Electric Lightwave, Inc.   Form 10-Q






















                             Quarterly Report Pursuant To Section 13 or 15(d)
                             of The Securities Exchange Act of 1934

                             For The Quarterly Period Ended September 30, 2000


<PAGE>


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the quarterly period ended September 30, 2000

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from                to

                         Commission file number 0-23393


                            ELECTRIC LIGHTWAVE, INC.
             (Exact name of registrant as specified in its charter)

                Delaware                                     93-1035711
    (State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                       Identification No.)


                                3 High Ridge Park
                                 P. O. Box 3801
                               Stamford, CT 06905
               (Address, zip code of principal executive offices)

        Registrant's telephone number, including area code (203) 614-5600

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding  twelve months (or for such shorter period that the registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past ninety days.

                                 Yes |X| No |_|

The number of shares outstanding of the registrant's class of common stock as of
October 30, 2000 were:

                         Common Stock Class A 9,563,446
                         Common Stock Class B 41,165,000


<PAGE>


Electric Lightwave, Inc.
Index
<TABLE>
<CAPTION>
<S>                                                                                                           <C>
                                                                                                              Page No.
Part I.       Financial Information                                                                           --------

     Item 1.  Financial Statements
                  Balance Sheets at September 30, 2000 and December 31, 1999
                      (unaudited)                                                                                 2
                  Statements of Operations for the Three and Nine Months Ended
                      September 30, 2000 and 1999 (unaudited)                                                     3
                  Condensed Statements of Cash Flows for the Nine Months Ended
                      September 30, 2000 and 1999 (unaudited)                                                     4
                  Notes to Financial Statements                                                                   5

     Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                                                           9


     Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                         16

Part II.      Other Information                                                                                  17

Signatures                                                                                                       18
</TABLE>
                                       1
<PAGE>


                         PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>
<CAPTION>

Balance Sheets
(In thousands )
(Unaudited)
                                                                             September 30,       December 31,
Assets                                                                           2000                1999
                                                                            ---------------    ----------------
Current assets:
<S>                                                                               <C>                 <C>
     Cash                                                                         $ 13,639            $ 21,378
     Trade receivables, net                                                         32,674              39,952
     Other receivables                                                               5,867               6,239
     Other current assets                                                            1,941               2,846
                                                                            ---------------    ----------------
        Total current assets                                                        54,121              70,415
                                                                            ---------------    ----------------

Property, plant and equipment                                                      962,454             771,947
Less accumulated depreciation and amortization                                    (117,561)            (76,288)
                                                                            ---------------    ----------------
     Property, plant and equipment, net                                            844,893             695,659
                                                                            ---------------    ----------------

Other assets                                                                         7,266               9,160
                                                                            ---------------    ----------------

        Total assets                                                             $ 906,280           $ 775,234
                                                                            ===============    ================

Liabilities and Shareholders' (Deficit) Equity
Current liabilities:
     Accounts payable and accrued liabilities                                     $ 59,717            $ 61,066
     Current portion of long-term obligations                                       29,414              25,105
     Due to Citizens Communications Company                                          5,083              14,650
     Other accrued taxes                                                            18,906              11,153
     Interest payable                                                               14,723               4,950
     Other current liabilities                                                       4,144               3,314
                                                                            ---------------    ----------------
        Total current liabilities                                                  131,987             120,238

Deferred revenue                                                                    14,214               6,888
Other long-term liabilities                                                            722                 952
Deferred income taxes payable                                                        3,598               2,658
Capital lease obligations                                                          107,586              39,997
Long-term debt                                                                     725,000             585,000
                                                                            ---------------    ----------------
        Total liabilities                                                          983,107             755,733
                                                                            ---------------    ----------------

Shareholders'  (deficit) equity:
     Common stock issued, $.01 par value
        Class A, authorized 110,000,000 shares, 9,486,924 shares
            and 8,966,276 shares issued and outstanding at
            September 30, 2000 and December 31, 1999, respectively                      95                  90
        Class B, authorized 60,000,000 shares, 41,165,000 shares
            issued and outstanding at September 30, 2000 and
            December 31, 1999                                                          412                 412
     Additional paid-in-capital                                                    332,833             326,477
     Accumulated deficit                                                          (410,167)           (307,478)
                                                                            ---------------    ----------------
        Total shareholders' (deficit) equity                                       (76,827)             19,501
                                                                            ---------------    ----------------

        Total liabilities and shareholders' (deficit) equity                     $ 906,280           $ 775,234
                                                                            ===============    ================

</TABLE>
                                       2

<PAGE>
Statements of Operations
(In thousands, except per-share amounts)
<TABLE>
<CAPTION>

                                                 For the three months ended Sept. 30,    For the nine months ended Sept. 30,
                                                        2000               1999                2000                1999
                                                   ----------------   ----------------    ----------------    ----------------

<S>                                                       <C>                <C>                <C>                 <C>
Revenue                                                   $ 63,610           $ 48,602           $ 181,008           $ 132,913
                                                   ----------------   ----------------    ----------------    ----------------
Operating expenses:
     Network access                                         17,821             14,719              56,811              63,645
     Operations                                             13,473             10,732              38,494              29,399
     Selling, general and administrative                    27,540             32,017              89,027              88,231
     Depreciation and amortization                          16,306              9,807              43,782              24,951
                                                   ----------------   ----------------    ----------------    ----------------
        Total operating expenses                            75,140             67,275             228,114             206,226
                                                   ----------------   ----------------    ----------------    ----------------

     Loss from operations                                  (11,530)           (18,673)            (47,106)            (73,313)

Interest expense                                            20,745             11,425              54,603              24,592
Loss on disposal of assets and investments                     117                289                 893                 483
Interest income and other                                     (259)              (290)               (853)               (804)
                                                   ----------------   ----------------    ----------------    ----------------

     Net loss before income taxes                          (32,133)           (30,097)           (101,749)            (97,584)

