FairPoint Communications 2003 Annual Report Download - page 55

In 2001, a law firm in which a partner of such law firm is a director of the Company, was paid $0.8 million, of which $0.3 million was for
general counsel services, $0.1 million was for services related to financings, and $0.4 million was for services related to the restructure and
discontinuance of the competitive communications operations. In 2002, this same law firm was paid $0.8 million, of which $0.3 million was
for general counsel services, $0.3 million was for services related to the discontinuance of the competitive communications operations, and
$0.2 million was for services related to acquisitions. In 2003, this same law firm was paid $1.3 million, of which $0.4 million was for general
counsel services and $0.9 million was for services related to financings. All payments made by the Company for general counsel services
and unsuccessful acquisition bids are classified within operating expenses on the statements of operations. All payments made for services
related to financings have been recorded as debt or equity issue costs. All payments made for services related to successful acquisition bids
have been capitalized as direct costs of the acquisitions. All services related to the restructure and discontinuance of the competitive
communications operations have been classified in discontinued operations.
On July 31, 2003, the Company loaned $990,980 to two employees that are the former owners of Fremont. These loans mature on
January 2, 2005.
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2002:
Revenue $57,156 55,570 57,778 60,315
Income (loss) from continuing operations 4,927 (7,826)(1,442)(4,353)
Net income (loss) 5,501 11,083 933 (4,278)
2003:
Revenue $55,812 57,285 58,566 59,769
Income (loss) from continuing operations 668 (1,112)(4,209)(3,597)
Net income (loss) 1,294 (504)4,283 (3,402)
In the second quarter of 2002, the Company recorded a gain in discontinued operations of $17.5 million related to the extinguishment of
debt and settlement of its interest rate swap agreements. In the second, third, and fourth quarters of 2002, the Company recorded a noncash
charge of $5.6 million, $1.8 million and $0.8 million, respectively, related to the other than temporary decline in market value of its Choice
One common stock. In the fourth quarter of 2002, the Company recorded a noncash charge of $4.4 million related to the other than
temporary decline in market value of investments accounted for under the equity method. During the fourth quarter of 2002, the Company
identified errors in the fair value calculations of the interest rate swaps and recorded an adjustment of $0.9 million to increase expense that
related to prior periods. The effect of this entry was not material to previously reported results.
In the first quarter of 2003, the Company recognized a $3.5 million nonoperating gain on the extinguishment of the Senior Subordinated
Notes and the Carrier Services' loans, offset by a loss of $5.0 million for the write-off of debt issue costs related to this extinguishment of debt.
In the third quarter of 2003, the Company recognized a gain of $7.7 million on the South Dakota Divestiture.
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The carrying amount approximates fair value because of the short maturity of these instruments.
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Investments classified as available for sale and trading are carried at their fair value which approximates $0.6 million and $0.5 million,
respectively, at December 31, 2002 and $1.9 million and $0.5 million, respectively, at December 31, 2003 (see note 5 and note 8).
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The fair value of the Company's publically registered long-term debt is stated at quoted market prices. The fair value of the Company's
remaining long-term debt is estimated by discounting the future cash flows of each instrument at rates currently offered to the Company for
similar debt instruments of comparable maturities. At December 31, 2002 and 2003, the Company had long-term debt with a carrying value
of $804.2 million and $825.6 million, respectively, and estimated fair values of $683.6 million and $870.7 million, respectively.
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The fair value of the Company's redeemable preferred stock is estimated utilizing a cash flow analysis at a discount rate equal to rates
available for debt with terms similar to the preferred stock. At December 31, 2002 and 2003, the Company's carrying value of its redeemable
preferred stock was $90.3 million and $96.7 million, respectively, and estimated fair value was $68.1 million and $97.3, respectively.