FairPoint Communications 2003 Annual Report Download - page 20

 Long distance services revenues decreased $2.7 million from $19.5 million in 2001 to $16.8 million in
2002, all attributed to a reduction in Carrier Services' long distance wholesale operations. Wholesale customers were lost when one of our
underlying wholesale carriers declared bankruptcy.
 Data and Internet services revenues increased $2.6 million from $7.7 million in 2001 to $10.3 million in
2002, including an increase of $0.1 million from acquisitions and an increase of $2.5 million as a result of increased service offerings to our
customers of our existing operations.
 Other revenues decreased by $0.9 million from $18.7 million in 2001 to $17.8 million in 2002 as other revenue
contributed by the companies we acquired in 2001 of $0.1 million was offset by a reduction in other revenues of $1.0 million from our existing
operations. This decrease is mainly associated with reductions in billing and collections revenues, as interexchange carriers, or IXCs, "take
back" the billing function for their long distance customers. This trend is expected to continue.
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 Operating expenses decreased $5.5 million, or 4.7%, to $110.3 million in 2002 from $115.8 million in 2001.
Expenses of our wholesale long distance company decreased $2.5 million as a result of lower minutes of use from our wholesale
customers. In addition, expenses of our existing operations decreased by $4.4 million, mainly attributable to overall cost reduction efforts
throughout the company. This decrease was offset by an increase of $1.4 million attributable to expenses of the RLECs we acquired in 2001.
 Depreciation and amortization from continuing operations decreased $8.8 million to $46.3 million in
2002 from $55.1 million in 2001. The decrease of $12.0 million attributable to the discontinuance of amortizing goodwill upon the
implementation of SFAS No. 142 was offset by increases in depreciation of property, plant and equipment consisting of $2.5 million
attributable to the increased investment in our communications network by existing operations we acquired prior to 2001 and $0.7 million
related to the companies we acquired in 2001.
 For the year ended December 31, 2002, stock based compensation of $0.9 million was incurred,
including $1.2 million related to a modification of an employee stock option agreement with an executive officer, offset by the decrease in the
estimated value of fully vested stockholder appreciation rights agreements of $0.3 million. For the year ended December 31, 2001, stock
based compensation of $0.9 million was related to the decrease in the estimated value of fully vested stockholder appreciation rights
agreements. This is offset by a $2.2 million non-cash stock based compensation charge related to a modification of an employee stock option
agreement with an executive officer. The net charge for the year ended December 31, 2001 was $1.3 million.
 Income from continuing operations increased $15.3 million to $73.3 million in 2002 from $58.0 million in
2001. Of this increase, $13.2 million was attributable to our existing operations and $2.1 million was attributable to the RLECs we acquired
in 2001. Income from our wholesale long distance company decreased $0.4 million, and stock based compensation expense decreased
$0.4 million.
 Total other expense from continuing operations decreased $1.5 million to $81.5 million in 2002 from
$83.0 million in 2001. The expense consists primarily of interest expense on long-term debt. Interest expense decreased $6.8 million to
$69.5 million in 2002 from $76.3 million in 2001. During 2002, we recorded non-cash impairment of investments of $12.6 million which is
associated with other than temporary declines in fair value of approximately $8.2 million of Choice One stock and a write-down of
$4.4 million for certain investments accounted for under the equity method. Earnings in equity investments increased $2.9 million to
$7.8 million in 2002 from $4.9 million in 2001.
The following is a summary of amounts included in realized and unrealized gains (losses) on interest rate swaps (dollars in thousands):
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Change in fair value of interest rate swaps $(6,896)$2,135
Reclassification of transition adjustment included in other comprehensive income (loss) (1,238) (1,437)
Realized gains (losses) (4,739) (10,275)
Total $(12,873)$(9,577)
 Income tax expense from continuing operations increased $0.1 million to $0.5 million in 2002 from
$0.4 million in 2001. The income tax expense relates primarily to income taxes owed in certain states.
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 Income from discontinued operations was $21.9 million in 2002. $2.4 million was a result of the South
Dakota disposition and $17.5 million was a result of a gain on extinguishment of debt at Carrier Services. Losses from discontinued