FairPoint Communications 2004 Annual Report Download - page 47

credit facility, to arrange additional funding through the sale of public or private debt and/or equity securities, or obtain additional senior bank
debt.
For the years ended December 31, 2004, 2003 and 2002, cash provided by operating activities of continuing operations was
$46.0 million, $32.8 million and $55.6 million, respectively.
Our ability to service our indebtedness depends on our ability to generate cash in the future. We are not required to make any scheduled
amortization payments under our credit facility's term loan facility which matures in February 2012. We will need to refinance all or a portion
of our indebtedness on or before maturity. We may not be able to refinance our indebtedness on commercially reasonable terms or at all. If
we were unable to renew or refinance our credit facility, our failure to repay all amounts due on the maturity date would cause a default under
our credit facility. In addition, borrowings under our credit facility bear interest at variable interest rates. In connection with the offering, we
entered into three interest rate swap agreements which fixed the interest rate on approximately $130.0 million of the term loans under our
credit facility at 6.11% until December 31, 2009, fixed the interest rate on approximately $130.0 million of the term loans under our credit
facility at 5.98% until December 31, 2008 and fixed the interest rate on approximately $130.0 million of the term loans under our credit
facility at 5.76% until December 31, 2007. After these interest rate swap agreements expire, our annual debt service obligations on such
portion of the term loans will vary from year to year unless we enter into a new interest rate swap or purchase an interest rate cap or other
interest rate hedge. An increase of ten percent in the annual interest rate applicable to borrowings under the term loan facility of our credit
facility would result in an increase of approximately $0.9 million in our annual cash interest expense, and a corresponding decrease in cash
available to pay dividends on our common stock. If we choose to enter into a new interest rate swap or purchase an interest rate cap or other
interest rate hedge in the future, the amount of cash available to pay dividends on our common stock may decrease. However, to the extent
interest rates increase in the future, we may not be able to enter into a new interest rate swap or to purchase an interest rate cap or other
interest rate hedge on acceptable terms.
Based on the dividend policy with respect to our common stock, we may not have any significant cash available to meet any
unanticipated liquidity requirements, other than available borrowings, if any, under our new revolving facility. As a result, we may not retain
a sufficient amount of cash to finance growth opportunities, including acquisitions, or unanticipated capital expenditures or to fund our
operations. If we do not have sufficient cash for these purposes, our financial condition and our business will suffer. However, our board of
directors may, in its discretion, amend or repeal the dividend policy to decrease the level of dividends provided for or discontinue entirely the
payment of dividends.
We used net proceeds received from the offering, together with approximately $566.0 million of borrowings under the term loan facility of
our credit facility, to, among other things, repay all outstanding loans under our old credit facility, repurchase all of our series A preferred stock
and consummate tender offers and consent solicitations in respect of our outstanding 91/2% notes, floating rate notes, 121/2% notes and
117/8% notes. On March 10, 2005, we redeemed the remaining outstanding 91/2% notes and floating rate notes. We intend to redeem the
remaining outstanding 121/2% notes on May 1, 2005 with borrowings under the delayed draw facility of our credit facility.
Net cash used in investing activities from continuing operations was $21.0 million, $54.0 million and $30.3 million for the years ended
December 31, 2004, 2003 and 2002, respectively. These cash flows primarily reflect capital expenditures of $36.5 million, $33.6 million and
$38.8 million for the years ended December 31, 2004, 2003 and 2002, respectively, and acquisitions of telephone properties, net of cash
acquired of $33.1 million for the year ended December 31, 2003. There were no acquisitions during 2004 or 2002.
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