SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 7, 2001
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, P.O. Box 3801
Stamford, Connecticut 06905
(Address of Principal Executive Offices) (Zip Code)
(203) 614-5600
(Registrant's Telephone Number, Including Area Code)
No Change Since Last Report
----------------------------------------------
(Former name or former address, if changed since last report)
Item 7. Financial Statements, Exhibits
(c) Exhibits
99.1 Press Release of Citizens Communications Company released
August 7, 2001 announcing earnings for the quarter and six months
ended June 30, 2001.
99.2 Financial and operating data
Citizens Communications
3 High Ridge Park
Stamford, CT 06905
203-614-5600
Web site: www.czn.net
FOR IMMEDIATE RELEASE
Contact:
Brigid Smith
Assistant Vice President,
Corporate Communications
203.614.5042
bsmith@czn.com
Citizens Communications Reports Financial Results
for the Second Quarter of 2001
Stamford, Conn., August 7, 2001-- Citizens Communications (NYSE:CZN, CZB) today
reported financial results for the quarter ended June 30, 2001. Consolidated
second-quarter revenue from continuing operations, which includes revenue from
the company's telecommunications, electric and gas operations, was $505.7
million, an increase of 21 percent from the second quarter of 2000. For the six
months ended June 30, 2001, consolidated revenue from continuing operations was
$1.13 billion, an increase of 30 percent from the same period of 2000.
Second quarter 2001 EBITDA from continuing operations totaled $174.9 million, a
45 percent increase over 2000 second quarter EBITDA of $120.6 million. For the
six months ended June 30, 2001, EBITDA from continuing operations totaled $368.5
million, a 44 percent increase over EBITDA of $255.3 million for the same period
of 2000.
The current and year-ago quarters include $153.8 million and $98.0 million of
EBITDA, respectively, from the company's ILEC and Electric Lightwave operations.
The current and year-ago quarters also include $10.0 million and $10.8 million
of EBITDA, respectively, from the company's gas operations and $11.1 million and
$11.8 million, respectively, of EBITDA from the company's electric operations.
The current and year-ago six-month periods ended June 30 include $306.9 million
and $193.5 million of EBITDA, respectively, from the company's ILEC and Electric
Lightwave operations. The current and year-ago six-month periods ended June 30
also include $38.8 million and $35.3 million of EBITDA, respectively, from the
company's gas operations and $22.8 million and $26.5 million, respectively, of
EBITDA from the company's electric operations.
Second quarter consolidated net loss was $0.6 million compared to consolidated
net income of $3.0 million for the prior year quarter.
For the six months ended June 30, 2001, consolidated net income was $19.1
million compared to consolidated net income of $10.3 million for the same period
of the prior year.
Telecommunications - Incumbent Local Exchange Carrier (ILEC )
Revenue for the second quarter of 2001 from the company's ILEC operations was
$288.8 million, up 27 percent from $227.4 million for the 2000 second quarter.
Acquisitions completed in the second half of 2000 representing approximately
340,700 access lines accounted for $52.5 million of the increase. Revenue for
the six months ended June 30, 2001 from the company's ILEC was $576.1 million,
up 27 percent from $453.7 million for the same period in 2000. Acquisitions
accounted for $100.6 million of the increase.
ILEC EBITDA for the second quarter was $149.0 million, up 50 percent from $99.2
million in the prior year period, resulting in an EBITDA margin of 52 percent.
Second quarter ILEC EBITDA results included $7.1 million of assimilation expense
related to acquisitions of telephone access lines that are pending. Absent this
one-time expense, continuing ILEC EBITDA was $156.1 million, a 46 percent
increase over the prior year's corresponding period, for an EBITDA margin of 54
percent for the 2001 second quarter compared to 47 percent in the second quarter
of 2000.
ILEC EBITDA for the six months ended June 30, 2001 was $298.0 million, up 48
percent from $201.1 million in the prior year period, resulting in an EBITDA
margin of 52 percent. ILEC EBITDA results for the six months ended June 30, 2001
included $12.5 million of assimilation expense related to acquisitions of
telephone access lines that are pending. Absent this one-time expense,
continuing ILEC EBITDA was $310.6 million, a 46 percent increase over the prior
year's corresponding period, for an EBITDA margin of 54 percent for the six
months ended June 30, 2001 compared to 47 percent in the same period of 2000.
Electric Lightwave, Inc. (NASDAQ:ELIX) (ELI)
Second quarter ELI revenue totaled $60.4 million compared to $60.6 million for
the prior year period. ELI revenue for the six months ended June 30, 2001 was
$123.0 million, compared to $117.4 million for the same period in 2000.
ELI second quarter EBITDA was $4.1 million, a $5.5 million improvement over the
$1.4 million loss of the year ago second quarter. ELI EBITDA for the six months
ended June 30, 2001 was $7.4 million, a $15.5 million improvement over the $8.1
million loss of the same period in 2000.
The Nasdaq Stock Market, Inc. has informed ELI that its Class A Common Stock
failed to maintain a minimum bid price of $5.00 for 30 consecutive trading days
and thus does not meet the minimum listing criteria of Nasdaq for shares listed
on the National Market System. ELI has filed an application for its listing to
be transferred to the Nasdaq SmallCap Market. As part of the application
process, Citizens Communications has agreed to convert approximately 25.3
million shares of ELI's Class B Common Stock into the same number of shares of
ELI's Class A Common Stock. Listing on Nasdaq's SmallCap Market requires that
the market capitalization of ELI's Class A Common Stock be at least $35 million.
Public Services
Gas and Electric second-quarter revenues totaled $157.6 million versus $131.3
million for the prior year quarter. Public Services EBITDA was $21.1 million, a
decrease of 7 percent from the second quarter of 2000.
Revenues for the six months ended June 30, 2001 totaled $432.8 million versus
$297.5 million for the same period in the prior year. For the six months ended
June 30, 2001, Public Services EBITDA was $61.6 million as compared to $61.8
million for the same period of 2000.
Acquisitions and Divestitures Update
On June 29, Citizens Communications completed the purchase from Global Crossing
Ltd. of 1.1 million local exchange telephone access lines owned by Frontier
Telephone. The purchase price was $3.4 billion. On July 2, 2001, Citizens
Communications completed the sale of its Louisiana Gas operations to Atmos
Energy Corporation for approximately $363.4 million in cash. On July 20, 2001,
Citizens Communications notified Qwest Communications International that it was
terminating an agreement to purchase approximately 540,000 access lines for $1.6
billion. On July 25, 2001, Citizens announced the sale of its Colorado Gas
division to Kinder Morgan for $11 million.
About Citizens Communications
-----------------------------
Citizens Communications serves 2.5 million access lines in 24 states and has
contracted to acquire an additional 70,000 access lines. Citizens owns 85
percent of Electric Lightwave, Inc. (NASDAQ:ELIX), a facilities-based,
integrated communications provider offering a broad range of services to
telecommunications-intensive businesses in the West. More information about
Citizens can be found at www.czn.net.
This document contains forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied in the statements. These and all forward-looking statements
(including oral representations) are only predictions or statements of current
plans that are constantly under review by the company. All forward-looking
statements may differ from actual results because of, but not limited to,
changes in the local and overall economy, changes in market conditions for debt
and equity securities, the nature and pace of technological changes, the number
and effectiveness of competitors in the company's markets, success in overall
strategy, changes in legal or regulatory policy, changes in legislation, the
company's ability to identify future markets and successfully expand existing
ones, the mix of products and services offered in the company's target markets,
the effects of acquisitions and dispositions and the ability to effectively
integrate businesses acquired. These important factors should be considered in
evaluating any statement contained herein and/or made by the company or on its
behalf. The foregoing information should be read in conjunction with the
company's filings with the U.S. Securities and Exchange Commission including,
but not limited to, reports on Forms 10-K and 10-Q. The company does not intend
to update or revise these forward-looking statements to reflect the occurrence
of future events or circumstances.
Citizens Communications Company
Financial and Operating Data by Service
(unaudited)
For the quarter ended For the six months ended
June 30, June 30,
-------------------------- -------------------
% %
(Amounts in thousands - except per-share amounts) 2001 2000 Change 2001 2000 Change
----------- --------- ------- ---------- --------- ------
Income Statement Data (1)
Revenue from continuing operations $ 505,741 $ 418,607 21% $ 1,130,023 $ 867,309 30%
Operating income from continuing operations 60,549 33,966 78% 148,432 72,698 104%
Income from discontinued operations, net of tax 3,367 2,663 26% 4,476 3,344 34%
Net income (649) 3,012 -122% 19,074 10,338 85%
Carrying cost of equity forward contracts 12,647 - 100% 12,647 - 100%
Net income (loss) available to common shareholders (13,296) 3,012 -541% 6,427 10,338 -38%
EBITDA Data (2)
EBITDA from continuing operations before acquisition
assimilation expenses $ 181,977 $ 128,226 42% $ 381,050 $ 266,913 43%
EBITDA from continuing operations 174,915 120,609 45% 368,504 255,322 44%
EBITDA from discontinued operations 13,532 11,418 19% 22,009 19,389 14%
Total Company EBITDA 188,447 132,027 43% 390,513 274,711 42%
Per Share Data
Net income available to common shareholders per common share $ (0.05) $ 0.01 -600% $ 0.02 $ 0.04 -50%
EBITDA per share from continuing operations 0.65 0.46 41% 1.38 0.98 41%
EBITDA per share from discontinued operations 0.05 0.04 25% 0.08 0.07 14%
Total Company EBITDA per share 0.70 0.51 37% 1.46 1.05 39%
EBITDA per share from continuing operations before acquisition
assimilation expenses 0.67 0.49 37% 1.43 1.02 40%
Shares of common stock outstanding 289,038 261,901 10% 289,038 261,901 10%
Weighted average shares outstanding 269,879 261,215 3% 266,898 261,426 2%
(1) Includes our Incumbent Local Exchange Carrier (ILEC), Electric Lightwave, Inc. (ELI), (our Competitive Local Exchange
Carrier) and our natural gas and electric businesses.
The natural gas and electric businesses are presented in continuing operations in the selected income statement
data and as assets held for sale on our balance sheet.
We are reporting our water and wastewater businesses as discontinued operations.
Prior year has been restated to conform to current presentation. Continuing operations reflect the elimination
of intercompany transactions (see segment footnote in the SEC Form 10-Q).
(2) EBITDA is operating income plus depreciation and amortization.
Citizens Communications Company
Consolidated Financial Data
(unaudited)
For the quarter ended For the six months ended
June 30, June 30,
----------------- ---------------------
% %
(Amounts in thousands - except per-share amounts) 2001 2000 Change 2001 2000 Change
-------------------------- ------------------------------
Income Statement Data
Continuing operations (1)
Revenue $ 505,741 $418,607 21% $1,130,023 $ 867,309 30%
Cost of Services 128,528 103,434 24% 353,893 224,342 58%
Depreciation and amortization 114,366 86,643 32% 220,072 182,624 21%
Other operating expenses 195,236 186,947 4% 395,080 376,054 5%
Acquisition assimilation expenses 7,062 7,617 -7% 12,546 11,591 8%
Operating income 60,549 33,966 78% 148,432 72,698 104%
Investment and other income, net 10,641 4,219 152% 13,425 9,817 37%
Minority interest - 5,937 -100% - 12,222 -100%
Interest expense 73,129 41,750 75% 134,581 79,340 70%
Income tax expense 525 471 11% 9,573 5,298 81%
Convertible preferred dividends 1,552 1,552 - 3,105 3,105 -
Income (loss) from continuing operations (4,016) 349 -1251% 14,598 6,994 109%
Income from discontinued operations, net of tax 3,367 2,663 26% 4,476 3,344 34%
Net income (649) 3,012 -122% 19,074 10,338 85%
Carrying cost of equity forward contracts 12,647 - 100% 12,647 - 100%
Net income (loss) available to common shareholders (13,296) 3,012 -541% 6,427 10,338 -38%
EBITDA and Capital Expenditure Data (2)
EBITDA from continuing operations $ 174,915 $120,609 45% $ 368,504 $ 255,322 44%
EBITDA from discontinued operations 13,532 11,418 19% 22,009 19,389 14%
Total Company EBITDA 188,447 132,027 43% 390,513 274,711 42%
EBITDA from continuing operations before
acquisition assimiliation expenses 181,977 128,226 42% 381,050 266,913 43%
Capital expenditures from continuing operations 87,177 119,071 -27% 184,093 252,305 -27%
Capital expenditures from assets held for sale 16,655 22,783 -27% 33,708 39,755 -15%
Capital expenditures from discontinued operations 2,861 22,719 -87% 12,893 34,476 -63%
Total Company capital expenditures 106,693 164,573 -35% 230,694 326,536 -29%
Balance Sheet Data
Cash and investments $ 222,896 $ 542,594 -59%
Total assets 10,845,688 6,073,322 79%
Net plant (continuing operations) 4,662,361 3,264,007 43%
Assets held for sale 1,240,998 1,070,922 16%
Assets of discontinued operations 687,275 608,899 13%
Long-term debt (continuing operations) 6,278,312 2,530,370 148%
Equity 2,016,196 1,879,580 7%
Shares of common stock outstanding 289,038 261,901 10%
Weighted average shares outstanding 269,879 261,215 3% 266,898 261,426 2%
Per-Share Data (3)
Net income available to common shareholders per
common share $ (0.05)$ 0.01 -527% $ 0.02 $ 0.04 -39%
EBITDA per share from continuing operations 0.65 0.46 40% 1.38 0.98 41%
EBITDA per share from discontinued operations 0.05 0.04 15% 0.08 0.07 11%
Total Company EBITDA per share 0.70 0.51 38% 1.46 1.05 39%
Book value per share 7.55 7.19 5%
Other Financial Data
Long-term debt to long-term debt and equity 76% 57%
Common equity market capitalization (in billions) $ 3.48 $ 4.52
Equity market capitalization (in billions) $ 3.68 $ 4.79
Market capitalization (in billions) (4) $ 9.96 $ 7.32
(1) Includes our Incumbent Local Exchange Carrier(ILEC),Electric Lightwave, Inc.(ELI), (our Competitive Local Exchange Carrier)
and our natural gas and electric businesses.
The natural gas and electric businesses are presented in continuing operations in the selected income statement
data and as assets held for sale in the balance sheet data.
We are reporting our water and wastewater businesses as discontinued operations.
Prior year has been restated to conform to current presentation. Continuing operations reflect the elimination
of intercompany transactions (see segment footnote in the SEC Form 10-Q).
(2) EBITDA is operating income plus depreciation and amortization.
(3) Calculated based on weighted average shares outstanding.
(4) Equity market capitalization plus long-term debt.
Citizens Communications Company
Financial and Operating Data by Service
For the quarter ended For the six months ended
June 30, June 30,
----------------------- -------------------------
% %
(Dollars in thousands, except operating data) 2001 2000 Change 2001 2000 Change
------------------------------- ---------------------------------
ILEC
Select Income Statement Data
Revenue
Network access services $ 139,403 $ 108,423 29% $ 271,800 $ 215,293 26%
Local network services 95,713 74,871 28% 196,405 147,924 33%
Long distance and data services 32,675 24,480 33% 63,284 49,462 28%
Directory services 10,999 9,000 22% 21,689 17,922 21%
Other 9,998 10,622 -6% 22,955 23,107 -1%
Total revenue 288,788 227,396 27% 576,133 453,708 27%
Network access expense 18,607 15,246 22% 35,148 34,649 1%
Depreciation and amortization 88,312 59,765 48% 174,689 129,771 35%
Other operating expenses 114,122 105,384 8% 230,395 206,341 12%
Acquisition assimilation expenses (1) 7,062 7,617 -7% 12,546 11,591 8%
Total expense 228,103 188,012 21% 452,778 382,352 18%
Operating income 60,685 39,384 54% 123,355 71,356 73%
EBITDA and Capital Expenditure Data
EBITDA (2) $ 148,997 $ 99,149 50% $ 298,044 $ 201,127 48%
EBITDA margin (3) 52% 44% 18% 52% 44% 17%
EBITDA before acquisition assimilation
expenses 156,059 106,766 46% 310,590 212,718 46%
EBITDA margin before acquisition
assimilation expense 54% 47% 15% 54% 47% 15%
Capital expenditures 72,207 74,227 -3% 148,789 182,090 -18%
Balance Sheet Data
Total assets $ 7,459,087 $ 2,673,415 179%
Net plant 3,735,861 2,353,722 59%
Operating Data
Access Lines: (4)
Embedded properties 1,062,784 1,017,188 4%
Acquired properties 340,736 62,200 n/a
Total Access lines 1,403,520 1,079,388 30%
Switched access minutes of use (in millions) 1,941 1,380 41% 3,752 2,703 39%
Employees 4,471 3,752 19%
(1) Represents expenses associated with the completed and pending acquisition of approximately 2 million telephone
access lines.
