Frontier Communications 2007 Annual Report Download - page 71

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
base (five year life) acquired in the Global Valley acquisition. Amortization expense, based on our estimate of
useful lives, is estimated to be $183.7 million in 2008, $115.0 million in 2009, and $57.4 million annually
thereafter through 2012.
(8) DISCONTINUED OPERATIONS:
(a) Electric Lightwave
On July 31, 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 $5.0
million due to the utilization of existing tax net operating losses on both the Federal and state level.
In accordance with SFAS No. 144, any component of our business that we dispose of, or classify as held for
sale, that has operations and cash flows clearly distinguishable from continuing operations for financial reporting
purposes, and that will be eliminated from the ongoing operations, should be classified as discontinued
operations. Accordingly, we have classified the results of operations of ELI as discontinued operations in our
consolidated statements of operations.
We ceased to record depreciation expense for ELI effective February 2006.
Summarized financial information for ELI is set forth below:
($ in thousands) For the years ended December 31,
2006 2005
Revenue ......................................... $100,612 $159,161
Operating income .................................. $ 27,882 $ 21,480
Income taxes ...................................... $ 11,583 $ 9,070
Net income ....................................... $ 18,912 $ 12,226
Gain on disposal of ELI, net of tax ..................... $ 71,635 $ —
(b) Conference Call USA
In February 2005, we entered into a definitive agreement to sell Conference-Call USA, LLC (CCUSA), our
conferencing services business. On March 15, 2005, we completed the sale for $43.6 million in cash. The pre-tax
gain on the sale of CCUSA was $14.1 million. Our after-tax gain was approximately $1.2 million. The book
income taxes recorded upon sale are primarily attributable to a low tax basis in the assets sold.
In accordance with SFAS No. 144, any component of our business that we dispose of, or classify as held for
sale, that has operations and cash flows clearly distinguishable from continuing operations for financial reporting
purposes, and that will be eliminated from the ongoing operations, should be classified as discontinued
operations. Accordingly, we have classified the results of operations of CCUSA as discontinued operations in our
consolidated statements of operations.
The Company had no outstanding debt specifically identified with CCUSA and therefore no interest
expense was allocated to discontinued operations. In addition, we ceased to record depreciation expense effective
February 16, 2005.
Summarized financial information for CCUSA is set forth below:
($ in thousands) For the year ended December 31, 2005
Revenue ...................................... $4,607
Operating income ............................... $1,489
Income taxes ................................... $ 449
Net income .................................... $1,040
Gain on disposal of CCUSA, net of tax .............. $1,167
F-21