UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

---

FORM 10-Q

|(Mark One)                                                    |                                                                                         
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|For the quarterly period ended June 30, 2007.                
|or                                                           
|o                                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from                             to

Commission File Number 333-56365

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FairPoint Communications, Inc.(Exact Name of Registrant as Specified in Its Charter)

|Delaware                                                       |  | 13-3725229                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|521 East Morehead Street, Suite 250                            |  |                                     
|Charlotte, North Carolina                                      |  | 28202                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

(704) 344-8150(Registrant's telephone number, including area code)

---

Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer    o

Accelerated filer    ý

Non-accelerated filer    o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes o No ý

As of August 5, 2007, there were 35,241,541 shares of the Registrant's common stock, par value $0.01 per share, outstanding.

Documents
incorporated by reference:None



---





INDEX

|                              |  |                                                                                                                                 |  | Page
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | ----
|PART I. FINANCIAL INFORMATION |  |                                                                                                                                
|Item 1.                       |  | Financial Statements                                                                                                            |  | 3   
|                              |  | Condensed Consolidated Balance Sheets as of June 30, 2007 (unaudited) and December 31, 2006                                     |  | 4   
|                              |  | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2007 and 2006 (unaudited)           |  | 5   
|                              |  | Condensed Consolidated Statement of Stockholders' Equity for the six months ended June 30, 2007 (unaudited)                     |  | 6   
|                              |  | Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2007 and 2006 (unaudited) |  | 7   
|                              |  | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006 (unaudited)                     |  | 8   
|                              |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                |  | 9   
|Item 2.                       |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                           |  | 17  
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                      |  | 30  
|Item 4.                       |  | Controls and Procedures                                                                                                         |  | 31  
|PART II. OTHER INFORMATION    |  |                                                                                                                                
|Item 1.                       |  | Legal Proceedings                                                                                                               |  | 32  
|Item 1A.                      |  | Risk Factors                                                                                                                    |  | 32  
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                     |  | 32  
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                                 |  | 33  
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                             |  | 33  
|Item 5.                       |  | Other Information                                                                                                               |  | 33  
|Item 6.                       |  | Exhibits                                                                                                                        |  | 33  
|                              |  | Signatures                                                                                                                      |  | 34  

2

---





PART IFINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements

Some statements in this Quarterly Report are known as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. Forward-looking statements may relate to, among other things:



These
forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this Quarterly
Report that are not historical facts. When used in this Quarterly Report, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally
intended to identify forward looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual
results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors
discussed in this Quarterly Report and in Exhibit 99.1 to this Quarterly Report. You should not place undue reliance on such forward-looking statements, which are based on the information
currently available to us and speak only as of the date on which this Quarterly Report was filed with the Securities and Exchange Commission, or the SEC. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in
our subsequent periodic reports filed with the SEC on Forms 10-K, 10-Q and 8-K and Schedule 14A.

Except as otherwise required by the context, references in this Quarterly Report to "FairPoint," "our company," "we," "us," or "our" refer to the combined
business of FairPoint Communications, Inc. and all of its subsidiaries. Except as otherwise required by the context, all references to the "Company" refer to FairPoint
Communications, Inc. excluding its subsidiaries.

3

---



Item 1. Financial Statements.

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES  Condensed Consolidated Balance Sheets

|                                           |                                                  | June 30,
2007 |         | December 31,
2006 |  
|------------------------------------------ | ------------------------------------------------ | ------------- | ------- | ----------------- | -
|
|
|Assets                                     |                                                  |               |         |                   |  
|Current assets:                            |                                                  |               |         |                   |  
|                                           | Cash                                             |               | $       | 29,226            |  
|                                           | Current receivables, net                         |               |         | 42,583            |  
|                                           | Other current assets                             |               |         | 14,381            |  
|                                           | Deferred income tax, net                         |               |         | 4,590             |  
|                                           |                                                  |               |         |                   |  
|Total current assets                       |                                                  |               | 90,780  |                   |  
|                                           |                                                  |               |         |                   |  
|Property, plant, and equipment, net        |                                                  |               | 245,188 |                   |  
|Investments                                |                                                  |               | 6,379   |                   |  
|Goodwill                                   |                                                  |               | 499,215 |                   |  
|Deferred income tax, net                   |                                                  |               | 41,240  |                   |  
|Deferred charges and other assets          |                                                  |               | 26,253  |                   |  
|                                           |                                                  |               |         |                   |  
|Total assets                               |                                                  | $             | 909,055 |                   | $
|                                           |                                                  |               |         |                   |  
|Liabilities and Stockholders' Equity       |                                                  |               |         |                   |  
|Current liabilities:                       |                                                  |               |         |                   |  
|                                           | Accounts payable                                 |               | $       | 30,127            |  
|                                           | Dividends payable                                |               |         | 13,957            |  
|                                           | Current portion of long-term debt                |               |         | 734               |  
|                                           | Demand notes payable                             |               |         | 308               |  
|                                           | Accrued interest payable                         |               |         | 636               |  
|                                           | Other accrued liabilities                        |               |         | 22,567            |  
|                                           | Liabilities of discontinued operations           |               |         | 476               |  
|                                           |                                                  |               |         |                   |  
|Total current liabilities                  |                                                  |               | 68,805  |                   |  
|                                           |                                                  |               |         |                   |  
|Long-term liabilities:                     |                                                  |               |         |                   |  
|                                           | Long-term debt, net of current portion           |               |         | 603,081           |  
|                                           | Deferred credits and other long-term liabilities |               |         | 6,913             |  
|                                           |                                                  |               |         |                   |  
|Total long-term liabilities                |                                                  |               | 609,994 |                   |  
|                                           |                                                  |               |         |                   |  
|Minority interest                          |                                                  |               | 8       |                   |  
|                                           |                                                  |               |         |                   |  
|Stockholders' equity:                      |                                                  |               |         |                   |  
|                                           | Common stock                                     |               |         | 353               |  
|                                           | Additional paid-in capital                       |               |         | 504,344           |  
|                                           | Accumulated deficit                              |               |         | (280,799          | )
|                                           | Accumulated other comprehensive income, net      |               |         | 6,350             |  
|                                           |                                                  |               |         |                   |  
|Total stockholders' equity                 |                                                  |               | 230,248 |                   |  
|                                           |                                                  |               |         |                   |  
|Total liabilities and stockholders' equity |                                                  | $             | 909,055 |                   | $
|                                           |                                                  |               |         |                   |  

See
accompanying notes to condensed consolidated financial statements (unaudited)

4

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FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES  Condensed Consolidated Statements of Operations  (Unaudited)

|                                     |                                                             | Three months ended
June 30, |         | Six months ended
June 30, |  
|------------------------------------ | ----------------------------------------------------------- | --------------------------- | ------- | ------------------------- | -
|
|
|Revenues                             |                                                             | $                           | 69,897  |                           | $
|                                     |                                                             |                             |         |                           |  
|Operating expenses:                  |                                                             |                             |         |                           |  
|                                     | Operating expenses, excluding depreciation and amortization |                             |         | 51,606                    |  
|                                     | Depreciation and amortization                               |                             |         | 12,342                    |  
|                                     |                                                             |                             |         |                           |  
|Total operating expenses             |                                                             |                             | 63,948  |                           |  
|                                     |                                                             |                             |         |                           |  
|Income from operations               |                                                             |                             | 5,949   |                           |  
|                                     |                                                             |                             |         |                           |  
|Other income (expense):              |                                                             |                             |         |                           |  
|                                     | Net gain on sale of investments and other assets            |                             |         | 46,585                    |  
|                                     | Interest and dividend income                                |                             |         | 433                       |  
|                                     | Interest expense                                            |                             |         | (9,976                    | )
|                                     | Equity in net earnings of investees                         |                             |         | 1,994                     |  
|                                     |                                                             |                             |         |                           |  
|Total other income (expense)         |                                                             |                             | 39,036  |                           |  
|                                     |                                                             |                             |         |                           |  
|Income before income taxes           |                                                             |                             | 44,985  |                           |  
|Income tax expense                   |                                                             |                             | (14,205 | )                         |  
|Minority interest                    |                                                             |                             | (1      | )                         |  
|                                     |                                                             |                             |         |                           |  
|Net income                           |                                                             | $                           | 30,779  |                           | $
|                                     |                                                             |                             |         |                           |  
|Weighted average shares outstanding: |                                                             |                             |         |                           |  
|                                     | Basic                                                       |                             |         | 34,765                    |  
|                                     |                                                             |                             |         |                           |  
|                                     | Diluted                                                     |                             |         | 34,949                    |  
|                                     |                                                             |                             |         |                           |  
|Earnings per share:                  |                                                             |                             |         |                           |  
|                                     | Basic                                                       |                             | $       | 0.89                      |  
|                                     |                                                             |                             |         |                           |  
|                                     | Diluted                                                     |                             | $       | 0.88                      |  
|                                     |                                                             |                             |         |                           |  

