Industry Leading EBITDA Margins
54.2%
1
-
For the Quarter Ending March 31, 2008
Approximately $20 -
$25 Million of Incremental Annual
Expense Savings In Process for 2008/2009
Billing Systems Consolidation, LD Least Cost Routing, Work
Simplification, Benefits Savings, Network Management
Strong, Stable Free Cash Flow Generation
Exceptional Customer Satisfaction
Notes
1. For a detailed definition please refer to page 18.

14
Focus on Shareholder Value
Shareholder Friendly Actions
Consistent, Sustainable Dividend
Annual Share Buybacks
Among Highest % of Cash Returned to Shareholders
Solid Balance Sheet
Investment Grade Debt Covenants
No Debt Refinancing Needed Until 2011

15
Selected Financial Metrics
23.1%
$528
13.8%
$316
54.7%
21.5%
0.9%²
$1,809
$2,288
2007
30.4%
$173
8.4%
$48
54.2%
22.7%
(0.3%)
3
$461
$569
Q1 2008
$2,025
$2,017
$2,022
Revenue
$562
$544
$503
Free Cash Flow
5
$269
$259
$264
CAPEX
$1,597
$1,586
$1,565
Customer Revenue
1
-
% of Revenue
-
% of Revenue
EBITDA Margin %
4
HSI Penetration
-
% Growth
($ in Millions)
27.7%
27.0%
24.9%
13.3%   
12.8%
13.1%
55.7%
55.3%
54.5%
18.5%
14.2%
9.4%
0.7%
1.3%
1.5%
2006
2005
2004
Notes
1. Customer revenue is defined as total revenue less access services. Access services include switched network access and subsidies.
2. % Growth for 2007 excludes $196.4M of revenue from acquisitions in 2007.
3.
%
Growth
for
Q1
2008
comparesQ1
2008
results
versusQ1
2007
results
ProForma
for
an
additional
2.25
months
of
CTE,
the
acquisition
of
GVN
and
the
sale
of
the
CTE
Equipment
Co.
4. For a detailed definition please refer to page 18.
5. Free cash flow includes ELI for all years prior to its sale in July of 2006.  For a detailed definition of free cash flow, refer to page 19.

16
What You Can Expect From Us
Provide a Unique Customer Experience
Annual Growth in Customer Revenue
New Products and Innovative Marketing
Consistently Strong EBITDA Margins
Continuous Achievement of Cost Reduction Initiatives
Efficient Execution of Our Operating Strategy
“Competitively
Fit”
–
Lean
&
Flexible
Shareholder Friendly Actions
Sustainable, Consistent Dividend & Share Repurchases

17
Appendix
Reconciliation of Non-GAAP financial measures

18
Reconciliation of Non-GAAP Financial
Measures
($ in 000's)
2004
2005
2006
2007
Q1 2008
EBITDA (Operating Cash Flow)
Operating Income
460,301
$   
588,968
$   
644,490
$   
705,416
$   
164,312
$
Add back:
Depreciation and amortization
549,381
520,204
476,487
545,856
141,080
EBITDA (Operating Cash Flow), as reported
1,009,682
$
1,109,172
$
1,120,977
$
1,251,272
$
305,392
$
Add back:
Severance and early retirement costs
1,182
6,981
7,193
13,874
2,891
Pension Curtailment Gain (Non Cash)
-
-
-
(14,379)
-
Management succession and strategic alternatives expenses
90,632
-
-
-
-
EBITDA (Operating Cash Flow), as adjusted
1,101,496
$
1,116,153
$
1,128,170
$
1,250,767
$
308,283
$
Revenue
2,022,378
$
2,017,041
$
2,025,367
$
2,288,015
$
569,205
$
EBITDA (Operating Cash Flow), as adjusted as % of Revenue
54.5%
55.3%
55.7%
54.7%
54.2%
For the years ended December 31,

19
Reconciliation of Non-GAAP Financial
Measures
Notes
1. Includes premium paid on debt repurchase in second quarter.
($ in 000's)
2004
2005
2006
2007
Q1 2008
Net Income Available to Common Shareholders
to Free Cash Flow
Net income available to common shareholders
72,150
$      
202,375
$    
344,555
$    
214,654
$    
45,589
$  
Add back:
Depreciation and amortization
549,381
520,204
476,487
545,856
141,080
Income tax expense
4,247
75,270
136,479
128,014
26,628
Management succession and strategic alternatives expenses
90,632
-
-
-
-
Stock based compensation
10,963
8,427
10,340
9,022
3,019
Subtract:
Cash paid (refunded) for income taxes
(4,901)
4,711
5,365
54,407
1,859
Pension Curtailment Gain (Non-Cash)
-
-
-
14,379
-
Other
income
(loss),
net
(34,242)
(2,843)
60,271
(15,038)
(1)
(6,339)
Capital expenditures
263,949
259,448
268,806
315,793
47,986
Gain on sale of discontinued operations
-
1,167
71,635
-
-
Free cash flow
502,567
$    
543,793
$    
561,784
$    
528,005
$    
172,810
$
Revenue
2,022,378
$
2,017,041
$
2,025,367
$
2,288,015
$
569,205
$
Free cash flow as % of Revenue
24.9%
27.0%
27.7%
23.1%
30.4%
For the years ended December 31,