-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G3oclPUZgmf6cneSOPyegyVOBfzT5Z1hwT+7jpg2/A3dPexNjtDbh4gZCPz3hNrM nJWsxAoAK2kCdKz32+ysHA== 0001116679-03-002273.txt : 20031014 0001116679-03-002273.hdr.sgml : 20031013 20031014105253 ACCESSION NUMBER: 0001116679-03-002273 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030930 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031014 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAIRPOINT COMMUNICATIONS INC CENTRAL INDEX KEY: 0001062613 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 133725229 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-56365 FILM NUMBER: 03938339 BUSINESS ADDRESS: STREET 1: 521 EAST MOREHEAD ST STREET 2: STE 250 CITY: CHARLOTTE STATE: NC ZIP: 28202 BUSINESS PHONE: 7043448150 FORMER COMPANY: FORMER CONFORMED NAME: MJD COMMUNICATIONS INC DATE OF NAME CHANGE: 19980527 8-K 1 fair8k.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 30, 2003 FAIRPOINT COMMUNICATIONS, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as specified in its charter) Delaware 333-56365 13-3725229 - ------------------------------ -------------------- -------------------------- (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 521 East Morehead Street, Suite 250, Charlotte, North Carolina 28202 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (704) 344-8150 - -------------------------------------------------------------------------------- Registrant's telephone number, including area code Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 2. Acquisition or Disposition of Assets On September 30, 2003, MJD Services Corp. ("MJD Services"), a wholly-owned subsidiary of FairPoint Communications, Inc. (the "Company"), completed the sale (the "South Dakota Divestiture") of all of the capital stock owned by MJD Services of Union Telephone Company of Hartford, Armour Independent Telephone Co., WMW Cable TV Co. and Kadoka Telephone Co. to Golden West Telephone Properties, Inc. ("Golden West"). The sale was completed in accordance with the terms of the Purchase Agreement, dated as of May 9, 2003 (the "Purchase Agreement"), between MJD Services and Golden West. MJD Services received $24,204,000 in cash at closing, subject to certain post-closing purchase price adjustments set forth in the Purchase Agreement. The companies sold to Golden West serve approximately 4,150 access lines located in South Dakota. The proceeds from the South Dakota Divestiture together with borrowings under the Company's revolving credit facility will be used to fund certain pending acquisitions. The foregoing description is qualified in its entirety by reference to the Purchase Agreement, which was previously filed as Exhibit 2.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003 and is incorporated herein by reference. Pro forma financial information reflecting the estimated effects of the South Dakota Divestiture is included herein in Item 7. ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements None (b) Pro Forma Financial Information Attached hereto as Exhibit 99.1, and incorporated by reference herein, is the following pro forma financial information: Basis of Presentation Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2003 Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2002 Notes to Pro Forma Condensed Consolidated Financial Statements (c) Exhibits 2.1 Purchase Agreement, dated as of May 9, 2003, by and between MJD Services Corp. and Golden West Telephone Properties, Inc. (Incorporated herein by reference to Exhibit 2.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003) 99.1 Pro Forma Financial Information, including Basis of Presentation, Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2003, Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2002 and Notes to Pro Forma Condensed Consolidated Financial Statements SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FAIRPOINT COMMUNICATIONS, INC. By: --------------------------------- Name: Walter E. Leach, Jr. Title: Senior Vice President and Chief Financial Officer Date: October 13, 2003 EXHIBIT INDEX Exhibit No. Exhibit - ----------- ------- 2.1 Purchase Agreement, dated as of May 9, 2003, by and between MJD Services Corp. and Golden West Telephone Properties, Inc. (Incorporated herein by reference to Exhibit 2.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003) 99.1 Pro Forma Financial Information, including Basis of Presentation, Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2003, Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2002 and Notes to Pro Forma Condensed Consolidated Financial Statements EX-99 3 ex99-1.txt EX. 99.1-PRO FORMA FINANCIAL INFORMATION Exhibit 99.1 INDEX TO PRO FORMA FINANCIAL STATEMENTS
Page ---- FAIRPOINT COMMUNICATIONS, INC AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: Basis of Presentation......................................................... P-2 Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2003............ P-3 Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2002...................................................... P-5 Notes to Pro Forma Condensed Consolidated Financial Statements................ P-6
