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F-8
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 2005, 2004 and 2003
($ in thousands)
2005 2004 2003
Cash flows provided by (used in) operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 202,375 $ 72,150 $ 187,852
Deduct: Gain on sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . (1,167 ) — —
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,040 ) (5,231 ) (4,380 )
Cumulative effect of change in accounting principle for the adoption of
SFAS No. 143 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (65,769 )
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541,959 570,808 593,161
Gain on expiration/settlement of customer advance . . . . . . . . . . . . . . . . . . . (681 ) (25,345 ) (6,165 )
Gain on capital lease termination/restructuring . . . . . . . . . . . . . . . . . . . . . . — — (69,512 )
Stock based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,427 47,581 8,956
Loss on debt exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,175 — —
Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 66,480 10,851
Investment gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (492 ) (12,066 ) —
Gain on sales of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,945 20,492
Loss on impairment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 15,300
Other non-cash adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,481 30,397 20,091
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,636 24,016 74,508
Change in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,583 11,895 69,619
Change in accounts payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . (33,399 ) (67,499 ) (113,532 )
Change in other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (640 ) (3,694 ) 748
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844,217 711,437 742,220
Cash flows provided from (used by) investing activities:
Proceeds from sales of assets, net of selling expenses . . . . . . . . . . . . . . . . . 24,195 30,959 388,079
Proceeds from sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . 43,565 — —
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (268,459 ) (275,204 ) (277,371 )
Securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (1,680 )
Securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,112 26,514 —
Other asset (purchased) distributions received . . . . . . . . . . . . . . . . . . . . . . . 5,724 (28,110 ) 68
Net cash provided from (used by) investing activities . . . . . . . . . . . . . . . . . . . . . (193,863 ) (245,841 ) 109,096
Cash flows provided from (used by) financing activities:
Repayment of customer advances for construction and contributions in aid
of construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,662 ) (2,089 ) (10,030 )
Long-term debt borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 700,000 —
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (15,502 ) —
Long-term debt payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,433 ) (1,214,018 ) (653,442 )
Premium to retire debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (66,480 ) (10,851 )
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,550 544,562 13,209
Shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (250,000 ) — —
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (338,364 ) (832,768 ) —
Net cash used by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (548,909 ) (886,295 ) (661,114 )
Cash flows of discontinued operations
Operating cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578 1,361 956
Investing cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7 ) (571 ) (644 )
Financing cash flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (3 ) (20 )
571 787 292
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . 102,016 (419,912 ) 190,494
Cash and cash equivalents at January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,759 583,671 393,177
Cash and cash equivalents at December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 265,775 $ 163,759 $ 583,671
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 318,638 $ 370,128 $ 418,561
Income taxes (refunds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,711 $ (4,901 ) $ (2,532 )
Non-cash investing and financing activities:
Change in fair value of interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . $ (13,193 ) $ (6,135 ) $ (6,057 )
Conversion of EPPICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,980 $ 147,991 $ —
Debt-for-debt exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,171 $ — $ —
Investment write-downs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 5,286 $ —
The accompanying Notes are an integral part of these Consolidated Financial Statements.