Frontier Communications 2007 Annual Report Download - page 11

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
will continue to intensify in 2008 across all products and in all of our markets, and that trends in changing
consumer behavior will continue. Our business experienced erosion in access lines and switched access minutes
of use in 2007 as a result of competition and these trends. Competition in our markets and these trends may result
in reduced revenues in 2008.
We are responding to this competitive environment with new product offers and by bundling products and
services together and making these services subject to an end-user contract term commitment (called a Price
Protection Plan). Revenues from data services and packages continue to increase as a percentage of our total
revenues. There will continue to be price and margin pressures in our business that may result in less revenues
and profitability.
In addition, the factors, that could affect our revenues and profitability, could also result in more
bankruptcies in the sector and therefore affect our ability to collect money owed to us by bankrupt carriers.
DIVESTITURE OF ELECTRIC LIGHTWAVE, LLC
In 2006, we sold our CLEC business, Electric Lightwave, LLC (ELI) for $255.3 million (including the sale
of associated real estate) in cash plus the assumption of approximately $4.0 million in capital lease obligations.
We recognized a pre-tax gain on 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 was approximately $5.0 million due to the
utilization of existing tax net operating losses on both the federal and state level.
SEGMENT INFORMATION
With the 2006 sale of our CLEC (ELI), we currently operate in only one reportable segment.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
We have no foreign operations.
GENERAL
Order backlog is not a significant consideration in our business. We have no material contracts or
subcontracts that may be subject to renegotiation of profits or termination at the election of the Federal
government. We hold no patents, licenses or concessions that are material. We have applied for a patent for
certain technology used in our “Frontier 1” product.
EMPLOYEES
As of December 31, 2007, we had approximately 5,900 employees. Approximately 3,100 of our employees
are affiliated with a union. The number of union employees covered by agreements set to expire during 2008 is
650. We consider our relations with our employees to be good.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act of 1934. Accordingly, we
file periodic reports, proxy statements and other information with the Securities and Exchange Commission
(SEC). Such reports, proxy statements and other information may be obtained by visiting the Public Reference
Room of the SEC at 100 F Street, NE, Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information
statements and other information regarding the Company and other issuers that file electronically. Material filed
by us can also be inspected at the offices of the New York Stock Exchange, Inc. (NYSE), 20 Broad Street, New
York, NY 10005, on which our common stock is listed. On June 8, 2007, our Chief Executive Officer submitted
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