See
accompanying notes to condensed consolidated financial statements (unaudited)

5

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FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES  Condensed Consolidated Statement of Stockholders' Equity (Unaudited)  Six Months Ended June 30, 2007  (in thousands)

|                                                  |  | Common Stock |   |   |     | Accumulated
other
comprehensive
income |   |         |   |   |      
|------------------------------------------------- |  | ------------ | - | - | --- | -------------------------------------- | - | ------- | - | - | -----
|
|
|Balance at December 31, 2006                      |  | 35,218       |   | $ | 352 |                                        | $ | 530,536 |   | $ | 5,376
|                                                  |  |              |   |   |     |                                        |   |         |   |   |      
|Net income                                        |  |             |   |   |    |                                        |   |        |   |   |     
|Issuance of restricted shares, net of forfeitures |  | 58           |   |   | 1   |                                        |   |        |   |   |     
|Restricted stock cancelled for withholding tax    |  | (38          | ) |   |    |                                        |   | (728    | ) |   |     
|Exercise of restricted units                      |  | 4            |   |   |    |                                        |   |        |   |   |     
|Stock based compensation expense                  |  |             |   |   |    |                                        |   | 2,041   |   |   |     
|Dividends declared                                |  |             |   |   |    |                                        |   | (27,866 | ) |   |     
|Tax benefit from stock based compensation expense |  |             |   |   |    |                                        |   | 361     |   |   |     
|Other comprehensive income from cash flow hedges  |  |             |   |   |    |                                        |   |        |   |   | 974  
|                                                  |  |              |   |   |     |                                        |   |         |   |   |      
|Balance at June 30, 2007                          |  | 35,242       |   | $ | 353 |                                        | $ | 504,344 |   | $ | 6,350
|                                                  |  |              |   |   |     |                                        |   |         |   |   |      

See accompanying notes to condensed consolidated financial statements (unaudited)

6

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FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES  Condensed Consolidated Statements of Comprehensive Income  (Unaudited)

|                            |                   | Three months ended
June 30,                                                                                                                                                                                                                                                        |        | Six months ended
June 30,
|--------------------------- | ----------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | -------------------------
|
|
|Net income                  |                   | $                                                                                                                                                                                                                                                                                  | 30,779 |                          
|                            |                   |                                                                                                                                                                                                                                                                                    |        |                          
|Other comprehensive income: |                   |                                                                                                                                                                                                                                                                                    |        |                          
|                            | Cash flow hedges: |                                                                                                                                                                                                                                                                                    |        |                          
|                            |                   | Change in net unrealized gain, net of tax expense of $1.8 million and $1.4 million for the three months ended June 30, 2007 and 2006, respectively, and net of tax expense of $0.6 million and $3.4 million
for the six months ended June 30, 2007 and June 30, 2006, respectively |        |                          
|                            |                   |                                                                                                                                                                                                                                                                                    |        |                          
|Comprehensive income        |                   | $                                                                                                                                                                                                                                                                                  | 33,741 |                          
|                            |                   |                                                                                                                                                                                                                                                                                    |        |                          

See
accompanying notes to condensed consolidated financial statements (unaudited)

7

---



FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES  Condensed Consolidated Statements of Cash Flows  (Unaudited)

|                                                                                                           |                                                         | Six months ended
June 30,                                      |                                                                   
|---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | -------------------------------------------------------------- | ------------------------------------------------------------------
|
|
|Cash flows from operating activities:                                                                      |                                                         |                                                                |                                                                   
|                                                                                                           | Net income                                              |                                                                | $                                                                 
|                                                                                                           |                                                         |                                                                |                                                                   
|Adjustments to reconcile net income to net cash provided by operating activities of continuing operations: |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         | Deferred income taxes                                          |                                                                   
|                                                                                                           |                                                         | Amortization of debt issue costs                               |                                                                   
|                                                                                                           |                                                         | Depreciation and amortization                                  |                                                                   
|                                                                                                           |                                                         | Minority interest in income of subsidiaries                    |                                                                   
|                                                                                                           |                                                         | Income from equity method investments                          |                                                                   
|                                                                                                           |                                                         | Net gain on sale of investments and other assets               |                                                                   
|                                                                                                           |                                                         | Other non cash items                                           |                                                                   
|                                                                                                           |                                                         | Changes in assets and liabilities arising from operations:     |                                                                   
|                                                                                                           |                                                         |                                                                | Accounts receivable and other current assets                      
|                                                                                                           |                                                         |                                                                | Accounts payable and other accrued liabilities                    
|                                                                                                           |                                                         |                                                                | Income taxes                                                      
|                                                                                                           |                                                         |                                                                | Other assets/liabilities                                          
|                                                                                                           |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         |                                                                |                                                                   
|Cash flows from investing activities of continuing operations:                                             |                                                         |                                                                |                                                                   
|                                                                                                           | Net capital additions                                   |                                                                |                                                                   
|                                                                                                           | Distributions from investments                          |                                                                |                                                                   
|                                                                                                           | Net proceeds from sales of investments and other assets |                                                                |                                                                   
|                                                                                                           | Other, net                                              |                                                                |                                                                   
|                                                                                                           |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         |                                                                | Net cash provided by investing activities of continuing operations
|                                                                                                           |                                                         |                                                                |                                                                   
|Cash flows from financing activities of continuing operations:                                             |                                                         |                                                                |                                                                   
|                                                                                                           | Loan origination costs                                  |                                                                |                                                                   
|                                                                                                           | Proceeds from issuance of long-term debt                |                                                                |                                                                   
|                                                                                                           | Repayments of long-term debt                            |                                                                |                                                                   
|                                                                                                           | Proceeds from exercise of stock options                 |                                                                |                                                                   
|                                                                                                           | Dividends paid to common stockholders                   |                                                                |                                                                   
|                                                                                                           |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         | Net cash used in financing activities of continuing operations |                                                                   
|                                                                                                           |                                                         |                                                                |                                                                   
|Cash flows of discontinued operations:                                                                     |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         | Operating cash flows, net used in                              |                                                                   
|                                                                                                           |                                                         |                                                                |                                                                   
|                                                                                                           |                                                         | Net increase in cash                                           |                                                                   
|Cash, beginning of period                                                                                  |                                                         |                                                                | 3,805                                                             
|                                                                                                           |                                                         |                                                                |                                                                   
|Cash, end of period                                                                                        |                                                         | $                                                              | 29,226                                                            
|                                                                                                           |                                                         |                                                                |                                                                   

See
accompanying notes to condensed consolidated financial statements (unaudited)

8

---





FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1)   Organization and Basis of Financial Reporting



(2)   Certain Transactions

(a)    Dividends



(b)    Merger



9

---





(3)   Income Taxes



10

---





(4)   Discontinued Operations and Restructure Charges



(5)   Interest Rate Swap Agreements



11

---





Effective Date:

Notional Amount

Rate

Rate, including
applicable margin

Expiration DateFebruary 8, 2005

$
130.0 Million

3.76
%
5.51
%
December 31, 2007February 8, 2005

$
130.0 Million

3.98
%
5.73
%
December 31, 2008February 8, 2005

$
130.0 Million

4.11
%
5.86
%
December 31, 2009April 29, 2005

$
50.0 Million

4.72
%
6.47
%
March 31, 2012June 30, 2005

$
50.0 Million

4.69
%
6.44
%
March 31, 2011June 30, 2006

$
50.0 Million

5.36
%
7.11
%
December 31, 2009




12

---



(6)   Investments



March 31,
2007

December 31,
2006Current assets

$
10,201

$
11,304Property, plant and equipment, net


39,234


38,917Total assets

$
49,435

$
50,221Total liabilities

$
1,716

$
431Partners' capital


47,719


49,790$
49,435

$
50,221


Three months ended
March 31,

Six months ended
March 31,2007

2006

2007

2006Revenues

$
32,750

$
38,469

$
73,011

$
88,694Operating income


24,656


30,195


56,941


70,878Net income


24,928


30,413


57,224


71,389




13

---





(7)   Long Term Debt

Long term debt at June 30, 2007 and December 31, 2006 is shown below:

June 30,
2007

December 31,
2006(In thousands)Senior secured notes (credit facility), variable rates ranging from 7.13% to 9.25% (weighted average rate of 7.2%) at June 30, 2007, due 2011 to 2012

$
599,695

$
603,500Senior notes, 11.875%, due 2010


2,050


2,050Senior notes to RTFC, fixed rate, ranging from 8.2% to 9.2%, due 2009 to 2014


2,070


2,436Total outstanding long-term debt


603,815


607,986Less current portion


(734
)

(714
)Total long-term debt, net of current portion

$
603,081

$
607,272




Year ending June 30,2008

$
7342009


4522010


2,2052011


11,3612012


588,676Thereafter


387$
603,815




14

---





15

---





(8)   Earnings Per Share



Three Months Ended

Six Months EndedJune 30,
2007

June 30,
2006

June 30,
2007

June 30,
2006(In thousands)Weighted average number of common shares used for basic earnings per share

34,765

34,649

34,718

34,601Effect of potential dilutive shares

184

34

229

64Weighted average number of common shares and potential dilutive shares used for diluted earnings per share

34,949

34,683

34,947

34,665Anti-dilutive shares excluded from the above reconciliation

640

1,575

595

1,553


16

---





(9)   Subsequent Events



(10) Litigation



Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.



17

---



Overview



18

---





Revenues



19

---







Revenues

% of RevenuesThree months ended
June 30,

Six months ended
June 30,

Three months ended
June 30,

Six months ended
June 30,2007

2006

2007

2006

2007

2006

2007

2006Revenue Source(1)Local calling services

$
17,532

$
16,823

$
35,036

$
33,286

25
%
26
%
25
%
26
%Universal service fund-high cost loop


4,445


4,731


9,061


9,550

6
%
7
%
6
%
7
%Interstate access
revenues


18,134


16,591


36,538


34,228

26
%
26
%
26
%
26
%Intrastate access
revenues


9,606


8,672


19,331


17,467

14
%
14
%
14
%
13
%Long distance services


7,542


5,734


14,663


11,202

11
%
9
%
11
%
9
%Data and Internet services


8,225


6,882


16,057


13,563

12
%
11
%
12
%
11
%Other services


4,413


4,763


8,883


9,691

6
%
7
%
6
%
8
%Total

$
69,897

$
64,196

$
139,569

$
128,987

100
%
100
%
100
%
100
%


---

Operating Expenses



20

---





Acquisitions and Mergers



Results of Operations



21

---



Three Months Ended June 30, 2007 Compared with Three Months Ended June 30, 2006

Three months ended June 30,

Three months ended June 30,2007

% of
revenue

2006

% of
revenueRevenues

$
69,897

100.0
%
$
64,196

100.0
%Operating expenses


51,606

73.8
%

36,275

56.5
%Depreciation and amortization


12,342

17.7
%

13,352

20.8
%Total operating expenses


63,948

91.5
%

49,627

77.3
%Income from operations


5,949

8.5
%

14,569

22.7
%Net gain on sale of investments and other assets


46,585

66.6
%

14,277

22.2
%Interest and dividend income


433

0.6
%

2,587

4.0
%Interest expense


(9,976
)
(14.3
)%

(9,792
)
(15.2
)%Equity in net earnings of investees


1,994

2.9
%

3,079

4.8
%Total other income (expense)


39,036

55.8
%

10,151

15.8
%Income before income taxes


44,985

64.3
%

24,720

38.5
%Income tax expense


(14,205
)
(20.3
)%

(9,645
)
(15.0
)%Minority interest in income of subsidiaries


(1
)
(0.0
)%

(1
)
(0.0
)%Net income

$
30,779

44.0
%
$
15,074

23.5
%


Revenues



22

---







Operating Expenses



23

---





Six Months Ended June 30, 2007 Compared with Six Months Ended June 30, 2006

Six months ended June 30,

Six months ended June 30,2007

% of
revenue

2006

% of
revenueRevenues

$
139,569

100.0
%
$
128,987

100.0
%Operating expenses


100,870

72.3
%

71,880

55.7
%Depreciation and amortization


25,249

18.1
%

26,987

20.9
%Total operating expenses


126,119

90.4
%

98,867

76.6
%Income from operations


13,450

9.6
%

30,120

23.4
%Net gain on sale of investments and other assets


46,827

33.5
%

14,225

11.0
%Interest and dividend income


511

0.4
%

2,927

2.3
%Interest expense


(20,008
)
(14.3
)%

(19,545
)
(15.2
)%Equity in net earnings of investees


4,569

3.3
%

6,365

4.9
%Total other income (expense)


