Frontier Communications 2006 Annual Report Download - page 68

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
the sale of ELI of approximately $116.7 million. Our after-tax gain on the sale was $71.6 million. Our cash
liability for taxes as a result of the sale is expected to be approximately $5.0 million due to the utilization of
existing tax net operating losses on both the federal and state level.
In accordance with SFAS No. 144, any component of our business that we dispose of or classify as held for
sale that has operations and cash flows clearly distinguishable from operations, and for financial reporting
purposes, and that will be eliminated from the ongoing operations, should be classified as discontinued
operations. Accordingly, we have classified the results of operations of ELI as discontinued operations in our
consolidated statements of operations and have restated prior periods.
We ceased to record depreciation expense effective February 2006.
Summarized financial information for ELI (discontinued operations) is set forth below:
($ in thousands) For the years ended December 31,
2006 2005 2004
Revenue .............................. $ 100,612 $ 159,161 $ 156,030
Operating income ....................... $ 27,882 $ 21,480 $ 16,621
Income taxes ........................... $ 11,583 $ 9,070 $ 6,175
Net income ............................ $ 18,912 $ 12,226 $ 9,855
Gain on disposal, net of tax ............... $ 71,635 $ — $ —
($ in thousands) December 31, 2006 December 31, 2005
(Sold)
Current assets .......................... $ 24,986
Net property, plant and equipment ......... 137,730
Total assets of discontinued operations ...... $ 162,716
Current liabilities ....................... $ 21,605
Long term liabilities .................... 24,661
Total liabilities of discontinued operations . . . $ 46,266
(b) Conference Call USA
In February 2005, we entered into a definitive agreement to sell Conference-Call USA, LLC (CCUSA), our
conferencing services business. On March 15, 2005, we completed the sale for $43,565,000 in cash. The pre-tax
gain on the sale of CCUSA was $14,061,000. Our after-tax gain was approximately $1,167,000. The book
income taxes recorded upon sale are primarily attributable to a low tax basis in the assets sold.
In accordance with SFAS No. 144, any component of our business that we dispose of or classify as held for
sale that has operations and cash flows clearly distinguishable from operations, and for financial reporting
purposes, and that will be eliminated from the ongoing operations, should be classified as discontinued
operations. Accordingly, we have classified the results of operations of CCUSA as discontinued operations in our
consolidated statements of operations and have restated prior periods.
The company had no outstanding debt specifically identified with CCUSA and therefore no interest expense
was allocated to discontinued operations. In addition, we ceased to record depreciation expense effective
February 16, 2005.
F-20