Frontier Communications 2006 Annual Report Download - page 86

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(23) QUARTERLY FINANCIAL DATA (UNAUDITED):
($ in thousands, except per share amounts)
First
quarter
Second
quarter
Third
quarter
Fourth
quarter
2006
Revenue .......................................... $ 506,861 $ 506,912 $ 507,198 $ 504,396
Operating income .................................. 157,338 169,458 160,720 156,974
Net income ....................................... 50,483 101,702 128,459 63,911
Net income available for common shareholders
per basic share ................................... $ 0.15 $ 0.32 $ 0.40 $ 0.20
Net income available for common shareholders
per diluted share ................................. $ 0.15 $ 0.31 $ 0.40 $ 0.20
2005
Revenue .......................................... $ 502,334 $ 496,133 $ 501,211 $ 517,363
Operating income .................................. 144,481 142,281 136,920 165,286
Net income ....................................... 42,634 44,584 38,376 76,781
Net income available for common shareholders
per basic share ................................... $ 0.13 $ 0.13 $ 0.11 $ 0.23
Net income available for common shareholders
per diluted share ................................. $ 0.13 $ 0.13 $ 0.11 $ 0.23
The quarterly net income per common share amounts are rounded to the nearest cent. Annual net income per
common share may vary depending on the effect of such rounding. During the second quarter of 2006 we
recorded a gain in investment income of $61.4 million resulting from the dissolution and liquidation of the Rural
Telephone Bank. In the third quarter of 2006 we sold ELI (see Note 8). See Note 14 for a description of other
miscellaneous transactions impacting our quarterly results.
(24) RETIREMENT PLANS:
We sponsor a noncontributory defined benefit pension plan covering a significant number of our employees
and other postretirement benefit plans that provide medical, dental, life insurance and other benefits for covered
retired employees and their beneficiaries and covered dependents. The benefits are based on years of service and
final average pay or career average pay. Contributions are made in amounts sufficient to meet ERISA funding
requirements while considering tax deductibility. Plan assets are invested in a diversified portfolio of equity and
fixed-income securities and alternative investments.
The accounting results for pension and postretirement benefit costs and obligations are dependent upon
various actuarial assumptions applied in the determination of such amounts. These actuarial assumptions include
the following: discount rates, expected long-term rate of return on plan assets, future compensation increases,
employee turnover, healthcare cost trend rates, expected retirement age, optional form of benefit and mortality.
We review these assumptions for changes annually with our independent actuaries. We consider our discount rate
and expected long-term rate of return on plan assets to be our most critical assumptions.
The discount rate is used to value, on a present value basis, our pension and postretirement benefit
obligation as of the balance sheet date. The same rate is also used in the interest cost component of the pension
and postretirement benefit cost determination for the following year. The measurement date used in the selection
of our discount rate is the balance sheet date. Our discount rate assumption is determined annually with
assistance from our actuaries based on the pattern of expected future benefit payments and the prevailing rates
available on long-term, high quality corporate bonds that approximate the benefit obligation. In making this
determination we consider, among other things, the yields on the Citigroup Pension Discount Curve and
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