(2) EBITDA is operating income plus depreciation and amortization.
(3) EBITDA divided by total revenue.
(4) Excludes access lines acquired from Frontier on June 29, 2001.
Citizens Communications Company
Financial and Operating Data by Service
For the quarter ended For the six months ended
June 30, June 30,
---------------------- --------------------------
% %
(Dollars in thousands, except operating data) 2001 2000 Change 2001 2000 Change
-------------------------------- ------------------------------------
Electric Lightwave, Inc.
Select Income Statement Data
Revenue
Network services $ 26,121 $ 17,173 52% $ 51,889 $ 33,177 56%
Local telephone services 21,868 25,951 -16% 43,664 50,225 -13%
Long distance services 3,098 4,265 -27% 6,183 8,862 -30%
Data services 9,342 13,231 -29% 21,255 25,134 -15%
Total revenue 60,429 60,620 0% 122,991 117,398 5%
Network access expense 17,051 18,294 -7% 33,782 38,990 -13%
Gross margin 43,378 42,326 2% 89,209 78,408 14%
Depreciation and amortization 19,834 14,721 35% 38,728 27,476 41%
Other operating expenses 39,314 43,761 -10% 81,852 86,508 -5%
Total expense 76,199 76,776 -1% 154,362 152,974 1%
Operating loss (15,770) (16,156) 2% (31,371) (35,576) 12%
EBITDA and Capital Expenditure Data
EBITDA (1) $ 4,064 $ (1,435) 383% $ 7,357 $ (8,100) 191%
Capital expenditures (2) 14,970 44,844 -67% 35,304 70,215 -50%
Balance Sheet Data
Total assets $ 949,796 $903,737 5%
Gross plant 1,023,783 936,368 9%
Operating Data
Access Line Equivalents 187,981 196,259 -4%
Route miles 6,734 5,911 14%
Fiber miles 349,455 295,157 18%
Customers 2,267 2,788 -19%
Buildings connected 856 838 2%
Employees 949 1,195 -21%
Revenue per employee $ 63,677 $ 50,728 26% $ 129,601 $ 98,241 32%
Reciprocal compensation received (in thousands) $ 8,011 $ 10,400 -23% $ 15,725 $ 20,026 -21%
(1) EBITDA is operating income plus depreciation and amortization.
(2) Excludes capitalized leases.
