FairPoint Communications 2007 Annual Report Download - page 101

Table of Contents
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for unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows in
thousands):
Balance as of January 1, 2007 $ 3,710
Additions for tax positions related to the current year —
Additions for tax positions of prior years —
Reductions for tax positions of prior years —
Reductions as a result of audit settlements (2,725)
Balance as of December 31, 2007 $ 985
The Company does not expect or anticipate a significant increase or decrease over the next twelve months in the unrecognized tax
benefits reported above. The entire amount of unrecognized tax benefits, if recognized, would affect the effective tax rate. The Company
has not provided for any interest or penalties on tax uncertainties since it is in a NOL carryforward position and any tax adjustments will
be offset by the NOL carryforward.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and with various state and local
governments. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax
examinations by tax authorities for years prior to 2004. During the quarter ended June 30, 2007, the Internal Revenue Service (“IRS”)
completed its examination of the U.S. income tax returns for the Company for the tax year ended December 31, 2004. The Company
received a “no change” letter from the IRS regarding its 2004 income tax return. As a result of this letter, the Company reversed the liability
associated with the 2004 exposure and recognized the related tax benefit during the second quarter.
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On February 8, 2005, the Company consummated its initial public offering of 25,000,000 shares of common stock, par value $.01
per share. At December 31, 2007, there were 35,222,445 shares of common stock outstanding and 200,000,000 shares of common stock
were authorized.
On January 28, 2005, the board of directors approved a 5.2773714 for 1 reverse stock split of the Company’s common stock,
which has been given retroactive effect in the accompanying consolidated financial statements. In connection with the Company’s initial
public offering in February 2005, the Company reclassified all of its class A common stock and class C common stock on a one-for-one
basis into a single class of common stock of which 200 million shares are authorized. After the stock split but prior to the issuance of any
new shares in the offering, 9,451,719 shares of common stock were outstanding. All common stock issued and outstanding has a
$0.01 par value.
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Effective on January 1, 2006, the Company adopted the provisions of SFAS 123(R). At December 31, 2007, the Company had
$4.0 million of total unearned compensation cost related to non-vested share-based payment arrangements granted under the Company’s
four stock-based compensation plans. That cost is expected to be recognized over a weighted average period of 1.1 years. Any future share
awards under any of
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