FairPoint Communications 2007 Annual Report Download - page 67

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Table of Contents
The following table discloses aggregate information about our contractual obligations as of December 31, 2007 and the periods in
which payments are due:

   
    

Contractual obligations:
Long term debt $ 624,972 $ 753 $ 2,372 $621,553 $ 294
Fixed interest payments 124,508 35,204 68,726 20,458 120
Variable interest payments 99,135 6,976 37,108 55,051 —
Operating leases 6,336 1,295 1,575 1,215 2,251
Total contractual cash obligations $854,951 $44,228 $109,781 $698,277 $ 2,665
The following table discloses aggregate information about our derivative financial instruments as of December 31, 2007, the source
of fair value of these instruments and their maturities.

    

Source of fair value:
Derivative financial instruments(1) $ (34,105) (7,035) (25,041) (2,029) —
(1) Fair value of interest rate swaps at December 31, 2007 was provided by the counterparties to the underlying contracts using
consistent methodologies.

Our critical accounting policies are as follows:
• Revenue recognition;
• Allowance for doubtful accounts;
• Accounting for income taxes;
• Valuation of long-lived assets, including goodwill; and
• Accounting for software development costs.
 Certain of our interstate network access and data revenues are based on tariffed access charges filed directly
with the FCC; the remainder of such revenues are derived from revenue sharing arrangements with other local exchange carriers
administered by the National Exchange Carrier Association.
The 1996 Act allows local exchange carriers to file access tariffs on a streamlined basis and, if certain criteria are met, deems those
tariffs lawful. Tariffs that have been “deemed lawful” in effect nullify an interexchange carrier’s ability to seek refunds should the
earnings from the tariffs ultimately result in earnings above the authorized rate of return prescribed by the FCC. Certain of the
Company’s telephone subsidiaries file interstate tariffs directly with the FCC using this streamlined filing approach. As of December 31,
2007, our earnings were lower than the authorized rate of return, and therefore we did not have a liability on the balance sheet for the 2005
to 2006 monitoring periods. The settlement period related to the 2005 to 2006 monitoring period lapses on September 30, 2009. We will
continue to monitor the legal status of any pending or future proceedings that could impact its entitlement to these funds, and may
recognize as revenue some or all of the over-earnings at the end of the settlement period or as the legal status becomes more certain.
 In evaluating the collectibility of our accounts receivable, we assess a number of factors,
including a specific customer’s or carrier’s ability to meet its financial obligations to us, the length of time the receivable has been past due
and historical collection experience. Based on these assessments, we record both specific and general reserves for uncollectible accounts
receivable to reduce the related accounts receivable to the amount we ultimately expect to collect from customers and carriers. If
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