FairPoint Communications 2004 Annual Report Download - page 36

A reconciliation of net cash provided by operating activities of continuing operations to EBITDA follows (in thousands):
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Net cash provided by operating activities of
continuing operations $45,975 $32,834 $55,632 $35,717 $44,706
Adjustments:
Depreciation and amortization (50,287) (48,089) (46,310) (55,081) (46,146)
Impairment of investments (349) — (12,568) — —
Other non-cash items (20,618) 1,866 1,281 (9,712) 7,439
Changes in assets and liabilities arising from
continuing operations, net of acquisitions 926 5,139 (6,729) 3,654 (21,190)
Loss from continuing operations (24,353) (8,250) (8,694) (25,422) (15,191)
Adjustments:
Interest expense(2)(3) 104,315 90,224 69,520 76,314 59,556
Provision (benefit) for income tax expense 516 (236) 518 431 5,607
Depreciation and amortization 50,287 48,089 46,310 55,081 46,146
EBITDA $130,765 $129,827 $107,654 $106,404 $96,118
Certain covenants in our credit facility contain ratios based on Adjusted EBITDA and the restricted payment covenant in our credit
facility regulating the payment of dividends on our common stock is based on Adjusted EBITDA. Adjusted EBITDA for any period is
defined in our credit facility as (1) the sum of Consolidated Net Income (which is defined in our credit facility and includes distributions
from investments), plus the following to the extent deducted from consolidated net income: provision for taxes, consolidated interest
expense, depreciation, amortization, losses on sales of assets and other extraordinary losses, and certain other non-cash items, each
as defined, minus (2) gains on sales of assets and other extraordinary gains and all non-cash items increasing consolidated net
income for the period. For a more detailed definition of Adjusted EBITDA and Consolidated Net Income, see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations—Description of Certain Indebtedness—Credit Facility" If
our Adjusted EBITDA were to decline below certain levels, covenants in our credit facility that are based on Adjusted EBITDA may be
violated and could cause, among other things, a default under our credit facility, or result in our inability to pay dividends. These
covenants are summarized under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
—Description of Certain Indebtedness—Credit Facility"." A reconciliation of EBITDA to Adjusted EBITDA is as follows (in thousands):
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EBITDA $130,765 $129,827 $107,654 $106,404 $96,118
Net (gain) loss on sale of investments and other
assets (104) (608) (34) 648 (6,642)
Impairment on investments 349 — 12,568 — —
Equity in net earnings of investees (10,899) (10,092) (7,798) (4,930) (4,807)
Distributions from investments(7) 15,017 10,775 9,018 5,013 3,155
Realized and unrealized losses on interest rate
swaps 112 1,387 9,577 12,873 —
Loss on early retirement of debt — 1,503 — — —
Non-cash stock based compensation 49 15 924 1,337 12,323
Write-off of cost associated with an abandoned
offering of Income Deposit Securities 5,951 — — — —
Deferred patronage dividends (84) (233) (253) (394) (113)
Adjusted EBITDA $141,156 $132,574 $131,656 $120,951 $100,034
(6) Total access line equivalents includes voice access lines and digital subscriber lines.
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