Citizens Communications Reports 2005 Fourth-Quarter Results; Announces New Stock Buyback and Debt Retirement Programs; Declares Quarterly Dividend

Fourth quarter 2005 revenue from the company's Frontier operationsincreased 2.7 percent to $513.7 million from $500.4 million in thefourth quarter of 2004. The increase is due primarily to growth indata and enhanced service revenues and higher access service revenues(which includes subsidy payments we receive from federal and stateagencies). Data service revenues increased 30.3 percent compared tothe fourth quarter of 2004 and high margin enhanced service revenuesincreased 3.0 percent from the fourth quarter of 2004. During thefourth quarter of 2005, we recognized approximately $10.0 million ofadditional Universal Service Fund (USF) subsidy revenue because of amissed filing deadline with the USF during the third quarter of 2005.

The company added 21,200 high-speed internet customers during thequarter and had 311,400 high-speed data subscribers at December 31,2005. The number of the company's high-speed internet subscribers hasincreased by more than 99,000 or 46.7 percent from a year ago.

Frontier operating income for the fourth quarter of 2005 was$165.0 million and operating income margin was 32.1 percent, comparedto $138.0 million and 27.6 percent in the fourth quarter of 2004.Capital expenditures for the Frontier operations were $90.0 millionfor the fourth quarter of 2005.

Free cash flow was $123.9 million during the fourth quarter andincreased 9.2 percent to $545.2 million for the full year. Thecompany's dividend represents a payout of 62.1 percent of 2005 freecash flow.

During the fourth quarter, the company bought 6,119,000 shares ofits common stock at a total cost of $78.0 million and completed its$250.0 million authorized share repurchase program. Under thisprogram, the company repurchased a total of 18,775,000 shares ofcommon stock.

The company's Board of Directors has authorized new sharerepurchase and debt retirement programs. Under the new programs, up to$300.0 million of common stock may be repurchased over the next 12months and up to $150.0 million of debt may be retired prior tomaturity over the next 12 months. The new stock repurchase program, incombination with the 2005 program, will result in the retirement ofalmost 13 percent of the company's common stock. The new debtretirement program is in addition to the previously announcedrepayment of $228.0 million of debt that matures in 2006 and $49.0million of debt that will be repaid in 2007. The combination of thepreviously announced debt repayments and the new debt retirementprogram total $427.0 million of debt that may be repaid during 2006and 2007 and will result in a reduction of 11 percent of the company'sdebt.

The company expects to receive approximately $64.6 million in cashupon the liquidation of the Rural Telephone Bank during the secondquarter of 2006. In addition, the previously announced sale ofElectric Lightwave, LLC (ELI) for $247.0 million (including $243.0million in cash) is expected to close during the third quarter of2006.

The company expects to produce during 2006 between $500.0 millionand $525.0 million of free cash flow assuming that the sale of ELIcloses during the third quarter of 2006. This estimate of free cashflow does not take into account the effect of the new debt retirementprogram announced today.

The company's next regular quarterly cash dividend of $0.25 pershare will be paid on March 31, 2006 to shareholders of record onMarch 9, 2006. The company expects that dividends paid to stockholdersin 2006 will be treated as dividends for federal income tax purposes.Shareholders are encouraged to consult with their tax advisors.

The company uses certain non-GAAP financial measures in evaluatingits performance. These include free cash flow. A reconciliation of thedifferences between free cash flow and the most comparable financialmeasure calculated and presented in accordance with GAAP is includedin the tables that follow. The non-GAAP financial measures are bydefinition not measures of financial performance under generallyaccepted accounting principles and are not alternatives to operatingincome or net income reflected in the statement of operations or tocash flow as reflected in the statement of cash flows and are notnecessarily indicative of cash available to fund all cash flow needs.The non-GAAP financial measures used by the company may not becomparable to similarly titled measures of other companies.

The company believes that presentation of non-GAAP financialmeasures provides useful information to investors regarding thecompany's financial condition and results of operations because thesemeasures, when used in conjunction with related GAAP financialmeasures, (i) together provide a more comprehensive view of thecompany's core operations and ability to generate cash flow, (ii)provide investors with the financial analytical framework upon whichmanagement bases financial, operational, compensation and planningdecisions and (iii) presents measurements that investors and ratingagencies have indicated to management are useful to them in assessingthe company and its results of operations. Management uses thesenon-GAAP financial measures to plan and measure the performance of itscore operations and its divisions measure performance and report tomanagement based upon these measures. In addition, the companybelieves that free cash flow, as the company defines it, can assist incomparing performance from period to period, without taking intoaccount factors affecting cash flow reflected in the statement of cashflows, including changes in working capital and the timing ofpurchases and payments.

