Frontier Communications 2006 Annual Report Download - page 83

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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, 2006,
2005 and 2004 is as follows:
($ in thousands, except per-share amounts) 2006 2005 2004
Net income used for basic and diluted earnings
per common share:
Income from continuing operations ................................ $ 254,008 $ 187,942 $ 57,064
Income from discontinued operations .............................. 90,547 14,433 15,086
Total basic net income available for common shareholders ............. $ 344,555 $ 202,375 $ 72,150
Effect of conversion of preferred securities .......................... 401 1,255 —
Total diluted net income available for common shareholders ............ $ 344,956 $ 203,630 $ 72,150
Basic earnings per common share:
Weighted-average shares outstanding - basic ........................ 322,641 337,065 303,989
Income from continuing operations ................................ $ 0.79 $ 0.56 $ 0.19
Income from discontinued operations .............................. 0.28 0.04 0.05
Net income per share available for common shareholders .............. $ 1.07 $ 0.60 $ 0.24
Diluted earnings per common share:
Weighted-average shares outstanding .............................. 322,641 337,065 303,989
Effect of dilutive shares ......................................... 931 1,417 5,194
Effect of conversion of preferred securities .......................... 973 3,193 —
Weighted-average shares outstanding - diluted ....................... 324,545 341,675 309,183
Income from continuing operations ................................ $ 0.78 $ 0.56 $ 0.18
Income from discontinued operations .............................. 0.28 0.04 0.05
Net income per share available for common shareholders .............. $ 1.06 $ 0.60 $ 0.23
Stock Options
For the years ended December 31, 2006, 2005 and 2004 options of 1,917,000 (at exercise prices ranging
from $13.45 to $18.46), 1,930,000 and 2,495,000 (at exercise prices ranging from $13.09 to $18.46),
respectively, issuable under employee compensation plans were excluded from the computation of diluted
earnings per share (EPS) for those periods as the effect would be antidilutive. In calculating diluted EPS we
apply the treasury stock method and include future unearned compensation as part of the assumed proceeds.
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 No. 44), “Accounting for Certain Transactions involving Stock Compensation” and
EITF No. 00-23, “Issues Related to the Accounting for Stock Compensation under APB No. 25 and FIN No. 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.
In addition, for the years ended December 31, 2006, 2005 and 2004, restricted stock awards of 1,174,000,
1,456,000 and 1,686,000 shares, respectively, are excluded from our basic weighted average shares outstanding and
included in our dilutive shares until the shares are no longer contingent upon the satisfaction of all specified conditions.
F-35