Frontier Communications 2009 Annual Report Download - page 44

Contingencies
At December 31, 2006, we had a reserve of $8.0 million in connection with a potential environmental
claim in Bangor, Maine. This claim was settled with a payment of $7.625 million plus additional expenses
during the third quarter of 2007.
We currently do not have any contingencies in excess of $5.0 million recorded on our books.
Purchase Price Allocation—Commonwealth and GVN
The allocation of the approximate $1.1 billion paid to the “fair market value” of the assets and liabilities
of Commonwealth is a critical estimate. We finalized our estimate of the fair values assigned to plant, customer
list and goodwill, as more fully described in Notes 3 and 6 to the consolidated financial statements.
Additionally, the estimated expected life of a customer (used to amortize the customer list) is a critical
estimate.
New Accounting Pronouncements
The following new accounting standards were adopted by the Company in 2009 without any material
financial statement impact. All of these standards are more fully described in Note 2 to the consolidated
financial statements.
•Fair Value Measurements (SFAS No. 157, ASC Topic 820), as amended
•Business Combinations (SFAS No. 141R, ASC Topic 805), as amended
•Noncontrolling Interests in Consolidated Financial Statements (SFAS No. 160, ASC Topic 810)
•Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating
Securities (FSP EITF No. 03-6-1, ASC Topic 260)
•Subsequent Events (SFAS No. 165, ASC Topic 855)
•The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles (SFAS No. 168, ASC Topic 105)
•Employers’ Disclosures about Postretirement Benefit Plan Assets (FSP SFAS No. 132(R)-1, ASC
Topic 715)
(b) Results of Operations
Our historical results include the results of operations of CTE from the date of its acquisition on March 8,
2007 and of GVN from the date of its acquisition on October 31, 2007. Accordingly, results of operations for
2009, 2008 and 2007 are not directly comparable as 2009 and 2008 results reflect the inclusion of a full year of
operations of CTE and GVN, whereas 2007 results reflect the inclusion of approximately ten months of
operations of CTE and of two months of operations of GVN.
REVENUE
Revenue is generated primarily through the provision of local, network access, long distance, and data and
internet services. Such revenues are generated through either a monthly recurring fee or a fee based on usage at
a tariffed rate and revenue recognition is not dependent upon significant judgments by management, with the
exception of a determination of a provision for uncollectible amounts.
Consolidated revenue for 2009 decreased $119.1 million, or 5%, to $2,117.9 million as compared to 2008.
This decline is a result of lower local services revenue, switched access revenue, long distance services revenue
and subsidy revenue, partially offset by a $31.3 million, or 5%, increase in data and internet services revenue,
each as described in more detail below.
Consolidated revenue for 2008 decreased $51.0 million, or 2%, to $2,237.0 million as compared to 2007.
Excluding additional revenue attributable to the CTE and GVN acquisitions for a full year in 2008 and for a
partial period in 2007, our revenue decreased $107.3 million during 2008, or 5%, as compared to 2007. During
42
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES