FairPoint Communications 2006 Annual Report Download - page 42
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· . We receive revenues from other services, including video services (including cable television and video-over-DSL), billing and
collection, directory services and sale and maintenance of customer premise equipment.
The following summarizes our revenues and percentage of revenues from continuing operations from these sources:
Local calling services $67,656 $65,105 $63,150 25%25%25%
Universal Service Fund high cost
loop 20,046 19,737 22,151 789
Interstate access 72,392 75,287 70,297 27 29 28
Intrastate access 37,352 40,009 42,389 14 15 17
Long distance services 23,537 20,868 17,766 977
Data and Internet services 28,242 24,168 19,054 10 9 7
Other services 20,844 17,669 17,838 8 7 7
Total $270,069 $262,843 $252,645 100%100%100%
Our operating expenses are categorized as operating expenses and depreciation and amortization.
· Operating expenses include cash expenses incurred in connection with the operation of our central offices and outside plant facilities and related
operations. In addition to the operational costs of owning and operating our own facilities, we also purchase long distance services from the regional
bell operating companies, large independent telephone companies and third party long distance providers. In addition, our operating expenses include
expenses relating to sales and marketing, customer service and administration and corporate and personnel administration. Also included in operating
expenses are non-cash expenses related to stock based compensation. Stock based compensation consists of compensation charges incurred in
connection with the employee stock options, stock units and non-vested stock granted to our executive officers and directors.
· Depreciation and amortization includes depreciation of our communications network and equipment and amortization of intangible assets.
We intend to continue to pursue selective acquisitions and mergers. Recent transactions are listed below.
· On January 15, 2007, we entered into the Merger Agreement pursuant to which the Company and Spinco will merge, with the Company continuing as
the surviving corporation for legal purposes. Spinco is a newly formed wholly-owned subsidiary of Verizon that will own Verizon’s local exchange and
related business activities in Maine, New Hampshire and Vermont. For accounting purposes, we expect that FairPoint will be the acquiree.
Consequently, merger related costs will been expensed as incurred in connection with the transaction and FairPoint’s assets and liabilities will be
recorded at fair value at acquisition.
· On November 15, 2006, we completed a merger with The Germantown Independent Telephone Company, or GITC. The merger consideration was
$10.7 million (or $9.2 million net of cash acquired). GITC is a single exchange rural incumbent local exchange carrier located in the Village
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