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	•	Consolidated Communications Illinois Holdings, Inc., or Illinois Holdings, and Consolidated Communications Texas Holdings, Inc, or Texas Holdings, will exchange all 93/4% Senior Notes due 2012, referred to as the outstanding notes, that are validly tendered and not validly withdrawn for an equal principal amount of 93/4% Senior Notes due 2012, referred to as the exchange notes, that are freely tradeable in integral multiples of $1,000.
	•	You may withdraw tenders of outstanding notes at any time prior to the expiration of the exchange offer.
	•	The exchange offer expires at 5:00 P.M., New York City time, on August 23, 2005, unless extended.
	•	The exchange of outstanding notes for exchange notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes.
	•	We will not receive any proceeds from the exchange offer.

	•	We issued the outstanding notes on April 14, 2004, in a transaction not requiring registration under the Securities Act of 1933, as amended, referred to as the Securities Act. We are offering you exchange notes in order to satisfy certain of our obligations under the registration rights agreement entered into in connection with that transaction.
	•	The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the transfer restrictions, registration rights and additional interest provisions applicable to the outstanding notes will not apply to the exchange notes.
	•	We do not intend to list the exchange notes on any securities exchange or automated dealer quotation system.

	•	If you are a broker-dealer and you receive exchange notes for your own account, you must acknowledge that you will deliver a prospectus in connection with any resale of such exchange notes. By making such acknowledgment, you will not be deemed to admit that you are an “underwriter” under the Securities Act. Broker-dealers may use this prospectus, as it may be amended from time to time, in connection with any resale of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired by the broker-dealer as a result of market-making activities or trading activities. We have agreed that, for a period of 180 days after the expiration of the exchange offer, we will make this prospectus available to such broker-dealers for use in connection with any such resale. A broker-dealer may not participate in the exchange offer with respect to outstanding notes acquired other than as a result of market-making activities or trading activities. See “Plan of Distribution”.
	•	If you are an affiliate of ours or are engaged in, or intend to engage in, or have an agreement or understanding to participate in, a distribution of the exchange notes, you cannot rely on the applicable interpretations of the SEC and you must comply with the registration requirements of the Securities Act in connection with any resale transaction.

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SUMMARY			1
RISK FACTORS			17
FORWARD-LOOKING STATEMENTS			35
THE TRANSACTIONS			36
USE OF PROCEEDS			38
CAPITALIZATION			39
SELECTED HISTORICAL AND OTHER FINANCIAL DATA — ILLINOIS HOLDINGS			40
SELECTED HISTORICAL AND OTHER FINANCIAL DATA — TEXAS HOLDINGS			42
SELECTED HISTORICAL AND OTHER FINANCIAL DATA — HOMEBASE			45
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CCI ILLINOIS AND CCI TEXAS			47
BUSINESS			91
REGULATION			113
MANAGEMENT			122
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			131
THE EXCHANGE OFFER			134
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			143
DESCRIPTION OF OTHER INDEBTEDNESS			151
DESCRIPTION OF NOTES			159
IPO MATTERS			204
BOOK ENTRY; DELIVERY AND FORM			206
PLAN OF DISTRIBUTION			208
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS			208
LEGAL MATTERS			209
EXPERTS			209
WHERE YOU CAN FIND MORE INFORMATION			209
INDEX TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS			P-1
INDEX TO FINANCIAL STATEMENTS			F-1

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	If you choose not to exchange your outstanding notes, the present transfer restrictions will remain in force and the market price of your outstanding notes could decline.

	An active trading market for the exchange notes may not develop, which could reduce their value.

	We have a substantial amount of debt outstanding and have significant interest payments.

	•	requiring us to dedicate a substantial portion of our cash flow from operations to make payments on our debt, thereby reducing funds available for operations, future business opportunities and other purposes;
	•	limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
	•	making it more difficult for us to satisfy our obligations with respect to the notes and our other debt obligations;

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	•	limiting our ability to borrow additional funds, or to sell assets to raise funds, if needed, for working capital, capital expenditures, acquisitions or other purposes;
	•	increasing our vulnerability to general adverse economic and industry conditions, including changes in interest rates;
	•	limiting noteholders’ rights to receive payments under the notes if lenders whose rights are senior have not been paid;
	•	placing us at a competitive disadvantage compared to our competitors which have less debt; and
	•	preventing us from raising the funds necessary to repurchase notes tendered to us if there is a change of control, which would constitute a default under the indenture governing the notes and the existing credit agreement.

	We will require a significant amount of cash to service and repay our debt, including the notes, and our ability to generate cash depends on many factors beyond our control.

	•	our business will generate sufficient cash flow from operations to service and repay our debt and to fund working capital and planned capital expenditures;
	•	future borrowings will be available under our current or any future credit facilities in an amount sufficient to enable us to repay our debt; or
	•	we will be able to refinance any of our debt on commercially reasonable terms or at all.

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	The indenture and the existing credit agreement contain covenants that limit the discretion of our management in operating our business and could prevent us from capitalizing on business opportunities and taking other corporate actions.

	•	incur additional debt and issue preferred stock;
	•	make restricted payments, including paying dividends on, redeeming, repurchasing or retiring our capital stock;
	•	make investments and prepay or redeem debt;
	•	enter into agreements restricting our subsidiaries’ ability to pay dividends, make loans or transfer assets to us;
	•	create liens;
	•	sell or otherwise dispose of assets, including capital stock of subsidiaries;
	•	engage in transactions with affiliates;
	•	engage in sale and leaseback transactions;
	•	make capital expenditures;
	•	engage in business other than telecommunications businesses; and
	•	consolidate or merge.

	•	limit our ability to plan for or react to market conditions, meet capital needs or otherwise restrict our activities or business plans; and
	•	adversely affect our ability to finance our operations, enter into acquisitions or to engage in other business activities that would be in our interest.

	Homebase’s guarantee is limited to a pledge of the common stock of each issuer.

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	The notes are effectively subordinated to our secured debt to the extent of the value of the collateral securing the debt.

	•	a bankruptcy, liquidation, reorganization or other winding up involving us or any of our subsidiaries;
	•	a default in the payment under the existing credit facilities, the notes or other secured debt; or
	•	an acceleration of any debt under the existing credit facilities, the notes or other secured debt.

	•	CCI Illinois and CCI Texas had approximately $624.9 million of senior indebtedness, including the notes and the cross-guarantees, $424.9 million of which was secured indebtedness of the issuers;
	•	CCI Illinois and CCI Texas had no subordinated indebtedness; and
	•	the issuers’ subsidiaries had total indebtedness, including such subsidiaries’ obligations under the existing credit facilities and the guarantees thereof, of approximately $424.9 million.

	Each of the issuers is a holding company, and they may not have access to sufficient cash to make payments on the notes. In addition, the notes are effectively subordinated to the liabilities and any preferred stock of the issuers’ subsidiaries.

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	U.S. bankruptcy or fraudulent conveyance law may interfere with the payment of the notes.

	•	either of the issuers incurred this debt with the intent of hindering, delaying or defrauding current or future creditors; or
	•	either of the issuers received less than reasonably equivalent value or fair consideration for incurring this debt and either of the issuers:

	•	were insolvent or were rendered insolvent by reason of any of the transactions;
	•	were engaged, or about to engage, in a business or transaction for which the assets remaining with the applicable issuer constituted unreasonably small capital to carry on their business;
	•	intended to incur, or believed that they would incur, debts beyond their respective ability to pay as these debts matured (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statues); or
	•	were defendants in an action for money damages or had a judgment for money damages docketed against them (if, in either case, after final judgment the judgment is unsatisfied),

	•	the sum of its debts (including contingent liabilities) is greater than its assets, at fair valuation;
	•	the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities) as they become absolute and mature; or
	•	it could not pay its debts as they became due.

	•	neither issuer was:

	•	insolvent or rendered insolvent by the incurrence;
	•	lacking sufficient capital to run its businesses effectively; or
	•	unable to pay obligations on the notes as they mature or become due; and

	•	each had sufficient assets to satisfy any probable money judgment against it in any pending action.

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	We may be unable to repurchase the notes upon a change of control as required by the indenture.

	None of Homebase’s owners or their affiliates will have any liability for payments on the notes.

	Should our proposed initial public offering occur, we will face several additional risks.

	•	Pursuant to our proposed dividend policy, we expect to distribute to our stockholders a substantial portion of the cash generated by our business, which will significantly reduce the amount of excess cash available for other uses, including payments on our outstanding indebtedness. In addition, if the cash generated by our business were to fall below our current expectations, in order to continue to pay dividends in accordance with our proposed dividend policy, we may need to fund dividends from a variety of sources, including (a) by incurring additional debt, which would likely increase the risks associated with our substantial leverage, including reducing our ability to service our debt, and/or (b) from other sources, such as by asset sales or reducing other expected cash uses, such as capital expenditures, both which could have a material adverse affect on our business.
	•	Our proposed dividend policy may limit our ability to pursue growth opportunities and otherwise make us more dependent upon third party financing in order to pursue growth opportunities, which may not be available to us on reasonable terms or at all.
	•	As a public company with listed equity securities, we will need to comply with new laws, regulations and requirements, which will increase our costs and expenses and occupy a significant amount of our directors’, officers’ and management’s time.

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	The telecommunications industry is generally subject to substantial regulatory changes, rapid development and introduction of new technologies and intense competition that could cause us to suffer price reductions, customer losses, reduced operating margins or loss of market share.

	•	substantial regulatory change due to the passage and implementation of the Telecommunications Act, which included changes designed to stimulate competition for both local and long distance telecommunications services;
	•	rapid development and introduction of new technologies and services;
	•	increased competition within established markets from current and new market entrants that may provide competing or alternative services;
	•	the blurring of traditional dividing lines between, and the bundling of, different services, such as local dial tone, long distance, wireless, cable, data and Internet services; and
	•	an increase in mergers and strategic alliances that allow one telecommunications provider to offer increased services or access to wider geographic markets.

	The use of new technologies by other existing companies may increase our costs and cause us to lose customers and revenues.

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	If we are not successful in integrating TXUCV, we may have higher costs and fail to achieve expected cost savings, among other things.

	•	greater demands on our management and administrative resources;
	•	difficulties and unexpected costs in integrating the operations, personnel, services, technologies and other systems of CCI Illinois and CCI Texas;
	•	possible unexpected loss of key employees, customers and suppliers;
	•	unanticipated liabilities and contingencies of TXUCV and its business;
	•	unexpected costs of integrating the management and operation of the two businesses; and
	•	failure to achieve expected cost savings.

	Our possible pursuit of acquisitions is expensive, may not be successful and, even if it is successful, may be more costly than anticipated.

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	Poor economic conditions in our service areas in Illinois and Texas could cause us to lose local access lines and revenues.

	•	demographic trends;
	•	in Illinois, the strength of the agricultural markets and the light manufacturing and services industries, continued demand from universities and hospitals and the level of government spending; and
	•	in Texas, the strength of the manufacturing and retail industries and continued demand from schools and hospitals.

	A system failure could cause delays or interruptions of service, which could cause us to lose customers.

	•	physical damage to our central offices or local access lines;
	•	disruptions beyond our control;
	•	power surges or outages; and
	•	software defects.

	Loss of a large customer could reduce our revenues. In addition, a significant portion of our revenues from the State of Illinois is based on contracts that are favorable to the government.

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	•	includes provisions that allow the respective state agency to terminate the contract without cause and without penalty under some circumstances;
	•	is subject to decisions of state agencies that are subject to political influence on renewal;
	•	gives the State of Illinois the right to renew the contract at its option but does not give us the same right; and
	•	could be cancelled if state funding becomes unavailable.

	If we are unsuccessful in obtaining and maintaining necessary rights-of-way for our network, our operations may be interrupted and we would likely face increased costs.

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	We are dependent on third party vendors for our information and billing systems. Any significant disruption in or relationship with these vendors could increase our costs and affect our operating efficiencies.

	We may be unable to repurchase the shares of Homebase as required by the Limited Liability Company Agreement of Homebase.

	We cannot predict how a change in control of our existing equity investors or an exit of any of them could affect our operations or business.

	Our existing equity investors control important decisions affecting our governance and our operations and their interests may differ from our and your interests.

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	Important decisions require the approval of our board of managers that are appointed by our existing equity investors and a failure to agree could result in deadlock.

	The loss of key management personnel, or the inability to attract and retain highly qualified management and other personnel in the future, could have a material adverse effect on our business, financial condition and results of operations.

	If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner or with adequate compliance, we may be unable to provide the required financial information in a timely and reliable manner and may be subject to sanctions by regulatory authorities. The perception of these matters could cause our share price to fall.

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	The telecommunications industry in which we operate is subject to extensive federal, state and local regulation that could change in a manner adverse to us.

	Our rural telephone companies could lose their rural status under interconnection rules, which would increase our costs and could cause us to lose customers and the associated revenues to competitors.

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	Legislative or regulatory changes could reduce or eliminate the revenues our rural telephone companies receive from network access charges.

	We believe telecommunications carriers, such as long distance carriers or VOIP providers, are disputing and/or avoiding their obligation to pay network access charges to rural telephone companies for use of their networks. If carriers successfully dispute or avoid the applicability of network access charges, our revenues could decrease.

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	Legislative or regulatory changes could reduce or eliminate the government subsidies we receive.

	•	In 2004, CCI Illinois received $10.6 million from the federal universal service fund and CCI Texas received an aggregate of $40.9 million from the federal universal service fund and the Texas universal service fund, which in the aggregate comprised 15.9% of our revenues in 2004, after giving effect to the TXUCV acquisition.
	•	For the three months ended March 31, 2005, CCI Illinois received $4.2 million from the federal universal service fund and CCI Texas received an aggregate of $9.5 million from the federal universal service fund and the Texas universal service fund, which in the aggregate comprised 17.2% of our revenues for the three months ended March 31, 2005

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	The high costs of regulatory compliance could make it more difficult for us to enter new markets, make acquisitions or change our prices.

	Legislative and regulatory changes in the telecommunications industry could raise our costs by facilitating greater competition against us and reduce potential revenues.

	“Do not call” registries may increase our costs and limit our ability to market our services.

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	Because we are subject to extensive laws and regulations relating to the protection of the environment, natural resources and worker health and safety, we may face significant liabilities or compliance costs in the future.

	•	Under certain environmental laws, we could be held liable, jointly and severally and without regard to fault, for the costs of investigating and remediating any actual or threatened environmental contamination at currently and formerly owned or operated properties, and those of our predecessors, and for contamination associated with disposal by us or our predecessors of hazardous materials at third party disposal sites. Hazardous materials may have been released at certain current or formerly owned properties as a result of historic operations.
	•	The presence of contamination can adversely affect the value of our properties and our ability to sell any such affected property or to use it as collateral.
	•	We could be held responsible for third party property damage claims, personal injury claims or natural resource damage claims relating to any such contamination.
	•	The cost of complying with existing environmental requirements could be significant.
	•	Adoption of new environmental laws or regulations or changes in existing laws or regulations or their interpretations could result in significant compliance costs or as yet identified environmental liabilities.
	•	Future acquisitions of businesses or properties subject to environmental requirements or affected by environmental contamination could require us to incur substantial costs relating to such matters.
	•	In addition, environmental laws regulating wetlands, endangered species and other land use and natural resource issues may increase costs associated with future business or expansion opportunities, delay, alter or interfere with such plans, or otherwise adversely affect such plans.

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	•	the contribution by our existing equity investors of $89.0 million in cash in exchange for additional class A preferred shares of Homebase, the distribution by CCI of $63.4 million to Homebase and the contribution by Homebase of $152.4 million to Texas Acquisition of the aggregate proceeds of such distribution and contribution;
	•	the offering of the outstanding notes;
	•	the borrowing by CCI and Texas Acquisition of $437.0 million under the existing credit facilities;
	•	the repayment of all the outstanding debt of CCI under its old credit facility;
	•	the acquisition, pursuant to the stock purchase agreement, by Texas Acquisition of TXUCV from Pinnacle One Partners L.P., or Pinnacle One, an indirect, wholly owned subsidiary of TXU Corp., for $524.1 million in cash, net of cash acquired and including transaction costs; and
	•	the payment of fees and expenses.

	Central Illinois Telephone

	Providence Equity

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	Spectrum Equity

	•	Consolidated Communications of Fort Bend Company (formerly known as Fort Bend Telephone Company) and Consolidated Communications of Texas Company (formerly known as TXU Communications Telephone Company, which was formerly known as Lufkin-Conroe Telephone Exchange, Inc.), which together serve markets in Conroe, Katy and Lufkin, Texas;
	•	a telephone directory publishing business; and
	•	a transport services business.

	•	Post-Closing Guaranty, dated as of April 14, 2004, pursuant to which TXU Corp., subject to defined limitations, guaranteed Pinacle One’s obligations to indemnify Texas Acquisition under the stock purchase agreement following the closing of the transactions;
	•	Trademark Assignment, dated as of 14, 2004, between TXUCV and TXU Corp., pursuant to which TXUCV assigned specified trademarks to TXU Corp.;

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	•	Internet Domain Name License Agreement, dated as of April 14, 2004, between TXUCV and TXU Corp, pursuant to which TXU Corp. licensed specified domain names to TXUCV for a transition period of two years;
	•	Software License and Services Agreement, dated as of December 24, 2003, between PeopleSoft USA, Inc. and TXUCV and Partial Assignment, Assumption and Release Agreement, dated as of December 22, 2003, by and between PeopleSoft USA, Inc., TXUCV and TXU Business Services Company, an indirect, wholly owned subsidiary of TXU Corp., pursuant to which TXUCV obtained the right to continue to use PeopleSoft’s applications for financial, human resources and inventory purposes following the closing of the transactions;
	•	Professional Services Fee letter, dated April 14, 2004, pursuant to which CCI agreed to pay a professional services fee to our existing equity investors in the aggregate amount of $2.0 million per year, as described under “Certain Relationships and Related Party Transactions — Professional Services Fee Agreements”; and
	•	Professional Services Fee letter, dated as of April 14, 2004, pursuant to which Texas Acquisition agreed to pay a professional services fee to our existing equity investors in the aggregate amount of $3.0 million per year, as described under “Certain Relationships and Related Party Transactions — Professional Services Fee Agreements”.

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				As of March 31, 2005
				CCI Illinois				CCI Texas				Homebase
				(in thousands)
Cash and cash equivalents				$	23,818			$	32,720			$	56,538
Long-term debt (including current portion):
Existing credit facilities:
	Revolving credit facility(1)			$	—			$	—			$	—
	Term loan facilities(2)				164,702				259,148				423,850
Total credit facilities					164,702				259,148				423,850
Capital lease obligation(3)					—				1,059				1,059
93/4 Senior Notes due 2012					75,000				125,000				200,000
Total long term debt (including current portion)					239,702				385,207				624,909
Redeemable preferred shares					—				—				210,092
Members’ deficit/stockholders’ equity:
		Common shares, no par value			—				—				—
		Additional paid-in capital			29,600				152,458				58
		Accumulated earnings (deficit)			834				4,225				(23,033	)
		Accumulated other comprehensive income			927				1,017				1,944
Members’ deficit/stockholders’ equity					31,361				157,700				(21,031	)
Total capitalization				$	271,063			$	542,907			$	813,970

(1)	The existing credit facilities contain a $30.0 million revolving credit facility. See “Description of Other Indebtedness — Existing Credit Facilities”.
(2)	As of March 31, 2005, the existing credit facilities included a $112.0 million term loan A facility and a $311.9 million term loan C facility. See “Description of Other Indebtedness — Existing Credit Facilities”.
(3)	The capital lease obligation represents the outstanding balance under the GECC capital lease. On May 27, 2005, we elected to pay in full the outstanding balance on this capital lease. See “Description of Other Indebtedness — GECC Capital Leases”.

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																								Three Months Ended
			Year Ended December 31,																					March 31,
			Predecessor of Illinois Holdings													Illinois Holdings
			2000				2001				2002					2003				2004				2004				2005
			(dollars in millions)
Consolidated Statement of Operations Data:
	Total operating revenues		$	117.1			$	115.6			$	109.9				$	132.3			$	136.5			$	34.1			$	33.6
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			39.0				38.9				35.8					46.3				46.2				12.4				11.0
	Selling, general and administrative			42.1				36.0				35.6					42.5				45.5				10.6				12.0
	Intangible assets impairment			—				—				—					—				11.6				—				—
	Depreciation and amortization(1)			33.6				31.8				24.6					22.5				22.3				5.4				5.8
	Income from operations			2.4				8.9				13.9					21.0				10.9				5.7				4.8
	Interest expense, net(2)			(1.8	)			(1.8	)			(1.6	)				(11.9	)			(19.5	)			(2.8	)			(4.2	)
	Other, net(3)			0.5				5.8				0.4					0.1				0.6				—				0.2
	Income before income taxes			1.1				12.9				12.7					9.2				(8.0	)			2.9				0.8
	Income tax (expense) benefit			(1.7	)			(6.3	)			(4.7	)				(3.7	)			2.9				(1.1	)			(0.3	)
	Net income (loss)		$	(0.6	)		$	6.6			$	8.0				$	5.5			$	(5.1	)		$	1.8			$	0.5
Other Financial Data:
	Illinois Telephone Operations revenues		$	82.0			$	79.8			$	76.7				$	90.3			$	97.3			$	22.9			$	24.7

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																									Three Months Ended
				Year Ended December 31,																					March 31,
				Predecessor of Illinois Holdings													Illinois Holdings
				2000				2001				2002					2003				2004				2004				2005
				(dollars in millions)
Other Data:
	Local access lines in service
		Residential			63,064				62,249				60,533					58,461				55,627				58,345				55,407
		Business			32,933				33,473				32,475					32,426				31,255				32,481				31,217
		Total local access lines(3)			95,997				95,722				93,008					90,887				86,882				90,826				86,624
	DSL subscribers				—				2,501				5,761					7,951				10,794				8,456				11,915
		Total connections			95,997				98,223				98,769					98,838				97,676				99,282				98,539
Consolidated Cash Flow Data:
	Cash flows from operating activities			$	36.1			$	34.3			$	28.5				$	28.9			$	30.4			$	5.9				10.3
	Cash flows used in investing activities				(21.8	)			(13.1	)			(14.1	)				(296.1	)			(13.3	)			(2.7	)			(1.4	)
	Cash flows from (used in) financing activities				(21.5	)			(18.9	)			(16.6	)				277.4				(10.5	)			(2.6	)			(1.8	)
	Capital expenditures				20.7				13.1				14.1					11.3				13.3				2.7				1.4

																								As of
																								March 31,
			As of December 31,																					2005
			Predecessor of Illinois Holdings													Illinois Holdings
			2000				2001				2002					2003				2004
			(dollars in millions)
Consolidated Balance Sheet Data:
	Cash and cash equivalents		$	0.9			$	3.3			$	1.1				$	10.1			$	16.7				23.8
	Total current assets			27.1				26.7				23.2					39.6				44.0				46.5
	Net plant, property & equipment(4)			102.6				100.5				105.1					104.6				101.6				98.7
	Total assets			270.0				248.9				236.4					317.6				307.9				306.2
	Total long-term debt (including current portion)(5)			21.3				21.1				21.0					180.4				241.5				239.7
	Shareholders’ equity			191.3				178.1				174.5					98.0				30.3				31.4

(1)	On January 1, 2002, CCI Illinois adopted SFAS No. 142, Goodwill and Other Intangible Assets. Pursuant to SFAS No. 142, CCI Illinois ceased amortizing goodwill on January 1, 2002 and instead tests for goodwill impairment annually. Amortization expense for goodwill and intangible assets was $17.6 million in 2000 and 2001, $10.1 million in 2002 and $7.0 million in 2003. In accordance with SFAS 142, CCI Illinois recognized intangible asset impairments of $11.6 million in 2004. Depreciation and amortization excludes amortization of deferred financing costs.
(2)	Interest expense includes amortization of deferred financing costs totaling $0.5 million in 2003, $5.2 million in 2004 and $0.3 million and $0.2 million for the three months ended March 31, 2004 and 2005, respectively.
(3)	On September 30, 2001, ICTC sold two exchanges of approximately 2,750 access lines, received proceeds from the sale of $7.2 million and recorded a gain on the sale of assets of approximately $5.2 million.
(4)	Property, plant and equipment are recorded at cost. The cost of additions, replacements and major improvements is capitalized, while repairs and maintenance are charged to expenses. When property, plant and equipment are retired from ICTC, the original cost, net of salvage, is charged against accumulated depreciation, with no gain or loss recognized in accordance with composite group life remaining methodology used for regulated telephone plant assets.
(5)	In connection with the TXUCV acquisition on April 14, 2004, CCI Illinois and CCI Texas incurred, severally and not jointly, an aggregate of $637.0 million of new long-term debt. As of March 31, 2005, CCI Illinois was severally responsible for $75.0 million in outstanding notes and $164.7 million in term loans under the existing credit facilities.

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												Year Ended December 31,
			Predecessor
			to TXUCV					Predecessor to Texas Holdings
																																	Three Months Ended
			Period					Period																Period					Period				March 31,
			from					from																from					from
			1/1/00 to					8/11/00 to																1/1/04 to					4/14/04 to				Predecessor				Texas Holdings
			8/10/00					12/31/00				2001				2002				2003				4/13/04					12/31/04				2004				2005
			(dollars in millions)
Consolidated Statement of Operations Data:
	Total operating revenues		$	93.2				$	67.9			$	207.5			$	214.7			$	194.8			$	53.9				$	133.1			$	45.4			$	46.3
	Network operating costs (exclusive of depreciation and amortization shown separately below)			38.7					29.9				95.6				76.9				58.4				15.3					34.4				13.1				13.6
	Selling, general and administrative			31.8					32.1				88.7				109.4				75.4				24.2					42.4				15.1				14.3
	Depreciation and amortization(1)			19.3					17.1				50.2				41.0				32.9				8.1					32.2				8.2				11.0
	Restructuring, asset impairment and other charges(2)			—					—				—				101.4				0.2				—					—				—				—
	Goodwill impairment charges			—					—				—				18.0				13.2				—					—				—				—
	Income (loss) from operations			3.4					(11.2	)			(27.0	)			(132.0	)			14.7				6.3					24.1				9.0				7.4
	Interest expense, net(3)			(3.6	)				(4.9	)			(11.1	)			(7.5	)			(5.4	)			(3.2	)				(20.0	)			(1.1	)			(7.2	)
	Other, net(4)			5.8					10.9				9.9				11.4				0.8				1.2					3.0				0.8				0.3
	Income (loss) before income taxes			5.6					(5.2	)			(28.2	)			(128.1	)			10.1				4.3					7.1				8.7				0.5
	Income taxes (expense) benefit			(3.8	)				(0.3	)			6.3				38.3				(12.4	)			(2.5	)				(3.1	)			(3.2	)			(0.3	)
	Net income (loss)		$	1.8				$	(5.5	)		$	(21.9	)		$	(89.8	)		$	(2.3	)		$	1.8				$	4.0			$	5.5			$	0.2

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													Year Ended December 31,
				Predecessor
				to TXUCV					Predecessor to Texas Holdings
																																		Three Months Ended
				Period					Period																Period					Period				March 31,
				from					from																from					from
				1/1/00 to					8/11/00 to																1/1/04 to					4/14/04 to				Predecessor				Texas Holdings
				8/10/00					12/31/00				2001				2002				2003				4/13/04					12/31/04				2004				2005
				(dollars in millions)
Other Data:
	Local access lines in service
		Residential			—					117,130				119,488				119,060				116,862				n/a					113,151				116,485				112,610
		Business			—					49,292				50,406				53,023				54,780				n/a					55,175				54,850				53,837
		Total local access lines			—					166,422				169,894				172,083				171,642				n/a					168,326				171,335				166,447
	DSL subscribers				—					1,593				4,069				5,423				8,668				n/a					16,651				10,592				18,903
		Total connections			—					168,015				173,963				177,506				180,310				n/a					184,977				183,377				185,350
	CLEC access lines				—					18,541				58,591				26,088				n/a				n/a					n/a
Consolidated Cash Flow Data:
	Cash flows from (used in) operating activities			$	(16.5	)			$	37.4			$	6.8			$	34.7			$	75.1			$	5.3				$	49.4			$	6.1			$	4.3
	Cash flows used in investing activities				(27.3	)				(48.3	)			(59.9	)			(21.3	)			(14.3	)			(6.3	)				(540.8	)			(4.5	)			(4.1	)
	Cash flows from (used in) financing activities				34.2					(3.8	)			46.3				(4.4	)			(61.8	)			(0.6	)				526.7				(0.1	)			(2.8	)
	Capital expenditures				36.0					59.2				67.0				27.4				18.2				6.7					16.7				4.8				4.1

							As of December 31,
																												As of
			Predecessor to Texas Holdings																									March 31,
																			As of					As of
			2000				2001				2002				2003				4/13/04					12/31/04				2005
			(dollars in millions)
Consolidated Balance Sheet Data:
	Cash and cash equivalents		$	10.3			$	3.4			$	12.4			$	11.5			$	9.9				$	35.4			$	32.7
	Total current assets			63.8				44.3				86.4				34.5				37.1					56.6				57.4
	Net plant, property & equipment(5)			332.4				363.4				240.8				231.4				230.0					259.2				254.4
	Total assets			787.0				800.4				700.1				647.9				625.2					702.2				697.8
	Total long-term debt (including current portion)(6)			157.5				172.8				166.2				100.4				2.8					388.0				385.2
	Shareholder’s equity			490.5				496.6				407.6				410.9				513.3					156.4				157.7

(1)	On January 1, 2002, TXUCV adopted SFAS No. 142, Goodwill and Other Intangible Assets. Pursuant to SFAS No. 142, TXUCV ceased amortizing goodwill on January 1, 2002, and instead tests for goodwill impairment annually. Amortization expense for goodwill and intangible assets was $8.7 million in 2000 and $13.7 million in 2001. Depreciation and amortization excludes amortization of debt issuance expenses. In accordance with SFAS 142, TXUCV recognized goodwill impairments of $18.0 million in 2002 and $13.2 million in 2003.
(2)	During 2002, TXUCV recognized restructurings, asset impairment and other charges of $101.4 million due to the write down of assets relating to TXUCV’s competitive telephone company and transport businesses.
(3)	Interest expense prior to the transactions was from the TXUCV’s revolving credit facility, GECC capital leases, mortgage notes and is reduced by allowance for funds used during construction.
(4)	Other, net includes equity earnings from our investments in cellular partnerships, dividend income, recognizing the minority interests of investors in East Texas Fiber Line Incorporated as well as certain other miscellaneous non-operating items.

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						Three Months				Three Months
		Year Ended				Ended				Ended
		December 31, 2004				March 31, 2004				March 31, 2005
		(dollars in millions)
Partnership income		$	2.5			$	0.9			$	0.3
Dividend income			2.3				0.1				0.1
Minority interest			(0.4	)			(0.1	)			(0.2	)
Other			(0.2	)			(0.1	)			0.1
Other, net		$	4.2			$	0.8			$	0.3

(5)	Property, plant and equipment items are recorded at cost. The cost of additions, replacements and major improvements is capitalized, while repairs and maintenance are charged to expense.
(6)	In connection with the TXUCV acquisition on April 14, 2004, CCI Texas and CCI Illinois incurred, severally and not jointly, an aggregate of $637.0 million of new long-term debt. As of March 31, 2005, CCI Texas was severally responsible for $125.0 million in outstanding notes and $259.0 million in term loans under the existing credit facilities.

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																								Three Months Ended
			Year Ended December 31,																					March 31,
			Predecessor													Homebase
			2000				2001				2002					2003				2004				2004				2005
			(dollars in millions)
Consolidated Statement of Operations Data:
	Total operating revenues		$	117.1			$	115.6			$	109.9				$	132.3			$	269.6			$	34.1			$	79.8
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			39.0				38.9				35.8					46.3				80.6				12.4				24.4
	Selling, general and administrative			42.1				36.0				35.6					42.5				87.9				10.6				26.2
	Asset impairment			—				—				—					—				11.6				—				—
	Depreciation and amortization(1)			33.6				31.8				24.6					22.5				54.5				5.4				16.8
	Income from operations			2.4				8.9				13.9					21.0				35.0				5.7				12.4
	Interest expense, net(2)			(1.8	)			(1.8	)			(1.6	)				(11.9	)			(39.6	)			(2.8	)			(11.4	)
	Other, net(3)			0.5				5.8				0.4					0.1				3.7				—				0.3
	Income before income taxes			1.1				12.9				12.7					9.2				(0.9	)			2.9				1.3
	Income tax expense			(1.7	)			(6.3	)			(4.7	)				(3.7	)			(0.2	)			(1.1	)			(0.6	)
	Net income (loss)		$	(0.6	)		$	6.6			$	8.0					5.5				(1.1	)			1.8				0.7
	Dividends on redeemable preferred shares			—				—				—					(8.5	)			(15.0	)			(2.3	)			(4.6	)
	Net loss applicable to common shares			—				—				—				$	(3.0	)		$	(16.1	)		$	(0.5	)		$	(3.9	)
	Net loss per common share — basic and diluted			—				—				—				$	(0.33	)		$	(1.79	)		$	(0.06	)		$	(0.42	)

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																									Three Months Ended
				Year Ended December 31,																					March 31,
				Predecessor													Homebase
				2000				2001				2002					2003				2004				2004				2005
				(dollars in millions)
Other Financial Data:
	Telephone Operations revenues			$	82.0			$	79.8			$	76.7				$	90.3			$	230.4			$	22.9			$	71.0
Other Data:
	Local access lines in service
		Residential			63,064				62,249				60,533					58,461				168,778				58,345				168,017
		Business			32,933				33,473				32,475					32,426				86,430				32,481				85,054
		Total local access lines(3)			95,997				95,722				93,008					90,887				255,208				90,826				253,071
	DSL subscribers				—				2,501				5,761					7,951				27,445				8,456				30,804
		Total connections			95,997				98,223				98,769					98,838				282,653				99,282				283,875
Consolidated Cash Flow Data:
	Cash flows from operating activities			$	36.1			$	34.3			$	28.5				$	28.9			$	79.8			$	5.9			$	14.6
	Cash flows used in investing activities				(21.8	)			(13.1	)			(14.1	)				(296.1	)			(554.1	)			(2.7	)			(5.5	)
	Cash flows from (used in) financing activities				(21.5	)			(18.9	)			(16.6	)				277.4				516.3				(2.6	)			(4.6	)
	Capital expenditures				20.7				13.1				14.1					11.3				30.0				2.7				5.5

																								As of
			As of December 31,																					March 31,
			Predecessor													Homebase
			2000				2001				2002					2003				2004				2005
			(dollars in millions)
Consolidated Balance Sheet Data:
	Cash and cash equivalents		$	0.9			$	3.3			$	1.1				$	10.1			$	52.1			$	56.5
	Total current assets			27.1				26.7				23.2					39.6				98.9				103.9
	Net plant, property & equipment(4)			102.6				100.5				105.1					104.6				360.8				353.1
	Total assets			270.0				248.9				236.4					317.6				1,006.1				1,002.2
	Total long-term debt (including current portion)(5)			21.3				21.1				21.0					180.4				629.4				624.9
	Redeemable preferred shares			—				—				—					101.5				205.5				210.1
	Parent company investment/ Members’ deficit			191.3				178.1				174.5					(3.5	)			(18.8	)			(21.0	)

(1)	On January 1, 2002, ICTC and related businesses adopted SFAS No. 142, Goodwill and Other Intangible Assets. Pursuant to SFAS No. 142, ICTC ceased amortizing goodwill on January 1, 2002 and instead tested for goodwill impairment annually. Amortization expense for goodwill and intangible assets was $17.6 million for 2000 and 2001, $10.1 million in 2002 and $7.0 million in 2003. Depreciation and amortization excludes amortization of deferred financing costs.
(2)	Interest expense includes amortization of deferred financing costs totaling $0.5 million in 2003, $6.4 million in 2004 and $0.2 million and $0.7 million for the three months ended March 31, 2004 and 2005, respectively.
(3)	On September 30, 2001, ICTC sold two exchanges of approximately 2,750 access lines, received proceeds from the sale of $7.2 million and recorded a gain on the sale of assets of approximately $5.2 million.
(4)	Property, plant and equipment are recorded at cost. The cost of additions, replacements and major improvements is capitalized, while repairs and maintenance are charged to expenses. When property, plant and equipment are retired from ICTC, the original cost, net of salvage, is charged against accumulated depreciation, with no gain or loss recognized in accordance with composite group life remaining methodology used for regulated telephone plant assets.
(5)	In connection with the TXUCV acquisition on April 14, 2004, we issued $200.0 million in aggregate principal amount of senior notes and entered into the existing credit facilities, of which $423.9 million was outstanding as of March 31, 2005.

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	CCI Illinois’ Business

	Segments

	Acquisition from McLeodUSA

	•	Revenues and expenses for the three months ended March 31, 2004 and 2005 and for the years ended December 31, 2003 and 2004 for certain long distance services and data and Internet services include services that were not part of the financial results of our Illinois Telephone Operations segment when it was owned by McLeodUSA in 2002. These services were provided, and revenues were recognized, by McLeodUSA as part of its competitive telephone company operations. In order for McLeodUSA to provide these services to customers in our Illinois rural telephone company’s service area, ICTC provided McLeodUSA’s competitive telephone company operations access to its network and billing and collection services for which it received network access charges and billing

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		and collection fees. Following the acquisition by Homebase of ICTC and the related businesses, Illinois Telephone Operations launched its own business providing similar long distance and data and Internet services to customers primarily located in our Illinois rural telephone company’s service area. As a result, the results of operations of Illinois Telephone Operations for the three months ended March 31, 2004 and 2005 and for the years ended December 31, 2003 and 2004 include businesses that were not included in 2002 when ICTC and the related operations were owned by McLeodUSA.
	•	Expenses for the three months ended March 31, 2004 and 2005 and for the years ended December 31, 2003 and 2004 included $0.5 million, $0.5 million, $2.0 million and $2.0 million, respectively, in aggregate professional services fees paid to Mr. Lumpkin, Providence Equity and Spectrum Equity pursuant to a professional services agreement. This is in addition to a professional services fee that was paid by CCI Texas to these parties under a separate professional services fee agreement, entered at the closing of the transactions. See “Certain Relationships and Related Party Transactions — Professional Services Fee Agreements”.
	•	In 2001 and 2002 McLeodUSA encountered financial difficulties and, as a result, initiated cost-cutting initiatives and reduced financial support for all operations other than ICTC. Although certain expenses were reduced as a result of these initiatives, revenues and income from operations also declined in these periods. In connection with its bankruptcy proceeding in 2002, McLeodUSA identified ICTC and the related businesses as assets held for sale and as discontinued operations.

	Revenues

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	•	aggressively promoting DSL service;
	•	bundling value-added services, such as DSL with a combination of local service, custom calling features, voicemail and Internet access;
	•	maintaining excellent customer service standards, particularly as we introduce new services to existing and new customers; and
	•	keeping a strong local presence in the communities we serve.

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	Expenses

	Cost of Services and Products

	•	operating expenses relating to plant costs, including those related to the network and general support costs, central office switching and transmission costs and cable and wire facilities;
	•	general plant costs, such as testing, provisioning, network, administration, power and engineering; and
	•	the cost of transport and termination of long distance and private lines outside our Illinois rural telephone company’s service area.

	Selling, General and Administrative Expenses

	•	selling and marketing expenses;
	•	expenses associated with customer care;
	•	billing and other operating support systems; and
	•	corporate expenses, including professional service fees.

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	Depreciation and Amortization Expenses

		Years
Buildings			15-20
Network and outside plant facilities			5-15
Furniture, fixtures and equipment			3-10

			Predecessor									CCI Illinois
			Year Ended December 31,																									Three Months Ended March 31,
			2002									2003								2004								2004								2005
							% of									% of								% of								% of								% of
			$				Total					$				Total				$				Total				$				Total				$				Total
			(Millions)				Revenues					(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues
Revenues:
Illinois Telephone Operations(1)
	Local calling services		$	33.4				30.4	%			$	34.4				26.0	%		$	33.9				24.8	%		$	8.5				24.9	%		$	8.3				24.7	%
	Network access services			29.0				26.4					27.5				20.8				30.3				22.2				6.6				19.5				6.8				20.2
	Subsidies			4.1				3.7					4.7				3.5				10.6				7.8				2.3				6.7				4.2				12.5
	Long distance services			1.4				1.3					8.8				6.7				7.7				5.6				2.0				5.9				1.9				5.7
	Data and Internet services			4.3				3.9					10.8				8.2				10.6				7.8				2.5				7.3				2.6				7.7
	Other services			4.5				4.1					4.1				3.1				4.2				3.0				1.0				2.9				1.0				3.0
	Total Illinois Telephone Operations			76.7				69.8					90.3				68.3				97.3				71.2				22.9				67.2				24.8				73.8
Other Illinois Operations				33.2				30.2					42.0				31.7				39.2				28.8				11.2				32.8				8.8				26.2
Total operating revenues				109.9				100.0					132.3				100.0				136.5				100.0				34.1				100.0				33.6				100.0

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			Predecessor									CCI Illinois
			Year Ended December 31,																									Three Months Ended March 31,
			2002									2003								2004								2004								2005
							% of									% of								% of								% of								% of
			$				Total					$				Total				$				Total				$				Total				$				Total
			(Millions)				Revenues					(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues
Expenses:
Operating expenses(2)
	Illinois Telephone Operations			46.9				42.7					54.7				41.3				56.7				41.5				13.5				39.6				14.6				43.4
	Other Illinois Operations			24.6				22.4					34.1				25.8				46.6				34.2				9.5				27.9				8.3				24.7
Depreciation and amortization				24.5				22.3					22.5				17.0				22.3				16.3				5.4				15.8				5.8				17.3
Total operating expenses				96.0				87.4					111.3				84.1				125.6				92.0				28.4				83.3				28.7				85.4
Income from operations				13.9				12.6					21.0				15.9				10.9				8.1				5.7				16.7				4.9				14.6
Interest expense				1.6				1.5					11.9				9.0				19.7				14.4				2.8				8.2				4.4				13.1
Other income, net				0.4				0.4					0.1				0.1				0.8				0.6				—				—				0.3				0.9
Income taxes expense (benefit)				4.7				4.3					3.7				2.8				(2.9	)			(2.1	)			1.1				3.2				0.3				0.9
Net income (loss)			$	8.0				7.2	%			$	5.5				4.2	%		$	(5.1	)			(3.7	)%		$	1.8				5.3	%		$	0.5				1.5	%

(1)	This category corresponds to the line items presented under “Business  — CCI Illinois — Overview — Illinois Telephone Operations” and provides more detail than that presented in the consolidated statement of income of CCI Illinois. See Consolidated Financial Statements of CCI Illinois and audited Combined Financial Statements of ICTC and related businesses.
(2)	This category reflects costs of services and products and selling, general and administrative expenses line items set forth in the Consolidated Financial Statement of Income of CCI Illinois and the audited Combined Statements of Income for ICTC.

	Three Months Ended March 31, 2005 compared to March 31, 2004

	CCI Illinois Revenues

	Illinois Telephone Operations Revenues

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	Other Illinois Operations Revenue

	CCI Illinois Operating Expenses

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	Illinois Telephone Operations Operating Expenses

	Other Illinois Operations Operating Expenses

	Depreciation and Amortization

	Income from Operations

	Interest Expense

	Other Income (Expense)

	Income Taxes

	Net Income (Loss)

	Year Ended December 31, 2004 compared to December 31, 2003

	CCI Illinois Revenues

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	Illinois Telephone Operations Revenues

	Other Illinois Operations Revenues

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	CCI Illinois Operating Expenses

	Illinois Telephone Operations Operating Expenses

	Other Illinois Operations Operating Expenses

	Depreciation and Amortization

	Income from Operations

	Interest Expense

	Other Income (Expense)

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	Income Taxes

	Net Income (Loss)

	Year Ended December 31, 2003 compared to December 31, 2002

	CCI Illinois Revenues

	Illinois Telephone Operations Revenues

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	Other Illinois Operations Revenues

	CCI Illinois Operating Expenses

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	Illinois Telephone Operations Operating Expenses

	Other Illinois Operations Operating Expenses

	Depreciation and Amortization

	Income from Operations

	Interest Expense

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	Other Income (Expense)

	Income Taxes

	Net Income

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	•	a change in the use or perceived value of CCI Illinois’ tradenames;
	•	significant underperformance relative to expected historical or projected future operating results;
	•	significant regulatory changes that would impact future operating revenues;
	•	significant negative industry or economic trends; or
	•	significant changes in the overall strategy in which we operate our overall business.

Percentage

December 31, 2004

Point

Obligation

2005 Expense

Assumption

Change

Higher/(Lower)

Higher/(Lower)

(dollars in thousands)

Discount rate

±0.5  pts

$(3,281)/$3,634

$(27)/$26

Expected return on assets

±1.0  pts

—

$(515)/$515

Percentage

December 31, 2004

Point

Obligation

2005 Expense

Assumption

Change

Higher/(Lower)

Higher/(Lower)

(dollars in thousands)

Discount rate

±0.5  pts

$(346)/$372

$(14)/$14

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	General

	Operating, Investing & Financing Activities

	Operating Activities

	Investing Activities

	Financing Activities

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	Debt and Capital Leases

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	Capital Requirements

	•	scheduled principal and interest payments on its long-term debt;
	•	capital expenditures of approximately $13.3 million for network, central offices and other facilities and information technology for operating support and other systems; and
	•	$1.5 million to integrate and restructure the operations of CCI Illinois and CCI Texas following the TXUCV acquisition.

	•	scheduled principal and interest payments on its long-term debt;
	•	$15.0 million of the $37.5 million cash distribution to our existing equity investors;
	•	capital expenditures of approximately $14.8 million for similar investments as were made in 2004;
	•	approximately $2.5 million in TXUCV integration and restructuring costs; and
	•	incremental costs associated with being a public company.

	Surety Bonds

	Table of Contractual Obligations & Commitments

		Payments Due by Period
		Total				2005				2006				2007				2008				2009				Thereafter
Long-term debt			239,702				14,279				8,884				9,397				10,934				13,598				182,610
Operating leases			15,860				1,943				2,312				1,914				1,511				1,514				6,666
Pension and other post-retirement obligations			12,045				628				1,922				1,974				1,964				1,979				3,578
Total contractual cash obligations and commitments			267,607				16,850				13,118				13,285				14,409				17,091				192,854

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	CCI Texas’ Business

	The Transactions

	Revenues

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	•	aggressively promoting DSL service;
	•	bundling value-added services, such as DSL with a combination of local service, custom calling features, voicemail and Internet access;
	•	maintaining excellent customer service standards, particularly as we introduce new services to existing and new customers; and
	•	keeping a strong local presence in the communities we serve.

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	Expenses

	Network Operating Costs

	•	expenses related to plant costs, including those related to network and general support costs, central office switching and transmission costs, and cable and wire facilities;
	•	general plant costs, such as testing, provisioning, network, administration, power and engineering; and

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	•	the cost of transport and termination of long distance and private lines outside our Texas rural telephone companies’ service areas.

	Selling, General and Administrative Expenses

	•	selling and marketing expenses;
	•	expenses associated with customer care;
	•	billing and other operating support systems; and
	•	corporate expenses, including professional service fees.

	Depreciation and amortization expenses

		Years
Buildings			15-35
Network and outside plant facilities			5-30
Furniture, fixtures, and equipment			3-17

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			Year Ended																																								Three Months
			December 31,																																								Ended March 31,
			Predecessor																								CCI Texas																Predecessor								CCI Texas
																			1/1/04 to								4/14/04 to								Combined
			2002								2003								4/13/04								12/31/04								2004								2004								2005
							% of								% of								% of								% of								% of								% of								% of
			$				Total				$				Total				$				Total				$				Total				$				Total				$				Total				$				Total
			(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues				(Millions)				Revenues
Revenues(1)
	Local calling services		$	54.3				25.3	%		$	56.2				28.9	%		$	16.9				31.4	%		$	41.0				30.8	%		$	57.9				31.0	%		$	14.5				31.9	%		$	14.2				30.7	%
	Network access services			36.2				16.9				35.2				18.1				10.6				19.7				26.5				19.9				37.1				19.8				9.0				19.8				9.6				20.7
	Subsidies			31.8				14.8				41.4				21.2				11.0				20.4				29.9				22.5				40.9				21.9				8.5				18.7				9.5				20.5
	Long distance services			20.1				9.4				13.4				6.9				3.5				6.4				7.0				5.3				10.5				5.6				3.0				6.6				2.1				4.5
	Data and Internet services			14.1				6.6				14.7				7.5				3.9				7.2				10.3				7.7				14.2				7.6				3.5				7.7				3.9				8.4
	Directory publishing			9.6				4.4				10.4				5.3				3.1				5.8				7.9				5.9				11.0				5.9				2.7				6.0				3.0				6.5
	Transport services			12.6				5.8				12.8				6.6				3.2				5.9				7.1				5.3				10.3				5.5				2.8				6.2				2.7				5.9
	Other services			6.0				2.8				4.8				2.5				1.7				3.2				3.4				2.6				5.1				2.7				1.4				3.1				1.3				2.8
	Exited services			30.0				14.0				5.9				3.0				—				0.0				—				0.0				—				0				—				0				—				0
Operating Revenues				214.7				100.0				194.8				100.0				53.9				100.0				133.1				100.0				187.0				100				45.4				100				46.3				100
Expenses
Operating expenses(2)				186.3				86.8				133.8				68.7				39.5				73.3				76.8				57.7				116.3				62.2				28.2				62.1				27.9				60.2
Depreciation and amortization				41.0				19.1				32.9				16.9				8.1				15.0				32.2				24.2				40.3				21.5				8.2				18.1				11.0				23.8
Other charges				119.4				55.6				13.4				6.9
Total operating expenses				346.7				161.5				180.1				92.5				47.6				88.3				109.0				81.9				156.6				83.7				36.4				80.2				38.9				84.0
Operating (loss) income				(132.0	)			(61.5	)			14.7				7.5				6.3				11.7				24.1				18.1				30.4				16.3				9.0				19.8				7.4				16.0
Total other (expense) income, net				3.9				1.8				(4.6	)			(2.3	)			(2.0	)			(3.7	)			(17.0	)			(12.8	)			(19.0	)			(10.2	)			(0.3	)			(0.7	)			(6.9	)			14.9
(Loss) income before income taxes				(128.1	)			(59.7	)			10.1				5.2				4.3				8.0				7.1				5.3				11.4				6.1				8.7				19.1				0.5				0.9
Income tax (benefit) expense				(38.3	)			(17.9	)			12.4				6.4				2.5				4.6				3.1				2.3				5.6				3.0				3.2				(7.0	)			0.3				0.4
Net (loss) income			$	(89.8	)			(41.8	)%		$	(2.3	)			(1.2	)%		$	1.8				3.4	%		$	4.0				3.0	%		$	5.8				3.1	%		$	5.5				12.1	%		$	0.2				0.5	%

(1)	This category corresponds to the line items presented under “Business — CCI Texas” and provides more detail than that presented in the consolidated statement of operations and comprehensive loss of TXUCV. See the Consolidated Financial Statements of TXUCV and Texas Holdings.
(2)	This line item includes network operating costs and selling, general and administrative expenses.

	Three Months Ended March 31, 2005 Compared to March 31, 2004

	Revenues

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	Operating Expenses

	Depreciation and Amortization

	Other Income (Expense)

	Income Tax Expense

	Net Income (Loss)

	Year ended December 31, 2004 compared to December 31, 2003

	Revenues

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	Operating Expenses

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	Depreciation and Amortization

	Other Income (Expense)

	Income Tax Expense

	Year ended December 31, 2003 compared to December 31, 2002

	Revenues

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	Operating Expenses

	•	Network costs decreased primarily as a result of CCI Texas having substantially exited the competitive telephone company business by the end of March 2003, which led to the removal of leased circuit costs from SBC and other carriers.
	•	Related to the exit from the competitive telephone company business, total headcount decreased by 161 to 644 as of December 31, 2003. CCI Texas estimates that the actual expense of salaries and benefits for these employees was approximately $4.4 million in addition to the $4.4 million in severance costs CCI Texas incurred in connection with these terminations.

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	•	Bad debt expense decreased by $11.0 million from $10.2 million in 2002 to a $0.8 million benefit in 2003. This was primarily due to (1) a re-evaluation of the bad debt reserve from $5.0 million at year-end 2002, which included a $2.7 million reserve for MCI accounts receivable due to the bankruptcy of MCI’s parent, Worldcom, Inc., to $1.5 million at year-end 2003 and (2) a decrease in bad debt write-offs to $2.3 million in 2003, which decrease primarily related to the exit from the competitive telephone company business.
	•	Non-competitive telephone company network costs decreased due to process improvements and network optimization projects. Process improvements were related to implementation of an automated system for tracking circuit costs payable to other carriers, including a monthly feed to the general ledger. Network optimization projects included renegotiation of contracts with long distance and other carriers, which eliminated monthly minimum usage fees. In addition, network costs decreased due to the removal of circuits in connection with the exit from the wholesale long distance business.
	•	Operating expenses decreased due to one-time system consolidation projects in 2002 that were not experienced in 2003. This decrease, however, was partially offset by expenses associated with a one-time software development project to enhance CCI Texas’ customer billing system in connection with the sale process.
	•	The incurrence of $1.4 million of one-time transaction costs, including financial and legal expenses associated with preparing TXUCV for sale.
	•	In addition, $2.4 million in retention bonuses that were paid to key employees to facilitate the sales transaction process while running the day to day operations of the business.

	Depreciation and Amortization

	Other Charges

	Other Income (Expense)

	Income Tax Expense (Benefit)

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	•	a change in the use or perceived value of CCI Texas’ tradenames;
	•	significant underperformance relative to expected historical or projected future operating results;
	•	significant regulatory changes that would impact future operating revenues;
	•	significant negative industry or economic trends; or
	•	significant changes in the overall strategy in which we operate our overall business.

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		Percentage		December 31, 2004
		Point		Obligation		2005 Expense
Assumption		Change		Higher/(Lower)		Higher/(Lower)
				(dollars in thousands)
Discount rate		±0.5 pts		$(4,545)/$5,110		$(114)/$116
Expected return on assets		±1.0 pts		—		$(413)/$413

		Percentage		December 31, 2004
		Point		Obligation		2005 Expense
Assumption		Change		Higher/(Lower)		Higher/(Lower)
				(dollars in thousands)
Discount rate		±0.5 pts		$(1,881)/$2,125		$(80)/$33

	Operating, Investing & Financing Activities

	Operating Activities

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	Investing Activities

	Financing Activities

	Working Capital

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	Debt and Capital Leases

	Capital Requirements

	•	scheduled principal and interest payments on its long-term debt;
	•	capital expenditures of approximately $23.4 million for network, central offices and other facilities and information technology for operating support and other systems; and
	•	$5.5 million to integrate and restructure the operations of CCI Illinois following the TXUCV acquisition.

	•	scheduled principal and interest payments on its long-term debt;
	•	$22.5 million of the $37.5 million cash distribution to our existing equity investors;
	•	capital expenditures of approximately $18.7 million for similar investments as were made in 2004;
	•	approximately $5.0 million in TXUCV integration and restructuring costs; and
	•	incremental costs associated with being a public company.

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	Surety Bonds

	Table of Contractual Obligations & Commitments

		Payments Due by Period
		Total				2005				2006				2007				2008				2009				Thereafter
		(In thousands)
Long-term debt		$	384,148			$	21,890			$	13,016			$	13,753			$	15,966			$	19,802			$	299,721
Operating leases			8,416				1,701				1,584				1,255				1,090				1,057				1,729
Capital lease			1,059				398				563				98				—				—				—
Minimum purchase contracts			1,056				297				396				363				—				—				—
Pension and other post-retirement obligations			50,879				2,399				3,385				3,730				3,975				4,285				33,105
Total contractual cash obligations and commitments		$	445,558			$	26,685			$	18,944			$	19,199			$	21,031			$	25,144			$	334,555

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	General

	Operating, Investing and Financing Activities

		Homebase
						Three
						Months
		Year Ended				Ended
		December 31,				March 31,
		2004				2005
		(in millions)
Net Cash Provided (Used):
Operating Activities			79.8				14.6
Investing Activities			(554.1	)			(5.5	)
Financing Activities			516.3				(4.6	)

	Operating Activities

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	Investing Activities

	Financing Activities

	Debt and Capital Leases

		Amount				Maturity Date				Rate(1)
		(In thousands)
Revolving credit facility		$	—				April 14, 2010				LIBOR + 2.25	%
Term loan A facility			112,000				April 14, 2010				LIBOR + 2.25	%
Term loan C facility			311,850				October 14, 2011				LIBOR + 2.50	%
Senior notes			200,000				April 1, 2012				9.75	%
Capital lease			1,059				March 1, 2007				6.50	%

(1)	As of March 31, 2005, the 90-day LIBOR rate was 3.12%.

	Existing Credit Facilities

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	Senior Notes

	GECC Capital Leases

	Capital Requirements

	•	scheduled principal and interest payments on our long-term debt;
	•	capital expenditures of approximately $30.0 million for network, central offices and other facilities and information technology for operating support and other systems; and
	•	approximately $7.0 million in aggregate to integrate and restructure the operations of CCI Illinois and CCI Texas following the TXUCV acquisition.

	•	interest payments on our long-term debt;
	•	a $37.5 million cash distribution to our existing equity investors;
	•	capital expenditures of approximately $33.5 million for similar investments as we made in 2004;
	•	approximately $7.5 million in TXUCV integration and restructuring costs; and
	•	following the closing of the proposed initial public offering, incremental costs associated with being a public company.

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	Surety Bonds

	Table of Contractual Obligations & Commitments

		Payments Due by Period
		Total				2005				2006				2007				2008				2009				Thereafter
		(in thousands)
Long-term debt(a)		$	623,850			$	36,169			$	21,900			$	23,150			$	26,900			$	33,400			$	482,331
Operating leases			24,276				3,644				3,896				3,169				2,601				2,571				8,395
Capital lease(b)			1,059				398				563				98				—				—				—
Minimum purchase contracts(c)			1,056				297				396				363				—				—				—
Pension and other post-retirement obligations(d)			62,924				3,027				5,307				5,704				5,939				6,264				36,683
Total contractual cash obligations and commitments		$	713,165			$	43,535			$	32,062			$	32,484			$	35,440			$	42,235			$	527,409

(a)		This item consists of loans outstanding under our existing credit facilities and our notes. Our existing credit facilities consist of a $112.0 million term loan A facility with a maturity of six years, a $311.9 million term loan C facility with a maturity of seven years and six months, and a $30.0 million revolving credit facility with a maturity of six years, which is fully available.
(b)		This item consists of a $1.1 million capital lease entered into by CCI Texas with GECC. On May 27, 2005, CCI Texas elected to pay in full the outstanding balance on this lease. See “Description of Other Indebtedness — GECC Capital Leases”.
(c)		As of March 31, 2005, the minimum purchase contract was a 60-month High-Capacity Term Payment Plan agreement with Southwestern Bell, dated November 25, 2002. The agreement requires CCI Texas to make monthly purchases of at least $33,000 from Southwestern Bell on a take-or-pay basis. The agreement also provides for an early termination charge of 45.0% of the monthly minimum commitment multiplied by the number of months remaining through the expiration date of November 25, 2007. As of March 31, 2005, the potential early termination charge was approximately $0.5 million.
(d)		Pension funding is an estimate of our minimum funding requirements to provide pension benefits for employees based on service through 2004. Obligations relating to other post retirement benefits are based on estimated future benefit payments. Our estimates are based on forecasts of future benefit payments which may change over time due to a number of factors, including life expectancy, medical costs and trends and on the actual rate of return on the plan assets, discount rates, discretionary pension contributions and regulatory rules. See Note E (Post Retirement Benefit Plans) to the consolidated financial statements of TXUCV and Note 12 (Pension Costs and Other Post Retirement Benefits) consolidated financial statements of Homebase.

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	Effect of the Proposed IPO

	Results of Operations

	•	We expect to pay approximately $13.6 million in one-time fees and expenses.
	•	We expect to pay a premium of $6.8 million in connection with the redemption of the notes.
	•	We expect to have a net decrease in interest expense of $6.8 million per year due to the partial redemption of the notes and amendment and restatement of the amended and restated credit facility.
	•	We expect to have a net increase in deferred financing costs, due to the write-off of approximately $2.5 million of deferred financing costs relating to the partial redemption of the notes, and the incurrence of approximately $3.4 million of deferred financing costs to amend and restate the amended and restated credit facilities.

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	•	As a result of the amendment and restatement of our amended and restated credit facility, we expect to (a) have approximately $18.1 million less in scheduled amortization payments due to the elimination of the requirement to amortize outstanding principal amounts and (b) no longer be required to prepay our outstanding term loans with 50% of our excess cash flow.
	•	As a public company, we expect to incur approximately $1.0 million in incremental ongoing expenses.
	•	Following the proposed initial public offering, we will have $5.0 million less annually in selling, general and administrative expenses from the termination of the two professional service agreements.
	•	We expect to incur a non-cash compensation expense of $8.8 million as a result of the amendment and restatement of our restricted share plan in connection with the proposed initial public offering. In the future, we expect to incur an additional $8.8 million of non-cash compensation expense under the restricted share plan that will be recognized ratably over the remaining three year vesting period of the issued, but unvested restricted shares outstanding at the offering date. We may also incur additional non-cash compensation expenses in connection with any new grants under our proposed 2005 long-term incentive plan, consistent with other public companies.
	•	As a result of the proposed dividend policy we currently intend to pay approximately $46.0 million in aggregate dividends for the first year following the closing of the proposed initial public offering, subject to various restrictions on our ability to do so.

Amount

Maturity Date

Rate(1)

(Dollars in thousands)

Revolving credit facility

$

—

April 14, 2010

LIBOR + 2.00%

Term loan D facility

423,850

October 14, 2011

LIBOR + 2.50%

Senior notes

130,000

April 1, 2012

9.75%

Capital lease

1,059

March 1, 2007

6.50%

(1)	As of March 31, 2005, the 90-day LIBOR rate was 3.12%.

	Existing Credit Facilities and Amended and Restated Credit Facilities

	•	a new term loan D facility of up to $425.0 million maturing on October 14, 2011; and
	•	a $30.0 million new revolving credit facility maturing on April 14, 2010.

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	Senior Notes

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	•	particular expertise in providing superior quality services to rural customers in a regulated environment;
	•	a proven track record of successful business integrations, including the integration of ICTC and several related businesses, including long distance and private line services, into McLeodUSA in 1998; and
	•	a proven track record of launching and growing of new, regulated services, such as long distance and DSL services, and complementary services, such as operator and telemarketing and order fulfillment services.

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	•	attractiveness of the markets;
	•	quality of the network;
	•	our ability to integrate the acquired company efficiently;
	•	potential operating synergies; and
	•	the potential of any proposed transaction to permit increased dividends on our common stock.

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	Illinois Telephone Operations

	•	86,624 local access lines in service, of which approximately 64% served residential customers and 36% served business customers;
	•	64% long distance penetration of Illinois Telephone Operations’ local access lines;
	•	7,611 dial-up Internet customers; and
	•	11,915 DSL lines, which represented an approximately 13.8% penetration of total local access lines. Approximately 90% of Illinois Telephone Operations’ total local access lines, excluding local access lines already served by other high speed connections, are DSL-capable.

		% of Net
		Revenue of
		Illinois
		Telephone
Revenue Source		Operations				Description
Local Calling Services			33.6%			Offers the local customer the ability to originate and receive an unlimited number of calls within a defined local calling area. The customer is charged a flat monthly fee for basic service, including local calls, and service charges for custom calling features, value added services and local private line services
Network Access Services			27.5%			Offers long distance and other carriers the opportunity to use our Illinois rural telephone company’s network to originate or terminate long distance calls in our Illinois rural telephone company’s service area. Network access charges are paid by the long distance or other carriers to our Illinois rural telephone company and are regulated by the FCC and the ICC. These revenues also include special access and certain regulated, end-user charges

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		% of Net
		Revenue of
		Illinois
		Telephone
Revenue Source		Operations				Description
Subsidies			17.0%			Our Illinois rural telephone company receives federal subsidy payments designed to promote widely available, quality telephone service at affordable prices in rural areas
Long Distance Services			7.7%			Offers intrastate and interstate long distance services provided to local customers who subscribe to Illinois Telephone Operations’ long distance services
Data and Internet Services			10.6%			Offers DSL, non-local private line service, dial-up Internet access and frame relay networks and related enhanced Internet services
Other Services			3.6%			Offers other services, including billing and collection services and commissions from the sale of advertising for yellow and white pages directories

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	Other Illinois Operations

	•	Public Services provides local and long distance service and automated collect calling from county jails and state prisons in Illinois under multi-year contracts as described under “— Customers and Markets”. These services include fraud control, customer service, call management and technical field support. The range of customized applications include institution-specific branding, call time and dollar limits, 3-way call detection, Personal Identification Number System, call blocking and screening, public defender access, call restriction application, on-site training, fully automated collect calls, touch tone and rotary dial acceptable, inmate tested equipment and monitors and recorders. Public Services also provides payphone services to approximately 356 payphones in our Illinois service area.
	•	Operator Services offers both live and automated local and long distance operator assistance and national directory assistance on a wholesale and retail basis to incumbent telephone companies, competitive telephone companies, long distance companies and payphone providers. Operator Services also provides specialized message center services and corporate and governmental attendant services and private corporate directory assistance and messaging services to corporations and government agencies.
	•	Market Response provides telemarketing and order fulfillment services to customers nationwide. Our order fulfillment services provide our clients with the ability to quickly and cost-effectively meet their customers’ requests for shipment of information and products. Typically, these customers are responding to a direct-response advertising campaign by the Internet, mail or telephone.
	•	Business Systems sells, installs and maintains telecommunications equipment and wiring to residential and business customers in our Illinois rural telephone company’s service area and in nearby, larger markets including Champaign, Decatur and Springfield, Illinois. This operation allows us to cross-sell our services to many of our Illinois Telephone Operations’ business customers, such as colleges, hospitals and secondary schools.

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	•	Mobile Services provides one-way messaging service to residential and business customers. The basic paging capability has been supplemented with other complimentary mobile information services, including Internet, 800 service, info-text and voicemail.

	Illinois Telephone Operations

	Key Market Data:

				Coles				Christian				Montgomery				Effingham				Shelby				Other				Totals
2000 Census Data
	County Population (2000)				53,196				35,372				30,652				34,264				22,893				n/a				176,377
	County Population CAGR 1990-2000				0.30	%			0.27	%			(0.03	)%			0.78	%			0.28	%			n/a				n/a
	County Median Household Income			$	32,286			$	36,561			$	33,123			$	39,379			$	37,313				n/a				n/a
Market Territory (sq. miles)					531				662				585				26				520				357				2,681
Local Access Lines
	Residence				19,095				12,276				9,564				4,369				6,002				4,101				55,407
	Business				12,859				4,670				4,239				5,568				1,958				1,923				31,217
		Total			31,954				16,946				13,803				9,937				7,960				6,024				86,624
Number of Exchanges					5				9				7				1				8				5				35

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	Other Illinois Operations

	•	includes provisions that allow the respective state agency and county to terminate the contract without cause and without penalty under some circumstances;
	•	is subject to decisions of state agencies and counties that are subject to political influence on renewal;

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	•	gives the State of Illinois the right to renew the contract at its option but does not give us the same right; and
	•	could be cancelled if state funding becomes unavailable.

	•	positioning itself as a single point of contact for customers’ telecommunications needs;
	•	providing its customers with a broad array of voice and data services and bundling services where possible;
	•	providing excellent customer service, including providing 24-hour, 7-day a week centralized customer support to coordinate installation of new services, repair and maintenance functions;
	•	developing and delivering new services; and
	•	leveraging the history of CCI Illinois and its involvement with its local communities and expanding “Consolidated Communications” and “Consolidated” brand recognition, subject to regulatory and strategic business considerations.

	•	accelerating DSL service penetration in all of our rural telephone companies service areas;
	•	cross-selling our services;
	•	developing additional services to maximize revenues and increase average revenues per customer;
	•	increasing customer loyalty through superior customer service, local presence and motivated service employees; and
	•	leveraging the CCI Illinois’ telemarketing, order fulfillment and directory-assistance capabilities to provide functions that are currently being outsourced by CCI Texas, a process that has already begun with the migration of Texas directory assistance traffic to the CCI Illinois system in May 2004.

	Illinois Telephone Operations

	Other Illinois Operations

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				Owned/		Approx.
Location		Primary Use		Leased		Sq. Ft.
Charleston		Illinois Telephone Operations Communications Center and Market Response Offices(1)		Leased			33,987
Effingham		Office and Illinois Telephone Operations Communications Center		Leased			2,500
Mattoon		Sales and Administration Office(1)		Leased			30,687
Mattoon		Corporate Headquarters(1)		Leased			49,054
Mattoon		Operator Services and Operations		Owned			36,263
Mattoon		Archive		Owned			9,097
Mattoon		Operations and Distribution Center(1)		Leased			30,883
Mattoon		Communications Center		Leased			5,677
Mattoon		Market Response Order Fulfillment(2)		Leased			20,000
Mattoon		Office		Owned			10,086
Taylorville		Operations and Branch Distribution Center(1)		Leased			14,655
Taylorville		Office and Illinois Telephone Operations Communications Center		Owned			15,934
Taylorville		Operator Services Call Center(2)		Leased			11,500

(1)	In 2002, CCI Illinois sold these facilities to, and leased them back from, LATEL, LLC, or LATEL, an entity affiliated with Mr. Lumpkin. For more information about these arrangements, see “Certain Relationships and Related Party Transactions — LATEL Sale/ Leaseback”.
(2)	All properties listed above other than these two properties are used by both Illinois Telephone Operations and Other Illinois Operations. These two properties are used by Other Illinois Operations only.

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	•	166,447 local access lines in service, of which approximately 68% served residential customers and 32% served business customers;
	•	40% long distance penetration of CCI Texas’ local access lines;
	•	11,998 dial-up Internet customers; and
	•	18,889 DSL lines, which represented an approximately 11.3% penetration of total local access lines. Approximately 90% of CCI Texas’ total local access lines, excluding local access lines already served by other high speed connections, are DSL-capable.

	•	GTE Mobilnet of South Texas, which serves the greater Houston metropolitan area. CCI Texas owns approximately 2.3% of this partnership. In 2004, CCI Texas recognized income of $2.5 million and received cash distributions totaling $3.2 million from this partnership. For the three months ended March 31, 2005, CCI Texas did not receive any income or receive any cash distributions from this partnership.
	•	GTE Mobilnet of Texas RSA #17, which serves rural areas in and around Conroe, Texas. CCI Texas owns approximately 17.0% of this partnership. In 2004, CCI Texas recognized income of $1.7 million and received cash distributions totaling $0.8 million from this partnership. For the three months ended March 31, 2005, CCI Texas recognized income of $0.3 million, but did not receive any cash distributions from this partnership.

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		% of Net
		Revenue of
Revenue Source		CCI Texas				Description
Local Calling Services			30.7%			Offers the local customer the ability to originate and receive an unlimited number of calls within a defined local calling area. The customer is charged a flat monthly fee for basic service, including local calls, and service charges for custom calling features, voicemail and local private line services.
Network Access Services			20.7%			Offers long distance and other carriers the opportunity to use our Texas rural telephone companies’ network to originate or terminate long distance calls in our Texas rural telephone companies’ service areas. Network access charges are paid by the long distance or other carriers to our Texas rural telephone companies and are regulated by the FCC and PUCT. These revenues also include special access and certain regulated, end user charges.
Subsidies			20.5%			Our Texas rural telephone companies receive federal and state subsidy payments designed to promote widely available, quality telephone service at affordable prices in rural areas.
Long Distance Services			4.5%			Offers intrastate and interstate long distance services provided to local customers who subscribe to CCI Texas’ long distance services.
Data and Internet Services			8.4%			Offers DSL, non-local private line service, dial-up Internet access, Asynchronous Transfer Mode, or ATM, based services and frame relay networks and related enhanced Internet services.
Directory Publishing			6.5%			Offers the sale of directory advertising and publishes yellow and white pages directories in and around our Texas rural telephone companies’ service areas.
Transport Services			5.9%			Offers connectivity to customers within Texas over a fiber-optic transport network.
Other Services			2.8%			Offers other services, including equipment sales and billing and collection services.

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	Key Market Data:

				Conroe Market				Lufkin Market				Katy Market
				(Montgomery				(Angelina				(Fort Bend
				County)				County)				County)				Totals
2000 Census Data
	County Population (2000)				293,768				80,130				354,452				728,350
	County Population CAGR 1990-2000				4.9	%			1.4	%			4.6	%
	County Median Household Income			$	50,864			$	33,806			$	63,831
Market Territory (sq. miles)					433				1,080				541				2,054
Local Access Lines
	Residential				49,868				30,552				32,190				112,610
	Business				23,400				16,966				13,471				53,837
		Total			73,268				47,518				45,661				166,447
Number of Exchanges					7				9				5				21

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	•	positioning itself as a single point of contact for customers’ telecommunications needs;
	•	providing its customers with a broad array of voice and data services and bundling services where possible;
	•	providing excellent customer service, including providing 24-hour, 7-day a week repair and maintenance functions;
	•	developing and delivering new services; and
	•	leveraging the history of CCI Texas and its involvement with its local communities.

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				Owned/		Approx.
Location		Primary Use		Leased		Sq. Ft.
Brookshire		Office		Owned			4,400
Conroe		Regional Office		Owned			51,875
Conroe		Warehouse & Plant		Owned			28,500
Conroe		Office		Owned			10,650
Dallas		Current Texas Headquarters — Administration		Leased			5,997
Irving		Office		Leased			44,060
Katy		Regional Office		Owned			6,500
Katy		Office (Electric Shop)		Owned			1,600
Katy		Warehouse		Owned			13,983
Katy		Office		Owned			5,733
Lufkin		Regional Office		Owned			30,145
Lufkin		Business Office		Owned			23,190
Lufkin		Warehouse		Owned			14,240
Lufkin		Office and Data Center		Owned			11,920
Lufkin		Office		Owned			8,000
Lufkin		Office and Parking Area		Owned			7,925
Needville		Office		Owned			6,649
Rosenberg		Storage		Leased			10,000

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	Wireline Competition

	Wireless Competition

	VOIP Competition

	Internet Competition

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	Long Distance Competition

	Other Competition

	Related Risks

	•	how well we market our existing services and develop new technologies;
	•	the quality and reliability of our network and service; and
	•	our ability to anticipate and respond to various competitive factors affecting the telecommunications industry, including a changing regulatory environment that may affect us differently from our competitors, pricing strategies by competitors, changes in consumer preferences, demographic trends and economic conditions.

	Market and Industry Data

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	Removal of Entry Barriers

	•	allow others to resell their services;
	•	where feasible, provide number portability;
	•	ensure dialing parity, whereby consumers can choose their local or long distance telephone company over which their calls will automatically route without having to dial additional digits;
	•	ensure that competitors’ customers receive nondiscriminatory access to telephone numbers, operator service, directory assistance and directory listing;
	•	afford competitors access to telephone poles, ducts, conduits and rights-of-way; and

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	•	establish reciprocal compensation arrangements for the transport and termination of telecommunications traffic.

	•	negotiate any interconnection agreements in good faith;
	•	interconnect their facilities and equipment with any requesting telecommunications carrier, at any technically feasible point, at nondiscriminatory rates and on nondiscriminatory terms and conditions;
	•	provide nondiscriminatory access to unbundled network elements, commonly known as UNEs, such as local loops and transport facilities, at any technically feasible point, at nondiscriminatory rates and on nondiscriminatory terms and conditions;
	•	offer their retail services for resale at discounted wholesale rates;
	•	provide reasonable notice of changes in the information necessary for transmission and routing of services over the incumbent telephone company’s facilities or in the information necessary for interoperability; and
	•	provide, at rates, terms and conditions that are just, reasonable and nondiscriminatory, for the physical co-location of equipment necessary for interconnection or access to UNEs at the premises of the incumbent telephone company.

	Rural Exemption

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	Access Charges

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	Promotion of Universal Service

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	Rural Telephone Company Services Regulation

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	•	maintain separate books of account;
	•	not own transmission or switching facilities jointly with our rural telephone companies; and
	•	acquire any services from our rural telephone companies at tariffed rates, term and conditions.

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	Local Government Authorizations

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	Texas Universal Service

	Local Government Authorizations

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	•	two directors are designated by Central Illinois Telephone, currently Messrs. Lumpkin and Currey;
	•	one director is designated by Providence Equity, currently Mark A. Pelson; and
	•	one director is designated by Spectrum Equity, currently Kevin J. Maroni.

Name		Age				Position
Richard A. Lumpkin			70			Chairman of the board of managers and Director of Homebase
Robert J. Currey			59			President, Chief Executive Officer and Director of Homebase, Illinois Holdings and Texas Holdings
Steven L. Childers			49			Chief Financial Officer of Illinois Holdings and Texas Holdings
Joseph R. Dively			45			Senior Vice President of Illinois Holdings and Texas Holdings and President of Telephone Operations of Illinois Holdings
Steven J. Shirar			46			Senior Vice President of Illinois Holdings and Texas Holdings and President of Enterprise Operations of Illinois Holdings and Texas Holdings
C. Robert Udell, Jr.			39			Senior Vice President of Illinois Holdings and Texas Holdings and President of Telephone Operations of Texas Holdings
Christopher A. Young			49			Chief Information Officer of Illinois Holdings and Texas Holdings
Steven L. Grissom			52			Treasurer and Secretary of Illinois Holdings and Texas Holdings
Kevin J. Maroni			42			Director
Mark A. Pelson			43			Director

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	•	Class I Directors. Mr. Lumpkin will be the Class I director, whose term will expire at the 2006 annual meeting of stockholders;
	•	Class II Directors. Messrs. Moore and Blumenstein will be the Class II directors, whose terms will expire at the 2007 annual meeting of stockholders; and
	•	Class III Directors. Mr. Currey and Ms. Rahe will be the Class III directors, whose terms will expire at the 2008 annual meeting of stockholders.

	•	the integrity of our financial statements and reporting process;

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	•	our compliance with legal and regulatory matters;
	•	the independent registered public accounting firm’s qualifications and independence; and
	•	the performance of our registered public accounting firm.

	•	conducting an annual performance evaluation of the audit committee;
	•	compensating, retaining and overseeing the work of our registered public accounting firm;
	•	establishing procedures for (a) receipt and treatment of complaints on accounting and other related matters and (b) submission of confidential employee concerns regarding questionable accounting or auditing matters; and
	•	preparing reports to be included in our public filings with the SEC.

	•	to review and approve goals and objectives relating to the compensation of our chief executive officer and, based upon a performance evaluation, to determine and approve the compensation of the chief executive officer;
	•	to make recommendations to our board of directors on the compensation of other executive officers and on incentive compensation and equity-based plans; and
	•	to prepare reports on executive compensation to be included in our public filings with the SEC.

	•	to identify individuals qualified for membership on our board of directors and to select, or recommend for selection, director nominees;
	•	to develop and recommend to our board of directors a set of corporate governance principles; and
	•	to oversee the evaluation of our board of directors and management.

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	Summary Compensation Table

																			Long-Term
			Annual Compensation																Compensation
																			2003 Restricted
			Fiscal												Other Annual				Share Plan				All Other
Name(1)			Year				Salary				Bonus				Compensation				Awards(8)				Compensation(9)
Richard A. Lumpkin				2004			$	1,528,205	(2)			—			$	653,019	(3)			—			$	5,538
	Chairman of the board of managers and Director			2003			$	816,205	(2)			—			$	21,945	(4)			—			$	2,077
Robert J. Currey				2004			$	301,923			$	400,000			$	—			$	0			$	8,931
	President, Chief Executive Officer and Director			2003			$	263,846			$	300,000			$	13,847	(5)		$	0			$	3,077
Steven J. Shirar				2004			$	193,846			$	100,000			$	8,123	(5)		$	0			$	5,873
	Senior Vice President and President of Enterprise Operations			2003			$	178,615			$	90,000			$	5,138	(5)		$	0			$	2,769
Joseph R. Dively				2004			$	170,769			$	115,000			$	6,141	(5)		$	0			$	6,828
	Senior Vice President and President of Telephone Operations of Illinois Holdings			2003			$	148,846			$	70,000			$	1,979	(5)		$	0			$	2,423
Steven L. Childers				2004			$	157,692			$	125,000			$	834	(5)		$	0			$	6,250
	Chief Financial Officer			2003			$	106,692			$	65,000			$	86,978	(6)		$	0			$	1,246
Christopher A. Young				2004			$	166,923			$	85,000			$	3,568	(5)		$	0			$	6,791
	Chief Information Officer			2003			$	144,615			$	74,000			$	58,724	(7)		$	0			$	1,108

	(1)	Each of the named executive officers served in their positions throughout fiscal years 2003 and 2004, other than Mr. Young, who was hired on February 3, 2003 and Mr. Childers, who was hired on January 13, 2003.
	(2)	Includes professional services fees of $1,378,205 and $666,667 in 2004 and 2003, respectively, paid to Mr. Lumpkin as one of our existing equity investors. See “Certain Relationships and Related Party Transactions — Professional Services Fee Agreements”. Pursuant to a side letter agreement with some of the other investors in Central Illinois Telephone, including affiliates of Mr. Lumpkin and members of his family, whereby Mr. Lumpkin shares a portion of this professional services fee, Mr. Lumpkin retained only $967,547 and $492,468 of the professional services fee in 2004 and 2003, respectively. In addition, the remaining $150,000 and $149,538 in the table above represents amounts paid to Mr. Lumpkin for his services to ICTC in 2004 and 2003, respectively.
	(3)	Includes a lump sum payment of $649,617 by ICTC to Mr. Lumpkin to terminate the Supplemental Executive Retirement Plan for Mr. Lumpkin. See “— Employment and Other Arrangements — Supplemental Executive Retirement Plan”. The amount in the table above also includes $3,402 for the reimbursement of taxes.
	(4)	Includes $21,050 we paid to purchase Mr. Lumpkin’s personal automobile, $542 attributable to Mr. Lumpkin’s personal use of the automobile in 2003 and $353 for the reimbursement of taxes.
	(5)	All amounts represent reimbursement of taxes.
	(6)	Includes a relocation allowance of $86,978. Of the relocation allowance $25,781 represents reimbursement of taxes.

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	(7)	Includes a relocation allowance of $58,724. Of the relocation allowance, $24,315 represents reimbursement of taxes.
	(8)	Our board of managers ascribed no value to the restricted shares on the date awarded. The value of the restricted common shares held by each of the named executive officers as of December 31, 2004 was as follows:

		Restricted				Value as of
Named Officer		Shares Held				December 31, 2004
Robert J. Currey			300,000			$	0
Steven J. Shirar			100,000			$	0
Joseph R. Dively			100,000			$	0
Steven L. Childers			100,000			$	0
Christopher A. Young			62,500			$	0

25.0% of these shares vested on December 31, 2004 and 25% will vest on the day prior to the completion of the proposed initial public offering. The remaining 50% (or 75% in the event the proposed initial public offering is not consummated) will vest in three equal installments on December 31, 2005, 2006 and 2007. Holders of restricted common shares are entitled to receive dividends and other distributions if and when declared by the board of managers.

	(9)	Amounts listed consist of CCI’s matching contributions to its 401(k) plan. We also provide the named executive officers with certain group life, health, medical and other non-cash benefits generally available to all salaried employees and excluded from this column pursuant to SEC rules.

	General

	Administration and Terms of Awards

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	Vesting

	•	if the board of managers accelerates the vesting of common shares at any time for any reason, which it is entitled to do; or
	•	upon a change of control (as defined in the restricted share plan) of Homebase, if the employee is terminated without cause, the employee’s compensation is reduced below 90.0% of the compensation prior to the change of control or the employee is assigned duties and responsibilities materially inconsistent with his or her previous level of responsibility.

	Call Rights

	Drag-Along Rights

	Other Shareholder Rights

	Term

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	Employment Arrangements

	Supplemental Executive Retirement Plan

	Directors’ and Officers’ Indemnification and Insurance

	•	to indemnify, to the fullest extent permitted by applicable law, its directors, employees and agents and the existing equity investors and their respective directors, stockholders, members, partners, representatives or agents for losses which the indemnified person may incur as a result of any act or omission performed by the indemnified person on behalf of Homebase in a manner reasonably believed to be within the scope of authority provided by the LLC agreement; and
	•	to obtain a policy of directors’ and officers’ liability insurance in an amount of at least $12.5 million.

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	•	each person or entity who is known to us to beneficially own more than 5.0% of Homebase shares;
	•	our named executive officers and directors; and
	•	our directors and executive officers as a group,

										Number of				Percentage of
		Number of				Percentage of				Class A				Class A
Name and Address of Beneficial Owner		Common Shares				Common Shares				Preferred Shares				Preferred Shares
Central Illinois Telephone(a)			3,000,000				30.0	%			60,666.7				33.3	%
Providence Equity(b)			3,000,000				30.0	%			60,666.7				33.3	%
Spectrum Equity(c)			3,000,000				30.0	%			60,666.7				33.3	%
Named Executive Officers and the Board of Managers
Richard A. Lumpkin(d)			—				—				—				—
Robert J. Currey(e)			300,000				3.0	%			—				—
Steven J. Shirar(f)			100,000				1.0	%			—				—
Joseph R. Dively(g)			100,000				1.0	%			—				—
Steven L. Childers(h)			100,000				1.0	%			—				—
Christopher A. Young(i)			62,500				*				—				—
Kevin J. Maroni(j)			—				*				—				—
Mark A. Pelson(k)			—				*				—				—
All directors and executive officers as a group (10 persons)(l)			707,500				7.1	%			—				—

*	Less than 1% ownership.

(a)		The equity interests in Central Illinois Telephone are approximately 81.9% owned by SKL Investment Group, a Delaware limited liability company, approximately 9.5% owned by LTIC, LLC, an Illinois limited liability company, approximately 1.0% owned by GRISS, LLC, an Illinois limited liability company, and approximately 7.6% owned collectively by Messrs. Currey, Shirar, Dively, Udell and

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		others, either directly or indirectly through retirement accounts and various trusts. SKL Investment Group is owned by Mr. Lumpkin and members of his family, Mr. Lumpkin is the sole manager of an SKL Investment Group investment fund and has the sole power to direct the voting and disposition of its investments. LTIC, LLC is managed by Agracel, an Illinois corporation, which has a four member board of directors, two of whom are Messrs. Lumpkin and Grissom. In addition, Mr. Lumpkin and members of his family own approximately 50.0% of Agracel and Mr. Grissom owns approximately 2.6% of Agracel. In addition, GRISS, LLC is approximately 80.0% owned by Mr. Grissom and members of his family, and Mr. Grissom is also a co-trustee of trusts that own approximately 37.4% of the common shares of Central Illinois Telephone through SKL Investment Group. As a result of the above, Messrs. Lumpkin, Currey, Shirar, Dively, Udell and Grissom may be deemed to share beneficial ownership of the shares of Homebase owned by Central Illinois Telephone. Each of them disclaims this beneficial ownership. Mr. Lumpkin is the sole manager of Central Illinois Telephone and has sole investment and voting power with respect to the shares held by Central Illinois Telephone. The address of Central Illinois Telephone and Mr. Lumpkin is c/o Homebase, P.O. Box 1234, Mattoon, Illinois 61938.
(b)		Consists of 2,990,355 common shares and 60,471.6 Class A preferred shares held by Providence Equity Partners IV, L.P. and 9,645 common shares and 195 Class A preferred shares held by Providence Equity Operating Partners IV, L.P. Providence Equity GP IV, L.P. is the general partner of each of these entities and Providence Equity Partners IV, LLC is the general partner of Providence Equity GP IV, L.P. Providence Equity Partners IV, LLC has the sole power to direct the voting and disposition of the shares. As a result, each of the entities may be deemed to share beneficial ownership of the shares owned by the others. Each of the entities disclaims this beneficial ownership. Jonathan M. Nelson, by virtue of his ownership interest in, and as managing member of, Providence Equity Partners IV, LLC, may also be deemed to possess indirect beneficial ownership of the securities owned by these entities. He disclaims such beneficial ownership except to the extent of his pecuniary interest in those securities. Glenn M. Creamer and Paul J. Salem are the remaining voting members of Providence Equity Partners IV, LLC, but neither has a voting interest sufficient, by itself, to either direct or prevent the voting or disposition of the shares deemed to be aired by Providence Equity Partners IV, LLC. The address of Providence Equity and Mr. Nelson is c/o Providence Equity Partners, Inc., 50 Kennedy Plaza, 18th Floor, Providence, Rhode Island 02903.
(c)		Consists of 2,702,563 common shares and 54,651.8 Class A preferred shares held by Spectrum Equity Investors IV, L.P. (“SEI4”); 32,183 common shares and 650.8 Class A preferred shares held by Spectrum IV Investment Managers’ Fund, L.P. (“SIM4”); 15,954 common shares and 322.6 Class A preferred shares held by Spectrum Equity Investors Parallel IV, L.P. (“SEIP4”); 239,328 common shares and 4,839.7 Class A preferred shares held by Spectrum Equity Investors III, L.P. (“SEI3”); 7,479 common shares and 151.2 Class A preferred shares held by SEI III Entrepreneurs’ Fund, L.P. (“SEI3E”); and 2,493 common shares and 50.4 Class A preferred shares held by Spectrum III Investment Managers’ Fund, L.P. (“SIM3”). Spectrum Equity Associates IV, L.P. (“SEA4”) is the sole general partner of SEI4 and SEIP4. Spectrum Equity Associates III, L.P. (“SEA3”) is the sole general partner of SEI3. SEI III Entrepreneurs’ LLC (“SEI3LLC”) is the general partner of SEI3E. Because these funds ultimately are under common management that shares the power to direct the voting and disposition of the shares, each of these entities may be deemed to share beneficial ownership of the shares owned by the others. Each of these entities disclaims this beneficial ownership except to the extent of their pecuniary interest therein. Because decisions by each of the entities serving as the ultimate general partners of the individual funds in question are made by majority vote of either four or seven partners or members, as the case may be, no individual partner of SEA4, SIM4, SEA3 or SIM3, and no individual member of SEI3LLC, has the power alone to direct the voting or disposition of the shares, and no such individual has the power to prevent the voting or disposition of such shares over his objection. The address of Spectrum Equity is c/o Spectrum Equity Investors, One International Place, 29th Floor, Boston, Massachusetts 02110.
(d)		Mr. Lumpkin and his family own a majority of the common shares of Central Illinois Telephone, Mr. Lumpkin is its sole manager and has the sole power to direct the voting of its shares. As a result,

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		Mr. Lumpkin may be deemed to share beneficial ownership of the shares of Homebase owned by Central Illinois Telephone. Mr. Lumpkin disclaims this beneficial ownership except to the extent of his pecuniary interest in those securities.
(e)		Consists of common shares initially awarded under the restricted share plan. See “Management — Restricted Share Plan”. In addition, Mr. Currey, through an IRA trust, owns less than 1.0% of Central Illinois Telephone. As a result, Mr. Currey may be deemed to share beneficial ownership of the shares of Homebase owned by Central Illinois Telephone. Mr. Currey disclaims this beneficial ownership except to the extent of his pecuniary interest in those securities.
(f)		Consists of common shares initially awarded under the restricted share plan. See “Management — Restricted Share Plan”. In addition, Mr. Shirar, through a trust, owns less than 1.0% of Central Illinois Telephone. As a result, Mr. Shirar may be deemed to share beneficial ownership of the shares of Homebase owned by Central Illinois Telephone. Mr. Shirar disclaims this beneficial ownership except to the extent of his pecuniary interest in those securities.
(g)		Consists of common shares initially awarded under the restricted share plan. See “Management — Restricted Share Plan”. In addition, Mr. Dively owns less than 1.0% of Central Illinois Telephone. As a result, Mr. Dively may be deemed to share beneficial ownership of the shares of Homebase owned by Central Illinois Telephone. Mr. Dively disclaims this beneficial ownership.
(h)		Consists of common shares initially awarded under the restricted share plan. See “Management — Restricted Share Plan”.
(i)		Consists of common shares initially awarded under the restricted share plan. See “Management — Restricted Share Plan”.
(j)		Mr. Maroni is a general partner or managing member of, and holds a minority interest in, the Spectrum Equity funds that own Homebase shares. As a result, Mr. Maroni may be deemed to share beneficial ownership of the shares of Homebase owned by Spectrum Equity. Mr. Maroni disclaims this beneficial ownership.
(k)		Mr. Pelson is a Managing Director of Providence Equity and holds a minority interest in the Providence Equity funds that own Homebase shares. As result, Mr. Pelson may be deemed to share beneficial ownership of the shares of Homebase owned by Providence Equity. Mr. Pelson disclaims this beneficial ownership.
(l)		Excludes 287,500 common awarded to employees, other than our executive officers, under the restricted share plan.

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	•	any exchange notes will be acquired in the ordinary course of its business;
	•	the holder will have no arrangements or understanding with any person to participate in the distribution of the exchange notes within the meaning of the Securities Act;
	•	the holder is not an “affiliate”, as defined in Rule 405 of the Securities Act, of either issuer or, if it is an affiliate, that it will comply with applicable registration and prospectus delivery requirements of the Securities Act to the extent applicable;
	•	if the holder is a broker-dealer, that it will receive exchange notes for its own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the exchange notes. See “Plan of Distribution”; and
	•	the holder is not acting on behalf of any person who could not truthfully make the foregoing representations.

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	•	the holder is not an “affiliate” of either issuer within the meaning of Rule 405 under the Securities Act;
	•	the exchange notes are acquired in the ordinary course of the holder’s business; and
	•	the holder does not intend to participate in the distribution of the exchange notes.

	•	cannot rely on the position of the staff of the SEC set forth in Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling (dated July 2, 1993), or similar no-action letters; and
	•	in the absence of any exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

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	•	to delay accepting for exchange any outstanding notes;
	•	to extend the exchange offer or to terminate the exchange offer and to refuse to accept outstanding notes not previously accepted if any of the conditions set forth below under “— Conditions to the Exchange Offer” have not been satisfied, by giving oral or written notice of the delay, extension or termination to the exchange agent; or
	•	to amend the terms of the exchange offer in any manner.

	•	the exchange notes to be received will not be tradable by the holder without restriction under the Securities Act and the Exchange Act and without material restrictions under the blue sky or securities laws of substantially all of the states of the United States;
	•	the exchange offer, or the making of any exchange by a holder of outstanding notes, violates applicable law or any applicable interpretation of the staff of the SEC; or
	•	any action or proceeding has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer.

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	•	the representations and acknowledgements described under “— Purpose and Effect of the Exchange Offer”, “— Procedures for Tendering” and “Plan of Distribution”; and
	•	such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to it an appropriate form for registration of the exchange notes under the Securities Act.

	•	complete, sign and date the accompanying letter of transmittal, or a facsimile of the letter of transmittal; have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires; and mail or deliver the letter of transmittal or facsimile to the exchange agent prior to the expiration date; or
	•	comply with DTC’s Automated Tender Offer Program procedures described below.

	•	the exchange agent must receive certificates for the outstanding notes along with the accompanying letter of transmittal prior to the expiration date; or
	•	the exchange agent must receive, prior to the expiration date, a timely confirmation of book-entry transfer of the outstanding notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message; or
	•	the holder must comply with the guaranteed delivery procedures described below.

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	•	make appropriate arrangements to register ownership of the outstanding notes in such owner’s name; or
	•	obtain a properly completed bond power from the registered holder of outstanding notes.

	•	by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the accompanying letter of transmittal; or
	•	for the account of an eligible institution.

	•	DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation;

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	•	the participant has received and agrees to be bound by the terms of the accompanying letter of transmittal, or, in the case of an agent’s message relating to guaranteed delivery, that the participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and
	•	the agreement may be enforced against that participant.

	•	outstanding notes or a timely book-entry confirmation of the outstanding notes into the exchange agent’s account at DTC; and
	•	a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message.

	•	any exchange notes that the holder receives will be acquired in the ordinary course of its business;
	•	the holder has no arrangement or understanding with any person or entity to participate in the distribution of the exchange notes;
	•	the holder is not an “affiliate”, as defined in Rule 405 of the Securities Act, of either issuer or, if the holder is an affiliate, it will comply with any applicable registration and prospectus delivery requirements of the Securities Act;
	•	if the holder is not a broker-dealer, that it is not engaged in and does not intend to engage in the distribution of the exchange notes;
	•	if the holder is a broker-dealer, that will receive exchange notes for its own account in exchange for outstanding notes that were acquired as a result of market-making activities or other trading activities, that it will deliver a prospectus, as required by law, in connection with any resale of any exchange notes. See “Plan of Distribution”; and
	•	the holder is not acting on behalf of any person who could not truthfully make the foregoing representations.

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	•	the tender is made through an eligible institution;
	•	prior to the expiration date, the exchange agent receives from the eligible institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail or hand delivery, or a properly transmitted agent’s message and notice of guaranteed delivery:

	•	setting forth the name and address of the holder, the registered number(s) of the outstanding notes and the principal amount of outstanding notes tendered:
	•	stating that the tender is being made thereby; and
	•	guaranteeing that, within three New York Stock Exchange trading days after the expiration date, the accompanying letter of transmittal, or facsimile thereof, together with the outstanding notes or a book-entry confirmation, and any other documents required by the accompanying letter of transmittal will be deposited by the eligible institution with the exchange agent; and

	•	the exchange agent receives the properly completed and executed letter of transmittal, or facsimile thereof, as well as all tendered outstanding notes in proper form for transfer or a book-entry confirmation and all other documents required by the accompanying letter of transmittal, within three New York Stock Exchange trading days after the expiration date.

	•	the exchange agent must receive a written notice of withdrawal, which notice may be by telegram, telex, facsimile transmission or letter of withdrawal at one of the addresses set forth below under “— Exchange Agent”, or
	•	holders must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system.

	•	specify the name of the person who tendered the outstanding notes to be withdrawn;
	•	identify the outstanding notes to be withdrawn, including the principal amount of the outstanding notes; and
	•	where certificates for outstanding notes have been transmitted, specify the name in which the outstanding notes were registered, if different from that of the withdrawing holder.

	•	the serial numbers of the particular certificates to be withdrawn; and
	•	a signed notice of withdrawal with signatures guaranteed by an eligible institution unless the holder is an eligible institution.

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By Registered and Certified Mail Wells Fargo Bank, N.A Corporate Trust Operations MAC N9303-121 P.O. Box 1517 Minneapolis, MN 55480		By Overnight Courier or Regular Mail Wells Fargo Bank, N.A. Corporate Trust Operations MAC N9303-121 6th & Marquette Avenue Minneapolis, MN 55479		By Hand Delivery Wells Fargo Bank, N.A. Corporate Trust Services 608 2nd Avenue South Northstar East Building — 12th  Floor Minneapolis, MN 55402

	•	SEC registration fees;
	•	fees and expenses of the exchange agent and trustee;
	•	accounting and legal fees and printing costs; and
	•	related fees and expenses.

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	•	certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered;
	•	tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or
	•	a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer.

	•	as set forth in the legend printed on the outstanding notes as a consequence of the issuance of the outstanding notes under the exemption from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and
	•	otherwise as set forth in the offering circular distributed in connection with the private offering of the outstanding notes.

	•	cannot rely on the applicable interpretations of the SEC; and
	•	must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

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	Action by the Board of Managers

	•	two directors designated by Central Illinois Telephone;
	•	one director designated by Providence Equity; and
	•	one director designated by Spectrum Equity.

	Action by the Board of Managers Prior to ICC Approval of Governance Change

	•	issuing equity securities;
	•	effecting a merger, consolidation, liquidation, dissolution or similar transaction, except as provided in the LLC agreement;
	•	acquiring or disposing of businesses or assets outside the ordinary course of business;
	•	incurring debt, other than working capital borrowings of subsidiaries in an aggregate amount not to exceed $1,000,000, or granting liens on property of Homebase or its subsidiaries to secure any debt;
	•	making capital investments in excess of $500,000;
	•	entering into material contracts or commitments in excess of $500,000 in any year;
	•	engaging in transactions with the existing equity investors, except as provided in the LLC agreement;

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	•	establishing committees of the board of managers or appointing directors thereto;
	•	waiving material rights or settling litigation;
	•	instituting material litigation and similar proceedings outside the ordinary course of business;
	•	filing for protection under any bankruptcy or insolvency law;
	•	adopting or amending the annual plan, which includes monthly capital and operating expenses budgets, cash flow statements and profit and loss projections; and
	•	filing a registration statement with the SEC for any securities of Homebase.

	•	Mr. Lumpkin ceases to make the business and affairs of our company his principal business activity or otherwise ceases to be a director or to be involved in our business and affairs at a level consistent with that of a director;
	•	Mr. Lumpkin’s death or disability;
	•	Mr. Lumpkin ceases to have sole voting control of at least 51.0% of the shares of Homebase held by Central Illinois Telephone as of the date of the acquisition of TXUCV; or
	•	any of Mr. Lumpkin, specified members of his family or Central Illinois Telephone exercises their respective put rights in accordance with the LLC agreement, as summarized below under “— Put Rights”.

	•	the failure of Homebase to comply with the appraisal rights granted to Providence Equity and Spectrum Equity, which may be exercised at any time after June 30, 2007, in accordance with the terms of the LLC agreement; or
	•	the failure of Homebase to comply with the put rights of Mr. Lumpkin and his affiliates, Providence Equity or Spectrum Equity in accordance with the terms of the LLC agreement.

	Action By the Board of Managers Following ICC Approval of Governance Change

	•	effect a sale of CCI Illinois other than to Mr. Lumpkin;
	•	effect a sale of Homebase prior to January 1, 2006, unless specified rights of Central Illinois Telephone remain in place following any such sale;
	•	incur debt in excess of specified leverage ratios;

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	•	relocate our headquarters and our senior management team from Mattoon, Illinois;
	•	terminate Mr. Currey as our chief executive officer prior to April 14, 2006;
	•	incorporate or merge into a dormant corporation, unless immediately prior to, and in connection with, a public equity offering; or
	•	with regard to Illinois Holdings or its subsidiaries:

	•	adopt or amend the annual plan, as summarized below under “— Annual Plan”;
	•	acquire or dispose of business or assets outside of the ordinary course of business;
	•	make capital investments in excess of $500,000;
	•	enter into contracts or commitments, other than in connection with incurring debt, in excess of $500,000 a year;
	•	waive any material rights or settle or initiate any litigation;
	•	liquidate, dissolve or file for protection under any bankruptcy or insolvency law;
	•	conduct a public offering of common shares;
	•	hire, fire or change the compensation of management; or
	•	effect transactions with CCI Texas or its subsidiaries, except in limited circumstances, including those related to the and Facilities Agreement discussed below.

	Annual Plan

	Preemptive Rights

	Distributions

	Transfer Restrictions

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	Tag Along Rights

	Right of First Offer to Purchase the Capital Securities of CCI Illinois

	Put Rights

	Registration Rights

	•	up to two demand registrations rights;

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	•	unlimited shelf registration rights; and
	•	unlimited “piggyback” registration rights.

	Competing Businesses

	Indemnification and Limitations on the Fiduciary Duty of Members

	Amendment

	Governing Law

	•	Central Illinois Telephone will receive from Homebase an aggregate of 7,504,001 shares of common stock;
	•	Spectrum Equity will receive from Homebase an aggregate of 7,504,003 shares of common stock;

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	•	Providence Equity will receive from Homebase an aggregate of 7,504,001 shares of common stock; and
	•	our management stockholders will receive from Homebase an aggregate of 1,175,509 shares of common stock.

	Registration Rights

	•	up to two demand registration rights;
	•	unlimited shelf registration rights; and
	•	unlimited “piggyback” registration rights.

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	•	a public offering of our equity securities;
	•	a change of control, defined as the acquisition of control by a person, group or entity other than one or more affiliates of Mr. Lumpkin or LATEL, of either ICTC, Consolidated Market Response or any entity that directly or indirectly controls either of them;
	•	a board shift event, as described under “— Limited Liability Company Agreement — Action By the Board of Managers — Action By the Board of Managers Prior to ICC Approval of Governance Change”; or
	•	a put breach event, as described under in “— Limited Liability Company Agreement — Action by the Board of Managers — Action By the Board of Managers Prior to ICC Approval of Governance Change”.

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	Business Systems

	Mobile Services

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	•	$122.0 million term loan A facility with a six year maturity;
	•	$315.0 million term loan B facility with a seven year and six-month maturity; and
	•	$30.0 million revolving credit facility with a six year maturity.

	•	with respect to the term loan A facility, the amortization is 8.2% (payable in quarterly installments) in the first year, increasing in each of the following five years to 12.3%, 16.4%, 16.4%, 20.5% and 26.2%, respectively.
	•	with respect to the term loan B facility, the amortization is 1.0% per year (payable in quarterly installments for each quarter ended on or prior to December 31, 2010) with the remaining amount payable in four equal payments in the final year prior to the maturity date.

	•	50.0% of excess cash flow;
	•	100% of the net proceeds of all non-ordinary course asset sales and any insurance or condemnation proceeds, not reinvested within required time periods;
	•	100% of the net proceeds of certain incurrences of indebtedness; and
	•	50.0% of the net proceeds from certain issuances of equity.

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	•	in respect of the term loan A facility and the revolving credit facility, 1.50% with respect to base rate loans and 2.50% with respect to LIBOR loans; and
	•	in respect of the term loan B facility, 1.75% with respect to base rate loans and 2.75% with respect to LIBOR loans.

	•	a pledge of the capital stock of the borrowers and each of the Texas Subsidiary Guarantors, the Illinois Subsidiary Guarantors and ICTC (the enforcement of the pledges of capital stock being subject to regulatory restriction); and
	•	a security interest in substantially all tangible and intangible assets of Texas Holdings and Illinois Holdings, the borrowers, the Texas Subsidiary Guarantors and the Illinois Subsidiary Guarantors.

	•	incur additional indebtedness or issue capital stock;
	•	create liens on assets;
	•	repay other indebtedness (including the notes);
	•	sell assets;
	•	make investments, loans, guarantees or advances;
	•	pay dividends, repurchase equity interests or make other restricted payments;

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	•	engage in transactions with affiliates;
	•	make capital expenditures;
	•	engage in mergers, acquisitions or consolidations;
	•	enter into sale-leaseback transactions;
	•	amend or otherwise modify agreements governing indebtedness, formation documents and certain material agreements,
	•	enter into agreements that restrict dividends from subsidiaries; and
	•	change the business conducted by Homebase and its subsidiaries.

	•	furnish specified financial information to the lenders;
	•	comply with applicable laws;
	•	maintain its properties and assets;
	•	maintain insurance on its properties;
	•	keep books and records which accurately reflect its business affairs;
	•	comply with environmental laws;
	•	pledge after acquired property as collateral and cause certain additional subsidiaries to become guarantors;
	•	keep in effect all rights, licenses, permits, privileges, franchises, patents and other intellectual property; and
	•	hedge a portion of the term loans.

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	Overview

	•	a new term loan D facility of up to $425.0 million available at closing and maturing on October 14, 2011; and
	•	a $30.0 million revolving credit facility maturing on April 14, 2010.

	Prepayments

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	•	a pledge of the capital stock of the borrowers and each of the subsidiary guarantors and ICTC (the enforcement of the pledges of capital stock being subject to regulatory restriction); and
	•	a security interest in substantially all tangible and intangible assets of CCI Holdings, the borrowers and the subsidiary guarantors.

	•	incur additional indebtedness or issue capital stock;
	•	create liens on assets;
	•	repay other indebtedness (including our senior notes other than as described under “Use of Proceeds”);
	•	sell assets;
	•	make investments, loans, guarantees or advances;
	•	pay dividends, repurchase equity interests or make other restricted payments (other than Subject Payments as described below) from the borrowers to CCI Holdings;
	•	engage in transactions with affiliates;
	•	make capital expenditures;
	•	engage in mergers, acquisitions or consolidations;
	•	enter into sale-leaseback transactions;
	•	amend or otherwise modify agreements governing indebtedness, formation documents and certain material agreements;
	•	enter into agreements that restrict dividends from subsidiaries; and
	•	change the business conducted by us and our subsidiaries.

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	•	First, the borrowers may make Subject Payments in an aggregate amount not to exceed Cumulative Available Cash which will be equal to the sum of:

	(1) for the portion of the quarter between the closing date of the initial public offering and September 30, 2005, a specified dollar amount;
	(2) plus the excess, if any, of:

	(a) Available Cash, as defined below, for a period commencing on the first day of the first full fiscal quarter commencing after the closing and ending on the last day of the fiscal quarter then most recently reported; and
	(b) the aggregate amount of Subject Payments paid after the closing out of Available Cash.

	•	Second, the borrowers may make Subject Payments from the portion of the proceeds of any equity sale not used to redeem or repurchase their indebtedness and not used to fund acquisitions, capital expenditures or make other investments.

