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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2000
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Transition period from to
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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 (IRS Employer Identification No.)
Incorporation or Organization)

521 East Morehead Street, Suite 250 28202
Charlotte, North Carolina (Zip Code)
(Address of Principal Executive Offices)

Registrant's Telephone Number, Including Area Code:

(704) 344-8150

MJD COMMUNICATIONS, INC.
(Former name, if changed since last report)
-------------

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 [X] No

As of May 1, 2000, the registrant had outstanding 11,522,488 shares of
Class A common stock, 12,543,728 shares of Class B common stock and 4,269,440
shares of Class C common stock.

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FAIRPOINT COMMUNICATIONS, INC.
QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 2000

INDEX

Page
----

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.......................................... 3
Condensed Consolidated Balance Sheets as of March 31,
2000 and December 31, 1999.................................... 3
Condensed Consolidated Statements of Operations for
the three months ended March 31, 2000 and 1999................ 4
Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 2000 and 1999................ 5
Notes to Condensed Consolidated Financial Statements.......... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 9
Item 3a. Quantitative and Qualitative Disclosures About
Market Risk................................................... 13
PART II. OTHER INFORMATION
Item 5. Other Information............................................. 15
Item 6. Exhibits and Reports on Form 8-K.............................. 15

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FairPoint Communications, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

March 31, December 31,
2000 1999
---------------- ----------------
(Unaudited)
(Dollars in thousands)

Assets
Current assets:
Cash and cash equivalents................................................ $58,660 9,923
Accounts receivable and other............................................ 40,559 40,257
-----------------------------------
Total current assets......................................................... 99,219 50,180
-----------------------------------
Property, plant, and equipment, net.......................................... 181,597 178,296
-----------------------------------
Other assets:
Investments.............................................................. 37,340 36,246
Goodwill, net of accumulated amortization................................ 228,113 229,389
Deferred charges and other assets........................................ 26,467 23,924
-----------------------------------
Total other assets........................................................... 291,920 289,559
-----------------------------------
Total assets................................................................. $572,736 518,035
===================================

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable......................................................... $12,109 12,778
Current portion of long-term debt and other long-term liabilities........ 5,231 5,102
Demand notes payable..................................................... 652 752
Accrued interest payable................................................. 8,870 4,396
Other accrued liabilities................................................ 10,006 11,492
-----------------------------------
Total current liabilities.................................................... 36,868 34,520
-----------------------------------
Long-term liabilities:
Long-term debt, net of current portion................................... 359,717 458,529
Deferred credits and other long-term liabilities......................... 40,375 33,124
-----------------------------------
Total long-term liabilities.................................................. 400,092 491,653
-----------------------------------
Minority interest............................................................ 17 443
-----------------------------------
Common stock subject to put option........................................... -- 3,000
-----------------------------------
Stockholders' equity:
Preferred stock.......................................................... 215 --
Common stock............................................................. 283 345
Additional paid-in capital............................................... 214,715 48,868
Accumulated other comprehensive income................................... 3,710 4,187
Accumulated deficit...................................................... (83,164) (64,981)
-----------------------------------
Total stockholders' equity (deficit)......................................... 135,759 (11,581)
-----------------------------------
Total liabilities and stockholders' equity (deficit)......................... $572,736 518,035
===================================

See accompanying notes to condensed consolidated financial statements.

FairPoint Communications, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
(Unaudited)

Three months ended
March 31,

------------------------------
2000 1999
------------------------------
(Dollars in thousands)

Revenues $44,918 32,828
------------------------------
Operating expenses:
Network operating costs................. 21,145 9,474
Selling, general and administrative..... 15,096 9,750
Depreciation and amortization........... 8,996 7,182
Stock-based compensation expense........ 12,323 50
------------------------------
Total operating expenses.................... 57,560 26,456
------------------------------
Income (loss) from operations............... (12,642) 6,372
------------------------------
Other income (expense):
Net gain on sale of investments 206 206
Interest income......................... 730 165
Dividend income......................... 182 405
Interest expense........................ (10,165) (9,334)
Other, net.............................. 681 140
------------------------------
Total other expense......................... (8,366) (8,418)
------------------------------
Loss before income taxes.................... (21,008) (2,046)
Income tax benefit.......................... 2,826 231
Minority interest in income of subsidiary... (1) (26)
------------------------------
Net loss ................................... $(18,183) (1,841)
==============================

See accompanying notes to condensed consolidated financial statements.

