Frontier Communications 2007 Annual Report Download - page 29

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Covenants
The terms and conditions contained in our indentures and credit facility agreements include the timely
payment of principal and interest when due, the maintenance of our corporate existence, keeping proper books
and records in accordance with United States Generally Accepted Accounting Principles (U.S. GAAP),
restrictions on the allowance of liens on our assets, and restrictions on asset sales and transfers, mergers and other
changes in corporate control. We currently have no restrictions on the payment of dividends either by contract,
rule or regulation, other than those imposed by the Delaware General Corporate laws.
Our $200.0 million term loan facility with the Rural Telephone Finance Cooperative (RTFC) contains a
maximum leverage ratio covenant. Under the leverage ratio covenant, we are required to maintain a ratio of
(i) total indebtedness minus cash and cash equivalents in excess of $50.0 million to (ii) consolidated adjusted
EBITDA (as defined in the agreement) over the last four quarters no greater than 4.00 to 1.
Our $250.0 million credit facility and our $150.0 million senior unsecured term loan contain a maximum
leverage ratio covenant. Under the leverage ratio covenant, we are required to maintain a ratio of (i) total
indebtedness minus cash and cash equivalents in excess of $50.0 million to (ii) consolidated adjusted EBITDA
(as defined in the agreements) over the last four quarters no greater than 4.50 to 1. Although both facilities are
unsecured, they will be equally and ratably secured by certain liens and equally and ratably guaranteed by certain
of our subsidiaries if we issue debt that is secured or guaranteed.
Certain indentures for our senior unsecured debt obligations limit our ability to create liens or merge or
consolidate with other companies and our subsidiaries’ ability to borrow funds, subject to important exceptions
and qualifications.
We are in compliance with all of our debt and credit facility covenants.
Proceeds from the Sale of Equity Securities
We receive proceeds from the issuance of our common stock upon the exercise of options pursuant to our
stock-based compensation plans. For the years ended December 31, 2007 and 2006, we received approximately
$13.8 million and $27.2 million, respectively, upon the exercise of outstanding stock options.
Share Repurchase Programs
In February 2008, our Board of Directors authorized us to repurchase up to $200.0 million of our common
stock in public or private transactions over the following twelve month period.
In February 2007, our Board of Directors authorized us to repurchase up to $250.0 million of our common
stock in public or private transactions over the following twelve month period. This share repurchase program
commenced on March 19, 2007, and was completed on October 15, 2007. During 2007, we repurchased
17,279,600 shares of our common stock at an aggregate cost of $250.0 million.
In February 2006, our Board of Directors authorized us to repurchase up to $300.0 million of our common
stock in public or private transactions over the following twelve-month period. This share repurchase program
commenced on March 6, 2006. During 2006, we repurchased 10,199,900 shares of our common stock at an
aggregate cost of approximately $135.2 million. No further purchases were made prior to expiration of this
authorization.
On May 25, 2005, our Board of Directors authorized us to repurchase up to $250.0 million of our common
stock. This share repurchase program commenced on June 13, 2005. During 2005, we completed the repurchase
program and had repurchased a total of 18,775,200 shares of our common stock at an aggregate cost of $250.0
million.
25