Frontier Communications 2006 Annual Report Download - page 92

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The amounts recognized as a component of accumulated comprehensive income for the year ended
December 31, 2006 are as follows:
($ in thousands) Pension Plan OPEB
Net actuarial loss recognized during year .................... $ (11,871) $ (4,678)
Prior service cost recognized during year .................... 255 7,589
Net actuarial loss (gain) occurring during year ................ (62,800) 2,222
Prior service cost (credit) occurring during year ............... (116) —
Other adjustments ...................................... 22,128 (18,836)
Net amount recognized in comprehensive income for the year . . . $ (52,404) $ (13,703)
401(k) Savings Plans
We sponsor an employee retirement savings plan under section 401(k) of the Internal Revenue Code. The
plan covers substantially all full-time employees. Under the plan, we provide matching and certain profit-sharing
contributions. Employer contributions were $4,705,000, $6,665,000 and $7,931,000 for 2006, 2005 and 2004,
respectively.
(25) COMMITMENTS AND CONTINGENCIES:
The City of Bangor, Maine, filed suit against us on November 22, 2002, in the U.S. District Court for the
District of Maine (City of Bangor v. Citizens Communications Company, Civ. Action No. 02-183-B-S). The City
alleged, among other things, that we are responsible for the costs of cleaning up environmental contamination
alleged to have resulted from the operation of a manufactured gas plant owned by Bangor Gas Company from
1852-1948 and by us from 1948-1963. In acquiring the operation in 1948 we acquired the stock of Bangor Gas
Company and merged it into us. The City alleged the existence of extensive contamination of the Penobscot
River and initially asserted that money damages and other relief at issue in the lawsuit could exceed $50,000,000.
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
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