Frontier Communications 2006 Annual Report Download - page 95

Download and view the complete annual report

Please find page 95 of the 2006 Frontier Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 98

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
recovery. Regardless, despite the remote chance that such an event could occur, or that the State of Vermont
could or would allow such an event, assuming that all the members of the VJO defaulted on January 1, 2008 and
remained in default for the duration of the contract (another 8 years), we estimate that our undiscounted purchase
obligation for 2008 through 2015 would be approximately $1.1 billion. In such a scenario the Company would
then own the power and could seek to recover its costs. We would do this by seeking to recover our costs from
the defaulting members and/or reselling the power to other utility providers or the northeast power grid. There is
an active market for the sale of power. We could potentially lose money if we were unable to sell the power at
cost. We caution that we cannot predict with any degree of certainty any potential outcome.
At December 31, 2006, we have outstanding performance letters of credit as follows:
($ in thousands)
Cellco (Verizon Wireless) ............................... $ 375
CNA ................................................ 19,404
State of New York ..................................... 2,993
ELI projects .......................................... 50
Total ............................................ $ 22,822
CNA serves as our agent with respect to general liability claims (auto, workers compensation and other
insured perils of the Company). As our agent, they administer all claims and make payments for claims on our
behalf. We reimburse CNA for such services upon presentation of their invoice. To serve as our agent and make
payments on our behalf, CNA requires that we establish a letter of credit in their favor. CNA could potentially
draw against this letter of credit if we failed to reimburse CNA in accordance with the terms of our agreement.
The value of the letter of credit is reviewed annually and adjusted based on claims history.
None of the above letters of credit restrict our cash balances.
F-47