Frontier Communications 2008 Annual Report Download - page 84

positively impact the calculation of our effective income tax rate, if our tax positions are sustained, is $33.4
million as of December 31, 2008.
The Company’s policy regarding the classification of interest and penalties is to include these amounts as
a component of income tax expense. This treatment of interest and penalties is consistent with prior periods.
We have recognized in our consolidated statement of operations for the year ended December 31, 2008,
additional interest in the amount of $2.9 million. We are subject to income tax examinations generally for the
years 2005 forward for both our Federal and state filing jurisdictions. We also maintain uncertain tax positions
in various state jurisdictions. Amounts related to uncertain tax positions that may change within the next twelve
months are not material.
The following table sets forth the changes in the Company’s balance of unrecognized tax benefits for the
years ended December 31, 2008 and 2007 in accordance with FIN No. 48:
($ in thousands)
2008 2007
Unrecognized tax benefits—beginning of year .............................. $ 59,717 $30,332
Gross increases—unrecognized tax benefits acquired via acquisitions ........ — 8,977
Gross decreases—prior year tax positions .................................. (2,070) —
Gross increases—current year tax positions. . . .............................. 2,379 20,408
Gross decreases—expired statute of limitations ............................. (11,315) —
Unrecognized tax benefits—end of year .................................... $ 48,711 $59,717
The amounts above exclude $4.2 million of accrued interest that we have recorded and would be payable
should the Company’s tax positions not be sustained.
(19) Net Income Per Common Share:
The reconciliation of the net income per common share calculation for the years ended December 31,
2008, 2007 and 2006 is as follows:
($ in thousands, except per-share amounts)
2008 2007 2006
Net income used for basic and diluted earnings per
common share:
Income from continuing operations............................ $182,660 $214,654 $254,008
Income from discontinued operations.......................... — — 90,547
Total basic net income available for common shareholders . . . . . $182,660 $214,654 $344,555
Effect of conversion of preferred securities—EPPICS .......... 130 152 401
Total diluted net income available for common shareholders . . . $182,790 $214,806 $344,956
Basic earnings per common share:
Weighted-average shares outstanding—basic ................... 317,501 331,037 322,641
Income from continuing operations............................ $ 0.58 $ 0.65 $ 0.79
Income from discontinued operations.......................... — — 0.28
Net income per share available for common shareholders ...... $ 0.58 $ 0.65 $ 1.07
Diluted earnings per common share:
Weighted-average shares outstanding—basic ................... 317,501 331,037 322,641
Effect of dilutive shares ...................................... 435 940 931
Effect of conversion of preferred securities 7—EPPICS ........ 306 401 973
Weighted-average shares outstanding—diluted ................. 318,242 332,378 324,545
Income from continuing operations............................ $ 0.57 $ 0.65 $ 0.78
Income from discontinued operations.......................... — — 0.28
Net income per share available for common shareholders ...... $ 0.57 $ 0.65 $ 1.06
F-33
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements