CITIZENS COMMUNICATIONS COMPANY


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


                     OF THE SECURITIES EXCHANGE ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005








<PAGE>








                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                  For the quarterly period ended June 30, 2005
                                                 -------------

                                       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: 001-11001
                                               ---------

                         CITIZENS COMMUNICATIONS COMPANY
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Delaware                                   06-0619596
    -------------------------------        ------------------------------------
    (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)


          3 High Ridge Park
        Stamford, Connecticut                               06905
    ----------------------------------------             ------------
    (Address of principal executive offices)              (Zip Code)

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

                                       N/A
              -----------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


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 12 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 90 days.

                                  Yes  X  No
                                      ---    ---

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                                  Yes  X  No
                                      ---    ---

The number of shares outstanding of the registrant's Common Stock as of July 29,
2005 was 343,169,135.

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                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

                                      Index




                                                                                                        Page No.
                                                                                                        --------
   Part I.  Financial Information (Unaudited)

   Financial Statements

       <S>                                                                                                  <C>
       Consolidated Balance Sheets at June 30, 2005 and December 31, 2004                                   2

       Consolidated Statements of Operations for the three months ended June 30, 2005 and 2004              3

       Consolidated Statements of Operations for the six months ended June 30, 2005 and 2004                4

       Consolidated Statements of Shareholders' Equity for the year ended
       December 31, 2004 and the six months ended June 30, 2005                                             5

       Consolidated  Statements of Comprehensive  Income for the three and six months ended
       June 30, 2005 and 2004
                                                                                                            5

       Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004                6

       Notes to Consolidated Financial Statements                                                           7

     Management's Discussion and Analysis of Financial Condition and Results of Operations                 21

     Quantitative and Qualitative Disclosures about Market Risk                                            32

     Controls and Procedures                                                                               33

   Part II.  Other Information

     Legal Proceedings                                                                                     34

     Unregistered Sales of Equity Securities and Use of Proceeds                                           34

     Submission of Matters to a Vote of Security Holders                                                   34

     Other Information                                                                                     35

     Exhibits                                                                                              35

     Signature                                                                                             36




                                       1
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<TABLE>
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                          PART I. FINANCIAL INFORMATION


   Item 1.  Financial Statements
            --------------------


                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                     ($ in thousands, except share amounts)



                                                                               (Unaudited)
                                                                              June 30, 2005    December 31, 2004
                                                                             ----------------- ------------------
ASSETS
------
Current assets:
<S>                                                                                 <C>                <C>
    Cash and cash equivalents                                                     $   368,772        $   167,463
    Accounts receivable, less allowances of $32,225 and $35,996, respectively         207,627            233,690
    Other current assets                                                               38,805             45,605
    Assets of discontinued operations                                                       -             24,122
                                                                             ----------------- ------------------
      Total current assets                                                            615,204            470,880

Property, plant and equipment, net                                                  3,234,734          3,335,850
Goodwill, net                                                                       1,921,465          1,921,465
Other intangibles, net                                                                621,922            685,111
Investments                                                                            20,626             23,062
Other assets                                                                          207,346            232,051
                                                                             ----------------- ------------------
          Total assets                                                            $ 6,621,297        $ 6,668,419
                                                                             ================= ==================

LIABILITIES AND EQUITY
----------------------
Current liabilities:
    Long-term debt due within one year                                            $   175,973            $ 6,380
    Accounts payable and other current liabilities                                    382,968            410,405
    Liabilities of discontinued operations                                                  -                735
                                                                             ----------------- ------------------
      Total current liabilities                                                       558,941            417,520

Deferred income taxes                                                                 291,754            232,766
Customer advances for construction and contributions in aid of construction            92,288             94,601
Other liabilities                                                                     289,412            294,294
Long-term debt                                                                      4,070,712          4,266,998

Shareholders' equity:
    Common stock, $0.25 par value (600,000,000 authorized shares; 343,307,000
      and 339,633,000 outstanding and 343,956,000 and 339,635,000 issued at
      June 30, 2005 and December 31, 2004, respectively )                              85,989             84,909
    Additional paid-in capital                                                      1,541,945          1,664,627
    Accumulated deficit                                                              (200,501)          (287,719)
    Accumulated other comprehensive loss, net of tax                                 (100,644)           (99,569)
    Treasury stock                                                                     (8,599)                (8)
                                                                             ----------------- ------------------
      Total shareholders' equity                                                    1,318,190          1,362,240
                                                                             ----------------- ------------------
          Total liabilities and equity                                            $ 6,621,297        $ 6,668,419
                                                                             ================= ==================

</TABLE>

              The accompanying Notes are an integral part of these
                       Consolidated Financial Statements.



                                       2
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<TABLE>
<CAPTION>


                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004
                   ($ in thousands, except per-share amounts)
                                   (Unaudited)

                                                                                           2005            2004
                                                                                      ---------------  --------------
<S>                                                                                        <C>             <C>
Revenue                                                                                    $ 531,798       $ 537,796

Operating expenses:
     Cost of services (exclusive of depreciation and amortization)                            43,698          46,710
     Other operating expenses                                                                203,185         210,760
     Management succession and strategic alternatives expenses (see Note 12)                       -          10,392
     Depreciation and amortization                                                           138,018         143,920
                                                                                      ---------------  --------------
Total operating expenses                                                                     384,901         411,782
                                                                                      ---------------  --------------
Operating income                                                                             146,897         126,014
Investment and other income                                                                    1,208           5,208
Interest expense                                                                              84,083          97,652
                                                                                      ---------------  --------------
     Income from continuing operations before income taxes                                    64,022          33,570
Income tax expense                                                                            19,438          11,098
                                                                                      ---------------  --------------
     Income from continuing operations                                                        44,584          22,472

Discontinued operations (see Note 5):
     Income from operations of discontinued conferencing business                                  -           2,165
     Income tax expense                                                                            -             845
                                                                                      ---------------  --------------
     Income from discontinued operations                                                           -           1,320
                                                                                      ---------------  --------------
Net income available to common shareholders                                                $  44,584       $  23,792
                                                                                      ===============  ==============
Basic income per common share:
     Income from continuing operations                                                     $    0.13       $    0.08
     Income from discontinued operations                                                           -               -
                                                                                      ---------------  --------------
     Net income available to common shareholders                                           $    0.13       $    0.08
                                                                                      ===============  ==============
Diluted income per common share:
     Income from continuing operations                                                     $    0.13       $    0.08
     Income from discontinued operations                                                           -               -
                                                                                      ---------------  --------------
     Net income available to common shareholders                                           $    0.13       $    0.08
                                                                                      ===============  ==============

</TABLE>

              The accompanying Notes are an integral part of these
                       Consolidated Financial Statements.

                                       3

<PAGE>

<TABLE>
<CAPTION>

                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                   ($ in thousands, except per-share amounts)
                                   (Unaudited)


                                                                                           2005            2004
                                                                                      ---------------  --------------
<S>                                                                                      <C>             <C>
Revenue                                                                                  $ 1,069,021     $ 1,090,107

Operating expenses:
     Cost of services (exclusive of depreciation and amortization)                            94,716         102,260
     Other operating expenses                                                                404,633         422,178
     Management succession and strategic alternatives expenses (see Note 12)                       -          14,774
     Depreciation and amortization                                                           277,663         287,283
                                                                                      ---------------  --------------
Total operating expenses                                                                     777,012         826,495
                                                                                      ---------------  --------------
Operating income                                                                             292,009         263,612

Investment and other income                                                                    5,981          30,503
Interest expense                                                                             167,868         195,433
                                                                                      ---------------  --------------
     Income from continuing operations before income taxes                                   130,122          98,682
Income tax expense                                                                            45,111          34,803
                                                                                      ---------------  --------------
     Income from continuing operations                                                        85,011          63,879

Discontinued operations (see Note 5):
     Income from operations of discontinued conferencing business
        (including gain on disposal of $14,061)                                               15,550           4,372
     Income tax expense                                                                       13,343           1,591
                                                                                      ---------------  --------------
     Income from discontinued operations                                                       2,207           2,781
                                                                                      ---------------  --------------
Net income available to common shareholders                                              $    87,218     $    66,660
                                                                                      ===============  ==============
Basic income per common share:
     Income from continuing operations                                                   $      0.25     $      0.22
     Income from discontinued operations                                                        0.01            0.01
                                                                                      ---------------  --------------
     Net income available to common shareholders                                         $      0.26     $      0.23
                                                                                      ===============  ==============
Diluted income per common share:
     Income from continuing operations                                                   $      0.25     $      0.22
     Income from discontinued operations                                                        0.01            0.01
                                                                                      ---------------  --------------
     Net income available to common shareholders                                         $      0.26     $      0.23
                                                                                      ===============  ==============

</TABLE>

              The accompanying Notes are an integral part of these
                       Consolidated Financial Statements.

                                       4
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<TABLE>
<CAPTION>


                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
   FOR THE YEAR ENDED DECEMBER 31, 2004 AND THE SIX MONTHS ENDED JUNE 30, 2005
                                ($ in thousands)
                                   (Unaudited)



                                                                               Accumulated
                                                      Additional                  Other                            Total
                                     Common Stock      Paid-In    Accumulated  Comprehensive  Treasury Stock    Shareholders'
                                   ------------------                                       -------------------
                                   Shares    Amount    Capital      Deficit       Loss      Shares     Amount      Equity
                                   -------- --------- ----------- ------------ ------------ -------- ----------- -----------

<S>             <C>                <C>       <C>      <C>          <C>           <C>        <C>      <C>         <C>
Balance January 1, 2004            295,434   $73,858  $ 1,953,317  $ (365,181)   $ (71,676) (10,725) $ (175,135) $1,415,183
   Stock plans                       4,821     1,206      14,236            -            -    6,407     106,823     122,265
   Conversion of EPPICS             10,897     2,724     133,621            -            -      725      11,646     147,991
   Conversion of Equity Units       28,483     7,121     396,221            -            -    3,591      56,658     460,000
   Dividends on common stock of
      $2.50  per share                   -         -    (832,768)           -            -        -           -    (832,768)
   Net income                            -         -           -       72,150            -        -           -      72,150
   Tax benefit on equity forward
      contract                           -         -           -        5,312            -        -           -       5,312
   Other comprehensive loss, net of
     tax and reclassifications
     adjustments                         -         -           -            -      (27,893)       -           -     (27,893)
                                   -------- --------- ----------- ------------ ------------ -------- ----------- -----------
Balance December 31, 2004          339,635    84,909   1,664,627     (287,719)     (99,569)      (2)         (8)  1,362,240
   Stock plans                       2,097       524      23,396            -            -      452       5,984      29,904
   Conversion of EPPICS              2,224       556      24,944            -            -        1          12      25,512
   Dividends on common stock of
      $0.50  per share                   -         -    (171,022)           -            -        -           -    (171,022)
   Shares repurchased                    -         -           -            -            -   (1,100)    (14,587)    (14,587)
   Net income                            -         -           -       87,218            -        -           -      87,218
   Other comprehensive loss, net of
     tax and reclassifications
     adjustments                         -         -           -            -       (1,075)       -           -      (1,075)
                                   -------- --------- ----------- ------------ ------------ -------- ----------- -----------
Balance June 30, 2005              343,956   $85,989  $ 1,541,945  $ (200,501)   $(100,644)    (649) $   (8,599) $1,318,190
                                   ======== ========= =========== ============ ============ ======== =========== ===========

</TABLE>

              The accompanying Notes are an integral part of these
                       Consolidated Financial Statements.


                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                ($ in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                For the three months ended June 30,         For the six months ended June 30,
                                               ---------------------------------------    --------------------------------------
                                                     2005                 2004                  2005                2004
                                               ------------------   ------------------    ------------------  ------------------

<S>                                                     <C>                  <C>                   <C>                 <C>
Net income                                              $ 44,584             $ 23,792              $ 87,218            $ 66,660
Other comprehensive loss, net of tax
  and reclassifications adjustments*                        (268)                (282)               (1,075)             (1,040)
                                               ------------------   ------------------    ------------------  ------------------
   Total comprehensive income                           $ 44,316             $ 23,510              $ 86,143            $ 65,620
                                               ==================   ==================    ==================  ==================



    * Consists of unrealized holding (losses)/gains of marketable securities
          and realized gains taken to income as a result of the sale of
                                   securities.


              The accompanying Notes are an integral part of these
                       Consolidated Financial Statements.

                                       5
</TABLE>

<PAGE>


                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                ($ in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>


                                                                               2005              2004
                                                                          ----------------  ---------------

<S>                                                                           <C>              <C>
Income from continuing operations                                           $   85,011         $   63,879
Adjustments to reconcile income from continuing operations
   to net cash provided by operating activities:
       Depreciation and amortization                                           277,663            287,283
       Gain on expiration/settlement of customer advances                         (668)           (25,345)
       Stock based compensation expense                                          4,381              5,917
       Loss on debt exchange                                                     3,175                  -
       Investment gain                                                            (493)                 -
       Other non-cash adjustments                                                3,860             14,209
       Deferred income taxes                                                    46,001             42,307
       Change in accounts receivable                                            26,063             19,168
       Change in accounts payable and other liabilities                        (31,440)           (45,606)
       Change in other current assets                                            2,616              2,408
                                                                          ------------        -----------
Net cash provided by continuing operating activities                           416,169            364,220

Cash flows from investing activities:
       Proceeds from sale of assets, net of selling expenses                    24,195             13,992
       Securities sold                                                           1,112                  -
       Capital expenditures                                                   (114,303)          (132,642)
       Other assets (purchased) distributions received, net                     (1,775)               -
                                                                          ------------        -----------
Net cash used by investing activities                                          (90,771)          (118,650)

Cash flows from financing activities:
       Repayment of customer advances for
         construction and contributions in aid of construction                  (1,645)            (1,860)
       Long-term debt payments                                                  (5,924)           (99,783)
       Issuance of common stock                                                 24,953             13,121
       Dividends paid                                                         (171,022)                 -
       Shares repurchased                                                      (14,587)                 -
                                                                          ------------        -----------
Net cash used by financing activities                                         (168,225)           (88,522)

Cash provided (used) by discontinued operations
       Proceeds from sale of discontinued operations                            43,565                  -
       Net cash provided (used) by discontinued operations                         571               (360)
                                                                          ------------        -----------
                                                                                44,136               (360)

Increase in cash and cash equivalents                                          201,309            156,688
Cash and cash equivalents at January 1,                                        167,463            583,671
                                                                          ------------        -----------

Cash and cash equivalents at June 30,                                       $  368,772         $  740,359
                                                                          ============        ===========

Cash paid during the period for:
       Interest                                                             $  143,436         $  204,292
       Income taxes                                                         $      838         $    1,126

Non-cash investing and financing activities:
       Change in fair value of interest rate swaps                          $    2,096         $  (10,980)
       Conversion of EPPICS                                                 $   25,512         $        -
       Debt-for-debt exchange                                               $    2,171         $        -

</TABLE>

              The accompanying Notes are an integral part of these
                       Consolidated Financial Statements.