	(3) plus (to the extent not included in the determination of Bank EBITDA), cash interest income for the period, the cash amount realized in respect of extraordinary or unusual gains during the period and net decreases in revolving loans during the period.

(a) plus all amounts deducted in arriving at Bank Consolidated Net Income amount in respect of (without duplication) interest expense, amortization or write-off of debt discount and non-cash expense incurred in connection with equity compensation plans, foreign, federal, state and local income taxes for the period, charges for depreciation of fixed assets and amortization of intangible assets during the period, non-cash charges for the impairment of long-lived assets during the period, fees accrued during periods prior to this offering payable to certain of our existing equity investors not exceeding $5.0 million in any twelve-month period, and fees, expenses and charges incurred in connection with this initial public offering and the related transactions as specified in reasonable detail in an amount not to exceed the amount of fees and expenses disclosed under the heading “Use of Proceeds” in this prospectus;

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	(b) minus (in the case of gains) or plus (in the case of losses) gain or loss on any sale of assets;
	(c) minus (in the case of gains) or plus (in the case of losses) non-cash charges relating to foreign currency gains or losses;
	(d) plus (in the case losses) and minus (in the case of income) non-cash minority interest income or loss;
	(e) plus (in the case of items deducted in arriving at Bank Consolidated Net Income) and minus (in the case of items added in arriving at Bank Consolidated Net Income) non-cash charges resulting from changes in accounting principles;
	(f) plus extraordinary loss as defined by GAAP;
	(g) plus the first $15.0 million of other expenses relating to the integration of CCV incurred after April 14, 2004 and prior to December 31, 2005;
	(h) minus the sum of interest income and extraordinary income or gains as defined by GAAP; and
	(i) plus unusual or nonrecurring charges, fees or expenses (excluding integration expenses) relating to the acquisition of TXUCV (including severance payments and retention bonuses) that were incurred during the fiscal quarter ended June 30, 2004 (net of any offsetting items that increased Bank EBITDA in such quarter as a result thereof) and to give pro forma effect to the TXUCV acquisition and the IPO transactions as if they had occurred on the first day of such fiscal quarter and in an aggregate amount not to exceed $12.0 million.

	•	If the total net leverage ratio, as of any fiscal quarter, is greater than 4.75:1.0, we will not be allowed to pay our Subject Payments from Available Cash. The total net leverage ratio will be defined as the ratio of total net debt (defined as total debt minus the lesser of (x) the consolidated cash and cash equivalents in excess of $5,000,000 reflected on our balance sheets, other than amount that could be classified as “restricted cash” in accordance with GAAP (and excluding consolidated cash of any subsidiary that is not a loan party to the extent the subsidiary would be prohibited from distributing cash to a loan party), and (y) $25.0 million) to Bank EBITDA.

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	•	In addition, the borrowers will not be permitted to pay Subject Payments if an event of default exists under the amended and restated credit agreement. In particular, it will be an event of default if:

	•	our total net leverage ratio, as of the end of any fiscal quarter, is greater than 5.00:1.00;
	•	our senior secured leverage ratio (as defined in the amended and restated credit agreement), as of the end of any fiscal quarter, is greater than 4.00:1.00;
	•	our fixed charge coverage ratio, as of the end of any fiscal quarter, is not (x) after the closing date and on or prior to December 31, 2005, at least 2.50 to 1.00, (y) after January 1, 2006 and on or prior to December 31, 2006, at least 2.00 to 1.00 and (z) after January 1, 2007, at least 1.75 to 1.00; or
	•	we make or commit to make capital expenditures greater than $45,000,000 in any fiscal year, provided that the base amount may be increased by up to 100% of such base amount by carrying over to any such period any portion of the base amount (without giving effect to any increase) not spent in the immediately preceding period, and that capital expenditures in any period shall be deemed first made from the base amount applicable to such period in any given period.

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		Redemption
Period		Price
Day 1 through Day 360			107.313	%
Day 361 through Day 540			109.750	%

		Redemption
Period		Price
2008			104.875	%
2009			102.438	%
2010 and thereafter			100.000	%

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	(1) remain in full force and effect until payment in full of the principal amount of all outstanding notes (whether by payment at maturity, purchase, redemption, defeasance, retirement or other acquisition) and all other relevant Guaranteed Note Obligations then due and owing, unless earlier terminated as described below,
	(2) be binding upon such Note Guarantor and
	(3) inure to the benefit of and be enforceable by the Trustee, the Holders and their permitted successors, transferees and assigns.

	(1) The Company will automatically and unconditionally be released from all obligations under its Note Guarantee, and such Note Guarantee shall thereupon terminate and be discharged and of no further force or effect,

	(A) with respect to the predecessor Company, as and when provided under the provisions described in the second paragraph under “— Merger, Consolidation and Sale of Property”,
	(B) pursuant to the terms of its Note Guarantee,
	(C) upon legal or covenant defeasance of the relevant Issuer’s obligations, or satisfaction and discharge of the Indenture,
	(D) subject to customary contingent reinstatement provisions, upon payment in full of the aggregate principal amount of all notes then outstanding for which the relevant Issuer is liable and all other Guaranteed Note Obligations of such Issuer then due and owing and
	(E) in the event of an Intermediate Holdco Reorganization as contemplated by the definition of the “Company” following the assumption of such Note Guarantee by the Intermediate Holdco.

	(2) An Issuer will automatically and unconditionally be released from all obligations under its Note Guarantee, and such Note Guarantee shall thereupon terminate and be discharged and of no further force or effect,

	(A) with respect to the relevant predecessor Issuer, as and when provided under the provisions described in the second paragraph under “— Merger, Consolidation and Sale of Property”,
	(B) pursuant to the terms of its Note Guarantee,
	(C) upon legal or covenant defeasance of the other Issuer’s obligations, or satisfaction and discharge of the Indenture, and

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	(D) subject to customary contingent reinstatement provisions, upon payment in full of the aggregate principal amount of all notes then outstanding for which the Issuer is liable and all other Guaranteed Note Obligations of the Issuer then due and owing.

	Upon any such occurrence specified in this paragraph, the Trustee shall execute any documents reasonably required in order to evidence such release, discharge and termination in respect of such Note Guarantee.

	(1) CCI Illinois and CCI Texas would have had approximately $624.9 million of Senior Indebtedness, including the notes and the Note Guarantees of the Issuers, $424.9 million of which was Secured Indebtedness of CCI Illinois and CCI Texas;
	(2) CCI Illinois and CCI Texas would have had no Subordinated Indebtedness; and
	(3) the Issuers’ Subsidiaries would have had total Indebtedness, including such Subsidiary’s obligations under the Credit Agreement and the guarantees thereof, of approximately $424.9 million.

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	(1) that a Change of Control has occurred or may occur and that such Holder has, or upon such occurrence will have, the right to require the Issuers to concurrently purchase such Holder’s notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on a record date to receive interest on the relevant interest payment date);
	(2) the circumstances and relevant facts and financial information regarding such Change of Control;
	(3) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed);
	(4) the instructions determined by the Issuers, consistent with this covenant, that a Holder must follow in order to have its notes purchased; and
	(5) if such notice is mailed prior to the occurrence of a Change of Control, that such offer (the “Change of Control Offer”) is conditioned on the occurrence of such Change of Control.

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	(1) Indebtedness of the Issuers evidenced by the notes issued on the Issue Date and any Note Guarantee;
	(2) Indebtedness under one or more Credit Facilities, provided that the aggregate principal amount of all such Indebtedness under the Credit Facilities at any one time outstanding under this clause (2) shall not exceed $515.0 million;
	(3) Indebtedness of the Issuers or any of their Restricted Subsidiaries in respect of Capital Lease Obligations and Purchase Money Indebtedness, provided that (1) the aggregate principal amount of such Indebtedness does not exceed the Fair Market Value (on the date of the Incurrence thereof) of the Property acquired, constructed or leased and (2) the aggregate principal amount of all Indebtedness Incurred and then outstanding pursuant to this clause (3) (together with all Permitted Refinancing Indebtedness Incurred and then outstanding in respect of Indebtedness previously Incurred pursuant to this clause (3)) shall not exceed $20.0 million;
	(4) Indebtedness of an Issuer owing to and held by the other Issuer or any Restricted Subsidiary and Indebtedness of a Restricted Subsidiary of an Issuer owing to and held by an Issuer or any other Restricted Subsidiary; provided, however, that any subsequent issue or transfer of Capital Stock or other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to such Issuer or a Restricted Subsidiary of such Issuer) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the issuer thereof;

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	(5) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within two Business Days of receipt by the borrower of notice of such overdraft;
	(6) obligations arising from or representing deferred compensation to employees of the Company or its Subsidiaries that constitute or are deemed to be Indebtedness under GAAP and that are Incurred in the ordinary course of business;
	(7) Indebtedness arising from agreements of the Issuers or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred in connection with the disposition of any business, assets or a Subsidiary thereof, other than guarantees of Indebtedness incurred by a Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that (1) such Indebtedness is not reflected on the balance sheet of an Issuer or any Restricted Subsidiary (contingent obligations referred to in the footnote or footnotes to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (1)) and (2) the maximum liability in respect of such Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received without giving effect to any such subsequent changes in value) actually received by one or both Issuers and/or any Restricted Subsidiary in connection with such disposition;
	(8) Indebtedness under Hedging Obligations entered into by the Issuers or their Restricted Subsidiaries for the purpose of limiting interest rate risk in the ordinary course of the financial management of such Issuer or its Restricted Subsidiaries and not for speculative purposes, provided that the obligations under such agreements are directly related to payment obligations on Indebtedness otherwise permitted by the terms of this covenant;
	(9) Indebtedness in connection with one or more standby letters of credit, bankers acceptances, surety or appeal bonds or performance bonds issued by the Issuers or their Restricted Subsidiaries in the ordinary course of business or pursuant to self-insurance obligations or in connection with workers’ compensation claims and not in connection with the borrowing of money or the obtaining of advances or credit;
	(10) Indebtedness (in addition to any Indebtedness permitted by clauses (1) through (9) above or that is entitled to be Incurred pursuant to the paragraph (a) of this covenant) outstanding on the Issue Date not otherwise described in clauses (1) through (9) above;
	(11) Indebtedness in an aggregate principal amount or liquidation preference (or accreted value, as applicable) outstanding at any one time not to exceed $20.0 million;
	(12) Permitted Refinancing Indebtedness Incurred in respect of Indebtedness Incurred pursuant to paragraph (a) of this covenant and clauses (1) and (10) above; and
	(13) Indebtedness, to the extent that the net proceeds thereof are promptly (1) used to repurchase notes tendered upon a Change of Control Offer or (2) deposited to defease all of the notes, any Additional Notes or any Exchange Notes as described below under “— Defeasance”.

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	(1) a Default or Event of Default shall have occurred and be continuing (or would result therefrom);
	(2) the Issuers (on a consolidated combined basis) could not Incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) of the covenant described under “— Limitation on Indebtedness and Issuance of Preferred Stock”; or
	(3) the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be based upon Fair Market Value) declared or made subsequent to the Issue Date and then outstanding would exceed, at the date of determination, without duplication, the sum of:

	(A) an amount (whether positive or negative) equal to the Issuers’ combined EBITDA from the beginning of the first fiscal quarter in which the notes are originally issued to the end of the Issuers’ most recent fiscal quarter for which internal financial statements are available at the date of such Restricted Payment, taken as a single accounting period, less the product of 1.5 times the Issuers’ Consolidated Interest Expense from the first date of the fiscal quarter in which the Issue Date occurs to the end of the Issuers’ most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment, taken as a single accounting period,
	(B) Capital Stock Sale Proceeds,
	(C) the sum of (A) the aggregate net cash proceeds received by any Issuer or any of its Restricted Subsidiaries from the issuance or sale after the Issue Date of convertible or exchangeable Indebtedness that has been converted into or exchanged for Capital Stock (other than Disqualified Stock) of the Issuers and (B) the aggregate amount by which Indebtedness of the Issuers or any of their Restricted Subsidiaries is reduced on the Issuers’ consolidated combined balance sheet on or after the Issue Date upon the conversion or exchange of any Indebtedness issued or sold on or prior to the Issue Date that is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Issuers (excluding, in the case of clause (A) or (B), (x) any such Indebtedness issued or sold to the Issuers or a Subsidiary of the Issuers or an employee stock ownership plan or trust established by the Issuers or any such Subsidiary for the benefit of their employees and (y) the aggregate amount of any cash or other Property distributed by the Issuers or any of their Restricted Subsidiaries upon any such conversion or exchange), and

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(D) an amount equal to the sum of (A) the net reduction in, or any return on, Investments (other than Permitted Investments) resulting from dividends, repayments of loans or advances or other transfers of Property, in each case to any Issuer or any Restricted Subsidiary in respect of such Investment, or from the reclassification of any Unrestricted Subsidiary as a Restricted Subsidiary, or from the disposition of capital stock of an Unrestricted Subsidiary for cash or Property (valued at the Fair Market Value thereof) received by any Issuer or any Restricted Subsidiary, and (B) the portion (proportionate to any Issuer’s equity interest in an Unrestricted Subsidiary) of the Fair Market Value of the net assets of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that the foregoing sum shall not exceed, in the case of any Person, the amount of Investments previously made (and treated as a Restricted Payment) by any Issuer or any Restricted Subsidiary in such Person.

	(1) the payment of dividends on Capital Stock of the Company or the Issuers within 60 days of the declaration thereof if, on said declaration date, such dividends could have been paid in compliance with the Indenture; provided, however, that such dividend shall be included in the calculation of the amount of Restricted Payments;
	(2) the purchase, repurchase, redemption, defeasance, acquisition or retirement for value of Capital Stock of an Issuer or Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of an Issuer (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of an Issuer or an employee stock ownership plan or trust established by an Issuer or any such Subsidiary for the benefit of their employees); provided, however, that (A) such purchase, repurchase, redemption, defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments and (B) the Capital Stock Sale Proceeds from such exchange or sale shall be excluded from the calculation pursuant to clause (a)(3) above;
	(3) the purchase, repurchase, redemption, defeasance, acquisition or retirement for value of any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments;
	(4) the repurchase of shares of, or of options to purchase shares of, common stock of an Issuer or any of its Affiliates or Subsidiaries from current or former officers, directors, employees or consultants of an Issuer or any of its Subsidiaries (or permitted transferees of such current or former officers, directors, employees or consultants), pursuant to the terms of agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell, or are granted the option to purchase or sell, shares of such common stock; provided, however, that (A) the aggregate amount of such repurchases shall not exceed $5.0 million in any fiscal year, (B) such repurchases shall be included in the calculation of the amount of Restricted Payments and (C) at the time of any such repurchase, no Default or Event of Default shall have occurred and be continuing (or result therefrom);
	(5) so long as no Default or Event of Default shall have occurred and be continuing, the payment of the fees and expenses of the Equity Investors as contemplated by the Professional Service Fee Agreements up to $5.0 million in aggregate in each fiscal year; provided, however, that any such amounts paid in excess of $3.0 million per fiscal year shall be included in the calculation of the amount of Restricted Payments;
	(6) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of an Issuer Incurred in accordance with the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock” to the extent that the amount of all

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	Repayment obligations with respect thereto is included in the calculation of the consolidated combined Indebtedness of the Issuers for the purposes of the Leverage Ratio, provided, however, that such amounts are excluded in the calculation of the amount of Restricted Payments;
	(7) the payment of dividends, other distributions or other amounts by an Issuer to the Company, to pay fees and expenses required to maintain its existence as a limited liability company, including as contemplated by the LLC Agreement (including franchise taxes and federal, state, local and foreign income taxes), customary salary, bonus and other benefits payable to its officers and employees, expenses of members of the Board of Directors and other general corporate administrative and overhead expenses, in the aggregate not to exceed $1.0 million in any fiscal year, of which $500,000 may be carried over to the succeeding fiscal year to the extent not used in the preceding fiscal year; provided, however, that upon the consummation of a Public Equity Offering, such amounts shall be $2.0 million and $1.0 million, respectively; provided, further, however, that such Permitted Payments shall be included in the calculation of the amount of Restricted Payments;
	(8) so long as no Default or Event of Default shall have occurred and be continuing or shall be in existence immediately thereafter, making loans to members of management of the Issuers pursuant to written agreements with such members in an aggregate principal amount not to exceed $2.0 million in the aggregate at any one time outstanding, provided, however, that any such loans shall be included in the calculation of Restricted Payments;
	(9) repurchases of Capital Stock deemed to occur upon (A) the exercise of stock options if such Capital Stock represents a portion of the exercise price thereof and (B) any purchase or acquisition from, or withholding on issuances to, any employee of an Issuer’s Capital Stock in order to satisfy any applicable federal, state or local tax payments in respect of the receipt of shares of the Issuer’s Capital Stock, provided, however, that such amounts shall be excluded in the calculation of the amount of Restricted Payments;
	(10) in the event of a Change of Control, and if no Default shall have occurred and be continuing, the payment, purchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of an Issuer at a purchase price not greater than 101% of the principal amount of such Subordinated Obligations, plus any accrued and unpaid interest thereon; provided, however, that prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Issuer (or a third party to the extent permitted by the Indenture) has made a Change of Control Offer with respect to the notes as a result of such Change of Control and has repurchased all notes validly tendered and not withdrawn in connection with such Change of Control Offer; provided further, however, that such payment, purchase, redemption, defeasance or other acquisition or retirement shall be included in the calculation of the amount of Restricted Payments;
	(11) the payment of cash in lieu of the issuance of fractional shares of Capital Stock upon the exercise or conversion of securities exercisable or convertible into Capital Stock of an Issuer, provided, however, that such payments shall be included in the calculation of the amount of Restricted Payments;
	(12) payments or distributions, in the nature of satisfaction of dissenters’ or appraisal rights, pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions hereof applicable to mergers, consolidations and transfers of all or substantially all of the Property and assets of the Company or an Issuer, provided, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments;
	(13) following the first Public Equity Offering that results in a Public Market, pay dividends on the Capital Stock of the Issuers of up to 6.0% per year of the cash proceeds contributed to the Issuers (net of underwriters’ fees, discounts or commissions paid by the Issuers) of such first Public Equity Offering; provided, however, that (1) such dividends shall be (x) paid pro rata to the holders of all classes of the applicable class of Capital Stock of the ultimate parent entity of the Issuers and (y) included in the calculation of the amount of Restricted Payments and (2) at the time of payment

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	of any such dividend, no Default or Event of Default shall have occurred and be continuing or would result therefrom;
	(14) the declaration and payment of dividends by an Issuer to the Company; provided that an equal amount of cash equity is concurrently contributed by the Company to the other Issuer; provided, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments; and
	(15) other Permitted Payments in an amount which does not exceed $10.0 million; provided, however, that such Permitted Payments shall be included in the calculation of the amount of Restricted Payments.

	(a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Indebtedness or other obligation owed to such Issuer or any of its other Restricted Subsidiaries,
	(b) make any loans or advances to such Issuer or any of its other Restricted Subsidiaries or
	(c) transfer any of its Property to such Issuer or any of its other Restricted Subsidiaries.

	(1) with respect to clauses (a), (b) and (c), to restrictions

	(A) arising under agreements of such Issuer and any of its Restricted Subsidiaries (as of the Issue Date) that were in effect on the Issue Date, including with respect to the Exchange Notes,
	(B) arising under Credit Facilities; provided such restrictions are no more restrictive than those contained in the Credit Agreement as in effect on the Issue Date,
	(C) relating to Indebtedness of such Issuer’s Restricted Subsidiary and existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by such Issuer or another of its Restricted Subsidiaries,
	(D) that result from the Refinancing of Indebtedness, provided such restriction is no more restrictive than those under the agreement evidencing the Indebtedness so Refinanced,
	(E) required by any governmental body or regulatory authority having jurisdiction over such Issuer or any of its Restricted Subsidiaries or any of their businesses or any rule, regulation, order or applicable law,
	(F) with respect to the disposition or distribution of assets or Property in joint venture and other similar agreements entered into in the ordinary course of business, or
	(G) on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business; and

	(2) with respect to clause (c) only, to restrictions

	(A) relating to Indebtedness that is permitted to be Incurred and/or secured without also securing the notes pursuant to the covenants described under “— Limitation on Indebtedness and Issuance of Preferred Stock” and/or “— Limitation on Liens”, as applicable, that limit the right of the debtor to dispose of the Property securing such Indebtedness,
	(B) encumbering Property at the time such Property was acquired by such Issuer or any of its Restricted Subsidiaries, so long as such restriction relates solely to the Property so acquired and was not created in connection with or in anticipation of such acquisition,

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	(C) resulting from customary provisions restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder, or
	(D) customary restrictions contained in asset sale or stock purchase agreements limiting the transfer of such Property, or payments, dividends or other distributions by any Restricted Subsidiary (including Capital Stock of a Restricted Subsidiary and Property of any such Restricted Subsidiary subject to a pending sale) pending the closing of such sale.

	(b) permit any of its Restricted Subsidiaries to, directly or indirectly, issue, sell, transfer, convey or otherwise dispose of any shares of its Capital Stock, other than

	(1) directors’ qualifying shares,
	(2) to such Issuer or a Wholly Owned Subsidiary of such Issuer, or
	(3) if, immediately after giving effect to such disposition, (A) such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and (B) any Investment in such Person remaining after giving effect thereto is treated as a new Investment by an Issuer and such Investment would be permitted to be made under the covenant described under “ — Limitation on Restricted Payments” if made on the date of such issuance, sale or other disposition; provided, however, that, in the case of this clause (3), such issuance, sale or disposition is effected in compliance with the covenant described under “— Limitation on Asset Sales”.

	(a) such Issuer or its Restricted Subsidiaries receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the Property subject to such Asset Sale;
	(b) at least 75.0% of the consideration paid to such Issuer or its Restricted Subsidiaries in connection with such Asset Sale is in the form of cash or cash equivalents; and
	(c) such Issuer delivers an Officers’ Certificate to the Trustee certifying that such Asset Sale complies with the foregoing clauses (a) and (b).

	(a) any liabilities, as shown on an Issuer’s most recent consolidated balance sheet, (other than contingent liabilities and liabilities that are by their terms subordinated to the notes) that are assumed by the transferee of any such assets pursuant to an agreement that releases the Issuers and the Restricted Subsidiaries from further liability;
	(b) any securities, notes or other obligations received by an Issuer or any Restricted Subsidiary from the transferee that are converted by such Issuer or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion, within 180 days after receipt;
	(c) any Designated Non-cash Consideration received by an Issuer or any Restricted Subsidiary in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed $10.0 million at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

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	(a) to Repay Senior Indebtedness of an Issuer or a Restricted Subsidiary (excluding any Indebtedness owed to an Affiliate of such Issuer);
	(b) subject to the covenant described under “— Limitation on Restricted Payments”, to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by an Issuer or another of its Restricted Subsidiaries); or
	(c) any combination of the foregoing clauses (a) and (b).

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	(a) the terms of such Affiliate Transaction are

	(1) set forth in writing,
	(2) in the best interest of such Issuer or its Restricted Subsidiaries, as the case may be, and
	(3) no less favorable to such Issuer or its Restricted Subsidiaries, as the case may be, taken as a whole, than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of such Issuer,

	(b) if such Affiliate Transaction involves aggregate payments or value in excess of $5.0 million, either (x) such Issuer’s Board of Directors (including a majority of the disinterested members of such Issuer’s Board of Directors) approves such Affiliate Transaction, and in its good faith judgment, believes that such Affiliate Transaction complies with clauses (a)(2) and (3) of this paragraph as evidenced by a board resolution promptly delivered to the Trustee or (y) such Issuer complies with clause (c) of this paragraph (without regard to the dollar threshold contained therein), and
	(c) if such Affiliate Transaction involves aggregate payments or value in excess of $10.0 million, such Issuer obtains a written opinion from an Independent Appraiser to the effect that the consideration to be paid or received in connection with such Affiliate Transaction is fair, from a financial point of view, to such Issuer or its Restricted Subsidiary, as the case may be.

	(a) any transaction or series of transactions exclusively between or among, as the case may be,

	(w) the Issuers,
	(x) an Issuer and one or more Restricted Subsidiaries,
	(y) two or more Restricted Subsidiaries, or
	(z) the Issuers and one or more Restricted Subsidiaries of either Issuer;

	(b) any Restricted Payment permitted to be made pursuant to the covenant described under “— Limitation on Restricted Payments”, including, but not limited to, Permitted Payments and Permitted Investments;
	(c) the payment of compensation (including amounts paid pursuant to employee benefit plans) or the entering into, and performance of, any indemnification agreement, for the personal services of officers, directors and employees of an Issuer or any of its Restricted Subsidiaries, so long as such payments are pursuant to a policy (1) established by its Board of Directors in good faith and (2) evidenced by a resolution of its Board of Directors that establishes standards to ensure that the terms and amount of such compensation are fair consideration for the services to be performed;
	(d) loans and advances to employees made in the ordinary course of business of an Issuer or its Restricted Subsidiaries, as the case may be, provided that such loans and advances do not exceed $2.0 million in the aggregate at any one time outstanding;
	(e) any sale or other issuance of Capital Stock (other than Disqualified Stock) of an Issuer;

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	(f) in the case of joint ventures in which an Issuer or any Restricted Subsidiary has an interest, so long as the other parties to the joint venture which are not Affiliates of the Issuer own at least 50% of the equity of such joint venture, transactions between such joint venture and the Issuer or any Restricted Subsidiary; provided, that the Board of Directors of such Issuer or Restricted Subsidiary approves such transaction and, in its good faith judgment, believes that such transaction complies with clauses (a)(2) and (3) of the first paragraph of this covenant;
	(g) any transactions between Homebase and any of its Subsidiaries or Affiliates and any existing or future portfolio company of any of the Equity Investors in the Telecommunications Business in the ordinary course of business (including, without limitation, the payment of access fee charges); provided, that the Board of Directors of such Issuer or Restricted Subsidiary approves such transaction and, in its good faith judgment, believes that such transaction complies with clauses (a)(2) and (3) of the first paragraph of this covenant; or
	(h) any transactions, to the extent not addressed by other clauses of this paragraph or the definition of Permitted Payments, as in effect on the Issue Date and contemplated by this prospectus and reasonable modifications or extensions of such transactions consistent with past practice and not less favorable to the Issuers from a financial point of view.

	(a) such Issuer or its Restricted Subsidiaries would be entitled to (1) Incur Indebtedness in an amount equal to the Attributable Indebtedness with respect to such Sale and Leaseback Transaction pursuant to the covenant described under “— Limitation on Indebtedness and Issuance of Preferred Stock” and (2) create a Lien on such Property securing such Attributable Indebtedness without also securing the notes pursuant to the covenant described under “Limitation on Liens” and
	(b) such Sale and Leaseback Transaction is effected in compliance with the covenant described under “— Limitation on Asset Sales”.

	(a) the Subsidiary to be so designated does not own any Capital Stock or Indebtedness of, or own or hold any Lien on any Property of, such Issuer or any of its Restricted Subsidiaries,
	(b) the Subsidiary to be so designated is not obligated under any Indebtedness, Lien or other obligation that, if in default, would result (with the passage of time or notice or otherwise) in a default on any Indebtedness of such Issuer or of any of its Restricted Subsidiary and
	(c) either (1) the Subsidiary to be so designated has total assets of $1,000 or less or (2) such designation is effective immediately upon such entity becoming a Subsidiary of such Issuer.

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	(a) the ownership of all of the Capital Stock of the Issuers and any activities directly related to such ownership,
	(b) the performance of its obligations under and in connection with its Note Guarantee and the Credit Agreement and the performance of similar obligations with respect to any Credit Facility or other items of indebtedness of future direct subsidiaries of the Company other than the Issuers,
	(c) the undertaking of any actions required by law, regulation or order, including to maintain its existence,
	(d) the ownership of the Capital Stock of other Persons that are corporations or limited liability companies or other Persons consisting of limited partnership interests in limited partnerships;

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	(a) an annual report on Form 10-K (or any successor form) containing the information required to be contained therein for such fiscal year,
	(b) quarterly reports on Form 10-Q containing unaudited financial statements (including a balance sheet and statement of income, changes in stockholders’ equity and cash flows) and Management’s Discussion and Analysis of Financial Condition and Results of Operations for and as of the end of such quarters (with comparable financial statements for such quarter of the immediately preceding fiscal year); and
	(c) all current reports that would be required to be filed with the SEC on Form 8-K.

	(a) the resulting, surviving or transferee Person (the “Surviving Person”) will be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia;
	(b) the Surviving Person (if other than the Company, an Issuer or a Note Guarantor) expressly assumes, by supplemental indenture in form reasonably satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual payment of the principal of, and premium, if any, and interest on, all the notes, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of the Indenture to be performed by the Company, such Issuer or Note Guarantor;

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	(c) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Property of the Company, any Issuer or Note Guarantor, such Property shall have been transferred as an entirety or virtually as an entirety to one Person;
	(d) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (d) and clauses (e) and (f) below, any Indebtedness that becomes, or is anticipated to become, an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing;
	(e) immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Issuers or the Surviving Person, as the case may be, would be able to Incur at least $1.00 of additional Indebtedness under paragraph (a) of the covenant described under “— Certain Covenants — Limitation on Indebtedness and Issuance of Preferred Stock”; and
	(f) the Issuers shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such transaction and the supplemental indenture, if any, in respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction have been satisfied.

	(a) failure by the Issuers to make the payment of any interest on the notes when the same becomes due and payable, and such failure continues for a period of 30 days;
	(b) failure by the Issuers to make the payment of any principal of, or premium, if any, on, any of the notes when the same becomes due and payable at its Stated Maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise;
	(c) failure by the Issuers to comply with the covenant described under “— Repurchase at the Option of Holders Upon a Change of Control” or “— Merger, Consolidation and Sale of Property”;
	(d) failure by the Issuers to comply with any other covenant or agreement in the notes or in the Indenture (other than a failure that is the subject of the foregoing clause (a), (b) or (c)) and such failure continues for 60 days after written notice is given to the Issuers as provided below;
	(e) a default under any Indebtedness by the Company, an Issuer or any of its Restricted Subsidiaries that results in acceleration of the maturity of such Indebtedness, or failure to pay any such Indebtedness at maturity, in an aggregate amount greater than $10.0 million or its foreign currency equivalent at the time (the “cross acceleration provisions”);
	(f) any judgment or judgments for the payment of money in an aggregate amount in excess of $10.0 million (or its foreign currency equivalent at the time) shall be rendered against the Company, an Issuer or any of its Restricted Subsidiaries and shall not be waived, satisfied or discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect (the “judgment default provisions”);

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	(g) any Note Guarantee by the Company or an Issuer fails to be in full force or effect; and
	(h) certain events involving bankruptcy, insolvency or reorganization of the Company, any Issuer or an Significant Subsidiary (the “bankruptcy provisions”).

	(a) such holder has previously given to the Trustee written notice of a continuing Event of Default,
	(b) the registered holders of at least 25.0% in aggregate principal amount of the notes then outstanding have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as trustee and
	(c) the Trustee shall not have received from the registered holders of a majority in aggregate principal amount of the notes then outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days.

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	(a) reduce the amount of notes whose holders must consent to an amendment or waiver,
	(b) reduce the rate of or extend the time for payment of interest on any note,
	(c) reduce the principal of or extend the Stated Maturity of any note,
	(d) make any note payable in money other than that stated in the note,
	(e) impair the right of any holder of the notes to receive payment of principal of and interest on such holder’s notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s notes,
	(f) release any security interest that may have been granted in favor of the holders of the notes other than pursuant to the terms of such security interest,
	(g) reduce the premium payable upon the redemption of any note nor change the time at which any note may be redeemed, as described under “— Optional Redemption”,
	(h) reduce the premium payable upon a Change of Control or, at any time after a Change of Control has occurred, change the time at which the Change of Control Offer relating thereto must be made or at which the notes must be repurchased pursuant to such Change of Control Offer,
	(i) at any time after the Issuers are obligated to make a Prepayment Offer with the Excess Proceeds from Asset Sales, change the time at which such Prepayment Offer must be made or at which the notes must be repurchased pursuant thereto or
	(j) make any change with respect to the ranking of the notes or any Note Guarantee relative to any other Indebtedness or other obligations of the Issuers or any Note Guarantor, as the case may be.

	(a) either (1) all outstanding notes (other than lost, destroyed or stolen notes which have been replaced) have been delivered to the Trustee for cancellation or (2) all outstanding notes have

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	become due and payable, whether at maturity or as a result of the mailing of a notice of redemption, and the Issuers have irrevocably deposited with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding notes, including interest thereon to the maturity date or redemption date, as the case may be;
	(b) the Issuers have paid all other sums payable under the Indenture; and
	(c) the Issuers have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.

	(a) the Issuers irrevocably deposit in trust with the Trustee money or U.S. Government Obligations for the payment of principal of and interest on the notes to maturity or redemption, as the case may be;
	(b) the Issuers deliver to the Trustee a certificate from a nationally recognized firm of independent certified public accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the notes to maturity or redemption, as the case may be;
	(c) 91 days pass after the deposit is made and during the 91-day period no Default described in clause (g) under “— Events of Default” occurs with respect to the Company or any Issuer which is continuing at the end of the period;
	(d) no Default or Event of Default has occurred and is continuing on the date of such deposit and after giving effect thereto;
	(e) such deposit does not constitute a default under any other agreement or instrument binding on the Issuers;

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	(f) the Issuers deliver to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940;
	(g) in the case of the legal defeasance option, the Issuers deliver to the Trustee an Opinion of Counsel stating that (1) the Issuers have received from the Internal Revenue Service a ruling, or (2) since the date of the Indenture there has been a change in the applicable Federal income tax law, to the effect, in either case, that, and based thereon such Opinion of Counsel shall confirm that, the holders of the notes will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such defeasance had not occurred;
	(h) in the case of the covenant defeasance option, the Issuers deliver to the Trustee an Opinion of Counsel to the effect that the holders of the notes will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and
	(i) the Issuers deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the notes have been complied with as required by the Indenture.

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	(a) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares) or
	(b) any other assets of an Issuer or any of its Restricted Subsidiaries outside of the ordinary course of business of such Issuer or its Restricted Subsidiaries

	(other than, in the case of clauses (a) and (b) above,

	(1) any disposition by a Restricted Subsidiary to an Issuer or by an Issuer or any Restricted Subsidiary to a Restricted Subsidiary,
	(2) for purposes of the covenant described under “— Limitation on Asset Sales” only, (x) any disposition that constitutes a Permitted Investment or Restricted Payment permitted by the covenant described under “— Limitation on Restricted Payments” and (y) contemporaneous exchanges by an Issuer or any Restricted Subsidiary of Telecommunications Assets for other Telecommunications Assets in the ordinary course of business; provided that the applicable Telecommunications Assets received by such Issuer or its Restricted Subsidiaries have at least substantially equal Fair Market Value to such Issuer or its Restricted Subsidiaries (as evidenced by a board resolution of the Board of Directors of such Issuer),
	(3) any disposition effected in compliance with the first paragraph of the covenant described under “— Merger, Consolidation and Sale of Property”,
	(4) any disposition of Property or equipment that has become worn out, obsolete or damaged or otherwise unsuitable or not required for use in connection with the business of an Issuer or any Restricted Subsidiary, as the case may be,

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	(5) the lease, assignment or sub-lease of any real or personal property in the ordinary course of business,
	(6) a disposition of cash or Temporary Cash Investments,
	(7) any sale or disposition deemed to occur in connection with creating, granting or exercising remedies in respect of any Permitted Liens or Liens permitted pursuant to the “— Limitation on Liens” covenant, and
	(8) a transaction or series of related transactions for which the Company or its Related Subsidiaries receive aggregate consideration of less than $1.0 million).

