FairPoint Communications 2005 Annual Report Download - page 243

3. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net, consists of the following as of December 31, 2005 and 2004:
Useful Lives 2005 2004
Buildings 10-40 years $13,408 $11,223
Wireless plant equipment 3-15 years 58,087 51,940
Furniture, fixtures and equipment 2-5 years 303 361
Leasehold Improvements 5 years 2,149 1,725
73,947 65,249
Less accumulated depreciation (36,431)(30,724)
Property, plant and equipment, net $37,516 $34,525
Capitalized network engineering costs of $406 and $245 were recorded during the years ended December 31, 2005 and 2004, respectively. Construction-
in-progress included in certain of the classifications shown above, principally wireless plant equipment, amounted to $2,368 and $1,767 at
December 31, 2005 and 2004, respectively. Depreciation expense for the years ended December 31, 2005, 2004 and 2003 was $6,347, $5,521 and
$5,179, respectively.
4. TRANSACTIONS WITH AFFILIATES
Significant transactions with affiliates (Cellco and its related entities), including allocations and direct charges, are summarized as follows for the years
ended December 31, 2005, 2004 and 2003:
2005 2004 2003
Revenue:
Operating revenues (b) $ 176,310 $ 158,571 $138,796
Cellsite allocated revenues (c) 1,377 1,506 2,963
Cost of Service:
Direct telecommunication charges (a) 6,355 1,697 274
Long distance charges 8,208 5,580 4,971
Allocation of cost of service (a) 3,364 3,360 3,315
Allocation of switch usage cost (a) 5,519 4,705 7,256
Selling, General and Administrative:
Allocation of certain general and
administrative expenses (a) 1,672 2,198 1,797
(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.
All affiliate transactions captured above are based on actual amounts directly incurred by Cellco on behalf of the Partnership and/or allocations from
Cellco. Revenues and expenses were allocated based on the Partnership’s percentage of total customers, gross customer additions or minutes of use where
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