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): January 30, 2002
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
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
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(Former name or former address, if changed since last report)
Item 2. Disposition of Assets.
On October 18, 1999, we announced the agreement to sell our water and wastewater
treatment operations to American Water Works, Inc. for $745.0 million in cash
and $90.0 million of assumed debt. This transaction closed on January 15, 2002
for $859.1 million in cash and $120.4 million in assumed debt and other
liabilities. The cash received in this transaction reflects a purchase price
adjustment for construction expenditures made by us since October 18, 1999 and
other purchase price adjustments pursuant to the asset purchase agreements. We
expect to report a pretax gain of over $300.0 million on this transaction in the
first quarter of 2002.
This transaction is part of our plan of divestiture of our public utilities
services businesses approved by our Board of Directors on August 24, 1999. In
addition to the sale of our water and wastewater treatment operations we have
previously sold two of our natural gas operations. We are pursuing the sales of
the remainder of our natural gas operations and all of our electric operations.
Item 7. Financial Statements, Exhibits
(a) Financial Statements of Business Disposed.
Not applicable
(b) Pro forma Financial Information
Unaudited Pro forma Balance Sheet as of September 30, 2001
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: January 30, 2002
Proforma Financial Information
Divestitures
------------
On August 24, 1999, our Board of Directors approved a plan of divestiture for
our public utilities services businesses, which include gas, electric and water
and wastewater treatment businesses. We have sold all of our water and
wastewater treatment operations and two of our natural gas operations. The
status of each transaction is described as follows:
Water and Wastewater
--------------------
On October 18, 1999, we announced the agreement to sell our water and wastewater
treatment operations to American Water Works, Inc. for $745.0 million in cash
and $90.0 million of assumed debt. This transaction closed on January 15, 2002
for $859.1 million in cash and $120.4 million in assumed debt and other
liabilities. The cash received in this transaction reflects a purchase price
adjustment for construction expenditures made by us since October 18, 1999 and
other purchase price adjustments pursuant to the asset purchase agreements. We
expect to report a pretax gain of over $300.0 million on this transaction in the
first quarter of 2002.
Electric
--------
On February 15, 2000, we announced that we had agreed to sell our electric
utility operations. The Arizona and Vermont electric divisions were under
contract to be sold to Cap Rock Energy Corp. (Cap Rock). The agreement with Cap
Rock was terminated on March 7, 2001. We intend to pursue the disposition of the
Vermont and Arizona electric divisions with alternative buyers. In August 2000,
the Hawaii Public Utilities commission denied the initial application requesting
approval of the purchase of our Kauai electric division by the Kauai Island
Electric Co-op for $270 million in cash including the assumption of certain
liabilities. We are discussing a reduction of the purchase price and other
options. Our agreement for the sale of this division may be terminated
unilaterally unless such amended and restated Purchase Agreement is entered
into.
Gas
---
On July 2, 2001, we completed the sale of our Louisiana Gas operations to Atmos
Energy Corporation for $363.4 million in cash. The pre-tax gain on the sale
recognized in the third quarter of 2001 was approximately $139.3 million.
In July 2001, an agreement was signed to sell the Colorado Gas division to
Kinder Morgan. This transaction closed on November 30, 2001. We received
approximately $8.9 million, after purchase price adjustments.
The following unaudited pro forma condensed combined Balance Sheet information
has been prepared to illustrate the effect of the water and wastewater treatment
sector disposition had this transaction been completed at September 30, 2001. A
pro forma statement of operations for the year ended December 31, 2000 and for
the nine months ended September 30, 2001 has not been presented since the
operations of the water and wastewater treatment sector was included in
discontinued operations for both periods and any pro forma adjustments to
continuing operations are negligible.
The pro forma information does not attempt to predict or suggest future results.
The pro forma information also does not attempt to show how the company would
actually have appeared had the transaction occurred prior to the date presented.
If the transaction had actually occurred in prior periods, the financial
position of the company would likely be different. You should not rely on pro
forma financial information as an indication of the financial position that
would have been achieved if the disposition had taken place earlier or the
future financial position that the company will experience.
This unaudited pro forma condensed combined balance sheet should be read in
conjunction with the historical financial statements of Citizens Communications
Company.
Citizens Communications Company and Subsidiaries
Pro Forma Balance Sheet Data
As of September 30, 2001
(unaudited)
Pro Forma for Water and Wastewater
Sector Disposition
Citizens --------------------------------------
Communications
(Amounts in thousands) 9/30/2001 Adjustments Adjusted
-------------------------------------------------------
Cash $ 38,922 $ 859,065 (1) $ 897,987
Accounts receivable, net 339,382 (39) (1) 339,343
Short-term investments 141,496 - 141,496
Other current assets 42,844 - 42,844
Assets held for sale 1,093,939 - 1,093,939
Assets of discontinued operations 743,238 (743,238) (1) -
--------------------------------- ----------------
Total current assets 2,399,821 115,788 2,515,609
Net property, plant & equipment 4,537,291 - 4,537,291
Goodwill 490,012 - 490,012
Customer Lists and other 195,243 - 195,243
Excess cost over net assets acquired 2,179,199 - 2,179,199
--------------------------------- ----------------
Intangibles 2,864,454 - 2,864,454
Investments 117,124 - 117,124
Deferred debits and other assets 466,441 - 466,441
--------------------------------- ----------------
Total assets $10,385,131 $ 115,788 $10,500,919
================================= ================
Long-term debt due within one year $ 155,967 $ - $ 155,967
Accounts payable and other current liabilities 516,520 196,455 (1) 712,975
Liabilities related to assets held for sale 214,090 - 214,090
Liabilities of discontinued operations 219,568 (219,568) (1) -
--------------------------------- ----------------
Total current liabilities 1,106,145 (23,113) 1,083,032
Deferred income taxes 408,975 - 408,975
Customer advances for construction
and contributions in aid of construction 206,332 - 206,332
Deferred credits and other liabilities 232,702 (227) (1) 232,475
Equity units 460,000 - 460,000
Long-term debt 5,783,591 - 5,783,591
--------------------------------- ----------------
Total liabilities 8,197,745 (23,340) 8,174,405
Company Obligated Mandatorily Redeemable
Convertible Preferred Securities * 201,250 - 201,250
Common stock, $.25 par value (600,000,000 authorized shares,
280,036,000 issued shares and 292,344,000 outstanding shares) 73,086 - 73,086
Additional paid-in capital 1,936,607 - 1,936,607
Retained earnings 238,179 139,128 (1) 377,307
Accumulated other comprehensive income (loss) (59,147) - (59,147)
Treasury stock (202,589) - (202,589)
--------------------------------- ----------------
Total shareholders' equity 1,986,136 139,128 2,125,264
--------------------------------- ----------------
Total liabilities and shareholders' equity $10,385,131 $ 115,788 $10,500,919
================================= ================
* Represents securities of a subsidiary trust, the sole assets of which are
securities of a subsidiary partnership, substantially all the assets of
which are convertible debentures of the Company.
See Notes to Pro Forma Condensed Financial Statements.
Citizens Communications Company
Notes to Unaudited Pro Forma Condensed Balance Sheet
September 30, 2001
(1) The adjustment represents the receipt of the net cash proceeds from the
sale of the Water and Wastewater treatment sector and the elimination of
the assets of discontinued operations and liabilities of discontinued
operations (at September 30, 2001) net of estimated income taxes due on the
sale. The cash amount reflects the gross sales price, as amended, plus
adjustments for construction expenditures and working capital less
liabilities and debt assumed. The estimated after tax gain on the sale of
$139.1 million (at September 30, 2001) is reported in retained earnings.