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	(a) prior to the first Public Equity Offering that results in a Public Market, the Permitted Holders cease to be the “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act, except that a Person will be deemed to have “beneficial ownership” of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of a majority of the total voting power of the Voting Stock of the Company, whether as a result of the issuance of securities of the Company, any merger, consolidation, liquidation or dissolution of the Company, any direct or indirect transfer of securities by the Permitted Holders or otherwise (for purposes of this clause (a), the Permitted Holders will be deemed to beneficially own any Voting Stock of a specified Person held directly or indirectly by a Person so long as the Permitted Holders beneficially own, directly or indirectly, in the aggregate a majority of the total voting power of the Voting Stock of such Person); or
	(b) on or after the first Public Equity Offering that results in a Public Market, (i) if any “Person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any one or more of the Permitted Holders, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, except that a Person will be deemed to have “beneficial ownership” of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 35.0% or more of the total voting power of the Voting Stock of the Company; provided, however, that the Permitted Holders are the “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act, except that a Person will be deemed to have “beneficial ownership” of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, in the aggregate of a lesser percentage of the total voting power of the Voting Stock of the Company than such other Person or group (for purposes of this clause (b) (i) a Person or group (a “Parent Group”) shall be deemed to beneficially own any Voting Stock of a specified Person (a “Subsidiary Person”) held by an intermediate Person (an “Intermediate Person”) so long as such Parent Group beneficially owns, directly or indirectly, in the aggregate a majority of the total voting power of the Voting Stock of such Intermediate Person) and (ii) a Parent Group shall be deemed to own the percentage of Voting Stock of a Subsidiary Person that it owns of an Intermediate Person so long as such Intermediate Person beneficially owns all of the Voting Stock of such Subsidiary Person; or
	(c) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the assets of the Company and the Restricted Subsidiaries, considered as a whole (other than a disposition of such assets as an entirety or virtually as an entirety to a Wholly Owned Subsidiary or direct or indirect parent of the Company or one or more Permitted Holders) shall have occurred, or the Company merges, consolidates or amalgamates with or into any other Person (other than with a direct or indirect parent or subsidiary of the Company or one or more Permitted Holders) or any other Person (other than one or more Permitted Holders) merges, consolidates or amalgamates with or into the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where (1) the outstanding Voting Stock of the Company is reclassified into or exchanged for Voting Stock of the surviving Person and (2) the holders of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving Person immediately after such transaction; or
	(d) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment or whose nomination for election (1) was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for

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	election was previously so approved or (2) was pursuant to one or more agreements among members in effect on the Issue Date) cease for any reason to constitute a majority of the Board of Directors then in office; or
	(e) the members of the Company shall have approved any plan of liquidation or dissolution of the Company.

	(a) interest expense attributable to leases constituting part of a Sale and Leaseback Transaction and to capital leases,
	(b) amortization of debt discount and debt issuance cost, including commitment fees,
	(c) capitalized interest,
	(d) non-cash interest expenses,
	(e) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing,
	(f) net costs associated with Hedging Obligations (including amortization of fees),
	(g) Disqualified Stock Dividends,
	(h) Preferred Stock Dividends,
	(i) interest Incurred in connection with Investments in discontinued operations,
	(j) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by an Issuer or any of its Restricted Subsidiaries and
	(k) the lesser of (1) cash contributions to any employee stock ownership plan or similar trust and (2) the interest or fees paid by such plan or trust to any Person (other than the Issuers) in connection with Indebtedness Incurred by such plan or trust.

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	(a) any net income (loss) of any Person (other than the Issuers) if such Person is not a Restricted Subsidiary of an Issuer, except that (1) subject to the exclusion contained in clause (c) below, there shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Issuers or their Restricted Subsidiaries as a dividend or other distribution, whether or not reflected on the Issuers’ consolidated combined income statement and (2) the Issuers’ equity in a net loss of any such Person other than an Unrestricted Subsidiary for such period shall be included in determining such Consolidated Net Income,
	(b) any net income (but not loss) of any Restricted Subsidiary of an Issuer, if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to such Issuer, except that, subject to the exclusion contained in clause (c) below, such Issuer’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Restricted Subsidiary during such period to such Issuer or another of such Issuer’s Restricted Subsidiaries as a dividend or other distribution, plus the amount of income accrued during such period in excess of such distributed cash to the extent such excess income could be distributed on the date of determination (subject, in the case of a dividend or other distribution to another Restricted Subsidiary of such Issuer, to the limitation contained in this clause),
	(c) any gain (but not loss) realized upon the sale or other disposition of any Property of the Issuers or any of their Subsidiaries on a consolidated combined basis (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business,
	(d) any net, after tax extraordinary gain or loss,
	(e) the cumulative effect of a change in accounting principles and
	(f) any non-cash compensation expense realized for grants of performance shares, stock options or other stock awards to officers, directors and employees of an Issuer or any of its Restricted Subsidiaries,

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	(a) changing the maturity of any Indebtedness incurred thereunder or contemplated thereby,
	(b) adding Subsidiaries as additional borrowers or guarantors thereunder,
	(c) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder or
	(d) otherwise altering the terms and conditions thereof.

	(x) the “asset sale” or “change of control” provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the terms applicable to the notes and described under “— Certain Covenants — Limitation on Asset Sales” and “— Certain Covenants — Change of Control”; and
	(y) any such requirement only becomes operative after compliance with such terms applicable to the notes, including the purchase of any notes tendered pursuant thereto;

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	(1) the provision for taxes based on income or profits or utilized in computing net loss,
	(2) Consolidated Interest Expense,
	(3) depreciation expense,
	(4) amortization expense,
	(5) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period),
	(6) the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Company or any of its Equity Investors (or any accruals relating to such fees and related expenses) during such period, provided that such amount shall not exceed $5.0 million in any fiscal year, and
	(7) (a) any unusual or nonrecurring charges, fees or expenses, including those relating to the Transactions (including for severance payments, retention bonuses, transaction fees and expenses and other unusual or nonrecurring charges, fees or expenses relating to the Transactions) to the extent incurred on or prior to the Issue Date and (b) other charges relating to the integration of the businesses and operations of the Issuers and their Subsidiaries after the Issue Date up to, in the case of clause (b) of this paragraph (7), an aggregate of $15.0 million for fiscal years 2004 and 2005,

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	(a) in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants,
	(b) in the statements and pronouncements of the Financial Accounting Standards Board,
	(c) in such other statements by such other entity as approved by a significant segment of the accounting profession and
	(d) in the rules and regulations of the SEC or the Public Company Accounting Oversight Board governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.

	(a) the principal of and premium (if any) in respect of (1) debt of such Person for money borrowed and (2) debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;

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	(b) all Capital Lease Obligations of such Person and all Attributable Indebtedness in respect of Sale and Leaseback Transactions entered into by such Person;
	(c) all obligations of such Person issued or assumed as the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);
	(d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);
	(e) the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends but only to the extent that any such dividends are mandatorily payable pursuant to the certificate of designations, or other applicable instrument, pursuant to which such Preferred Stock was issued);
	(f) all obligations of the type referred to in clauses (a) through (e) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;
	(g) all obligations of the type referred to in clauses (a) through (f) of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such Property or the amount of the obligation so secured; and
	(h) to the extent not otherwise included in this definition, Hedging Obligations of such Person.

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	(a) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale,
	(b) all payments made on any Indebtedness that is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale,
	(c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale,
	(d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed in such Asset Sale and retained by the Company or any Restricted Subsidiary after such Asset Sale, and
	(e) any portion of the purchase price from an Asset Sale placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Asset Sale or otherwise in connection with that Asset Sale; provided, however, that upon the termination of such escrow, Net Available Cash will be increased by any portion of funds in the escrow that are released to an Issuer or any Restricted Subsidiary.

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	(a) an Issuer or any Restricted Subsidiary of such Issuer, or any Person that will, upon the making of such Investment, become a Restricted Subsidiary;
	(b) any Person if as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, such Issuer or its Restricted Subsidiaries, provided that such Person’s primary business is a Telecommunications Business;
	(c) Temporary Cash Investments;
	(d) receivables owing to an Issuer or its Restricted Subsidiaries, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as such Issuer or its Restricted Subsidiary deems reasonable under the circumstances;
	(e) payroll, travel and similar advances to employees and other advances to customers and vendors, in each case, to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business of an Issuer or its Restricted Subsidiaries;
	(f) loans and advances to employees made in the ordinary course of business of an Issuer or its Restricted Subsidiaries, as the case may be, provided that such loans and advances do not exceed $2.0 million at any one time outstanding;
	(g) stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to an Issuer or its Restricted Subsidiaries or in satisfaction of judgments;
	(h) any Person to the extent such Investment represents the non-cash portion of the consideration received in connection with an Asset Sale consummated in compliance with the covenant described under “— Certain Covenants — Limitation on Asset Sales”;
	(i) any acquisition of assets solely in exchange for the issuance of Capital Stock (other than Disqualified Stock) of an Issuer or any of its Restricted Subsidiaries;

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	(j) Hedging Obligations entered into in the ordinary course of business and not for speculative purposes;
	(k) Investments in the notes, any Additional Notes or any Exchange Notes;
	(l) any Person where such Investment was acquired by the Company, an Issuer or any Restricted Subsidiary (1) in exchange for any other Investment or accounts receivable held by the Company, an Issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (2) as a result of a foreclosure by the Company, an Issuer or any Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
	(m) any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Company, an Issuer or any Restricted Subsidiary;
	(n) other Investments equal to the amount of net proceeds received by the Company or an Issuer (and of received by the Company, which proceeds are contributed to an Issuer or the Issuers) after the closing date from an Equity Sale or as a capital contribution, from the sale of its Capital Stock (other than Disqualified Stock) to a Person who is not a direct or indirect Subsidiary of the Company, except to the extent such net proceeds are used to make Restricted Payments permitted pursuant to clause (a)(3)(B) of the “Limitation on Restricted Payments” covenant;
	(o) any Investment existing as of the Issue Date, and any amendment, modification, extension or renewal thereof to the extent such amendment, modification, extension or renewal does not require an Issuer or any Restricted Subsidiary to make any additional cash or non-cash payments or provide additional services in connection therewith; and
	(p) other Investments made for Fair Market Value that do not exceed $10.0 million outstanding at any one time in the aggregate, when taken together with all other Investments made pursuant to this clause (p) since the Issue Date.

	(a) Liens to secure Indebtedness permitted to be Incurred under clause (2) of the second paragraph of the covenant described under “— Certain Covenants — Limitation on Indebtedness and Issuance of Preferred Stock” and Hedging Obligations in respect of such Indebtedness owed to lenders under the Credit Facilities and their Affiliates (even if such lender ceases to be a party to the Credit Facilities);
	(b) Liens to secure Indebtedness permitted to be Incurred under clause (3) of the second paragraph of the covenant described under “— Certain Covenants — Limitation on Indebtedness and Issuance of Preferred Stock”, provided that any such Lien may not extend to any Property of an Issuer or any of its Restricted Subsidiaries, other than the Property acquired, constructed or leased with the proceeds of such Indebtedness and any improvements or accessions to such Property;
	(c) Liens for taxes, assessments or governmental charges or levies on the Property of an Issuer or any of its Restricted Subsidiaries if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision that shall be required in conformity with GAAP shall have been made therefor;
	(d) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and other similar Liens, on the Property of an Issuer or any of its Restricted Subsidiaries arising in the ordinary course of business and securing payment of obligations that are being contested in good faith and by appropriate proceedings, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;

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	(e) Liens on the Property of an Issuer or any of its Restricted Subsidiaries Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and Incurred in the ordinary course of business (including, without limitation, landlord Liens on leased properties), in each case which are not Incurred in connection with the Incurrence of Indebtedness and which do not in the aggregate impair in any material respect the use of Property in the operation of the business of such Issuer and its Restricted Subsidiaries taken as a whole;
	(f) Liens on Property at the time an Issuer or any of its Restricted Subsidiaries acquired such Property, including any acquisition by means of a merger or consolidation with or into such Issuer or any of its Restricted Subsidiaries; provided, however, that any such Lien may not extend to any other Property of such Issuer or any of its Restricted Subsidiaries; provided further, however, that such Liens shall not have been Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Property was acquired by such Issuer or any of its Restricted Subsidiaries;
	(g) Liens on the Property of a Person at the time such Person becomes a Restricted Subsidiary of an Issuer; provided, however, that any such Lien may not extend to any other Property of such Issuer or any of its other Restricted Subsidiaries that is not a direct Subsidiary of such Person; provided further, however, that any such Lien was not Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Restricted Subsidiary;
	(h) pledges or deposits by an Issuer or any of its Restricted Subsidiaries under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Issuer or any of its Restricted Subsidiaries is party, or deposits to secure public or statutory obligations of the Company, or deposits for the payment of rent, in each case Incurred in the ordinary course of business;
	(i) minor survey exceptions, minor encumbrances, or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its Properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said Properties or materially impair their use in the operation of the business of such Person;
	(j) Liens in favor of an Issuer or any Restricted Subsidiary;
	(k) leases or subleases granted to, and any operating lease with, third persons in the ordinary course of business of an Issuer or any Restricted Subsidiary;
	(l) Liens securing reimbursement obligations with respect to letters of credit which encumber Property relating to such letters of credit and the products and proceeds thereof;
	(m) attachment or judgment Liens not giving rise to a Default or an Event of Default;
	(n) customary Liens for the fees, costs and expenses of trustees and escrow agents pursuant to an indenture, escrow agreement or similar agreement establishing a trust or escrow arrangement, and Liens pursuant to merger agreements, stock purchase agreements, asset sale agreements, option agreements and similar agreements in respect of the disposition of Property or assets of an Issuer or any Restricted Subsidiary on the Property to be disposed of, to the extent such dispositions are permitted hereunder;
	(o) Liens existing on the Issue Date not otherwise described in clauses (a) through (n) above;
	(p) Liens on the Property of an Issuer or any of its Restricted Subsidiaries to secure any Refinancing, in whole or in part, of any Indebtedness secured by Liens referred to in clause (b), (f), (g) or (o) above; provided, however, that any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property)

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	and the aggregate principal amount of Indebtedness that is secured by such Lien shall not be increased to an amount greater than the sum of (1) the outstanding principal amount, or, if greater, the committed amount, of the Indebtedness secured by Liens described under clause (b), (f), (g) or (o) above, as the case may be, at the time the original Lien became a Permitted Lien under the Indenture and (2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, incurred by an Issuer or such Restricted Subsidiary in connection with such Refinancing;
	(q) Liens securing Indebtedness in an aggregate principal amount not to exceed $50.0 million at any one time outstanding and permitted to be Incurred under paragraph (a) of the covenant described under “— Certain Covenants — Limitation on Indebtedness and Issuance of Preferred Stock” and Hedging Obligations in respect of such Indebtedness owed to lenders under a Credit Facility and their Affiliates (even if such lender ceases to be a party to such Credit Facility);
	(r) Liens granted to secure the notes pursuant to the covenant described under “— Certain Covenant — Limitation on Liens”; and
	(s) Liens not otherwise permitted by clauses (a) through (r) above encumbering assets having an aggregate Fair Market Value not in excess of $5.0 million.

	(a) such Indebtedness is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of (1) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being Refinanced and (2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing,
	(b) the Average Life of such Indebtedness is equal to or greater than the Average Life of the Indebtedness being Refinanced,
	(c) the Stated Maturity of such Indebtedness is no earlier than the Stated Maturity of the Indebtedness being Refinanced and
	(d) the new Indebtedness shall not be senior in right of payment to the Indebtedness that is being Refinanced;

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	(a) any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of an Issuer or any of its Restricted Subsidiaries (including any payment in connection with any merger or consolidation with or into such Issuer or any of its Restricted Subsidiaries), except for (1) any dividend or distribution that is made solely to such Issuer or any of its Restricted Subsidiaries, (2) any dividend or distribution made to the shareholders of a Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by the Issuer or any of its Restricted Subsidiaries of dividends or distributions of greater value than it would receive on a pro rata basis or, (3) any dividend or distribution payable solely in shares of Capital Stock (other than Disqualified Stock) of such Issuer;
	(b) the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of an Issuer or any Affiliate of an Issuer (other than from such Issuer or any of its Restricted Subsidiaries) or any securities exchangeable for or convertible into any such Capital Stock, including the exercise of any option to exchange any Capital Stock (other than for or into Capital Stock of such Issuer that is not Disqualified Stock);
	(c) the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of any Subordinated Obligation (other than the purchase, repurchase or other acquisition of any Subordinated Obligation (1) purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition) or (2) constituting Indebtedness of the type described in clause (4) of paragraph (b) of the “Limitation on Indebtedness and Issuance of Preferred Stock” covenant;
	(d) any Investment (other than Permitted Investments) in any Person;
	(e) the issuance, sale or other disposition of Capital Stock of any Restricted Subsidiary of an Issuer to a Person other than such Issuer or another Restricted Subsidiary of such Issuer if the result thereof is that such Restricted Subsidiary shall cease to be a Restricted Subsidiary of such Issuer, in which event the amount of such “Restricted Payment” shall be the Fair Market Value of the remaining interest, if any, in such former Restricted Subsidiary held by such Issuer and the other Restricted Subsidiaries of such Issuer; or
	(f) the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Company or any of its Equity Investors (or any accruals relating to such fees and related expenses).

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	(a) the notes;
	(b) all obligations consisting of the principal, premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Issuers whether or not post-filing interest is allowed in such proceeding) in respect of (1) Indebtedness of the Issuers for borrowed money (including all monetary obligations of the Issuers under a Credit Facility) and (2) Indebtedness of the Issuers evidenced by notes, debentures, bonds or other similar instruments permitted under the Indenture for the payment of which the Issuers are responsible or liable;
	(c) all Capital Lease Obligations of the Issuers and all Attributable Indebtedness in respect of Sale and Leaseback Transactions entered into by the Issuers;
	(d) all obligations of the Issuers (1) for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction, (2) under Hedging Obligations or (3) issued or assumed as the deferred purchase price of Property and all conditional sale obligations of the Issuers and all obligations under any title retention agreement permitted under the Indenture; and
	(e) all obligations of other Persons of the type referred to in clauses (a), (b), (c) and (d) for the payment of which the Issuers are responsible or liable as Guarantor;

	(A) any Indebtedness of the Issuers that is by its terms subordinate or junior in right of payment to the notes or any other Indebtedness of the Issuers;
	(B) any Indebtedness Incurred in violation of the provisions of the Indenture (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (B) if the holders of such obligation or their representative and the Trustee shall have received an Officers’ Certificate of the Issuers to the effect that the Incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the Incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of the Indenture);
	(C) accounts payable or any other obligations of the Issuers to trade creditors created or assumed by the Issuers in the ordinary course of business in connection with the obtaining of materials or services (including Guarantees thereof or instruments evidencing such liabilities);
	(D) any liability for Federal, state, local or other taxes owed or owing by the Issuers;
	(E) any obligation of the Issuers to any Subsidiary; or
	(F) any obligations with respect to any Capital Stock of the Issuers.

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	(a) Investments in U.S. Government Obligations maturing within one year of such Investment;
	(b) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within one year of the date of acquisition thereof issued by a bank or trust company organized under the laws of the United States of America or any State thereof or with First Mid-Illinois Bank & Trust, N.A., Mattoon, Illinois or consistent with past practice or, otherwise having capital, surplus and undivided profits aggregating in excess of $500.0 million and whose long-term debt is rated “A-3” or “A-” or higher according to Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act));
	(c) Investments in repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) entered into with a bank meeting the qualifications described in clause (b) above;

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	(d) Investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or with First Mid-Illinois Bank & Trust, N.A., Mattoon, Illinois or consistent with past practice or, otherwise with a rating at the time as of which any Investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act));
	(e) direct obligations (or certificates representing an ownership interest in such obligations) of any State of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of such State is pledged and which are not callable or redeemable at the issuer’s option, provided that (1) the long-term debt of such State is rated “A-3” or “A-“ or higher according to Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)) and (2) such obligations mature within 180 days of the date of acquisition thereof;
	(f) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (a) and (e) above entered into with any bank meeting the qualifications specified in clause (b) above; and
	(g) investments in money market funds which invest at least 95% of their assets in securities of the types described in clauses (a) through (f) above.

	(a) the amendment of the LLC Agreement (as contemplated by the definition of LLC Agreement) and the contribution by the Equity Investors of $89 million in cash in exchange for additional Class A Preferred Stock of the Company pursuant to the LLC Agreement,
	(b) the Purchase Agreement, the Registration Rights Agreement, the Indenture and any related agreements and the issuance of the notes pursuant to this offering circular,
	(c) the entering into of the Credit Agreement on the closing date and the borrowings by CCI and Texas Acquisition thereunder,
	(d) the repayment of all the outstanding Indebtedness of CCI under its old credit facility,
	(e) the Acquisition and the entering into the agreements contemplated by the Stock Purchase Agreement,
	(f) the payment of related fees and expenses and
	(g) all transactions related to or contemplated by the above clauses of this definition.

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	(1) that any Exchange Notes to be received by it will be acquired in the ordinary course of its business,
	(2) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes,
	(3) that it is not an “affiliate” of either of the Issuers, as defined in Rule 405 of the Securities Act, or if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable,
	(4) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of Exchange Notes,
	(5) if such Holder is a Participating Broker-Dealer, that it will deliver a prospectus in connection with any resale of such Exchange Notes, and
	(6) that it is not acting on behalf of any person who could not truthfully make the foregoing representations.

	(1) because of any change in law or in applicable interpretations thereof by the staff of the SEC, the Issuers and Homebase are not permitted to effect such an Exchange Offer,
	(2) the Exchange Offer is not consummated within 300 days of the Issue Date,
	(3) under certain circumstances, the Initial Purchasers so request with respect to notes not eligible to be exchanged for Exchange Notes in the Exchange Offer, or
	(4) if certain Holders of outstanding notes are not permitted by applicable law to participate in the Exchange Offer or do not receive freely tradeable Exchange Notes in the Exchange Offer (other than, in either case, due solely to the status of such Holder as an affiliate of either of the Issuers or due to such Holder’s inability to make the representations referred to above).

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	•	redeem 35.0% of the aggregate principal amount of the notes and pay the associated redemption premium of 9.75% of the principal amount to be redeemed, together with accrued but unpaid interest through the date of redemption;
	•	repay in full outstanding borrowings under our term loan A facility and term loan C facility, together with accrued but unpaid interest through the closing date of the proposed initial public offering;
	•	pre-fund expected integration and restructuring costs for 2005 relating to the TXUCV acquisition; and
	•	pay fees and expenses associated with the repayment of the term loan A facility and term loan C facility and the entering into of the new amended and restated credit facilities.

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	(1) DTC (a) notifies the issuers that it is unwilling or unable to continue as depositary for the global exchange note or (b) has ceased to be a clearing agency registered under the Exchange Act, and in either case the issuers thereupon fail to appoint a successor depositary within 90 days;
	(2) The issuers, at their option, notify the trustee in writing that they elect to cause the issuance of the exchange notes in certificated form; or
	(3) There shall have occurred and be continuing an event of default or any event which after notice or lapse of time or both would be an event of default with respect to the exchange notes.

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	•	no gain or loss will be recognized by a holder upon receipt of an exchange note;
	•	the holding period of the exchange note will include the holding period of the outstanding note; and
	•	the adjusted tax basis of the exchange note will be the same as the adjusted tax basis of the outstanding note immediately before the exchange.

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	Consolidated Communications Illinois Holdings, Inc.
	Consolidated Communications Texas Holdings, Inc.
	Homebase Acquisition, LLC
	121 South 17th Street
	Mattoon, Illinois 61938-3987
	Attention: Secretary
	Telephone: (217) 235-3311

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			Page
Unaudited Pro Forma Condensed Statement of Operations — Homebase				P-2
	Unaudited Pro Forma Condensed Statement of Operations — Year ended December 31, 2004			P-4
	Notes to Unaudited Pro Forma Condensed Statement of Operations			P-5
Unaudited Pro Forma Condensed Consolidated Statement of Operations — CCI Illinois				P-7
	Unaudited Pro Forma Condensed Consolidated Statement of Operations — Year ended December 31, 2004			P-8
	Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations			P-9
Unaudited Pro Forma Condensed Consolidated Statement of Operations — CCI Texas				P-10
	Unaudited Pro Forma Condensed Consolidated Statement of Operations — Year ended December 31, 2004			P-11
	Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations			P-12

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	•	the contribution by our existing equity investors of $89.0 million in cash in exchange for additional Class A preferred shares of Homebase, the distribution by CCI, a wholly owned subsidiary of Homebase, of $63.4 million to Homebase and the contribution by Homebase of $152.4 million to Texas Acquisition of the aggregate proceeds of such distribution and contribution;
	•	the TXUCV acquisition by Texas Acquisition, a wholly owned subsidiary of Homebase, on April 14, 2004, pursuant to which Texas Acquisition acquired all of the capital stock of TXUCV for $524.1 million in cash, net of cash acquired and including transaction costs;
	•	the refinancing and termination of the old credit facilities of CCI, and the entering into, and borrowing under, the existing credit facilities;
	•	the issuance of the notes; and
	•	the payment of related fees and expenses.

	•	A $122.0 million term loan A facility with a six year maturity;
	•	A $315.0 million term loan B facility with a seven year and six-month maturity; and
	•	A $30.0 million revolving credit facility with a six year maturity, all of which remains available for general corporate purposes.

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	•	in respect of the term loan A facility and the revolving credit facility, 1.25% with respect to base rate loans and 2.25% with respect to LIBOR loans; and
	•	in respect of the term loan C facility, 1.50% with respect to base rate loans and 2.50% with respect to LIBOR loans.

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							CCI Texas
							Historical				Acquisition				Pro Forma as
			Homebase				January 1 -				Pro Forma				Adjusted for
			Historical				April 13				Adjustments				Acquisition
Revenues			$	269,608			$	53,855			$	—			$	323,463
Operating expenses:
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			80,572				15,296				—				95,868
	Selling, general and administrative expenses			87,955				24,138				(1,118	)(2)			110,975
	Depreciation and amortization			54,522				8,124				4,875	(3)			67,521
	Intangible impairment charges			11,578				(12	)			—				11,566
Total operating expenses				234,627				47,546				3,757				285,930
Income from operations				34,981				6,309				(3,757	)			37,533
Other income (expense):
	Interest income			384				—				—				384
	Interest expense			(39,935	)			(1,244	)			(3,484	)(4)			(44,663	)
	Prepayment penalty on extinguishment of debt			—				(1,914	)			—				(1,914	)
	Partnership income			1,288				1,174	(1)			—				2,462
	Minority interest			(327	)			(106	)			—				(433	)
	Other, net			2,698				37				—				2,735
Income (loss) before income taxes				(911	)			4,256				(7,241	)			(3,896	)
Income tax expense (benefit)				232				2,473				(3,012	)(5)			(307	)
Net income (loss)				(1,143	)			1,783				(4,229	)			(3,589	)
Dividends on redeemable preferred shares				(14,965	)			—				(2,225	)(6)			(17,190	)
Net income (loss) applicable to common shareholders			$	(16,108	)		$	1,783			$	(6,454	)		$	(20,779	)

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1.	Partnership Income

	•	a 2.34% interest in GTE Mobilnet of South, Texas, LP (“South Texas”);
	•	a 17.02% interest in GTE Mobilnet of Texas RSA #17, LP (“RSA #17”); and
	•	a 39.06% interest in Fort Bend Fibernet, LP (“Fort Bend”).

2.	Selling, General and Administrative Expenses

Effect of TXUCV acquisition related headcount reductions		$	(1,983	)
Incremental professional service fees			865
		$	(1,118	)

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3.	Depreciation and Amortization

Removing historical depreciation and amortization		$	(62,646	)
Recording new depreciation and amortization			67,521
		$	4,875

4.	Interest Expense

											Twelve Months
			Estimated				Estimated				Ended
			Principal				Interest				December 31,
			Outstanding				Rates				2004
Removal of historical interest expense including amortization of deferred financing costs											$	41,179
Recording of new interest expense, net
	Term loan A		$	122,000				LIBOR+2.50%				(4,892	)
	Term loan B			315,000				LIBOR+2.75%				(13,419	)
	Senior notes			200,000				9.750%				(19,500	)
	Capital leases			1,059				6.500%				(69	)
	Revolver commitment fee											(150	)
	Net effect of interest rate hedges											(3,733	)
	Amortization of deferred financing costs											(2,900	)
Total new interest expense												(44,663	)
Net adjustment to interest expense											$	(3,484	)

5.	Income Tax Expense

Twelve months ended December 31, 2004		41.6%

6.	Dividends on Preferred Shares

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	•	the issuance of the notes;
	•	the borrowing by CCI, a wholly owned subsidiary of Illinois Holdings, of $170.0 million under the existing credit facilities;
	•	the repayment of all the outstanding debt of CCI under its old credit facility;
	•	the distribution of $63.4 million by CCI to Homebase and the contribution by Homebase of these funds to Texas Acquisition in connection with the purchase of TXUCV; and
	•	the payment of fees and expenses.

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			Historical
			CCI				Pro Forma
			Illinois				Adjustments				Pro Forma
Operating Revenues
Illinois telephone operations			$	97,326			$	—			$	97,326
Other Illinois operations				39,207				—				39,207
	Total operating revenues			136,533				—				136,533
Operating Expenses
Cost of revenues				46,198				—				46,198
Selling, general and administrative				45,557				—				45,557
Depreciation and amortization				22,347				—				22,347
Intangible impairment charges				11,578				—				11,578
	Total expenses			125,680				—				125,680
Other, net				840				—				840
Interest expense				(19,715	)			2,788	(1)			(16,927	)
Income (loss) before income taxes				(8,022	)			2,788				(5,234	)
Income tax expense (benefit)				(2,887	)			1,160	(2)			(1,727	)
Net income (loss)			$	(5,135	)		$	1,628			$	(3,507	)

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1.	Interest Expense, Net

Interest expense of existing credit facilities and notes			$	(15,838	)
Amortization of deferred financing costs of existing credit facilities and notes				(1,089	)
Pro forma interest expense				(16,927	)
Elimination of historical interest expense, including amortization of deferred financing costs				19,715
	Pro forma adjustment to interest expense		$	2,788

2.	Income Taxes

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	•	the offering of the notes;
	•	the borrowing by Texas Acquisition, a wholly owned subsidiary of Texas Holdings, of $267.0 million under the existing credit facilities;
	•	the acquisition, pursuant to the stock purchase agreement, by Texas acquisition of TXUCV from Pinnacle One, an indirect, wholly owned subsidiary of TXU Corp., for $524.1 million in cash, net of cash acquired and including transaction costs; and
	•	the payment of fees and expenses.

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			CCI Texas
			Historical				CCI Texas
			January 1, 2004				Historical								Pro Forma as
			to April 13,				April 14, 2004 to				Pro Forma				Adjusted for
			2004				December 31, 2004				Adjustments				Acquisition
Operating Revenues
Operating revenues			$	53,855			$	133,075			$	—			$	186,930
Operating Expenses:
	Network operating costs			15,296				34,374				—				49,670
	Selling, general and administrative			24,138				42,398				(1,118	)(1)			65,418
	Depreciation and amortization			8,124				32,175				4,875	(2)			45,174
	Restructuring, asset impairment and other charges			(12	)			—				—				(12	)
Total operating expenses				47,546				108,947				3,757				160,250
Income from operations				6,309				24,128				(3,757	)			26,680
Other income (expense):
Interest expense				(1,244	)			(20,220	)			(6,272	)(3)			(27,736	)
Pre-payment penalty on extinguishment of debt				(1,914	)			—				—				(1,914	)
Other, net				1,105				3,203				—				4,308
Income (loss) before income taxes				4,256				7,111				(10,029	)			1,338
Income taxes				2,473				3,119				(4,172	)(4)			1,420
Net income			$	1,783			$	3,992			$	(5,857	)		$	(82	)

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1.	Selling, General and Administrative

Effect of transaction related headcount reductions		$	(1,983	)
Incremental fee			865
		$	(1,118	)

2.	Depreciation and Amortization:

Removing historical depreciation and amortization		$	(40,299	)
Recording new depreciation and amortization			45,174
		$	4,875

3.	Interest Expense, net

Interest expense of existing credit facilities and notes		$	(25,925	)
Amortization of deferred financing costs of existing credit facilities and notes			(1,811	)
Pro forma interest expense			(27,736	)
Elimination of historical interest expense, including amortization of deferred financing costs			21,464
Pro forma adjustment to interest expense		$	(6,272	)

4.	Income Taxes

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			Page
Audited Financial Statements
Consolidated Financial Statements — Homebase Acquisition, LLC				F-3
	Report of Independent Registered Public Accounting Firm			F-4
	Consolidated Balance Sheets as of December 31, 2004 and 2003			F-5
	Consolidated Statements of Operations for the years ended December 31, 2004 and 2003			F-6
	Consolidated Statements of Changes in Common Members’ Deficit for the years ended December 31, 2004 and 2003			F-7
	Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2003			F-8
	Notes to Consolidated Financial Statements			F-9
Consolidated Financial Statements — Consolidated Communications Illinois Holdings, Inc.				F-34
	Report of Independent Registered Public Accounting Firm			F-35
	Consolidated Balance Sheets as of December 31, 2004 and 2003			F-36
	Consolidated Statements of Operations for the years ended December 31, 2004 and 2003			F-37
	Consolidated Statements of Changes in Shareholder’s Equity for the years ended December 31, 2004 and 2003			F-38
	Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2003			F-39
	Notes to Consolidated Financial Statements			F-40
Combined Financial Statements — Illinois Consolidated Telephone Company and Related Businesses				F-59
	Report of Independent Registered Public Accounting Firm			F-60
	Combined Balance Sheet as of December 30, 2002			F-61
	Combined Statement of Income for the year ended December 30, 2002			F-62
	Combined Statement of Changes in Parent Company Investment for the year ended December 30, 2002			F-63
	Combined Statement of Cash Flows for the year ended December 30, 2002			F-64
	Notes to Combined Financial Statements			F-65
Consolidated Financial Statements — Consolidated Communications Texas Holdings, Inc.				F-77
	Report of Independent Registered Public Accounting Firm			F-78
	Consolidated Balance Sheet as of December 31, 2004			F-79
	Consolidated Statement of Operations for the period from April 14, 2004 to December 31, 2004			F-80
	Consolidated Statement of Changes in Shareholder’s Equity for the period from April 14, 2004 to December 31, 2004			F-81
	Consolidated Statement of Cash Flows for the period from April 14, 2004 to December 31, 2004			F-82
	Notes to Consolidated Financial Statements			F-83
Consolidated Financial Statements — TXU Communications Ventures Company and Subsidiaries				F-100
	Report of Independent Registered Public Accounting Firm			F-101
	Consolidated Balance Sheets as of April 13, 2004, December 31, 2003 and 2002			F-102
	Consolidated Statements of Operations and Comprehensive Income (Loss) for the period from January 1, 2004 to April 13, 2004 and for the years ended December 31, 2003, 2002 and 2001			F-103
	Consolidated Statements of Shareholder’s Equity for the period from January 1, 2004 to April 13, 2004 and for the years ended December 31, 2003, 2002, and 2001			F-104
	Consolidated Statements of Cash Flows for the period from January 1, 2004 to April 13, 2004 and for the years ended December 31, 2003, 2002, and 2001			F-105
	Notes to Consolidated Financial Statements			F-106

F-1

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Table of Contents

			Page
Financial Statements — GTE Mobilnet of Texas RSA #17 Limited Partnership				F-128
	Report of Independent Registered Public Accounting Firm			F-129
	Balance Sheets as of December 31, 2004 and 2003			F-130
	Statements of Operations for the years ended December 31, 2004, 2003 and 2002			F-131
	Statements of Changes in Partners’ Capital for the years ended December 31, 2004, 2003 and 2002			F-132
	Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002			F-133
	Notes to Financial Statements			F-134
Unaudited Financial Statements
Condensed Consolidated Financial Statements — Homebase Acquisition, LLC				F-141
	Condensed Consolidated Balance Sheet as of March 31, 2005			F-142
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004			F-143
	Condensed Consolidated Statements of Changes in Common Members’ Deficit for the three months ended March 31, 2005 and 2004			F-144
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004			F-145
	Notes to Unaudited Condensed Consolidated Financial Statements			F-146
Condensed Consolidated Financial Statements — Consolidated Communications Illinois Holdings, Inc.				F-155
	Condensed Consolidated Balance Sheet as of March 31, 2005			F-156
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004			F-157
	Condensed Consolidated Statement of Changes in Shareholder’s Equity for the three months ended March 31, 2005			F-158
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004			F-159
	Notes to Unaudited Condensed Consolidated Financial Statements			F-160
Consolidated Financial Statements — Consolidated Communications Texas Holdings, Inc.				F-165
	Condensed Consolidated Balance Sheet as of March 31, 2005			F-166
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004			F-167
	Condensed Consolidated Statements of Changes in Shareholder’s Equity for the three months ended March 31, 2005			F-168
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004			F-169
	Notes to Unaudited Consolidated Financial Statements			F-170

