FairPoint Communications 2007 Annual Report Download - page 90

Table of Contents
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acquired was approximately $6.2 million. The Company recorded an intangible asset related to the acquired company’s customer
relationships of $1.8 million and the remaining $4.4 million has been recognized as goodwill. The estimated useful life of the $1.8 million
intangible asset is 15 years.
On August 17, 2006, the Company completed the purchase of Unite Communications Systems, Inc., or Unite, for approximately
$11.5 million (or $11.4 million net of cash acquired). Goodwill on this transaction will be deductible for income tax purposes. The
Company incurred acquisition costs of $58,000. Unite owns ExOp of Missouri, Inc., which is a facilities-based voice, data and video
service provider located outside of Kansas City, Missouri. In 2007, the Company recorded a $0.2 million purchase adjustment to reduce
the goodwill related to Unite.
The Unite acquisition has been accounted for using the purchase method of accounting for business combinations and, accordingly,
the acquired assets and liabilities have been recorded at their estimated fair values as of the date of acquisition, and its results of
operations have been included in the Company’s consolidated financial statements from the date of acquisition. Based upon the
Company’s purchase price allocation the excess of the purchase price and acquisition costs over the fair value of the net tangible assets
acquired was approximately $5.6 million. The Company recorded an intangible asset related to the acquired company’s customer
relationships of $2.9 million and the remaining $2.7 million has been recognized as goodwill. The estimated useful life of the
$2.9 million intangible asset is 15 years.
On July 26, 2006, the Company completed the purchase of the assets of Cass County Telephone Company Limited Partnership
and LEC Long Distance, Inc., or Cass County, for approximately $28.7 million. Goodwill on this transaction will be deductible for
income tax purposes. The Company incurred acquisition costs of $0.2 million.
The acquisition of the assets of Cass County has been accounted for using the purchase method of accounting for business
combinations and, accordingly, the acquired assets and liabilities have been recorded at their estimated fair values as of the date of
acquisition, and its results of operations have been included in the Company’s consolidated financial statements from the date of
acquisition. Based upon the Company’s purchase price allocation, the excess of the purchase price and acquisition costs over the fair
value of the net tangible assets acquired was approximately $14.5 million. The Company recorded an intangible asset related to the
acquired company’s customer relationships of $5.3 million and the remaining $9.2 million has been recognized as goodwill. The
estimated useful life of the $5.3 million intangible asset is 15 years.
The allocation of the total net purchase price of the GITC, Unite and Cass County acquisitions, which occurred in 2006, is shown
in the table below (in thousands):
Current assets $ 3,226
Property, plant, and equipment 28,166
Investments 869
Excess cost over fair value of net assets acquired 16,410
Intangible assets 10,000
Current liabilities (5,751)
Other liabilities (1,913)
Total net purchase price $ 51,007
On May 2, 2005, the Company completed the acquisition of Berkshire Telephone Corporation, or Berkshire, for a purchase price
of approximately $20.3 million (or $16.4 million net of cash acquired). Berkshire is an independent local exchange carrier that provides
voice communication, cable and internet services to over 7,200 access line equivalents, as of the date of acquisition, serving five
communities in New York State. Berkshire’s communities of service are adjacent to those of Taconic Telephone Corp., one of the
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