FairPoint Communications 2007 Annual Report Download - page 57

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Table of Contents


Revenues increased $13.4 million to $283.5 million in 2007 compared to 2006. Operations acquired in 2006 contributed
$11.8 million to the increased total revenues. Excluding the impact of acquired operations, revenues from our existing operations
increased $1.6 million. We derived our revenues from the following sources:
 Local calling service revenues increased $2.0 million to $69.7 million in 2007. Acquired operations
increased local calling service revenues by $3.8 million. Revenues from our existing operations decreased $1.8 million compared to 2006.
The decrease in local revenues from existing operations is primarily due to a 5.2% decline in net voice access lines.
  USF high-cost loop payments decreased $1.0 million to $19.1 million in 2007.
Acquired operations added $1.0 million in USF revenue and USF revenues from our existing operations declined $2.0 million. The
national average cost per loop in relation to our average cost per loop has increased and, as a result, our receipts from the USF have
declined. We expect this trend to continue as we anticipate the national average cost per loop will likely continue to increase in relation to
our average cost per loop.
 Interstate access revenues decreased $0.8 million to $71.6 million in 2007 compared to 2006. Acquired
operations contributed $3.2 million to interstate access revenues. Interstate access revenues from our existing operations decreased
$4.0 million. In 2007, we recognized certain negative interstate revenue settlement adjustments related to prior years in the amount of
$1.3 million. In addition, in 2006, we recognized certain negative interstate revenue settlement adjustments related to prior years in the
amount of $0.8 million. Excluding these prior year adjustments and acquired operations, interstate access revenue declined $3.5 million
in 2007. This decrease is partially due to lower expenses and lower net property, plant and equipment balance at the operating companies.
 Intrastate access revenues increased $4.1 million to $41.4 million in 2007 compared to 2006. Acquired
operations added $1.3 million in intrastate access revenues in 2007. Intrastate access revenues from our existing operations increased
$2.8 million. The increase is due to the settlement of certain previously disputed access charges during 2007 totaling $5.0 million.
Excluding this settlement, intrastate revenues would have decreased due to a decrease in access rates and a decrease in minutes of use
compared to 2006. Intrastate access revenues are expected to continue to decline.
 Long distance services revenues increased $6.1 million to $30.2 million in 2007 compared to 2006. Of
this increase, $0.1 million was attributable to acquired companies and $6.0 million was attributable to our existing operations. This
increase was primarily a result of promotional efforts and bundled product offerings with unlimited long distance designed to generate
more revenue.
 Data and Internet services revenues increased $5.4 million to $33.6 million in 2007 compared to 2006.
Of this increase, $1.3 million was attributable to acquired companies and $4.1 million was attributable to our existing operations. The
increase from existing operations is due primarily to increases in HSD customers as we continue to aggressively market our HSD
services. Our HSD subscriber customer base as of December 31, 2007 increased to 67,703 subscribers compared to 59,444 subscribers
as of December 31, 2006, a 14% increase during this period.
 Other services revenues decreased $2.4 million to $18.0 million in 2007 compared to 2006. Acquired operations
added $0.9 million in other services revenues in 2007. Other services revenues from our existing operations decreased $3.3 million. This
decrease is principally due to a decrease in directory revenues in 2007.

 . Operating expenses increased $63.1 million to $218.6 million in
2007 compared to 2006. Of the increase, $52.1 million is related to transition expenses related to the merger and $6.2 million is related to
expenses of the acquired operations. The remaining increase from our existing operations is principally due an increase in cost of goods
sold of $3.4 million
55