FairPoint Communications 2004 Annual Report Download - page 39

The following summarizes our revenues and percentage of revenues from continuing operations from these sources:
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Local calling services $63,150 $56,078 $54,000 25%24%23%
Universal Service Fund high cost loop 22,151 18,903 22,429 9 8 10
Interstate access 70,297 66,564 65,769 28 29 29
Intrastate access 42,389 43,969 43,848 17 19 19
Long distance services 17,766 15,440 16,763 7 7 7
Data and Internet services 19,054 13,431 10,257 7 6 4
Other services 17,838 17,047 17,753 7 7 8
Total $252,645 $231,432 $230,819 100%100%100%
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Our operating expenses are categorized as operating expenses; depreciation and amortization; and stock based compensation.
•Operating expenses includes cash costs 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 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.
•Depreciation and amortization includes depreciation of our communications network and equipment. Prior to January 1, 2002,
and the implementation of SFAS No. 142, this category also included amortization of goodwill relating to our acquisitions.
•Stock based compensation consists of non-cash compensation charges incurred in connection with the employee stock options
granted to our officers, and stockholder appreciation rights agreements granted to two of our officers.
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We intend to continue to pursue selective acquisitions:
•During 2004, we made no acquisitions.
•On December 1, 2003, we purchased all of the capital stock of Community Service Telephone and Commtel
Communications, which we refer to as the Maine acquisition. Community Service Telephone and Commtel Communications
provided communication services to approximately 13,280 access line equivalents in central Maine as of the date of such
acquisition.
•On June 18, 2003, we executed an agreement and plan of merger with Berkshire Telephone Company, or Berkshire, to
merge FairPoint Berkshire Corporation with Berkshire. Shareholders of Berkshire would receive approximately $19.2 million
in the merger, subject to adjustment. Berkshire is an independent local exchange carrier that, as of December 31, 2004,
provided communication services to 7,260 access line equivalents serving five communities in New York State. Berkshire's
communities of service are adjacent to Taconic Telephone Corp., one of the Company's subsidiaries. This acquisition is
expected to close during the second quarter of 2005, pending receipt of required regulatory approvals.
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