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): November 25, 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)
(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 5. Other Events.
In its Quarterly Report on Form 10-Q for the period ended September 30, 2002,
that was filed on November 12, 2002 ("Third Quarter 10-Q"), the Company reported
that it was investigating possible irregularities involving payments made by the
Company's public utilities division for services or benefits that the Company
did not receive. The payments do not involve the Company's current operations in
Arizona, Vermont or The Gas Company in Hawaii. The Company, with the assistance
of forensic specialists, outside auditors and counsel are continuing to
investigate information relating to the payments and to date has identified a
total of $7.8 million in payments for which Company did not receive benefits.
These payments were reflected in the Company's financial statements as charges
to earnings (primarily during 2002). The Company believes that a significant
portion of this amount will be reimbursed by insurance or will be recouped.
Beginning on November 15, 2002, the Company has provided detailed information
regarding the results of its investigation to federal prosecutors, including the
names of two officers of the Company (Ken Cohen and Livingston Ross, who were
the President and Chief Operating Officer of the Public Services Sector and the
Vice President of Reporting and Audit, respectively) who approved the payments.
The Company has been advised by federal prosecutors that these two officers have
admitted their involvement in these schemes and the Company has terminated the
employment of these individuals. On November 8, 2002, and November 18, 2002, the
Company's Audit Committee met to receive and review interim reports on the
status of the investigation. The Company has removed all approval and payment
authority from its New Orleans office.
In connection with the investigation of these matters by federal officials, the
Company is cooperating fully with the Office of the U.S. Attorney for the
Southern District of New York and with the New York office of the Securities and
Exchange Commission and has agreed with an SEC request that, in connection with
an informal inquiry, the Company preserve financial, audit and accounting
records.
Separately, as described in the Third Quarter 10-Q, the Company has continued to
review our personnel levels in light of current and anticipated business
conditions and operating performance. The review has resulted in a reduction in
force affecting approximately 8% of the Company's employees in the
telecommunications business. Most affected employees will be terminated by the
end of 2002. The reduction will result in a charge to earnings for severance and
related costs to be recognized in the fourth quarter of 2002 of approximately
$15 to $16 million and is expected to provide annualized cost savings of
approximately $25 to $30 million.
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: November 25, 2002