P-1 FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS BASIS OF PRESENTATION (unaudited) The following unaudited pro forma condensed consolidated financial statements of FairPoint Communications, Inc. and subsidiaries (FairPoint or the Company) give effect to the divestiture described in Note 1 to the unaudited pro forma condensed consolidated financial statements (which divestiture is referred to as the South Dakota Divestiture). Pro forma adjustments and the assumptions on which they are based are described in the accompanying notes to the pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated balance sheet gives effect to the South Dakota Divestiture as if the transaction had occurred on June 30, 2003. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2002 gives effect to the South Dakota Divestiture as if the transaction had occurred as of January 1, 2002. The December 31, 2002 unaudited pro forma condensed consolidated statement of operations includes financial information derived from the Company's historical statements of operations as contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. During the second quarter of 2003, the South Dakota operations were reclassified from continuing operations to discontinued operations for financial reporting purposes. As required under generally accepted accounting principles, the Company will restate the previously reported 2002 historical financial statements to reflect the South Dakota operations as discontinued operations when the 2002 financial statements are reissued and presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Because the South Dakota operations have been reclassified to discontinued operations in the Company's June 30, 2003 historical financial statements, pro forma financial information for the six-month period ended June 30, 2003 is not required. The unaudited pro forma condensed consolidated financial statements are based upon the historical consolidated financial statements of FairPoint and should be read in conjunction with those consolidated financial statements and notes thereto included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 and the Company's Annual Report on Form 10-K for the year ended December 31, 2002. The unaudited condensed consolidated financial statements do not necessarily indicate the results that would have actually occurred if the South Dakota Divestiture had occurred on the dates indicated or that may occur in the future. P-2 FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET June 30, 2003 (Unaudited-Amounts in thousands)
South FairPoint Dakota Pro forma Note historical Divestiture adjustments ref. Pro forma ------------- ------------- ------------- ------------ ----------- Current assets: Cash............................................ $ 7,784 -- 24,204 1 31,988 Accounts receivable............................. 25,958 -- -- 25,958 Other........................................... 6,319 -- -- 6,319 Assets of discontinued operations............... 615 -- -- 615 Assets held for sale............................ 16,467 (16,467) -- -- ------------ ----------- ----------- ----------- Total current assets............................... 57,143 (16,467) 24,204 64,880 ------------ ------------ ----------- ----------- Property, plant, and equipment, net................ 258,351 -- -- 258,351 ------------ ----------- ----------- ----------- Other assets: 43,695 Investments..................................... 43,695 -- -- Goodwill, net of accumulated amortization....... 443,781 -- -- 443,781 Deferred charges and other assets............... 24,316 -- -- 24,316 ------------ ----------- ----------- ----------- Total other assets................................. 511,792 -- -- 511,792 ------------ ----------- ----------- ----------- Total assets....................................... $ 827,286 (16,467) 24,204 835,023 ============ =========== =========== =========== ===========
P-3 FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET June 30, 2003 (Unaudited-Amounts in thousands)
South FairPoint Dakota Pro forma Note historical Divestiture adjustments ref. Pro forma ------------- ------------- ------------- ------------ ----------- Current liabilities: Accounts payable.......................... $ 13,804 -- -- 13,804 Current portion of long-term debt and other long-term liabilities............ 13,304 -- -- 13,304 Demand notes payable...................... 416 -- -- 416 Accrued interest payable.................. 17,221 -- -- 17,221 Other accrued liabilities................. 19,611 -- -- 19,611 Liabilities of discontinued operations.... 3,583 -- -- 3,583 Liabilities held for sale................. 692 (692) -- 1 -- ------------- -------- ------ --------- Total current liabilities.................... 68,631 (692) -- 67,939 ------------- -------- ------ --------- Long-term liabilities: Long-term debt, net of current portion.... 802,218 -- -- 802,218 Liabilities of discontinued operations.... 5,039 -- -- 5,039 Deferred credits and other long-term liabilities, net of current portion.... 11,828 -- -- 11,828 ------------- -------- ------ --------- Total long-term liabilities.................. 