FairPoint Communications 2013 Annual Report Download - page 47

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Impairment of Intangible Assets and Goodwill
At September 30, 2011, as a result of the significant sustained decline in our stock price since the Effective Date, our market
capitalization dropped below our book value. Signaling a possible impairment, we performed interim impairment tests on our
goodwill and non-amortizable trade name. Results of these interim impairment tests required us to write off the entire balance of
goodwill and write down the carrying value of the non-amortizable trade name to $39.2 million. There were no subsequent
impairments.
The following table reflects the impairment charges recorded during the year ended December 31, 2011 (in millions):
Year Ended
December 31, 2011
Goodwill $ 243.2
Non-amortizable trade name 18.8
Total impairment of intangible assets and goodwill $ 262.0
Interest Expense
The following table reflects a summary of interest expense recorded during the years ended December 31, 2013, 2012 and
2011, respectively (in millions):
Year Ended Year Ended Year Ended
December 31, 2013 December 31, 2012 December 31, 2011
New Credit Agreement Loans $ 44.1 $ — $ —
Notes 23.0 — —
Old Credit Agreement Loans 7.7 66.6 63.0
Pre-Petition Credit Facility — — 9.1
Amortization of debt issue costs 0.9 0.7 0.7
Amortization of debt discount 2.3 — —
Other interest expense 0.7 0.3 0.3
Total interest expense $ 78.7 $ 67.6 $ 73.1
Interest expense increased $11.1 million (16%) in the year ended December 31, 2013 as compared to the year ended December
31, 2012. The increase in interest expense is primarily attributable to the increase in interest rates and amortization of the debt
discount and debt issuance fees related to the New Credit Agreement Loans as a result of the Refinancing, partially offset by lower
weighted average long-term debt outstanding during fiscal year 2013 as compared to fiscal year 2012.
Interest on borrowings under the Old Credit Agreement Loans accrued at an annual rate equal to either LIBOR or the base
rate, in each case plus an applicable margin. Generally, the Old Credit Agreement Loans accrued interest at 6.50%. During the
year ended December 31, 2012, the Old Credit Agreement Loans had an outstanding weighted average balance of $987.3 million,
taking into consideration $43.0 million of principal payments made on our Old Term Loan in 2012, of which $33.0 million exceeded
the scheduled payments and was allocated to the final payment due at maturity. During the first half of the first quarter of 2013,
the Old Credit Agreement Loans had an outstanding weighted average balance of $952.3 million, taking into consideration $10.5
million of prepayments made during that period.
On February 14, 2013, in connection with the Refinancing, we repaid the entire outstanding balance of the Old Credit
Agreement Loans, issued $300.0 million aggregate principal amount of the Notes and entered into the New Credit Agreement
Loans, which include the $640.0 million New Term Loan outstanding and the $75.0 million New Revolving Facility. The Notes
accrue interest at a rate of 8.75% per annum. Interest on borrowings under the New Credit Agreement Loans accrues at an annual
rate equal to either LIBOR or the base rate, in each case plus an applicable margin. Generally, the New Term Loan accrued interest
at 7.50% during 2013. Regularly scheduled amortization payments of $1.6 million were made on the New Term Loan at the end
of the second, third and fourth quarters of 2013. In addition, the New Term Loan was issued at a $19.4 million discount, which is
being amortized using the effective interest method. As of December 31, 2013, we were party to interest rate swap agreements;
however, since the agreements are not effective until September 30, 2015, they will have no impact on interest expense in 2013
or 2014.
Interest expense decreased $5.5 million (8%) in the year ended December 31, 2012 as compared to the year ended December
31, 2011. The decrease in 2012 interest expense is primarily attributable to the 24 days ended January 24, 2011, whereby we were
subject to interest charges under the Pre-Petition Credit Facility. During the 24 days ended January 24, 2011, the Pre-Petition