Frontier Communications 2006 Annual Report Download - page 25

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
During 2005, we sold 79,828 shares of Global Crossing Limited for $1.1 million in cash.
Capital Expenditures
For the year ended December 31, 2006, our capital expenditures were $268.8 million. We continue to
closely scrutinize all of our capital projects, emphasize return on investment and focus our capital expenditures
on areas and services that have the greatest opportunities with respect to revenue growth and cost reduction. We
anticipate capital expenditures of approximately $270.0 million—$280.0 million for 2007.
Increasing competition and improving the capabilities or reducing the maintenance costs of our plant may
cause our capital expenditures to increase in the future. Our capital expenditures planned for new services such as
wireless and VOIP in 2007 are not material. However, based on the success of our planned roll-out of these
products that began in late 2006, our capital expenditures for these products may increase in the future.
CASH FLOW FROM FINANCING ACTIVITIES
Debt Reduction and Debt Exchanges
For the year ended December 31, 2006, we retired an aggregate principal amount of $251.0 million of debt,
including $15.9 million of 5% Company Obligated Mandatorily Redeemable Convertible Preferred Securities
(EPPICS) that were converted into our common stock.
During the first quarter of 2006, we entered into two debt-for-debt exchanges of our debt securities. As a
result, $47.5 million of our 7.625% notes due 2008 were exchanged for approximately $47.4 million of our
9.00% notes due 2031. During the fourth quarter of 2006, we entered into four debt-for-debt exchanges and
exchanged $157.3 million of our 7.625% notes due 2008 for $149.9 million of our 9.00% notes due 2031. The
9.00% notes are callable on the same general terms and conditions as the 7.625% notes exchanged. No cash was
exchanged in these transactions. However, with respect to the first quarter debt exchanges, a non-cash pre-tax
loss of approximately $2.4 million was recognized in accordance with EITF No. 96-19, “Debtor’s Accounting for
a Modification or Exchange of Debt Instruments,” which is included in other income (loss), net.
On June 1, 2006, we retired at par our entire $175.0 million principal amount of 7.60% Debentures due
June 1, 2006.
On June 14, 2006, we repurchased $22.7 million of our 6.75% Senior Notes due August 17, 2006 at a price
of 100.181% of par.
On August 17, 2006, we retired at par the $29.1 million remaining balance of the 6.75% Senior Notes.
In February 2006, our Board of Directors authorized us to repurchase up to $150.0 million of our
outstanding debt over the following twelve-month period. Through December 31, 2006, we had not made any
purchases pursuant to this authorization.
For the year ended December 31, 2005, we retired an aggregate principal amount of $36.4 million of debt,
including $30.0 million of EPPICS that were converted into our common stock. During the second quarter of
2005, we entered into two debt-for-debt exchanges of our debt securities. As a result, $50.0 million of our
7.625% notes due 2008 were exchanged for approximately $52.2 million of our 9.00% notes due 2031. The
9.00% notes are callable on the same general terms and conditions as the 7.625% notes exchanged. No cash was
exchanged in these transactions, however a non-cash pre-tax loss of approximately $3.2 million was recognized
in accordance with EITF No. 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments,”
which is included in other income (loss), net.
During August and September 2004, we repurchased an additional $108.2 million of our 6.75% notes
which, in addition to the $300.0 million we purchased in July, resulted in a pre-tax charge of approximately
$20.1 million during the third quarter of 2004, but resulted in an annual reduction in interest expense of about
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