FairPoint Communications 2004 Annual Report Download - page 111

At December 31, 2004, the Company had federal and state net operating loss carryforwards of $251.9 million that will expire
between 2019 and 2024. At December 31, 2004, the Company had alternative minimum tax credits of $1.5 million that may be
carried forward indefinitely. The Company completed an initial public offering on February 8, 2005, which resulted in an "ownership
change" within the meaning of the U.S. Federal income tax laws addressing net operating loss carryforwards, alternative minimum
tax credits, and other similar tax attributes. As a result of such ownership change, these will be specific limitations on the Company's
ability to use its net operating loss carryfowards and other tax attributes.

On January 28, 2005, the board of directors approved a 5.2773714 for 1 reverse stock split of the Company's common stock. All
share and per share amounts related to common stock and stock options included in the accompanying consolidated financial
statements and notes have been restated to reflect the reverse stock split.
The following summarizes the authorized share capital of the Company:
—authorized 44,757,130 voting common shares at a par value of $0.01 per share. Class A
common shares carry one vote per share.
—authorized 28,423,241 nonvoting, convertible common shares at a par value of $0.01 per
share.
—authorized 2,614,938 nonvoting, convertible common shares at a par value of $0.01 per
share. The Class C common shares are automatically convertible into Class A common shares upon either the
completion of an initial public offering of at least $150 million of the Company's Class A common stock or the
occurrence of certain conversion events, as defined in the articles of incorporation. The conversion rate for the Class C
common shares to Class A common shares is one-for-one.
—authorized 1,000,000 nonvoting, nonconvertible, redeemable preferred shares at a par
value of $0.01 per share (see note 7).
Issuance of Common Stock Subject to Put Obligations
In connection with the acquisition of Fremont, the Company issued 86,656 shares of Class A common stock to certain of
the former owners of Fremont. Under the terms of the agreements, these shares can be put back to the Company at any time.
The purchase price for such stock is the higher of the current fair market value or the fair market value of the Company's
common stock on the date of the acquisition of Fremont. Such former owners of Fremont exercised their put options on 14,291
shares in December 2000 and on 12,634 shares in March 2001. The Company has recorded the common stock subject to put
options as temporary equity in the accompanying consolidated balance sheets. In May 2001, the Company loaned $1.0 million
to such former owners of Fremont. In January 2002, these loans were paid with 14,442 shares subject to the put options. In
January 2003, put options on 14,442 shares were exercised for $1.0 million. In July 2003, the Company loaned $1.0 million
to such former owners of Fremont; these loans matured on January 2, 2005. In January 2004, put options on 14,442 shares
were exercised for $1.0 million. In January 2005, the loans made
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