Frontier Communications 2010 Annual Report Download - page 37

that imposed by the General Corporation Law of the State of Delaware. However, we would be restricted under
the Credit Agreement and the Letter of Credit Agreement from declaring dividends if an event of default had
occurred and was continuing at the time or would result from the dividend declaration.
Our $200.0 million term loan facility with the Rural Telephone Finance Cooperative (RTFC), which
matures in 2011, the 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 (including restricted cash) 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.
The Credit Facility, the Letter of Credit Facility 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, 2010, we were in compliance with all of our debt and credit facility covenants.
Share Repurchase Programs
There were no shares repurchased during 2010 and 2009 under share repurchase programs. During 2008,
we repurchased 17,778,300 shares of our common stock at an aggregate cost of $200.0 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. Effective July
1, 2010, our Board of Directors set the annual cash dividend rate at $0.75 per share, subject to applicable law
and within the discretion of our Board of Directors.
Off-Balance Sheet Arrangements
We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships
with unconsolidated entities that would be expected to have a material current or future effect upon our
financial statements.
Future Commitments
A summary of our future contractual obligations and commercial commitments as of December 31, 2010
is as follows:
Contractual Obligations:
($ in thousands) Total 2011 2012-2013 2014-2015 Thereafter
Payment due by period
Long-term debt obligations, excluding
interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,326,994 $ 280,002 $ 890,221 $1,401,066 $5,755,705
Interest on long-term debt . . . . . . . . . . . . . 7,098,592 652,903 1,255,196 1,082,483 4,108,010
Operating lease obligations . . . . . . . . . . . . 119,180 68,087 31,572 12,993 6,528
Purchase obligations . . . . . . . . . . . . . . . . . . 109,052 45,722 62,882 448 —
Liability for uncertain tax positions . . . . 54,864 26,674 24,466 3,724 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,708,682 $1,073,388 $2,264,337 $2,500,714 $9,870,243
At December 31, 2010, we have outstanding performance letters of credit totaling $229.9 million.
36
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES