FairPoint Communications 2005 Annual Report Download - page 42

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We intend to continue to pursue selective acquisitions:
· On January 25, 2006, we agreed to purchase the assets of Cass County Telephone Company Limited Partnership, or Cass County Telephone, for
approximately $33.0 million in cash, subject to adjustment. Cass County Telephone serves approximately 8,600 access line equivalents in Missouri
and Kansas. This acquisition is expected to close in the second quarter of 2006 after regulatory approvals.
· On May 2, 2005, we completed the acquisition of Berkshire Telephone Corporation, or Berkshire, for a purchase price of approximately
$20.3 million (or $16.4 million net of cash acquired), subject to adjustment. Berkshire is an independent local exchange carrier that provides voice
communication, cable and internet services to over 7,200 access line equivalents, as of the date of acquisition, serving five communities in New York
State. Berkshire’s communities of service are adjacent to those of Taconic Telephone Corp., one of the Company’s subsidiaries.
· On September 1, 2005, we completed the acquisition of Bentleyville Communications Corporation, or Bentleyville, for approximately $11.0 million
(or $9.3 million net of cash acquired), subject to adjustment. Bentleyville, which had approximately 3,600 access line equivalents at the date of
acquisition, provides telecommunications, cable and internet services to rural areas of Southwestern Pennsylvania which are adjacent to our existing
operations in Pennsylvania.
· During 2004 we did not complete any acquisitions.
· On December 1, 2003, we purchased all of the capital stock of Community Service Telephone Co. and Commtel Communications Inc., which we
refer to as the Maine acquisition. Community Service Telephone and Commtel Communications provided communication services to approximately
13,280 access line equivalents in central Maine as of the date of such acquisition.
· During 2002, we did not complete any acquisitions.
In the normal course of business, we evaluate selective acquisitions and may enter into non-binding letters of intent with respect to such acquisitions,
subject to customary conditions. Management currently intends to fund future acquisitions through the use of the revolving facility of our credit facility or
additional debt financing or the issuance of additional shares of our common stock. However, our substantial amount of indebtedness and our dividend
payments could restrict our ability to obtain such financing on acceptable terms or at all.
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In February 2005 and September 2005, we issued 473,716 shares and 50,000 shares, respectively, of restricted stock under our 2005 Stock Incentive
Plan to our employees. Also, during 2005, 53,687 shares of restricted stock were forfeited bringing the total number of restricted shares outstanding under the
2005 Stock Incentive Plan to 470,029 shares. At December 31, 2005, 467,654 shares of our common stock may be issued in the future pursuant to awards
authorized under our 2005 Stock Incentive Plan which could result in an additional compensation expense. In the second quarter of 2005, our board of
directors approved an annual award to each of our non-employee directors in the form of restricted stock or restricted units, at the recipient’s option, which
will vest on a quarterly basis, issued under the Company’s 2005 Stock Incentive Plan. The 2005 non-employee director awards began to vest on July 1, 2005.
During 2005, we granted 1,870 shares of restricted stock with a total value at the grant date of approximately $30,000 and 7,480 restricted units with a total
value at the grant date of approximately $120,000 to our non-employee directors. An additional 408 restricted units were granted in 2005 in lieu of dividends on
the restricted units. In addition, we granted restricted units to certain employees in December 2003 of which
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