Management uses these non-GAAP financial measures to (i) assist inanalyzing the company's underlying financial performance from periodto period, (ii) evaluate the financial performance of its businessunits, (iii) analyze and evaluate strategic and operational decisions,(iv) establish criteria for compensation decisions; and (v) assistmanagement in understanding the company's ability to generate cashflow and, as a result, to plan for future capital and operationaldecisions. Management uses these non-GAAP financial measures inconjunction with related GAAP financial measures. The company believesthat the non-GAAP financial measures are meaningful and useful for thereasons outlined above.

While the company utilizes these non-GAAP financial measures inmanaging and analyzing its business and financial condition andbelieves they are useful to management and to investors for thereasons described above, these non-GAAP financial measures havecertain shortcomings. In particular, free cash flow does not representthe residual cash flow available for discretionary expenditures, sinceitems such as debt repayments and dividends are not deducted from suchmeasure. Management compensates for the shortcomings of these measuresby utilizing them in conjunction with their comparable GAAP financialmeasures. The information in this press release should be read inconjunction with the financial statements and footnotes contained inour documents to be filed with the U.S. Securities and ExchangeCommission.

About Citizens Communications

More information about Citizens can be found at www.czn.net.

This press release contains forward-looking statements that aremade pursuant to the safe harbor provisions of The Private SecuritiesLitigation Reform Act of 1995. These statements are made on the basisof management's views and assumptions regarding future events andbusiness performance. Words such as "believe," "anticipate," "expect"and similar expressions are intended to identify forward-lookingstatements. Forward-looking statements (including oralrepresentations) involve risks and uncertainties that may cause actualresults to differ materially from any future results, performance orachievements expressed or implied by such statements. These risks anduncertainties are based on a number of factors, including but notlimited to: our ability to effectively manage our operations, costsand capital spending; our ability to successfully introduce newproduct offerings, including bundled service packages; our ability tosell enhanced services; our ability to comply with federal and stateregulations; changes in the number of our revenue generating units;general and local economic and employment conditions; the effects ofongoing changes in the regulation of the communications industry;overall changes in the telecommunications market; and greater thananticipated competition from wireless or wireline carriers. Inaddition, we may be unable to implement some of our current businessinitiatives if we fail to recognize the benefits we expect to receivefrom certain transactions, including but not limited to, theanticipated sale of ELI and the liquidation of Rural Telephone Bank.These and other uncertainties related to our business are described ingreater detail in our filings with the Securities and ExchangeCommission, including our reports on Forms 10-K and 10-Q. We undertakeno obligation to publicly update or revise any forward-lookingstatement or to make any other forward-looking statements, whether asa result of new information, future events or otherwise unlessrequired to do so by securities laws.
Citizens Communications Company
Consolidated Financial Data (1)
(unaudited)

For the quarter
ended
December 31,
(Amounts in thousands - except per-share ------------------- %
amounts) 2005 2004 Change
--------------------------

Income Statement Data (2)
Revenue (3) $556,112 $539,127 3%
Cost of services (exclusive of
depreciation and amortization) 49,725 47,023 6%
Other operating expenses 201,201 203,877 -1%
Management succession and strategic
alternatives expenses (4) - - -
Stock based compensation 1,994 3,204 -38%
Depreciation and amortization 129,969 142,617 -9%
Operating income 173,223 142,406 22%
Investment and other income (loss) 3,813 (36,592) 110%
Interest expense (includes interest on
convertible debt) 85,807 92,725 -7%
Income tax expense (benefit) 14,448 (2,447) 690%
Income from discontinued operations, net of
tax - 1,244 -100%
Net income attributable to common
shareholders 76,781 16,780 358%

Weighted average shares outstanding 331,180 335,143 -1%

Basic net income per share attributable to
common shareholders (5) $0.23 $0.05 360%

Other Financial Data
Total capital expenditures $92,999 $75,024 24%
Free cash flow (6) 123,904 127,575 -3%


For the year ended
December 31,
(Amounts in thousands - except per- ----------------------- %
share amounts) 2005 2004 Change
------------------------------

Income Statement Data (2)
Revenue (3) $2,162,479 $2,168,422 0%
Cost of services (exclusive of
depreciation and amortization) 195,491 198,938 -2%
Other operating expenses 809,753 820,976 -1%
Management succession and strategic
alternatives expenses (4) - 90,632 -100%
Stock based compensation 8,427 10,963 -23%
Depreciation and amortization 541,959 570,808 -5%
Operating income 606,849 476,105 27%
Investment and other income (loss) 16,562 (19,743) 184%
Interest expense (includes interest
on convertible debt) 338,903 379,021 -11%
Income tax expense (benefit) 84,340 10,422 709%
Income from discontinued operations,
net of tax 2,207 5,231 -58%
Net income attributable to common
shareholders 202,375 72,150 180%

Weighted average shares outstanding 337,065 303,989 11%

Basic net income per share attributable
to common shareholders (5) $0.60 $0.24 150%

Other Financial Data
Total capital expenditures $268,459 $275,204 -2%
Free cash flow (6) 545,162 499,184 9%


(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) Revenue for the year ended December 31, 2004 includes $9,735 of
revenue from electric operations sold.
(4) Includes $36,618 related to stock based compensation expense for
the twelve months ended December 31, 2004.
(5) Calculated based on weighted average shares outstanding.
(6) 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
December 31,
(Dollars in thousands, except operating ---------------------- %
data) 2005 2004 Change
-----------------------------

TELECOMMUNICATIONS
Select Income Statement Data
Revenue
Access services $168,529 $159,797 5%
Local services 205,434 210,719 -3%
Long distance services 40,405 44,657 -10%
Data and internet services 48,220 37,020 30%
Directory services 28,226 27,636 2%
Other 22,914 20,545 12%
ILEC revenue 513,728 500,374 3%
Electric Lightwave 42,384 38,753 9%
Total revenue 556,112 539,127 3%

Expenses
Network access expense 49,725 47,023 6%
Other operating expenses 201,201 203,075 -1%
Management succession and strategic
alternatives expenses - - -
Stock based compensation 1,994 3,204 -38%
Depreciation and amortization 129,969 142,617 -9%
Total expenses 382,889 395,919 -3%

Operating Income
ILEC $164,954 $137,979 20%
ELI 8,269 5,229 58%

Other Financial and Operating Data
ILEC capital expenditures $89,987 $71,259 26%
ELI capital expenditures 2,965 3,578 -17%
ILEC depreciation and amortization 123,790 136,457 -9%
ELI depreciation and amortization 6,179 6,160 0%


ILEC access lines 2,218,570 2,320,772 -4%
High-speed internet subscribers 311,416 212,277 47%
ILEC switched access minutes of use (in
millions) 2,705 2,895 -7%
ILEC average monthly revenue per average
RGU (2) $67.60 $65.85 3%


For the year ended
December 31,
(Dollars in thousands, except operating ---------------------- %
data) 2005 2004 Change
-----------------------------

TELECOMMUNICATIONS
Select Income Statement Data
Revenue
Access services $623,918 $634,196 -2%
Local services 829,801 851,177 -3%
Long distance services 169,496 183,623 -8%
Data and internet services 175,026 138,231 27%
Directory services 113,092 110,623 2%
Other 91,985 84,807 8%
ILEC revenue 2,003,318 2,002,657 0%
Electric Lightwave 159,161 156,030 2%
Total revenue 2,162,479 2,158,687 0%

Expenses
Network access expense 195,491 193,415 1%
Other operating expenses 809,753 813,630 0%
Management succession and strategic
alternatives expenses - 90,632 -100%
Stock based compensation 8,427 10,963 -23%
Depreciation and amortization 541,959 570,808 -5%
Total expenses 1,555,630 1,679,448 -7%

Operating Income
ILEC $588,543 $468,889 26%
ELI 18,306 10,350 77%

Other Financial and Operating Data
ILEC capital expenditures $252,213 $263,193 -4%
ELI capital expenditures 16,099 11,644 38%
ILEC depreciation and amortization 516,982 546,747 -5%
ELI depreciation and amortization 24,977 24,061 4%


ILEC access lines 2,218,570 2,320,772 -4%
High-speed internet subscribers 311,416 212,277 47%
ILEC switched access minutes of use (in
millions) 11,225 11,785 -5%
ILEC average monthly revenue per average
RGU (2) $65.93 $66.23 0%

(1) See footnote (1) on the first page.
(2) RGUs are access lines plus high-speed internet subscribers.




Citizens Communications Company
Financial and Operating Data
(unaudited)

For the quarter For the year
ended ended
December 31, December 31,
--------------- % ---------------- %
(Dollars in thousands) 2005 2004 Change 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 - 802 -100% - 7,346 -100%
Operating income (loss) - (802) 100% - (3,134) 100%


(1) See footnote (2) on the first page.