FairPoint Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Three months ended
March 31,
--------------------------------------
2000 1999
--------------------------------------
(Dollars in thousands)

Cash flows from operating activities:
Net loss......................................................... $(18,183) (1,841)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Amortization of debt issue costs................................. 649 487
Depreciation and amortization.................................... 8,996 7,182
Other non cash items............................................. 11,191 (222)
Changes in assets and liabilities arising from
operations, net of acquisitions:
Accounts receivable........................................... (2,791) 1,250
Accounts payable and accrued expenses......................... 3,523 (836)
Income taxes recoverable...................................... (438) 3,651
--------------------------------------
Total adjustments................................................ 21,130 11,512
--------------------------------------
Net cash provided by operating activities........................ 2,947 9,671
--------------------------------------
Cash flows from investing activities:
Net capital additions............................................ (10,446) (3,105)
Acquisitions of telephone properties............................. - (13,035)
Other, net....................................................... (818) 7,562
--------------------------------------
Net cash used in investing activities............................ (11,264) (8,578)
--------------------------------------
Cash flows from financing activities:
Loan origination costs........................................... (3,251) -
Proceeds from issuance of long-term debt......................... 5,861 -
Repayment of long-term debt...................................... (104,702) (2,151)
Net proceeds from the issuance of common stock................... 159,160 -
Other, net....................................................... (14) 57
--------------------------------------
Net cash provided by (used in) financing activities.............. 57,054 (2,094)
--------------------------------------
Net increase (decrease) in cash and cash equivalents................. 48,737 (1,001)
Cash and cash equivalents, beginning of period....................... 9,923 13,241
--------------------------------------
Cash and cash equivalents, end of period............................. $58,660 12,240
=======================================

See accompanying notes to condensed consolidated financial statements.

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)

(1) Organization and Basis of Financial Reporting

In April 2000, MJD Communications, Inc. (the "Company") changed its name to
FairPoint Communications, Inc.

In the opinion of the management, the accompanying financial statements
reflect all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of results of operations, financial position, and cash
flows. The results of operations for the interim periods are not necessarily
indicative of the results of operations which might be expected for the entire
year. The condensed consolidated financial statements should be read in
conjunction with the Company's 1999 Annual Report on Form 10-K, as amended.
Certain amounts from 1999 have been reclassified to conform to the current
period presentation.

In January 2000, the Company declared a twenty-for-one stock split in the
form of a stock dividend. This stock split has been given retroactive effect in
the accompanying consolidated financial statements.

(2) Acquisitions

The Company acquired telephone properties through a number of acquisitions
in 1999. On February 1, 1999, the Company acquired 100% of the common stock of
Ravenswood Communications, Inc. and its subsidiaries. On February 16, 1999, the
Company acquired 100% of the common stock of Columbus Grove Telephone Company
and its subsidiary. On April 30, 1999, the Company acquired 100% of the common
stock of Union Telephone Company of Hartford, Armour Independent Telephone Co.
and its subsidiaries, Bridgewater-Canistota Independent Telephone Co. and WMW
Cable TV Co. (collectively, "Union"). On September 1, 1999, the Company acquired
100% of the common stock of Yates City Telephone Company. On December 17, 1999
the Company acquired 100% of the common stock of The Orwell Telephone Company.
The aggregate purchase price for these acquisitions was $82.7 million, and
acquisition costs were approximately $0.9 million. These acquisitions have been
accounted for under the purchase method of accounting for business combinations
and, accordingly, the acquired assets and liabilities have been recorded at
their estimated fair values at the dates of acquisition, and the results of
operations has been included in the accompanying consolidated financial
statements from the dates of acquisition. Goodwill recognized in connection
with these acquisitions was approximately $36.7 million and will be amortized
over an estimated useful life of 40 years.

On April 3, 2000, the Company acquired 100% of the common stock of TPG
Communications, Inc. ("TPG") and Peoples Mutual Telephone Company ("Peoples").
The approximate aggregate purchase price for these acquisitions was $259.0
million. The acquisitions of TPG and Peoples have been accounted for under the
purchase method of accounting for business combinations and, accordingly, the
acquired assets and liabilities have been recorded at their estimated fair
values at the dates of acquisition, and the results of operations will be
included in the Company's results from the date of acquisition. Goodwill of
approximately $171.8 million was recorded in connection with these acquisitions
and will be amortized over an estimated useful life of 40 years. The allocation
of the purchase price is preliminary, however, as the working capital adjustment
to the purchase price for these acquisitions have not been determined. On April
3, 2000, the Company borrowed an additional $200.5 million under its senior
secured credit facility (the "Credit Facility") to fund the acquisitions.

The following unaudited pro forma information presents the combined results
of operations of the Company as though the completed acquisitions referred to in
the preceding paragraphs occurred on January 1, 1999. These combined results
include certain adjustments, including amortization of goodwill, increased
interest expense on debt related to the acquisitions and related income tax
effects. The pro forma financial information does not necessarily reflect the
results of operations that would have been achieved had the acquisitions been
consummated as of the assumed dates, nor are the results necessarily indicative
of the Company's future results of operations.

Pro Forma
Three Months Ended
March 31,
------------------------------------
2000 1999
------------------------------------
(Unaudited)
(Dollars in thousands)

Revenues................................... $54,985 45,438
Net loss................................... (22,223) (4,995)

The Company has entered into a definitive agreement to acquire one other
telephone company for an aggregate purchase price of approximately $35.9 million
in cash and our common stock. This acquisition is expected to close in June
2000. The acquisition will be financed by borrowings under the Credit Facility
and additional equity financing.

(3) Equity Financing and Recapitalization

In January 2000, the Company completed an equity financing and
recapitalization, pursuant to which it realized net cash proceeds of $159.1
million from the issuance of capital stock. The Company used these proceeds to
repay debt. Capital stock issued by the Company included 317,528 shares of Class
A common stock issued upon the exercise of stock options and warrants. In
addition, the Company issued 4,673,920 shares of Series D preferred stock,
100,160 shares of Class A common stock, 4,243,728 shares of convertible Class B
common stock and 4,269,440 shares of convertible Class C common stock. Offering
expenses associated with the issuance of the capital stock were $23.6 million,
which includes a liability of $8.4 million for transaction fees due to an
existing shareholder which is not payable until the shareholder liquidates all
of their holdings in the Company.

In addition, the Company issued 16,787,800 shares of Series D preferred
stock and 8,300,000 shares of convertible Class B common stock in exchange for
25,087,800 shares of Class A common stock. The Class A common stock was retired
upon reacquisition.

(4) Cancellation of Put Obligation

In January 2000, the Company was released from put obligations associated
with shareholder loan agreements secured by 1,752,000 shares of the Company's
Class A common shares.

(5) Compensation Expense

In January 2000, the Company recognized aggregate compensation expense of
$12,323,293 related to transactions involving employee stock options. Those
transactions included the modification of options to purchase 40,600 shares of
Class A common stock ($463,002), the settlement of options to purchase 260,340
shares of Class A common stock for cash ($3,349,665), and settlement of
compensatory cash payment obligations with employee-shareholders ($8,510,626).

In addition, the Company's board of directors approved the issuance of
compensatory stock options ($15,925,718) and cash bonus commitments ($5,308,573)
to participants in a subsidiary's stock option plan in exchange for the
cancellation of all existing stock options issued by the subsidiary. The
compensatory options and cash bonuses will be recognized in expense over the
five-year vesting period. The transaction was formally ratified by the
participants in the subsidiary's stock option plan in April 2000. In April 2000,
the Company issued 1,620,465 options to purchase Class A common stock of the
Company at an exercise price of $3.28 per share and 73,200 options at an
exercise price of $13.12 per share.

(6) Long Term Debt

On January 20, 2000, the Company repaid borrowings of $75.2 million under
the Credit Facillity. On March 14, 2000, an additional $165 million was
committed and available to the Company under the Credit Facility. On March 31,
2000, the unused borrowing capacity under the Credit Facility was $250.0
million.

In January 2000, the Company borrowed an additional $5.4 million under its
subsidiary FairPoint Solutions' senior secured revolving credit facility
("FairPoint Solutions Credit Facility") at 10.75%. On January 20, 2000, the
Company repaid borrowings of $27.1 under the FairPoint Solutions Credit Facility
at 10.00%, including accrued interest expense of $0.5 million. On March 27,
2000, the maximum funds available under the FairPoint Solutions Credit Facility
was increased to $165.0 million. On March 31, 2000, the unused borrowing
capacity under the FairPoint Solutions Credit Facility was $165.0 million.

After March 31, 2000 and through April 30, 2000, the Company borrowed
$217.5 million and repaid borrowings of $3.2 million under the Credit Facility.
The net borrowings of $214.3 million have been used primarily to finance the
acquisitions of TPG and Peoples.

(7) Reportable Segments

The Company has two reportable segments: traditional telephone operations
and competitive operations. The traditional telephone operations provide local,
long distance and other communications services to customers in rural
communities in which competition is typically limited or currently does not
exist for local telecommunications services. The competitive operations provide
local, long distance, Internet, and other communications services to customers
in markets outside of the Company's traditional telephone markets.

