FairPoint Communications 2004 Annual Report Download - page 26

We believe that in order to fund dividend payments to holders of our common stock at the level described above solely from cash
generated by our business, our Adjusted EBITDA for the four fiscal quarters ending March 31, 2006 would need to be at least $120.7 million
and our average Adjusted EBITDA with respect to each such quarter would need to be at least $30.2 million. Based on a review and analysis
conducted by our management and our board of directors as described under "—Assumptions and Considerations" below, we believe that
our Adjusted EBITDA for the four fiscal quarters ending March 31, 2006 will be at least $120.7 million and our average Adjusted EBITDA
with respect to each such quarter will be at least $30.2 million. If our Adjusted EBITDA with respect to such periods were at or above these
levels, we would be able to make the full targeted dividend payments on our common stock and we would be permitted to make such
payments under the leverage ratio and restricted payment covenants in our credit facility.
The table below sets forth our calculation that a minimum of $120.7 million of Adjusted EBITDA would be sufficient to fund dividend
payments at the targeted levels on our common stock for the four fiscal quarters ending March 31, 2006 (excluding any dividends payable
with respect to 115,733 shares of our common stock issuable upon the exercise of fully vested, exercisable and in-the-money stock options
and 473,716 shares of restricted stock awarded under our 2005 stock incentive plan, which shares will begin to vest on April 1, 2006 and will
not be entitled to receive dividends for any period prior to April 1, 2006) and would satisfy the leverage ratio and restricted payment covenants
in our credit facility.
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Minimum Adjusted EBITDA(1)(2) $120,662
Less:
Estimated cash interest expense on credit facility(3) 33,738
Estimated cash interest expense on other debt 453
Estimated capital expenditures(4) 31,000
Estimated cash income taxes(5) 650
Estimated cash available to pay dividends on outstanding common stock(6) $54,821
Estimated leverage ratio derived from above(7) 4.9x
The table below sets forth for the year ended December 31, 2004 the amount of cash that would have been available for distributions to
our stockholders subject to the assumptions described in such table. The information in the table below should be read in conjunction with
our consolidated historical financial statements and notes thereto contained elsewhere in this Annual Report.
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