Income tax expense                                             459                277                 940                 947
                                                   ----------------   ----------------    ----------------    ----------------

     Net loss                                            $ (32,592)         $ (30,374)         $ (102,689)          $ (98,531)
                                                   ================   ================    ================    ================

Net loss per common share:
     Basic                                                 $ (0.64)           $ (0.61)            $ (2.04)            $ (1.98)
     Diluted                                               $ (0.64)           $ (0.61)            $ (2.04)            $ (1.98)

Weighted average shares outstanding                         50,606             49,915              50,404              49,846

</TABLE>

                                       3
<PAGE>


Condensed Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>

                                                                          For the nine months ended Sept. 30,

                                                                                     2000               1999
                                                                            ---------------    ----------------

<S>                                                                              <C>                 <C>
Net cash used for operating activities                                           $ (38,983)          $ (76,421)
                                                                            ---------------    ----------------

Cash flows used for investing activities:
     Capital expenditures                                                          (90,864)           (138,557)
                                                                            ---------------    ----------------

Cash flows from financing activities:
     Revolving bank credit facility proceeds                                       150,000             226,000
     Revolving bank credit facility repayments                                     (10,000)           (310,000)
     Note issuance                                                                       -             325,000
     Reduction of capital lease obligation                                         (23,676)            (12,816)
     Other                                                                           5,784              (1,714)
                                                                            ---------------    ----------------
        Net cash provided by financing activities                                  122,108             226,470
                                                                            ---------------    ----------------

Net increase (decrease) in cash                                                     (7,739)             11,492

Cash at January 1,                                                                  21,378              13,120
                                                                            ---------------    ----------------
Cash at September 30,                                                             $ 13,639            $ 24,612
                                                                            ===============    ================




Supplemental cash flow information:
     Cash paid for interest, net of capitalized portion                           $ 23,792            $ 16,572
     Non-cash increase in capital lease asset                                     $ 98,555            $ 45,195

</TABLE>
                                       4


<PAGE>

Notes to Financial Statements:

1.   Summary of  Significant Accounting Policies

     a.   Basis of Presentation and Use of Estimates

     Electric  Lightwave,  Inc. is  referred  to as "we",  "us" or "our" in this
     report. We have prepared these unaudited financial statements in accordance
     with generally accepted accounting  principles (GAAP) for interim financial
     information  and with the  instructions  to Form  10-Q  and  Article  10 of
     Regulation  S-X.   Accordingly,   we  have  condensed  or  omitted  certain
     information  and  footnote  disclosures.  In our opinion,  these  financial
     statements  include all  adjustments  and recurring  accruals  necessary to
     present fairly the results for the interim periods shown.


     Preparing financial  statements in conformity with GAAP requires us to make
     estimates and assumptions which affect the amounts of assets,  liabilities,
     revenue and expenses we have  reported  and our  disclosure  of  contingent
     assets and liabilities at the date of the financial statements. The results
     of the interim  periods are not  necessarily  indicative of the results for
     the  full  year.  We  have  made  certain   reclassifications  of  balances
     previously   reported  to  conform  to  the  current  financial   statement
     presentation.  You should read these  financial  statements in  conjunction
     with the audited financial statements and the related notes included in our
     Annual Report on Form 10-K for the year ended December 31, 1999.

     B.   Capitalized Interest

     Property,  plant and equipment  includes interest costs capitalized  during
     the   installation   and   expansion   of  our   communications   networks.
     Approximately  $1,628,000 and $2,697,000 of interest costs were capitalized
     in the three months ended  September 30, 2000 and 1999,  respectively,  and
     approximately $4,898,000 and $8,864,000 were capitalized in the nine months
     ended September 30, 2000 and 1999, respectively.

     c.   Revenue  Recognition

     We recognize  revenue from  communications  services  when the services are
     provided.  Amounts  received from long-term leases of fiber optic cable are
     included in deferred  revenue and are  amortized on a  straight-line  basis
     over the terms of the related leases.

     d.   Net Loss Per Share

     We follow the  provisions  of Statement of Financial  Accounting  Standards
     (SFAS) 128, "Earnings Per Share" which requires  presentation of both basic
     and  diluted  earnings  per share  (EPS) on the face of the  Statements  of
     Operations.  Basic EPS excludes dilution and is computed using the weighted
     average number of common shares  outstanding during the period. The diluted
     EPS calculation assumes that all stock options or contracts to issue common
     stock were exercised or converted into common stock at the beginning of the
     period.  We have excluded certain common stock equivalents from our diluted
     EPS  calculation  during the quarters ended  September 30, 2000 and 1999 as
     their effect would have reduced our net loss per share.

                                       5
<PAGE>


Electric Lightwave, Inc.

2.   Exit Costs

     In the third quarter 1999, we announced two strategic decisions that led to
     $1.5  million in employee  severance  and facility  shutdown  costs that we
     recorded in selling,  general and administrative  expense in our Statements
     of Operations  for the year ended December 31, 1999. On August 24, 1999, we
     announced  that  we  were   eliminating   our  prepaid   calling  card  and
     videoconferencing  products,  effective  November 1, 1999.  On September 1,
     1999, we announced  that we were  consolidating  our national  retail sales
     efforts in Dallas and  closing  nine  retail  sales  offices in the eastern
     United  States by  October  8,  1999.  We have  maintained  all of our data
     points-of-presence and wholesale sales offices. In the first three quarters
     of 2000, we incurred additional exit costs of $0.4 million related to these
     decisions that were recorded in selling, general and administrative expense
     in our Statements of Operations.

