FairPoint Communications 2003 Annual Report Download - page 25

35
outstanding 91/2% notes and floating rate notes for cash at a purchase price of 101% of the principal amount of such notes, together with all
accrued and unpaid interest, if any, to the date of repurchase.
The 91/2% notes and floating rate notes are general unsecured obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness of the Company, including all obligations under our credit facility.
The indenture governing the Company's 91/2% notes and floating rate notes contains certain customary covenants and events of
default.

The Company issued $200.0 million of the 12 1/2% notes in 2000. The 121/2% notes bear interest at the rate of 121/2% per annum
payable semi-annually in arrears.
The 121/2% notes mature on May 1, 2010. The Company may redeem the 12 1/2% notes at any time on or after May 1, 2005 at the
redemption prices stated in the indenture under which the 121/2% notes were issued, together with accrued and unpaid interest, if any, to the
redemption date. In the event of a change of control, the Company must offer to repurchase the outstanding 12 1/2% notes for cash at a
purchase price of 101% of the principal amount of such notes, together with all accrued and unpaid interest, if any, to the date of repurchase.
The 121/2% notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future senior
indebtedness of the Company, including all obligations under our credit facility.
The indenture governing the 121/2% notes contains certain customary covenants and events of default.

The Company issued $225.0 million of the 117/8% notes in 2003. The 117/8% notes bear interest at the rate of 117/8% per annum
payable semi-annually in arrears.
The 117/8% notes mature on March 1, 2010. The Company may redeem the 117/8% notes at any time on or after March 1, 2007 at the
redemption prices stated in the indenture under which the 117/8% notes were issued, together with accrued and unpaid interest, if any, to the
redemption date. In the event of a change of control, the Company must offer to repurchase the outstanding senior notes for cash at a
purchase price of 101% of the principal amount of such notes, together with all accrued and unpaid interest, if any, to the date of repurchase.
The 117/8% notes are general unsecured obligations of the Company, ranking pari passu in right of payment with all existing and future
senior debt of the Company, including all obligations under our credit facility, and senior in right of payment to all existing and future
subordinated indebtedness of the Company.
The indenture governing the 117/8% notes contains certain customary covenants and events of default.

Our critical accounting policies are as follows:
•Accounting for income taxes; and
•Valuation of long-lived assets, including goodwill
36
 As part of the process of preparing our consolidated financial statements we were required to estimate
our income taxes. This process involves estimating our actual current tax exposure and assessing temporary differences resulting from
different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included
within our consolidated balance sheets. We must then assess the realizability of our deferred tax assets. In performing the assessment,
management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.
We had $250.8 million in federal and state net operating loss carryforwards as of December 31, 2003. In order to fully utilize the deferred
tax assets, mainly generated by the net operating losses, we will need to generate future taxable income of approximately $176.4 million
prior to the expiration of the net operating loss carryforwards beginning in 2019 through 2022. Based upon the level of projections for future
taxable income over the periods in which the deferred tax assets are deductible, we believe we will realize the benefits of these deductible
differences, net of the valuation allowance of $64.4 million at December 31, 2003. The amount of the deferred tax assets considered