The Company utilizes the following information for purposes of making
decisions about allocating resources to a segment and assessing a segment's
performance:

Traditional
telephone Competitive
operations operations Total
---------- ---------- -----
(Dollars in thousands)

Three months ended March 31, 2000:
Revenues from external customers............. $35,966 8,952 44,918
Intersegment revenues........................ -- 771 771
Adjusted EBITDA.............................. 21,596 (11,121) 10,475
Three months ended March 31, 1999:
Revenues from external customers............. $30,689 2,139 32,828
Intersegment revenues........................ -- 235 235
Adjusted EBITDA.............................. 17,157 (2,663) 14,494

A reconciliation of reportable segment amounts to the Company's
consolidated balances for the three months ended March 31, 2000 and 1999 is as
follows:

2000 1999
---- ----
(Dollars in thousands)

Adjusted EBITDA to net loss:
Adjusted EBITDA............................................ $10,475 $14,494
Other components of net loss
Depreciation and amortization........................... (8,996) (7,182)
Interest expense........................................ (10,165) (9,334)
Stock-based compensation expense........................ (12,323) (50)
Income tax benefit...................................... 2,826 231
--------- -------
Net loss............................................. $(18,183) $(1,841)
========= =======

8
s

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

The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of the consolidated
results of operations and financial condition of FairPoint Communications, Inc.
and its Subsidiaries (collectively, the "Company" or "FairPoint"). The
discussion should be read in conjunction with the Company's Consolidated
Financial Statements for the year ended December 31, 1999 included in the
Company's Annual Report on Form 10-K, as amended.

Certain statements included in this document are forward-looking, such as
statements relating to estimates of operating and capital expenditure
requirements, future revenue and operating income, and cash flow and liquidity.
Such forward-looking statements are based on the Company's current expectations
and are subject to a number of risks and uncertainties that could cause actual
results in the future to differ significantly from results expressed or implied
in any forward-looking statements made by, or on behalf of, the Company. These
risks and uncertainties include, but are not limited to, uncertainties relating
to economic and business conditions, governmental and regulatory policies, and
the competitive environment in which the Company operates. These and other risks
are detailed below as well as in other documents filed by the Company with the
Securities and Exchange Commission.

Overview

In April 2000, MJD Communications, Inc. changed its name to FairPoint
Communications, Inc.

We are a national, facilities-based provider of voice, data and Internet
services. We began our business in 1993 for the purpose of acquiring and
operating traditional telephone companies in rural markets. Since our inception,
we have acquired 26 such companies, which currently operate in 16 states. In
early 1998, we launched our competitive communications business by competing for
small and medium-sized business customers in Tier IV and select Tier III
markets, which typically have populations of less than 100,000. These markets
are generally within a 200-mile radius of the areas served by our traditional
telephone companies. We refer to this as our "edge-out" strategy, which allows
us to leverage our existing network infrastructure, operating systems and
management expertise to accelerate the nationwide roll-out of our competitive
communications business in a captial-efficient manner. Furthermore, the stable
cash flows of our traditional telephone business provide financial capacity to
help fund our continued growth.

Historically, our operating results have been primarily related to our
traditional telephone business, which is characterized by stable growth and cash
flow. In the future, we anticipate that our competitive communications business
will have an increasing impact on our operating results. We expect that our
revenue growth will accelerate along with the expansion of our competitive
communications services and web-enabled services. As we continue to expand our
services and enter new markets, we expect network operating costs, selling,
general and administrative expenses, capital expenditures and depreciation to
increase substantially. We expect to experience operating losses for the next
few years as a result of expanding our competitive communications business into
new markets.

Revenues

We derive our revenues from:

. Local calling services. We receive revenues from providing local
exchange telephone services, including monthly recurring charges for basic
service, usage charges for local calls and service charges for special calling
features.

. Network access charges. These revenues consist primarily of charges
paid by long distance companies and other customers for access to our networks
in connection with the completion of long distance telephone calls both to and
from our customers.

. Long distance services. We receive revenues from charges to our retail
and wholesale long distance customers.

. Data and Internet services. We receive revenues from monthly recurring
charges for services, including digital subscriber line, Voice over Internet
Protocol/Voice Telephony over Asynchronus Transfer Mode, special access, private
lines, Internet and other services.

. Other services. We receive revenues from other services, including
billing and collection, directory services and sale and maintenance of customer
premise equipment.

The following summarizes our percentage of revenues from these sources:

% of Revenue
------------------------
Three-month period
ended
------------------------
March March
Revenue Source 31, 2000 31, 1999
-------------- -------- --------

Local calling services...................... 33% 25%
Network access charges...................... 44% 52%
Long distance services...................... 10% 8%
Data and Internet services.................. 4% 3%
Other services.............................. 9% 12%

Operating Expenses

Our principal operating expenses are categorized as network operating
costs, selling, general and administrative expenses, depreciation and
amortization and stock-based compensation expense.

. Network operating costs include costs incurred in connection with the
operation of our central offices and outside plant facilities and
related operations. In addition to the operational costs of owning and
operating our own facilities, we also lease and purchase local and
long distance services from the regional Bell operating companies,
large independent telephone companies and third party long distance
providers.

. Selling, general and administrative expenses consist of expenses
relating to sales and marketing, customer service and administration
and corporate and personnel administration.