     As a result of both of these  decisions,  we  eliminated 63 sales and sales
     support positions,  and incurred charges relating to employee severance and
     facility shutdown costs of $0.9 million and $1.0 million,  respectively.  A
     summary of the activity in the exit costs accrual  since  December 31, 1999
     is as follows:
<TABLE>
<CAPTION>

                                               Balance                                                   Balance
                                            December 31,            New                               September 30,
($ In thousands)                                1999              Charges            Payments             2000
                                           ----------------    ---------------    ----------------   ----------------
<S>                                          <C>                <C>                  <C>                 <C>
Severance related costs                      $     -            $     133            $   133             $    -
Network and facilities costs                     134                  226                360                  -
                                           ----------------    ---------------    ----------------   ----------------
     Total                                   $   134            $     359            $   493             $    -
                                           ================    ===============    ================   ================

</TABLE>


     3.   Commitments and Contingencies

     We have  entered  into an 18-month  take-or-pay  contract,  that expires on
     February 28, 2001, to provide data products to a significant customer.  The
     take-or-pay  contract  will provide $20 million in revenue for 2000.  It is
     not likely that this take-or-pay contract will be renewed in 2001.

     We have entered into various  capital and operating  leases for fiber optic
     cable to interconnect our local networks with long-haul fiber optic routes.
     The terms of the various agreements range from 20 to 25 years, with varying
     optional renewal periods.

     In addition to the long-haul  agreements  above,  we have also entered into
     certain  operating and capital  leases to develop our local  networks.  The
     terms of the various  agreements  range from 15 to 30 years,  with  varying
     optional  renewal  periods.  One of  these  contracts  provides  us with an
     exclusive  right to use the facilities as long as certain  minimum usage is
     satisfied. We continue to meet those requirements as of September 30, 2000.

     We are involved in various claims and legal actions arising in the ordinary
     course of business. In the opinion of management,  the ultimate disposition
     of these matters will not have a material  adverse effect on our results of
     operations, financial position or liquidity.


                                       6
<PAGE>

4.   Related Party Transactions

     Citizens  Communications  Company  (Citizens) owns approximately 86% of our
     common  stock.  On  December  1, 1997,  we entered  into an  Administrative
     Services  Agreement  (Agreement)  under  which  Citizens  provides  us with
     certain  administrative  services including,  but not limited to, financial
     management services,  information services, legal and contract services and
     planning and human  resources  services.  Under the terms of the Agreement,
     Citizens  bills us for direct costs and an  allocation  of indirect  costs,
     plus an administrative  charge. The current practice of allocating indirect
     costs is based on four factors: plant assets, operating expenses, number of
     customers and payroll expenses.  We believe that this allocation method and
     the resultant  amounts are reasonable as contemplated by the Agreement.  In
     addition,  we  reimburse  third  party  costs  incurred  by Citizens on our
     behalf.  We believe  that the  amounts  charged by  Citizens  do not exceed
     comparable  amounts that would be charged by an  unaffiliated  third party.
     Also, we believe that the accompanying  financial statements include all of
     our costs of doing business.

     In  April  2000,  Citizens  announced  a plan to buy up to $25  million  of
     Electric  Lightwave,  Inc.'s Class A common stock which was completed  July
     2000.  In August  2000,  Citizens  announced  a plan to  purchase up to one
     million  shares of Electric  Lightwave,  Inc.'s Class A common stock on the
     open  market  which was  completed  in  September  2000.  In the  aggregate
     Citizens purchased 2.3 million shares between April and September, 2000.

     This table summarizes the activity in the liability account Due to Citizens
     for the nine months ended September 30,

<TABLE>
<CAPTION>

($ In thousands)                                                    2000               1999
                                                               ---------------    ----------------
<S>                                                                  <C>                  <C>
Balance beginning of period                                          $ 14,650             $ 5,254
Guarantee fees                                                         20,382              13,687
Administrative services:
     Services provided by Citizens                                      4,438               6,028
     ELI expenses paid by Citizens                                      5,578              11,282
Payments to Citizens                                                  (39,965)            (21,000)
                                                               ---------------    ----------------
Balance end of period                                                 $ 5,083            $ 15,251
                                                               ===============    ================

</TABLE>

5.   Significant Customer

     Qwest (formerly U S WEST Communications, Inc.) accounted for 16% and 18% of
     our total revenue for the three and nine-month  periods ended September 30,
     2000 and 18% for the three and  nine-months  ended  September  30, 1999. No
     other  customer  accounted  for 10% or more of our total revenue for either
     the three months or nine months ended September 30, 2000.

6.   Income Taxes

     Citizens includes us in their consolidated  federal income tax return which
     uses a calendar year reporting period. We record income taxes as if we were
     a  stand-alone  company.  We recorded  income tax  expense of $459,000  and
     $277,000  for  the  three  months  ended   September  30,  2000  and  1999,
     respectively, and $940,000 and $947,000 for the nine months ended September
     30, 2000 and 1999,  respectively.  This expense represents the deferred tax
     effect of the increase in temporary  differences between our GAAP financial
     statements  and our tax return that may not be fully offset with the use of
     tax loss  carryforwards  when the temporary  differences  reverse in future
     periods.

     The income taxes payable by Citizens'  consolidated group have been reduced
     as a  consequence  of our losses for tax  purposes in past years.  We would
     have been able to carry-forward  our tax losses to future periods to offset
     taxable income in these future  periods had we been a stand-alone  company.
     In  accordance  with our tax  sharing  agreement,  Citizens  has  agreed to
     reimburse us for the taxes we would be required to pay in the future, if we
     have  taxable  income,  to the extent that these loss  carryforwards  would
     otherwise remain available on a stand-alone basis.

                                       7

<PAGE>


7.   Segment Disclosures

     We operate  in a single  industry  segment,  communications  services.  Our
     operations  involve  developing  an  integrated  advanced  fiber network to
     provide the full range of our products  and services in the western  United
     States as well as enhanced  broadband  data  services  in  selected  cities
     nationwide.  While our chief operating  decision-maker monitors the revenue
     streams  of the  various  products  and  geographic  locations,  we  manage
     operations  and  evaluate  financial  performance  based on the delivery of
     multiple  services to customers  over a single  fiber-optic  network.  This
     practice allows us to leverage our network costs to maximize profitability.
     As a result, there are many shared and indistinguishable expenses generated
     by the various revenue streams. Our management believes that any allocation
     of the expenses  incurred on a single network to multiple  revenue  streams
     would be impractical,  arbitrary and inconsistent with the way the business
     is currently  evaluated by  management.  As a result,  management  does not
     currently make such allocations internally.

     Products and Services

     We group our products and services into Network  Services,  Local Telephone
     Services,  Long Distance Services and Data Services.  The revenue generated
     by  these  products  and  services  for the  three  and nine  months  ended
     September 30 were:

<TABLE>
<CAPTION>


                                          For the three months ended Sept. 30,    For the nine months ended Sept. 30,
($ In thousands)                                2000                1999               2000               1999
                                          ----------------    ---------------    ----------------   ----------------
<S>                                            <C>              <C>                 <C>               <C>
Network services                               $ 21,627         $    14,024         $  54,804         $    37,431
Local telephone services                         25,187              22,313            75,412              55,221
Long distance services                            3,728               4,812            12,590              22,587
Data services                                    13,068               7,453            38,202              17,674
                                           ----------------    ---------------    ----------------   ----------------
     Total                                     $ 63,610         $    48,602         $ 181,008         $   132,913
                                           ================    ===============    ================   ================
</TABLE>


     We do not currently provide products or services outside the United States.


                                       8
<PAGE>


Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations

     _________________________________________________________________________


     We  caution  you  that  this   quarterly   report  on  Form  10-Q  contains
     forward-looking  statements  within  the  meaning  of  the  Securities  and
     Exchange  Act  of  1934.   Forward-looking   statements   (including   oral
     representations)  are only  predictions or statements of our current plans,
     which we  review  on a  continual  basis,  and are  based  on our  beliefs,
     expectations and assumptions and on information  currently available to us.
     The  words  "may",  "should",  "expect",  "anticipate",  "intend",  "plan",
     "continue",  "believe",  "estimate"  or  similar  expressions  used in this
     report are intended to identify forward-looking statements.


     The  forward-looking  statements  in this  quarterly  report  on Form  10-Q
     involve  certain  risks,  uncertainties  and  assumptions.   They  are  not
     guarantees of future performance.  Factors that may cause actual results to
     differ  materially from those  expressed or implied in any  forward-looking
     statements  include,   but  are  not  limited  to,  any  of  the  following
     possibilities:

     o    if the local and overall  economic  conditions of our markets are less
          favorable  than we expected;
     o    if there are changes in the nature and pace of technological  advances
          in our industry;
     o    if competitive pressure in the  telecommunications  industry increases
          in any of our markets because of the entrance of new competitors,  the
          combination  of  existing   competitors   and/or  the  more  effective
          provision  of products and services  from our  competitors,  including
          ILECs, or other public  utilities;
     o    if  our  business  strategy  or  its  execution,  including  financial
          performance goals, is not as successful as we anticipate;
     o    if state or federal regulatory changes are implemented that assist our
          competitors,  impair our competitive  position,  threaten our costs or
          impact our rate structures,  including the ability to bill and collect
          reciprocal  compensation  for calls  terminated  to  Internet  Service
          Providers (ISPs);
     o    if we do not receive the  services  and support  which we require from
          the regional ILECs or cannot maintain our current  relationships  with
          ILECs;
     o    if we are not  able to  effectively  manage  rapid  growth,  including
          integrating any businesses acquired;
     o    if we are not able to correctly identify future markets,  successfully
          expand existing ones, or successfully expand through acquisitions;
     o    if the mix of products and services we are able to offer in our target
          markets is not appropriate to the demands of our customers;
     o    if we are not able to obtain additional  financing;  or
     o    if our stock price is volatile.

     You should  consider  these  important  factors in evaluating any statement
     contained  in this report  and/or  made by us or on our behalf.  We have no
     obligation to update or revise forward-looking statements.


    _________________________________________________________________________


     The  following  information  has not been  audited.  You  should  read this
     information  in  conjunction  with the condensed  financial  statements and
     related notes to financial statements included in this report. In addition,
     please see our Management's  Discussion and Analysis of Financial Condition
     and Results of Operations,  audited financial  statements and related notes
     included in our Annual Report on Form 10-K for the year ended  December 31,
     1999.  Electric  Lightwave,  Inc. is referred to as "we", "us", or "our" in
     this report.

                                       9
<PAGE>

Overview

     We have  built an  extensive  fiber-optic  network  in the  western  United
     States,  which includes  expansive local networks in seven major cities and
     their surrounding areas, connected by our long-haul routes. In addition, we
     provide data services in certain strategic  markets across the nation.  Our
     product offerings include:

     o    Network services - includes dedicated service between two points for a
          customer's  exclusive  use. We offer this in both local and  long-haul
          applications  and  collocation  facilities  to meet us directly in our
          hub.
     o    Local telephone services - consists of the delivery of local dial tone
          and related services,  and related carrier and local access revenue as
          well as Integrated  Services  Digital  Network  Primary Rate Interface
          (ISDN  PRI).  ISPN PRI  provides  customers  with a high speed  access
          connection to the public switched  telephone network for voice,  video
          and data applications.
     o    Long distance  services - includes  retail and wholesale long distance
          phone services.
     o    Data  services - includes a wide range of  products  to deliver  large
          quantities of data from one location to another  through  Asynchronous
          Transfer  Mode  (ATM),   Frame  Relay  and  Internet  Protocol  packet
          technologies.  These technologies group data (voice, video, images and
          character-based  data) into small packets of information  and transmit
          the packets over a network.

     Refer  to  Note 4 in  Part  I,  Item 1,  for a  discussion  concerning  our
     relationship  with  Citizens,  which owns  approximately  86% of our common
     stock.

a.   Liquidity and Capital Resources

     We drew $140 million (net) from our revolving bank credit facility  (Credit
     Facility) to fund operating and capital expenditures during the first three
     quarters of 2000.  At  September  30, 2000,  there were no remaining  funds
     available  for draw under our $400 million  Credit  Facility.  No principal
     payment is due until the expiration date of the Credit Facility in November
     2002.  Additionally,  we  have  $325  million  of  five-year  6.05%  senior
     unsecured  notes  outstanding  with maturity on May 14, 2004.  Citizens has
     guaranteed both the Credit Facility and our senior unsecured notes for fees
     of  3.25%  and  4.0%,  respectively,  based on the  respective  outstanding
     balances. The current portion of our long-term obligations of $29.4 million
     consists solely of capital lease obligations.

     We anticipate that our existing cash balances and cash to be generated from
     operations  will be inadequate to fund operating  leases,  working  capital
     deficiencies,  capital  expenditures  and debt  through  2001.  Citizens is
     committed to continue to finance our cash requirements, at market terms and
     conditions,  until the  earlier  of the  completion  of a public or private
     financing  which  would  provide  the funds  necessary  to support our cash
     requirements, or through 2001.

     In order to continue the growth of our customer base and revenue stream, we
     must continue to invest in the  installation,  development and expansion of
     our  existing  communications  networks.  A  significant  portion  of these
     expenditures  is  incurred  before any  revenue is  realized.  Our  capital
     additions were approximately  $194.2 million in the first three quarters of
     2000,   including   $98.6  million  in  capital  lease   additions.   These
     expenditures,  combined  with our  operating  expenses,  have  resulted  in
     operating  losses and negative cash flows. We expect to continue  incurring
     operating losses and negative cash flows until we can establish an adequate
     customer base necessary to generate a revenue stream  sufficient to support
     our operations,  capital  requirements and debt service.  We cannot provide
     assurance  that  we will  achieve  or  sustain  profitability  or  generate
     sufficient  positive cash flow to fund our operating,  capital  expenditure
     and debt service requirements.

                                       10
<PAGE>

     We continue to evaluate  opportunities  to generate  revenue growth through
     making substantial investments in the continued development of our existing
     networks,   new  long-haul  routes  and  entry  into  new  markets.   These
     opportunities  may include  acquisitions  and/or  joint  ventures  that are
     consistent  with our business plan of  generating  revenue  growth  through
     expansion  of  our  network  and  customer  base.  Any  such  acquisitions,
     investments  and/or  strategic  arrangements,  if available,  could require
     additional   financial  resources  and/or  reallocation  of  our  financial
     resources.

Other Matters

New Accounting Pronouncements

     In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS
     No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities".
     This  statement   establishes   accounting  and  reporting   standards  for
     derivative instruments and hedging activities and, as amended, is effective
     for all fiscal  quarters of fiscal years beginning after June 15, 2000. The
     statement  requires  balance sheet  recognition of derivatives as assets or
     liabilities  measured  at fair  value.  Accounting  for  gains  and  losses
     resulting from changes in the values of derivatives is dependent on the use
     of the derivative and whether it qualifies for hedge accounting. Management
     is currently  assessing the impact of SFAS No. 133 and does not  anticipate
     that it will have a material impact on our financial statements.

     On December 3, 1999,  the Securities  and Exchange  Commission  (SEC) staff
     issued Staff  Accounting  Bulletin (SAB) No. 101,  "Revenue  Recognition in
     Financial  Statements". On October 13, 2000, the SEC published  "Frequently
     Asked  Questions  and  Answers"  (Q&A)  related to SAB 101 and deferred the
     effective  date to no  later  than  the  fourth  quarter  of  fiscal  years
     beginning  after December 15, 1999. We are currently  evaluating the impact
     of SAB 101 on our financial statements.

Reciprocal Compensation

     On February 25,  1999,  the FCC issued a  Declaratory  Ruling and Notice of
     Proposed  Rulemaking that categorized calls terminated to ISPs as "largely"
     interstate in nature,  which could have had the effect of precluding  these
     calls from reciprocal compensation charges. However, the ruling stated that
     ILECs are bound by the existing  interconnection  agreements  and the state
     decisions  that have  defined  them.  The FCC gave the states  authority to
     interpret  existing  interconnection  agreements.  Since  the FCC order was
     issued, Oregon,  Washington,  California,  Utah and Arizona have ruled that
     calls terminated to ISPs should be included in the calculation to determine
     reciprocal compensation.

     On March 24, 2000, the DC Circuit Court changed  certain  provisions of the
     FCC's 1999 Declaratory Ruling. The DC Circuit Court is requiring the FCC to
     again  review  the  definitions  of  traffic  that  require   inter-carrier
     compensation.   The  FCC  has  been  asked  to   specifically   review  the
     compensation   mechanisms  for  ISP-bound  traffic.  A  decision  regarding
     inter-carrier  compensation  is expected in the fourth quarter 2000. We are
     not currently  able to determine  the potential  impact of that decision on
     us.

     We have various interconnection  agreements with Qwest (formerly U S West),
     Verizon  (formerly  GTE) and  PacBell,  the ILECs in the states in which we
     operate. We recognized reciprocal compensation revenues of $9.2 million and
     $10.1  million  for the three  months  ended  September  30, 2000 and 1999,
     respectively  and  $29.2  and  $24.8  million  for the  nine  months  ended
     September 30, 2000 and 1999,  respectively.  Net trade accounts  receivable
     relating to reciprocal  compensation totaled $6.0 million and $14.9 million
     at September 30, 2000 and December 31, 1999, respectively. These agreements
     are  scheduled to expire  between  September  30 and December 31, 2001.  We
     cannot  provide  assurance that renewal of the  interconnection  agreements
     will  be  in  the  same  form,  or  at  rates  comparable  to  the  current
     interconnection agreements.

                                       11
<PAGE>

Exit Costs

     In the third  quarter  1999,  we  announced  that we were  eliminating  our
     prepaid calling card and videoconferencing products,  effective November 1,
     1999, and that we were  consolidating  our national retail sales efforts in
     Dallas and closing nine retail sales  offices in the eastern  United States
     by October 8, 1999. As a result of both of these  decisions,  we eliminated
     63 sales and sales  support  positions,  and incurred  charges  relating to
     employee  severance  and facility  shutdown  costs of $0.7 million and $0.8
     million,  respectively  for the year ended  December 31, 1999. In the first
     three quarters of 2000, we have incurred  additional  costs of $0.4 million
     related to these decisions due to sublease and lease  termination costs and
     additional costs for terminated employees.

b.   Results of Operations

Revenue

     Revenue increased $15.0 million, or 31%, and $48.1 million, or 36%, for the
     three and nine months ended September 30, 2000, respectively, over the same
     periods in 1999.
<TABLE>
<CAPTION>

                                    For the three months ended Sept. 30,         For the nine months ended Sept. 30,
                                ------------------------------------------   -----------------------------------------
<S>                                 <C>            <C>           <C>            <C>             <C>
($ In thousands)                    2000           1999          % Change       2000            1999          % Change
                                -------------   ------------   ----------    ------------   -------------   ----------
Network services                  $ 21,627        $ 14,024           54%       $  54,804       $  37,431          46%
Local telephone services            25,187          22,313           13%          75,412          55,221          37%
Long distance services               3,728           4,812          (23%)         12,590          22,587         (44%)
Data services                       13,068           7,453           75%          38,202          17,674         116%
                                -------------   ------------                 ------------   -------------
     Total                        $ 63,610        $ 48,602           31%       $ 181,008       $ 132,913          36%
                                =============   ============                 ============   =============
</TABLE>

Network Services

     Network Services revenue increased $7.6 million, or 54%, and $17.4 million,
     or  46%, for  the  three  and  nine  months  ended   September   30,  2000,
     respectively,  over  the  same  periods  in 1999.  The  increase  is due to
     continued  growth in our network and sales of  additional  high  bandwidth,
     DS-3 and OC level circuits to new and existing customers.

Local Telephone Services

     Local telephone  services revenue increased $2.9 million, or 13%, and $20.2
     million,  or 37%, for the three and nine months ended  September  30, 2000,
     respectively,  over the same  periods  in 1999.  Local  telephone  services
     include  dial  tone,  ISDN PRI,  carrier  access  billings  and  reciprocal
     compensation.

     ISDN PRI revenue increased $3.1 million, or 51%, and $10.2 million, or 66%,
     for the three and nine months ended September 30, 2000, respectively,  over
     the same periods in 1999. Dial tone revenue increased $0.6 million, or 12%,
     and $1.9 million, or 15%, for the three and nine months ended September 30,
     2000, respectively, over the same periods in 1999. Increases in revenue for
     both ISDN PRI and dial tone is the  result of an  increase  in the  average
     access line  equivalents  of 61,478,  or 43%,  and 72,716,  or 60%, for the
     three and nine months ended September 30, 2000, respectively.

     Carrier access  billings  revenue  increased $0.1 million,  or 7%, and $3.7
     million,  or 142%, for the three and nine months ended  September 30, 2000,
     respectively,  over the same  periods in 1999.  The  increase  is due to an
     increase in average  monthly  minutes  processed  of 38.6 million from 21.9
     million,  or 76%, and 33.2 million from 19.2 million, or 73%, for the three
     and nine months ended September 30, 2000, respectively, partially offset by
     lower average rates per minute due to competitive  pressures in the markets
     in which we operate and a reserve for estimated  uncollectible revenue made
     in September 2000.

                                       12
<PAGE>

     Reciprocal   compensation  revenue  decreased  $0.9  million,  or  9%,  and
     increased  $4.4  million,  or 18%,  for the  three  and nine  months  ended
     September  30,  2000,  respectively,  over the same  periods  in 1999.  The
     decrease for the three months ended  September 30, 2000 is primarily due to
     decreased  revenue  from  Qwest  due  to  lower  rates  applicable  to  new
     interconnection  agreements effective January 1, 2000. The increase for the
     nine months ended September 30, 2000 is due to  interconnection  agreements
     being in place with  Verizon and  PacBell  during the three and nine months
     ended  September 30, 2000 to record  reciprocal  compensation  revenue that
     were not in place  for the same  periods  in 1999.  The  increase  for nine
     months was  partially  offset by decreased  revenue from Qwest due to lower
     rates applicable to new  interconnection  agreements  effective  January 1,
     2000.  See Part I,  "Management's  Discussion  and  Analysis  of  Financial
     Condition  and Results of  Operations - Liquidity  and Capital  Resources -
     Other  Matters  -  Reciprocal   Compensation"  for  further  discussion  of
     reciprocal compensation.

Long Distance Services

     Long distance  services  revenue  decreased $1.1 million, or 23%, and $10.0
     million,  or 44%, for the three and nine months ended  September  30, 2000,
     respectively, over the same periods in 1999. Long distance services include
     retail long distance, wholesale long distance and prepaid services.

     Retail long  distance  revenue  increased  $0.7  million,  or 42%, and $2.3
     million,  or 51%, for the three and nine months ended  September  30, 2000,
     respectively,  over the same  periods in 1999.  The  increase  is due to an
     increase in average  monthly  minutes  processed  of 9.8  million  from 6.8
     million,  or 44%, and 9.9 million  from 5.9 million,  or 68%, for the three
     and nine months ended September 30, 2000, respectively, partially offset by
     lower average rates per minute.

     Wholesale  long  distance  revenue  decreased  $0.4  million,  or 26%,  and
     increased  $0.2  million,  or 4%,  for the  three  and  nine  months  ended
     September 30, 2000, respectively, over the same periods in 1999.

     We exited the prepaid  services  market in the third  quarter of 1999. As a
     result prepaid  services revenue  decreased $1.4 million, or 86%, and $12.5
     million,  or 93%, for the three and nine months ended  September  30, 2000,
     respectively, over the same periods in 1999.