                                       6
<PAGE>



                    PART I. FINANCIAL INFORMATION (Continued)

                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

(1)   Summary of Significant Accounting Policies:
      ------------------------------------------
      (a) Basis of Presentation and Use of Estimates:
          ------------------------------------------
          Citizens  Communications  Company and its subsidiaries are referred to
          as "we," "us," "our" or the  "Company" in this report.  Our  unaudited
          consolidated  financial  statements  have been  prepared in accordance
          with accounting  principles generally accepted in the United States of
          America (GAAP) and should be read in conjunction with the consolidated
          financial  statements  and notes included in our 2004 Annual Report on
          Form 10-K. Certain  reclassifications  of balances previously reported
          have been made to conform to the current presentation. All significant
          intercompany   balances  and  transactions  have  been  eliminated  in
          consolidation.   These  unaudited  consolidated  financial  statements
          include all adjustments,  which consist of normal  recurring  accruals
          necessary to present fairly the results for the interim periods shown.

          The  preparation  of  financial  statements  in  conformity  with GAAP
          requires management 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.  Actual  results  may  differ  from  those
          estimates.  We believe that our critical  estimates are accounting for
          allowance for doubtful  accounts,  impairment  of  long-lived  assets,
          intangible  assets,  depreciation and  amortization,  employee benefit
          plans,  income taxes,  contingencies,  and pension and  postretirement
          benefits expenses among others.

          Certain information and footnote disclosures have been excluded and/or
          condensed  pursuant to Securities  and Exchange  Commission  rules and
          regulations.  The results of the interim  periods are not  necessarily
          indicative of the results for the full year.

      (b) Cash Equivalents:
          ----------------
          We consider all highly liquid investments with an original maturity of
          three months or less to be cash equivalents.

     (c)  Revenue Recognition:
          -------------------
          Incumbent  Local Exchange  Carrier (ILEC) - Revenue is recognized when
          services are provided or when  products  are  delivered to  customers.
          Revenue that is billed in advance includes:  monthly recurring network
          access services,  special access services and monthly  recurring local
          line  charges.  The  unearned  portion of this  revenue  is  initially
          deferred  as a  component  of other  liabilities  on our  consolidated
          balance  sheet and  recognized  in revenue  over the  period  that the
          services are  provided.  Revenue  that is billed in arrears  includes:
          non-recurring  network  access  services,  switched  access  services,
          non-recurring  local services and long-distance  services.  The earned
          but unbilled  portion of this revenue is  recognized in revenue in our
          statement  of  operations  and accrued in accounts  receivable  in the
          period that the services are provided.  Excise taxes are recognized as
          a liability  when billed.  Installation  fees and their related direct
          and incremental costs are initially deferred and recognized as revenue
          and  expense  over the  average  term of a customer  relationship.  We
          recognize as current period expense the portion of installation  costs
          that exceeds installation fee revenue.

          Electric  Lightwave,  LLC  (ELI) -  Revenue  is  recognized  when  the
          services are provided. Revenue from long-term prepaid network services
          agreements,  including  Indefeasible Rights to Use (IRU), are deferred
          and recognized on a straight-line  basis over the terms of the related
          agreements. Installation fees and their related direct and incremental
          costs are  initially  deferred and  recognized  as revenue and expense
          over the average  term of a customer  relationship.  We  recognize  as
          current period expense the portion of installation  costs that exceeds
          installation fee revenue.

     (d)  Property, Plant and Equipment:
          -----------------------------
          Property,  plant and  equipment  are stated at  original  cost or fair
          market  value  for  our  acquired  properties,  including  capitalized
          interest. Maintenance and repairs are charged to operating expenses as
          incurred.  The book value, net of salvage, of routine property,  plant
          and equipment retired is charged against accumulated depreciation.


                                       7
<PAGE>

     (e)  Goodwill and Other Intangibles:
          ------------------------------
          Intangibles represent the excess of purchase price over the fair value
          of identifiable  tangible  assets  acquired.  We undertake  studies to
          determine  the fair  values of assets  and  liabilities  acquired  and
          allocate   purchase  prices  to  assets  and  liabilities,   including
          property,  plant  and  equipment,   goodwill  and  other  identifiable
          intangibles.  On January 1, 2002,  we adopted  Statement  of Financial
          Accounting  Standards  (SFAS) No. 142,  "Goodwill and Other Intangible
          Assets,"  which  applies to all goodwill and other  intangible  assets
          recognized  in the  statement  of  financial  position  at that  date,
          regardless  of  when  the  assets  were  initially  recognized.   This
          statement  requires  that  goodwill and other  intangibles  (primarily
          trade name) with  indefinite  useful  lives no longer be  amortized to
          earnings, but instead be tested for impairment,  at least annually. In
          performing  this test, the Company first compares the carrying  amount
          of its  reporting  units  to  their  respective  fair  values.  If the
          carrying  amount of any  reporting  unit  exceeds its fair value,  the
          Company is  required  to perform  step two of the  impairment  test by
          comparing the implied fair value of the reporting unit's goodwill with
          its  carrying   amount.   The   amortization  of  goodwill  and  other
          intangibles  with indefinite  useful lives ceased upon adoption of the
          statement on January 1, 2002. We annually  (during the fourth quarter)
          examine the carrying value of our goodwill and trade name to determine
          whether there are any impairment losses.

          SFAS No. 142 also requires that intangible assets (primarily  customer
          base) with estimated useful lives be amortized over those lives and be
          reviewed for impairment in accordance  with SFAS No. 144,  "Accounting
          for Impairment or Disposal of Long-Lived  Assets" to determine whether
          any changes to these lives are required.  We periodically reassess the
          useful life of our intangible  assets with  estimated  useful lives to
          determine whether any changes to those lives are required.

     (f)  Impairment of  Long-Lived Assets and  Long-Lived Assets to Be Disposed
          ----------------------------------------------------------------------
          of:
          --
          We review  long-lived assets to be held and used and long-lived assets
          to be disposed of, including  intangible  assets with estimated useful
          lives,  for  impairment  whenever  events or changes in  circumstances
          indicate  that  the  carrying   amount  of  such  assets  may  not  be
          recoverable.  Recoverability of assets to be held and used is measured
          by  comparing  the  carrying   amount  of  the  asset  to  the  future
          undiscounted  net cash flows  expected to be  generated  by the asset.
          Recoverability  of assets held for sale is measured by  comparing  the
          carrying amount of the assets to their estimated fair market value. If
          any assets are  considered to be impaired,  the impairment is measured
          by the amount by which the carrying  amount of the assets  exceeds the
          estimated fair value.

     (g)  Derivative Instruments and Hedging Activities:
          ---------------------------------------------
          We account  for  derivative  instruments  and  hedging  activities  in
          accordance  with  SFAS  No.  149,   "Amendment  of  Statement  133  on
          Accounting  for  Derivative  Instruments  and  Hedging."  SFAS No. 149
          requires that all derivative instruments, such as interest rate swaps,
          be recognized in the financial  statements  and measured at fair value
          regardless of the purpose or intent of holding them.

          We have  interest rate swap  arrangements  related to a portion of our
          fixed rate debt. These hedge strategies satisfy the fair value hedging
          requirements  of SFAS No.  149.  As a  result,  the fair  value of the
          hedges is carried on the balance sheet in other assets and the related
          underlying  liabilities  are also  adjusted  to fair value by the same
          amount.

     (h)  Employee Stock Plans:
          --------------------
          We have various employee stock-based  compensation plans. Awards under
          these plans are granted to eligible officers, management employees and
          non-management employees.  Awards may be made in the form of incentive
          stock options, non-qualified stock options, stock appreciation rights,
          restricted stock or other stock based awards.  As permitted by current
          accounting rules, we apply Accounting  Principles Board Opinions (APB)
          No. 25 and related  interpretations  in  accounting  for the  employee
          stock plans  resulting in the use of the intrinsic  value to value the
          stock.

          SFAS No. 123,  "Accounting for Stock-Based  Compensation" and SFAS No.
          148,  "Accounting  for  Stock-Based   Compensation  -  Transition  and
          Disclosure,  an amendment of SFAS No. 123," established accounting and
          disclosure  requirements using a fair-value-based method of accounting
          for stock-based employee  compensation plans. As permitted by existing
          accounting standards, the Company has elected to continue to apply the
          intrinsic-valued-based  method of accounting  described above, and has
          adopted only the disclosure requirements of SFAS No. 123, as amended.


                                       8
<PAGE>

          In  December  2004,  the FASB  issued  SFAS No.  123  (revised  2004),
          "Share-Based  Payment,"  ("SFAS No.  123R").  SFAS 123R  requires that
          stock-based employee compensation be recorded as a charge to earnings.
          In April 2005,  the Securities  and Exchange  Commission  required the
          adoption of SFAS No. 123R for annual periods  beginning after June 15,
          2005. Accordingly,  we will adopt SFAS 123R commencing January 1, 2006
          and expect to recognize  approximately  $2,800,000  of expense for the
          year ended December 31, 2006.

          We  provide  pro forma net  income and pro forma net income per common
          share  disclosures  for employee stock option grants based on the fair
          value of the options at the date of grant.  For purposes of presenting
          pro forma  information,  the fair value of options granted is computed
          using the Black Scholes option-pricing model.

          Had we  determined  compensation  cost  based on the fair value at the
          grant date for the Management  Equity  Incentive  Plan (MEIP),  Equity
          Incentive Plan (EIP) and Directors'  Deferred Fee Equity Plan, our pro
          forma net income and net income per common share  available for common
          shareholders would have been as follows:
<TABLE>
<CAPTION>


                                                            Three Months Ended June 30,         Six Months Ended June 30,
                                                            ---------------------------       ----------------------------
                                                                 2005            2004              2005            2004
                                                            -----------     -----------       ------------    ------------
             ($ in thousands)

             Net income available for
<S>                                                          <C>             <C>                <C>            <C>
             common shareholders           As reported       $  44,584       $ 23,792           $ 87,218       $  66,660

             Add: Stock-based employee
             compensation expense
             included in reported net
             income, net of related tax
             effects                                             1,322          1,797              2,738           3,828

            Deduct: Total stock-based
             employee compensation
             expense determined under
             fair value based method
             for all awards, net of
             related tax effects                                (2,170)        (3,866)            (4,531)         (7,865)
                                                             ---------       --------           --------       ---------

                                           Pro forma         $  43,736       $ 21,723           $ 85,425       $  62,623
                                                             =========       ========           ========       =========

             Net income per common
             share available for common
             shareholders                  As reported:
                                             Basic           $    0.13       $   0.08           $   0.26       $    0.23
                                             Diluted         $    0.13       $   0.08           $   0.26       $    0.23

                                           Pro forma:
                                             Basic           $    0.13       $   0.08           $   0.25       $    0.22
                                             Diluted         $    0.13       $   0.07           $   0.25       $    0.22

</TABLE>

     (i)  Net Income Per Common Share Available for Common Shareholders:
          -------------------------------------------------------------
          Basic net income  per  common  share is  computed  using the  weighted
          average  number of common shares  outstanding  during the period being
          reported on. Except when the effect would be antidilutive, diluted net
          income per common share  reflects  the dilutive  effect of the assumed
          exercise  of stock  options  using the  treasury  stock  method at the
          beginning  of the period  being  reported on as well as common  shares
          that would result from the conversion of convertible debt (EPPICS). In
          addition,  the related interest on the debt (net of tax) is added back
          to  income  since it would  not be paid if the debt was  converted  to
          common stock.

                                       9

<PAGE>

(2)  Recent Accounting Literature and Changes in Accounting Principles:
     -----------------------------------------------------------------

     Variable   Interest  Entities
     -----------------------------
     In  December  2003,  the FASB issued  FASB  Interpretation  No. 46 (revised
     December 2003) ("FIN 46R"),  "Consolidation of Variable Interest Entities,"
     which addresses how a business  enterprise should evaluate whether it has a
     controlling financial interest in an entity through means other than voting
     rights and accordingly should consolidate the entity. FIN 46R replaces FASB
     Interpretation No. 46, "Consolidation of Variable Interest Entities," which
     was issued in January  2003.  We are  required to apply FIN 46R to variable
     interests in variable  interest entities or VIEs created after December 31,
     2003.  For any VIEs  that  must be  consolidated  under  FIN 46R that  were
     created before January 1, 2004, the assets,  liabilities and noncontrolling
     interests of the VIE initially would be measured at their carrying  amounts
     with any  difference  between the net amount added to the balance sheet and
     any  previously  recognized  interest  being  recognized as the  cumulative
     effect of an accounting  change. If determining the carrying amounts is not
     practicable,  fair value at the date FIN 46R first  applies  may be used to
     measure the assets,  liabilities and noncontrolling interest of the VIE. We
     reviewed all of our investments  and determined that the EPPICS,  issued by
     our consolidated wholly-owned subsidiary,  Citizens Utilities Trust and the
     related Citizens  Utilities  Capital L.P., were our only VIEs. The adoption
     of FIN 46R on  January  1,  2004 did not have any  material  impact  on our
     financial position or results of operations (see Note 14).

     Exchanges of Productive Assets
     ------------------------------
     In December 2004,  the FASB issued SFAS No. 153,  "Exchanges of Nonmonetary
     Assets," an  amendment  of APB Opinion No. 29. SFAS No. 153  addresses  the
     measurement of exchanges of certain non-monetary assets (except for certain
     exchanges of products or property  held for sale in the ordinary  course of
     business).  The Statement requires that non-monetary exchanges be accounted
     for at the fair value of the assets  exchanged,  with gains or losses being
     recognized,  if the fair value is determinable within reasonable limits and
     the  transaction  has commercial  substance.  SFAS No. 153 is effective for
     nonmonetary  exchanges occurring in fiscal periods beginning after June 15,
     2005.  The Company does not expect the adoption of the new standard to have
     a  material  impact  on  the  Company's  financial  position,   results  of
     operations and cash flows.

     Accounting for Conditional Asset Retirement Obligations
     -------------------------------------------------------
     In March 2005, the FASB issued FIN 47,  "Accounting for  Conditional  Asset
     Retirement  Obligations,"  an  interpretation  of  FASB  No.  143.  FIN  47
     clarifies that the term conditional asset retirement  obligation as used in
     FASB No. 143 refers to a legal  obligation  to perform an asset  retirement
     activity in which the timing or method of settlement  are  conditional on a
     future  event that may or may not be within the control of the entity.  FIN
     47 also  clarifies  when an entity  would have  sufficient  information  to
     reasonably estimate the fair value of an asset retirement  obligation.  FIN
     47 is  effective  for the year ended  December  31,  2005.  The  Company is
     currently  evaluating  the effect that  implementation  of the new standard
     will have on the Company's  financial  position,  results of operations and
     cash flows.

     Accounting Changes and Error Corrections
     ----------------------------------------
     In May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error
     Corrections," a replacement of APB Opinion No. 20 and FASB Statement No. 3.
     SFAS No. 154 changes the  accounting  for,  and  reporting  of, a change in
     accounting principle.  SFAS No. 154 requires  retrospective  application to
     prior  period's  financial  statements  of voluntary  changes in accounting
     principle,  and  changes  required  by new  accounting  standards  when the
     standard  does not include  specific  transition  provisions,  unless it is
     impracticable  to do so. SFAS No. 154 is effective for  accounting  changes
     and corrections of errors made in fiscal years beginning after December 15,
     2005.

