FairPoint Communications 2004 Annual Report Download - page 25

We believe that our dividend policy limits, but does not preclude, our ability to pursue growth. If we continue paying dividends at the level
currently anticipated under our dividend policy, we expect that we would need additional financing to fund significant acquisitions or to pursue
growth opportunities requiring capital expenditures that are significantly beyond our current expectations. However, we intend to retain
sufficient cash after the distribution of dividends to permit the pursuit of growth opportunities that do not require material capital investment.
For further discussion of the relationship of our dividend policy to our ability to pursue potential growth opportunities, see "—Assumptions
and Considerations" below.
On March 3, 2005, we declared a dividend of $0.22543 per share of our common stock, payable on April 15, 2005 to holders of record as
of March 31, 2005. In accordance with our dividend policy, we currently intend to continue to pay quarterly dividends at an annual rate of
$1.59125 per share for the four fiscal quarters ending March 31, 2006. In respect of the four fiscal quarters ending March 31, 2006, this
would be $54.8 million in the aggregate. This aggregate amount of dividends does not include any dividends with respect to 115,733 shares
of our common stock issuable upon the exercise of fully vested, exercisable and in-the-money stock options or 473,716 shares of restricted
stock awarded under our 2005 stock incentive plan on February 15, 2005, which shares will begin to vest on April 1, 2006 and will not be
entitled to receive dividends for any period prior to April 1, 2006. Dividends on our common stock will not be cumulative. Consequently, if
dividends on our common stock are not declared and/or paid at the targeted level, our stockholders will not be entitled to receive such
payments in the future. In determining our initial dividend level, we reviewed and analyzed, among other things, our operating and financial
performance in recent years, the anticipated cash requirements associated with our capital structure, our anticipated capital expenditure
requirements, our other anticipated cash needs, the terms of our credit facility, applicable provisions of Delaware law, other potential sources
of liquidity and various other aspects of our business.
Prior to the dividend which will be paid on April 15, 2005, we had not paid dividends on our common stock in the past.
Minimum Adjusted EBITDA
We do not as a matter of course make public projections as to future sales, earnings or other results. However, our management has
prepared the estimated financial information set forth below to present the estimated minimum Adjusted EBITDA required to generate
sufficient cash to pay dividends on our common stock in accordance with our dividend policy. See "Item 6. Selected Financial Data" for a
definition of, and other information with respect to, Adjusted EBITDA. The accompanying estimated financial information was not prepared
with a view toward complying with the rules and regulations of the Securities and Exchange Commission with respect to prospective
financial information, but, in the view of our management, was prepared on a reasonable basis, reflects the best currently available
estimates and judgments, and presents, to the best of our management's knowledge and belief, our expected course of action and our
expected future financial performance. However, this information is not fact and should not be relied upon as being necessarily indicative of
future results, and readers of this Annual Report are cautioned not to place undue reliance on the estimated financial information.
The assumptions and estimates underlying the estimated financial information below are inherently uncertain and, though considered
reasonable by our management as of the date of its preparation, are subject to a wide variety of significant business, economic, and
competitive risks and uncertainties, including those described under "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations—Risk Factors." Accordingly, there can be no assurance that the estimated financial information is indicative of our
future performance or that the actual results will not differ materially from the estimated financial information presented below.
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