FairPoint Communications 2006 Annual Report Download - page 80

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Chouteau Cellular Telephone Company (a limited partnership in which the Company holds a 1.0% general partner interest and a 32.67% limited partner
interest) (Chouteau) is an investment vehicle that holds a 25% member interest in Independent Cellular Telephone, LLC (ICT). ICT, in turn, is an investment
vehicle that holds a 44.45% member interest in United States Cellular Telephone of Greater Tulsa, LLC (Tulsa, LLC).
In January 2004, ICT sold its membership interest in Tulsa, LLC and, as a result, Chouteau Cellular Telephone Company made a $2.5 million
distribution to the Company. Subsequent to the sale, the Company continues to have an investment in Chouteau Cellular Telephone Company, but the
partnership assets are minimal and do not include any interests in the cellular telephone business of Chouteau.
During 2005, the Company determined that the carrying amount of its investment in Illinois Valley Cellular RSA No. 2, which is accounted for under
the equity method, exceeded the estimated fair value and such decline was “other-than-temporary.” As a result, the Company recorded a non-cash impairment
charge of $1.2 million. This charge is classified as impairment on investments in the consolidated statements of operations. The Company sold its investment
in Illinois Valley Cellular RSA No. 2 during 2006 and recorded a gain of $0.1 million.
(c) Investments in Equity Securities Carried at Cost
The aggregate cost of the Company’s cost method investments totaled $4.1 million at December 31, 2006. These investments consist primarily of
investments in stock of governmental agencies and minority interests in limited partnerships or corporations. Therefore, the investments are highly illiquid
and there is no readily available market for these securities which makes it impracticable to estimate a fair value. As a result, these investments were not
evaluated for impairment because (a) the Company did not estimate the fair value of those investments in accordance with paragraphs 14 and 15 of SFAS
No. 107  and (b) the Company did not identify any events or circumstances that may have had a
significant adverse effect on the fair value of those investments.
On August 4, 2005, the Board of Directors of the RTB approved the liquidation and dissolution of the RTB. As part of such liquidation and dissolution,
all RTB loans were to be transferred to the Rural Utilities Service and all shares of the RTB’s Class A Stock, Class B Stock and Class C Stock were to be
redeemed at par value. The Company had no outstanding loans with the RTB but owned 2,477,493 shares of Class B Stock and 24,380 shares of Class C
Stock. This liquidation was completed in April 2006, and, as a result, the Company received proceeds of $26.9 million from the RTB liquidation. The
Company recorded a gain on this investment of approximately $4.1 million in 2006. Some portion of the proceeds received from the RTB, while not estimable
at this time, may be subject to review by regulatory authorities who may require us to record a portion thereof as a regulatory liability. In October 2006, the
Company was notified that the state of Washington opened a docket to review the proceeds received by companies from the RTB in that state. In
November 2006, the Company also received an information request from the state of Maine regarding the RTB transaction. At this time, the Company can not
determine the impact of these reviews.
On May 1, 2006, the Company completed the sale of its investment in Southern Illinois Cellular Corp., or SICC, from which it received total proceeds
of $16.9 million. As part of this sale, the Company received a portion of total proceeds, approximately $2.1 million, in the form of a dividend. In addition to
the dividend income of $2.1 million, the Company recorded a gain on this investment of approximately $10.2
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