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F-30
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(20) NET INCOME PER COMMON SHARE:
The reconciliation of the net income per common share calculation for the years ended December 31, 2005,
2004 and 2003 is as follows:
($ in thousands, except per-share amounts) 2005 2004 2003
Net income used for basic and diluted earnings
per common share:
Income from continuing operations before cumulative effect of
change in accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,168 $ 66,919 $ 117,703
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,207 5,231 4,380
Income before cumulative effect of change in accounting principle . . . . . . 202,375 72,150 122,083
Income from cumulative effect of change in accounting principle . . . . . . . — — 65,769
Total basic net income available for common shareholders . . . . . . . . . . . . . $ 202,375 $ 72,150 $ 187,852
Effect of conversion of preferred securities . . . . . . . . . . . . . . . . . . . . . . . . . 1,255 — 6,210
Total diluted net income available for common shareholders . . . . . . . . . . . $ 203,630 $ 72,150 $ 194,062
Basic earnings per common share:
Weighted-average shares outstanding - basic . . . . . . . . . . . . . . . . . . . . . . . 337,065 303,989 282,434
Income from continuing operations before cumulative effect of
change in accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.59 $ 0.22 $ 0.42
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01 0.02 0.02
Income before cumulative effect of change in accounting principle . . . . . . 0.60 0.24 0.44
Income from cumulative effect of change in accounting principle . . . . . . . — — 0.23
Net income per share available for common shareholders. . . . . . . . . . . . . . $ 0.60 $ 0.24 $ 0.67
Diluted earnings per common share:
Weighted-average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,065 303,989 282,434
Effect of dilutive shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,417 5,194 4,868
Effect of conversion of preferred securities . . . . . . . . . . . . . . . . . . . . . . . . . 3,193 — 15,134
Weighted-average shares outstanding - diluted . . . . . . . . . . . . . . . . . . . . . . 341,675 309,183 302,436
Income from continuing operations before cumulative effect of
change in accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.59 $ 0.22 $ 0.41
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01 0.01 0.01
Income before cumulative effect of change in accounting principle . . . . . . 0.60 0.23 0.42
Income from cumulative effect of change in accounting principle . . . . . . . — — 0.22
Net income per share available for common shareholders. . . . . . . . . . . . . . $ 0.60 $ 0.23 $ 0.64
Stock Options
For the years ended December 31, 2005, 2004 and 2003 options of 1,930,000 and 2,495,000 (at exercise prices
ranging from $13.09 to $18.46), and 10,190,000 (at exercise prices ranging from $9.18 to $21.47), respectively, issuable
under employee compensation plans were excluded from the computation of diluted earnings per share (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 $2.00 per common share on
September 2, 2004, the exercise price and number of all outstanding options was adjusted such that each option had
the same value 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.