Data Services

     Data services revenue increased $5.6 million, or 75%, and $20.5 million, or
     116%, for the three and nine months ended September 30, 2000, respectively,
     over the same periods in 1999.  Data services  include  Internet,  RSVP and
     other services.

     Data services revenue  increased $3.3 million,  or 200%, and $13.2 million,
     or  800%,  for  the  three  and  nine  months  ended  September  30,  2000,
     respectively,  over the same periods in 1999,  as the result of an 18-month
     take-or-pay  contract with a significant  customer that expires on February
     28, 2001. The take-or-pay  contract will provide $20 million in revenue for
     2000.  It is not likely that this  take-or-pay  contract will be renewed in
     2001.

     Revenue from our Internet services product increased $1.6 million,  or 49%,
     and $5.0 million, or 64%, for the three and nine months ended September 30,
     2000,  respectively,  over the same periods in 1999.  Revenue from our RSVP
     products  increased $0.6 million,  or 235%, and $1.7 million,  or 288%, for
     the three and nine months ended September 30, 2000, respectively,  over the
     same periods in 1999.

                                       13
<PAGE>

Operating Expenses

     Operating  expenses  increased $7.9 million, or 12%, and $21.9 million,  or
     11%, for the three and nine months ended September 30, 2000,  respectively,
     over the same periods in 1999.
<TABLE>
<CAPTION>

                                    For the three months ended Sept. 30,         For the nine months ended Sept. 30,
                                -----------------------------------------    -----------------------------------------
<S>                                  <C>            <C>           <C>           <C>             <C>
 ($ In thousands)                    2000           1999          % Change       2000            1999        % Change
                                -------------   ------------   ----------    ------------   -------------   ----------
Network access                      $ 17,821       $ 14,719          21%        $ 56,811        $ 63,645         (11%)
Operations                            13,473         10,732          26%          38,494          29,399          31%
Selling, general and
   administrative                     27,540         32,017         (14%)         89,027          88,231           1%
Depreciation and
   amortization                       16,306          9,807          66%          43,782          24,951          75%
                                -------------   ------------                 ------------   -------------
     Total                          $ 75,140       $ 67,275          12%       $ 228,114       $ 206,226          11%
                                =============   ============                 ============   =============
</TABLE>

Network Access

     Network  access  expenses  include  circuit  and  usage-based  charges  for
     carrying and terminating traffic on another carrier's network.

     Network  access  expenses  for the three months  ended  September  30, 2000
     increased $3.1 million,  or 21%, compared to the same period in 1999 due to
     increased  costs directly  related to increased  revenue growth and network
     expansion  and were also impacted by the  termination  of the prepaid phone
     card business and favorable  resolution of vendor disputes during the third
     quarter of 1999.

     Network  access  expenses  for the nine  months  ended  September  30, 2000
     decreased  $6.8 million,  or 11%,  compared to the same period in 1999 as a
     result  of the  termination  of  the  prepaid  phone  card  business  which
     decreased expense by $15.7 million,  partially offset by increases in costs
     directly related to increased revenue growth.

     Our  revenue  growth  was 31% and 36% for the three and nine  months  ended
     September 30, 2000,  respectively,  over the same periods in 1999.  Network
     access expense did not increase in proportion to revenue as a result of our
     ability to transmit a greater portion of activity over our internal network
     facilities.  Additionally,  we have renegotiated agreements with vendors to
     reduce our off-net costs.

Operations

     Operations expenses consist of costs related to providing  facilities based
     network and enhanced  communications  services  other than  network  access
     costs.  The primary  components  of these  expenses  are  right-of-way  and
     telecommunications  equipment  leases as well as operations and engineering
     personnel costs.

     Operations  expenses for the three and nine months ended September 30, 2000
     increased  $2.7 million,  or 26%, and $9.1 million,  or 31%,  respectively,
     over the same  periods in 1999,  primarily  due to  increases  in  payroll,
     maintenance,  operating rents and related  expenses to support the expanded
     delivery of services.

                                       14
<PAGE>

Selling, General and Administrative

     Selling,  general  and  administrative  expenses  include  all  direct  and
     indirect sales channel expenses and commissions, as well as all general and
     administrative expenses.

     Selling,  general and  administrative  expenses  for the three months ended
     September  30, 2000 decreased  $4.5  million,  or 14%, and  increased  $0.8
     million, or 1%, for the nine months ended  September 30, 2000,  compared to
     the same periods in 1999. The decrease for the three months ended September
     30, 2000 is primarily due to decreased  expenses related to the decision to
     exit our  prepaid  calling  card  and  videoconferencing  products  and the
     consolidation  of our  national  retail  sales  efforts  which  resulted in
     closing nine retail sales offices in the eastern United States in the third
     quarter  of 1999,  partially  offset by  increases  in  franchise  fees and
     property  taxes.  See Part I, "Management's  Discussion  and  Analysis of
     Financial  Condition  and Results of  Operations  -  Liquidity  and Capital
     Resources  - Other  Matters - Exit Costs" for  further  discussion  of exit
     cost.

     The increase for the nine months ended  September 30, 2000 is primarily due
     to increases in property taxes, maintenance and related expenses to support
     the delivery of services in existing and new markets,  partially  offset by
     decreases in costs related to the decision to exit our prepaid calling card
     and videoconferencing products and the consolidation of our national retail
     sales  efforts  which  resulted in closing nine retail sales offices in the
     eastern United States in the third quarter of 1999.

Depreciation and Amortization

     Depreciation   and   amortization    expenses   include   depreciation   of
     communications   network  assets  including   fiber-optic  cable,   network
     electronics, network switching and network data equipment.

     Depreciation and  amortization  expense for the three and nine months ended
     September 30, 2000  increased $6.5 million, or 66%, and $18.8  million,  or
     75%, respectively, over the same periods in 1999. This was primarily due to
     higher plant in service balances for newly completed communications network
     facilities and electronics.


