FairPoint Communications 2009 Annual Report Download - page 61

Table of Contents
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On March 31, 2008, Legacy FairPoint completed the acquisition of Spinco, pursuant to which Spinco merged with and into Legacy FairPoint, with
Legacy FairPoint continuing as the surviving corporation for legal purposes. Spinco was a wholly-owned subsidiary of Verizon and prior to the Merger
the Verizon Group transferred certain specified assets and liabilities of the local exchange businesses of Verizon New England in Maine, New
Hampshire and Vermont and the customers of the related long distance and Internet service provider businesses in those states to subsidiaries of
Spinco. The Merger was accounted for as a "reverse acquisition" of Legacy FairPoint by Spinco under the purchase method of accounting because
Verizon stockholders owned a majority of the shares of the consolidated Company following the Merger and, therefore, Spinco is treated as the acquirer
for accounting purposes. The following financial information reflects the transaction as if Spinco had issued consideration to Legacy FairPoint
shareholders. As a result, for the year ended December 31, 2008, financial information derived from the statement of operations reflects the consolidated
financial results of the Company by including the financial results of the Verizon Northern New England business for the three months ended
March 31, 2008, the financial results of Spinco for the nine months ended December 31, 2008 and the financial results of Legacy FairPoint for the nine
months ended December 31, 2008. Financial information derived from the statement of operations for all periods prior to April 1, 2008 reflects the
actual results of the Verizon Northern New England business for such periods. Financial information derived from the balance sheet reflects the
consolidated assets and liabilities of Legacy FairPoint and Spinco at December 31, 2008. Financial information derived from the balance sheet reflects
the balance sheet of the Verizon Northern New England business at December 31, 2007 and for all prior periods.
The following financial information should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and notes thereto contained elsewhere in this Annual Report. Amounts are in
thousands, except access lines and per share data.
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       
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Revenues $ 1,126,761 $ 1,274,619 $ 1,197,465 $ 1,193,392 $ 1,206,100
Operating expenses:
Cost of services and
sales 514,935 576,786 555,954 540,305 528,075
Selling, general and
administrative expense 425,642 384,388 288,762 283,089 282,931
Depreciation and
amortization 275,334 255,032 233,231 258,515 267,416
Total operating
expenses 1,215,911 1,216,206 1,077,947 1,081,909 1,078,423
Income (loss) from
operations (89,150) 58,413 119,518 111,483 127,677
Interest expense(1) (204,919) (162,040) (70,581) (65,741) (59,540)
Gain (loss) on derivative
instruments 12,320 (11,800) — — —
Gain on early retirement of
debt 12,357 — — — —
Other income (expense),
net 2,000 3,494 3,350 3,531 1,369
Income (loss) before
reorganization items and
income taxes (267,392) (111,933) 52,287 49,273 69,506
Reorganization items (53,018) — — — —
Income (loss) before
income taxes (320,410) (111,933) 52,287 49,273 69,506
Income tax (expense)
benefit 79,014 43,408 (19,459) (17,322) (25,896)
Net income (loss) (241,396) (68,525) 32,828 31,951 43,610
Basic shares outstanding 89,271 80,443 53,761 53,761 53,761
Diluted shares outstanding 89,271 80,443 53,761 53,761 53,761
Basic and diluted earnings