FairPoint Communications 2005 Annual Report Download - page 49

Carrier Services’ credit facility. These gains were offset by a non-operating loss of $5.0 million for the write-off of debt issue costs related to this
extinguishment of debt in 2003.
The following is a summary of amounts included in realized and unrealized gains (losses) on interest rate swaps (dollars in thousands):
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Change in fair value of interest rate swaps $874 $7,693
Reclassification of transition adjustment included in other comprehensive income (loss) (103) (1,029)
Realized losses (883) (8,051)
Total $(112)$(1,387)
 Income tax expense from continuing operations increased $0.7 million to $0.5 million in 2004 from a benefit of $0.2 million in
2003. The income tax expense relates primarily to income taxes owed in certain states offset by investment tax credits in certain states.
 Net income from discontinued operations of our existing operations sold in the South Dakota disposition was $1.9 million
in 2003. The companies were sold on September 30, 2003 and resulted in the recognition of a gain on disposal of the discontinued operations of $7.7 million
during 2003. During the twelve months ended December 31, 2004 and 2003, we recorded a reduction to our liability associated with the discontinuation of our
competitive local exchange carrier operations of $0.7 million and $0.3 million, respectively. This was mainly attributable to excise tax refunds received from
the Internal Revenue Service as well as a reduction in liabilities associated with potential property tax payments.
 Net loss attributable to common stockholders for the year ended December 31, 2004 was $23.7 million. Our 2003 net loss
attributable to common shareholders was $4.3 million after giving effect to $8.9 million in dividends and accretion related to our series A preferred stock and
the repurchase of our series A preferred stock at a discount of $2.9 million. The difference between 2004 and 2003 is a result of the factors discussed above.
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Our short-term and long-term liquidity needs arise primarily from: (i) interest payments primarily related to our credit facility; (ii) capital expenditures;
(iii) working capital requirements as may be needed to support the growth of our business; (iv) dividend payments on our common stock; and (v) potential
acquisitions. Our board of directors has adopted a dividend policy which reflects our judgment that our stockholders would be better served if we distributed a
substantial portion of our cash available for distribution to them instead of retaining it in our business.
We expect to fund our operations, interest expense, capital expenditures, working capital requirements and dividend payments on our common stock
from cash from operations and distributions from investments. To fund future acquisitions, we intend to use cash from operations and borrowings under our
credit facility, or, subject to the restrictions in our credit facility, to arrange additional funding through the sale of public or private debt and/or equity
securities, or obtain additional senior bank debt.
For the years ended December 31, 2005, 2004 and 2003, net cash provided by operating activities of continuing operations was $61.7 million,
$46.0 million and $32.8 million, respectively. The increase in net cash provided by operating activities in 2005 was primarily due to a decrease in accrued
interest resulting from our recapitalization in February 2005.
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