31,899

22.9
%

3,972

3.0
%Income before income taxes


45,349

32.5
%

34,092

26.4
%Income tax expense


(14,602
)
(10.5
)%

(13,297
)
(10.3
)%Minority interest in income of subsidiaries


(1
)
(0.0
)%

(1
)
(0.0
)%Net income

$
30,746

22.0
%
$
20,794

16.1
%


Revenues



24

---





Operating Expenses



25

---





Liquidity and Capital Resources



26

---





27

---





28

---





Off-Balance Sheet Arrangements



Summary of Contractual Obligations



|                         |                                    | Payments due by period
|------------------------ | ---------------------------------- | ----------------------
|
|
|Contractual obligations: |                                    |                       
|                         | Debt maturing within one year      |                       
|                         | Long term debt                     |                       
|                         | Fixed interest payments            |                       
|                         | Variable interest payments         |                       
|                         | Operating leases                   |                       
|                         | Unrecognized tax benefits          |                       
|                         | Minimum purchase contract          |                       
|                         |                                    |                       
|                         | Total contractual cash obligations |                       
|                         |                                    |                       



|                      |                                     | Fair Value of Contracts at Period-End
|--------------------- | ----------------------------------- | -------------------------------------
|
|
|Source of fair value: |                                     |                                      
|                      | Derivative financial instruments(1) |                                      
|                      |                                     |                                      

---

29

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Critical Accounting Policies



New Accounting Standards



Inflation



Item 3.    Quantitative and Qualitative Disclosures about Market Risk.



30

---





Effective Date:

Notional Amount

Rate

Rate, including
applicable margin

Expiration DateFebruary 8, 2005

$
130.0 Million

3.76
%
5.51
%
December 31, 2007February 8, 2005

$
130.0 Million

3.98
%
5.73
%
December 31, 2008February 8, 2005

$
130.0 Million

4.11
%
5.86
%
December 31, 2009April 29, 2005

$
50.0 Million

4.72
%
6.47
%
March 31, 2012June 30, 2005

$
50.0 Million

4.69
%
6.44
%
March 31, 2011June 30, 2006

$
50.0 Million

5.36
%
7.11
%
December 31, 2009December 31, 2007

$
65.0 Million

4.91
%
6.66
%
December 30, 2011December 31, 2008

$
100.0 Million

5.02
%
6.77
%
December 31, 2010December 31, 2008

$
75.0 Million

5.46
%
7.21
%
December 31, 2010December 31, 2009

$
150.0 Million

5.65
%
7.40
%
December 31, 2011




Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures



Changes in Internal Control over Financial Reporting



31

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PART IIOTHER INFORMATION

Item 1. Legal Proceedings.



Item 1A. Risk Factors



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.



32

---







Item 3.    Defaults Upon Senior Securities.



Item 4.    Submission of Matters to a Vote of Security Holders.



Item 5.    Other Information.



Item 6.    Exhibits.



33

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to be
signed on its behalf by the undersigned, thereunto duly authorized, and the undersigned also has signed this Quarterly Report in his capacity as the Registrant's Executive Vice President and Chief
Financial Officer (Principal Financial Officer).

|                     |  | FAIRPOINT COMMUNICATIONS, INC.
|-------------------- |  | ------------------------------
|Date: August 9, 2007 |  | By:                           

