Frontier Communications 2005 Annual Report Download - page 16

14
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
ITEM 2. PROPERTIES
Our principal corporate offices are located in leased premises at 3 High Ridge Park, Stamford, Connecticut.
An operations support office is currently located in leased premises at 180 South Clinton Avenue, Rochester,
New York. In addition, our Frontier segment leases and owns space in various markets throughout the United
States.
An operations support office for ELI is located in a building we own at 4400 NE 77th Avenue, Vancouver,
Washington. In addition, our ELI segment leases local office space in various markets throughout the United States,
and also maintains a warehouse facility in Portland, Oregon. Our ELI segment also leases network hub and network
equipment installation sites in various locations throughout the areas in which it provides services. For additional
information regarding obligations under lease, see Note 25 to Consolidated Financial Statements.
Our Frontier and ELI segments own telephone properties which include: connecting lines between customers’
premises and the central offices; central office switching equipment; fiber-optic and microwave radio facilities;
buildings and land; and customer premise equipment. The connecting lines, including aerial and underground cable,
conduit, poles, wires and microwave equipment, are located on public streets and highways or on privately owned
land. We have permission to use these lands pursuant to local governmental consent or lease, permit, franchise,
easement or other agreement.
ITEM 3. LEGAL PROCEEDINGS
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). The City
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 owned by Bangor Gas Company from 1852-1948 and
by us from 1948-1963. In acquiring the operation in 1948 we acquired the stock of Bangor Gas Company and merged
it into us. The City alleged the existence of extensive contamination of the Penobscot River and 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 filed an answer denying liability to the City, and asserted a number of
counterclaims against the City. In addition, we identified a number of other potentially responsible parties that may
be liable for the damages alleged by the City and joined them as parties to the lawsuit. These additional parties
include Honeywell Corporation, Guilford Transportation (operating as Maine Central Railroad), UGI Utilities, Inc.
and Centerpoint Energy Resources Corporation. The Court 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. Trial was conducted in September and October 2005
for the first (liability) phase of the case, and a decision from the court is anticipated by the end of the first quarter of
2006. We intend to continue to defend ourselves vigorously against the City’s lawsuit. 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 this lawsuit and 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 were cooperating with the patent holder to
determine if we are currently using any of the processes that are protected by its patents but have not had any
communication with them on this issue since mid-2004. 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