Frontier Communications 2008 Annual Report Download - page 85

Stock Options
For the years ended December 31, 2008, 2007 and 2006, options to purchase shares of 2,647,000 (at
exercise prices ranging from $11.15 to $18.46), 1,804,000 (at exercise prices ranging from $15.02 to $18.46),
and 1,917,000 (at exercise prices ranging from $13.45 to $18.46), respectively, issuable under employee
compensation plans were excluded from the computation of diluted earnings per share (EPS) for those periods
because the exercise prices were greater than the average market price of our common stock and, therefore, the
effect would be antidilutive. In calculating diluted EPS we apply the treasury stock method and include future
unearned compensation as part of the assumed proceeds.
In addition, for the years ended December 31, 2008, 2007 and 2006, restricted stock awards of 1,702,000,
1,209,000 and 1,174,000 shares, respectively, are excluded from our basic weighted average shares outstanding
and included in our dilutive shares until the shares are no longer subject to restriction after the satisfaction of
all specified conditions.
EPPICS
There were no outstanding EPPICS at December 31, 2008. At December 31, 2007, we had 80,307 shares
of potentially dilutive EPPICS, which were convertible into our common stock at a 4.3615 to 1 ratio at an
exercise price of $11.46 per share. If all EPPICS that remained outstanding as of December 31, 2007 were
converted, we would have issued approximately 350,259 shares of our common stock. As a result of the
September 2004 special, non-recurring dividend, the EPPICS exercise price for conversion into common stock
was reduced from $13.30 to $11.46. These securities have been included in the diluted income per common
share calculation for the periods ended December 31, 2007 and 2006.
Stock Units
At December 31, 2008, 2007 and 2006, we had 324,806, 225,427 and 319,423 stock units, respectively,
issued under the Director Plans and the Non-Employee Directors’ Retirement Plan. These securities have not
been included in the diluted income per share of common stock calculation because their inclusion would have
had an antidilutive effect.
Share Repurchase Programs
In February 2008, our Board of Directors authorized us to repurchase up to $200.0 million of our common
stock in public or private transactions over the following twelve-month period. This share repurchase program
commenced on March 4, 2008 and was completed on October 3, 2008. During 2008, we repurchased
approximately 17.8 million shares of our common stock at an aggregate cost of $200.0 million.
In February 2007, our Board of Directors authorized us to repurchase up to $250.0 million of our common
stock in public or private transactions over the following twelve-month period. This share repurchase program
commenced on March 19, 2007 and was completed on October 15, 2007. During 2007, we repurchased
approximately 17.3 million shares of our common stock at an aggregate cost of $250.0 million.
In February 2006, our Board of Directors authorized us to repurchase up to $300.0 million of our common
stock in public or private transactions over the following twelve-month period. This share repurchase program
commenced on March 6, 2006. During 2006, we repurchased approximately 10.2 million shares of our common
stock at an aggregate cost of $135.2 million. No further purchases were made prior to expiration of this
authorization.
(20) Comprehensive Income:
Comprehensive income consists of net income and other gains and losses affecting shareholders’
investment and SFAS No. 158 pension/OPEB liabilities that, under GAAP, are excluded from net income.
F-34
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements