Frontier Communications 2009 Annual Report Download - page 40

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Our $200.0 million term loan facility with the Rural Telephone Finance Cooperative (RTFC), which
matures in 2011, our $250.0 million credit facility, and our $150.0 million and $135.0 million senior unsecured
term loans, each contain a maximum leverage ratio covenant. Under those covenants, we are required to
maintain a ratio of (i) total indebtedness minus cash and cash equivalents in excess of $50.0 million to (ii)
consolidated adjusted EBITDA (as defined in the agreements) over the last four quarters no greater than 4.50
to 1.
Our credit facilities and certain indentures for our senior unsecured debt obligations limit our ability to
create liens or merge or consolidate with other companies and our subsidiaries’ ability to borrow funds, subject
to important exceptions and qualifications.
As of December 31, 2009, we were in compliance with all of our debt and credit facility covenants.
Proceeds from the Sale of Equity Securities
We receive proceeds from the issuance of our common stock upon the exercise of options pursuant to our
stock-based compensation plans. For the years ended December 31, 2009, 2008 and 2007, we received
approximately $0.8 million, $1.4 million and $13.8 million, respectively, upon the exercise of outstanding stock
options.
Share Repurchase Programs
There were no shares repurchased during 2009 under a share repurchase program.
During 2008, we repurchased 17,778,300 shares of our common stock at an aggregate cost of $200.0
million. During 2007, we repurchased 17,279,600 shares of our common stock at an aggregate cost of $250.0
million.
Dividends
We intend to pay regular quarterly dividends. Our ability to fund a regular quarterly dividend will be
impacted by our ability to generate cash from operations. The declarations and payment of future dividends will
be at the discretion of our Board of Directors, and will depend upon many factors, including our financial
condition, results of operations, growth prospects, funding requirements, applicable law, restrictions in
agreements governing our indebtedness and other factors our Board of Directors deems relevant. We have
announced that after the closing of the Verizon Transaction we intend to reduce our annual cash dividend from
$1.00 per share to $0.75 per share, subject to applicable law and within the discretion of our Board of
Directors, as discussed above. Until consummation of the Verizon Transaction or termination of the merger
agreement, we are also restricted from increasing the amount of our dividends by the terms of our merger
agreement with Verizon.
Off-Balance Sheet Arrangements
We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships
with unconsolidated entities that would be expected to have a material current or future effect upon our
financial statements.
38
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES