FairPoint Communications 2004 Annual Report Download - page 520

infrastructure and sells service, delays and increased costs in the expansion of the Partnership’s network infrastructure or losses of potential customers
could result, which would adversely affect the financial statements.
Financial Instruments - The Partnership’s trade receivables and payables are short-term in nature, and accordingly, their carrying value approximates
fair value.
Income Taxes - The Partnership is not a taxable entity for Federal and state income tax purposes. Any taxable income or loss is apportioned to the
partners based on their respective partnership interests and is reported by them individually.
Segments – The Partnership has one reportable business segment and operates domestically only. The Partnership’s products and services are
materially comprised of wireless telecommunications services.
Due to/from General Partner - Due to/from General Partner principally represents the Partnership’s cash position. The General Partner manages all
cash, investing and financing activities of the Partnership. As such, the change in Due to/from General Partner is reflected as a financing activity in the
Statements of Cash Flows. Additionally, administrative and operating costs incurred by the General Partner on behalf of the Partnership are charged to
the Partnership through this account. Interest expense/income is based on the average monthly outstanding balance in this account and is calculated by
applying Cellco’s average cost of borrowing from Verizon Global Funding, a wholly owned subsidiary of Verizon Communications. The cost of
borrowing was approximately 5.9%, 5.0%, and 5.0% for the years ended December 31, 2004, 2003 and 2002, respectively. Included in Interest and
Other Income, Net is net interest income related to the Due from General Partner balance of $980, $1,472 and $1,553 for the years ended December 31,
2004, 2003 and 2002, respectively.
Recently Issued Accounting Pronouncements - In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets – An
Amendment of APB Opinion No. 29.” This standard eliminates the exception from fair value measurement for nonmonetary exchanges of similar
productive assets. A nonmonetary exchange shall be measured based on the recorded amount of the nonmonetary asset(s) relinquished, and not on the
fair values of the exchanged assets, if a) the fair value is not determinable, b) the exchange transaction is to facilitate sales to customers, or c) the
exchange transaction lacks commercial substance. This statement specifies that a nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a result of the exchange. The Partnership will adopt the standard effective January 1, 2006.
The Partnership does not expect the impact of the adoption of SFAS No. 153 to have a material effect on the Partnership’s financial statements.
Reclassifications - Certain reclassifications have been made to the 2003 and 2002 financial statements to conform to the current year presentation.
Distributions – The Partnership is required to make distributions to its partners on a quarterly basis based upon the Partnership’s operating results,
cash availability and financing needs as determined by the General Partner at the date of the distribution.
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