Frontier Communications 2010 Annual Report Download - page 87

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The following table sets forth the changes in the Company’s balance of unrecognized tax benefits for the
years ended December 31, 2010 and 2009:
($ in thousands) 2010 2009
Unrecognized tax benefits—beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $56,860 $48,711
Gross decreases—prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,442) (3,133)
Gross increases—current year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,216 12,412
Gross decreases—expired statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,454) (1,130)
Unrecognized tax benefits—end of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $49,180 $56,860
The amounts above exclude $5.7 million and $5.0 million of accrued interest as of December 31, 2010 and
2009, respectively, that we have recorded and would be payable should the Company’s tax positions not be
sustained.
(14) Net Income Per Common Share:
The reconciliation of the net income per common share calculation for the years ended December 31,
2010, 2009 and 2008 is as follows:
($ and shares in thousands, except per-share amounts) 2010 2009 2008
Net income used for basic and diluted earnings per
common share:
Net income attributable to common shareholders of Frontier. . . . $152,673 $120,783 $182,660
Less: Dividends allocated to unvested restricted stock awards. . . (3,072) (2,248) (1,744)
Total basic net income attributable to common shareholders of
Frontier ................................................... 149,601 118,535 180,916
Effect of conversion of preferred securities—EPPICS . . . . . . . . . . — — 130
Total diluted net income attributable to common shareholders
of Frontier ................................................ $149,601 $118,535 $181,046
Basic earnings per common share:
Total weighted-average shares and unvested restricted stock
awards outstanding—basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653,248 312,183 319,161
Less: Weighted-average unvested restricted stock awards . . . . . . . (3,420) (2,162) (1,660)
Total weighted-average shares outstanding—basic. . . . . . . . . . . . . . 649,828 310,021 317,501
Net income per share attributable to common shareholders of
Frontier ................................................... $ 0.23 $ 0.38 $ 0.57
Diluted earnings per common share:
Total weighted-average shares outstanding—basic. . . . . . . . . . . . . . 649,828 310,021 317,501
Effect of dilutive shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,163 92 435
Effect of conversion of preferred securities—EPPICS . . . . . . . . . . — — 306
Total weighted-average shares outstanding—diluted . . . . . . . . . . . . 650,991 310,113 318,242
Net income per share attributable to common shareholders of
Frontier ................................................... $ 0.23 $ 0.38 $ 0.57
Stock Options
For the years ended December 31, 2010, 2009 and 2008, options to purchase 1,116,000 shares (at exercise
prices ranging from $10.44 to $13.95), 3,551,000 shares (at exercise prices ranging from $8.19 to $18.46) and
2,647,000 shares (at exercise prices ranging from $11.15 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
F-28
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements