FairPoint Communications 2006 Annual Report Download - page 77
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The following unaudited pro forma information presents the combined results of operations of the Company as though the GITC, Unite, Cass County,
Berkshire and Bentleyville acquisitions each had been consummated on January 1, 2005. These results include certain adjustments, mainly associated with
increased interest expense on debt and amortization of intangible assets related to the acquisitions and the related income tax effects. The pro forma financial
information does not necessarily reflect the results of operations as if the Germantown, Unite, Cass County, Berkshire and Bentleyville acquisitions each had
been consummated at the beginning of the period or which may be attained in the future (in thousands, except per share data).
Revenues $ 280,015 $ 282,478
Income from continuing operations 31,238 28,997
Net income 31,812 29,377
Earnings per common share from continuing operations:
Basic $0.90 $ 0.91
Diluted 0.90 0.91
Earnings per common share:
Basic $ 0.92 $ 0.92
Diluted 0.92 0.92
On January 16, 2007, the Company announced that it signed definitive agreements to merge with a subsidiary of Verizon Communications Inc. owning
the wireline operations of Verizon in Maine, New Hampshire and Vermont. The Company expects that FairPoint will be the acquiree for accounting purposes.
Consequently, merger related costs have been expensed as incurred in connection with the transaction and FairPoint’s assets and liabilities will be recorded at
fair value at acquisition. The Company incurred expenses related to this transaction, principally legal and consultant fees, of approximately $2.4 million in
2006, which were expensed as incurred. This transaction is subject to regulatory approval. In a separate but related transaction, the Company also agreed on
January 16, 2007 to sell its investment in Orange County-Poughkeepsie Limited Partnership to Verizon Wireless for $55 million.
Changes in the carrying amount of goodwill were as follows (in thousands):
Balance, December 31, 2004 $468,508
Acquisition of Berkshire and Bentleyville 12,835
Balance, December 31, 2005 481,343
Acquisition of GITC, Unite and Cass County 16,869
Acquisition adjustment to Berkshire goodwill 972
Balance, December 31, 2006 $499,184
As required under SFAS No. 142, the Company updated its annual impairment testing of goodwill as of December 31, 2006, 2005, and 2004, and
determined that no impairment loss was required to be recognized.
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