     Partnerships
     ------------
     In June 2005, the FASB issued EITF No. 04-5, "Determining Whether a General
     Partner, or the General Partners as a Group, Controls a Limited Partnership
     or Similar  Entity When the Limited  Partners Have Certain  Rights,"  which
     provides  new  guidance  on how general  partners in a limited  partnership
     should determine whether they control a limited partnership.  EITF No. 04-5
     is effective for fiscal  periods  beginning  after  December 15, 2005.  The
     Company is currently  evaluating the effect that  implementation of the new
     guidance  will  have  on  the  Company's  financial  position,  results  of
     operations and cash flows with respect to our  partnership  interest in the
     Mohave Cellular Limited Partnership.


                                       10
<PAGE>



(3)  Accounts Receivable:
     -------------------
     The  components of accounts  receivable,  net at June 30, 2005 and December
     31, 2004 are as follows:

<TABLE>
<CAPTION>


     ($ in thousands)                              June 30, 2005     December 31, 2004
                                                 ----------------- ---------------------

<S>                                                  <C>                   <C>
     Customers                                       $ 211,344             $ 227,385
     Other                                              28,508                42,301
     Less:  Allowance for doubtful accounts            (32,225)              (35,996)
                                                ----------------    -----------------
     Accounts receivable, net                        $ 207,627             $ 233,690
                                                ================    =================
</TABLE>

     The Company  maintains an allowance  for  estimated  bad debts based on its
     estimate of collectibility of its accounts  receivables.  Bad debt expense,
     which is recorded as a reduction of revenue,  was $4,534,000 and $4,277,000
     for the  three  months  ended  June 30,  2005 and 2004,  respectively,  and
     $8,143,000  and $6,469,000 for the six months ended June 30, 2005 and 2004,
     respectively.  In addition,  additional  reserves are provided for known or
     impending  telecommunications  bankruptcies,  disputes or other significant
     collection issues.

(4)  Property, Plant and Equipment, Net:
     ----------------------------------
     Property,  plant and equipment at June 30, 2005 and December 31, 2004 is as
     follows:

<TABLE>
<CAPTION>
     ($ in thousands)                          June 30, 2005         December 31, 2004
                                            -------------------    ---------------------

<S>                                              <C>                      <C>
     Property, plant and equipment               $ 6,529,393              $ 6,428,364
     Less: accumulated depreciation               (3,294,659)              (3,092,514)
                                            -------------------    ---------------------
       Property, plant and equipment, net        $ 3,234,734              $ 3,335,850
                                            ===================    =====================

</TABLE>

     Depreciation  expense is principally  based on the composite  group method.
     Depreciation expense was $106,424,000 and $112,290,000 for the three months
     ended  June  30,  2005  and  2004,   respectively,   and  $214,474,000  and
     $224,023,000 for the six months ended June 30, 2005 and 2004.

(5)  Discontinued Operations and Net Assets Held for Sale:
     ----------------------------------------------------

     Conference Call USA
     -------------------
     In  February  2005,  we  entered  into  a  definitive   agreement  to  sell
     Conference-Call  USA, LLC (CCUSA), our conferencing  services business.  On
     March 15, 2005, we completed the sale for  $43,565,000 in cash,  subject to
     adjustments under the terms of the agreement.  The pre-tax gain on the sale
     of CCUSA was $14,061,000.  Our after-tax gain was approximately $1,167,000.
     The book income taxes  recorded upon sale are primarily  attributable  to a
     low tax basis in the assets sold.

     In  accordance  with SFAS No. 144, any  component  of our business  that we
     dispose of or classify as held for sale that has  operations and cash flows
     clearly  distinguishable  from  operations,  and  for  financial  reporting
     purposes,  and that will be eliminated from the ongoing operations,  should
     be classified as discontinued operations.  Accordingly,  we have classified
     the  results  of  operations  of CCUSA as  discontinued  operations  in our
     consolidated statement of operations and have restated prior periods.

     CCUSA had revenues of  approximately  $24,600,000  and operating  income of
     approximately  $8,000,000 for the year ended December 31, 2004. At December
     31, 2004, CCUSA's net assets totaled approximately $23,400,000. The company
     had no outstanding debt specifically identified with CCUSA and therefore no
     interest expense was allocated to discontinued operations.  In addition, we
     ceased to record depreciation expense effective February 16, 2005.


                                       11
<PAGE>

     Summarized financial information for CCUSA (discontinued operations) is set
     forth below:

                                                      December 31,
     ($ in thousands)                                      2004
                                                     ----------------

     Current assets                                      $  2,819
     Net property, plant and equipment                      2,450
     Goodwill                                              18,853
                                                     ------------
     Total assets of discontinued operations             $ 24,122
                                                     ============

     Current liabilities                                 $    735
                                                     ------------
     Total liabilities of discontinued operations        $    735
                                                     ============



<TABLE>
<CAPTION>
                                            For the three months ended June 30,      For the six months ended June 30,
                                           --------------------------------------   -------------------------------------
($ in thousands)                                 2005                2004                 2005                2004
                                           -----------------   ------------------   -----------------   -----------------

<S>                                             <C>                <C>                 <C>                   <C>
Revenue                                         $ -                $ 6,295             $ 4,607               $ 12,452
Operating income                                  -                  2,161               1,489                  4,372
Income taxes                                      -                    846                 449                  1,591
Net income                                        -                  1,320               1,040                  2,781
Gain on disposal of CCUSA, net of tax             -                      -               1,167                      -

</TABLE>

     Public Utilities
     ----------------
     On  April  1,  2004,  we  completed  the  sale  of  our  Vermont   electric
     distribution  operations  for  approximately  $13,992,000  in cash,  net of
     selling expenses.  With that  transaction,  we completed the divestiture of
     our public utilities services business pursuant to plans announced in 1999.
     Losses  on the  sales  of  our  Vermont  properties  were  included  in the
     impairment charges recorded in 2003.

(6)  Intangibles:
     -----------
     Intangibles at June 30, 2005 and December 31, 2004 are as follows:

<TABLE>
<CAPTION>

     ($ in thousands)                                 June 30, 2005        December 31, 2004
                                                   ------------------   ---------------------

     <S>                                               <C>                     <C>
     Customer base - amortizable over 96 months        $  994,605              $  994,605
     Trade name - non-amortizable                         122,058                 122,058
                                                   --------------        ----------------
       Other intangibles                                1,116,663               1,116,663
     Accumulated amortization                            (494,741)               (431,552)
                                                   --------------        ----------------
       Total other intangibles, net                    $  621,922              $  685,111
                                                   ==============        ================
</TABLE>

     Amortization  expense was  $31,594,000 and $31,630,000 for the three months
     ended June 30, 2005 and 2004,  respectively and $63,189,000 and $63,260,000
     for the six months  ended  June 30,  2005 and 2004.  Amortization  expense,
     based on our estimate of useful lives, is estimated to be $126,380,000  per
     year through 2008 and $57,533,000 in 2009, at which point these assets will
     have been fully amortized.



                                       12

<PAGE>
<TABLE>
<CAPTION>

(7)  Long-Term Debt:
     --------------
     The activity in our long-term  debt from December 31, 2004 to June 30, 2005
     is as follows:


                                                             Six Months Ended June 30, 2005
                                                  -----------------------------------------------------
                                                                Interest                               Interest Rate* at
                                    December 31,                  Rate                     June 30,         June 30,
($ in thousands)                       2004         Payments      Swap        Other          2005             2005
                                      -----         --------      -----       -----          -----            ----

<S>                                 <C>             <C>           <C>        <C>           <C>                 <C>
Rural Utilities Service Loan        $   29,108      $(5,876)      $   -      $   -         $   23,232          6.070%
Contracts

Senior Unsecured Debt                4,131,803          -           2,096       2,171       4,136,070          7.945%

EPPICS** (reclassified as a
 result of adopting FIN 46R)            63,765          -             -       (25,512)         38,253          5.000%

ELI Capital Leases                       4,421          (48)          -          -              4,373         10.360%
Industrial Development Revenue
Bonds                                   58,140          -             -          -             58,140          5.559%
                                    ----------      -------       -------    --------      ----------
TOTAL LONG TERM DEBT                $4,287,237      $(5,924)      $ 2,096    $(23,341)     $4,260,068
                                    ----------      =======       =======    ========      ----------

Less: Debt Discount                    (13,859)                                               (13,383)
Less: Current Portion                   (6,380)                                              (175,973)
                                    ----------                                             ----------
                                    $4,266,998                                             $4,070,712
                                    ==========                                             ==========

* Interest rate includes  amortization of debt issuance costs,  debt premiums or
discounts. The interest rate for Rural Utilities Service Loan Contracts,  Senior
Unsecured  Debt, and Industrial  Development  Revenue Bonds represent a weighted
average of multiple issuances.

** In  accordance  with FIN 46R,  the Trust  holding  the EPPICS and the related
Citizens Utilities Capital L.P. are now deconsolidated (see Note 14).

     Total future minimum cash payment commitments under ELI's long-term capital
     leases amounted to $9,651,000 as of June 30, 2005.

     As of June 30,  2005,  we have  available  lines of credit  with  financial
     institutions in the aggregate amount of $250,000,000.  Associated  facility
     fees vary,  depending on our debt leverage ratio,  and are 0.375% per annum
     as of June 30, 2005.  The  expiration  date for the facility is October 29,
     2009.  During the term of the  facility we may borrow,  repay and  reborrow
     funds. The credit facility is available for general corporate  purposes but
     may not be used to fund  dividend  payments.  There  have  never  been  any
     borrowings under the facility.

     For the six months ended June 30, 2005,  we retired an aggregate  principal
     amount of  $31,436,000 of debt,  including  $25,512,000 of EPPICS that were
     converted  to our common  stock.  We also  entered  into two  debt-for-debt
     exchanges of our debt  securities.  As a result,  $50,000,000 of our 7.625%
     Notes due 2008 were  exchanged for  approximately  $52,171,000 of our 9.00%
     Notes  due  2031.  The  9.00%  Notes  are  callable  on the same  terms and
     conditions  as the 7.625% Notes  exchanged.  No cash was exchanged in these
     transactions,  however a non-cash pre-tax loss of approximately  $3,175,000
     was recognized in accordance with EITF No. 96-19,  "Debtor's Accounting for
     a  Modification  or  Exchange  of Debt  Instruments"  which is  included in
     investment and other income.


                                       13
</TABLE>
<PAGE>



(8)  Net Income Per Common Share:
     ---------------------------

     The reconciliation of the income per common share calculation for the three
     and six months ended June 30, 2005 and 2004, respectively, is as follows:

<TABLE>
<CAPTION>

($ in thousands, except per-share amounts)         For the three months ended June 30,  For the six months ended June 30,
                                                   -----------------------------------  ---------------------------------
                                                        2005             2004                 2005            2004
                                                   ---------------  ---------------      ---------------  --------------
Net income used for basic and diluted earnings
----------------------------------------------
   per common share:
   ----------------
<S>                                                      <C>              <C>               <C>             <C>
Income from continuing operations                        $ 44,584         $ 22,472            $ 85,011        $ 63,879
Income from discontinued operations                             -            1,320               2,207           2,781
                                                   ---------------  ---------------    ---------------  --------------
Net income available to common shareholders              $ 44,584         $ 23,792            $ 87,218        $ 66,660
                                                   ===============  ===============    ===============  ==============

Effect of conversion of preferred securities
  - EPPICS                                                      -                -                   -           3,255
                                                   ---------------  ---------------    ---------------  --------------
Diluted net income available to common
  shareholders                                           $ 44,584         $ 23,792            $ 87,218        $ 69,915
                                                   ===============  ===============    ===============  ==============

Basic earnings per common share:
-------------------------------
Weighted-average shares outstanding - basic               340,389          284,782             339,484         284,378
                                                   ---------------  ---------------    ---------------  --------------

Income from continuing operations                        $   0.13         $   0.08            $   0.25        $   0.22
Income from discontinued operations                             -                -                0.01            0.01
                                                   ---------------  ---------------    ---------------  --------------
Net income available to common shareholders              $   0.13         $   0.08            $   0.26        $   0.23
                                                   ===============  ===============    ===============  ==============

Diluted earnings per common share:
---------------------------------
Weighted-average shares outstanding                       340,389          284,782             339,484         284,378
Effect of dilutive shares                                   3,252            6,572               3,402           5,921
Effect of conversion of preferred securities
    - EPPICS                                                    -                -                   -          15,134
                                                   ---------------  ---------------    ---------------  --------------
Weighted-average shares outstanding - diluted             343,641          291,354             342,886         305,433
                                                   ===============  ===============    ===============  ==============

Income from continuing operations                        $   0.13         $   0.08            $   0.25        $   0.22
Income from discontinued operations                             -                -                0.01            0.01
                                                   ---------------  ---------------    ---------------  --------------
Net income available to common shareholders              $   0.13         $   0.08            $   0.26        $   0.23
                                                   ===============  ===============    ===============  ==============
</TABLE>

     Stock Options
     -------------
     For the three and six months ended June 30, 2005,  options of 2,521,000 and
     2,501,000,  respectively,  at exercise prices ranging from $13.03 to $18.46
     issuable  under  employee   compensation   plans  were  excluded  from  the
     computation  of diluted EPS for those periods  because the exercise  prices
     were greater than the average market price of common shares and, therefore,
     the effect would be antidilutive.

     For the three and six months  ended  June 30,  2004,  7,267,000  options at
     exercise  prices  ranging  from $12.91 to $21.47  issuable  under  employee
     compensation  plans were excluded from the  computation  of diluted EPS for
     those  periods  because the  exercise  prices were greater than the average
     market  price  of  common  shares  and,  therefore,  the  effect  would  be
     antidilutive.

     In connection with the payment of the special, non-recurring dividend of $2
     per common share on September 2, 2004, the exercise price and number of all
     outstanding  options were adjusted such that each option had the same value


                                       14
<PAGE>
     to the  holder  after  the  dividend  as it had  before  the  dividend.  In
     accordance  with FASB  Interpretation  No. 44 ("FIN 44"),  "Accounting  for
     Certain Transactions  involving Stock Compensation" and EITF 00-23, "Issues
     Related to the Accounting for Stock  Compensation  under APB No. 25 and FIN
     44",  there is no accounting  consequence  for changes made to the exercise
     price and the number of shares of a fixed stock option or award as a direct
     result of the special, non-recurring dividend.

     In addition,  restricted stock awards of 1,477,000 shares for the three and
     six months  ended June 30, 2005 and  restricted  stock  awards of 2,639,000
     shares for the three and six months ended June 30, 2004,  are excluded from
     our basic weighted average shares  outstanding and included in our dilutive
     shares until the shares are no longer  contingent upon the  satisfaction of
     all specified conditions.


     EPPICS
     ------
     As a result of our July 2004  dividend  announcement  with  respect  to our
     common shares, our 5% Company Obligated Mandatorily  Redeemable Convertible
     Preferred  Securities due 2036 (EPPICS) began to convert to Citizens common
     shares. As of June 30, 2005,  approximately 86% of the EPPICS  outstanding,
     or about $173,503,000  aggregate  principal amount of units, have converted
     to 13,848,112 Citizens common shares,  including 725,000 shares issued from
     treasury.

     At June 30, 2005, we had 554,938  shares of  potentially  dilutive  EPPICS,
     which  were  convertible  into  common  stock  at a 4.36 to 1  ratio  at an
     exercise  price of $11.46  per  share.  As a result of the  September  2004
     special,  non-recurring  dividend, the EPPICS exercise price for conversion
     into common stock was reduced from $13.30 to $11.46.  These securities have
     not been included in the diluted income per share calculation because their
     inclusion would have had an antidilutive effect.

