Frontier Communications 2005 Annual Report Download - page 76

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F-27
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
We account for the Directors’ Deferred Fee Equity Plan in accordance with APB Opinion No. 25, “Accounting
for Stock Issued to Employees” and related interpretations. Compensation expense is recorded if cash or stock units
are elected. If stock units are elected, the compensation expense is based on the market value of our common stock
at the date of grant. If the stock option election is chosen, compensation expense is not recorded because the options
are granted at the fair market value of our common stock on the grant date.
We had also maintained a Non-Employee Directors’ Retirement Plan providing for the payment of specified
sums annually to our non-employee directors, or their designated beneficiaries, starting at the director’s retirement,
death or termination of directorship. In 1999, we terminated this Plan. The vested benefit of each non-employee
director, as of May 31, 1999, was credited to the director’s account in the form of stock units. Such benefit will be
payable to each director upon retirement, death or termination of directorship. Each participant had until July 15,
1999 to elect whether the value of the stock units awarded would be payable in our common stock (convertible on a
one-for-one basis) or in cash. As of December 31, 2005, the liability for such payments was $634,000 all of which
will be payable in stock (based on the July 15, 1999 stock price).
(18) RESTRUCTURING AND OTHER EXPENSES:
2005 and 2004
During 2005 and 2004, we did not recognize any restructuring and other expenses. We continue to review our
operations, personnel and facilities to achieve greater efficiency.
2003
Restructuring and other expenses primarily consist of expenses related to reductions in personnel at our
telecommunications operations and the write-off of software no longer useful.
(19) INCOME TAXES:
The following is a reconciliation of the provision for income taxes for continuing operations computed at
federal statutory rates to the effective rates for the years ended December 31, 2005, 2004 and 2003:
2005 2004 2003
Consolidated tax provision at federal statutory rate . . . . . . . . . . . . . . . . . . . . 35.0 % 35.0 % 35.0 %
State income tax provisions, net of federal income tax benefit . . . . . . . . . . . . 2.0 % 1.8 % 6.6 %
Tax reserve adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7.9 )% (19.3 )% (8.4 )%
All other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 % (4.0 )% 1.1 %
29.6 % 13.5 % 34.3 %