FairPoint Communications 2003 Annual Report Download - page 54
Download and view the complete annual report
Please find page 54 of the 2003 FairPoint Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44 -
45 -
46 -
47 -
48 -
49 -
50 -
51 -
52 -
53 -
54 -
55 -
56 -
57 -
58 -
59 -
60 -
61 -
62 -
63 -
64 -
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
 |
 |
Restructuring accrual as of December 31, 2003 $ — 5,253 — — 5,253
On September 30, 2003, the Company completed the sale of all of the capital stock
owned by Services of Union Telephone Company of Hartford, Armour Independent Telephone Co., WMW Cable TV Co. and Kadoka
Telephone Co. to Golden West Telephone Properties, Inc. ("Golden West"). The sale was completed in accordance with the terms of the
Purchase Agreement, dated as of May 9, 2003 (the "Purchase Agreement"), with Golden West. The Company received $24,156,000 in
sales proceeds, subject to certain escrow obligations as set forth in the Purchase Agreement. The South Dakota properties were
geographically isolated from other Company properties making it increasingly difficult to realize additional operating efficiencies. These
properties were adjacent to Golden West's operations and offered Golden West numerous operational
78
synergies. The proceeds from this divestiture were used to fund acquisitions completed in 2003. The operations of these companies are
presented as discontinued operations. Therefore, the balances associated with these activities were reclassified as "held for sale." All prior
period financial statements have been restated accordingly.
Income from the South Dakota Divestiture operations consists of the following (dollars in thousands):
Revenue $5,037 5,299 4,028
Income from discontinued operations $2,073 2,433 1,929
Assets and liabilities of the South Dakota Divestiture as of December 31, 2002 follow (dollars in thousands):
Cash $178
Accounts receivable 430
Property, plant and equipment, net 5,027
Investments 395
Goodwill, net of accumulated amortization 10,526
Other 91
Current assets held for sale $16,647
Accounts payable $342
Accrued liabilities 297
Current liabilities held for sale $639
The Company recorded a gain on disposal of the South Dakota companies of $7.7 million.
The Company has entered into financial advisory agreements with certain equity investors, pursuant to which the equity investors
provide certain consulting and advisory services related but not limited to equity financings and strategic planning. The Company paid
$1.0 million for each of the years ended December 31, 2001, 2002, and 2003 in such fees to the equity investors and this expense is
classified within operating expenses. The agreements also provide that the Company will reimburse the equity investors for travel relating to
the Company's boards of directors meetings. The Company reimbursed the equity investors $0.1 million, $43,000, and $21,000 for the
years ended December 31, 2001, 2002, and 2003, respectively, for travel and related expenses. Per the financial advisory agreements, the
advisory and consulting fees to be paid to each of the principal shareholders through December 31, 2006 is $0.5 million per annum. In
January 2000, the Company entered into an agreement whereby the Company must obtain consent from its two principal shareholders in
order to incur debt in excess of $5.0 million.
79