FairPoint Communications 2004 Annual Report Download - page 534

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Long-term debt consists of:
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RTFC notes—variable rate $513,032
RTFC notes—variable rate 146,308
Total long-term debt 659,340
Less current portion (659,340)
$ —
The mortgage notes outstanding at December 31, 2001, are to be repaid in equal quarterly installments covering principal and interest
beginning two to five years after date of issue and expiring by 2002. The interest rate on the debt is a variable rate established periodically by
the RTFC. The rate at December 31, 2001, was 5.3%.
Substantially all assets of the Partnership are pledged as security under the mortgage and security agreement with the RTFC.
The mortgage and security and loan agreements underlying the RTFC notes contain certain restrictions on Partnership distributions,
return of partner capital contributions, and investment in, or loans to others. In 2000, the Partnership received a waiver from the lender to
make partnership distributions. Also included in the loan agreement is a provision which requires the partners to infuse, on an ongoing
basis, the greater of sufficient amounts of equity to accommodate any cash shortfalls or certain specified amounts. Further, the Partnership is
required, under the loan agreement, to achieve a debt service coverage ratio of not less than 1.25.
Of the funds available under the RTFC approved loans, including amendments, all amounts were advanced as of December 31, 2002.
Cash paid for interest net of amounts capitalized for 2002, 2001, and 2000, totaled $25,021, $92,928, and $158,095, respectively.
The fair value of the partnership debt is estimated based on the discounted value of future cash flows expected to be paid using current
rates of borrowing for similar types of debt. The fair value of debt approximates carrying value at December 31, 2002 and 2001.
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MC, as operating and network partner, performed certain technical, professional, and administrative services on behalf of the
Partnership. In accordance with the Partnership Agreement, MC is reimbursed by the Partnership for the Partnership's share of these costs.
MC allocates these costs to the various cellular systems to which they provide service based on each entity's customer access lines.
Reimbursed expenses in 2002, 2001, and 2000 were $2,224,397, $1,944,325, and $1,725,222, respectively. These reimbursed expenses
are classified and presented under the Operating Expenses category to which each relates.
In addition, $276,062, $252,406, and $223,877 were paid to an affiliate of MC for contract labor, interest, and other services in 2002,
2001, and 2000, respectively.
Certain cellular equipment sold to subscribers by the Partnership is provided to the Partnership by a related entity at cost. Cost of goods
sold is recorded by the Partnership at the time of sale.