     At June 30, 2004, we had 4,025,000  shares of potentially  dilutive EPPICS,
     which  were  convertible  into  common  stock  at a 3.76 to 1  ratio  at an
     exercise price of $13.30 per share.  These securities have been included in
     the diluted  income per common share  calculation  for the six months ended
     June 30, 2004.

     Stock Units
     -----------
     At June 30,  2005  and  2004,  we had  201,000  and  425,000  stock  units,
     respectively,  issuable under our  Directors'  Deferred Fee Equity Plan and
     Non-Employee  Directors'  Retirement  Plan.  These securities have not been
     included  in  the  diluted  income  per  share  calculation  because  their
     inclusion would have had an antidilutive effect.

(10) Segment Information:
     -------------------
     As of  April  1,  2004,  we  operate  in  two  segments,  ILEC  and  ELI (a
     competitive local exchange carrier (CLEC)).  The ILEC segment provides both
     regulated and unregulated communications services to residential,  business
     and wholesale  customers  and is typically  the  incumbent  provider in its
     service areas.  Our remaining  electric  property was sold on April 1, 2004
     and is  classified  as "assets held for sale" and  "liabilities  related to
     assets held for sale" for the quarter ended March 31, 2004.

     As an ILEC,  we compete  with CLECs that may operate in our  markets.  As a
     CLEC, we provide telecommunications services, principally to businesses, in
     competition with the ILEC. As a CLEC, we frequently  obtain the "last mile"
     access to customers  through  arrangements  with the applicable ILEC. ILECs
     and CLECs are subject to  different  regulatory  frameworks  of the Federal
     Communications Commission (FCC). Our ILEC operations and ELI do not compete
     with each other.

     As permitted by SFAS No. 131, we have utilized the aggregation  criteria in
     combining our markets  because all of the Company's ILEC  properties  share
     similar  economic  characteristics:  they  provide  the same  products  and
     services to similar  customers  using  comparable  technologies  in all the
     states  we  operate.   The  regulatory   structure  is  generally  similar.
     Differences  in  the  regulatory  regime  of  a  particular  state  do  not
     materially  impact the economic  characteristics  or operating results of a
     particular property.




                                       15
<PAGE>

<TABLE>
<CAPTION>
($ in thousands)                    For the three months ended June 30, 2005
                                  ----------------------------------------------
                                                                     Total
                                      ILEC             ELI          Segments
                                  --------------  -------------- ---------------
<S>                                  <C>              <C>            <C>
Revenue                              $ 492,771        $ 39,027      $  531,798
Depreciation and amortization          131,711           6,307         138,018
Operating income                       142,135           4,762         146,897
Capital expenditures                    57,013           5,089          62,102

($ in thousands)                    For the three months ended June 30, 2004
                                  ------------------------------------------------------------
                                                                                    Total
                                      ILEC             ELI        Electric (1)     Segments
                                  --------------  -------------- --------------- -------------
Revenue                              $ 499,494        $ 38,302      $     -       $ 537,796
Depreciation and amortization          137,975           5,945            -         143,920
Strategic alternatives and
   management succession expenses       10,007             385            -          10,392
Operating income (loss)                125,076           1,957          (1,019)     126,014
Capital expenditures                    73,535           4,397            -          77,932



</TABLE>

(1)  Consists principally of post-sale activities associated with the completion
     of our utility divestiture  program.  These costs could not be accrued as a
     selling cost at the time of sale.
<TABLE>
<CAPTION>

($ in thousands)                      For the six months ended June 30, 2005
                                  ----------------------------------------------
                                                                     Total
                                      ILEC             ELI          Segments
                                  --------------  -------------- ---------------
<S>                                  <C>              <C>           <C>
Revenue                              $ 992,014        $ 77,007      $1,069,021
Depreciation and amortization          265,077          12,586         277,663
Operating income                       286,575           5,434         292,009
Capital expenditures                   104,338           9,890         114,228

($ in thousands)                      For the six months ended June 30, 2004
                                  ------------------------------------------------------------
                                                                                    Total
                                      ILEC             ELI        Electric         Segments
                                  --------------  -------------- --------------- -------------
Revenue                              $ 1,002,305      $ 78,067      $ 9,735       $ 1,090,107
Depreciation and amortization            275,503        11,780            -           287,283
Strategic alternatives and
   management succession expenses         14,227           547            -            14,774
Operating income (loss)                  261,586         4,347       (2,321)          263,612
Capital expenditures                     126,312         6,159            -           132,471

</TABLE>

The following table reconciles sector capital expenditures to total consolidated
capital expenditures.

<TABLE>
<CAPTION>

                                       For the three months ended      For the six months ended
($ in thousands)                                 June 30,                        June 30,
                                      ------------------------------ -----------------------------
                                          2005            2004            2005           2004
                                      --------------  -------------- --------------- -------------
<S>                                        <C>             <C>            <C>           <C>
Total segment capital expenditures         $ 62,102        $ 77,932       $ 114,228     $ 132,471
General capital expenditures                     18             171              75           171
                                      --------------  -------------- --------------- -------------
Consolidated reported capital
   expenditures                            $ 62,120        $ 78,103       $ 114,303     $ 132,642
                                      ==============  ============== =============== =============
</TABLE>

                                       16

<PAGE>

(11) Derivative Instruments and Hedging Activities:
     ---------------------------------------------
     Interest rate swap  agreements are used to hedge a portion of our debt that
     is  subject  to  fixed  interest  rates.   Under  our  interest  rate  swap
     agreements, we agree to pay an amount equal to a specified variable rate of
     interest  times a notional  principal  amount,  and to receive in return an
     amount equal to a specified  fixed rate of interest times the same notional
     principal amount.  The notional amounts of the contracts are not exchanged.
     No other cash payments are made unless the agreement is terminated prior to
     maturity,  in which case the  amount  paid or  received  in  settlement  is
     established  by agreement at the time of  termination  and  represents  the
     market  value,  at the then  current  rate of  interest,  of the  remaining
     obligations to exchange payments under the terms of the contracts.

     The  interest  rate  swap  contracts  are  reflected  at fair  value in our
     consolidated balance sheet and the related portion of fixed-rate debt being
     hedged is  reflected at an amount equal to the sum of its book value and an
     amount  representing  the  change  in fair  value of the  debt  obligations
     attributable to the interest rate risk being hedged.  The notional  amounts
     of fixed-rate indebtedness hedged as of June 30, 2005 and December 31, 2004
     was $500,000,000 and $300,000,000,  respectively. Such contracts require us
     to  pay  variable  rates  of  interest  (estimated  average  pay  rates  of
     approximately  7.38% as of June  30,  2005  and  approximately  6.12% as of
     December 31,  2004) and receive  fixed rates of interest  (average  receive
     rates of 8.46% as of June 30,  2005  and  8.44% as of  December  31,  2004,
     respectively).  The fair value of these  derivatives  is reflected in other
     assets as of June 30,  2005,  in the amount of  $6,562,000  and the related
     underlying debt has been increased by a like amount.  The amounts  received
     during  the three and six months  ended June 30,  2005 as a result of these
     contracts  amounted to $1,142,000  and  $2,210,000,  respectively,  and are
     included as a reduction of interest expense.

     We do not anticipate any nonperformance by counterparties to our derivative
     contracts as all counterparties have investment grade credit ratings.

(12) Management Succession and Strategic Alternatives Expenses:
     ---------------------------------------------------------
     On July 11, 2004,  our Board of Directors  announced  that it had completed
     its review of the Company's financial and strategic  alternatives.  Through
     the first six months of 2004, we expensed approximately $14,774,000 related
     to our exploration of financial and strategic  alternatives  and management
     succession costs.

(13) Investment and Other Income:
     ---------------------------
     The components of investment and other income are as follows:
<TABLE>
<CAPTION>

                                                    Three Months Ended June 30,       Six Months Ended June 30,
                                                    -----------------------------   ------------------------------
($ in thousands)                                        2005           2004             2005            2004
                                                    -------------- --------------   --------------  --------------
<S>                                                       <C>            <C>              <C>             <C>
Investment income                                         $ 4,028        $ 2,576          $ 6,207         $ 5,611
Gain on expiration/settlement of customer advances            588          1,163              668          25,345
Loss on exchange of debt                                   (3,175)             -           (3,175)              -
Investment gain                                               395              -              888               -
Gain/(loss) on sale of assets                                   -              -                -          (1,370)
Other, net                                                   (628)         1,469            1,393             917
                                                    -------------- --------------   --------------  --------------
     Total investment and other income                    $ 1,208        $ 5,208          $ 5,981        $ 30,503
                                                    ============== ==============   ==============  ==============

</TABLE>

     In connection  with our exchange of debt during the second quarter of 2005,
     we  recognized  a  non-cash  pre-tax  loss  of  approximately   $3,175,000.
     Investment  gain  represents  the gain on the sale of shares of  Prudential
     Financial,  Inc.  during the first quarter,  and Global Crossing LTD during
     the second quarter of 2005.

     During 2005 and 2004,  we  recognized  income in  connection  with  certain
     retained  liabilities  associated with customer  advances for  construction
     from  our  disposed  water  properties,  as  a  result  of  some  of  these
     liabilities  terminating.  Gain/(loss)  on sale of  assets  represents  the
     gain/(loss) recognized on the sale of fixed assets during 2004.

(14) Company Obligated Mandatorily Redeemable Convertible Preferred Securities:
     -------------------------------------------------------------------------
     In 1996, our consolidated wholly-owned subsidiary, Citizens Utilities Trust
     (the Trust),  issued, in an underwritten public offering,  4,025,000 shares
     of  5%  Company  Obligated  Mandatorily  Redeemable  Convertible  Preferred
     Securities due 2036 (EPPICS), representing preferred undivided interests in

                                       17
<PAGE>

     the assets of the Trust, with a liquidation  preference of $50 per security
     (for a total liquidation amount of $201,250,000).  These securities have an
     adjusted  conversion  price  of  $11.46  per  Citizens  common  share.  The
     conversion price was reduced from $13.30 to $11.46 during the third quarter
     of 2004 as a result of the $2.00 per share special, non-recurring dividend.
     The  proceeds  from  the  issuance  of  the  Trust  Convertible   Preferred
     Securities  and a  Company  capital  contribution  were  used  to  purchase
     $207,475,000  aggregate  liquidation  amount of 5% Partnership  Convertible
     Preferred  Securities  due  2036  from  another  wholly-owned   subsidiary,
     Citizens  Utilities Capital L.P. (the  Partnership).  The proceeds from the
     issuance of the Partnership  Convertible Preferred Securities and a Company
     capital  contribution were used to purchase from us $211,756,000  aggregate
     principal  amount of 5% Convertible  Subordinated  Debentures due 2036. The
     sole  assets  of  the  Trust  are  the  Partnership  Convertible  Preferred
     Securities,  and our Convertible  Subordinated Debentures are substantially
     all the assets of the  Partnership.  Our  obligations  under the agreements
     related to the issuances of such securities,  taken together,  constitute a
     full and unconditional  guarantee by us of the Trust's obligations relating
     to  the  Trust  Convertible  Preferred  Securities  and  the  Partnership's
     obligations relating to the Partnership Convertible Preferred Securities.

     In  accordance  with the  terms of the  issuances,  we paid the  annual  5%
     interest  in  quarterly   installments  on  the  Convertible   Subordinated
     Debentures  in the first and second  quarters of 2005 and the four quarters
     of 2004. Only cash was paid (net of investment  returns) to the Partnership
     in payment of the interest on the Convertible Subordinated Debentures.  The
     cash was then  distributed by the  Partnership to the Trust and then by the
     Trust to the holders of the EPPICS.

     As of June 30,  2005,  EPPICS  representing  a total  principal  amount  of
     $173,503,000  had been converted into 13,848,112  shares of Citizens common
     stock, and a total of $27,747,000 remains outstanding to third parties. Our
     long-term debt footnote indicates $38,253,000 of EPPICS outstanding at June
     30,  2005  of  which  $10,506,000  is  intercompany  debt.  Our  accounting
     treatment of the EPPICS debt is in accordance with FIN 46R (see Note 2).

     We adopted the  provisions of FIN 46R (revised  December 2003) ("FIN 46R"),
     "Consolidation of Variable Interest Entities," effective January 1, 2004.

(15) Retirement Plans:
     ----------------
     The following table provides the components of net periodic benefit cost:

<TABLE>
<CAPTION>
                                                               Pension Benefits
                                           --------------------------------------------------------
                                           For the three months ended     For the six months ended
                                                     June 30,                      June 30,
                                           ----------------------------   -------------------------
($ in thousands)                               2005           2004           2005         2004
                                           -------------  -------------   ------------ ------------
Components of net periodic benefit cost
---------------------------------------
<S>                                             <C>            <C>            <C>          <C>
Service cost                                   $  1,584       $  1,589       $  3,079     $  3,178
Interest cost on projected benefit
  obligation                                     11,338         11,496         23,102       22,992
Return on plan assets                           (15,795)       (14,308)       (30,185)     (28,616)
Amortization of prior service cost and
   unrecognized net obligation                      (61)           (61)          (122)        (122)
Amortization of unrecognized loss                 2,136          1,854          4,663        3,708
                                           -------------  -------------   ------------ ------------
Net periodic benefit cost                      $   (798)      $    570       $    537     $  1,140
                                           =============  =============   ============ ============

</TABLE>

                                       18

<PAGE>
<TABLE>
<CAPTION>

                                                        Other Postretirement Benefits
                                           --------------------------------------------------------
                                           For the three months ended     For the six months ended
                                                    June 30,                      June 30,
                                           ----------------------------   -------------------------
($ in thousands)                               2005           2004           2005         2004
                                           -------------  -------------   ------------ ------------
Components of net periodic benefit cost
---------------------------------------
<S>                                             <C>            <C>            <C>          <C>
Service cost                                    $   314        $   399        $   596      $   798
Interest cost on projected benefit
  obligation                                      3,128          3,157          6,305        6,314
Return on plan assets                               (59)          (530)          (624)      (1,060)
Amortization of prior service cost and
   unrecognized net obligation                     (158)             6           (209)          12
Amortization of unrecognized loss                 2,173          1,559          3,484        3,118
                                           -------------  -------------   ------------ ------------
Net periodic benefit cost                       $ 5,398        $ 4,591        $ 9,552      $ 9,182
                                           =============  =============   ============ ============

</TABLE>

     We  expect  that  our  pension  expense  for  2005  will  be  approximately
     $1,000,000 (it was $3,600,000 in 2004) and no contribution will be required
     to be made by us to the  pension  plan in 2005.  We expect that our retiree
     medical cost for 2005 will be approximately $19,000,000 (it was $16,600,000
     in 2004).

     In  December  2003,  the  Medicare   Prescription   Drug   Improvement  and
     Modernization  Act of 2003 (the  Act)  became  law.  The Act  introduces  a
     prescription  drug benefit under  Medicare as well as a federal  subsidy to
     sponsors of retiree  health care benefit  plans that provide a benefit that
     is at least  actuarially  equivalent  to the Medicare  Part D benefit.  The
     amount of the federal  subsidy will be based on 28 percent of an individual
     beneficiary's annual eligible  prescription drug costs ranging between $250
     and  $5,000.  Currently,  the  Company  has not yet been  able to  conclude
     whether  the  benefits  provided  by its  postretirement  medical  plan are
     actuarially  equivalent  to Medicare Part D under the Act.  Therefore,  the
     Company cannot quantify the effects,  if any, that the Act will have on its
     future benefit costs or accumulated  postretirement  benefit obligation and
     accordingly,  the  effects  of the  Act  have  not  been  reflected  in the
     accompanying consolidated financial statements.