F-2

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Table of Contents

F-3

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Table of Contents

	/s/ Ernst & Young, LLP

F-4

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Table of Contents

			December 31
			2004				2003
ASSETS
Current assets:
	Cash and cash equivalents		$	52,084			$	10,142
	Accounts receivable, net of allowance of $2,613 and $1,837, respectively			33,817				18,701
	Inventories			3,529				2,277
	Deferred income taxes			3,278				2,868
	Prepaid expenses and other current assets			6,179				5,643
Total current assets				98,887				39,631
Property, plant and equipment, net				360,760				104,580
Intangibles and other assets:
	Investments			42,884				—
	Goodwill			318,481				99,554
	Customer lists, net			149,805				53,559
	Tradenames			14,546				15,863
	Deferred financing costs and other assets			20,736				4,408
Total assets			$	1,006,099			$	317,595
LIABILITIES AND MEMBERS’ DEFICIT
Current liabilities:
	Current portion of long-term debt		$	41,079			$	10,300
	Accounts payable			11,176				5,518
	Advance billings and customer deposits			11,061				6,368
	Accrued expenses			34,251				12,642
Total current liabilities				97,567				34,828
Long-term debt less current maturities				588,342				170,100
Deferred income taxes				66,641				1,114
Pension and postretirement benefit obligations				61,361				12,595
Other liabilities				3,223				972
Total liabilities				817,134				219,609
Minority interests				2,291				—
Redeemable preferred shares:
	Class A, redeemable preferred shares, $1 par value, 182,000 shares authorized, 182,000 and 93,000 shares issued and outstanding, respectively; liquidation preference of $205,469 and $101,504, respectively			205,469				101,504
Common members’ deficit:
	Common shares, no par value, 10,000,000 shares, authorized, 10,000,000 and 9,975,000 shares issued and outstanding, respectively			—				—
	Paid in capital			58				—
	Accumulated deficit			(19,111	)			(3,003	)
	Accumulated other comprehensive income (loss)			258				(515	)
Total common members’ deficit				(18,795	)			(3,518	)
Total liabilities and members’ deficit			$	1,006,099			$	317,595

F-5

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Table of Contents

			Year ended December 31
			2004				2003
Revenues			$	269,608			$	132,330
Operating expenses:
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			80,572				46,305
	Selling, general and administrative expenses			87,955				42,495
	Intangible assets impairment			11,578				—
	Depreciation and amortization			54,522				22,476
Income from operations				34,981				21,054
Other income (expense):
	Interest income			384				154
	Interest expense			(39,935	)			(11,975	)
	Partnership income			1,288				—
	Dividend income			2,497				—
	Minority interest			(327	)			—
	Other, net			201				(15	)
Income (loss) before income taxes				(911	)			9,218
Income tax expense				232				3,717
Net income (loss)				(1,143	)			5,501
Dividends on redeemable preferred shares				(14,965	)			(8,504	)
Net loss applicable to common shareholders			$	(16,108	)		$	(3,003	)
Net loss per common share — basic and diluted			$	(1.79	)		$	(0.33	)

F-6

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Table of Contents

																		Accumulated
		Common Shares																Other
														Accumulated				Comprehensive								Comprehensive
		Shares				Amount				Paid in Capital				Deficit				Income (Loss)				Total				Income (Loss)
Balance, January 1, 2003			—			$	—			$	—			$	—			$	—			$	—			$	—
Net income			—				—				—				5,501				—				5,501				5,501
Capital contributions			9,000,000				—				—				—				—				—
Shares issued under employee plan			975,000				—				—				—				—				—				—
Dividends on redeemable preferred shares			—				—				—				(8,504	)			—				(8,504	)
Change in fair value of cash flow hedges, net of ($344) of tax			—				—				—				—				(515	)			(515	)			(515	)
Balance, December 31, 2003			9,975,000				—				—				(3,003	)			(515	)			(3,518	)		$	4,986
Net loss			—				—				—				(1,143	)			—				(1,143	)		$	(1,143	)
Shares issued under employee plan			25,000				—				58				—				—				58				—
Dividends on redeemable preferred shares			—				—				—				(14,965	)			—				(14,965	)			—
Minimum pension liability, net of ($174) of tax			—				—				—				—				(283	)			(283	)			(283	)
Unrealized loss on marketable securities, net of ($33) of tax			—				—				—				—				(49	)			(49	)			(49	)
Change in fair value of cash flow hedges, net of $1,090 tax			—				—				—				—				1,105				1,105				1,105
Balance, December 31, 2004			10,000,000			$	—			$	58			$	(19,111	)		$	258			$	(18,795	)		$	(370	)

F-7

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Table of Contents

					Year ended December
					2004				2003
Operating Activities
	Net income (loss)				$	(1,143	)		$	5,501
	Adjustments to reconcile net income (loss) to cash provided by operating activities:
		Depreciation and amortization				54,522				22,476
		Provision for bad debt losses				4,666				3,412
		Deferred income tax				201				3,388
		Asset impairment				11,578				—
		Partnership income				(1,288	)			—
		Minority interest in net income of subsidiary				327				—
		Amortization of deferred financing costs				6,476				504
	Changes in operating assets and liabilities, net of effects of acquisitions:
		Accounts receivable				(3,499	)			(9,799	)
		Inventories				(249	)			(73	)
		Other assets				4,401				(480	)
		Accounts payable				(2,689	)			(2,267	)
		Accrued expenses and other liabilities				6,463				6,227
			Net cash provided by operating activities			79,766				28,889
Investing Activities
		Capital expenditures				(30,010	)			(11,296	)
		Acquisitions, net of cash acquired				(524,090	)			(284,834	)
		Other				—				(2	)
			Net cash used in investing activities			(554,100	)			(296,132	)
Financing Activities
		Capital contributions from investors				89,058				93,000
		Proceeds from long-term obligations				637,000				190,000
		Payments made on long-term obligations				(190,826	)			(10,193	)
		Payment of deferred financing costs				(18,956	)			(4,602	)
		Proceeds from sale of building				—				9,180
			Net cash provided by financing activities			516,276				277,385
Net increase in cash and cash equivalents						41,942				10,142
Cash and cash equivalents at beginning of period						10,142				—
Cash and cash equivalents at end of period					$	52,084			$	10,142
Supplemental cash flow information
		Interest paid			$	27,758			$	11,463
		Income taxes paid (refunded)			$	(509	)		$	2,000

F-8

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Table of Contents

1.	Description of Business

2.	Summary of Significant Accounting Policies

	Principles of Consolidation

	Basis of Presentation

	Use of Estimates

F-9

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Table of Contents

	Regulatory Accounting

	Cash Equivalents

	Investments

	Accounts Receivable and Allowance for Doubtful Accounts

F-10

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Table of Contents

	Inventory

	Goodwill and Other Intangible Assets

	Property, Plant, and Equipment

F-11

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Table of Contents

		Years
Buildings			15-35
Network and outside plant facilities			5-30
Furniture, fixtures, and equipment			3-17

	Revenue Recognition

	Advertising Costs

	Income Taxes

F-12

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Table of Contents

	Stock Based Compensation

	Financial Instruments and Derivatives

F-13

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Table of Contents

	Recent Accounting Pronouncements

3.	Acquisitions

	Acquisition of ICTC and Related Businesses

F-14

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Table of Contents

Current assets		$	25,802
Property, plant and equipment			118,057
Customer lists			59,517
Tradenames			15,863
Goodwill			99,554
Liabilities assumed			(33,959	)
Net purchase price		$	284,834

	Acquisition of TXUCV

F-15

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Table of Contents

Current assets		$	27,478
Property, plant and equipment			268,706
Customer list			108,200
Goodwill			228,792
Other assets			43,291
Liabilities assumed			(152,377	)
Total purchase price, net of cash acquired		$	524,090

		Year Ended December 31
		2004				2003
Total revenues		$	323,463			$	327,148
Income from operations		$	37,533			$	29,507
Proforma net loss		$	(3,589	)		$	(15,431	)
Proforma net loss applicable to common shareholders		$	(20,779	)		$	(31,945	)
Loss per share — basic and diluted		$	(2.31	)		$	(3.55	)

F-16

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Table of Contents

4.	Prepaids and other current assets

		December 31
		2004				2003
Deferred charges		$	1,637			$	1,138
Prepaid expenses			3,492				1,991
Income tax receivables			—				2,002
Other current assets			1,050				512
		$	6,179			$	5,643

5.	Property, plant and equipment

			December 31
			2004				2003
Property, plant and equipment:
	Land and buildings		$	49,567			$	15,487
	Network and outside plant facilities			641,913				209,927
	Furniture, fixtures and equipment			68,360				29,145
	Work in process			7,783				2,639
				767,623				257,198
	Less: accumulated depreciation			(406,863	)			(152,618	)
Net property, plant and equipment			$	360,760			$	104,580

6.	Investments

Cash surrender value of life insurance policies			$	1,708
Cost method investments:
	GTE Mobilnet of South Texas Limited Partnership (2.34% owned)			21,450
	CoBank, ACB stock			1,879
	Rural Telephone Bank stock			5,921
	Other			19
Equity method investments
	GTE Mobilnet of Texas RSA #17 Limited Partnership (17.02% owned)			11,759
	Fort Bend Fibernet Limited Partnership (39.06% owned)			148
			$	42,884

F-17

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Table of Contents

Year ended December 31, 2004:
Revenues		$	35,203
Operating income			9,636
Income before income taxes			10,116
Net income or loss			10,116
As of December 31, 2004:
Current assets			6,443
Non-current assets			22,494
Current liabilities			1,733
Non-current liabilities			—
Partnership equity			27,204

F-18

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Table of Contents

7.	Minority Interest

8.	Goodwill and Other Intangible Assets

		Telephone				Other
		Operations				Operations				Total
Balance at January 1, 2004		$	78,443			$	21,111			$	99,554
Impairment			—				(10,147	)			(10,147	)
Finalization of ICTC and related businesses purchase accounting			2,292				(2,010	)			282
TXUCV acquisition			228,792				—				228,792
Balance at December 31, 2004		$	309,527			$	8,954			$	318,481

F-19

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Table of Contents

		Telephone				Other
		Operations				Operations				Total
Balance at January 1, 2004		$	10,046			$	5,817			$	15,863
Impairment			—				(1,431	)			(1,431	)
Other			—				114				114
Balance at December 31, 2004		$	10,046			$	4,500			$	14,546

		December 31
		2004				2003
Gross carrying amount		$	167,633			$	59,517
Less: accumulated amortization			(17,828	)			(5,958	)
Net carrying amount		$	149,805			$	53,559

9.	Affiliated Transactions

F-20

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Table of Contents

			Year Ended
			December 31
			2004				2003
Fees charged from First Mid-Illinois for:
	Banking fees		$	5			$	2
	401K plan administration			77				46
Interest income earned by the Company on deposits at First Mid-Illinois				170				97
Fees charged by the Company to First Mid-Illinois for telecommunication services				476				437

F-21

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Table of Contents

10.	Income Taxes

			Year Ended
			December 31
			2004				2003
Current:
	Federal		$	393			$	—
	State			673				—
				1,066				—
Deferred:
	Federal			(305	)			3,252
	State			(529	)			465
				(834	)			3,717
Income tax expense			$	232			$	3,717

		Year Ended
		December 31
		2004				2003
Statutory federal income tax rate (benefit)			(35.0	)%			35.0	%
State income taxes, net of federal effect			15.1	%			5.0	%
Other permanent differences			28.8	%			0.0	%
Derivative instruments			24.6				0.0	%
Change in valuation allowance			(5.7	)%			0.0	%
Other			(2.2	)%			0.3	%
			25.6	%			40.3	%

F-22

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Table of Contents

			December 31
			2004				2003
Current deferred tax assets:
	Reserve for uncollectible accounts		$	1,020			$	385
	Accrued vacation pay deducted when paid			1,504				512
	Accrued expenses and deferred revenue			754				1,971
				3,278				2,868
Noncurrent deferred tax assets:
	Net operating loss carryforwards			21,866				2,253
	Derivative instruments			—				344
	Goodwill and other intangibles			846				—
	Pension and post retirement obligations			23,402				3,691
	Minimum tax credit carryforward			806				—
	Valuation allowance			(17,136	)			—
				29,784				6,288
Noncurrent deferred tax liabilities:
	Goodwill and other intangibles			—				(1,641	)
	Derivative instruments			(547	)			—
	Partnership investment			(6,898	)			—
	Property, plant and equipment			(87,348	)			(5,761	)
	Basis in investment			(1,632	)			—
				(96,425	)			(7,402	)
Net noncurrent deferred tax liabilities				(66,641	)			(1,114	)
Net deferred income tax assets (liabilities)			$	(63,363	)		$	1,754

F-23

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Table of Contents

11.	Accrued Expenses

		December 31
		2004				2003
Salaries and employee benefits		$	9,191			$	2,542
Taxes payable			6,915				987
Accrued interest			6,490				859
Other accrued expenses			11,655				8,254
		$	34,251			$	12,642

12.	Pension Costs and Other Postretirement Benefits

F-24

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Table of Contents

		Pension Benefits								Other Benefits
		December 31								December 31
		2004				2003				2004				2003
Change in benefit obligation
Projected benefit obligation, beginning of period		$	55,528			$	49,637			$	8,951			$	7,966
TXUCV acquisition			60,984				—				26,629				—
Service cost			2,930				770				989				165
Interest cost			5,902				3,207				1,579				557
Plan participant contributions			—				—				158				135
Plan amendments			—				—				(2,652	)			454
Plan curtailment			—				—				(772	)			—
Benefits paid			(7,237	)			(3,403	)			(1,747	)			(692	)
Administrative expenses paid			(410	)			—				—				—
Actuarial (gain)/ loss			(57	)			5,317				2,612				366
Projected benefit obligation, end of period		$	117,640			$	55,528			$	35,747			$	8,951
Accumulated benefit obligation		$	105,451			$	51,070
Change in plan assets
Fair value of plan assets, beginning of period		$	50,704			$	45,446			$	—			$	—
TXUCV acquisition			40,633				—				—				—
Actual return on plan assets			6,715				7,804				—				—
Employer contributions			3,887				857				1,589				557
Plan participant contributions			—				—				158				135
Administrative expenses paid			(410	)			—				—				—
Benefits paid			(7,237	)			(3,403	)			(1,747	)			(692	)
Fair value of plan assets, end of period		$	94,292			$	50,704			$	—			$	—
Funded status
Funded status		$	(23,348	)		$	(4,824	)		$	(35,747	)		$	(8,951	)
Employer contributions after measurement date and before fiscal year end			—				—				275				194
Unrecognized prior service cost			—				—				918				952
Unrecognized net actuarial (gain) loss			(177	)			162				(115	)			(128	)
Accrued benefit cost		$	(23,525	)		$	(4,662	)		$	(34,669	)		$	(7,933	)
Amounts recognized in the consolidated balance sheet
Accrued benefit liability		$	(23,982	)		$	(4,662	)		$	(34,669	)		$	(7,933	)
Accumulated other comprehensive income			457				—				—				—
Net amount recognized		$	(23,525	)		$	(4,662	)		$	(34,669	)		$	(7,933	)

F-25

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Table of Contents

		December 31
		2004				2003
Plan assets by category at end of year
Equity securities			54.8	%			52.8	%
Debt securities			36.8	%			44.5	%
Other			8.4	%			2.7	%
			100.0	%			100.0	%

		Pension				Other
		Benefits				Benefits
2005		$	5,388			$	1,820
2006			5,587				1,924
2007			5,864				2,085
2008			6,101				2,129
2009			6,481				2,259
2010 through 2014			40,217				12,555

		Pension Benefits								Other Benefits
		2004				2003				2004				2003
Service cost		$	2,930			$	770			$	989			$	165
Interest cost			5,902				3,207				1,579				557
Expected return on plan assets			(6,434	)			(3,507	)			—				—
Other, net			(2	)			—				(19	)			(4	)
Net periodic benefit cost		$	2,396			$	470			$	2,549			$	718

F-26

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Table of Contents

		Pension
		Benefits								Other Benefits
		2004				2003				2004				2003
Discount rate			6.0	%			6.0	%			6.0	%			6.0	%
Compensation rate increase			3.5	%			3.5	%			—				—
Initial healthcare cost trend rate			—				—				10.0	%			11.0	%
Ultimate healthcare cost trend rate			—				—				5.0	%			5.0	%
Year ultimate trend rate is reached			—				—				2010 to 2012				2009

		1% Increase				1% Decrease
Effect on 2004 service and interest costs		$	581			$	(452	)
Effect on accumulated postretirement benefit obligations as of December 31, 2004			4,424				(3,565	)

13.	Employee 401k Benefit Plans and Deferred Compensation Agreements

	401k Benefit Plans

	Deferred Compensation Agreements

F-27

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Table of Contents

14.	Long-Term Debt

			December 31
			2004				2003
Senior Secured Credit Facility Revolving loan			$	—			$	—
	Term loan A			115,333				110,400
	Term loan B			—				70,000
	Term loan C			312,900				—
Senior notes				200,000				—
Capital leases				1,188				—
				629,421				180,400
Less: current portion				(41,079	)			(10,300	)
			$	588,342			$	170,100

	Senior Secured Credit Facility

F-28

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Table of Contents

	Senior Notes

Calendar year 2005			$	41,079
Calendar year 2006				22,463
Calendar year 2007				23,248
Calendar year 2008				26,900
Calendar year 2009				33,400
	Thereafter			482,331
			$	629,421

F-29

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Table of Contents

	Derivative Instruments

15.	Redeemable Preferred Shares and Member’s Equity

	Preferred Shares

	Common Shares

16.	Restricted Share Plan

F-30

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Table of Contents

17.	Environmental Remediation Liabilities

18.	Commitments and Contingencies

	Legal proceedings

	Operating leases

19.	Net Loss per Common Share

		Year Ended December 31
		2004				2003
Net loss applicable to common shareholders		$	(16,108	)		$	(3,003	)
Weighted average number of common shares outstanding			9,000,685				9,000,000
Net loss per common share		$	(1.79	)		$	(0.33	)

20.	Business Segments

F-31

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Table of Contents

		Telephone				Other
		Operations				Operations				Total
Year ended December 31, 2004
Operating revenues		$	230,401			$	39,207			$	269,608
Cost of services and products			56,339				24,233				80,572
			174,062				14,974				189,036
Selling, general and administrative expenses			77,123				10,832				87,955
Intangible assets impairment			—				11,578				11,578
Depreciation and amortization			49,061				5,461				54,522
Net operating income (loss)		$	47,878			$	(12,897	)		$	34,981
Capital expenditures		$	28,779			$	1,231			$	30,010
Year ended December 31, 2003
Operating revenues		$	90,282			$	42,048			$	132,330
Cost of services and products			21,762				24,543				46,305
			68,520				17,505				86,025
Selling, general and administrative expenses			32,987				9,508				42,495
Depreciation and amortization			16,488				5,988				22,476
Net operating income		$	19,045			$	2,009			$	21,054
Capital expenditures		$	9,117			$	2,179			$	11,296
As of December 31, 2004:
Goodwill		$	309,527			$	8,954			$	318,481
Total assets		$	936,545			$	69,554			$	1,006,099
As of December 31, 2003:
Goodwill		$	78,443			$	21,111			$	99,554
Total assets		$	245,855			$	71,740			$	317,595

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21.	Quarterly Financial Information (unaudited)

				March 31				June 30				September 30				December 31
2004
	Revenues			$	34,067			$	72,538			$	84,405			$	78,598
	Operating expenses:
		Cost of services and products			12,374				22,401				23,223				22,574
		Selling, general and administrative expenses			10,589				22,441				27,768				27,157
		Depreciation and amortization			5,366				15,176				16,942				17,038
		Asset impairment			—				—				—				11,578
Total operating expenses					28,329				60,018				67,933				78,347
Income from operations					5,738				12,520				16,472				251
Other expenses, net					2,797				12,984				10,143				9,968
Pretax income (loss)					2,941				(464	)			6,329				(9,717	)
Income tax expense (benefit)					1,177				(357	)			2,842				(3,430	)
Net income (loss)					1,764				(107	)			3,487				(6,287	)
Dividends on redeemable preferred shares					(2,274	)			(4,019	)			(4,330	)			(4,342	)
Net loss applicable to common shareholders				$	(510	)		$	(4,126	)		$	(843	)		$	(10,629	)
Net loss per common share				$	(0.06	)		$	(0.46	)		$	(0.09	)		$	(1.18	)
2003
	Revenues			$	31,772			$	33,224			$	33,741			$	33,593
	Operating expenses:
		Cost of services and products			11,081				12,028				12,355				10,841
		Selling, general and administrative expenses			10,090				10,114				10,348				11,943
		Depreciation and amortization			5,494				5,938				5,698				5,346
Total operating expenses					26,665				28,080				28,401				28,130
Income from operations					5,107				5,144				5,340				5,463
Other expenses, net					3,131				2,889				2,961				2,855
Income tax expense					790				902				952				1,073
Net income					1,186				1,353				1,427				1,535
Dividends on redeemable preferred shares					(2,119	)			(2,119	)			(2,119	)			(2,148	)
Net loss applicable to common shareholders				$	(933	)		$	(766	)		$	(692	)		$	(613	)
Net loss per common share				$	(0.10	)		$	(0.09	)		$	(0.08	)		$	(0.07	)

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	/s/ Ernst & Young, LLP

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			December 31
			2004				2003
ASSETS
Current assets:
	Cash and cash equivalents		$	16,726			$	10,142
	Accounts receivable, net of allowance of $1,668 and $1,837, respectively			20,474				18,701
	Inventories			2,136				2,277
	Deferred income taxes			1,598				2,868
	Prepaid expenses and other current assets			3,082				5,643
Total current assets				44,016				39,631
Property, plant and equipment, net				101,577				104,580
Intangibles and other assets:
	Goodwill			89,689				99,554
	Customer lists, net			47,541				53,559
	Tradenames			14,546				15,863
	Deferred income taxes			2,251				—
	Deferred financing costs and other assets			8,246				4,408
Total assets			$	307,866			$	317,595
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
	Current portion of long-term debt		$	16,045			$	10,300
	Accounts payable			3,041				5,518
	Advance billings and customer deposits			7,605				6,368
	Accrued expenses			12,451				12,642
Total current liabilities				39,142				34,828
Long-term debt less current maturities				225,423				170,100
Deferred income taxes				—				1,114
Pension and postretirement benefit obligations				11,745				12,595
Other liabilities				1,299				972
Total liabilities				277,609				219,609
Shareholder’s Equity:
	Common shares, $.01 par value, 1,000 shares authorized, issued and outstanding			—				—
	Paid in capital			29,600				93,000
	Retained earnings			366				5,501
	Accumulated other comprehensive income (loss)			291				(515	)
Total shareholder’s equity				30,257				97,986
Total liabilities and shareholder’s equity			$	307,866			$	317,595

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			Year Ended December 31
			2004				2003
Revenues			$	136,533			$	132,330
Operating expenses:
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			46,198				46,305
	Selling, general and administrative expenses			45,557				42,495
	Intangible assets impairment			11,578				—
	Depreciation and amortization			22,347				22,476
Income from operations				10,853				21,054
Other income (expense):
	Interest income			197				154
	Interest expense			(19,715	)			(11,975	)
	Dividend income			310				—
	Other, net			333				(15	)
Income (loss) before income taxes				(8,022	)			9,218
Income tax (benefit) expense				(2,887	)			3,717
Net income (loss)			$	(5,135	)		$	5,501

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																		Accumulated
		Common Shares																Other
										Paid in				Retained				Comprehensive								Comprehensive
		Shares				Amount				Capital				Earnings				Income (Loss)				Total				Income (Loss)
Balance, January 1, 2003			—			$	—			$	—			$	—			$	—			$	—			$	—
Net income			—				—				—				5,501				—				5,501				5,501
Capital contributions			1,000				—				93,000				—				—				93,000
Change in fair value of cash flow hedges, net of ($344) of tax			—				—				—				—				(515	)			(515	)			(515	)
Balance, December 31, 2003			1,000				—				93,000				5,501				(515	)			97,986			$	4,986
Net loss			—				—				—				(5,135	)			—				(5,135	)		$	(5,135	)
Capital distributions			—				—				(63,400	)			—				—				(63,400	)			—
Change in fair value of cash flow hedges, net of $547 of tax			—				—				—				—				806				806				806
Balance, December 31, 2004			1,000			$	—			$	29,600			$	366			$	291			$	30,257			$	(4,329	)

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					Year Ended December 31
					2004				2003
Operating Activities
	Net income (loss)				$	(5,135	)		$	5,501
	Adjustments to reconcile net income to cash provided by operating activities:
		Depreciation and amortization				22,347				22,476
		Provision for bad debt losses				3,509				3,412
		Deferred income tax				(2,094	)			3,388
		Intangible assets impairment				11,578				—
		Amortization of deferred financing costs				5,184				504
	Changes in operating assets and liabilities:
		Accounts receivable				(5,282	)			(9,799	)
		Inventories				141				(73	)
		Other assets				2,091				(480	)
		Accounts payable				(2,477	)			(2,267	)
		Accrued expenses and other liabilities				523				6,227
			Net cash provided by operating activities			30,385				28,889
Investing Activities
	Capital expenditures					(13,339	)			(11,296	)
	Acquisition, net of cash acquired					—				(284,834	)
	Proceeds from investments					—				(2	)
			Net cash used in investing activities			(13,339	)			(296,132	)
Financing Activities
	Capital (distributions to) contributions from investors					(63,400	)			93,000
	Proceeds from long-term obligations					245,000				190,000
	Payments made on long-term obligations					(183,932	)			(10,193	)
	Payment of deferred financing costs					(8,130	)			(4,602	)
	Proceeds from sale of building					—				9,180
			Net cash (used in) provided by financing activities			(10,462	)			277,385
Net increase in cash and cash equivalents						6,584				10,142
Cash and cash equivalents at beginning of period						10,142				—
Cash and cash equivalents at end of period					$	16,726			$	10,142
Supplemental cash flow information
	Interest paid				$	12,624			$	11,463
	Income taxes paid (refunded)				$	(2,004	)		$	2,000

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1.	Description of Business

2.	Summary of Significant Accounting Policies

	Principles of Consolidation

	Basis of Presentation

	Use of Estimates

	Regulatory Accounting

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	Cash Equivalents

	Accounts Receivable and Allowance for Doubtful Accounts

	Inventory

	Goodwill and Other Intangible Assets

	Property, Plant, and Equipment

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		Years
Buildings			15-20
Network and outside plant facilities			5-15
Furniture, fixtures, and equipment			3-10

	Revenue Recognition

	Advertising Costs

	Income Taxes

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	Financial Instruments and Derivatives

	Recent Accounting Pronouncements

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3.	Acquisitions

	Acquisition of ICTC and Related Businesses

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Current assets		$	25,802
Property, plant and equipment			118,057
Customer lists			59,517
Tradenames			15,863
Goodwill			99,554
Liabilities assumed			(33,959	)
Net purchase price		$	284,834

4.	Prepaids and Other Current Assets

		December 31,
		2004				2003
Deferred charges		$	1,637			$	1,138
Prepaid expenses			1,371				1,991
Income tax receivables			—				2,002
Other current assets			74				512
		$	3,082			$	5,643

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5.	Property, Plant and Equipment

			December 31,
			2004				2003
Property, plant and equipment:
	Land and buildings		$	11,698			$	15,487
	Network and outside plant facilities			226,747				209,927
	Furniture, fixtures and equipment			26,931				29,145
	Work in process			2,813				2,639
				268,189				257,198
	Less: accumulated depreciation			(166,612	)			(152,618	)
Net property, plant and equipment			$	101,577			$	104,580

6.	Goodwill and Other Intangible Assets

		Telephone				Other
		Operations				Operations				Total
Balance at January 1, 2004		$	78,443			$	21,111			$	99,554
Impairment			—				(10,147	)			(10,147	)
Finalization of ICTC and related businesses purchase accounting			2,292				(2,010	)			282
Balance at December 31, 2004		$	80,735			$	8,954			$	89,689

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		Telephone				Other
		Operations				Operations				Total
Balance at January 1, 2004		$	10,046			$	5,817			$	15,863
Impairment			—				(1,431	)			(1,431	)
Other			—				114				114
Balance at December 31, 2004		$	10,046			$	4,500			$	14,546

		December 31,
		2004				2003
Gross carrying amount		$	59,433			$	59,517
Less: accumulated amortization			(11,892	)			(5,958	)
Net carrying amount		$	47,541			$	53,559

7.	Affiliated Transactions

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			Year Ended
			December 31,
			2004				2003
Fees charged from First Mid-Illinois for:
	Banking fees		$	5			$	2
	401K plan administration			77				46
Interest income earned by the Company on deposits at First Mid-Illinois				170				97
Fees charged by the Company to First Mid-Illinois for telecommunication services				476				437

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8.	Income Taxes

			Year Ended
			December 31,
			2004				2003
Current:
	Federal		$	255			$	—
	State			19				—
				274				—
Deferred:
	Federal			(2,766	)			3,252
	State			(395	)			465
				(3,161	)			3,717
Income tax expense (benefit)			$	(2,887	)		$	3,717

		Year Ended
		December 31,
		2004				2003
Statutory federal income tax rate			(35.0	)%			35.0	%
State income taxes, net of federal benefit			(4.8	)%			5.0	%
Other			3.8	%			0.3	%
			(36.0	)%			40.3	%

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			December 31,
			2004				2003
Current deferred tax assets:
	Reserve for uncollectible accounts		$	661			$	385
	Accrued vacation pay deducted when paid			591				512
	Accrued expenses and deferred revenue			346				1,971
				1,598				2,868
Noncurrent deferred tax assets:
	Net operating loss carryforwards			6,015				2,253
	Derivative instruments			—				344
	Goodwill and other intangibles			846				—
	Pension and postretirement obligations			4,698				3,691
				11,559				6,288
Noncurrent deferred tax liabilities:
	Goodwill and other intangibles			—				(1,641	)
	Derivative instruments			(547	)			—
	Property, plant and equipment			(8,761	)			(5,761	)
				(9,308	)			(7,402	)
Net non-current deferred tax assets (liabilities)				2,251				(1,114	)
Net deferred income tax assets			$	3,849			$	1,754

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9.	Accrued Expenses

		December 31,
		2004				2003
Salaries and employee benefits		$	3,085			$	2,542
Taxes payable			559				987
Accrued interest			1,944				859
Other accrued expenses			6,863				8,254
		$	12,451			$	12,642

10.	Pension Costs and Other Postretirement Benefits

		Pension Benefits								Other Benefits
		December 31,								December 31,
		2004				2003				2004				2003
Change in benefit obligation
Projected benefit obligation, beginning of period		$	55,528			$	49,637			$	8,951			$	7,966
Service cost			943				770				186				165
Interest cost			3,234				3,207				513				557
Plan participant contributions			—				—				97				135
Plan amendments			—				—				—				454
Benefits paid			(3,199	)			(3,403	)			(891	)			(692	)
Actuarial (gain)/ loss			422				5,317				852				366
Projected benefit obligation, end of period		$	56,928			$	55,528			$	9,708			$	8,951
Accumulated benefit obligation		$	52,389			$	51,070

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		Pension Benefits								Other Benefits
		December 31,								December 31,
		2004				2003				2004				2003
Change in plan assets
Fair value of plan assets, beginning of period		$	50,704			$	45,446			$	—			$	—
Actual return on plan assets			4,713				7,804				—				—
Employer contributions			916				857				794				557
Plan participant contributions			—				—				97				135
Benefits paid			(3,199	)			(3,403	)			(891	)			(692	)
Fair value of plan assets, end of period		$	53,134			$	50,704			$	—			$	—
Funded status
Funded status		$	(3,794	)		$	(4,824	)		$	(9,708	)		$	(8,951	)
Employer contributions after measurement date and before fiscal year end			—				—				275				194
Unrecognized prior service cost			—				—				(115	)			952
Unrecognized net actuarial (gain) loss			(202	)			162				1,799				(128	)
Accrued benefit cost		$	(3,996	)		$	(4,662	)		$	(7,749	)		$	(7,933	)

		December 31,
		2004				2003
Plan assets by category at end of year
Equity securities			52.9	%			65	%
Debt securities			35.1	%			35	%
Other			12.0	%			—
			100.0	%			100.0	%

		Pension				Other
		Benefits				Benefits
2005		$	3,173			$	837
2006			3,204				922
2007			3,245				974
2008			3,291				964
2009			3,472				983
2010 through 2014			20,150				4,915

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		Pension Benefits								Other Benefits
		2004				2003				2004				2003
Service cost		$	943			$	770			$	186			$	165
Interest cost			3,234				3,207				513				557
Expected return on plan assets			(3,927	)			(3,507	)			—				—
Other, net			—				—				(9	)			(4	)
Net periodic benefit cost		$	250			$	470			$	690			$	718

		Pension
		Benefits								Other Benefits
		2004				2003				2004				2003
Discount rate			6.0	%			6.8	%			6.0	%			6.8	%
Compensation rate increase			3.5	%			3.5	%			—				—
Initial healthcare cost trend rate			—				—				10.0	%			10.0	%
Ultimate healthcare cost trend rate			—				—				5.0	%			5.0	%
Year ultimate trend rate is reached			—				—				2010 to 2012				2009

		1% Increase				1% Decrease
Effect on 2004 service and interest costs		$	50			$	(44	)
Effect on accumulated postretirement benefit obligations as of December 31, 2004			498				(452	)

11.	Employee 401k Benefit Plan

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12.	Long-Term Debt

			December 31,
			2004				2003
Senior Secured Credit Facility
	Revolving loan		$	—			$	—
	Term loan A			47,268				110,400
	Term loan B			—				70,000
	Term loan C			119,200				—
Senior notes				75,000				—
Capital leases				—				—
				241,468				180,400
Less: current portion				(16,045	)			(10,300	)
			$	225,423			$	170,100

	Senior Secured Credit Facility

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	Senior Notes

Calendar year 2005			$	16,045
Calendar year 2006				8,884
Calendar year 2007				9,397
Calendar year 2008				10,934
Calendar year 2009				13,598
	Thereafter			182,610
			$	241,468

	Derivative Instruments

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13.	Environmental Remediation Liabilities

14.	Commitments and Contingencies

	Legal proceedings

	Operating leases

15.	Business Segments

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		Telephone				Other
		Operations				Operations				Total
Year ended December 31, 2004
Operating revenues		$	97,326			$	39,207			$	136,533
Cost of services and products			21,965				24,233				46,198
			75,361				14,974				90,335
Operating expenses			34,725				10,832				45,557
Intangible assets impairment			—				11,578				11,578
Depreciation and amortization			16,886				5,461				22,347
Net operating income (loss)		$	23,750			$	(12,897	)		$	10,853
Capital expenditures		$	12,108			$	1,231			$	13,339
Year ended December 31, 2003
Operating revenues		$	90,282			$	42,048			$	132,330
Cost of services and products			21,762				24,543				46,305
			68,520				17,505				86,025
Operating expenses			32,987				9,508				42,495
Depreciation and amortization			16,488				5,988				22,476
Net operating income		$	19,045			$	2,009			$	21,054
Capital expenditures		$	9,117			$	2,179			$	11,296
As of December 31, 2004:
Goodwill		$	80,735			$	8,954			$	89,689
Total assets		$	238,312			$	69,554			$	307,866
As of December 31, 2003:
Goodwill		$	78,443			$	21,111			$	99,554
Total assets		$	245,855			$	71,740			$	317,595

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16.	Quarterly Financial Information (unaudited)

			March 31				June 30				September 30				December 31
2004
Revenues			$	34,067			$	33,028			$	34,679			$	34,759
Operating expenses:
	Cost of services and products			12,374				11,372				12,439				10,013
	Selling, general and administrative expenses			10,589				11,139				11,276				12,553
	Depreciation and amortization			5,366				6,090				5,728				5,163
	Asset impairment			—				—				—				11,578
Total operating expenses				28,329				28,601				29,443				39,307
Income (loss) from operations				5,738				4,427				5,236				(4,548	)
Other expenses, net				2,797				8,025				3,992				4,061
Pretax income (loss)				2,941				(3,598	)			1,244				(8,609	)
Income tax expense (benefit)				1,177				(1,440	)			498				(3,122	)
Net income (loss)			$	1,764			$	(2,158	)		$	746			$	(5,487	)
2003
Revenues			$	31,772			$	33,224			$	33,741			$	33,593
Operating expenses:
	Cost of services and products			11,081				12,028				12,355				10,841
	Selling, general and administrative expenses			10,090				10,114				10,348				11,943
	Depreciation and amortization			5,494				5,938				5,698				5,346
Total operating expenses				26,665				28,080				28,401				28,130
Income from operations				5,107				5,144				5,340				5,463
Other expenses, net				3,131				2,889				2,961				2,855
Income tax expense				790				902				952				1,073
Net income			$	1,186			$	1,353			$	1,427			$	1,535

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ASSETS
Current assets:
	Cash and cash equivalents			$	1,089
	Accounts receivable, net of allowances of $1,850				14,107
	Inventories				2,204
	Prepaid expenses				1,399
	Deferred directory costs and other charges				369
	Deferred tax assets				2,914
	Other current assets				1,122
		Total current assets			23,204
Investments					18
Property, plant, and equipment:
	Land and buildings				24,162
	Network and outside plant facilities				200,481
	Furniture, fixtures and equipment				32,614
	Work in process				3,330
					260,587
Less: Accumulated depreciation					155,526
Net property, plant, and equipment					105,061
Intangibles and other assets:
	Goodwill				101,324
	Other intangibles				6,463
	Deferred charges and other assets				333
		Total intangibles and other assets			108,120
		Total assets		$	236,403
LIABILITIES AND PARENT COMPANY INVESTMENT
Current liabilities:
	Current portion of capital lease obligations			$	479
	Accounts payable				7,306
	Accrued liabilities				6,725
	Advance billings and customer deposits				5,307
		Total current liabilities			19,817
Long-term liabilities:
	Unamortized investment tax credits				320
	Deferred income taxes				10,815
	Pension benefit obligations and other postretirement obligations				9,471
	Deferred compensation				—
	Other long-term liabilities				903
	Long-term debt, excluding current maturities				20,593
	Long-term capital lease obligations				—
	Commitments and contingencies				—
		Total long-term liabilities			42,102
Parent company investment					174,484
		Total liabilities and parent company investment		$	236,403

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Operating revenues
	Illinois Telephone Operations		$	76,745
	Other Illinois Operations			33,159
Total operating revenues				109,904
Operating expenses
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			35,820
	Selling, general, and administrative			35,616
	Depreciation and amortization			24,544
Total operating expenses				95,980
Income from operations				13,924
Other income (expense):
	Interest income			6
	Interest expense			(1,652	)
	Other, net			428
Total other expense				(1,218	)
Income before income taxes				12,706
Income taxes				4,670
Net income			$	8,036

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Balance at January 1, 2002		$	178,142
Net income			8,036
Net settlement with parent			(11,694	)
Balance at December 30, 2002		$	174,484

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Cash flows from operating activities
Net income				$	8,036
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization				24,544
	Deferred income taxes				(4,933	)
	Other deferred credits, net				1,864
	Changes in net operating assets and liabilities:
		Accounts receivable			(660	)
		Inventories			805
		Prepaid expenses			(105	)
		Accounts payable			1,102
		Advance billings and customer deposits			453
		Accrued income taxes and liabilities			(3,604	)
		Other			1,035
Net cash provided by operating activities					28,537
Cash flows from investing activities
Property, plant, and equipment expenditures					(14,137	)
Net cash used in investing activities					(14,137	)
Cash flows from financing activities
Repayment of long-term debt					(68	)
Deferred charges and other noncurrent assets					19
Settle intercompany receivables, net					(16,515	)
Net cash used in financing activities					(16,564	)
Net decrease in cash and cash equivalents					(2,164	)
Cash and cash equivalents at beginning of year					3,253
Cash and cash equivalents at end of year				$	1,089
Non-cash investing and financing activities
	Property, plant and equipment additions			$	4,821
Supplemental disclosures of cash flow information
	Cash paid for interest			$	1,643

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1.	Nature of Business

	Illinois Consolidated Telephone Company (ICTC) provides a broad range of local exchange telecommunications services including local dialtone and central office based vertical services features, private line services, data services (including DSL), intraLATA toll and carrier access services. Operations are subject to regulation by the Illinois Commerce Commission and the Federal Communications Commission.
	Consolidated Communications Operator Services provides both live and automated local and long distance assistance as well as national directory assistance on a wholesale and retail basis. CCOS also provides specialized message center services and corporate and governmental attendant services.
	McLeodUSA Public Services, Inc. primarily offers managed local and long distance automated calling from county jails and state prison facilities in Illinois. These inmate services include fraud control, customer service, call management, and technical field support.
	Consolidated Communications Business Systems sells and installs telecommunications equipment, and performs cabling, wiring, and equipment maintenance services to business and residential customers within the ICTC service territory and to business customers in adjacent markets.
	Consolidated Market Response, Inc. is a full service teleservices business providing inbound and outbound telemarketing and backend fulfillment services to corporate clients from diverse industry segments.
	Consolidated Communications Mobile Services provides one-way messaging service for both personal and business accounts. The basic paging service has been supplemented with complimentary mobile information services including Internet, 800 service, info text and voice mail.

