Frontier Communications 2006 Annual Report Download - page 16

Download and view the complete annual report

Please find page 16 of the 2006 Frontier Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 98

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
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 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.
On June 27, 2006, the court issued Findings of Fact and Conclusions of Law in the first phase of the case.
The court found contamination in only a small section of the River and determined that Citizens and the City
should share cleanup costs 60% and 40%, respectively. The precise nature of the remedy in this case remains to
be determined by subsequent proceedings. However, based upon the Court’s ruling, we believed that we would
be responsible for only a portion of the cost to clean up and the final resolution of this matter would not be
material to the operating results nor the financial condition of the Company.
Subsequent to the June 27, 2006 judgment, we began settlement discussions with the City, with participation
from the State of Maine. In January 2007, we reached an agreement in principle to settle the matter for a payment
by us of $7,625,000. The Bangor City Council has approved the settlement terms, and a settlement agreement has
been executed by the City and Citizens. Completion of settlement remains contingent upon entry of a Consent
Decree with the State that is reasonably acceptable to us. We are in negotiations with the State over the terms of
the Consent Decree. If the settlement of this matter does not become effective, we intend to (i) seek relief from
the Court in connection with the adverse aspects of the Court’s opinion and (ii) continue pursuing our right to
obtain contribution from the third parties against whom we have commenced litigation in connection with this
case. In addition, 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. We cannot at this time determine what amount we may recover
from third parties or insurance carriers.
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None in fourth quarter 2006.
EXECUTIVE OFFICERS OF THE REGISTRANT
Our Executive Officers as of February 1, 2007 were:
Name Age Current Position and Officer
Mary Agnes Wilderotter .... 52 Chairman of the Board and Chief Executive Officer
Donald R. Shassian ........ 51 Chief Financial Officer
John H. Casey, III ......... 50 Executive Vice President
Hilary E. Glassman ........ 44 Senior Vice President, General Counsel and Secretary
Peter B. Hayes ............ 49 Executive Vice President Sales, Marketing and Business Development
Robert J. Larson .......... 47 Senior Vice President and Chief Accounting Officer
Daniel J. McCarthy ........ 42 Executive Vice President and Chief Operating Officer
Cecilia K. McKenney ...... 44 Senior Vice President, Human Resources
15