Citizens Communications Company
Condensed Consolidated Balance Sheet Data (1)

(Amounts in thousands)
December 31, December 31,
2005 2004
------------ ------------
ASSETS
------
Current assets:
Cash and cash equivalents $265,775 $163,759
Accounts receivable and other current
assets 276,320 282,999
Assets of discontinued operations - 24,122
------------ ------------
Total current assets 542,095 470,880

Property, plant and equipment, net 3,186,465 3,335,850

Other long-term assets 2,683,549 2,861,689
------------ ------------
Total assets $6,412,109 $6,668,419
============ ============

LIABILITIES AND EQUITY
----------------------
Current liabilities:
Long-term debt due within one year $227,734 $6,380
Accounts payable and other current
liabilities 388,908 410,405
Liabilities of discontinued operations - 735
------------ ------------
Total current liabilities 616,642 417,520

Deferred income taxes and other liabilities 754,282 621,661
Long-term debt 3,999,376 4,266,998
Shareholders' equity 1,041,809 1,362,240
------------ ------------
Total liabilities and equity $6,412,109 $6,668,419
============ ============


(1) See footnote (1) on the first page.




Citizens Communications Company
Condensed Consolidated Cash Flow Data (1)
(unaudited)

(Amounts in thousands)
For the year ended
December 31,
-----------------------
2005 2004
----------- -----------

Cash flows provided by (used in) operating
activities:
Net income $202,375 $72,150
Deduct: Gain on sale of discontinued
operations (1,167) -
Income from discontinued operations (1,040) (5,231)
Adjustments to reconcile income to net cash
provided by operating activities:
Depreciation and amortization 541,959 570,808
Gain on expiration/settlement of customer
advances (681) (25,345)
Loss on debt exchange 3,175 -
Stock based compensation 8,427 47,581
Other 91,169 51,474
----------- -----------
Net cash provided by operating activities 844,217 711,437

Cash flows from investing activities:
Proceeds from sales of assets, net of
selling expenses 24,195 30,959
Proceeds from sale of discontinued
operations 43,565 -
Securities sold 1,112 26,514
Capital expenditures (268,459) (275,204)
Other assets (purchased) distributions
received, net 5,724 (28,110)
----------- -----------
Net cash used by investing activities (193,863) (245,841)

Cash flows from financing activities:
Long-term debt borrowings - 700,000
Debt issuance costs - (15,502)
Long-term debt payments (6,433) (1,214,018)
Premiums paid to retire debt - (66,480)
Issuance of common stock 47,550 544,562
Dividends paid (338,364) (832,768)
Shares repurchased (250,000) -
Other (1,662) (2,089)
----------- -----------
Net cash used by financing activities (548,909) (886,295)

Cash flows of discontinued operations

Operating cash flows 578 1,361
Investing cash flows (7) (571)
Financing cash flows - (3)
----------- -----------
571 787

Increase (decrease) in cash and cash
equivalents 102,016 (419,912)
Cash and cash equivalents at January 1, 163,759 583,671
----------- -----------

Cash and cash equivalents at December 31, $265,775 $163,759
=========== ===========
Cash paid during the period for:
Interest $318,638 $370,128
Income taxes (refunds) $4,711 $(4,901)


(1) See footnote (1) on the first page.



Schedule A
Reconciliation of Non-GAAP Financial Measures (1)
(unaudited)

For the quarter For the year
ended December 31, ended December 31,
------------------- -------------------
(Amounts in thousands) 2005 2004 2005 2004
--------- --------- --------- ---------

Net Income to Free Cash Flow;
Net Cash Provided by Operating
Activities
-------------------------------

Net income $76,781 $16,780 $202,375 $72,150

Add back:
Depreciation and
amortization 129,969 142,617 541,959 570,808

Income tax expense
(benefit) 14,448 (2,447) 84,340 10,422

Management succession and
strategic alternatives
expenses - - - 90,632

Stock based compensation 1,994 3,204 8,427 10,963

Subtract:
Cash paid (refunded) for
income taxes 2,476 (7,097) 4,711 (4,901)

Gain on sale of
discontinued operations - - 1,040 -

Income from discontinued
operations - 1,244 1,167 5,231

Investment and other income
(loss) 3,813 (36,592) 16,562 (19,743)

Capital expenditures 92,999 75,024 268,459 275,204

--------- --------- --------- ---------
Free cash flow 123,904 127,575 545,162 499,184

Add back:
Deferred income taxes 44,405 8,893 100,636 24,016

Non-cash (gains)/losses,
net 14,439 64,413 30,910 108,992

Investment and other income
(loss) 3,813 (36,592) 16,562 (19,743)

Cash paid (refunded) for
income taxes 2,476 (7,097) 4,711 (4,901)

Capital expenditures 92,999 75,024 268,459 275,204

Subtract:
Changes in current assets
and liabilities 25,722 56,920 29,456 59,298

Income tax expense
(benefit) 14,448 (2,447) 84,340 10,422

Management succession and
strategic alternatives
expenses - - - 90,632

Stock based compensation 1,994 3,204 8,427 10,963

--------- --------- --------- ---------
Net cash provided by operating
activities $239,872 $174,539 $844,217 $711,437
========= ========= ========= =========

(1) See footnote (1) on the first page.