. Depreciation and amortization includes depreciation of our
communications network and equipment and amortization of goodwill
related to our acquisitions.

. Stock-based compensation expense consists of non-cash compensation
charges incurred in connection with shareholder appreciation rights
agreements granted to a number of executive officers and stock options
to employees.

Acquisitions

As we continue to expand into competitive markets, we expect to focus our
acquisition efforts on companies that enable us to enhance the implementation of
our strategy as a competitive communications provider. Our past acquisitions
have had a major impact on our operations. Accordingly, we do not believe that
comparing historical results on a period by period basis is meaningful due to
the significant number of acquisitions we have made each year.

. In 2000, we acquired two traditional telephone companies for an
aggregate purchase price of $259.0 million. At the respective dates of
acquisition, these companies served an aggregate of approximately
60,400 access lines.

. In 1999, we acquired seven traditional telephone companies, which we
refer to as the 1999 acquisitions, for an aggregate purchase price of
$82.7 million. At the respective dates of acquisition, these companies
served an aggregate of approximately 14,700 access lines.

Stock-based Compensation Expense

In connection with the January 2000 equity financing and recapitalization,
we recognized a non-cash compensation charge of $12.3 million. The charge
consisted of compensation expense of $3.8 million recognized in connection with
the modification of employee stock options and the settlement of employee stock
options for cash by a principal shareholder of the Company. The compensation
expense also included the settlement of a cash payment obligation between
certain employee-shareholders of the Company and its principal shareholders
under their pre-existing shareholders' agreements for $8.5 million.

We will also recognize expense related to the excess of estimated fair
market value over the aggregate exercise price of options that were granted to
some of our officers and employees in April 2000 in exchange for options to
purchase common stock of our subsidiary, FairPoint Communications Solutions
Corp. ("FairPoint Solutions"). This excess of $15.9 million will be amortized
over the vesting period of five years. In conjunction with these options, we
intend to provide a cash bonus of $5.3 million that will also be recognized over
the five-year vesting period. The payment of the cash bonus will be deferred
until the underlying options are exercised, with proceeds from exercise being
equal to the bonus. Accordingly, there will not be any material cash impact to
us from these transactions.

Results of Operations

Three Month Period Ended March 31, 2000 Compared with Three Month Period
Ended March 31, 1999

Revenues. Revenues increased $12.1 million to $44.9 million for the three
months ended March 31, 2000 from $32.8 million for the three months ended March
31, 1999. $8.4 million of this increase was attributable to the internal growth
of our competitive and traditional communications businesses and $3.7 million
of the increase was attributable to revenues from companies we acquired in 1999.
These factors contributed to the growth in all of our revenue sources. Local
calling services accounted for $6.4 million of this increase, including $5.4
million from new business lines in our competitive markets and increasing access
lines in our traditional telephone companies and $1.0 million from companies we
acquired in 1999. Network access revenue increased $2.8 million, of which $1.7
million was contributed by the companies we acquired in 1999 and $0.6 million
was from new business lines in our competitive markets. Long distance services
revenues increased $2.0 million due mainly to revenues from new long distance
retail and wholesale customers. Data and Internet services increased $0.7
million from $1.1 million as a result of increased service offerings to our
customers. Other revenues increased $0.2 million primarily due to the companies
we acquired in 1999.

Operating Expenses.

Network Operating Costs. Network operating costs increased $11.6 million to
$21.1 million for the three months ended March 31, 2000 from $9.5 million for
the three months ended March 31, 1999. The majority of the increase, $10.7
million, was

attributable to operating expenses associated with the expansion into
competitive markets and increased growth in local access and long distance
service offerings. The remaining increase was associated with the companies we
acquired in 1999, which accounted for $0.9 million of the increase.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $5.3 million to $15.1 million for the three
months ended March 31, 2000 compared to $9.8 million for the three months ended
March 31, 1999. Contributing to this increase were costs of $4.9 million
primarily related to expansion of selling, customer support and administration
activities to support our growth in competitive markets. The companies we
acquired in 1999 contributed $0.4 million to the increase.

Depreciation and Amortization. Depreciation and amortization increased $1.8
million to $9.0 million for the three months ended March 31, 2000 from $7.2
million for the three months ended March 31, 1999. This increase consisted of
$0.5 million due to the increased investment in our communications network to
support the growth of our competitive communications business and $0.9 million
related to the acquisitions.

Stock-based Compensation Expense. As discussed above, in connection with
our equity recapitalization, we recognized non-cash compensation charges of
$12.3 million in the first quarter of 2000.

Income (loss) from Operations. Income (loss) from operations decreased
$19.0 million to $(12.6) million for the three months ended March 31, 2000 from
$6.4 million for the three months ended March 31, 1999. This margin decline was
primarily attributable to the $12.3 million stock based compensation expense and
the expenses associated with the expansion into competitive markets. We expect
this trend to continue for the next few years as we build-out our competitive
communications business.

