FairPoint Communications 2003 Annual Report Download - page 19

$4.4 million for certain investments accounted for under the equity method. There were no similar impairment losses recorded in 2003.
Earnings in equity investments increased $2.3 million to $10.1 million in 2003 from $7.8 million in 2002. Other non-operating income
(expense) includes net gain (loss) on the extinguishment of debt and expenses related to the loss on the write off of loan origination costs. As
a result of the issuance of $225.0 million in senior notes during the first quarter of 2003, we recorded $2.8 million and $0.7 million of non-
operating gains on the extinguishment of the senior subordinated notes and the Carrier Services loans, respectively. Additionally, we
recorded a non-operating loss of $5.0 million for the write-off of debt issue costs related to this extinguishment of debt in 2003.
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 $2,135 $7,693
Reclassification of transition adjustment included in other comprehensive income (loss) (1,437) (1,029)
Realized gains (losses) (10,275) (8,051)
Total $(9,577)$(1,387)
 Income tax benefit from continuing operations increased $0.7 million to $0.2 million in 2003 from an expense of
$0.5 million in 2002. The income tax benefit related primarily to income taxes owed in certain states offset by investment tax credits in certain
states.
 In November 2001, we decided to discontinue the CLEC operations of Carrier Services. Net income from
discontinued operations of our CLEC operations was $0.3 million and $19.5 million for 2003 and 2002, respectively. The income in 2002
was a result of a gain on extinguishment of debt attributable to Carrier Services. Net income from discontinued operations of our existing
operations sold in the South Dakota disposition was $1.9 million and $2.4 million for 2003 and 2002, respectively. The Company recorded a
gain on disposal in connection with the South Dakota disposition of $7.7 million in 2003.
 Our 2003 net loss attributable to common shareholders was $4.3 million after giving effect to $8.9 million in
dividends and accretion related to our series A preferred stock and the repurchase of series A preferred stock at a discount of $2.9 million.
Additionally, as a result of the adoption of SFAS 150 on July 1, 2003, the dividends and accretion of $9.0 million related to these instruments
is included as a reduction of net income for the third and fourth quarters of 2003. Our 2002 net income attributable to common shareholders
was $1.3 million after giving effect to $11.9 million in dividends and accretion related to our series A preferred stock. The differences between
the 2003 and 2002 net income (loss) are a result of the factors discussed above.
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 Revenues increased $0.6 million to $230.8 million in 2002 compared to $230.2 million in 2001. Of this increase,
$4.2 million was attributable to revenues from companies we acquired in 2001. This was offset by a reduction of $0.7 million in revenues
from our existing operations and a decrease in revenues of $2.9 million attributable to revenues from our wholesale long distance company.
We derived our revenues from the following sources.
 Local calling service revenues increased $3.4 million from $50.6 million in 2001 to $54.0 million in 2002,
including an increase of $2.2 million from an increase in the number of access lines and local services provided in our existing operations,
as well as an increase of $1.2 million from the companies we acquired in 2001.
 Universal service fund—high cost loop receipts increased $3.4 million to $22.4 million in
2002 from $19.0 million in 2001. Our existing operations accounted for $3.2 million of the increase with the balance obtained from
companies we acquired in 2001. The support from the high cost loop fund is associated with historical expense levels of our companies that
exceed the national average cost per loop.
 Interstate access revenues were relatively flat from year to year, decreasing $0.2 million from
$66.0 million in 2001 to $65.8 in 2002. A reduction of $1.2 million from our existing operations was offset by $1.0 million associated with
companies we acquired in 2001. The $1.2 million revenue reductions are due mainly to our cost reductions at acquired entities, which
correspondingly lower our revenue requirement.
 Intrastate access revenues decreased $4.9 million from $48.7 million in 2001 to $43.8 in 2002. An
increase of $1.6 million from companies we acquired in 2001 was offset by a reduction of $6.5 million from our existing operations. The
decrease was mainly due to rate and state support reductions in Maine, Kansas, Vermont and Illinois. We continue to expect downward
pressure on our intrastate access rates. To the extent these pressures reduce our earnings levels below authorized rates of return, our
companies are allowed to file and seek approval from the state public utility commissions for recovery of these reductions through increases
in local rates and, where they exist, state universal service funds.