Citizens Communications Company
Financial and Operating Data by Service
For the quarter ended For the six months ended
June 30, June 30,
--------------------- ----------------------
% %
(Dollars in thousands, except operating data) 2001 2000 Change 2001 2000 Change
-------------------------------- ----------------------------------
Gas Sector
Select Income Statement Data
Revenue
Residential distribution $ 40,036 $ 33,920 18% $ 164,789 $ 89,422 84%
Commercial distribution 32,748 29,224 12% 93,554 65,601 43%
Industrial distribution 21,252 11,064 92% 47,927 23,081 108%
Total distribution 94,036 74,208 27% 306,270 178,104 72%
Other 8,119 3,157 157% 16,400 12,317 33%
Total revenue 102,155 77,366 32% 322,670 190,421 69%
Gas purchased 63,914 42,785 49% 227,077 100,056 127%
Gross margin 38,241 34,581 11% 95,593 90,365 6%
Depreciation and amortization (1) 155 5,922 -97% 305 12,368 -98%
Other operating expenses 28,204 23,783 19% 56,792 55,047 3%
Total expense 92,273 72,490 27% 284,174 167,471 70%
Operating income 9,882 4,876 103% 38,496 22,950 68%
EBITDA and Capital Expenditure Data
EBITDA (2) $ 10,037 $ 10,798 -7% $ 38,801 $ 35,318 10%
Capital expenditures 10,751 15,963 -33% 18,158 23,738 -24%
Balance Sheet Data
Assets held for sale $ 651,569 $592,713 10%
Net plant 552,618 508,402 9%
Operating Data
Customers 478,185 470,234 2%
Employees 1,024 1,022 0%
Customers per employee 467 460 1%
Gross margin (net revenue) per employee $ 37,345 $ 33,837 10% $ 93,353 $ 88,420 6%
Billion Cubic Feet of gas throughput (BCF) 13.8 14.1 - 37.5 37.7 -
(1) Our gas operations are reported as "assets held for sale" and are expected to be sold for a
profit. Accordingly, we ceased to record depreciation expense effective October 1, 2000.
(2) EBITDA is operating income plus depreciation and amortization.
Citizens Communications Company
Financial and Operating Data by Service
For the quarter ended For the six months ended
June 30, June 30,
---------------------- ------------------------
% %
(Dollars in thousands, except operating data) 2001 2000 Change 2001 2000 Change
------------------------------ ----------------------------------
Electric Sector
Select Income Statement Data
Revenue
Residential distribution $ 22,359 $ 23,061 -3% $ 46,064 $ 46,049 0%
Commercial distribution 16,236 17,231 -6% 31,434 31,567 0%
Industrial distribution 12,991 12,055 8% 25,274 23,673 7%
Total distribution 51,586 52,347 -1% 102,772 101,289 1%
Other 3,878 1,570 147% 7,389 5,820 27%
Total revenue 55,464 53,917 3% 110,161 107,109 3%
Electric energy and fuel oil purchased 29,969 27,801 8% 59,655 51,974 15%
Gross margin 25,495 26,116 -2% 50,506 55,135 -8%
Depreciation and amortization (1) 5,800 6,247 -7% 5,800 13,077 -56%
Other operating expenses 14,435 14,347 1% 27,747 28,670 -3%
Total expense 50,204 48,395 4% 93,202 93,721 -1%
Operating income 5,260 5,522 -5% 16,959 13,388 27%
EBITDA and Capital Expenditure Data
EBITDA (2) $ 11,060 $ 11,769 -6% $ 22,759 $ 26,465 -14%
Capital expenditures 5,904 6,820 -13% 15,550 16,017 -3%
Balance Sheet Data
Assets held for sale $ 589,429 $ 478,209 23%
Net plant 437,549 415,957 5%
Operating Data
Customers 127,592 122,808 4%
Employees 344 333 3%
Customers per employee 371 369 1%
Gross margin (net revenue) per employee $ 74,113 $ 78,426 -5% $ 146,820 $ 165,571 -11%
Megawatt hours sold 472,472 460,540 3% 937,804 898,469 4%
Megawatt hours generated 111,648 102,954 8% 211,015 203,289 4%
Megawatt hours purchased 412,020 426,660 -3% 804,193 800,815 0%
(1) Our electric operations are reported as "assets held for sale" and are expected to be sold for a
profit. Accordingly, we ceased to record depreciation expense effective January 1, 2001.
(2) EBITDA is operating income plus depreciation and amortization.
Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CITIZENS COMMUNICATIONS COMPANY
-------------------------------
(Registrant)
By: /s/ Robert J. Larson
-------------------------------------------
Robert J. Larson
Vice President and Chief Accounting Officer
Date: August 10, 2001