34

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Exhibit Index

|Exhibit
No. |  | Description                                                                                                                                                                                                                           
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         |  | Agreement and Plan of Merger, dated September 13, 2006, among FairPoint, MJD Ventures, Inc., FairPoint Germantown Corporation and The Germantown Independent Telephone Company.(1)                                                    
|2.2         |  | Agreement and Plan of Merger, dated as of January 15, 2007, by and among Verizon Communications Inc., Northern New England Spinco Inc. and FairPoint.(2)                                                                              
|2.3         |  | Amendment No. 1 to Agreement and Plan of Merger, dated as of April 20, 2007, by and among Verizon Communications Inc., Northern New England Spinco Inc. and FairPoint.(2)                                                             
|2.4         |  | Amendment No. 2 to Agreement and Plan of Merger, dated as of June 28, 2007, by and among Verizon Communications Inc., Northern New England Spinco Inc. and FairPoint.(3)                                                              
|2.5         |  | Amendment No. 3 to Agreement and Plan of Merger, dated as of July 3, 2007, by and among Verizon Communications Inc., Northern New England Spinco Inc. and FairPoint.(4)                                                               
|2.6         |  | Distribution Agreement, dated as of January 15, 2007, by and between Verizon Communications Inc. and Northern New England Spinco Inc.(2)                                                                                              
|2.7         |  | Amendment No. 1 to Distribution Agreement, dated as of March 30, 2007, by and between Verizon Communications Inc. and Northern New England Spinco Inc.(2)                                                                             
|2.8         |  | Amendment No. 2 to Distribution Agreement, dated as of June 28, 2007, by and between Verizon Communications Inc. and Northern New England Spinco Inc.(2)                                                                              
|2.9         |  | Amendment No. 3 to Distribution Agreement, dated as of July 3, 2007, by and between Verizon Communications Inc. and Northern New England Spinco Inc.(2)                                                                               
|2.10        |  | Transition Services Agreement, dated as of January 15, 2007, by and among Verizon Information Technologies LLC, Northern New England Telephone Operations Inc., Enhanced Communications of Northern New England Inc. and FairPoint.(2)
|2.11        |  | Master Services Agreement, dated as of January 15, 2007, by and between FairPoint and Capgemini U.S. LLC.(2)                                                                                                                          
|2.12        |  | Amendment No. 1 to Master Services Agreement, dated as of July 6, 2007, by and between FairPoint and Capgemini U.S. LLC.(4)                                                                                                           
|2.13        |  | Employee Matters Agreement, dated as of January 15, 2007, by and among Verizon Communications Inc., Northern New England Spinco Inc. and FairPoint.(2)                                                                                
|2.14        |  | Tax Sharing Agreement, dated as of January 15, 2007, by and among FairPoint, Verizon Communications Inc. and Northern New England Spinco Inc.(5)                                                                                      
|2.15        |  | Partnership Interest Purchase Agreement, dated as of January 15, 2007, by and among Verizon Wireless of the East LP, Cellco Partnership d/b/a Verizon Wireless and Taconic Telephone Corp.(2)                                         
|2.16        |  | Joinder Agreement, dated as of April 5, 2007, by and among Warwick Valley Telephone Company, Taconic Telephone Corp., Cellco Partnership d/b/a Verizon Wireless and Verizon Wireless of the East LP.(6)                               
|3.1         |  | Eighth Amended and Restated Certificate of Incorporation of FairPoint.(7)                                                                                                                                                             
|3.2         |  | Amended and Restated By-Laws of FairPoint.(7)                                                                                                                                                                                         
|            |  |                                                                                                                                                                                                                                       

