Frontier Communications 2007 Annual Report Download - page 77

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(14) OTHER INCOME(LOSS) NET:
The components of other income (loss), net for the years ended December 31, 2007, 2006 and 2005 are as
follows:
($ in thousands) 2007 2006 2005
Bridge loan fee ..................................................... $ (4,069) $ — $ —
Premium on debt repurchases ......................................... (18,217) — —
Legal contingency .................................................. — (1,000) (7,000)
Gain on expiration/settlement of customer advances ........................ 2,031 3,539 681
Loss on exchange of debt ............................................. — (2,433) (3,175)
Gain on forward rate agreements ....................................... — 430 1,851
Other, net ......................................................... 2,422 2,471 8,399
Total other income (loss), net ...................................... $(17,833) $ 3,007 $ 756
During the first quarter of 2007, we incurred $4.1 million of fees associated with a bridge loan facility. In
2007, we retired certain debt and recognized a pre-tax loss of $18.2 million on the early extinguishment of debt
at a premium, mainly for the 7.625% Senior Notes due 2008. During 2006 and 2005, we recorded expense in
connection with the Bangor, Maine legal matter. During 2007, 2006 and 2005, we recognized income in
connection with certain retained liabilities, that have terminated, associated with customer advances for
construction from our disposed water properties. In connection with our exchange of debt during the first quarter
of 2006 and second quarter of 2005, we recognized a non-cash, pre-tax loss. 2006 and 2005 also include a gain
for the changes in fair value of our forward rate agreements.
Pre-tax gains (losses) in connection with the following transactions were also recorded in other income
(loss), net during 2005:
On February 1, 2005, we sold shares of Prudential Financial, Inc. for approximately $1.1 million in cash,
and we recognized a pre-tax gain of approximately $493,000.
In June 2005, we sold for cash our interests in certain key man life insurance policies on the lives of
Leonard Tow, our former Chairman and Chief Executive Officer, and his wife, a former director. The cash
surrender value of the policies purchased by Dr. Tow totaled approximately $24.2 million, and we recognized a
pre-tax gain of approximately $457,000.
During 2005, we sold shares of Global Crossing Limited for approximately $1.1 million in cash, and we
recognized a pre-tax gain for the same amount.
(15) COMPANY OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES:
As of December 31, 2007, we have only $4.0 million of EPPICS related debt outstanding to third parties.
The following disclosure provides the history regarding this issue.
In 1996, our consolidated wholly-owned subsidiary, Citizens Utilities Trust (the Trust), issued, in an
underwritten public offering, 4,025,000 shares of EPPICS, representing preferred undivided interests in the assets
of the Trust, with a liquidation preference of $50 per security (for a total liquidation amount of $201.3 million).
These securities have an adjusted conversion price of $11.46 per share of our common stock. The conversion
price was reduced from $13.30 to $11.46 during the third quarter of 2004 as a result of the $2.00 per share of
common stock special, non-recurring dividend. The proceeds from the issuance of the Trust Convertible
Preferred Securities and a Company capital contribution were used to purchase $207.5 million aggregate
liquidation amount of 5% Partnership Convertible Preferred Securities due 2036 from another wholly-owned
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