Frontier Communications 2005 Annual Report Download - page 40

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
During the third and fourth quarters of 2003, we recognized additional pre-tax impairment losses of $4.0
million and $11.3 million related to our Vermont property to write down assets to be sold to our best estimate of their
net realizable value upon sale.
INVESTMENT AND OTHER INCOME (LOSS), NET / INTEREST EXPENSE /
INCOME TAX EXPENSE (BENEFIT)
($ in thousands)
2005 2004 2003
Amount $ Change % Change Amount $ Change % Change Amount
Investment income . . . . . . . . . . $ 18,236 $ (15,380 ) -46 % $ 33,616 $ 23,198 -223 % $ 10,418
Other income (loss), net . . . . . . $ (1,674 ) $ 51,685 -97 % $ (53,359 ) $ (97,418 ) -221 % $ 44,059
Interest expense . . . . . . . . . . . . $ 338,903 $ (40,118 ) -11 % $ 379,021 $ (37,499 ) -9 % $ 416,520
Income tax expense . . . . . . . . . $ 84,340 $ 73,918 709 % $ 10,422 $ (54,354 ) 84 % $ 64,776
Investment Income
Investment income for the year ended December 31, 2005 decreased $15.4 million, or 46%, as compared with
the prior year primarily due to the sale in 2004 of our investments in D & E Communications, Inc. (D & E) and
Hungarian Telephone and Cable Corp. (HTCC), partially offset by higher income in 2005 from short-term
investments.
Investment income for the year ended December 31, 2004 increased $23.2 million as compared with the prior
year primarily due to the sale of our investments in D & E and HTCC and higher income from short-term
investments.
Other Income (Loss), net
Other income, net for the year ended December 31, 2005 increased $51.7 million, or 97%, as compared to prior
year. The increase is primarily due to a pre-tax loss from the early extinguishment of debt of $66.5 million in 2004
and a net loss on sales of assets of $1.9 million, which is primarily attributable to the loss on the sale of our corporate
aircraft, partially offset by $25.3 million in income 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. In addition,
during 2005 $7.0 million was reserved in the fourth quarter in connection with a lawsuit, and during the second
quarter we incurred a $3.2 million loss on the exchange of debt, partially offset by gains on our forward rate
agreements
Other loss, net for the year ended December 31, 2004 increased $97.4 million as compared to prior year primarily
due to a pre-tax loss from the early extinguishment of debt of $66.5 million in 2004, and the recognition in 2003 of
$69.5 million in non-cash pre-tax gains related to a capital lease termination and a capital lease restructuring at ELI,
partially offset in 2004 by $25.3 million in income 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 and a net
loss on sales of assets in 2004 of $1.9 million, which is primarily attributable to the loss on the sale of our corporate
aircraft, compared to a net loss on sales of assets in 2003 of $20.5 million.
Interest Expense
Interest expense for the year ended December 31, 2005 decreased $40.1 million, or 11%, as compared with the
prior year primarily due to the retirement and refinancing of debt. Our composite average borrowing rate for the year
ended December 31, 2005 as compared with the prior year was 2 basis points lower, decreasing from 7.96% to
7.94%.
Interest expense for the year ended December 31, 2004 decreased $37.5 million, or 9%, as compared with the
prior year primarily due to the retirement of debt. Our composite average borrowing rate for the year ended December
31, 2004 as compared with the prior year was 11 basis points lower, decreasing from 8.07% to 7.96%.