FairPoint Communications 2004 Annual Report Download - page 118

(b) Rural Local Exchange Carrier Operations
On September 30, 2003, the Company completed the sale of all of the capital stock owned by Services of Union
Telephone Company of Hartford, Armour Independent Telephone Co., WMW Cable TV Co., and Kadoka Telephone Co. to
Golden West Telephone Properties, Inc. (Golden West). The sale was completed in accordance with the terms of the purchase
agreement, dated as of May 9, 2003, with Golden West. The Company received $24.2 million in sales proceeds. The South
Dakota properties were geographically isolated from other Company properties making it increasingly difficult to realize
additional operating efficiencies. These properties were adjacent to Golden West's operations and offered Golden West
numerous operational synergies. The proceeds from this divestiture were used to fund acquisitions completed in 2003. The
operations of these companies are presented as discontinued operations.
Income from the South Dakota divestiture operations consists of the following (dollars in thousands):









Revenue $4,028 5,299
Income from discontinued operations 1,929 2,433
The Company recorded a gain on disposal of the South Dakota companies of $7.7 million.

The Company has entered into financial advisory agreements with certain equity investors, pursuant to which the equity
investors provide certain consulting and advisory services related, but not limited to, equity financings and strategic planning. The
Company paid $1.0 million for each of the years ended December 31, 2004, 2003, and 2002 in such fees to the equity investors and
this expense is classified within operating expenses. The agreements also provide that the Company will reimburse the equity
investors for travel relating to the Company's board of directors meetings. The Company reimbursed the equity investors $123,000,
$21,000, and $43,000 for the years ended December 31, 2004, 2003, and 2002, respectively, for travel and related expenses. Per the
financial advisory agreements, the advisory and consulting fees to be paid to each of the principal shareholders through December 31,
2006 is $0.5 million per annum. In January 2000, the Company entered into an agreement whereby the Company must obtain
consent from its two principal shareholders in order to incur debt in excess of $5.0 million.
In 2004, a law firm in which a partner of such law firm was a director of the Company through February 8, 2005 was paid
$3.5 million, of which $0.1 million was for general counsel services and $3.4 million was for services related to financing and equity
offering costs. In 2003, this same law firm was paid $1.3 million, of which $0.4 million was for general counsel services and
$0.9 million was for services related to financings. In 2002, this same law firm was paid $0.8 million, of which $0.3 million was for
general counsel services, $0.3 million was for services related to the discontinuance of the competitive communications operations,
and $0.2 million was for services related to acquisitions.
114