FairPoint Communications 2004 Annual Report Download - page 35

                
Cash $3,595 $5,603 $5,394 $2,919 $3,991
Property, plant and equipment, net 252,262 266,706 271,690 278,277 272,228
Total assets 819,136 843,068 829,253 875,015 863,547
Total long term debt 810,432 825,560 804,190 907,602 756,812
Preferred shares subject to mandatory
redemption 116,880 96,699 90,307 — —
Total stockholders' equity (deficit) (172,952) (147,953) (146,150) (149,510) 64,378
(1) On January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other Intangible Assets." Pursuant to the requirements of SFAS
No. 142, we ceased amortizing goodwill beginning January 1, 2002, and instead test for goodwill impairment annually. Amortization
expense for goodwill and equity method goodwill was $9,762 and $11,962 in fiscal 2000 and 2001, respectively. Depreciation and
amortization excludes amortization of debt issue costs.
(2) Interest expense includes amortization of debt issue costs aggregating $2,362, $4,018, $3,664, $4,171 and $4,603 for the fiscal
years ended December 31, 2000, 2001, 2002, 2003 and 2004. We prospectively adopted the provisions of SFAS No. 150, "Accounting
for Certain Financial Instruments with Characteristics of Liabilities and Equity," effective July 1, 2003. SFAS No. 150 requires us to
classify as a long-term liability our series A preferred stock and to reclassify dividends and accretion from the series A preferred stock
as interest expense. Such stock is now described as "Preferred Shares Subject to Mandatory Redemption" in the balance sheet and
dividends and accretion on these shares are now included in pre-tax income whereas previously they were presented as a reduction to
equity (a dividend), and, therefore, a reduction of net income available to common stockholders. For the years ended December 31,
2004 and 2003, interest expense includes $20,181 and $9,049, respectively, related to dividends and accretion on preferred shares
subject to mandatory redemption.
(3) On January 1, 2001, we adopted the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Certain Hedging
Activities," as amended by SFAS No. 138. On the date of adoption, we recorded a cumulative adjustment of $4,664 in accumulated
other comprehensive income for the fair value of interest rate swaps. Because the interest rate swaps did not qualify as accounting
hedges under SFAS No. 133, the change in fair value of the interest rate swaps were recorded as non operating gains or losses,
which we classify in other income (expense). We also recorded other income (expense) in 2001, 2002 and 2003 for the amortization of
the transition adjustment of the swaps initially recognized in accumulated other comprehensive income. In the second quarter of
2002, we adopted SFAS No. 145 "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and
Technical Corrections." This statement eliminates the requirement that gains and losses from the extinguishment of debt be required
to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. In 2003, other income (expense)
includes a $3,465 gain on the extinguishment of debt and a $4,967 loss for the write-off of debt issue costs related to this
extinguishment of debt. In 2004, other income (expense) includes a $5,951 loss for the write-off of debt issuance and offering costs
associated with an abandoned offering of Income Deposit Securities.
(4) In connection with the offering, we effected a 5.2773714 for 1 reverse stock split of our common stock. All share and per share
amounts related to our common stock have been restated to reflect the reverse stock split.
(5) EBITDA means net income (loss) before income (loss) from discontinued operations, interest expense, income taxes, and
depreciation and amortization. We believe EBITDA is useful to investors because EBITDA is commonly used in the communications
industry to analyze companies on the basis of operating performance, liquidity and leverage. We believe EBITDA allows a
standardized comparison between companies in the industry, while minimizing the differences from depreciation policies, financial
leverage and tax strategies. We also believe that EBITDA is useful as a means to evaluate our ability to pay dividends. While providing
useful information, EBITDA should not be considered in isolation or as a substitute for consolidated statement of operations and cash
flows data prepared in accordance with accounting principles generally accepted in the United States of America. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."
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