FairPoint Communications 2003 Annual Report Download - page 39

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On September 4, 2001, the Company acquired 100% of the capital stock of Marianna. This acquisition is not deductible for tax purposes.
On September 28, 2001, the Company acquired certain assets of Illinois Consolidated Telephone Company. This acquisition is deductible
for tax purposes. The aggregate purchase price for these acquisitions was $23.5 million.
On December 1, 2003, the Company acquired 100% of the capital stock of CST and Commtel. The purchase for this acquisition was
$32.6 million. The Company believes the entire amount of goodwill will be deductible for income tax purposes.
Acquisition costs were $0.3 million and $0.3 million in 2001 and 2003, respectively. The Company's 2001 and 2003 acquisitions have
been accounted for using the purchase method and, accordingly, the results of their operations have been included in the Company's
consolidated financial statements from the date of acquisition. The excess of the purchase price and acquisition costs over the fair value of the
net identifiable assets acquired was $14.4 million and $25.1 million and has been recognized as goodwill in 2001 and 2003, respectively.
The allocation of the total net purchase price for the 2001 and 2003 acquisitions are shown in the table below:
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Current assets $5,659 1,027
Property, plant, and equipment 4,953 8,301
Excess cost over fair value of net assets acquired 14,358 25,064
Other assets 6 —
Current liabilities (111)(1,182)
Other liabilities (1,098)(268)
Total net purchase price $23,767 32,942
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The following unaudited pro forma information presents the combined results of operations of the Company as though the acquisitions
made in each of the following years occurred at the beginning of the preceding year. These results include certain adjustments, including
increased interest expense on debt related to the acquisitions, certain preacquisition transaction costs, and related income tax effects. The pro
forma financial information does not necessarily reflect the results of operations if the acquisitions had been in effect at the beginning of the
period or which may be attained in the future.
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Revenues $233,640 $238,466 $238,663
Loss from continuing operations (25,182) (8,321) (8,190)
Net income (loss) (211,360) 13,612 1,731
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Changes in the carrying amount of goodwill were as follows (dollars in thousands):
Balance, December 31, 2001 and 2002 $454,306
Disposal of South Dakota Divestiture (10,525)
Balance, December 31, 2002, adjusted for discontinued operations 443,781
Acquisition of CST and Commtel 25,064
Balance, December 31, 2003 $468,845
In connection with the transitional goodwill impairment evaluation performed as of January 1, 2002, SFAS No. 142 required the
Company to perform an assessment of whether there was an indication that goodwill was impaired as of the date of adoption. To accomplish
this, the Company was required to identify its reporting units and determine the carrying value of each reporting unit by assigning the assets
and liabilities, including the existing goodwill and intangible assets, to those reporting units as of January 1, 2002. The Company was
required to determine the fair value of each reporting unit and compare it to the carrying amount of the reporting unit within six months of
January 1, 2002. In performing the initial transitional impairment test, the Company determined that the carrying amount of its reporting unit
did not exceed its estimated fair value and, therefore, the Company did not record an impairment loss upon adoption of SFAS No. 142. The