Frontier Communications 2007 Annual Report Download - page 70

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) ACCOUNTS RECEIVABLE:
The components of accounts receivable at December 31, 2007 and 2006 are as follows:
($ in thousands) 2007 2006
End user ...................................................... $244,592 $ 273,828
Other ........................................................ 22,918 22,446
Less: Allowance for doubtful accounts .............................. (32,748) (108,537)
Accounts receivable, net ..................................... $234,762 $ 187,737
An analysis of the activity in the allowance for doubtful accounts for the years ended December 31, 2007,
2006, and 2005 is as follows:
Additions
Allowance for doubtful accounts
Balance at
beginning of
Period
Balance of
acquired
properties
Charged to
bad debt
expense*
Charged to other
accounts -
Revenue Deductions
Balance at
end of
Period
2005 ..................... $ 35,080 $ — $12,797 $ 1,080 $17,572 $ 31,385
2006 ..................... 31,385 — 20,257 80,003 23,108 108,537
2007 ..................... 108,537 1,499 31,131 (77,898) 30,521 32,748
* Such amounts are included in bad debt expense and for financial reporting purposes are classified as contra-
revenue.
We maintain an allowance for estimated bad debts based on our estimate of collectability of our accounts
receivable. Bad debt expense is recorded as a reduction to revenue.
Our allowance for doubtful accounts increased by approximately $78.3 million in 2006 as a result of carrier
activity that was in dispute. Our allowance for doubtful accounts (and “end user” receivables) declined from
December 31, 2006, primarily as a result of the resolution of our principal carrier dispute. On March 12, 2007,
we entered into a settlement agreement with a carrier pursuant to which we were paid $37.5 million, resulting in
a favorable impact on our revenue in the first quarter of 2007 of $38.7 million.
(7) OTHER INTANGIBLES:
Other intangibles at December 31, 2007 and 2006 are as follows:
($ in thousands) 2007 2006
Customer base ............................................... $1,271,085 $ 994,605
Trade name ................................................. 132,381 122,058
Other intangibles ......................................... 1,403,466 1,116,663
Less: Accumulated amortization ................................. (855,731) (684,310)
Total other intangibles, net ................................. $ 547,735 $ 432,353
Amortization expense was $171.4 million, $126.4 million and $126.4 million for the years ended
December 31, 2007, 2006 and 2005, respectively. Amortization expense for 2007 is comprised of $126.4 million
for amortization associated with our “legacy” properties and $45.0 million for intangible assets (customer base
and trade name) acquired in the Commonwealth and Global Valley acquisitions. As of December 31, 2007,
$263.5 million has been allocated to the customer base (five year life) and $10.3 million to the trade name (five
year life) acquired in the Commonwealth acquisition, and $13.0 million on a preliminary basis to the customer
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