Citizens Communications Reports 2005 First-Quarter Results.STAMFORD Stamford, town, England Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles. , Conn. -- Citizens Communications Citizens Communications is the parent company of Frontier Telephone, providing telephone and internet access in 24 states. The company headquarters are located at 3 High Ridge Park in Stamford, Connecticut. (NYSE NYSE See: New York Stock Exchange :CZN) today reported first quarter 2005 consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenues of $537.2 million; consolidated operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $145.1 million; and consolidated net income of $42.6 million. Consolidated net income includes $2.2 million, net of taxes, from our conferencing See teleconferencing. service business, which was sold in March 2005 and is therefore treated as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . First-quarter 2005 revenue from the company's ILEC (Incumbent Local Exchange Carrier) A traditional local telephone company such as one of the Regional Bell companies (RBOCs). Contrast with CLEC. See ELEC and TELRIC. operations was $499.2 million, a decrease from $502.8 million in the first quarter of 2004. The decrease was due primarily to loss of access lines, lower access service revenues and reduced long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. revenue. Strong growth in data and enhanced service Enhanced service is service offered over commercial carrier transmission facilities used in interstate communications, that employs computer processing applications that act on the format, content, code, protocol, or similar aspects of the subscriber's transmitted information; revenues offset most of the decreases. Data service revenues increased 21.9 percent compared to the first quarter of 2004. The company's revenue generating units (which consist of access lines and High-Speed Internet See broadband. subscribers) increased 1 percent from a year ago as the company added a record 30,500 High-Speed Internet customers during the quarter and had 242,800 High-Speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. data subscribers at March 31, 2005. The number of the company's High-Speed Internet subscribers has increased by more than 100,000 or 71 percent from a year ago. The company's access line count decreased 22,300 lines during the quarter. ILEC operating income for the first quarter of 2005 was $144.4 million and operating income margin was 28.9 percent, compared to $136.5 million and 27.1 percent in the first quarter of 2004. Capital expenditures for the ILEC were $47.3 million for the first quarter of 2005, compared to $52.8 million in the year ago period. Free cash flow increased 12.4 percent to $152.9 million during the first quarter of 2005. The company's quarterly dividend represented a payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. of 55.6 percent of first-quarter 2005 free cash flow. The company expects to continue to pay its dividend of $0.25 per common share on the last day of each quarter. The company uses certain non-GAAP financial measures in evaluating its performance. These include free cash flow. A reconciliation of the differences between free cash flow and the most comparable financial measure calculated and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and are not alternatives to operating income or net income reflected in the statement of operations See Income statement. or to cash flow as reflected in the statement of cash flows and are not necessarily indicative indicative: see mood. 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 conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. 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 analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. framework upon which management bases financial, operational, compensation and planning decisions and (iii) presents measurements that investors and rating agencies have indicated to management are useful to them in assessing the company and its results of operations. Management uses these non-GAAP financial measures to plan and measure the performance of its core operations and its divisions measure performance and report to management based upon these measures. In addition, the company believes that free cash flow, as the company defines it, can assist in comparing performance from period to period, without taking into account factors affecting cash flow reflected in the statement of cash flows, including changes in working capital and the timing of purchases and payments. Management uses these non-GAAP financial measures to (i) assist in analyzing the company's underlying financial performance from period to period, (ii) evaluate the financial performance of its business units, (iii) analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. and evaluate strategic and operational decisions, (iv) establish criteria criteria (krītēr´ē  ),n. 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 A shortcoming is a character flaw. Shortcomings may also be:
See:Residual value cash flow available for discretionary expenditures, since items such as debt repayments and dividends are not deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. from such measure. Management compensates for the shortcomings of these measures by utilizing them in conjunction with their comparable GAAP financial measures. The information in this press release should be read in conjunction with the financial statements and footnotes contained in our documents to be filed with the U.S. Securities and Exchange Commission. About Citizens Communications More information about Citizens can be found at www.czn.net. This document contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
Citizens Communications Company
Consolidated Financial Data (1)
(unaudited)
For the quarter ended
--------------------------
(Amounts in thousands - except per-share March 31, March 31, %
amounts) 2005 2004 Change
--------- --------- ------
Income Statement Data (2)
Continuing operations
Revenue $537,223 $552,311 -3%
Cost of services (exclusive of
depreciation and amortization) 51,018 55,550 -8%
Other operating expenses 199,183 208,229 -4%
Management succession and strategic
alternatives expenses - 4,382 -100%
Stock based compensation 2,265 3,189 -29%
Depreciation and amortization 139,645 143,363 -3%
Operating income 145,112 137,598 5%
Investment and other income, net 4,773 25,295 -81%
Interest expense (includes dividends on
preferred securities) 83,785 97,781 -14%
Income tax expense 25,673 23,705 8%
Income from discontinued operations, net of
tax 2,207 1,461 51%
Net income attributable to common
shareholders 42,634 42,868 -1%
Weighted average shares outstanding 338,450 283,990 19%
Basic net income per share attributable to
common shareholders (3) $0.13 $0.15 -13%
Other Financial Data
Capital expenditures 52,183 54,539 -4%
Free cash flow (4) 152,913 135,985 12%
(1) Our conferencing business was sold on March 15, 2005. Prior
periods have been restated to present our conferencing business as
discontinued operations.
(2) Our Vermont distribution facilities were sold on April 1, 2004.
This sale affects the comparability of data presented.
(3) Calculated based on weighted average shares outstanding.
(4) A reconciliation to the most comparable GAAP measure is presented
at the end of these tables.
Citizens Communications Company
Financial and Operating Data (1)
(unaudited)
For the quarter ended
--------------------------
(Dollars in thousands, except operating March 31, March 31, %
data) 2005 2004 Change
--------- --------- ------
TELECOMMUNICATIONS
Select Income Statement Data
Revenue
Access services $157,322 $161,483 -3%
Local services 209,986 212,742 -1%
Long distance services 43,750 47,331 -8%
Data services 38,609 31,674 22%
Directory services 27,963 27,474 2%
Other 21,613 22,107 -2%
ILEC revenue 499,243 502,811 -1%
Electric Lightwave 37,980 39,765 -4%
Total revenue 537,223 542,576 -1%
Expenses
Network access expense 51,018 50,027 2%
Other operating expenses 199,183 202,715 -2%
Management succession and strategic
alternatives expenses - 4,382 -100%
Stock based compensation 2,265 3,189 -29%
Depreciation and amortization 139,645 143,363 -3%
Total expenses 392,111 403,676 -3%
Operating Income
ILEC $144,440 $136,510 6%
ELI 672 2,390 -72%
Other Financial and Operating Data
ILEC capital expenditures $47,325 $52,777 -10%
ELI capital expenditures 4,801 1,762 172%
ILEC depreciation and amortization 133,366 137,528 -3%
ELI depreciation and amortization 6,279 5,835 8%
ILEC access lines 2,298,510 2,375,629 -3%
High-speed internet subscribers 242,768 141,942 71%
ILEC switched access minutes of use (in
millions) 2,882 3,000 -4%
ILEC average monthly revenue per average
RGU (2) $65.59 $66.72 -2%
(1) See footnote (1) on the first page.
(2) RGU's are access lines plus high-speed internet subscribers.
Citizens Communications Company
Financial and Operating Data
(unaudited)
For the quarter ended
--------------------------
March 31, March 31, %
(Dollars in thousands) 2005 2004 Change
--------- --------- ------
GAS AND ELECTRIC SECTORS (1)
Select Income Statement Data
Revenue $- $9,735 -100%
Gas, electric energy and fuel oil purchased - 5,523 -100%
Other operating expenses - 5,514 -100%
Operating (loss) - (1,302) -100%
(1) See footnote (2) on the first page.
Citizens Communications Company
Condensed Consolidated Balance Sheet Data (1)
(Dollars in thousands) (unaudited)
March 31, December 31,
2005 2004
----------- -----------
ASSETS
------------
Current assets:
Cash and cash equivalents $284,220 $167,463
Accounts receivable and other current
assets 245,822 279,295
Assets of discontinued operations - 24,122
----------- -----------
Total current assets 530,042 470,880
Property, plant and equipment, net 3,279,957 3,335,850
Other long-term assets 2,812,023 2,861,689
----------- -----------
Total assets $6,622,022 $6,668,419
=========== ===========
LIABILITIES AND EQUITY
----------------------
Current liabilities:
Long-term debt due within one year $6,362 $6,380
Accounts payable and other current
liabilities 382,969 410,405
Liabilities of discontinued operations - 735
----------- -----------
Total current liabilities 389,331 417,520
Deferred income taxes and other liabilities 652,772 621,661
Long-term debt 4,253,034 4,266,998
Shareholders' equity 1,326,885 1,362,240
----------- -----------
Total liabilities and equity $6,622,022 $6,668,419
=========== ===========
(1) See footnote (1) on the first page.
Citizens Communications Company
Condensed Consolidated Cash Flow Data (1)
(unaudited)
(Dollars in thousands)
For the three months
ended March 31,
-------------------
2005 2004
--------- ---------
Income from continuing operations $40,427 $41,407
Adjustments to reconcile income from continuing
operations to net cash provided by continuing
operating activities:
Depreciation and amortization expense 139,645 143,363
Gain on expiration/settlement of customer
advances (80) (24,182)
Stock based compensation 2,265 3,189
Other 22,646 41,649
--------- ---------
Net cash provided by continuing operating
activities 204,903 205,426
Cash flows from investing activities:
Proceeds from sales of assets, net of
selling expenses 1,112 -
Capital expenditures (52,183) (54,539)
Other assets (purchased) distributions
received. net 247 -
--------- ---------
Net cash used in investing activities (50,824) (54,539)
Cash flows from financing activities:
Debt issuance costs (385) -
Long-term debt payments (307) (93,557)
Issuance of common stock 5,552 7,682
Dividends paid (85,081) -
Other (1,237) (1,775)
--------- ---------
Net cash used in financing activities (81,458) (87,650)
Cash provided by discontinued operations 44,136 1,104
Increase in cash and cash equivalents 116,757 64,341
Cash and cash equivalents at January 1, 167,463 583,671
--------- ---------
Cash and cash equivalents at March 31, $284,220 $648,012
========= =========
Cash paid (refunded) during the period for:
Interest $71,336 $97,515
Income taxes $(1,859) $227
(1) See footnote (1) on the first page.
Schedule A
Reconciliation of Non-GAAP Financial Measures (1)
For the quarter
ended March 31,
-------------------
(Dollars in thousands) 2005 2004
--------- ---------
Net Income from Continuing Operations to Free
---------------------------------------------
Cash Flow ; Net Cash Provided by Continuing
---------------------------------------------
Operating Activities
--------------------
Net income from continuing operations $40,427 $41,407
Add back:
Depreciation and amortization 139,645 143,363
Income tax expense 25,673 23,705
Management succession and strategic
alternatives expenses - 4,382
Stock based compensation 2,265 3,189
Subtract:
Cash paid (refunded) for income taxes (1,859) 227
Investment and other income, net 4,773 25,295
Capital expenditures 52,183 54,539
--------- ---------
Free cash flow 152,913 135,985
Add back:
Deferred income taxes 25,109 20,991
Noncash (gains)/losses, net 1,855 (17,136)
Investment and other income, net 4,773 25,295
Cash paid (refunded) for income taxes (1,859) 227
Capital expenditures 52,183 54,539
Subtract:
Changes in current assets and liabilities 2,133 (16,801)
Income tax expense 25,673 23,705
Management succession and strategic
alternatives expenses - 4,382
Stock based compensation 2,265 3,189
--------- ---------
Net cash provided by continuing operating
activities $204,903 $205,426
========= =========
(1) See footnote (1) on the first page.
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