FairPoint Communications 2004 Annual Report Download - page 521

3. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net, consists of the following:
December 31,
Useful Lives 2004 2003
Buildings 10-40 years $11,223 $9,951
Wireless plant equipment 3-15 years 51,940 44,525
Furniture, fixtures and equipment 2-5 years 361 318
Leasehold Improvements 5 years 1,725 1,294
65,249 56,088
Less accumulated depreciation (30,724)(26,466)
Property, plant and equipment, net $34,525 $29,622
Property, plant, and equipment, net, includes the following:
Allocated capitalized network engineering costs of $245 and $415 were recorded during the years ended December 31, 2004 and 2003, respectively.
Construction-in-progress included in certain of the classifications shown above, principally wireless plant equipment, amounted to $1,767 and $852
at December 31, 2004 and 2003, respectively.
Depreciation expense for the years ended December 31, 2004, 2003 and 2002 was $5,521, $5,179 and $4,225, respectively.
4. TRANSACTIONS WITH AFFILIATES
Significant transactions with affiliates are summarized as follows:
Years Ended December 31,
2004 2003 2002
Revenue:
Operating revenues (b) $158,571 $138,796 $ 109,232
Cellsite allocated revenues (c) 1,506 2,963 3,037
Cost of Service:
Direct telecommunication charges (a) 1,697 274 302
Allocation of cost of service (a) 3,360 3,315 1,105
Allocation of switch usage cost (a) 4,705 7,256 5,077
Selling, General and Administrative:
Allocation of certain general and administrative expenses (a) 2,198 1,797 1,399
(a) Expenses were allocated based on the Partnership’s percentage of total customers, customer gross additions or minutes-of-use where applicable. The
Partnership believes the allocations are reasonable.
(b) Affiliate operating revenues primarily represent revenues generated from transactions with Cellco, the Partnership’s primary reseller. The wholesale
rates charged to Cellco do not necessarily reflect current market rates. The Partnership continues to re-evaluate the rates and expects these rates to be
reduced in the future consistent with market trends and the terms of the limited partnership agreement.
(c) Cellsite allocated revenues, based on the Partnership’s percentage of minutes of use, result from the Partnership sharing a cell site with the Catskills
RSA Limited Partnership, an affiliate entity.
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