2.	Basis of Preparation

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3.	Summary of Significant Accounting Policies

	Regulatory Accounting

	Use of Estimates

	Cash Equivalents

	Accounts Receivable and Allowance for Doubtful Accounts

	Inventory

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	Investments

	Intangible Assets and Goodwill

	Property, Plant, and Equipment

		Years
Buildings			15-20
Telecommunications networks			5-15
Furniture, fixtures, and equipment			3-10

	Revenue Recognition

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	Advertising Costs

	Financial Instruments

	Deferred Income Taxes

	Stock-Based Compensation

	Recent Accounting Pronouncements

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4.	Affiliated Transactions

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5.	Goodwill and Intangible Assets

6.	Income Taxes

Current:
	Federal		$	8,628
	State			1,240
Total Current				9,868
Deferred:
	Federal			(4,297	)
	State			(636	)
Total Deferred				(4,933	)
	Investment tax credit amortized			(265	)
Total income tax expense			$	4,670

Statutory federal income tax rate			34.0	%
State income taxes, net of federal benefit			4.8
Other			(2.0	)
Effective overall income tax rate			36.8	%

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Current deferred income tax assets:
	Accrued vacation		$	582
	Reserve for uncollectible accounts			541
	Accrued expenses			365
	Deferred revenue and regulatory reserves			1,426
Total current deferred income tax assets				2,914
Noncurrent deferred income tax assets:
	Pension and post retirement expense			3,771
	Other			320
Total noncurrent deferred income tax assets				4,091
Noncurrent deferred income tax liabilities:
	Depreciable property			(11,740	)
	Intangibles			(2,685	)
	Regulatory liabilities			(481	)
Total noncurrent deferred income tax liability				(14,906	)
Net noncurrent deferred income tax liability				(10,815	)
Total net deferred tax liability			$	(7,401	)

7.	Pension Costs and Other Postretirement Benefits

Projected benefit obligation at beginning of period		$	47,379
Service cost			807
Interest cost			3,240
Benefits paid			(3,374	)
Actuarial loss			1,585
Projected benefit obligation at end of period		$	49,637

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Fair value of plan assets at beginning of period		$	50,769
Actual return on plan assets			(1,949	)
Benefits paid			(3,374	)
Fair value of plan assets at end of period		$	45,446

Funded status		$	(4,191	)
Unrecognized net actuarial gain			(220	)
Unrecognized prior service cost			2,536
Net amount recognized at period-end		$	(1,875	)

Service cost		$	807
Interest cost			3,240
Expected return on plan assets			(3,940	)
Amortization of prior service costs			482
Recognized actuarial gain			(223	)
Net periodic benefit cost		$	366

Benefit obligation at beginning of period		$	7,710
Service cost			143
Interest cost			520
Benefits paid			(393	)
Actuarial gain			(14	)
Benefit obligation at end of period		$	7,966

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Fair value of plan assets at beginning of period		$	—
Employer contributions			393
Benefits paid			(393	)
Fair value of plan assets at end of period		$	—

Funded status		$	(7,966	)
Contributions made after measurement date and before fiscal year end			111
Unrecognized net actuarial gain			(1,018	)
Unrecognized transition obligation			2,796
Unrecognized prior service cost			(1,519	)
Net amount recognized at period-end		$	(7,596	)

Service cost		$	143
Interest cost			520
Amortization of prior service costs			(174	)
Amortization of transitional obligation			388
Recognized actuarial gain			(26	)
Net periodic benefit cost		$	851

8.	Employee Benefit Plan

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9.	Long-Term Debt

ICTC First mortgage bonds:
	Series K, 8.620%, due September 1, 2022		$	10,000
	Series L, 7.050%, due October 1, 2013			10,000
CMR mortgage bond				593
			$	20,593

10.	Environmental Remediation Liabilities

11.	Operating Leases

		Lease
Year		Payments
2003		$	675
2004			457
2005			419
2006			364
2007			312
2008 and thereafter			815
Total		$	3,042

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12.	Capital Leases

13.	Business Segments

		2002
		Illinois				Other
		Telephone				Illinois
		Operations				Operations				Total
Operating revenues		$	76,745			$	33,159			$	109,904
Cost of services and products			17,980				17,840				35,820
			58,765				15,319				74,084
Selling, general and administrative expenses			28,967				6,649				35,616
Depreciation and amortization			20,074				4,470				24,544
Net operating income		$	9,724			$	4,200			$	13,924
Total assets		$	222,380			$	14,023			$	236,403
Goodwill			81,059				20,265				101,324
Capital expenditures			12,005				2,132				14,137

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14.	Quarterly Financial Information (unaudited)

		2002
		March 31				June 30				September 30				December 31
Operating revenues		$	27,155			$	27,998			$	27,610			$	27,141
Cost of services and products			8,837				9,188				8,518				9,277
			18,318				18,810				19,092				17,864
Selling, general and administrative expenses			8,733				7,782				8,752				10,349
Depreciation and amortization			6,135				6,136				6,136				6,137
Net operating income			3,450				4,892				4,204				1,378
Other expenses			(252	)			(305	)			(320	)			(341	)
Income taxes			1,183				2,127				1,639				(279	)
Net income		$	2,015			$	2,460			$	2,245			$	1,316

15.	Subsequent Event

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	/s/ Ernst & Young, LLP

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			December 31, 2004
ASSETS
Current assets:
	Cash and cash equivalents		$	35,358
	Accounts receivable, net of allowance of $945			14,946
	Inventories			1,393
	Deferred income taxes			1,680
	Prepaid expenses and other current assets			3,202
Total current assets				56,579
Property, plant and equipment, net				259,183
Intangibles and other assets:
	Investments			42,554
	Goodwill			228,792
	Customer lists, net			102,264
	Deferred financing costs and other assets			12,820
Total assets			$	702,192
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
	Current portion of long-term debt		$	25,034
	Accounts payable			9,738
	Advance billings and customer deposits			3,456
	Accrued expenses			21,905
Total current liabilities				60,133
Long-term debt less current maturities				362,919
Deferred income taxes				68,892
Pension and postretirement benefit obligations				49,616
Other liabilities				1,924
Total liabilities				543,484
Minority interests				2,291
Shareholder’s equity
	Common shares, $0.01 par value, 1,000 shares authorized, issued and outstanding			—
	Paid in capital			152,458
	Retained earnings			3,992
	Accumulated other comprehensive loss			(33	)
Total shareholder’s equity				156,417
Total liabilities and shareholder’s equity			$	702,192

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			For the Period from
			April 14, 2004
			through
			December 31, 2004
Revenues			$	133,075
Operating expenses:
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			34,374
	Selling, general and administrative expenses			42,398
	Depreciation and amortization			32,175
Income from operations				24,128
Other income (expense):
	Interest income			187
	Interest expense			(20,220	)
	Partnership income			1,288
	Dividend income			2,187
	Minority interest			(327	)
	Other, net			(132	)
Income before income taxes				7,111
Income tax expense				3,119
Net income			$	3,992

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		For the Period from April 14, 2004 through December 31, 2004
																		Accumulated
		Common Shares																Other
														Retained				Comprehensive								Comprehensive
		Shares				Amount				Paid in Capital				Earnings				Income (Loss)				Total				Income
Net income			—				—				—				3,992				—				3,992			$	3,992
Capital contributions			—				—				152,458				—				—				152,458
Minimum pension liability, net of ($174) of tax			—				—				—				—				(283	)			(283	)			(283	)
Unrealized loss on marketable securities, net of ($33) of tax			—				—				—				—				(49	)			(49	)			(49	)
Change in fair value of cash flow hedges, net $200 of tax			—				—				—				—				299				299				299
Balance, December 31, 2004			1,000			$	—			$	152,458			$	3,992			$	(33	)		$	156,417			$	3,959

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					For the Period from
					April 14, 2004
					through
					December 31, 2004
Operating Activities
	Net income				$	3,992
	Adjustments to reconcile net income to cash provided by operating activities:
		Depreciation and amortization				32,175
		Provision for bad debt losses				1,157
		Deferred income tax				2,295
		Partnership income				(1,288	)
		Minority interest in net income of subsidiary				327
		Amortization of deferred financing costs				1,292
	Changes in operating assets and liabilities:
		Accounts receivable				1,783
		Inventories				(390	)
		Other assets				2,310
		Accounts payable				(212	)
		Accrued expenses and other liabilities				5,940
			Net cash provided by operating activities			49,381
Investing Activities
		Capital expenditures				(16,671	)
		Acquisition, net of cash acquired				(524,090	)
			Net cash used in investing activities			(540,761	)
Financing Activities
		Capital contributions from investors				152,458
		Proceeds from long-term obligations				392,000
		Payments made on long-term obligations				(6,894	)
		Payment of deferred financing costs				(10,826	)
			Net cash provided by financing activities			526,738
Net increase in cash and cash equivalents						35,358
Cash and cash equivalents at beginning of period						—
Cash and cash equivalents at end of period					$	35,358
Supplemental cash flow information
		Interest paid			$	15,134
		Income taxes paid			$	1,495

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1.	Description of Business

2.	Summary of Significant Accounting Policies

	Principles of Consolidation

	Use of Estimates

	Regulatory Accounting

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	Cash Equivalents

	Investments

	Accounts Receivable and Allowance for Doubtful Accounts

	Inventory

	Goodwill and Other Intangible Assets

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	Property, Plant, and Equipment

		Years
Buildings			15-35
Network and outside plant facilities			5-30
Furniture, fixtures, and equipment			3-17

	Revenue Recognition

	Operating Costs

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	Advertising Costs

	Income Taxes

	Financial Instruments and Derivatives

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	Recent Accounting Pronouncements

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3.	Acquisition

Current assets		$	27,478
Property, plant and equipment			268,706
Customer list			108,200
Goodwill			228,792
Other assets			43,291
Liabilities assumed			(152,377	)
Net purchase price		$	524,090

		Year Ended December 31
		2004				2003
Total revenues		$	186,930			$	194,818
Income from operations		$	26,680			$	8,453
Pro forma net income (loss)		$	(82	)		$	(20,338	)

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4.	Prepaids and Other Current Assets

Prepaid expenses		$	2,121
Other current assets			1,081
		$	3,202

5.	Property, Plant and Equipment

Property, plant and equipment:
	Land and buildings		$	37,869
	Network and outside plant facilities			415,166
	Furniture, fixtures and equipment			41,429
	Work in process			4,970
				499,434
	Less: accumulated depreciation			(240,251	)
Net property, plant and equipment			$	259,183

6.	Investments

Cash surrender value of life insurance policies			$	1,708
Cost method investments:
	GTE Mobilnet of South Texas Limited Partnership (2.34% owned)			21,450
	CoBank, ACB stock			1,568
	Rural Telephone Bank stock			5,921
Equity method investments
	GTE Mobilnet of Texas RSA #17 Limited Partnership (17.02% owned)			11,759
	Fort Bend Fibernet Limited Partnership (39.06% owned)			148
			$	42,554

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Year ended December 31, 2004:
Revenues		$	35,203
Operating income			9,636
Income before income taxes			10,116
Net income or loss			10,116

As of December 31, 2004:
Current assets			6,443
Non-current assets			22,494
Current liabilities			1,733
Non-current liabilities			—
Partnership equity			27,204

7.	Minority Interest

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8.	Goodwill and Other Intangible Assets

Gross carrying amount		$	108,200
Less: accumulated amortization			(5,936	)
Net carrying amount		$	102,264

9.	Affiliated Transactions

10.	Income Taxes

Current:
	Federal		$	138
	State			654
				792
Deferred:
	Federal			2,461
	State			(134	)
				2,327
Income tax expense			$	3,119

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Statutory federal income tax rate			35.0%
State income taxes, net of federal benefit			7.3%
Other			1.6%
			43.9%

Current deferred tax assets:
	Reserve for uncollectible accounts		$	359
	Accrued vacation pay deducted when paid			913
	Accrued expenses and deferred revenue			408
				1,680
Noncurrent deferred tax assets:
	Net operating loss carryforwards			15,851
	Pension and postretirement obligations			18,704
	Minimum tax credit carryforward			806
	Valuation allowance			(17,136	)
				18,225
Noncurrent deferred tax liabilities:
	Partnership investment			(6,898	)
	Property, plant and equipment			(78,587	)
	Basis in investment			(1,632	)
				(87,117	)
Net non-current deferred tax liabilities				(68,892	)
Net deferred income tax liabilities			$	(67,212	)

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11.	Accrued Expenses

Salaries and employee benefits		$	6,106
Taxes payable			6,356
Accrued interest			4,546
Other accrued expenses			4,897
		$	21,905

12.	Pension Costs and Other Postretirement Benefits

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		Pension				Other
		Benefits				Benefits
Change in benefit obligation
Projected benefit obligation, beginning of period		$	—			$	—
TXUCV acquisition			60,984				26,629
Service cost			1,987				803
Interest cost			2,668				1,066
Plan participant contributions			—				61
Plan amendments			—				(2,652	)
Plan curtailment			—				(772	)
Benefits paid			(4,038	)			(856	)
Administrative expenses paid			(410	)			—
Actuarial (gain)/ loss			(479	)			1,760
Projected benefit obligation, end of period		$	60,712			$	26,039
Accumulated benefit obligation		$	53,062
Change in plan assets
Fair value of plan assets, beginning of period		$	—			$	—
TXUCV acquisition			40,633				—
Actual return on plan assets			2,002				—
Employer contributions			2,971				795
Plan participant contributions			—				61
Administrative expenses paid			(410	)			—
Benefits paid			(4,038	)			(856	)
Fair value of plan assets, end of period		$	41,158			$	—
Funded status
Funded status		$	(19,554	)		$	(26,039	)
Unrecognized prior service cost			—				—
Unrecognized net actuarial (gain) loss			25				(883	)
Accrued benefit cost		$	(19,529	)		$	(26,922	)

		Pension				Other
		Benefits				Benefits
Accrued benefit liability		$	(19,986	)		$	(26,922	)
Accumulated other comprehensive income			457				—
Net amount recognized		$	(19,529	)		$	(26,922	)

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Equity securities			57.1%
Debt securities			39.0%
Other			3.9%
			100.0%

		Pension				Other
		Benefits				Benefits
2005		$	2,215			$	983
2006			2,383				1,002
2007			2,619				1,111
2008			2,810				1,165
2009			3,009				1,276
2010 through 2014			20,067				7,640

		Pension				Other
		Benefits				Benefits
Service cost		$	1,987			$	803
Interest cost			2,668				1,066
Expected return on plan assets			(2,507	)			—
Other, net			(2	)			(10	)
Net periodic benefit cost		$	2,146			$	1,859

		Pension				Other
		Benefits				Benefits
Discount rate			6.0%				6.0%
Compensation rate increase			3.5%				—
Initial healthcare cost trend rate			—				10.0%
Ultimate healthcare cost trend rate			—				5.0%
Year ultimate trend rate is reached			—				2010

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		1% Decrease				1% Increase
Effect on 2004 service and interest costs		$	(408	)		$	531
Effect on accumulated postretirement benefit obligations as of December 31, 2004			(3,113	)			3,926

13.	Employee 401k Benefit Plans and Deferred Compensation Agreements

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14.	Long-Term Debt

Senior Secured Credit Facility
	Revolving loan		$	—
	Term loan A			68,065
	Term loan B			—
	Term loan C			193,700
Senior notes				125,000
Capital leases				1,188
				387,953
Less: current portion				(25,034	)
			$	362,919

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Calendar year 2005			$	25,034
Calendar year 2006				13,579
Calendar year 2007				13,851
Calendar year 2008				15,966
Calendar year 2009				19,802
	Thereafter			299,721
			$	387,953

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15.	Commitments and Contingencies

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	DELOITTE & TOUCHE LLP

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						April 13,				December 31,
						2004				2003				2002
						(Dollars in thousands)
ASSETS
CURRENT ASSETS
	Cash and Cash Equivalents					$	9,897			$	11,464			$	12,427
	Accounts Receivable — net of allowance of $1,316 in 2004, $1,501 in 2003 and $5,021 in 2002						17,555				15,778				18,825
	Short-Term Investments						117				125				125
	Prepaid Federal Income Taxes						45				—				6,615
	Materials and Supplies						1,003				1,102				2,379
	Deferred Income Taxes						3,974				2,527				34,145
	Assets Held for Sale						—				—				8,030
	Other Current Assets						4,467				3,519				3,814
		TOTAL CURRENT ASSETS					37,058				34,515				86,360
NONCURRENT ASSETS
	Investments						36,862				36,118				35,260
	Goodwill						304,336				304,336				317,536
	Prepaid Pension Cost						—				997				3,669
	Deferred Income Taxes						16,033				39,525				15,709
	Other						831				961				771
		TOTAL NONCURRENT ASSETS					358,062				381,937				372,945
PROPERTY, PLANT & EQUIPMENT
	Plant in Service						341,238				333,607				326,243
	Plant Under Construction						7,147				8,595				5,249
				TOTAL PROPERTY, PLANT & EQUIPMENT			348,385				342,202				331,492
	Less: Accumulated Depreciation						118,343				110,795				90,700
			TOTAL PROPERTY, PLANT & EQUIPMENT-NET				230,042				231,407				240,792
TOTAL ASSETS						$	625,162			$	647,859			$	700,097
LIABILITIES AND SHAREHOLDER’S EQUITY
CURRENT LIABILITIES
	Accounts Payable					$	7,712			$	9,223			$	14,043
	Accounts Payable-Affiliates						35				2,314				352
	Advance Billing and Payments						4,163				2,954				3,438
	Customer Deposits						752				739				788
	Current Maturities of Long-Term Debt						2,847				98,247				2,999
	Accrued Expenses						12,105				18,518				18,234
	Liabilities Related to Assets Held for Sale						—				—				2,661
	Other Current Liabilities						3,485				4,594				4,078
		TOTAL CURRENT LIABILITIES					31,099				136,589				46,593
LONG-TERM DEBT, LESS CURRENT MATURITIES							—				2,136				163,203
OTHER LIABILITIES AND DEFERRED CREDITS
	Accrued Postretirement and Pension Benefits						31,173				27,669				28,072
	Deferred Income Taxes						33,513				54,486				39,458
	Other Deferred Credits and Liabilities						5,868				5,856				5,145
	Regulatory Liabilities						8,283				8,405				8,807
				TOTAL OTHER LIABILITIES AND DEFERRED CREDITS			78,837				96,416				81,482
TOTAL LIABILITIES							109,936				235,141				291,278
MINORITY INTEREST							1,964				1,858				1,224
SHAREHOLDER’S EQUITY
	Common Stock-No par value, 1,000 shares authorized, 1,000 shares issued and outstanding						—				—				—
	Paid-In Capital						636,868				534,749				530,459
	Accumulated Deficit						(117,463	)			(119,246	)			(116,905	)
	Accumulated Other Comprehensive Loss						(6,143	)			(4,643	)			(5,959	)
		TOTAL SHAREHOLDER’S EQUITY					513,262				410,860				407,595
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY						$	625,162			$	647,859			$	700,097

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				Period from				Year Ended December 31,
				January 1, 2004
				to April 13, 2004				2003				2002				2001
				(Dollars in thousands)
OPERATING REVENUES				$	53,855			$	194,818			$	214,709			$	207,451
OPERATING EXPENSES
	Network Operating Costs (exclusive of depreciation and amortization shown separately below)				15,296				58,415				76,891				95,663
	Selling, General and Administrative				24,138				75,365				109,401				88,671
	Depreciation and Amortization				8,124				32,875				40,990				50,177
	Restructuring, Asset Impairment and Other Charges				(12	)			248				101,390				—
	Goodwill Impairment Charges				—				13,200				18,000				—
		TOTAL OPERATING EXPENSES			47,546				180,103				346,672				234,511
OPERATING INCOME (LOSS)					6,309				14,715				(131,963	)			(27,060	)
OTHER INCOME (EXPENSE):
	Pre-payment Penalty on Extinguishment of Debt				(1,914	)			—				—
	Interest Expense				(1,275	)			(5,422	)			(7,669	)			(11,625	)
	(Loss)/ Gain on Sale of Property and Investments				(19	)			(101	)			558				6,158
	Allowance for Funds Used During Construction				31				81				179				572
	Partnership Income				1,174				2,693				2,332				3,151
	Minority Interest				(106	)			(872	)			8,048				507
	Other				56				(980	)			489				101
		TOTAL (EXPENSE) OTHER INCOME			(2,053	)			(4,601	)			3,937				(1,136	)
INCOME (LOSS) BEFORE INCOME TAXES					4,256				10,114				(128,026	)			(28,196	)
	Income Tax Expense (Benefit)				2,473				12,455				(38,261	)			(6,304	)
NET INCOME (LOSS)					1,783				(2,341	)			(89,765	)			(21,892	)
OTHER COMPREHENSIVE INCOME (LOSS)
	Minimum Pension Liability Adjustment, Net of Tax				(1,494	)			1,316				(6,028	)			—
	Unrealized (Loss) Gain on Marketable Securities, Net of Tax				(6	)			—				(136	)			169
COMPREHENSIVE INCOME (LOSS)				$	283			$	(1,025	)		$	(95,929	)		$	(21,723	)

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																			Accumulated
			Common Stock																Other
											Paid In				Accumulated				Comprehensive
			Shares				Amount				Capital				Deficit				Loss
			(Dollars in thousands)
Balance, January 1, 2001				1,000				—			$	495,701			$	(5,248	)		$	36
	Net Loss															(21,892	)
	Capital Contributions											27,784
	Unrecognized Gain on Marketable Securities, Net of Tax																			169
Balance, December 31, 2001				1,000				—				523,485				(27,140	)			205
	Net Loss															(89,765	)
	Capital Contributions											6,974
	Minimum Pension Liability Adjustment, Net of Tax																			(6,028	)
	Unrealized Loss on Marketable Securities, Net of Tax																			(136	)
Balance, December 31, 2002				1,000				—				530,459				(116,905	)			(5,959	)
	Net Loss															(2,341	)
	Capital Contributions											4,290
	Minimum Pension Liability Adjustment, Net of Tax																			1,316
Balance, December 31, 2003				1,000				—				534,749				(119,246	)			(4,643	)
	Net Income															1,783
	Capital Contributions											102,119
	Minimum Pension Liability Adjustment, Net of Tax																			(1,494	)
	Unrealized Loss on Marketable Securities, Net of Tax																			(6	)
Balance, April 13, 2004				1,000				—			$	636,868			$	(117,463	)		$	(6,143	)

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				Period from				Year Ended December 31,
				January 1, 2004
				to April 13, 2004				2003				2002				2001
				(Dollars in thousands)
OPERATING ACTIVITIES
Net Income (Loss)				$	1,783			$	(2,341	)		$	(89,765	)		$	(21,892	)
Adjustments to Reconcile Net Income (Loss) to Cash
	Provided by Operating Activities:
	Pre-payment Penalty on Extinguishment of Debt				1,914				—				—				—
	Deferred Income Tax				950				22,428				(38,908	)			(9,368	)
	Depreciation and Amortization				8,124				32,875				40,990				50,177
	Provision for Postretirement Benefits				3,007				3,583				9,160				838
	Loss/(Gain) on Disposition of Property and Investments				19				101				(558	)			(6,158	)
	Restructuring, Asset Impairment and Other Charges				(12	)			248				101,390				—
	Goodwill Impairment				—				13,200				18,000				—
	Partnership Income				(1,174	)			(2,693	)			(2,332	)			(3,151	)
	Allowance for Funds Used During Construction				(31	)			(81	)			(179	)			(572	)
	Minority Interest				106				872				(8,048	)			(507	)
	Provision for Bad Debt Losses				542				(804	)			10,200				3,981
Changes in Operating Assets and Liabilities:
	Accounts Receivable				(2,319	)			3,851				1,349				(7,287	)
	Materials and Supplies				99				1,277				2,520				3,048
	Prepaid Federal Income Tax				(45	)			6,615				(4,664	)			12,299
	Other Assets				(1,164	)			105				(2,075	)			2,688
	Accounts Payable				(1,051	)			(2,858	)			(15,003	)			(14,520	)
	Accrued Expenses and Other Liabilities				(5,429	)			(1,323	)			12,637				(2,772	)
		Net Cash Provided by Operating Activities			5,319				75,055				34,714				6,804
INVESTING ACTIVITIES
	Capital Expenditures				(6,735	)			(18,189	)			(27,374	)			(66,976	)
	Business Assets Purchased																(2,467	)
	Proceeds From Sale-Leaseback Transactions				—				—				4,814				—
	Proceeds From Investments				432				1,837				998				188
	Proceeds From Sale of Assets				—				2,101				290				9,309
		Net Cash Used in Investing Activities			(6,303	)			(14,251	)			(21,272	)			(59,946	)
FINANCING ACTIVITIES
	Other Paid-In Capital				—				—				—				2,479
	Proceeds From TXU Investment Company				—				4,290				6,974				27,784
	Proceeds From Long-Term Obligations				18,000				5,895				23,319				40,620
	Minority Interest Equity Distribution				—				(238	)			—				—
	Pre-payment Penalty on Extinguishment of Debt				(1,914	)			—				—
	Payments Made on Long-Term Obligations				(16,669	)			(71,714	)			(34,724	)			(24,619	)
		Net Cash (Used in) Provided by Financing Activities			(583	)			(61,767	)			(4,431	)			46,264
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS					(1,567	)			(963	)			9,011				(6,878	)
CASH AND CASH EQUIVALENTS — BEGINNING					11,464				12,427				3,416				10,294
CASH AND CASH EQUIVALENTS — ENDING				$	9,897			$	11,464			$	12,427			$	3,416
SUPPLEMENTAL CASH FLOW INFORMATION:
	Debt for Equity Swap with TXU Investment Co.			$	102,119			$	—			$	—			$	—
	Interest Paid			$	1,045			$	6,045			$	7,500			$	11,820
	Taxes Paid (Refunds) Received			$	73			$	(16,329	)		$	(153	)		$	(1,333	)
	Capital Leases			$	—			$	—			$	4,761			$	—

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	•	GTE Mobilnet of South Texas, which serves the greater Houston metropolitan area. TXUCV owns 2% of the equity of this partnership.
	•	GTE Mobilnet of Texas RSA #17, which serves rural areas in and around Conroe, Texas. TXUCV owns 17% of the equity of this partnership.

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		April 13,				December 31,
														Estimated
		2004				2003				2002				Useful Life
		(Dollars in thousands)
Land		$	4,228			$	4,280			$	4,433
Buildings			25,209				24,922				24,938				15-35 years
Telephone Plant			264,352				258,000				242,934				5-30 years
Furniture and Office Equipment			41,455				40,327				45,420				5-17 years
Automotive and Other Equipment			5,994				6,078				8,518				3-7 years
Construction in Progress			7,147				8,595				5,249
			348,385				342,202				331,492
Less: Accumulated Depreciation			118,343				110,795				90,700
		$	230,042			$	231,407			$	240,792

			April 13,				December 31,
			2004				2003				2002
			(Dollars in thousands)
TXU Corp. Revolving Credit Facility			$	—			$	80,867			$	144,066
CoBank Mortgage Notes				—				16,429				18,071
Capital Leases				2,847				3,087				4,009
Debentures Payable				—				—				56
				2,847				100,383				166,202
Less: Current Maturities				2,847				98,247				2,999
	TOTAL LONG-TERM DEBT		$	—			$	2,136			$	163,203

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2004		$	711
2005			952
2006			1,010
2007			174
TOTAL		$	2,847

			Period from				Year Ended December 31,
			January 1, 2004
			to April 13, 2004				2003				2002				2001
			(Dollars in thousands)
Current:
	U.S. Federal		$	28			$	(9,704	)		$	(3,018	)		$	(1,951	)
	State			455				324				(214	)			83
Deferred:
	U.S. Federal			1,833				21,435				(31,819	)			(3,610	)
	State			157				610				(2,766	)			(311	)
Amortization of Investment Tax Credit				—				(210	)			(231	)			(301	)
Amortization of Excess Deferred Taxes				—				—				(213	)			(214	)
INCOME TAX EXPENSE (BENEFIT)			$	2,473			$	12,455			$	(38,261	)		$	(6,304	)

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		Period from				Year Ended December 31,
		January 1, 2004
		to April 13, 2004				2003				2002				2001
		(Dollars in thousands)
Income Tax Expense (Benefit) at U.S. Federal Statutory Rate		$	1,488			$	3,540			$	(44,809	)		$	(10,101	)
State Income Tax Expense (Benefit)			239				934				(3,841	)			(355	)
State Income Tax Refunds			—				—				(866	)			—
Goodwill Amortization			—				—				—				4,752
Goodwill Impairment			(1	)			4,704				6,300				—
Minority Interest			37				305				(2,817	)			(177	)
Amortization of Investment Tax Credit			—				(210	)			(231	)			(301	)
Amortization of Excess Deferred Taxes			—				—				(214	)			(214	)
Increase in Valuation Reserve			157				3,084				9,080				(270	)
Other			480				33				(929	)			—
Other Permanent Differences			73				65				66				362
INCOME TAX EXPENSE (BENEFIT)		$	2,473			$	12,455			$	(38,261	)		$	(6,304	)

			April 13,				December 31,
			2004				2003				2002
			(Dollars in thousands)
Deferred Tax Assets
	Net Operating Losses		$	8,649			$	9,625			$	19,437
	Allowance for Uncollectible Accounts Receivable			500				570				1,831
	Accrued Vacation			2,127				873				939
	Postretirement Benefits			14,833				13,164				12,496
	Deferred Franchise Tax			4,183				3,918				1,666
	Prior Year Minimum Tax Credit			699				527				—
	Other			1,347				1,084				129
TOTAL DEFERRED ASSETS			$	32,338			$	29,761			$	67,873
Deferred Tax Liabilities
	Franchise Tax		$	—			$	—			$	(3,600	)
	Partnership Investment			(2,212	)			(1,698	)			(1,151	)
	Basis in Investment			(1,632	)			(1,632	)			(1,632	)
	Depreciation			(29,669	)			(26,691	)			(42,004	)
TOTAL DEFERRED LIABILITIES				(33,513	)			(30,021	)			(48,387	)
VALUATION ALLOWANCE				(12,331	)			(12,174	)			(9,090	)
NET DEFERRED TAX (LIABILITY) ASSET			$	(13,506	)		$	(12,434	)		$	10,396

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			April 13,				December 31,
			2004				2003				2002
			(Dollars in thousands)
Current Deferred Income Tax Asset			$	3,974			$	2,527			$	34,145
Noncurrent Deferred Income Tax Asset				16,033				39,525				15,709
Noncurrent Deferred Income Tax Liability				(33,513	)			(54,486	)			(39,458	)
	NET DEFERRED TAX LIABILITY (ASSET)		$	(13,506	)		$	(12,434	)		$	10,396