819,085 -- -- 819,085 ------------- -------- ------ --------- Minority interest............................ 16 -- -- 16 ------------- -------- ------ --------- Common stock subject to put options.......... 2,136 -- -- 2,136 ------------- -------- ------ --------- Redeemable preferred stock................... 87,650 -- -- 87,650 ------------- -------- ------ --------- Shareholders' deficit: Common stock.............................. 499 -- -- 499 Additional paid-in capital................ 198,050 -- -- 198,050 Accumulated other comprehensive loss...... (17) -- -- (17) Accumulated deficit....................... (348,764) (15,775) 24,204 1 (340,335) ------------- -------- ------ --------- Total stockholders deficit................... (150,232) (15,775) 24,204 (141,803) ------------- -------- ------ --------- Total liabilities and stockholders' deficit.. $ (827,286) (16,467) 24,204 835,023 ============= ======== ====== =========
P-4 FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, 2002 (Unaudited-Amounts in thousands)
FairPoint South Dakota Pro forma Note historical Divestiture adjustments ref. Pro forma ------------ ----------- ----------- ----- --------- Revenues Operating expenses: $ 235,860 (5,040) -- 230,820 ------------ -------- --------- ----- --------- Operating expenses, excluding depreciation and amortization and stock-based compensation........................... 112,272 (2,002) 110,270 Depreciation and amortization............. 47,060 (751) -- 46,309 Stock-based compensation.................. 924 -- -- 924 ------------ -------- --------- ----- --------- Total operating expenses..................... 160,256 (2,753) -- 157,503 ------------ -------- --------- ----- --------- Income from operations....................... 75,604 (2,287) -- 73,317 ------------ -------- --------- ----- --------- Other income (expense): -- Net gain on sale of investments and other assets................................. 34 -- 34 Interest and dividend income.............. 1,898 -- -- 1,898 Interest expense.......................... (79,796) -- -- (79,796) Impairment on investments................. (12,568) -- -- (12,568) Equity in net earnings of investees....... 7,903 (106) -- 7,797 Other nonoperating, net................... 1,184 (40) -- 1,144 ------------ -------- --------- ----- --------- Total other expense.......................... (81,345) (146) -- (81,491) ------------ -------- --------- ----- --------- Loss from continuing operations before income -- taxes..................................... (5,741) (2,433) (8,174) Income tax expense........................... (518) -- -- (518) Minority interest in income of subsidiaries.. (2) -- -- (2) ------------ -------- --------- ----- --------- Loss from continuing operations.............. (6,261) (2,433) -- (8,694) ============ ======== ========= ----- =========
P-5 FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) South Dakota Divestiture On September 30, 2003, MJD Services Corp. ("MJD Services"), a wholly-owned subsidiary of FairPoint Communications, Inc. (the "Company"), completed the sale (the "South Dakota Divestiture") of all of the capital stock owned by MJD Services of Union Telephone Company of Hartford, Armour Independent Telephone Co., WMW Cable TV Co. and Kadoka Telephone Co. to Golden West Telephone Properties, Inc. ("Golden West"). The sale was completed in accordance with the terms of the Purchase Agreement, dated as of May 9, 2003 (the "Purchase Agreement"), between MJD Services and Golden West. MJD Services received $24,204,000 in cash at closing, subject to certain post-closing purchase price adjustments set forth in the Purchase Agreement. The companies sold to Golden West serve approximately 4,150 access lines located in South Dakota. The operations of these companies have been shown as discontinued operations beginning in the second quarter of 2003. Under the terms of the Company's credit facility and the indentures governing the Company's senior notes and senior subordinated notes, the proceeds from the South Dakota Divestiture (net of the expenses related thereto) must be either used to repay borrowings under the Company's credit facility or reinvested in other telecommunications assets. Accordingly, the proceeds from the South Dakota Divestiture will be held as a short-term investment and a pro forma entry of $24.2 million has been made to reflect the temporary use of proceeds as invested cash and cash equivalents. The proceeds from the South Dakota Divestiture together with borrowings under the Company's revolving credit facility will be used to fund certain pending acquisitions. As a result of the South Dakota Divestiture, 3.5% ownership in South Dakota Network, LLC was transferred to Golden West. Had the South Dakota Divestiture occurred on January 1, 2000, pro forma revenues for 2000 and 2001 would have been $190.8 million and $230.1 million, respectively; income from operations for 2000 and 2001 would have been $46.8 million and $58.0 million, respectively; and loss from continuing operations would have been $15.2 and $26.4 million, respectively. P-6 -----END PRIVACY-ENHANCED MESSAGE-----