Other Income (Expense). Total other expense remained constant at $8.4
million for the three months ended March 31, 2000 and 1999 and consists
primarily of interest expense on long-term debt.

Net Loss. Our net loss was $18.2 million for the three months ended March
31, 2000, compared to a loss of $1.8 million for the three months ended March
31, 1999, as a result of the factors discussed above.

Liquidity and Capital Resources

The Company's cash flow requirements include general corporate
expenditures, capital expenditures, debt service requirements and acquisitions.
The Company expects that its traditional telephone companies' cash flow from
operations and the Credit Facility will fund the capital expenditures, working
capital and debt interest payment requirements of its traditional telephone
companies for the foreseeable future. The Company will require significant
capital resources as it expands its competitive communications business. The
Company's capital requirements will include the funding of operations and
capital asset expenditures.

Historically, the Company has used the proceeds from institutional and bank
debt, private equity offerings, and available cash flow to fund its operations.
The Company may secure additional funding through the sale of public or private
debt and/or equity securities or enter into another bank credit facility to fund
future acquisitions and operations. If the growth of the Company's competitive
communications business occurs more rapidly than the Company currently
anticipates or if the Company's operating results are below expectations, there
can be no assurance that the Company will be successful in raising sufficient
additional capital on terms that it considers acceptable, or that the Company's
operations will produce positive cash flow in sufficient amounts to meet its
liquidity requirements. The failure to raise and generate sufficient funds may
require the Company to delay or abandon some of its planned future growth or
expenditures, which could have a material adverse effect on the Company's growth
and its ability to compete in the communications industry.

Debt Financing

The Company has utilized a variety of debt instruments to fund its
business, including:

The Credit Facility. The Credit Facility provides for two term facilities,
one with approximately $67.4 million principal amount outstanding as of March
31, 2000 that matures on March 31, 2006 and the other with the principal amount
of approximately $71.5 million outstanding that matures on March 31, 2007. Our
Credit Facility also provides for a revolving facility with a principal amount
of $85.0 million that matures on September 30, 2004 and a revolving acquisition
facility with a principal amount of $165.0 million that also matures on
September 30, 2004. As of March 31, 2000, no amounts were outstanding and $250.0
million was available for borrowing under the Credit Facility.

Senior Subordinated Notes and Floating Rate Notes. The Company has
outstanding publicly-held debt comprised of $125.0 million aggregate principal
amount of 9 1/2% senior subordinated notes and $75.0 million aggregate principal
amount of floating rate notes. Interest on the senior subordinated notes and
floating rate notes is payable semi-annually in cash on each May 1 and November
1. Both series of notes mature on May 1, 2008. The Company has entered into
interest rate swap agreements to reduce the impact of changes in interest rates
on our floating rate notes. These notes are general unsecured obligations,
subordinated in right of payment to all existing and future senior debt and
effectively subordinated to all existing and future debt and other liabilities
of our subsidiaries.

FairPoint Solutions Credit Facility. The FairPoint Solutions Credit
Facility provides for a revolving facility with a principal amount of $165.0
million that matures on October 20, 2004. As of March 31, 2000, no amounts were
outstanding and $165.0 million was available for borrowing under the FairPoint
Solutions' credit facility. Amounts under the FairPoint Solutions credit
facility bear interest at a base rate or LIBOR, plus a margin up to
4.25%.

Equity Financing

In connection with our January 2000 equity financing and recapitalization
transaction, affiliates of Thomas H. Lee Equity Fund IV, L.P. (collectively,
"THL"), investment partnerships affiliated with Kelso & Company (collectively,
"Kelso"), and certain other institutional investors and members of management
acquired an aggregate of $408.8 million of our equity securities. The Company
received $159.1 million of net proceeds in such transaction, which it used to
repay debt. In addition, THL committed to invest up to an additional $50 million
in the Company's equity securities, subject to various conditions. This
commitment expires on December 31, 2000.

Cash Flows

Net cash provided by operating activities was $2.9 million and $9.7 million
for the three months ended March 31, 2000 and 1999, respectively. Net cash used
in investing activities was $11.3 million and $8.6 million for the three months
ended March 31, 2000 and 1999, respectively. These cash flows primarily reflect
expenditures relating to traditional telephone company acquisitions of $13.7
million for the three months ended March 31, 1999 and capital expenditures of
$10.5 million and $3.1 million for the three months ended March 31, 2000 and
1999, respectively. Net cash provided by financing activities was $57.1 million
for the three months ended March 31, 2000 and net cash used by financing
activities was $2.1 million for the three months ended March 31, 1999. These
cash flows for the three months ended March 31, 2000 primarily represent the
proceeds from the equity transaction of $159.1 million and the repayment of long
term debt of $104.7 million. The cash flows for the three months ended March 31,
1999 represents the repayment of long term debt.

New Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which establishes accounting and reporting standards for derivative

instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS 137, or Accounting
for Derivative Instruments and Hedging Activities-Deferral of the Effective Date
of FASB Statement No. 133, delays the effective date of this statement to all
fiscal years beginning after June 15, 2000. We anticipate adopting this
accounting pronouncement in 2001; however, we believe it will not have a
significant impact on our consolidated financial statements.

Inflation

We do not believe inflation has a significant effect on our operations.

Year 2000

We did not experience significant disruptions in our operations as a result
of the Year 2000 issue.

Quantitative and Qualitative Disclosures About Market Risk

At March 31, 2000, we recorded our marketable equity securities at a fair
value of $6.6 million. These securities have exposure to price risk. A
hypothetical ten percent adverse change in quoted market prices would decrease
the recorded value by approximately $0.7 million.

We have limited our exposure to material future earnings or cash flow
exposures from changes in interest rates on long-term debt, since approximately
66% of our debt bears interest at fixed rates or effectively at fixed rates
through the use of interest rate swaps. However, our earnings are affected by
changes in interest rates as our long-term debt under our senior credit facility
has variable interest rates based on either the prime rate or LIBOR. If interest
rates on our variable debt averaged 10% more, our interest expense would have
increased, and loss before taxes would have increased by $0.3 million for the
quarter ended March 31, 2000.

We have entered into interest rate swaps to manage our exposure to
fluctuations in interest rates on our variable rate debt. The fair value of
these swaps was approximately $1.2 million at March 31, 2000. The positive fair
value indicates an estimated amount we would be paid to cancel the contracts or
transfer them to other parties. In connection with our credit facility, we used
an interest rate swap agreement with a notional amount of $25 million to
effectively convert a portion of our variable interest rate exposure to a fixed
rate of 9.91 %. The swap agreement expires on September 29, 2000. In connection
with our floating rate notes, we used two interest rate swap agreements, with
notional amounts of $50 million and $25 million, respectively, to effectively
convert our variable interest rate exposure to a fixed rate of 10.01% and 9.95%,
respectively. The swap agreements expire on November 1, 2001 and 2000,
respectively.

PART II. OTHER INFORMATION

Item 5. Other Information

Pending Acquisition. The Company has entered into an agreement to acquire
an unrelated traditional telephone company for an aggregate purchase price of
approximately $35.9 million in cash and our common stock. This acquisition is
expected to close in the third quarter of 2000. The acquisition will be financed
by borrowings under the Company's senior secured credit facility and additional
equity financing.

The above referenced acquisition will be accounted for using the purchase
method of accounting.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit
Number Description
- ------ -----------

2.1 Stock Purchase Agreement, dated March 6, 1997 among the Company, MJD
Partners, L.P. Carousel Capital Partners, L.P., Kelso Investment
Associates V, L.P. and Kelso Equity Partners, V, L.P., as amended*

2.2 Stock Purchase Agreement dated as of March 28, 1996 among MJD Services
Corp., Rick A. Moore, Tom D. Moore, Penta-Gen Investments, Inc., and
Odin Telephone Exchange, Inc.*

2.3 Agreement and Plan of Merger dated as of March 27, 1998 by and among
MJD Ventures, Inc., Utilities Acquisition Corp. and Utilities, Inc.*

2.4 Agreement and Plan of Merger, dated as of August 6, 1996 among MJD
Holdings Corp., C&E Acquisitions Corp. and Chatauqua and Erie
Telephone Corporation*

2.5 Stock Purchase Agreement, dated as of September 24, 1996 among MJD
Holdings Corp., Kadoka Telephone Co., Bruce G. Conlee and Virginia L.
Conlee*

2.6 Stock Purchase Agreement, dated as of June 24, 1997 among MJD
Ventures, Inc., Gary Porter, Virginia M. Porter, Renee Porter, C-R
Communications, Inc., C- R Telephone Company and certain stockholders*

2.7 Agreement and Plan of Merger, dated as of September 2, 1997 among MJD
Holdings Corp., Taconic Acquisition Corp. and Taconic Telephone Corp.*

2.8 Agreement and Plan of Merger, dated December 31, 1997 among MJD
Ventures, Inc., Ellensburg Acquisition Corp. and Ellensburg Telephone
Company*

2.9 Agreement and Plan of Merger, dated as of March 12, 1998 among MJD
Communications, Inc., Chouteau Acquisitions Corp., Chouteau Telephone
Company and certain shareholders of Chouteau Telephone Company*

