FairPoint Communications 2004 Annual Report Download - page 89

that was recorded in other comprehensive income (loss). The fair value of the Company's interest rate swap agreements is
determined from valuations received from financial institutions. The fair value indicates an estimated amount the Company
would pay if the contracts were canceled or transferred to other parties.
Amounts receivable or payable under interest rate swap agreements are accrued at each balance sheet date and included
as adjustments to realized and unrealized gains (losses) on interest rate swaps.
The following is a summary of amounts included in realized and unrealized gains (losses) on interest rate swaps (dollars
in thousands):
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





Change in fair value of interest rate swaps $874 7,693 2,135
Reclassification of transition adjustment included in
other comprehensive income (loss) (103)(1,029)(1,437)
Realized losses (883)(8,051)(10,275)
Total $(112)(1,387)(9,577)
(n) Stock Appreciation Rights
Stock appreciation rights have been granted to certain members of management by the founding shareholders of the
Company. The Company accounts for stock appreciation rights in accordance with FASB Interpretation No. 28, 
 The Company measures compensation as
the amount by which the market value of the shares of the Company's stock covered by the grant exceeds the option price or
value specified, by reference to a market price or otherwise, subject to any appreciation limitations and a corresponding credit to
additional paid-in capital. Changes, either increases or decreases, in the market value of those shares between the date of the
grant and the measurement date result in a change in the measure of compensation for the right. Valuation of stock
appreciation rights is typically based on traditional valuation models utilizing multiples of cash flows, unless there is a current
market value for the Company's stock.
(o) Stock Option Plans
At December 31, 2004, the Company had three stock-based employee compensation plans. The Company accounts for
its stock option plans using the intrinsic-value-based method prescribed by Accounting Principles Board Opinion No. 25,
 , and related interpretations. As such, compensation expense is recorded on the
date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS No. 123, 
, permits entities to recognize as expense over the vesting period the fair value of all stock-based
awards on the date of grant. SFAS No. 123 allows entities to continue to apply the provisions of APB No. 25 and provide pro
forma net income disclosures as if the fair-value method defined in SFAS No. 123 had been applied. The Company has elected
to continue to apply the intrinsic-value-based method
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