Interest Expense
<TABLE>
<CAPTION>


                                  For the three months ended Sept. 30,         For the nine months ended Sept. 30,
                                -----------------------------------------    -----------------------------------------
<S>                                 <C>            <C>           <C>           <C>             <C>
($ In thousands)                    2000           1999          % Change       2000            1999          % Change
                                -------------   ------------   ----------    ------------   -------------   ----------
     Gross interest expense         $ 22,373       $ 14,122          58%        $ 59,501        $ 33,456          78%
     Capitalized interest             (1,628)        (2,697)        (40%)         (4,898)         (8,864)        (45%)
                                -------------   ------------                 ------------   -------------
Interest expense, net               $ 20,745       $ 11,425          82%        $ 54,603        $ 24,592         122%
                                =============   ============                 ============   =============
</TABLE>

     Gross interest expense  increased $8.3 million,  or 58%, and $26.0 million,
     or  78%,  for  the  three  and  nine  months  ended   September  30,  2000,
     respectively, over the same periods in 1999, primarily due to higher levels
     of outstanding  long-term debt and higher  interest  rates. As of September
     30, 2000, we had long-term  debt  outstanding  of $725 million  compared to
     $525 million at September  30,  1999.  The higher  balance led to increased
     interest and guarantee fees.

     Capitalized  interest decreased $1.1 million, or 40%, and $4.0 million,  or
     45%, for the three and nine months ended September 30, 2000,  respectively,
     over the same  periods in 1999.  The  decreases  are due to  reductions  in
     average  Construction  Work In Process of $45.6  million, or 42%, and $63.8
     million,  or 49%, for the three and nine months ended  September  30, 2000,
     respectively,  over the same  periods in 1999,  partially  offset by higher
     interest rates.

                                       15
<PAGE>

Income Tax Expense
<TABLE>
<CAPTION>


                                  For the three months ended Sept. 30,         For the nine months ended Sept. 30,
                                -----------------------------------------    -----------------------------------------
<S>                                 <C>            <C>           <C>           <C>             <C>
($ In thousands)                    2000           1999          % Change       2000            1999        % Change
                                -------------   ------------   ----------    ------------   -------------   ----------
Income tax expense                  $ 459          $ 277            66%        $ 940           $ 947          (1%)
</TABLE>

     Income tax expense  increased  $0.2  million, or 66%, for the three  months
     ended  September 30, 2000,  and remained  virtually  unchanged for the nine
     months ended  September 30, 2000,  compared to the same periods in 1999. In
     both 2000 and 1999, the benefit of our tax loss  carryforwards  is not able
     to fully  offset the  deferred  tax expense  associated  with  current year
     temporary differences.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to minimal market risks. We do not hold or issue  derivative
     instruments,   derivative   commodity   instruments   or  other   financial
     instruments for trading purposes. Financial instruments held for other than
     trading purposes do not impose a material market risk.

     We  are  exposed  to  interest  rate  risk,  as  additional   financing  is
     periodically   needed  due  to  the  large  operating  losses  and  capital
     expenditures  associated with establishing and expanding our communications
     networks.  The interest  rate that we will be able to obtain on future debt
     financings  will depend on market  conditions at that time,  and may differ
     from the rates we have secured on our current  debt.  Additionally,  we are
     exposed  to  interest  rate risk on  amounts  borrowed  against  our credit
     facility and  construction  agency  agreement as of September 30, 2000. Our
     credit  facility  and  construction  agency  agreement  are  guaranteed  by
     Citizens. The construction agency agreement and advances against the credit
     facility  periodically renew, at which point the lease payments are subject
     to the then current market interest rates,  which may differ from the rates
     we are currently paying on our borrowings.

     We reduced our interest rate risk by issuing $325 million, five-year senior
     unsecured  notes in April 1999 that is  guaranteed  by Citizens.  The notes
     have a  fixed  interest  rate  of  6.05%,  and we pay  Citizens  an  annual
     guarantee  fee of 4.0%. We used the net proceeds from the issuance to repay
     outstanding borrowings under our floating rate bank credit facility.

                                       16
<PAGE>



                           PART II: OTHER INFORMATION

Item 1. Legal Proceedings

     We are  party  to  routine  litigation  arising  in the  normal  course  of
     business. We do not expect these matters, individually or in the aggregate,
     to have a material  adverse  effect on our financial  position,  results of
     operations or cash flows. We are also party to various  proceedings  before
     state Public Utilities  Commissions.  These proceedings typically relate to
     authority  to  operate  in state  and  regulatory  arbitration  proceedings
     concerning  our  interconnection  agreements.  See Part  I,  "Management's
     Discussion and Analysis of Financial  Condition and Results of Operations -
     Liquidity and Capital Resources - Other Matters - Reciprocal Compensation".

Item 2.       Changes in Securities and Use of Proceeds

              None.

Item 3.       Defaults Upon Senior Securities

              None.

Item 4.       Submission of Matters to a Vote of Security Holders

              None.

Item 5.       Other Information

              None.

Item 6.       Exhibits and Reports on Form 8-K
a)   The exhibits below are filed as part of this report:

     Exhibit No.            Description
        3.2                 Amended By-laws
       27.1                 Financial Data Schedule for the nine months ended
                            September 30, 2000.



b)   Reports on Form 8-K

     On August 10, 2000,  we filed a current  report on Form 8-K,  under Item 5,
     "Other  Events",  to make available a press release dated August 8,  2000,
     regarding our second quarter 2000 financial results.


                                       17
<PAGE>


Signatures

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.



ELECTRIC LIGHTWAVE, INC.

(Registrant)

By:      /s/ Kerry D. Rea
         Kerry D. Rea
         Vice President and Controller

By:      /s/ Robert J. Larson
         Robert J. Larson
         Chief Accounting Officer


November 13, 2000