FairPoint Communications 2007 Annual Report Download - page 91

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Table of Contents


Company’s subsidiaries. In 2006, the Company recorded a $1.0 million purchase adjustment to increase the goodwill related to
Berkshire.
On September 1, 2005, the Company completed the acquisition of Bentleyville Communications Corporation, or Bentleyville, for a
purchase price of approximately $11.0 million (or $9.3 million net of cash acquired). Bentleyville, which had approximately 3,600
access line equivalents as of the date of acquisition, provides telecommunications, cable and internet services to rural areas of
Southwestern Pennsylvania that are adjacent to our existing operations in Pennsylvania.
 
Changes in the carrying amount of goodwill were as follows (in thousands):
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
Acquisition adjustment to GITC goodwill (271)
Acquisition adjustment to Unite (188)
Balance, December 31, 2007 $498,725
As required under SFAS No. 142, the Company updated its annual impairment testing of goodwill as of December 31, 2007, 2006,
and 2005, and determined that no impairment loss was required to be recognized.
The Company has recorded intangible assets related to the acquired companies’ customer relationships of $13.8 million. These
intangible assets are being amortized over 15 years using the straight-line method. As of December 31, 2007 and 2006, accumulated
amortization related to the customer relationship intangibles was $1.5 million and $0.6 million, respectively. Amortization expense for the
years ended December 31, 2007, 2006 and 2005 was $0.9 million, $0.5 million and $0.1 million, respectively. Amortization expense
related to these customer relationship intangibles is expected to be approximately $0.9 million per year over the next five years.

A summary of property, plant, and equipment from continuing operations is shown below (in thousands):

  

Land — $ 4,000 $ 4,256
Buildings and leasehold improvements 2 -- 40 43,217 41,486
Telephone equipment 3 -- 50 719,541 704,146
Cable equipment 3 -- 20 13,632 12,190
Furniture and equipment 3 -- 34 24,887 22,718
Vehicles and equipment 3 -- 20 28,058 27,458
Computer software 3 -- 5 9,699 6,880
Plant under construction -- 53,335 10,100
Total property, plant, and equipment 896,369 829,234
Accumulated depreciation (627,479) (582,970)
Net property, plant, and equipment $ 268,890 $ 246,264
89