(16) Related Party Transaction:
     -------------------------
     In June 2005,  the Company  sold for cash its  interests in certain key man
     life  insurance  policies on the lives of Leonard Tow, our former  Chairman
     and Chief  Executive  Officer,  and his wife, a former  director.  The cash
     surrender value of the policies purchased by Dr. Tow totaled  approximately
     $24,195,000,  and we  recognized a gain of  approximately  $457,000 that is
     included in investment and other income.

(17) Commitments and Contingencies:
     -----------------------------
     The City of Bangor,  Maine,  filed suit against us on November 22, 2002, in
     the U.S.  District  Court  for the  District  of Maine  (City of  Bangor v.
     Citizens Communications Company, Civ. Action No. 02-183-B-S).  We intend to
     defend  ourselves  vigorously  against  the  City's  lawsuit.  The City has
     alleged,  among  other  things,  that we are  responsible  for the costs of
     cleaning up environmental  contamination  alleged to have resulted from the
     operation of a manufactured gas plant by Bangor Gas Company, which we owned
     from 1948-1963.  The City alleged the existence of extensive  contamination
     of the Penobscot River and has asserted that money damages and other relief
     at issue in the lawsuit could exceed  $50,000,000.  The City also requested
     that  punitive  damages  be  assessed  against  us. We have filed an answer
     denying  liability to the City, and have asserted a number of counterclaims
     against  the  City.  In  addition,  we have  identified  a number  of other
     potentially  responsible parties that may be liable for the damages alleged
     by the  City  and  have  joined  them  as  parties  to the  lawsuit.  These
     additional  parties  include  Honeywell  Corporation,  the  Army  Corps  of
     Engineers,  Guilford Transportation  (formerly Maine Central Railroad), UGI
     Utilities,  Inc., and Centerpoint Energy Resources  Corporation.  The Court
     has  dismissed  all but two of the City's  claims  including its claims for
     joint and several liability under the Comprehensive Environmental Response,
     Compensation,  and  Liability  Act  (CERCLA)  and the claim  against us for
     punitive damages. We are currently pursuing settlement discussions with the
     city and the other parties, but if those efforts fail a trial of the City's
     remaining  claims could begin as early as September  2005. We have demanded
     that various of our insurance carriers defend and indemnify us with respect
     to the City's  lawsuit,  and on December 26, 2002,  we filed a  declaratory
     judgment action against those  insurance  carriers in the Superior Court of
     Penobscot County,  Maine, for the purpose of establishing their obligations
     to us with respect to the City's  lawsuit.  We intend to vigorously  pursue


                                       19
<PAGE>

     this lawsuit to obtain from our insurance carriers  indemnification for any
     damages that may be assessed against us in the City's lawsuit as well as to
     recover the costs of our defense of that lawsuit.

     On June 7, 2004,  representatives  of Robert A. Katz Technology  Licensing,
     LP, contacted us regarding possible infringement of several patents held by
     that firm. The patents cover a wide range of operations in which  telephony
     is supported by computers,  including obtaining  information from databases
     via  telephone,   interactive  telephone  transactions,  and  customer  and
     technical support  applications.  We are cooperating with the patent holder
     to  determine  if we are  currently  using  any of the  processes  that are
     protected by its patents.  If we determine that we are utilizing the patent
     holder's  intellectual  property,  we expect to commence  negotiations on a
     license agreement.

     On June 24, 2004, one of our subsidiaries,  Frontier Subsidiary Telco Inc.,
     received a "Notice of Indemnity Claim" from Citibank, N.A., that is related
     to a complaint  pending against Citibank and others in the U.S.  Bankruptcy
     Court for the Southern  District of New York as part of the Global Crossing
     bankruptcy  proceeding.  Citibank  bases  its claim  for  indemnity  on the
     provisions  of a credit  agreement  that was entered  into in October  2000
     between  Citibank  and our  subsidiary.  We purchased  Frontier  Subsidiary
     Telco,  Inc.,  in June  2001 as part  of our  acquisition  of the  Frontier
     telephone  companies.  The complaint against  Citibank,  for which it seeks
     indemnification,  alleges that the seller  improperly used a portion of the
     proceeds  from the  Frontier  transaction  to pay off the  Citibank  credit
     agreement, thereby defrauding certain debt holders of Global Crossing North
     America Inc.  Although the credit  agreement was paid off at the closing of
     the Frontier  transaction,  Citibank claims the indemnification  obligation
     survives.  Damages  sought  against  Citibank and its  co-defendants  could
     exceed $1,000,000,000.  In August 2004, we notified Citibank by letter that
     we believe its claims for indemnification are invalid and are not supported
     by applicable law. We have received no further communications from Citibank
     since our August letter.

     We are party to other legal proceedings arising in the normal course of our
     business. The outcome of individual matters is not predictable. However, we
     believe that the ultimate resolution of all such matters, after considering
     insurance  coverage,  will  not  have  a  material  adverse  effect  on our
     financial position, results of operations, or our cash flows.

     We  have   budgeted   capital   expenditures   in  2005  of   approximately
     $270,000,000,  including  $255,000,000  for ILEC and  $15,000,000  for ELI.
     Although we from time to time make  short-term  purchasing  commitments  to
     vendors with respect to these expenditures,  we generally do not enter into
     firm, written contracts for such activities.

     The  Company  sold all of its  utility  businesses  as of  April  1,  2004.
     However,  we have retained a potential payment  obligation  associated with
     our  previous  electric  utility  activities  in the state of Vermont.  The
     Vermont Joint Owners (VJO), a consortium of 14 Vermont utilities, including
     us, entered into a purchase power agreement with  Hydro-Quebec in 1987. The
     agreement contains  "step-up"  provisions that state that if any VJO member
     defaults on its purchase  obligation  under the contract to purchase  power
     from Hydro-Quebec the other VJO participants will assume responsibility for
     the defaulting party's share on a pro-rata basis. Our pro-rata share of the
     purchase power  obligation is 10%. If any member of the VJO defaults on its
     obligations under the Hydro-Quebec agreement, then the remaining members of
     the VJO,  including us, may be required to pay for a  substantially  larger
     share of the VJO's total power purchase obligation for the remainder of the
     agreement  (which runs through 2015).  Paragraph 13 of FIN 45 requires that
     we   disclose,   "the   maximum   potential   amount  of  future   payments
     (undiscounted)   the  guarantor   could  be  required  to  make  under  the
     guarantee." Paragraph 13 also states that we must make such disclosure "...
     even if the likelihood of the guarantor's having to make any payments under
     the guarantee is remote..." As noted above, our obligation only arises as a
     result of default by another VJO member such as upon bankruptcy. Therefore,
     to satisfy the "maximum  potential amount"  disclosure  requirement we must
     assume  that  all  members  of the VJO  simultaneously  default,  a  highly
     unlikely  scenario  given  that the two  members  of the VJO that  have the
     largest  potential  payment  obligations  are  publicly  traded with credit
     ratings that are equal to or superior to ours, and that all VJO members are
     regulated  utility  providers with  regulated  cost  recovery.  Regardless,
     despite the remote chance that such an event could occur, or that the State
     of  Vermont  could or would  allow  such an  event,  assuming  that all the
     members of the VJO defaulted on January 1, 2006 and remained in default for
     the  duration  of the  contract  (another 10 years),  we estimate  that our
     undiscounted   purchase   obligation   for  2006   through  2015  would  be
     approximately $1,400,000,000. In such a scenario the Company would then own
     the power and could seek to recover its costs.  We would do this by seeking
     to recover our costs from the defaulting members and/or reselling the power
     to other utility  providers or the northeast power grid. There is an active
     market for the sale of power.  We could  potentially  lose money if we were
     unable to sell the power at cost.  We caution  that we cannot  predict with
     any degree of certainty any potential outcome.


                                       20

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        -----------------------------------------------------------------------
        of Operations
        -------------
This quarterly report on Form 10-Q contains forward-looking  statements that are
subject to risks and  uncertainties  which could cause actual  results to differ
materially from those  expressed or implied in the  statements.  Forward-looking
statements  (including oral  representations) are only predictions or statements
of current plans, which we review continuously.  Forward-looking  statements may
differ  from  actual  future  results due to, but not limited to, and our future
results may be materially affected by, any of the following possibilities:

     o    Changes in the number of our revenue  generating units, which consists
          of access lines plus high-speed internet subscribers;

     o    The effects of  competition  from wireless,  other  wireline  carriers
          (through voice over internet protocol (VOIP) or otherwise), high speed
          cable modems and cable telephony;

     o    The effects of general and local economic and employment conditions on
          our revenues;

     o    Our  ability  to   effectively   manage  and  otherwise   monitor  our
          operations, costs, regulatory compliance and service quality;

     o    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,  and our ability to
          sell enhanced and data services in order to offset ongoing declines in
          highly  profitable  revenue from local  services,  access services and
          subsidies;

     o    Our ability to comply with  Section 404 of the  Sarbanes-Oxley  Act of
          2002, which requires management to assess its internal control systems
          and disclose whether the internal  control systems are effective,  and
          the identification of any material  weaknesses in our internal control
          over financial reporting;

     o    The  effects  of  changes  in  regulation  in  the  telecommunications
          industry as a result of federal and state  legislation and regulation,
          including  potential  changes in access charges and subsidy  payments,
          regulatory   network   upgrade  and  reliability   requirements,   and
          portability requirements;

     o    Our ability to comply with  federal  and state  regulation  (including
          state rate of return  limitations  on our earnings) and our ability to
          successfully  renegotiate  certain ILEC state regulatory plans as they
          expire or come up for renewal from time to time;

     o    Our ability to manage our operating  expenses,  capital  expenditures,
          pay dividends and reduce or refinance our debt;

     o    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;

     o    The effects of bankruptcies in the  telecommunications  industry which
          could result in more price competition and potential bad debts;

     o    The effects of technological  changes 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;

     o    The effects of  increased  medical,  retiree and pension  expenses and
          related funding requirements;

     o    The effect of changes in the telecommunications  market, including the
          likelihood of significantly increased price and service competition;



                                       21

<PAGE>

     o    The  effects  of state  regulatory  cash  management  policies  on our
          ability  to  transfer  cash among our  subsidiaries  and to the parent
          company;

     o    Our  ability to  successfully  renegotiate  union  contracts  that are
          scheduled to expire during 2005;

     o    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
          and our liquidity;

     o    The  effects  of  any  future   liabilities  or  compliance  costs  in
          connection with environmental and worker health and safety matters;

     o    The  effects of any  unfavorable  outcome  with  respect to any of our
          current or future  legal,  governmental,  or  regulatory  proceedings,
          audits or disputes; and

     o    The effects of more  general  factors,  including  changes in economic
          conditions;  changes  in the  capital  markets;  changes  in  industry
          conditions;  changes in our credit ratings;  and changes in accounting
          policies or practices adopted  voluntarily or as required by generally
          accepted accounting principles or regulators.

You should consider these important  factors in evaluating any statement in this
Form 10-Q or otherwise made by us or on our behalf. The following information is
unaudited  and should be read in  conjunction  with the  consolidated  financial
statements  and related  notes  included in this report and as  presented in our
2004 Annual Report on Form 10-K. We have no obligation to update or revise these
forward-looking statements.

Overview
--------
We are a communications  company providing services to rural areas and small and
medium-sized  towns and cities as an incumbent local exchange carrier,  or ILEC.
We offer our ILEC services  under the "Frontier"  name. In addition,  we provide
competitive local exchange carrier,  or CLEC, services to business customers and
to other  communications  carriers in certain  metropolitan areas in the western
United  States  through  Electric  Lightwave,  LLC,  or  ELI,  our  wholly-owned
subsidiary.

Competition  in the  telecommunications  industry is  increasing.  We experience
competition  from other wireline local carriers,  VOIP providers such as Vonage,
from other long distance carriers (including Regional Bell Operating Companies),
from cable  companies and internet  service  providers  with respect to internet
access and cable telephony,  and from wireless carriers.  Competition from cable
companies  and other  high-speed  internet  service  providers  with  respect to
internet  access is intense and  increasing  in many of our  markets.  We expect
cable  telephony  competition  to increase  throughout  2005.  Competition  from
wireless companies and other long distance companies is increasing in all of our
markets.

The   telecommunications   industry  is  undergoing   significant   changes  and
difficulties.  The market is extremely  competitive,  resulting in lower prices.
Demand and pricing for  certain  CLEC  services  have  decreased  substantially,
particularly  for  long-haul  services.  These trends are likely to continue and
result in a challenging revenue environment.  These factors could also result in
more  bankruptcies  in the sector and  therefore  affect our  ability to collect
money owed to us by carriers.  Several long distance and interexchange  carriers
(IXCs)  have  filed  for  bankruptcy  protection,   which  will  allow  them  to
substantially  reduce  their cost  structure  and debt.  This could  enable such
companies to further reduce prices and increase competition.

Revenues from data services such as high-speed  internet continue to increase as
a percentage of our total  revenues and revenues from high margin  services such
as local line and access charges and subsidies are decreasing as a percentage of
our revenues.  These factors, along with increasing operating and employee costs
will cause our cash generated by operations to decrease.


                                       22
<PAGE>

(a)  Liquidity and Capital Resources
     -------------------------------
For the six  months  ended  June 30,  2005,  we used cash  flow from  continuing
operations,  proceeds  from  the  sale of  non-strategic  assets,  stock  option
exercises and cash and cash equivalents to fund capital expenditures, dividends,
interest payments, debt repayments and common stock repurchases.  As of June 30,
2005, we had cash and cash equivalents aggregating $368.8 million.

For the six months ended June 30,  2005,  our capital  expenditures  were $114.3
million, including $104.3 million for the ILEC segment, $9.9 million for the ELI
segment and $0.1 million of general capital expenditures. We continue to closely
scrutinize all of our capital projects, emphasize return on investment and focus
our  capital   expenditures  on  areas  and  services  that  have  the  greatest
opportunities with respect to revenue growth and cost reduction. For example, in
2005 we  will  allocate  significant  capital  to  services  such as  high-speed
internet in areas that are growing or  demonstrate  meaningful  demand.  We will
continue  to focus on managing  our costs while  increasing  our  investment  in
certain  product  areas such as  high-speed  internet.  Increasing  competition,
offering new services,  improving the  capabilities  or reducing the maintenance
costs of our plant may cause our capital expenditures to increase in the future.

We have budgeted  approximately  $270.0  million for our 2005 capital  projects,
including  $255.0  million for the ILEC  segment  and $15.0  million for the ELI
segment.  Included in these  budgeted  capital  amounts are  approximately  $6.9
million of capital  expenditures  associated with the Communications  Assistance
for Law Enforcement Act (CALEA).

As of  June  30,  2005,  we  have  available  lines  of  credit  with  financial
institutions in the aggregate amount of $250.0 million. Associated facility fees
vary,  depending on our debt leverage ratio, and are 0.375% per annum as of June
30, 2005. The expiration  date for the facility is October 29, 2009.  During the
term of the  facility  we may  borrow,  repay and  reborrow  funds.  The  credit
facility is available for general corporate purposes but may not be used to fund
dividend payments. There have never been any borrowings under the facility.

Our ongoing annual dividends of  approximately  $343.0 million under our current
policy  utilizes a significant  portion of our cash  generated by operations and
therefore  limits our  operating and  financial  flexibility  and our ability to
significantly  increase  capital  expenditures   particularly  compared  to  the
flexibility  and ability to change capital  spending we would have if we did not
pay such dividends. While we believe that the amount of our dividends will allow
for adequate amounts of cash flow for other purposes,  any material reduction in
cash generated by operations and any increases in capital expenditures, interest
expense or cash taxes  would  reduce the amount of cash  generated  in excess of
dividends.  Losses of access lines, increases in competition,  lower subsidy and
access revenues and the other factors described above are expected to reduce our
cash   generated  by  operations   and  may  require  us  to  increase   capital
expenditures.  The  downgrades  in our  credit  ratings  in July  2004 to  below
investment  grade may make it more  difficult  and  expensive to  refinance  our
maturing  debt.  We have in recent  years paid  relatively  low  amounts of cash
taxes. We expect that over time our cash taxes will increase.

We believe our operating cash flows, existing cash balances, and credit facility
will be  adequate  to finance our working  capital  requirements,  fund  capital
expenditures, make required debt payments through 2007, pay taxes, pay dividends
to our  stockholders  in  accordance  with our  dividend  policy and support our
short-term  and  long-term  operating  strategies.  We have  approximately  $0.5
million,  $227.8  million and $37.9 million of debt  maturing in 2005,  2006 and
2007,  respectively,  all of which  we  intend  to pay at or  prior to  maturity
utilizing available cash on hand.

Share Repurchase Program
------------------------
On May 25, 2005,  our Board of Directors  authorized  the Company to  repurchase
over the following  twelve- month period,  up to $250.0 million of the Company's
common stock, either in the open market or through negotiated transactions. This
share  repurchase  program  commenced on June 13, 2005. As of June 30, 2005, the
Company had  committed to  repurchase a total of 1,400,000  common  shares at an
aggregate cost of approximately $18.6 million. Of that amount,  1,100,000 shares
had settled by June 30, 2005, at a cash cost of approximately $14.6 million.

Debt Reduction and Debt Exchanges
---------------------------------
For the six months ended June 30, 2005, we retired an aggregate principal amount
of $31.4 million of debt,  including $25.5 million of EPPICS that were converted
to our common  stock.  We also entered into two  debt-for-debt  exchanges of our
debt  securities.  As a result,  $50.0 million of our 7.625% Notes due 2008 were
exchanged for approximately $52.2 million of our 9.00% Notes due 2031. The 9.00%


                                       23
<PAGE>

Notes  are  callable  on the same  terms  and  conditions  as the  7.625%  Notes
exchanged.  No cash was  exchanged  in these  transactions,  however a  non-cash
pre-tax loss of  approximately  $3.2 million was  recognized in accordance  with
EITF No. 96-19,  "Debtor's  Accounting  for a  Modification  or Exchange of Debt
Instruments" which is included in investment and other income.

We may from time to time repurchase our debt in the open market,  through tender
offers or privately negotiated transactions.  We may also exchange existing debt
obligations for newly issued debt obligations.

Interest Rate Management
------------------------
In order to manage our interest  expense,  we have entered  into  interest  swap
agreements.  Under the terms of these agreements, we make semi-annual,  floating
rate interest  payments based on six month LIBOR and receive a fixed rate on the
notional amount. The underlying variable rate on these swaps is set in arrears.

The notional amounts of fixed-rate  indebtedness  hedged as of June 30, 2005 and
December 31, 2004 were $500.0 and $300.0 million,  respectively.  Such contracts
require us to pay  variable  rates of interest  (estimated  average pay rates of
approximately  7.38% as of June 30, 2005 and approximately  6.12% as of December
31, 2004) and receive fixed rates of interest  (average receive rate of 8.46% as
of June 30, 2005 and 8.44% as of December 31, 2004). All swaps are accounted for
under SFAS No. 133 as fair value hedges. For the six months ended June 30, 2005,
the  interest   savings   resulting  from  these  interest  rate  swaps  totaled
approximately $2.2 million.

Sale of Non-Strategic Investments
---------------------------------
On February 1, 2005,  we sold 20,672 shares of  Prudential  Financial,  Inc. for
approximately $1.1 million in cash.

On March 15,  2005,  we  completed  the sale of our  conferencing  business  for
approximately $43.6 million in cash.

In June 2005,  the Company  sold for cash its  interests in certain key man life
insurance  policies on the lives of Leonard Tow,  our former  Chairman and Chief
Executive Officer, and his wife, a former director.  The cash surrender value of
the policies purchased by Dr. Tow totaled  approximately  $24.2 million,  and we
recognized a gain of  approximately  $457,000 that is included in investment and
other income.

Off-Balance Sheet Arrangements
------------------------------
We do not maintain any off-balance sheet arrangements, transactions, obligations
or other  relationships with  unconsolidated  entities that would be expected to
have a material current or future effect upon our financial statements.

EPPICS
------
In 1996, our consolidated wholly-owned subsidiary, Citizens Utilities Trust (the
Trust),  issued,  in an underwritten  public  offering,  4,025,000  shares of 5%
Company Obligated  Mandatorily  Redeemable  Convertible Preferred Securities due
2036 (Trust Convertible Preferred Securities or EPPICS),  representing preferred
undivided interests in the assets of the Trust, with a liquidation preference of
$50 per  security  (for a total  liquidation  amount of $201.3  million).  These
securities  have an  adjusted  conversion  price of $11.46 per  Citizens  common
share.  The conversion  price was reduced from $13.30 to $11.46 during the third
quarter  of 2004 as a result  of the  $2.00  per  share  special,  non-recurring
dividend.  The  proceeds  from the issuance of the Trust  Convertible  Preferred
Securities  and a Company  capital  contribution  were used to  purchase  $207.5
million aggregate  liquidation  amount of 5% Partnership  Convertible  Preferred
Securities due 2036 from another wholly owned consolidated subsidiary,  Citizens
Utilities Capital L.P. (the Partnership).  The proceeds from the issuance of the
Partnership  Convertible Preferred Securities and a Company capital contribution
were used to purchase from us $211.8 million  aggregate  principal  amount of 5%
Convertible  Subordinated  Debentures due 2036. The sole assets of the Trust are
the  Partnership   Convertible   Preferred   Securities,   and  our  Convertible
Subordinated Debentures are substantially all the assets of the Partnership. Our
obligations  under the agreements  related to the issuances of such  securities,
taken  together,  constitute  a full and  unconditional  guarantee  by us of the
Trust's obligations  relating to the Trust Convertible  Preferred Securities and
the Partnership's  obligations relating to the Partnership Convertible Preferred
Securities.

In accordance with the terms of the issuances, we paid the annual 5% interest in
quarterly installments on the Convertible  Subordinated  Debentures in the first
and second  quarters of 2005 and the four  quarters of 2004.  Only cash was paid
(net of investment returns) to the Partnership in payment of the interest on the
Convertible  Subordinated  Debentures.  The  cash was  then  distributed  by the
Partnership to the Trust and then by the Trust to the holders of the EPPICS.


                                       24

<PAGE>

As of June 30, 2005,  EPPICS  representing  a total  principal  amount of $173.5
million had been converted into 13,848,112  shares of Citizens common stock, and
a total of $27.8 million  remains  outstanding to third  parties.  Our long-term
debt footnote  indicates $38.3 million of EPPICS outstanding at June 30, 2005 of
which $10.5 million is intercompany debt. Our accounting treatment of the EPPICS
debt is in accordance with FIN 46R (see Note 2 and 14).

We adopted the provisions of FASB Interpretation No. 46R (revised December 2003)
("FIN 46R"), "Consolidation of Variable Interest Entities," effective January 1,
2004.

Covenants
---------
The terms and  conditions  contained  in our  indentures  and credit  facilities
agreements  include the timely and punctual  payment of  principal  and interest
when due, the maintenance of our corporate  existence,  keeping proper books and
records in accordance  with GAAP,  restrictions on the allowance of liens on our
assets, and restrictions on asset sales and transfers, mergers and other changes
in  corporate  control.  We  currently  have no  restrictions  on the payment of
dividends either by contract, rule or regulation.

Our $200 million term loan facility with the Rural Telephone Finance Cooperative
(RTFC)  contains a maximum  leverage  ratio  covenant.  Under the leverage ratio
covenant,  we are required to maintain a ratio of (i) total  indebtedness  minus
cash and cash  equivalents  in  excess  of $50.0  million  to (ii)  consolidated
adjusted  EBITDA (as defined in the  agreement)  over the last four  quarters no
greater than 4.00 to 1.

Our $250 million credit  facility  contains a maximum  leverage ratio  covenant.
Under the leverage  ratio  covenant,  we are required to maintain a ratio of (i)
total indebtedness minus cash and cash equivalents in excess of $50.0 million to
(ii)  consolidated  adjusted  EBITDA (as defined in the agreement) over the last
four  quarters  no  greater  than 4.50 to 1.  Although  the credit  facility  is
unsecured,  it will be equally and ratably  secured by certain liens and equally
and ratably  guaranteed by certain of our  subsidiaries if we issue debt that is
secured  or  guaranteed.  We are in  compliance  with all of our debt and credit
facility covenants.

Divestitures
------------
On August 24, 1999, our Board of Directors  approved a plan of  divestiture  for
our public utilities services businesses, which included gas, electric and water
and  wastewater  businesses.  We have sold all of these  properties.  All of the
agreements  relating  to the  sales  provide  that we will  indemnify  the buyer
against  certain  liabilities  (typically  liabilities  relating  to events that
occurred prior to sale), including environmental liabilities, for claims made by
specified dates and that exceed threshold amounts specified in each agreement.

On April 1, 2004, we completed the sale of our electric distribution  facilities
in Vermont for $14.0 million in cash, net of selling expenses.

Critical Accounting Policies and Estimates
------------------------------------------
We  review  all  significant  estimates  affecting  our  consolidated  financial
statements  on a  recurring  basis  and  record  the  effect  of  any  necessary
adjustment  prior to  their  publication.  Uncertainties  with  respect  to such
estimates  and   assumptions  are  inherent  in  the  preparation  of  financial
statements;  accordingly,  it is possible that actual  results could differ from
those  estimates  and changes to  estimates  could  occur in the near term.  The
preparation of our financial  statements  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of the contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period.  Estimates  and  judgments  are used when  accounting  for allowance for
doubtful  accounts,   impairment  of  long-lived   assets,   intangible  assets,
depreciation   and   amortization,   employee   benefit  plans,   income  taxes,
contingencies, and pension and postretirement benefits expenses among others.

Management  has  discussed  the  development  and  selection  of these  critical
accounting  estimates with the audit committee of our Board of Directors and our
audit committee has reviewed our disclosures relating to them.

There have been no material  changes to our  critical  accounting  policies  and
estimates from the information provided in "Item 7. Management's  Discussion and
Analysis of Financial Condition and Results of Operations"  included in our 2004
Annual Report on Form 10-K.

                                       25
<PAGE>

New Accounting Pronouncements
-----------------------------

Stock-Based Compensation
In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment," ("SFAS No. 123R").  SFAS No. 123R requires that  stock-based  employee
compensation be recorded as a charge to earnings.  In April 2005, the Securities
and Exchange  Commission  required  adoption of SFAS No. 123R for annual periods
beginning after June 15, 2005.  Accordingly,  we will adopt SFAS 123R commencing
January 1, 2006 and expect to  recognize  approximately  $2.8 million of expense
for the year ended December 31, 2006.

Exchanges of Productive Assets
In  December  2004,  the FASB issued SFAS No.  153,  "Exchanges  of  Nonmonetary
Assets,"  an  amendment  of APB  Opinion  No.  29.  SFAS No. 153  addresses  the
measurement  of exchanges  of certain  non-monetary  assets  (except for certain
exchanges  of  products  or  property  held for sale in the  ordinary  course of
business).  The Statement requires that non-monetary  exchanges be accounted for
at the  fair  value  of  the  assets  exchanged,  with  gains  or  losses  being
recognized,  if the fair value is determinable  within reasonable limits and the
transaction has commercial substance.  SFAS No. 153 is effective for nonmonetary
exchanges occurring in fiscal periods beginning after June 15, 2005. The Company
does not expect the  adoption of the new  standard to have a material  impact on
the Company's financial position, results of operations and cash flows.

Accounting for Conditional Asset Retirement Obligations
In March  2005,  the FASB  issued  FIN 47,  "Accounting  for  Conditional  Asset
Retirement  Obligations,"  an  interpretation  of FASB No. 143. FIN 47 clarifies
that the term conditional  asset  retirement  obligation as used in FASB No. 143
refers to a legal  obligation to perform an asset  retirement  activity in which
the timing or method of settlement are conditional on a future event that may or
may not be within  the  control of the  entity.  FIN 47 also  clarifies  when an
entity would have sufficient  information to reasonably  estimate the fair value
of an asset  retirement  obligation.  FIN 47 is  effective  for the  year  ended
December  31,  2005.  The  Company  is  currently  evaluating  the  effect  that
implementation  of  the  new  standard  will  have  on the  Company's  financial
position,  results of  operations  and cash  flows.  The  Company  is  currently
evaluating the effect that  implementation  of the new standard will have on the
Company's financial position, results of operations and cash flows.

Accounting Changes and Error Corrections
In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections," a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS
No. 154 changes the  accounting  for, and  reporting  of, a change in accounting
principle.  SFAS No. 154 requires  retrospective  application  to prior period's
financial statements of voluntary changes in accounting  principle,  and changes
required by new accounting standards when the standard does not include specific
transition  provisions,  unless it is  impracticable  to do so.  SFAS No. 154 is
effective for accounting  changes and corrections of errors made in fiscal years
beginning after December 15, 2005.

Partnerships
In June 2005,  the FASB issued  EITF No.  04-5,  "Determining  Whether a General
Partner,  or the General Partners as a Group,  Controls a Limited Partnership or
Similar  Entity When the Limited  Partners Have Certain  Rights," which provides
new guidance on how general partners in a limited  partnership  should determine
whether  they  control a limited  partnership.  EITF No. 04-5 is  effective  for
fiscal  periods  beginning  after  December 15,  2005.  The Company is currently
evaluating the effect that  implementation  of the new guidance will have on the
Company's financial position,  results of operations and cash flows with respect
to our partnership interest in the Mohave Cellular Limited Partnership.


(b)  Results of Operations
     ---------------------
                                     REVENUE

ILEC  revenue is generated  primarily  through the  provision of local,  network
access, long distance and data services. Such services are provided under either
a  monthly  recurring  fee or  based  on  usage  at a  tariffed  rate and is not
dependent  upon  significant  judgments by  management,  with the exception of a
determination of a provision for uncollectible amounts.

