FairPoint Communications 2006 Annual Report Download - page 148

Download and view the complete annual report

Please find page 148 of the 2006 FairPoint Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

3. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net, consists of the following as of December 31, 2006 and 2005:
Useful Lives 2006 2005
Buildings 10-40 years $ 14,367 $ 13,408
Wireless plant equipment 3-15 years 61,795 58,087
Furniture, fixtures and equipment 2-5 years 18 303
Leasehold Improvements 5 years 2,460 2,149
78,640 73,947
Less accumulated depreciation (39,723)(36,431)
Property, plant and equipment, net $38,917 $37,516
Capitalized network engineering costs of $545 and $406 were recorded during the years ended December 31, 2006 and 2005, respectively. Construction-
in-progress included in certain of the classifications shown above, principally wireless plant equipment, amounted to $641 and $2,368 at December 31,
2006 and 2005, respectively. Depreciation and amortization expense for the years ended December 31, 2006, 2005 and 2004 was $6,720, $6,347 and
$5,521, 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, 2006, 2005 and 2004:
2006 2005 2004
Revenue:
Operating revenues (b) $153,176 $ 176,310 $ 158,571
Cellsite allocated revenues (c) 1,336 1,377 1,506
Cost of Service:
Direct telecommunication charges (a) 7,194 6,355 1,697
Long distance charges 7,082 8,208 5,580
Allocation of cost of service (a) 3,812 3,364 3,360
Allocation of switch usage cost (a) 4,360 5,519 4,705
Selling, General and Administrative:
Allocation of certain general and administrative expenses (a) 1,911 1,672 2,198
(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.
10