35

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|4.1   |  | Indenture, dated as of March 6, 2003, by and between FairPoint and The Bank of New York, relating to FairPoint's $225,000,000 117/8% Senior Notes due 2010.(8)                                                                                                                                                                                  
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.2   |  | Supplemental Indenture, dated as of January 20, 2005, by and between FairPoint and The Bank of New York, amending the Indenture dated as of March 6, 2003 between FairPoint and The Bank of New York.(7)                                                                                                                                        
|4.3   |  | Form of Initial Senior Note due 2010.(8)                                                                                                                                                                                                                                                                                                        
|4.4   |  | Form of Exchange Senior Note due 2010.(8)                                                                                                                                                                                                                                                                                                       
|10.1  |  | Credit Agreement, dated as of February 8, 2005, by and among FairPoint, various lending institutions, Bank of America, N.A., CoBank ACB, General Electric Capital Corporation and Deutsche Bank Trust Company Americas.(7)                                                                                                                      
|10.2  |  | First Amendment to Credit Agreement, dated as of March 11, 2005, among FairPoint, various lending institutions, Bank of America, N.A., CoBank ACB, General Electric Capital Corporation and Deutsche Bank Trust Company Americas.(7)                                                                                                            
|10.3  |  | Second Amendment and Consent to Credit Agreement, dated as of April 29, 2005, among FairPoint, various lending institutions, Bank of America, N.A., CoBank ACB, General Electric Capital Corporation and Deutsche Bank Trust Company Americas.(9)                                                                                               
|10.4  |  | Third Amendment to Credit Agreement, dated as of September 14, 2005, among FairPoint, various lending institutions, Bank of America, N.A., CoBank ACB, General Electric Capital Corporation and Deutsche Bank Trust Company Americas.(10)                                                                                                       
|10.5  |  | Fourth Amendment and Waiver to Credit Agreement, dated as of January 25, 2007, among FairPoint, various lending institutions, Bank of America, N.A., CoBank ACB, General Electric Capital Corporation and Deutsche Bank Trust Company Americas.(11)                                                                                             
|10.6  |  | Pledge Agreement, dated as of February 8, 2005, by FairPoint, ST Enterprises, Ltd., FairPoint Broadband, Inc., MJD Services Corp., MJD Ventures, Inc., C-R Communications, Inc., Comerco, Inc., GTC Communications, Inc., Ravenswood Communications, Inc.,
Utilities, Inc., FairPoint Carrier Services, Inc. and St. Joe Communications, Inc.(7)
|10.7  |  | Subsidiary Guaranty, dated as of February 8, 2005, by FairPoint Broadband, Inc., MJD Ventures, Inc., MJD Services Corp., ST Enterprises, Ltd. and FairPoint Carrier Services, Inc.(12)                                                                                                                                                          
|10.8  |  | Form of Swingline Note.(7)                                                                                                                                                                                                                                                                                                                      
|10.9  |  | Form of RF Note.(7)                                                                                                                                                                                                                                                                                                                             
|10.10 |  | Form of B Term Note.(7)                                                                                                                                                                                                                                                                                                                         
|10.11 |  | Amended and Restated Tax Sharing Agreement, dated as of November 9, 2000, by and among FairPoint and its Subsidiaries.(13)                                                                                                                                                                                                                      
|10.12 |  | Affiliate Registration Rights Agreement, dated as of February 8, 2005.(7)                                                                                                                                                                                                                                                                       
|10.13 |  | Employment Agreement, dated as of March 17, 2006, by and between FairPoint and Eugene B. Johnson.(14)                                                                                                                                                                                                                                           
|10.14 |  | Change in Control and Severance Agreement, dated as of March 14, 2007, by and between FairPoint and Walter E. Leach, Jr.(15)                                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                 

36

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|10.15 |  | Change in Control and Severance Agreement, dated as of March 14, 2007, by and between FairPoint and Peter G. Nixon.(15)              
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------
|10.16 |  | Change in Control and Severance Agreement, dated as of March 14, 2007, by and between FairPoint and Shirley J. Linn.(15)             
|10.17 |  | Change in Control and Severance Agreement, dated as of March 14, 2007, by and between FairPoint and John P. Crowley.(15)             
|10.18 |  | Letter Agreement, dated as of March 23, 2007, by and between FairPoint and Patrick T. Hogan.(16)                                     
|10.19 |  | FairPoint Amended and Restated 1998 Stock Incentive Plan.(17)                                                                        
|10.20 |  | FairPoint Amended and Restated 2000 Employee Stock Incentive Plan.(18)                                                               
|10.21 |  | FairPoint 2005 Stock Incentive Plan.(7)                                                                                              
|10.22 |  | FairPoint Annual Incentive Plan.(7)                                                                                                  
|10.23 |  | Form of February 2005 Restricted Stock Agreement.(19)                                                                                
|10.24 |  | Form of Director Restricted Stock Agreement.(20)                                                                                     
|10.25 |  | Form of Director Restricted Unit Agreement.(20)                                                                                      
|10.26 |  | Form of Non-Director Restricted Stock Agreement.(21)                                                                                 
|21    |  | Subsidiaries of FairPoint.(22)                                                                                                       
|31.1  |  | Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                 
|31.2  |  | Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                 
|32.1  |  | Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|32.2  |  | Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|99.1  |  | Risk Factors.(23)                                                                                                                    

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37

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