FairPoint Communications 2010 Annual Report Download - page 53

Table of Contents

On March 31, 2008, the Merger between Spinco and Legacy FairPoint was completed. In connection with the Merger and in accordance with the terms of
the Merger Agreement, Legacy FairPoint issued 53,760,623 shares of the Old Common Stock to Verizon stockholders. Prior to the Merger, the Verizon Group
engaged in a series of restructuring transactions to effect the transfer of specified assets and liabilities of the Verizon Northern New England business to
Spinco and the entities that became Spinco’s subsidiaries. Spinco was then spun off from Verizon immediately prior to the Merger. While FairPoint was the
surviving entity in the Merger, for accounting purposes Spinco is deemed to be the acquirer. As a result, for the year ended December 31, 2008, the statement
of operations and the financial information derived from the statement of operations in this Annual Report reflect the consolidated financial results of the
Company by including the financial results of the Verizon Northern New England business for the three months ended March 31, 2008, the financial results
of Spinco for the nine months ended December 31, 2008 and the financial results of Legacy FairPoint for the nine months ended December 31, 2008. The
statement of operations and the financial information derived from the statement of operations for the nine months ended December 31, 2008 in this Annual
Report reflects the actual results of the consolidated Company (FairPoint and Spinco) for such period. The balance sheet and financial information derived
from the balance sheet in this Annual Report reflect the consolidated assets and liabilities of Legacy FairPoint and Spinco at December 31, 2010 and 2009.
Certain assets and liabilities of the Verizon Northern New England business (principally related to pension, other post-employment benefits and associated
deferred taxes) were not distributed to Spinco prior to the Merger. The statements of operations in this Annual Report may not be indicative of our future
results. For more information, see note 1 to the consolidated financial statements.
Management views our business of providing data, voice and communication services to residential and business customers as one business segment as
defined in the Segment Reporting Topic of the ASC.

We derive our revenues from:
 Voice services. We receive revenues from our telephone operations from the provision of local exchange, long distance, local private line, wire
maintenance, voice messaging and value-added services. Included in long-distance services revenue are revenues received from regional toll calls.
Value-added services are a family of services that expand the utilization of the network, including products such as caller ID, call waiting and call
return. The provision of local exchange services not only includes retail revenues but also includes local wholesale revenues from UNEs,
interconnection revenues from CLECs and wireless carriers, and some data transport revenues. Local calling services revenues also include
Universal Service Fund payments for high-cost loop support, local switching support, long-term support and ICLS.
 Access. We receive revenues for the provision of network access, including interstate access and intrastate access.
Network access revenues are earned from end-user customers and long-distance and other competing carriers who use our local exchange facilities to
provide usage services to their customers. Switched access revenues are derived from fixed and usage-based charges paid by carriers for access to our
local network. Special access revenues originate from carriers and end-users that buy dedicated local and interexchange capacity to support their
private networks.
Interstate access revenues are earned on charges to long-distance carriers and other customers for access to our networks in connection with the
origination and termination of interstate telephone calls both to and from our customers. Interstate access charges to long-distance carriers and other
customers are based on access rates filed with the FCC.
Intrastate access revenues consist primarily of charges paid by long-distance companies and other customers for access to our networks in connection
with the origination and termination of intrastate telephone calls both to and from our customers. Intrastate access charges to long-distance carriers
and other customers are based on access rates filed with the state regulatory agencies.
52