FairPoint Communications 2006 Annual Report Download - page 24

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Our initial public offering in February 2005 resulted in an “ownership change” within the meaning of the U.S. federal income tax laws addressing net
operating loss carry forwards, alternative minimum tax credits and other similar tax attributes. As a result of such ownership change, there are specific
limitations on our ability to use our net operating loss carry forwards and other tax attributes from periods prior to our initial public offering. Although it is not
expected that such limitations will materially affect our U.S. federal and state income tax liability in the near-term, it is possible in the future that such
limitations could limit our ability to utilize such tax attributes and, therefore, result in an increase in our U.S. federal and state income tax payments. In
addition, in the future we may be required to pay cash income taxes because all of our net operating loss carry forwards have been used or have expired.
Limitations on our usage of net operating loss carry forwards, and other factors requiring us to pay cash taxes in the future, would reduce the funds available
for the payment of dividends and might require us to reduce or eliminate the dividends on our common stock.
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The market price of our common stock may fluctuate widely as a result of various factors, such as period-to-period fluctuations in our operating results,
sales of our common stock by principal stockholders, developments in the communications industry, the failure of securities analysts to cover our common
stock or changes in financial estimates by analysts, competitive factors, regulatory developments, economic and other external factors, general market
conditions and market conditions affecting the stock of communications companies in particular. Communications companies have in the past experienced
extreme volatility in the trading prices and volumes of their securities, which has often been unrelated to operating performance. Any such market volatility
may have a significant adverse effect on the market price of our common stock.
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Future sales, or the availability for sale in the public market, of substantial amounts of our common stock could adversely affect the prevailing market
price of our common stock, and could impair our ability to raise capital through future sales of equity securities. We may issue shares of our common stock,
or other securities, from time to time as consideration for future acquisitions and investments. In the event any such acquisition or investment is significant,
the number of shares of our common stock, or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in
turn be significant. We may also grant registration rights covering those shares or other securities in connection with any such acquisitions and investments.
In connection with the Merger, we will issue an estimated 53.8 million shares of our common stock to stockholders of Spinco. We plan to register the
issuance of such shares pursuant to a registration statement to be filed with the SEC.
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A number of provisions in our restated certificate of incorporation and amended and restated by-laws make it difficult for another company to acquire us
and for you to receive any related takeover premium
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