2.10 Stock Purchase Agreement, dated as of October 16, 1998 among MJD
Service Corp., Carla J. Brownlee and Ravenswood Communications, Inc.*

3.1 Amended and Restated Certificate of Incorporation of the Company*

3.2 Amended and Restated By-Laws of the Company*

4.1 Indenture, dated as of May 5, 1998, between the Company and
United States Trust Company of New York, as trustee, relating to
the Company's $125,000,000 9 1'2% Senior Subordinated Notes due
2008 and $75,000,000 Floating Rate Callable Securities due 2008*

4.2 Form of Initial Fixed Rate Security*

4.3 Form of Initial Floating Rate Security*

4.4 Form of Exchange Fixed Rate Security*

4.5 Form of Exchange Floating Rate Security*

4.6 Form of Purchase Agreement dated as of April 30, 1998 between the
Company and the Initial Purchasers named therein*

4.7 Registration Agreement dated as of April 30, 1998 between the Company
and the Initial Purchasers named therein*

10.1 Credit Agreement dated as of March 30, 1998 among the Company, various
lending institutions, NationsBanc of Texas, N.A. and Bankers Trust
Company*

10.2 Form of B Term Note*

10.3 Form of C Term Note Floating Rate*

10.4 Form of C Term Note Fixed Rate*

10.5 Form of RF Note*

10.6 Form of AF Note*

10.7 Subsidiary Guarantee, dated as of March 30, 1998, by MJD Holdings
Corp., MJD Ventures, Inc., MJD Services Corp., ST Enterprises, Ltd.
for the benefit of Bankers Trust Company*

10.8 Pledge Agreement, dated as of March 30, 1998 among MJD Communications,
Inc., ST Enterprises, Ltd., MJD Holdings Corp., MJD Services Corp.,
MJD Ventures, Inc., C-R Communications, Inc., as pledgors, and Bankers
Trust Company, as collateral agent and pledgee*

10.9 Capital Contribution Agreement, dated as of March 27, 1998 among Kelso
Investment Associates V, L.P., Kelso Equity Partners V, L.P., Carousel
Capital Partners, L.P., MJD Communications, Inc. and Bankers Trust
Company*

10.10 Stockholder's Agreement, dated as of July 31, 1997 among Kelso
Investment Associates V, L.P., Kelso Equity Partners V, L.P., Carousel
Capital Partners V, L.P., the Company and MJD Partners, L.P.*

10.11 Registration Rights Agreement, dated as of July 31, 1997 among Kelso
Investment Associates V, L.P., Kelso Equity Partners, L.P., the
Company and MJD Partners, L.P.*

10.12 Financial Advisory Agreements, dated as of July 31, 1997 among the
Company, MJD Holdings Corp. and affiliates of each of Kelso Investment
Associates V, L.P., Kelso Equity Partners, L.P. and Carousel Capital
Partners, L.P.*

10.13 Share Exchange Agreement, dated as of July 31, 1997 between the
Company and MJD Partners, L.P.*

10.14 Contribution Agreement, dated as of July 31, 1997 between Meyer
Haberman, Jack H. Thomas, Eugene B. Johnson and Bugger Associates,
Inc. and MJD Partners, L.P.*

10.15 Contribution Agreement, dated as of July 31, 1997 between MJD
Partners, L.P. and the Company*

10.16 Amended and Restated Class A Voting Common Stock Purchase Warrants of
the Company*

10.17 Consulting Agreement, dated as of July 31, 1997 between MJD Partners,
Inc. and Bugger Associates, Inc.*

10.18 Severance Agreement, dated as of July 31, 1997 between ST Enterprises,
LTD and John P. Duda*

10.19 Severance Agreement, dated as of July 31, 1997 among the Company, MJD
Partners, Inc. and Eugene B. Johnson*

10.20 Severance Agreement, dated as of July 31, 1997 between the Company and
Walter E. Leach, Jr.*

10.21 Severance Agreement, dated as of July 31, 1997 among the Company, MJD
Partners, Inc. and Jack H. Thomas*

10.22 Amendment to Credit Agreement dated as of July 30, 1998, among the
Company, various lending institutions, NationsBanc of Texas, N.A. and
Bankers Trust Company*

10.23 Form of Purchase Agreement and Subordination Agreement between Bankers
Trust Company and the Company*
21 Subsidiaries of the Company*

27 Financial Data Schedule

- -----------

* Previously filed.

(b) Reports on Form 8-K

On February 4, 2000, the Company filed a Current Report on Form 8-K
disclosing the consummation of its January 2000 equity financing and
recapitalization.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

MJD COMMUNICATIONS, INC.
By:
/s/ WALTER E. LEACH, JR.
------------------------
Walter E. Leach, Jr.
Senior Vice President and
Chief Financial Officer

Dated: May 11, 2000