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		Pension Benefits												Other Benefits
		April 13,				Dec. 31,								April 13,				Dec. 31,
		2004				2003				2002				2004				2003				2002
		(Dollars in thousands)
Change in benefit obligation
Benefit obligation at beginning of period		$	56,966			$	51,534			$	45,838			$	24,320			$	18,701			$	14,240
Service cost			928				2,973				3,321				400				1,205				1,129
Interest cost			1,125				3,480				3,232				472				1,486				1,002
Plan participants’ contributions			—				—				—				47				94				97
Amendments			—				—				407				—				—				—
Benefit vesting due to partial plan terminination			2,105				—				—				—				—				—
Actuarial loss			736				4,624				3,672				1,701				5,743				4,561
Curtailment			—				(3,250	)			(2,388	)			—				(1,933	)			(1,606	)
Assumption change			—				62				5				—				—				—
Benefits paid			(768	)			(2,115	)			(2,191	)			(311	)			(976	)			(722	)
Administrative expenses paid			(108	)			(342	)			(363	)			—				—				—
Benefit obligation at end of period			60,984				56,966				51,533				26,629				24,320				18,701
Change in plan assets
Fair value of plan assets at beginning of period			40,399				35,468				41,397				—				—				—
Actual return on plan assets			1,105				5,667				(3,375	)			—				—				—
Employer contribution			—				1,705				—				264				882				626
Plan participants’ contributions			—				—				—				47				94				97
Benefits paid			(763	)			(2,099	)			(2,191	)			(311	)			(976	)			(723	)
Administrative expenses paid			(108	)			(342	)			(363	)			—				—				—
Fair value of plan assets at end of period			40,633				40,399				35,468				—				—				—
Funded status			(20,351	)			(16,567	)			(16,065	)			(26,629	)			(24,320	)			(18,701	)
Unrecognized net actuarial loss			19,687				17,255				19,291				9,251				7,665				4,153
Unrecognized prior service cost			302				309				443				—				—				—
Net amount recognized		$	(362	)		$	997			$	3,669			$	(17,378	)		$	(16,655	)		$	(14,548	)

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		Pension Benefits												Other Benefits
		April 13,				Dec. 31,								April 13,				Dec. 31,
		2004				2003				2002				2004				2003				2002
										(Dollars in thousands)
(Accrued) Prepaid benefit cost		$	(362	)		$	997			$	3,669			$	—			$	—			$	—
Accrued benefit liability			(10,324	)			(7,921	)			(10,176	)			(17,378	)			(16,655	)			(14,548	)
Intangible assets			311				318				453				—				—				—
Accumulated other comprehensive income			10,013				7,603				9,723				—				—				—
Net amount recognized		$	(362	)		$	997			$	3,669			$	(17,378	)		$	(16,655	)		$	(14,548	)

		April 13,				Dec. 31,
		2004				2003				2002
Projected benefit obligation		$	60,984			$	56,966			$	51,533
Accumulated benefit obligation			51,197				47,323				41,975
Fair value of plan assets			40,633				40,399				35,468

		Pension Benefits												Other Benefits
		Period from												Period from
		Jan. 1, 2004												Jan. 1, 2004
		to April 13,				Dec. 31,								to April 13,				Dec. 31,
		2004				2003				2002				2004				2003				2002
										(Dollars in thousands)
Service cost		$	928			$	2,973			$	3,321			$	400			$	1,205			$	1,129
Interest cost			1,125				3,480				3,232				472				1,486				1,002
Expected return on plan assets			(994	)			(3,066	)			(3,478	)			—				—				—
Amortization of prior service cost			7				28				41				—				—				—
Net actuarial loss recognition			298				873				289				116				298				—
Net periodic benefit cost		$	1,364			$	4,288			$	3,405			$	988			$	2,989			$	2,131

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		Pension Benefits												Other Benefits
		April 13,				Dec. 31,								April 13,				Dec. 31,
		2004				2003				2002				2004				2003				2002
Discount rate			6.25	%			6.25	%			6.75	%			6.25	%			6.25	%			6.75	%
Rate of compensation increase			4.30	%			4.30	%			4.30	%			—				—				—

		Pension Benefits												Other Benefits
		April 13,				Dec. 31,								April 13,				Dec. 31,
		2004				2003				2002				2004				2003				2002
Discount rate			6.25	%			6.75%/6.50%*				7.25	%			6.25	%			6.75	%			7.25	%
Expected long-term return on plan assets			8.50	%			8.50%				8.50	%			—				—				—
Rate of compensation increase			4.30	%			4.30%				4.30	%			—				—				—

*	6.75% from 1/1/2003 — 8/1/2003 6.5% from 8/1/2003 — 12/31/2004 for qualified plan only

		April 13,				Dec. 31,
		2004				2003				2002
Health care cost trend rate assumed for next year			10.00	%			10.00	%			11.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)			5.00	%			5.00	%			5.00	%
Year that the rate reaches the ultimate trend rate			2009				2009				2009

		1-Percentage-				1-Percentage-
		Point Increase				Point Decrease
		(Dollars in thousands)
Effect on total of service and interest cost		$	176			$	(135	)
Effect on postretirement benefit obligation		$	4,061			$	(3,215	)

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			Plan Assets
			April 13,				Dec. 31,
			2004				2003				2002
Asset Category
Equity securities				55%				55%				49%
Debt securities				40%				40%				47%
Other				5%				5%				4%
	Total			100%				100%				100%

		Pension				Other
		Benefits				Benefits
		(Dollars in thousands)
4/14 - 12/31/2004		$	1,452			$	647
2005			2,182				983
2006			2,353				1,095
2007			2,594				1,139
2008			2,790				1,239
Years 2009-2013			18,759				7,357

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			Fiber Optic
As of April 13, 2004			Systems
			(Dollars in
			thousands)
4/14 - 12/31/2004			$	827
	2005			1,131
	2006			1,103
	2007			1,103
	2008			1,103
			$	5,267

		April 13,				December 31,
		2004				2003				2002
		(Dollars in thousands)
Fiber Optic System		$	222			$	222			$	245
Less: Accumulated Depreciation			10				6				—
		$	212			$	216			$	245

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		Cost												Fair Value												Unrealized Gain												Realized Gain
		4/13/04				2003				2002				4/13/04				2003				2002				4/13/04				2003				2002				4/13/04				2003				2002
		(Dollars in thousands)
Other Marketable Equity Securities		$	11			$	11			$	11			$	117			$	125			$	125			$	106			$	114			$	114			$	—			$	—			$	230

		Percentage Owned												Investment Amount
		April 13,				December 31,								April 13,				December 31,
		2004				2003				2002				2004				2003				2002
		(Dollars in thousands)
GTE Mobilnet of South Texas Limited Partnership			2.34	%			2.34	%			2.34	%		$	24,045			$	23,384			$	22,332
GTE Mobilnet of Texas RSA #17 Limited Partnership			17.02	%			17.02	%			17.02	%		$	3,731			$	3,794			$	3,629
Fort Bend Fibernet Limited Partnership			39.06	%			39.06	%			39.06	%		$	187			$	139			$	731

		April 13,				December 31,
		2004				2003				2002
		(Dollars in thousands)
CoBank, ACB Stock		$	1,452			$	1,347			$	1,230
Rural Telephone Bank Stock		$	5,921			$	5,921			$	5,921

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		April 13,				December 31,
		2004				2003				2002				2001
		(Dollars in thousands)
Prepaid to Oncor for Transmission Fees		$	886			$	—			$	—
Accounts Payable — TXU		$	35			$	2,314			$	352
Accounts Payable — Oncor		$	—			$	245			$	117
Long-Term Debt Payable — TXU		$	—			$	80,867			$	144,066
Capital Contributions — Pinnacle		$	102,119			$	4,290			$	6,974			$	27,784
Interest Expense Paid to TXU		$	636			$	3,597			$	5,059			$	8,501
Billings From Oncor for Transmission Line Fees		$	1,139			$	1,458			$	1,324			$	1,184
Billings From TXU for Management Fees		$	2,350			$	2,647			$	3,331			$	5,594
Billings From TXU for Services		$	660			$	1,487			$	2,427			$	1,885

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4/14 - 12/31/2004		$	2,827
2005		$	3,451
2006		$	2,747
2007		$	1,546
2008		$	1,368
Thereafter		$	3,038

		Carrying Amount												Fair Value
		April 13,				Dec. 31,								April 13,				Dec. 31,
		2004				2003				2002				2004				2003				2002
		(Dollars in thousands)
Long-Term Investments For Which It Is Not Practicable To Estimate Fair Value		$	36,862			$	34,585			$	33,884			$	36,862			$	34,585			$	33,884
Debt		$	2,847			$	100,383			$	166,202			$	2,663			$	102,077			$	166,202
Cash Surrender Value of Life Insurance Policies		$	1,526			$	1,533			$	1,376			$	1,526			$	1,533			$	1,376

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	Impairment Charges

		CLEC				Transport				Total
		(Dollars in thousands)
PPE Net Book Value		$	27,512			$	70,831			$	98,343
Estimated Cost of Sale			232				360				592
			27,744				71,191				98,935
Less: Estimated FMV			947				7,083				8,030
Assets Held For Sale Impairment Charges		$	26,797				64,108			$	90,905

	Restructuring Charges

Employee Separations		$	736
Facility Closure Costs			916
Other Contractual Commitments			417
Total		$	2,069

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		2003				2002
Balance, January 1		$	317,536			$	335,536
Less impairment			13,200				18,000
Balance, December 31		$	304,336			$	317,536

		April 13,				December 31,
		2004				2003				2002				2001
		(Dollars in thousands)
Reported Net Income (Loss)		$	1,783			$	(2,341	)		$	(89,765	)		$	(21,892	)
Add: Goodwill Amortization			—				—				—				8,419
Proforma Net Income (Loss)		$	1,783			$	(2,341	)		$	(89,765	)		$	(13,473	)

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	•	Fort Bend Telephone (now known as Consolidated Communications of Fort Bend Company) and TXUCV Telephone (now known as Consolidated Communications of Texas Company), two RLECs, which together serve markets in Conroe, Katy and Lufkin, Texas;
	•	TXUCV’s investments in the cellular partnership (see Note H — Investments in Nonaffiliated Companies);
	•	a telephone directory publishing business; and
	•	a transport services business.

	The purchase price was reduced by $2.8 million, the outstanding principal amount of the capital lease obligations between TXUCV and GECC.
	The purchase price assumed $4.6 million of cash on the balance sheet of TXUCV at closing and was adjustable upward (or downward) by the amount cash on the balance sheet at closing greater than (or less than) $4.6 million.
	The purchase price was also adjustable upward (or downward) to the extent that TXUCV’s working capital was greater than (or less than) negative $2.8 million. At April 13, 2004, TXUCV’s adjusted working capital (as defined in the stock purchase agreement) was negative $3.9 million. As a result of differences in assumed working capital (including cash) and other balances and related actual balances at April 13, 2004, Homebase Acquisition, LLC made an additional cash payment to TXU Corp. of $5.1 million.
	TXUCV was required to repay all of its outstanding indebtedness at or prior to the closing of the transactions, other than capital leases that were subject to the purchase price adjustment described above and affiliate indebtedness relating to contracts that continued following the closing of the transaction. Accordingly, all indebtedness deemed to be affected by the stock purchase agreement was reflected in the current liabilities section of TXUCV’s balance sheet as of December 31, 2003 and subsequently extinguished prior to or as of April 13. 2004. In addition, Pinnacle One was to bear the first $5.1 million of any severance and similar expenses associated with work force reductions occurring between the date of the signing of the stock purchase agreement on January 15, 2004 and the closing of the transactions.
	The stock purchase agreement contained customary representations and warranties, covenants and indemnification provisions. Most representations and warranties expire on the later of the first anniversary of the closing of the transactions and April 30, 2005.
	TXU Corp. agreed to guarantee the payment obligations of Pinnacle One for up to the purchase price and further agreed to guarantee certain tax indemnification obligations up to, and in excess of, the purchase price.
	The stock purchase agreement further provided that certain agreements and arrangements between TXU Corp. and TXUCV and its subsidiaries, and all the related liabilities and obligations of TXUCV and its subsidiaries automatically terminate in their entirety effective as of the closing without any further actions by the parties and thereby be deemed voided, cancelled and discharged in their entirety.

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				2004				2003
ASSETS
CURRENT ASSETS:
	Accounts receivable, net of allowance of $268 and $244			$	2,061			$	1,920
	Unbilled revenue				712				533
	Due from General Partner				3,659				7,513
	Prepaid expenses and other current assets				11				13
		Total current assets			6,443				9,979
PROPERTY, PLANT AND EQUIPMENT — Net					22,494				13,681
TOTAL ASSETS				$	28,937			$	23,660
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES:
	Accounts payable and accrued liabilities			$	1,193			$	1,117
	Advance billings				297				223
	Other current liabilities				243				232
		Total current liabilities			1,733				1,572
COMMITMENTS AND CONTINGENCIES (see Notes 6 and 8)
PARTNERS’ CAPITAL					27,204				22,088
TOTAL LIABILITIES AND PARTNERS’ CAPITAL				$	28,937			$	23,660

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				2004				2003				2002
OPERATING REVENUES:
	Service revenues			$	32,687			$	28,324			$	24,525
	Equipment and other				2,516				2,135				1,594
		Total operating revenues			35,203				30,459				26,119
OPERATING COSTS AND EXPENSES:
Cost of service (excluding depreciation and amortization related to network assets included below)					9,899				8,316				8,724
Cost of equipment					2,490				2,284				1,172
Selling, general and administrative					10,144				9,344				8,389
Depreciation and amortization					3,034				2,886				2,688
Loss on disposal of property, plant and equipment					—				—				3
		Total operating costs and expenses			25,567				22,830				20,976
OPERATING INCOME					9,636				7,629				5,143
OTHER INCOME:
	Interest income, net				480				365				250
	Other, net				—				—				20
		Total other income			480				365				270
NET INCOME				$	10,116			$	7,994			$	5,413
Allocation of Net Income:
	Limited partners			$	8,093			$	6,396			$	4,329
	General partner			$	2,023			$	1,598			$	1,084

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			General
			Partner				Limited Partners
			San				Eastex								Consolidated								San
			Antonio				Telecom				Telecom				Communications				ALLTEL				Antonio				Total
			MTA,				Investments,				Supply,				Transport				Communications				MTA,				Partners’
			L.P.				L.P.				Inc.				Company				Investments, Inc.				L.P.				Capital
BALANCE — January 1, 2002			$	3,536			$	3,009			$	3,009			$	3,009			$	3,009			$	2,109			$	17,681
	Distributions			(400	)			(340	)			(340	)			(340	)			(340	)			(240	)			(2,000	)
	Net income			1,084				921				921				921				921				645				5,413
BALANCE — December 31, 2002				4,220				3,590				3,590				3,590				3,590				2,514				21,094
	Distributions			(1,402	)			(1,191	)			(1,191	)			(1,191	)			(1,191	)			(834	)			(7,000	)
	Net income			1,598				1,361				1,361				1,361				1,361				952				7,994
BALANCE — December 31, 2003				4,416				3,760				3,760				3,760				3,760				2,632				22,088
	Distributions			(1,000	)			(851	)			(851	)			(851	)			(851	)			(596	)			(5,000	)
	Net income			2,023				1,722				1,722				1,722				1,722				1,205				10,116
BALANCE — December 31, 2004			$	5,439			$	4,631			$	4,631			$	4,631			$	4,631			$	3,241			$	27,204

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						2004				2003				2002
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income					$	10,116			$	7,994			$	5,413
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization					3,034				2,886				2,688
		Net loss on disposal of property, plant and equipment					—				—				3
		Provision for losses on accounts receivable					793				496				719
		Changes in certain assets and liabilities:
			Accounts receivable and unbilled revenue				(1,113	)			(125	)			(671	)
			Prepaid expenses and other current assets				2				6				(18	)
			Accounts payable and accrued liabilities				76				(294	)			275
			Advance billings and other current liabilities				85				178				133
				Net cash provided by operating activities			12,993				11,141				8,542
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures, including purchases from affiliates, net						(11,847	)			(2,654	)			(3,225	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Decrease (Increase) in Due from General Partner						3,854				(1,487	)			(3,317	)
	Distributions to partners						(5,000	)			(7,000	)			(2,000	)
				Net cash used in financing activities			(1,146	)			(8,487	)			(5,317	)
CHANGE IN CASH							—				—				—
CASH — Beginning of year							—				—				—
CASH — End of year						$	—			$	—			$	—

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1.	Organization and Management

General Partner:
	San Antonio MTA, L.P.*			20.0000	%
Limited Partners:
	Eastex Telecom Investments, L.P.			17.0213	%
	Telecom Supply, Inc.			17.0213	%
	Consolidated Communications Transport Company			17.0213	%
	ALLTEL Communications Investments, Inc.			17.0213	%
	San Antonio MTA, L.P.*			11.9148	%

*	San Antonio MTA, L.P. (“General Partner”) is a wholly-owned subsidiary of Cellco Partnership (“Cellco”) doing business as Verizon Wireless.

2.	Significant Accounting Policies

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3.	Property, Plant and Equipment

		2004				2003
Buildings and improvements (10-40 years)		$	6,858			$	5,422
Cellular plant equipment (3-15 years)			34,259				24,134
Furniture, fixtures and equipment (2-5 years)			349				55
Leasehold improvements (5-10 years)			226				213
			41,692				29,824
Less accumulated depreciation and amortization			19,198				16,143
Property, plant and equipment, net		$	22,494			$	13,681

4.	Accounts Payable and Accrued Liabilities

		2004				2003
Accounts payable		$	481			$	258
Non-income based taxes and regulatory fees			449				605
Accrued commissions			263				254
Accounts payable and accrued liabilities		$	1,193			$	1,117

5.	Transactions with Affiliates

		2004				2003				2002
Service revenues(a)		$	1			$	(76	)		$	(1	)
Equipment and other revenues(b)			(234	)			(267	)			197
Cost of service(c)			4,137				1,579				984
Equipment costs(d)			349				852				443
Selling, general and administrative expenses(e)			5,430				5,143				5,063

(a)		Service revenues include long distance, paging, data and allocated contra revenues including revenue concessions; excluding roaming revenue, see below.
(b)		Equipment and other revenues include sales of handsets and accessories and allocated contra revenues including equipment concessions and coupon rebates.

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(c)		Cost of service includes cost of telecom, long distance, paging, and handset applications; excluding roaming costs, see below.
(d)		Equipment costs include warehousing, freight, handsets, accessories, and upgrades.
(e)		Selling, general and administrative expenses include office telecom, customer care, billing, salaries, sales and marketing, advertising, and commissions.

6.	Commitments

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Year
2005		$	1,077
2006			985
2007			929
2008			891
2009			827
2010 and thereafter			235
Total minimum payments		$	4,944

7.	Valuation and Qualifying Accounts

			Balance at				Additions				Write-offs				Balance at
			Beginning				Charged to				Net of				End
			of the Year				Operations				Recoveries				of the Year
Accounts Receivable Allowances:
	2004		$	244			$	793			$	(769	)		$	268
	2003			320				496				(572	)			244
	2002			451				719				(850	)			320

8.	Contingencies

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			March 31,
			2005
ASSETS
Current assets:
	Cash and cash equivalents		$	56,538
	Accounts receivable, net of allowance of $2,795			32,148
	Inventories			3,202
	Deferred income taxes			3,278
	Prepaid expenses and other current assets			8,750
Total current assets				103,916
Property, plant and equipment, net				353,060
Intangibles and other assets:
	Investments			43,261
	Goodwill			318,481
	Customer lists, net			146,236
	Tradenames			14,546
	Deferred financing costs and other assets			22,743
Total assets			$	1,002,243
LIABILITIES AND MEMBERS’ DEFICIT
Current liabilities:
	Current portion of long-term debt		$	41,242
	Accounts payable			9,621
	Advance billings and customer deposits			10,466
	Accrued expenses			31,443
Total current liabilities				92,772
Long-term debt less current maturities				583,667
Deferred income taxes				68,192
Pension and postretirement benefit obligations				62,924
Other liabilities				3,170
Total liabilities				810,725
Minority interests				2,457
Redeemable preferred shares:
	Class A, redeemable preferred shares, $1 par value, 182,000 shares authorized, issued and outstanding; liquidation preference of $210,092			210,092
Common members’ deficit:
	Common shares, no par value, 10,000,000 shares, authorized, issued and outstanding			—
	Paid in capital			58
	Accumulated deficit			(23,033	)
	Accumulated other comprehensive income			1,944
Total common members’ deficit				(21,031	)
Total liabilities and members’ deficit			$	1,002,243

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			Three Months Ended
			March 31,
			2005				2004
Revenues			$	79,772			$	34,067
Operating expenses:
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			24,417				12,374
	Selling, general and administrative expenses			26,196				10,589
	Depreciation and amortization			16,818				5,366
Income from operations				12,341				5,738
Other income (expense):
	Interest income			253				32
	Interest expense			(11,694	)			(2,829	)
	Partnership income			330				—
	Dividend income			98				—
	Minority interest			(165	)			—
	Other, net			124				—
Income before income taxes				1,287				2,941
Income tax expense				586				1,177
Net income				701				1,764
Dividends on redeemable preferred shares				(4,623	)			(2,274	)
Net loss applicable to common shareholders			$	(3,922	)		$	(510	)
Net loss per common share — basic and diluted			$	(0.42	)		$	(0.06	)

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																		Accumulated
		Common Shares																Other
														Accumulated				Comprehensive
		Shares				Amount				Paid in Capital				Deficit				Income				Total
Balance, January 1, 2005			10,000,000			$	—			$	58			$	(19,111	)		$	258			$	(18,795	)
Net income			—				—				—				701				—				701
Dividends on redeemable preferred shares			—				—				—				(4,623	)			—				(4,623	)
Change in fair value of cash flow hedges, net of $1,090 of tax			—				—				—				—				1,686				1,686
Balance, March 31, 2005			10,000,000			$	—			$	58			$	(23,033	)		$	1,944			$	(21,031	)

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					Three Months Ended
					March 31,
					2005				2004
Operating Activities
	Net income				$	701			$	1,764
	Adjustments to reconcile net income to cash provided by operating activities:
		Depreciation and amortization				16,818				5,366
		Provision for bad debt losses				1,579				1,067
		Deferred income tax				1,551				—
		Partnership income				(330	)			—
		Minority interest in net income of subsidiary				166				—
		Amortization of deferred financing costs				732				163
	Changes in operating assets and liabilities:
		Accounts receivable				90				(1,278	)
		Inventories				327				470
		Other assets				(3,574	)			197
		Accounts payable				(1,555	)			802
		Accrued expenses and other liabilities				(1,893	)			(2,681	)
			Net cash provided by operating activities			14,612				5,870
Investing Activities
		Capital expenditures				(5,533	)			(2,737	)
			Net cash used in investing activities			(5,533	)			(2,737	)
Financing Activities
		Payments made on long-term obligations				(4,512	)			(2,575	)
		Payment of deferred financing costs				(113	)			—
			Net cash used in financing activities			(4,625	)			(2,575	)
Net increase in cash and cash equivalents						4,454				558
Cash and cash equivalents at beginning of period						52,084				10,142
Cash and cash equivalents at end of period					$	56,538			$	10,700

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1.	Description of Business

2.	Presentation of Interim Financial Statements

3.	Recent Accounting Pronouncements

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4.	Acquisition

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Current assets		$	27,478
Property, plant and equipment			268,706
Customer list			108,200
Goodwill			228,792
Other assets			43,291
Liabilities assumed			(152,377	)
Net purchase price		$	524,090

Total revenues		$	79,433
Income from operations		$	11,451
Proforma net income		$	1,259

5.	Summarized financial information for significant investments

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Three Months ended March 31, 2005:
Revenues		$	9,352
Operating income			2,173
Income before income taxes			2,225
Net income or loss			2,225
As of March 31, 2005:
Current assets			8,037
Non-current assets			23,078
Current liabilities			1,686
Non-current liabilities			—
Partnership equity			29,429

6.	Pension Costs and Other Postretirement Benefits

		Pension Benefits								Other Benefits
		2005				2004				2005				2004
Service cost		$	1,233			$	119			$	343			$	12
Interest cost			2,615				407				508				32
Expected return on plan assets			(2,888	)			(495	)			(3	)			(1	)
Other, net			79				—				27				—
Net periodic benefit cost		$	1,038			$	32			$	874			$	43

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7.	Long-Term Debt

			March 31,
			2005
Senior Secured Credit Facility
	Revolving loan		$	—
	Term loan A			112,000
	Term loan C			311,850
Senior notes				200,000
Capital leases				1,059
				624,909
Less: current portion				(41,242	)
			$	583,667

	Senior Secured Credit Facility

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	Senior Notes

April 1 - December 31, 2005			$	36,567
Calendar year 2006				22,463
Calendar year 2007				23,248
Calendar year 2008				26,900
Calendar year 2009				33,400
	Thereafter			482,331
			$	624,909

	Derivative Instruments

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8.	Restricted Share Plan

9.	Net Loss per Common Share

		Three Months Ended
		March 31,
		2005				2004
Net loss applicable to common shareholders		$	(3,922	)		$	(510	)
Weighted average number of common shares outstanding			9,250,000				9,000,000
Net loss per common share		$	(0.42	)		$	(0.06	)

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10.	Comprehensive Income

		Three Months Ended
		March 31,
		2005				2004
Net income		$	701			$	1,764
Change in fair value of cash flow hedges, net of tax			1,686				—
Total comprehensive income		$	2,387			$	1,764

11.	Business Segments

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		Telephone				Other
		Operations				Operations				Total
Three months ended March 31, 2005:
Operating revenues		$	71,019			$	8,753			$	79,772
Cost of services and products			18,809				5,608				24,417
			52,210				3,145				55,355
Selling, general and administrative expenses			23,625				2,571				26,196
Depreciation and amortization			15,547				1,271				16,818
Net operating income (loss)		$	13,038			$	(697	)		$	12,341
Capital expenditures		$	5,145			$	388			$	5,533
Three months ended March 31, 2004:
Operating revenues		$	22,883			$	11,184			$	34,067
Cost of services and products			5,640				6,734				12,374
			17,243				4,450				21,693
Selling, general and administrative expenses			7,829				2,760				10,589
Depreciation and amortization			2,930				2,436				5,366
Net operating income (loss)		$	6,484			$	(746	)		$	5,738
Capital expenditures		$	2,190			$	547			$	2,737
As of March 31, 2005:
Goodwill		$	309,527			$	8,954			$	318,481
Total assets		$	956,991			$	45,252			$	1,002,243

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			March 31, 2005
ASSETS
Current assets:
	Cash and cash equivalents		$	23,818
	Accounts receivable, net of allowance of $1,619			17,775
	Deferred income taxes			1,598
	Prepaid expenses and other current assets			3,303
Total current assets				46,494
Property, plant and equipment, net				98,690
Intangibles and other assets:
	Investments			348
	Goodwill			89,689
	Customer lists, net			46,051
	Tradenames			14,546
	Deferred income taxes			1,693
	Deferred financing costs and other assets			8,661
Total assets			$	306,172
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
	Current portion of long-term debt		$	16,116
	Accounts payable			3,279
	Advance billings and customer deposits			6,250
	Accrued expenses			12,270
Total current liabilities				37,915
Long-term debt less current maturities				223,586
Pension and postretirement benefit obligations				12,045
Other liabilities				1,265
Total liabilities				274,811
Shareholder’s equity:
	Common shares, $0.01 par value, 1,000 shares, authorized, issued and outstanding			—
	Paid in capital			29,600
	Retained earnings			834
	Accumulated other comprehensive income			927
Total shareholder’s equity				31,361
Total liabilities and shareholder’s equity			$	306,172

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			Three Months Ended
			March 31,
			2005				2004
Revenues			$	33,631			$	34,067
Operating expenses:
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			10,952				12,374
	Selling, general and administrative expenses			11,970				10,589
	Depreciation and amortization			5,800				5,366
Income from operations				4,909				5,738
Other income (expense):
	Interest income			115				32
	Interest expense			(4,363	)			(2,829	)
	Dividend income			18				—
	Other, net			123				—
Income before income taxes				802				2,941
Income tax expense				334				1,177
Net income			$	468			$	1,764

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																		Accumulated
		Common Shares																Other
														Retained				Comprehensive
		Shares				Amount				Paid in Capital				Earnings				Income				Total
Balance, January 1, 2005			1,000			$	—			$	29,600			$	366			$	291			$	30,257
Net income			—				—				—				468				—				468
Change in fair value of cash flow hedges, net of $391 of tax			—				—				—				—				636				636
Balance, March 31, 2005			1,000			$	—			$	29,600			$	834			$	927			$	31,361

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					Three Months Ended
					March 31,
					2005				2004
Operating Activities
	Net income				$	468			$	1,764
	Adjustments to reconcile net income to cash provided by operating activities:
		Depreciation and amortization				5,800				5,366
		Provision for bad debt losses				1,054				—
		Deferred income tax				558				—
		Amortization of deferred financing costs				275				163
	Changes in operating assets and liabilities:
		Accounts receivable				1,645				(211	)
		Inventories				2,136				470
		Other assets				(589	)			197
		Accounts payable				238				802
		Accrued expenses and other liabilities				(1,270	)			(2,681	)
			Net cash provided by operating activities			10,315				5,870
Investing Activities
		Capital expenditures				(1,421	)			(2,737	)
			Net cash used in investing activities			(1,421	)			(2,737	)
Financing Activities
		Payments made on long-term obligations				(1,766	)			(2,575	)
		Payment of deferred financing costs				(36	)			—
			Net cash used in financing activities			(1,802	)			(2,575	)
Net increase in cash and cash equivalents						7,092				558
Cash and cash equivalents at beginning of period						16,726				10,142
Cash and cash equivalents at end of period					$	23,818			$	10,700

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1.	Description of Business

2.	Presentation of Interim Financial Statements

3.	Recent Accounting Pronouncements

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4.	Pension Costs and Other Postretirement Benefits

		Pension Benefits								Other Benefits
		2005				2004				2005				2004
Service cost		$	475			$	119			$	47			$	12
Interest cost			1,630				407				129				32
Expected return on plan assets			(1,979	)			(495	)			(3	)			(1	)
Other, net			—				—				1				—
Net periodic benefit cost		$	126			$	31			$	174			$	43

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5.	Long-Term Debt

Senior Secured Credit Facility
	Revolving loan		$	—
	Term loan A			45,902
	Term loan C			118,800
Senior notes				75,000
			$	239,702
Less: current portion				(16,116	)
			$	223,586

April 1 — December 31, 2005			$	14,279
Calendar year 2006				8,884
Calendar year 2007				9,397
Calendar year 2008				10,934
Calendar year 2009				13,598
	Thereafter			182,610
			$	239,702

	Derivative Instruments

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6.	Comprehensive income

		Three Months
		Ended March 31,
		2005				2004
Net income		$	468			$	1,764
Change in fair value of cash flow hedge, net of tax			636				—
Total comprehensive income		$	1,104			$	1,764

7.	Business Segments

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		Telephone				Other
		Operations				Operations				Total
Three months ended March 31, 2005:
Operating revenues		$	24,764			$	8,867			$	33,631
Cost of services and products			5,230				5,722				10,952
Gross margin			19,534				3,145				22,679
Operating expenses			9,399				2,571				11,970
Depreciation and amortization			4,529				1,271				5,800
Net operating income (loss)		$	5,606			$	(697	)		$	4,909
Capital expenditures		$	1,033			$	388			$	1,421
Three months ended March 31, 2004:
Operating revenues		$	22,883			$	11,184			$	34,067
Cost of services and products			5,640				6,734				12,374
Gross margin			17,243				4,450				21,693
Operating expenses			7,829				2,760				10,589
Depreciation and amortization			2,930				2,436				5,366
Net operating income (loss)		$	6,484			$	(746	)		$	5,738
Capital expenditures		$	2,190			$	547			$	2,737
As of March 31, 2005:
Goodwill		$	80,735			$	8,954			$	89,689
Total assets		$	260,920			$	45,252			$	306,172

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			March 31,
			2005
ASSETS
Current assets:
	Cash and cash equivalents		$	32,720
	Accounts receivable, net of allowance of $1,176			14,373
	Inventories			3,202
	Deferred income taxes			1,680
	Prepaid expenses and other current assets			5,447
Total current assets				57,422
Property, plant and equipment, net				254,370
Intangibles and other assets:
	Investments			42,913
	Goodwill			228,792
	Customer lists, net			100,185
	Deferred income taxes			—
	Deferred financing costs and other assets			14,082
Total assets			$	697,764
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
	Current portion of long-term debt		$	25,126
	Accounts payable			6,342
	Advance billings and customer deposits			4,216
	Accrued expenses			19,343
Total current liabilities				55,027
Long-term debt less current maturities				360,081
Deferred income taxes				69,715
Pension and postretirement benefit obligations				50,879
Other liabilities				1,905
Total liabilities				537,607
Minority interests				2,457
Shareholder’s equity:
	Common shares, $0.01 par value, 1,000 shares, authorized, issued and outstanding			—
	Paid in capital			152,458
	Retained earnings			4,225
	Accumulated other comprehensive income			1,017
Total shareholder’s equity				157,700
Total liabilities and shareholder’s equity			$	697,764

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			Three Months Ended
			March 31,
			2005				2004
							Predecessor
Revenues			$	46,255			$	45,366
Operating expenses:
	Cost of services and products (exclusive of depreciation and amortization shown separately below)			13,579				13,134
	Selling, general and administrative expenses			14,226				15,086
	Depreciation and amortization			11,018				8,150
Income from operations				7,432				8,996
Other income (expense):
	Interest income			138				38
	Interest expense			(7,331	)			(1,112	)
	Partnership income			330				857
	Dividend income			80				94
	Minority interest			(165	)			(126	)
	Other, net			1				(49	)
Income before income taxes				485				8,698
Income tax expense				252				3,223
Net income (loss)			$	233			$	5,475

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																		Accumulated
																		Other
		Common Shares																Comprehensive
														Retained				Income
		Shares				Amount				Paid in Capital				Earnings				(Loss)				Total
Balance, January 1, 2005			1,000			$	—			$	152,458			$	3,992			$	(33	)		$	156,417
Net income			—				—				—				233				—				233
Change in fair value of cash flow hedges, net of $699 of tax			—				—				—				—				1,050				1,050
Balance, March 31, 2005			1,000			$	—			$	152,458			$	4,225			$	1,017			$	157,700

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					Three Months Ended
					March 31,
					2005				2004
									Predecessor
Operating Activities
	Net income				$	233			$	5,475
	Adjustments to reconcile net income to cash provided by operating activities:
		Depreciation and amortization				11,018				8,150
		Provision for bad debt losses				525				442
		Deferred income tax				823				2,777
		Partnership income				(330	)			(857	)
		Minority interest in net income of subsidiary				165				126
		Amortization of deferred financing costs				457				—
	Changes in operating assets and liabilities:
		Accounts receivable				48				1,690
		Inventories				(1,809	)			98
		Accounts payable				(3,396	)			(377	)
		Accrued expenses and other liabilities				(558	)			(8,460	)
		Other, net				(2,879	)			(2,926	)
			Net cash provided by operating activities			4,297				6,138
Investing Activities
		Capital expenditures				(4,112	)			(4,797	)
		Other				—				266
			Net cash used in investing activities			(4,112	)			(4,531	)
Financing Activities
		Proceeds from long-term obligations				—				566
		Payments made on long-term obligations				(2,746	)			(673	)
		Payment of deferred financing costs				(77	)			—
			Net cash used in financing activities			(2,823	)			(107	)
Net increase (decrease) in cash and cash equivalents						(2,638	)			1,500
Cash and cash equivalents at beginning of period						35,358				11,464
Cash and cash equivalents at end of period					$	32,720			$	12,964

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1.	Description of Business

2.	Presentation of Interim Financial Statements

3.	Recent Accounting Pronouncements

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4.	Acquisition

Current assets		$	27,478
Property, plant and equipment			268,706
Customer list			108,200
Goodwill			228,792
Other assets			43,291
Liabilities assumed			(152,377	)
Net purchase price		$	524,090

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		2004
Total revenues		$	45,366
Income from operations		$	5,713
Proforma net loss		$	(253	)

5.	Summarized Financial Information for Significant Investments

Three months ended March 31, 2005:
	Revenues		$	9,352
	Operating income			2,173
	Income before income taxes			2,225
	Net income			2,225
As of March 31, 2005:
	Current assets			8,037
	Non-current assets			23,078
	Current liabilities			1,686
	Non-current liabilities			—
	Partnership equity			29,429

6.	Pension Costs and Other Postretirement Benefits

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		Pension				Other
		Benefits				Benefits
Service cost		$	758			$	296
Interest cost			985				378
Expected return on plan assets			(909	)			—
Other, net			79				26
Net periodic benefit cost		$	913			$	700

7.	Long-Term Debt

Senior Secured Credit Facility
	Revolving loan		$	—
	Term loan A			66,098
	Term loan C			193,050
Senior notes				125,000
Capital leases				1,059
				385,207
Less: current portion				(25,126	)
			$	360,081

April 1 — December 31, 2005			$	22,288
Calendar year 2006				13,579
Calendar year 2007				13,851
Calendar year 2008				15,966
Calendar year 2009				19,802
	Thereafter			299,721
			$	385,207

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8.	Comprehensive income

Net income		$	233
Change in fair value of cash flow hedge, net of tax			1,050
Total comprehensive income		$	1,283

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