FairPoint Communications 2005 Annual Report Download - page 51

acquired, of $25.7 million and $33.1 million for the years ended December 31, 2005 and December 31, 2003. There were no acquisitions during 2004.
Offsetting capital expenditures were distributions from investments of $10.9 million, $15.0 million and $10.8 million for the years ended December 31,
2005, 2004 and 2003, respectively. The $15.0 million received in 2004 included a one time $2.5 million distribution from our equity interest in Chouteau
Cellular Telephone Company as the partnership sold the majority of its assets. In addition, distributions for the twelve months ended December 31, 2005
included $10.0 million from our equity interest in Orange County Poughkeepsie Limited Partnership as compared to $11.8 million during the twelve months
ended December 31, 2004. The distributions declined mainly due to the timing of an additional distribution in 2004. All of these distributions represent passive
ownership interests in partnership investments. We do not control the timing or amount of distributions from such investments.
Net cash used in financing activities from continuing operations was $16.6 million, $24.0 million and $2.0 million for the years ended December 31,
2005, 2004 and 2003, respectively. For the year ended December 31, 2005, net proceeds from the issuance of common stock of $431.9 million was used for
the net repayment of long term debt of $205.7 million and the repurchase of series A preferred stock and common stock of $129.3 million. The remaining
proceeds were used to pay fees and penalties associated with the early retirement of long term debt of $61.0 million, to pay a deferred transaction fee of
$8.4 million and to pay debt issuance costs of $9.0 million. For the year ended December 31, 2004, these cash flows primarily represented net repayment of
long-term debt of $15.2 million and $7.8 million in debt issuance and offering related costs. For the year ended December 31, 2003, net proceeds from the
issuance of long term debt of $23.3 million were offset by debt issuance costs of $15.6 million and the repurchase of our series A preferred stock and class A
common stock of $8.6 million.
Our annual capital expenditures for our rural telephone operations have historically been significant. Because existing regulations allow us to recover our
operating and capital costs, plus a reasonable return on our invested capital in regulated telephone assets, capital expenditures have historically constituted an
attractive use of our cash flow. Capital expenditures were approximately $28.1 million, $36.5 million and $33.6 million for the years ended December 31,
2005, 2004 and 2003, respectively.
We expect that our annual capital expenditures for our existing operations will be approximately $28.0 to $30.0 million for fiscal 2006. We expect to fund
all of these capital expenditures through our cash flow from operations. If cash is available beyond what is required to support our dividend policy, we may
consider additional capital expenditures if we believe they are beneficial. Although the amount of our capital expenditures can fluctuate from quarter to quarter,
on an annual basis we do not expect capital expenditures for our existing operations through fiscal 2009 to vary significantly from our estimated amounts.
On January 5, 2006, we announced that we expect to receive proceeds of $26.7 million from the liquidation of our investment in the Rural Telephone
Bank. We expect to receive the proceeds in the middle of 2006. On February 20, 2006, we announced that we had entered into an agreement to sell our
investment in Southern Illinois Cellular Corp. Upon closing of this transaction, which is anticipated to be in the second quarter of 2006, we expect to receive
proceeds of $16 to $17 million. On January 25, 2006, we agreed to purchase the assets of Cass County Telephone for approximately $33.0 million in cash,
subject to adjustment.
On May 2, 2005, we used borrowings under our credit facility’s revolving facility to fund the Berkshire acquisition (including the repayment of
$1.3 million of Berkshire’s debt). On September 1, 2005, we used borrowings under our credit facility’s revolving facility to fund the Bentleyville
acquisition. We expect to fund the acquisition of Cass County Telephone through proceeds from the previously discussed asset sales and/or borrowings under
our credit facility’s revolving facility.
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