FairPoint Communications 2009 Annual Report Download - page 68

Table of Contents
• Selling, general and administrative expense includes salaries and wages and benefits not
directly attributable to a service or product, bad debt charges, taxes other than income, advertising and sales commission costs, customer
billing, call center and information technology costs, professional service fees and rent for administrative space. Also included in selling,
general and administrative expenses are non-cash expenses related to stock based compensation. Stock based compensation consists of
compensation charges incurred in connection with the employee stock options, stock units and non-vested stock granted to executive
officers and directors.
• Depreciation and amortization includes depreciation of our communications network and equipment and
amortization of intangible assets.
Because the Verizon Northern New England business had been operating as the LEC of Verizon in Maine, New Hampshire and Vermont, and not
as a standalone telecommunications provider, the historical operating results of the Verizon Northern New England business for the three months ended
March 31, 2008 and the year ended December 31, 2007 include approximately $58 million and $259 million, respectively, of expenses for services
provided by the Verizon Group, including information systems and information technology, shared assets including office space outside of New
England, supplemental customer sales and service and operations. During the one month ended January 2009 and nine months ended December 31,
2008, we operated under the Transition Services Agreement, under which we incurred $15.9 million and $148.6 million of expenses, respectively.
Subsequent to January 30, 2009, we have performed these services internally or obtained them from third-party service providers and not from Verizon.

On March 31, 2008, we completed the Merger with Spinco. The Merger of Legacy FairPoint and Spinco was accounted for as a reverse
acquisition of Legacy FairPoint by Spinco under the purchase method of accounting because Verizon's stockholders owned at least a majority of the
shares of the combined Company following the Merger. The Merger consideration was $316.3 million. Spinco was a wholly-owned subsidiary of
Verizon that owned Verizon's local exchange and related business activities in Maine, New Hampshire and Vermont. Spinco was spun off from
Verizon immediately prior to the Merger. Spinco served approximately 1,562,000 access line equivalents as of the date of acquisition.
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