Filed
by Citizens Communications Company pursuant to Rule 425
promulgated
under the Securities Act of 1933, as amended,
and
deemed filed pursuant to Rule 14a-12 promulgated
under
the Securities Act of 1934, as amended.
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Subject
Company: Commonwealth Telephone Enterprises, Inc.
Commission
File No.: 0-11053
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Safe
Harbor Statement
This
presentation contains forward-looking statements that are made
pursuant to
the safe harbor provisions of The Private Securities Litigation
Reform Act
of 1995. These statements are made on the basis of management's
views and
assumptions regarding future events and business performance.
Words such
as “believe,” “anticipate,” “expect,” and similar expressions are intended
to identify forward-looking statements. Forward-looking statements
(including oral representations) involve risks and uncertainties
that may
cause actual results to differ materially from any future results,
performance or achievements expressed or implied by such statements.
These
risks and uncertainties are based on a number of factors, including
but
not limited to: Our ability to complete the acquisition of Commonwealth,
to successfully integrate their operations and to realize the
synergies
from the acquisition; Our ability to refinance the bridge loan
that will
be used to finance the cash portion of the merger consideration
with
long-term debt; Changes in the number of our revenue generating
units,
which consists of access lines plus high-speed internet subscribers;
The
effects of competition from wireless, other wireline carriers
(through
voice over internet protocol (VOIP) or otherwise), high-speed
cable modems
and cable telephony; The effects of greater than anticipated
competition
requiring new pricing, marketing strategies or new product offerings
and
the risk that we will not respond on a timely or profitable basis;
The
effects of general and local economic and employment conditions
on our
revenues; Our ability to effectively manage service quality;
Our ability
to successfully introduce new product offerings, including our
ability to
offer bundled service packages on terms that are both profitable
to us and
attractive to our customers; Our ability to sell enhanced and
data
services in order to offset ongoing declines in revenue from
local
services, switched access services and subsidies; Changes in
accounting
policies or practices adopted voluntarily or as required by generally
accepted accounting principles or regulators; The effects of
changes in
regulation in the communications industry as a result of federal
and state
legislation and regulation, including potential changes in access
charges
and subsidy payments, and regulatory network upgrade and reliability
requirements; Our ability to comply with federal and state regulation
(including state rate of return limitations on our earnings)
and our
ability to successfully renegotiate state regulatory plans as
they expire
or come up for renewal from time to time; Our ability to manage
our
operations, operating expenses and capital expenditures, to pay
dividends
and to reduce or refinance our debt; Adverse changes in the ratings
given
to our debt securities by nationally accredited ratings organizations,
which could limit or restrict the availability and/or increase
the cost of
financing; The effects of bankruptcies in the telecommunications
industry,
which could result in more price competition and potential bad
debts; The
effects of technological changes and competition on our capital
expenditures and product and service offerings, including the
lack of
assurance that our ongoing network improvements will be sufficient
to meet
or exceed the capabilities and quality of competing networks;
The effects
of increased medical, retiree and pension expenses and related
funding
requirements; Changes in income tax rates, tax laws, regulations
or
rulings, and/or federal or state tax assessments; The effects
of state
regulatory cash management policies on our ability to transfer
cash among
our subsidiaries and to the parent company; Our ability to successfully
renegotiate expiring union contracts covering approximately 945
employees
that are scheduled to expire during the remainder of 2006; Our
ability to
pay a $1.00 per common share dividend annually may be affected
by our cash
flow from operations, amount of capital expenditures, debt service
requirements, cash paid for income taxes (which will increase
in the
future) and our liquidity; The effects of any future liabilities
or
compliance costs in connection with worker health and safety
matters; The
effects of any unfavorable outcome with respect to any of our
current or
future legal, governmental, or regulatory proceedings, audits
or disputes;
and The effects of more general factors, including changes in
economic,
business and industry conditions. In addition, we may be unable
to
implement some of our current business initiatives if we fail
to recognize
the benefits we expect to receive from certain transactions.
These and
other uncertainties related to our business are described in
greater
detail in our filings with the Securities and Exchange Commission,
including our reports on Forms 10-K and 10-Q. We undertake no
obligation
to publicly update or revise any forward-looking statement or
to make any
other forward-looking statements, whether as a result of new
information,
future events or otherwise unless required to do so by securities
laws.
ADDITIONAL
INFORMATION AND WHERE TO FIND IT
This
material is not a substitute for the prospectus/proxy statement
Citizens
Communications Company and Commonwealth Telephone Enterprises,
Inc. will
file with the Securities and Exchange Commission. Investors are
urged to
read the prospectus/proxy statement which will contain important
information, including detailed risk factors, when it becomes
available.
The prospectus/proxy statement and other documents which will
be filed by
Citizens Communications Company and Commonwealth Telephone Enterprises,
Inc. with the Securities and Exchange Commission will be available
free of
charge at the SEC’s website, www.sec.gov, or by directing a request when
such a filing is made to Citizens Communications Company, 3 High
Ridge
Park, Stamford, CT 06905, Attention: Investor Relations; or to
Commonwealth Telephone Enterprises, Inc., 100 CTE Drive, Dallas,
Pennsylvania 18612, Attention: Investor Relations. The final
prospectus/proxy statement will be mailed to shareholders of
Commonwealth
Telephone Enterprises, Inc.
This
communication shall not constitute an offer to sell or the solicitation
of
an offer to buy securities, nor shall there be any sale of securities
in
any jurisdiction in which such offer, solicitation or sale would
be
unlawful prior to registration or qualification under the securities
laws
of such jurisdiction.
Citizens
Communications Company and Commonwealth Telephone Enterprises,
Inc., and
certain of their respective directors, executive officers and
other
members of management and employees are participants in the solicitation
of proxies in connection with the proposed transactions. Information
about
the directors and executive officers of Citizens Communications
Company is
set forth in the proxy statement for Citizens Communications
Company’s
2006 annual meeting of shareholders. Information about the directors
and
executive officers of Commonwealth Telephone Enterprises, Inc.
is set
forth in the proxy statement for Commonwealth Telephone Enterprises,
Inc.’s 2006 annual meeting of shareholders. Investors may obtain
additional information regarding the interests of such participants
in the
proposed transactions by reading the prospectus/proxy statement
for such
proposed transactions when it becomes available.
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Non-GAAP
Financial Measures
The
company uses certain non-GAAP financial measures in evaluating
its
performance. These include EBITDA (earnings before interest,
taxes,
depreciation and amortization) and free cash flow. A reconciliation
of the
differences between EBITDA and free cash flow and the most
comparable
financial measure calculated and presented in accordance
with 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 and are not alternatives to operating
income or net
income reflected in the statement of operations or to cash
flow as
reflected in the statement of cash flows and are not necessarily
indicative 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 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
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
and evaluate strategic and operational decisions, (iv) establish
criteria
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.
In
particular, free cash flow does not represent the residual
cash flow
available for discretionary expenditures, since items such
as debt
repayments and dividends are not deducted 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 presentation 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.
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