Frontier Communications 2007 Annual Report Download - page 83

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
considered equity-based awards is based on the market value of our common stock at the date of grant.
Compensation expense for stock units that are considered liability-based awards is based on the market value of
our common stock at the end of each period. For awards granted prior to 1999, a director could elect to be paid in
stock options. Generally, compensation cost was not recorded because the options were granted at the fair market
value of our common stock on the grant date under APB No. 25 and related interpretations.
We had also maintained a Non-Employee Directors’ Retirement Plan providing for the payment of specified
sums annually to our non-employee directors, or their designated beneficiaries, starting at the director’s
retirement, death or termination of directorship. In 1999, we terminated this Plan. As of December 31, 2007, the
liability for such payments was reduced to $0 as the obligation was fully settled during the second quarter of
2007.
(18) INCOME TAXES:
The following is a reconciliation of the provision for income taxes for continuing operations computed at
Federal statutory rates to the effective rates for the years ended December 31, 2007, 2006 and 2005:
2007 2006 2005
Consolidated tax provision at federal statutory rate ............................ 35.0 % 35.0 % 35.0 %
State income tax provisions, net of federal income tax benefit ................... 1.8% 2.1% 1.6%
Tax reserve adjustment .................................................. 1.0% 0.2% (8.2)%
All other, net .......................................................... (0.4)% (2.4)% 0.2 %
37.4 % 34.9 % 28.6 %
The components of the net deferred income tax liability (asset) at December 31 are as follows:
($ in thousands) 2007 2006
Deferred income tax liabilities:
Property, plant and equipment basis differences .................. $ 624,426 $ 547,726
Intangibles ............................................... 275,102 175,991
Other, net ................................................ 10,431 9,675
909,959 733,392
Deferred income tax assets:
SFAS No. 158 pension/OPEB liability ......................... 58,540 51,660
Tax operating loss carryforward .............................. 83,203 81,515
Alternate minimum tax credit carryforward ..................... 26,658 54,834
Employee benefits ......................................... 67,813 70,013
State tax liability .......................................... 10,361 —
Other, net ................................................ 33,514 24,039
280,089 282,061
Less: Valuation allowance .................................. (59,566) (49,679)
Net deferred income tax asset ................................ 220,523 232,382
Net deferred income tax liability ............................ $ 689,436 $ 501,010
Deferred tax assets and liabilities are reflected in the following captions
on the balance sheet:
Deferred income taxes ...................................... $ 711,645 $ 514,130
Other current assets ........................................ (22,209) (13,120)
Net deferred income tax liability ............................ $ 689,436 $ 501,010
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