CLEC revenue is generated  through  local,  long  distance,  data and  long-haul
services. These services are primarily provided under a monthly recurring fee or
based on usage at agreed  upon  rates  and are not  dependent  upon  significant


                                       26
<PAGE>

judgments by management with the exception of the  determination  of a provision
for  uncollectible  amounts and realizability of reciprocal  compensation.  CLEC
usage based revenue  includes amounts  determined under reciprocal  compensation
agreements.  While this  revenue is  governed  by  specific  contracts  with the
counterparty, management defers recognition of disputed portions of such revenue
until  realizability  is assured.  Revenue  earned from  long-haul  contracts is
recognized over the term of the related agreement.

Consolidated  revenue for the three  months ended June 30, 2005  decreased  $6.0
million, or 1%, as compared with the prior year period. The decrease is due to a
$6.7  million  decrease  in ILEC  revenue,  partially  offset by a $0.7  million
increase in ELI revenue.

Consolidated  revenue  for the six months  ended June 30, 2005  decreased  $21.1
million, or 2%, as compared with the prior year period. The decrease is due to a
$10.3 million  decrease in ILEC revenue,  a $1.1 million decrease in ELI revenue
and a $9.7 million decrease in electric revenue.

On March 15, 2005, we completed the sale of our conferencing  service  business.
As a result of the  sale,  we have  classified  the  results  of  operations  as
discontinued operations in our consolidated statement of operations and restated
prior periods.

Change in the  number  of our  access  lines is a  critical  determinant  of our
revenue.  We have been  losing  access  lines  primarily  because  of  increased
competition,   changing  consumer  behavior,   economic   conditions,   changing
technology  and by some  customers  disconnecting  second  lines  when  they add
high-speed internet or cable modem service. We lost approximately  45,300 access
lines during the six months ended June 30, 2005 but added  approximately  55,000
high-speed  internet  subscribers during this period on a net basis. The loss of
lines  during  the first  six  months of 2005 was  primarily  among  residential
customers.  The non-residential  line losses were principally in Rochester,  New
York,  while the residential  losses were  throughout our markets.  We expect to
continue to lose access lines but to increase  high-speed  internet  subscribers
during  2005.  A  continued  loss  of  access  lines,  combined  with  increased
competition and the other factors  discussed in MD&A, will cause our revenues to
decrease in 2005.

<TABLE>
<CAPTION>
                           TELECOMMUNICATIONS REVENUE


($ in thousands)                    For the three months ended June 30,       For the six months ended June 30,
                                --------------------------------------------  -----------------------------------------------
                                   2005        2004      $ Change   % Change    2005        2004      $ Change    % Change
                                ----------- ----------- ----------- --------  ---------  ----------   ----------  ---------
<S>                              <C>         <C>          <C>            <C>   <C>        <C>           <C>            <C>
Access services                  $ 152,152   $ 155,224    $ (3,072)     -2%   $  309,474   $ 316,707    $  (7,233)      -2%
Local services                     205,751     213,417      (7,666)     -4%      415,737     426,159      (10,422)      -2%
Long distance and data services     84,729      79,170       5,559       7%      167,088     158,175        8,913        6%
Directory services                  28,541      28,201         340       1%       56,504      55,675          829        1%
Other                               21,598      23,482      (1,884)     -8%       43,211      45,589       (2,378)      -5%
                                 ---------   ---------   ---------            ----------  ----------    ---------
  ILEC revenue                     492,771     499,494      (6,723)     -1%      992,014   1,002,305      (10,291)      -1%
ELI                                 39,027      38,302         725       2%       77,007      78,067       (1,060)      -1%
                                 ---------   ---------   ---------            ----------  ----------    ---------
                                 $ 531,798   $ 537,796    $ (5,998)     -1%   $1,069,021  $1,080,372    $ (11,351)      -1%
                                 =========   =========   =========            ==========  ==========    =========
</TABLE>

Access Services
Access services  revenue for the three months ended June 30, 2005 decreased $3.1
million or 2%, as compared with the prior year period.  Special  access  revenue
increased $4.3 million primarily due to growth in high-capacity circuits. Access
service  revenue  includes  subsidy  payments we receive  from federal and state
agencies.  Subsidy  revenue  decreased  $7.5 million  primarily due to decreased
Universal Service Fund (USF) support of $5.3 million because of increases in the
national average cost per loop (NACPL) and a decrease of $4.5 million related to
changes in measured factors,  partially offset by an increase of $3.1 million in
USF surcharge rates.

Access  services  revenue for the six months ended June 30, 2005  decreased $7.2
million or 2%, as compared with the prior year period.  Switched  access revenue
decreased $3.2 million, as compared with the prior year period, primarily due to
a decline in minutes of use.  Special  access  revenue  increased  $6.9  million
primarily due to growth in  high-capacity  circuits.  Subsidy revenue  decreased
$10.9 million primarily due to decreased USF support of $11.1 million because of
increases  in the NACPL,  and a decrease of $5.1  million  related to changes in
measured  factors,  partially  offset  by an  increase  of $6.1  million  in USF
surcharge rates.



                                       27
<PAGE>
We currently  expect our subsidy  revenue in 2005 will be at least $20.0 million
(exclusive of the late filing amount described in the next paragraph) lower than
2004  because  of  improvement  in  prior  years  in  the  profitability  of our
operations  and because of  increases  in the NACPL.  Increases in the number of
competitive  communications  companies  (including wireless companies) receiving
federal subsidies may lead to further increases in the NACPL,  thereby resulting
in further  decreases  in our subsidy  revenue in the future.  The FCC and state
regulators  are  currently  considering  a number of proposals  for changing the
manner in which  eligibility for federal  subsidies is determined as well as the
amounts of such  subsidies.  The FCC is also  reviewing  the  mechanism by which
subsidies  are  funded.  We cannot  predict  when or how these  matters  will be
decided nor the effect on our subsidy revenues. Future reductions in our subsidy
and access revenues are not expected to be accompanied by proportional decreases
in our costs,  so any further  reductions in those revenues will directly affect
our profitability.

We filed one of our Universal Service Fund (USF) qualifying reports two business
days late and are  currently  seeking a waiver  from the FCC,  that will  permit
acceptance of the  late-filed  report.  If we do not receive the waiver from the
FCC,  we will not  qualify  for $9.6  million  in USF  funding  during the third
quarter of 2005.  Except for the late filing,  we otherwise  expected to receive
the $9.6 million and recognize  such amount as revenue during the third quarter.
We will not  recognize  such  amount as revenue  unless and until we receive the
waiver.  As a result  of the late  USF  filing,  we are  making  changes  to our
procedures,  policies  and  reporting  structure  of the group  responsible  for
preparing  such filings during the third quarter of 2005.  Such changes  include
improving the automated  reminder  system relating to USF filings and having the
group report to the Chief Accounting Officer.

Local Services
Local  services  revenue for the three months ended June 30, 2005 decreased $7.7
million or 4% as compared with the prior year period.  Local  revenue  decreased
$9.0 million primarily due to a $4.0 million reserve  associated with state rate
of return limitations on earnings and $3.8 million related to the continued loss
of access lines.  Enhanced services revenue increased $1.4 million,  as compared
with the prior year period, primarily due to sales of additional packages.

Local services  revenue for the six months ended June 30, 2005  decreased  $10.4
million or 2% as compared with the prior year period.  Local  revenue  decreased
$13.8  million  primarily due to $7.4 million  related to the continued  loss of
access  lines as well as the  state  rate of  return  limitations  on  earnings.
Enhanced  services  revenue  increased $3.4 million,  as compared with the prior
year period, primarily due to sales of additional packages.  Economic conditions
or increasing  competition could make it more difficult to sell our packages and
bundles and cause us to lower our prices for those products and services,  which
would adversely affect our revenues and profitability.

Long Distance and Data Services
Long distance and data services revenue for the three months ended June 30, 2005
increased $5.6 million or 7%, as compared with the prior period primarily due to
growth of $8.8  million  related  to data  services  (data  includes  high-speed
internet) partially offset by decreased long distance revenue of $3.2 million as
a result of a decline in the average rate per long  distance  minute as a result
of the  introduction  of  unlimited  and  packages of minutes for long  distance
plans.

Long distance and data  services  revenue for the six months ended June 30, 2005
increased $8.9 million or 6%, as compared with the prior period primarily due to
growth of $15.7 million related to data services  partially  offset by decreased
long  distance  revenue of $6.8  million as a result of a decline in the average
rate per long  distance  minute.  Our long  distance  revenues  may  continue to
decrease in the future due to competition.  Competing services such as wireless,
VOIP,  and cable  telephony  will  result in a loss of  customers  and may cause
further declines in the rates we charge our customers.

Other
Other revenue for the three months ended June 30, 2005 decreased $1.9 million or
8%,  as  compared  with  the  prior  year  primarily  due to lower  billing  and
collection  revenue of $2.9 million  partially  offset by a $1.0 million revenue
increase due to the introduction of television service in 2005.

Other revenue for the six months ended June 30, 2005 decreased $2.4 million,  or
5% compared with the prior year primarily due to a $1.4 million  increase in bad
debt expense and lower billing and collection  revenue of $1.6 million partially
offset by a $1.0 million revenue  increase due to the introduction of television
service.

ELI
ELI revenue for the six months ended June 30, 2005  decreased  $1.1 million,  or
1%, as  compared  to the prior year  period  primarily  due to lower  demand and
prices for long-haul services and lower reciprocal compensation revenues.



                                       28
<PAGE>


                                ELECTRIC REVENUE

      ($ in thousands)          For the six months ended June 30,
                                --------------------------------------------
                                   2005        2004      $ Change   % Change
                                -----------  ----------  ---------- ---------
     Electric revenue              $  -       $ 9,735     $ (9,735)    -100%

Electric  revenue for the six months ended June 30, 2005 decreased $9.7 million,
as compared  with the prior year period due to the sale of our Vermont  electric
division on April 1, 2004. We have sold all of our electric  operations and as a
result will have no operating results in future periods for these businesses.

<TABLE>
<CAPTION>
                                COST OF SERVICES

($ in thousands)              For the three months ended June 30,          For the six months ended June 30,
                          --------------------------------------------- -----------------------------------------------
                            2005        2004      $ Change   % Change    2005        2004      $ Change    % Change
                          ----------- ----------- ----------- --------- ---------- ----------- ------------ ----------
<S>                         <C>         <C>         <C>           <C>   <C>       <C>          <C>             <C>
Network access              $ 43,698    $ 46,710    $  (3,012)    -6%   $ 94,716  $ 96,737     $ (2,021)       -2%
Electric energy and
  fuel oil purchased             -           -            -        -         -       5,523       (5,523)     -100%
                          ----------   ---------   ----------           --------  ---------   ---------
                            $ 43,698    $ 46,710    $  (3,012)    -6%   $ 94,716  $ 102,260    $ (7,544)       -7%
                          ==========   =========   ==========           ========  =========   =========

</TABLE>

Network access  expenses for the three months ended June 30, 2005 decreased $3.0
million,  or 6%,  as  compared  with the  prior  year  period  primarily  due to
decreased  circuit expense  partially offset by increased costs in long distance
access  expense in the ILEC  sector.  ELI costs have  declined  due to  improved
network cost efficiencies partially offset by an increase in demand.

Network  access  expenses for the six months ended June 30, 2005  decreased $2.0
million,  or 2%, as compared  with the prior year  period.  Our  network  access
expense  could  increase as we continue to increase  our sales of data  products
such as high-speed internet and continue to increase the number of long distance
minutes we sell.

Electric  energy and fuel oil  purchased  for the six months ended June 30, 2005
decreased  $5.5 million,  as compared with the prior year period due to the sale
of our  Vermont  electric  division  on April 1,  2004.  We have sold all of our
electric  operations  and as a result will have no  operating  results in future
periods for these businesses.

<TABLE>
<CAPTION>
                            OTHER OPERATING EXPENSES

($ in thousands)                    For the three months ended June 30,           For the six months ended June 30,
                                --------------------------------------------   -----------------------------------------------
                                   2005        2004      $ Change   % Change    2005        2004      $ Change    % Change
                                ----------- ----------- ----------- ---------  --------  ----------- ------------ ----------
<S>                              <C>         <C>          <C>            <C>   <C>        <C>          <C>             <C>
Operating expenses               $ 149,927   $ 155,178     $ (5,251)     -3%    $ 296,410  $ 313,206    $ (16,796)     -5%
Taxes other than income taxes       23,857      25,496       (1,639)     -6%       50,814     51,684         (870)     -2%
Sales and marketing                 29,401      30,086         (685)     -2%       57,409     57,288          121       0%
                                ----------  ----------  -----------            ----------  ---------   ----------
                                 $ 203,185   $ 210,760     $ (7,575)     -4%    $ 404,633  $ 422,178    $ (17,545)     -4%
                                ==========  ==========  ===========            ==========  =========   ==========

</TABLE>

Operating  expenses  for the three  months  ended June 30, 2005  decreased  $5.3
million,  or 3%, as compared  with the prior year period  primarily due to lower
billing  expenses as a result of the  conversion of our billing  system in 2004,
increased operating efficiencies and a reduction of personnel.

Operating  expenses  for the six months  ended  June 30,  2005  decreased  $16.8
million,  or 5%, as compared  with the prior year period  primarily due to lower
billing  expenses as a result of the  conversion of our billing  system in 2004,
increased  operating  efficiencies  and a reduction of personnel  and  decreased
operating  expenses in the public services sector of approximately  $5.2 million
due to the sale of our  Vermont  electric  division.  We  routinely  review  our
operations,  personnel and  facilities to achieve  greater  efficiencies.  These
reviews may result in  reductions  in  personnel  and an  increase in  severance
costs.





                                       29

<PAGE>
Taxes other than income taxes for the three months ended June 30, 2005 decreased
$1.6  million,  or 6%, as compared  with the prior year period  primarily due to
lower state unemployment taxes of $1.4 million in the ILEC sector.

Included in operating expenses is stock compensation expense. Stock compensation
expense was $4.4  million and $5.9  million for the first six months of 2005 and
2004,  respectively.  In 2006,  we  expect  to begin  expensing  the cost of the
unvested  portion of  outstanding  stock  options  pursuant to SFAS No. 123R. We
expect to recognize  approximately  $2.8 million of stock option expense for the
year ended December 31, 2006.

Included in operating  expenses is pension  expense.  In future periods,  if the
value of our pension assets or interest rates decline and/or  projected  benefit
costs  increase,  we may have  increased  pension  expenses.  Based  on  current
assumptions and plan asset values,  we estimate that our pension expense will be
approximately  $1.0 million in 2005 (it was $3.6 million in 2004).  In addition,
as medical  costs  increase the costs of our  postretirement  benefit costs also
increase.  Our retiree medical costs for 2004 were $16.6 million and our current
estimate for 2005 is approximately $19.0 million.

<TABLE>
<CAPTION>
                      DEPRECIATION AND AMORTIZATION EXPENSE

      ($ in thousands)              For the three months ended June 30,             For the six months ended June 30,
                                --------------------------------------------  -----------------------------------------------
                                   2005        2004      $ Change   % Change    2005        2004      $ Change    % Change
                                ----------- ----------- ----------- --------- ---------- -----------  ----------- ----------
<S>                              <C>         <C>          <C>            <C>   <C>        <C>           <C>              <C>
      Depreciation  expense      $ 106,423   $ 112,290    $ (5,867)     -5%    $ 214,474  $ 224,023     $ (9,549)       -4%
      Amortization expense          31,595      31,630         (35)      0%       63,189     63,260          (71)        0%
                                ----------   ---------   ---------            ----------  ---------   ----------
                                 $ 138,018   $ 143,920    $ (5,902)     -4%    $ 277,663  $ 287,283     $ (9,620)       -3%
                                ==========   =========   =========            ==========  =========   ==========
</TABLE>

Depreciation  expense for the three and six months ended June 30, 2005 decreased
$5.9 million, or 5%, and $9.5 million, or 4%, respectively, as compared with the
prior year period due to a declining asset base.

