FairPoint Communications 2005 Annual Report Download - page 78

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As required under SFAS No. 142, the Company updated its annual impairment testing of goodwill as of December 31, 2005, 2004, and 2003, and
determined that no impairment loss was required to be recognized.
In 2005, as part of the Berkshire and Bentleyville acquisitions, the Company has recorded intangible assets related to the acquired companies’ customer
relationships of $2.4 million and $1.4 million, respectively. These intangible assets will be amortized over 15 years using the straight-line method. As of
December 31, 2005, accumulated amortization related to the customer relationship intangibles was $0.1 million. The intangible assets are included in
Intangible Assets, net on the Consolidated Balance Sheet. Amortization expense related to these customer relationship intangibles is expected to be approximately
$0.3 million per year over the next five years.
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A summary of property, plant, and equipment from continuing operations is shown below (in thousands):
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Land — $ 4,096 $3,851
Buildings and leasehold improvements 2-40 39,889 36,339
Telephone equipment 3-50 649,465 615,976
Cable equipment 3-20 10,287 3,143
Furniture and equipment 3-34 19,219 17,098
Vehicles and equipment 3-20 25,105 22,011
Computer software 3-5 11,861 4,577
Total property, plant, and equipment 759,922 702,995
Accumulated depreciation (517,305) (450,733)
Net property, plant, and equipment $242,617 $252,262
The telephone company composite depreciation rate for property and equipment was 7.38%, 7.32%, and 7.46% in 2005, 2004, and 2003, respectively.
Depreciation expense from continuing operations, excluding amortization of intangible assets and previously disclosed deferred billing system credits, for the
years ended December 31, 2005, 2004, and 2003 was $53.5 million, $50.3 million, and $47.1 million, respectively.
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(a) Marketable Equity Securities
As of December 31, 2005, the Company no longer holds any marketable equity investments classified as available-for-sale. Following an August 2, 2004
announcement by Choice One of a financial restructuring under Chapter 11 of the United States Bankruptcy Code, the quoted market value of the
Company’s investment in Choice One Communications Inc.’s common stock declined to $33,000. The Company determined that the decline in fair value was
other-than-temporary and recorded an impairment loss of $0.5 million in the third quarter of 2004, of which $0.4 million was recorded as an expense in the
consolidated statement of operations and $0.1 million was recorded as a reduction in accumulated other comprehensive income. On November 8, 2004, Choice
One exited Chapter 11 and, in accordance with its
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