<TABLE>
<CAPTION>

            MANAGEMENT SUCCESSION AND STRATEGIC ALTERNATIVES EXPENSES

($ in thousands)                    For the three months ended June 30,         For the six months ended June 30,
                                --------------------------------------------  ---------------------------------------------
                                   2005        2004      $ Change   % Change    2005        2004      $ Change    % Change
                                ----------- ----------- ----------- --------  ----------  ---------   ---------  ----------
Strategic alternatives and
<S>                                  <C>    <C>         <C>           <C>         <C>      <C>        <C>             <C>
  management succession expenses     $ -    $ 10,392    $ (10,392)   -100%        $ -      $ 14,774   $ (14,774)     -100%

</TABLE>

Management succession and strategic  alternatives expenses in 2004 include a mix
of cash retention payments, equity awards and severance agreements.

<TABLE>
<CAPTION>
              INVESTMENT AND OTHER INCOME, NET / INTEREST EXPENSE /
                               INCOME TAX EXPENSE


      ($ in thousands)              For the three months ended June 30,         For the six months ended June 30,
                                --------------------------------------------- --------------------------------------------------
                                   2005        2004      $ Change   % Change    2005        2004       $ Change       % Change
                                ----------- ----------- ----------- --------- --------   ----------    ----------     ----------
      Investment and
<S>                               <C>         <C>         <C>           <C>    <C>         <C>          <C>              <C>
        other income              $  1,208    $  5,208    $ (4,000)    -77%    $   5,981   $  30,503    $ (24,522)      -80%
      Interest expense            $ 84,083    $ 97,652    $(13,569)    -14%    $ 167,868   $ 195,433    $ (27,565)      -14%
      Income tax expense          $ 19,438    $ 11,098    $  8,340      75%    $  45,111   $  34,803    $  10,308        30%

</TABLE>

Investment  and other income for the three months ended June 30, 2005  decreased
$4.0 million,  or 77%, as compared  with the prior year period  primarily due to
the loss on exchange of debt incurred  during the second quarter of 2005 of $3.2
million.

Investment  and other  income for the six months  ended June 30, 2005  decreased
$24.5 million,  or 80%, as compared with the prior year period  primarily due to
$25.3  million  of  income  in 2004  from the  expiration  of  certain  retained
liabilities at less than face value, which are associated with customer advances
for construction from our disposed water properties.



                                       30
<PAGE>
Interest  expense  for the three  months  ended June 30,  2005  decreased  $13.6
million,  or 14%,  as  compared  with the prior  year  period  primarily  due to
conversions  and refinancing of debt. Our composite  average  borrowing rate for
the six months ended June 30, 2005 as compared with the prior year period was 11
basis points lower, decreasing from 7.97% to 7.86%.

Interest expense for the six months ended June 30, 2005 decreased $27.6 million,
or 14%, as compared with the prior year period  primarily due to conversions and
refinancing  of debt.  Our composite  average  borrowing rate for the six months
ended June 30, 2005 as compared  with the prior year period was 16 basis  points
lower, decreasing from 8.02% to 7.86%.

Income  taxes for the three and six months  ended June 30, 2005  increased  $8.3
million, or 75%, and $10.3 million, or 30%,  respectively,  as compared with the
prior year periods primarily due to changes in taxable income. The effective tax
rate for the first six months of 2005 was 34.7% as  compared  with 35.3% for the
first six months of 2004.
<TABLE>
<CAPTION>

            DISCONTINUED OPERATIONS

      ($ in thousands)              For the three months ended June 30,         For the six months ended June 30,
                                --------------------------------------------   -----------------------------------------------
                                   2005        2004      $ Change   % Change     2005        2004      $ Change    % Change
                                ----------- ----------- ----------- ---------  --------   ---------   ----------   ----------
<S>                                 <C>     <C>          <C>          <C>       <C>       <C>         <C>           <C>
      Revenue                       $ -     $ 6,295      $ (6,295)   -100%      $ 4,607   $ 12,452    $ (7,845)      -63%
      Operating income              $ -     $ 2,161      $ (2,161)   -100%      $ 1,489   $ 4,372     $ (2,883)      -66%
      Income from discontinued
         operations, net of tax     $ -     $ 1,320      $ (1,320)   -100%      $ 1,040   $ 2,781     $ (1,741)      -63%
      Gain on disposal of CCUSA,
         net of tax                 $ -     $   -        $    -        -        $ 1,167   $   -       $  1,167       100%


</TABLE>

On March 15,  2005,  we completed  the sale of CCUSA for $43.6  million in cash,
subject to adjustments under the terms of the agreement. The pre-tax gain on the
sale of CCUSA was $14.1 million.  Our after-tax gain was $1.2 million.  The book
income taxes recorded upon sale are primarily attributable to a low tax basis in
the assets sold.


                                       31
<PAGE>


Item 3.  Quantitative and Qualitative Disclosures about Market Risk
         ----------------------------------------------------------

Disclosure of primary market risks and how they are managed
We are exposed to market risk in the normal  course of our  business  operations
due to ongoing  investing  and  funding  activities.  Market  risk refers to the
potential  change  in fair  value  of a  financial  instrument  as a  result  of
fluctuations in interest rates and equity and commodity  prices.  We do not hold
or issue  derivative  instruments,  derivative  commodity  instruments  or other
financial instruments for trading purposes. As a result, we do not undertake any
specific  actions to cover our  exposure to market risks and we are not party to
any  market  risk  management  agreements  other  than in the  normal  course of
business or to hedge  long-term  interest  rate risk.  Our  primary  market risk
exposures are interest rate risk and equity and commodity price risk as follows:

Interest Rate Exposure

Our exposure to market risk for changes in interest  rates relates  primarily to
the  interest-bearing  portion of our  investment  portfolio and interest on our
long-term  debt and capital  lease  obligations.  The long term debt and capital
lease  obligations  include  various  instruments  with various  maturities  and
weighted average interest rates.

Our  objectives  in managing our  interest  rate risk are to limit the impact of
interest  rate  changes  on  earnings  and cash  flows and to lower our  overall
borrowing costs. To achieve these objectives,  a majority of our borrowings have
fixed interest rates. Consequently,  we have limited material future earnings or
cash flow  exposures  from changes in interest  rates on our long-term  debt and
capital lease  obligations.  A hypothetical 10% adverse change in interest rates
would  increase  the amount that we pay on our  variable  obligations  and could
result in  fluctuations in the fair value of our fixed rate  obligations.  Based
upon our overall  interest rate exposure at June 30, 2005, a near-term change in
interest rates would not materially affect our consolidated  financial position,
results of operations or cash flows.

In order to  manage  our  interest  rate risk  exposure,  we have  entered  into
interest  rate  swap  agreements.  Under the  terms of the  agreements,  we make
semi-annual,  floating  interest rate interest payments based on six month LIBOR
and receive a fixed rate on the notional amount.

Sensitivity analysis of interest rate exposure
At June  30,  2005,  the fair  value of our  long-term  debt and  capital  lease
obligations was estimated to be approximately $4.3 billion, based on our overall
weighted  average rate of 7.88% and our overall  weighted  maturity of 12 years.
There has been no material change in the weighted average maturity applicable to
our obligations since December 31, 2004.

The overall  weighted  average  interest rate  increased  approximately  5 basis
points during the first six months of 2005. A hypothetical  increase of 79 basis
points (10% of our overall weighted  average  borrowing rate) would result in an
approximate  $220.7  million  decrease  in the  fair  value  of our  fixed  rate
obligations.  However,  the  interest  rates on most of our debt are  fixed  and
therefore  changes in market interest rates have little  near-term impact on our
results of operations.

Equity Price Exposure

Our exposure to market risks for changes in equity prices as of June 30, 2005 is
limited and relates to our investment in Adelphia, and our pension assets.

As of June 30, 2005 and December 31, 2004, we owned 3,059,000 shares of Adelphia
common  stock.  The stock price of Adelphia was $0.10 and $0.39 at June 30, 2005
and December 31, 2004, respectively.

Sensitivity analysis of equity price exposure
At June  30,  2005,  the fair  value of the  equity  portion  of our  investment
portfolio  was  estimated to be $0.3  million.  A  hypothetical  10% decrease in
quoted market prices would result in an approximate $31,000 decrease in the fair
value of the equity portion of our investment portfolio.



                                       32
<PAGE>

Disclosure of limitations of sensitivity analysis
Certain  shortcomings  are  inherent in the method of analysis  presented in the
computation  of fair value of financial  instruments.  Actual  values may differ
from those presented should market  conditions vary from assumptions used in the
calculation of the fair value.  This analysis  incorporates only those exposures
that  exist as of June  30,  2005.  It does  not  consider  those  exposures  or
positions, which could arise after that date. As a result, our ultimate exposure
with respect to our market risks will depend on the exposures  that arise during
the period and the fluctuation of interest rates and quoted market prices.

Item 4.   Controls and Procedures
          -----------------------

(a) Evaluation of disclosure controls and procedures
We carried out an evaluation,  under the supervision and with the  participation
of our management,  regarding the  effectiveness  of the design and operation of
our  disclosure  controls  and  procedures.  Based  upon  this  evaluation,  our
principal executive officer and principal financial officer concluded, as of the
end of the period  covered by this report,  June 30, 2005,  that our  disclosure
controls and procedures are effective.

(b)  Changes in internal  control  over  financial  reporting  We  reviewed  our
internal  control over financial  reporting at June 30, 2005. There have been no
changes in our  internal  control  over  financial  reporting  identified  in an
evaluation  thereof that occurred during the second fiscal quarter of 2005, that
materially  affected or are reasonably  likely to materially affect our internal
control over financial  reporting.





                                       33
<PAGE>



                           PART II. OTHER INFORMATION
                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES


Item 1.   Legal Proceedings
          -----------------

There  have  been  no  material  changes  to  our  legal  proceedings  from  the
information  provided in Item 3. Legal Proceedings included in our Annual Report
on Form 10-K for the year ended December 31, 2004.

We are party to other  legal  proceedings  arising in the  normal  course of our
business.  The outcome of individual  matters is not  predictable.  However,  we
believe that the ultimate  resolution  of all such  matters,  after  considering
insurance  coverage,  will not have a material  adverse  effect on our financial
position, results of operations, or our cash flows.


Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
         -----------------------------------------------------------

On May 25, 2005,  our Board of Directors  authorized  the Company to  repurchase
over the following  twelve-month  period,  up to $250.0 million of the Company's
common stock, either in the open market or through negotiated transactions. This
share  repurchase  program  commenced  on June 13,  2005.  The  following  table
reflects the Company's  repurchases of its common stock by month since inception
of  the  program,   all  of  which  were   effected  in   accordance   with  the
above-described program.

<TABLE>
<CAPTION>
                     ISSUER PURCHASES OF EQUITY SECURITIES
                     -------------------------------------

                                                                                                      (d) Maximum
                                                                                                       Number (or
                                                                                                      Approximate
                                                                            (c) Total Number         Dollar Value)
                                                                              of Shares (or           of Shares (or
                                         (a) Total                           Units) Purchased        Units) that May
                                         Number of         (b) Average          as Part of               Yet Be
                                         Shares (or        Price Paid per        Publicly               Purchased
                                           Units)            Share (or        Announced Plans        Under the Plans
          Period                         Purchased            Unit)            or Programs             or Programs
-----------------------------           -----------         ------------      ---------------        ----------------

<S>                                      <C>                <C>                  <C>                   <C>
June 1, 2005 to June 30, 2005            1,400,000          $  13.28             1,400,000             $231,400,000


</TABLE>

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

     (a)  The registrant held its 2005 Annual Meeting of the Stockholders on May
          26, 2005.

     (b)  Proxies for the Annual Meeting were  solicited  pursuant to Regulation
          14A; there was no solicitation in opposition to management's  nominees
          for directors as listed in the Proxy Statement. All such nominees were
          elected pursuant to the following votes:

                                                        Number of Votes
                                                        ---------------

          DIRECTORS                                FOR                 WITHHELD
          ---------                                ---                 --------

          Jerry Elliott                        293,649,184            14,268,817
          Lawton Wehle Fitt                    299,412,899             8,505,102
          Stanley Harfenist                    292,217,025            15,700,976
          William M. Kraus                     294,402,615            13,515,386
          Scott N. Schneider                   300,973,852             6,944,149
          Larraine D. Segil                    302,077,492             5,840,509
          Robert A. Stanger                    294,830,733            13,087,268
          Edwin Tornberg                       298,545,744             9,372,257
          David H. Ward                        302,161,362             5,756,639
          Myron A. Wick, III                   301,966,879             5,951,122
          Mary Agnes Wilderotter               297,117,470            10,800,531


                                       34
<PAGE>

     (c)  Other matters voted upon and approved:

          Ratification  of appointment of KPMG LLP as the Company's  independent
          public accountants for 2005.

                    Number of votes FOR                       302,992,787
                    Number of votes AGAINST/WITHHELD            2,195,452
                    Number of votes ABSTAINING                  2,729,761
                    Number of BROKER NON-VOTES                          0

          Shareholder  approval of an amendment to the Amended and Restated 2000
          Equity Incentive Plan.

                    Number of votes FOR                       188,894,717
                    Number of votes AGAINST/WITHHELD           40,011,080
                    Number of votes ABSTAINING                  4,100,636
                    Number of BROKER NON-VOTES                 74,911,558

Item 5.  Other Information
         -----------------

As  disclosed  in our  Proxy  Statement  for the  2005  Annual  Meeting,  if any
stockholder  intends to present  any  proposal  at the 2006  annual  meeting the
proposal  must be received  by the  Secretary  of the  Company not earlier  than
January 27, 2006 nor later than  February 26, 2006.  Furthermore,  in accordance
with the proxy rules and regulations of the Securities and Exchange  Commission,
if a stockholder does not notify us of a proposal by February 26, 2006, then our
proxies  would  be  able  to  use  their  discretionary  voting  authority  if a
stockholder's proposal is raised at the meeting.

On July 26, 2005,  Howard  Schott was elected as a director to fill a vacancy on
the board.  Mr.  Schott will serve on the Audit,  and  Nominating  and Corporate
Governance Committees.


Item 6.  Exhibits
         --------

a) Exhibits:

         31.1   Certification of Principal Executive Officer pursuant to
                Rule 13a-14(a) under the Securities Exchange Act of 1934.

         31.2   Certification of Principal Financial Officer pursuant to
                Rule 13a-14(a) under the Securities Exchange Act of 1934.

         32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.

         32.2   Certification of Chief Financial Officer pursuant to 18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.





                                       35
<PAGE>




                CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES

                                    SIGNATURE
                                    ---------


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.






                         CITIZENS COMMUNICATIONS COMPANY
                         -------------------------------
                                  (Registrant)


                         By:   /s/ Jerry Elliott
                              ---------------------------------------
                              Jerry Elliott
                              Executive Vice President and
                              Chief Financial Officer






Date: August 1, 2005






                                       36