FairPoint Communications 2009 Annual Report Download - page 113

Table of Contents
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or superseded, are without merit, are overstated or for other reasons. As of May 3, 2010, the Bankruptcy Court has disallowed $1.0 billion of these
claims and has not yet ruled on the Company's other objections to claims, the disputed portions of which aggregate to an additional $2.4 million. We
expect to continue to file objections in the future. Because the process of analyzing and objecting to claims will be ongoing, the amount of disallowed
claims may increase significantly in the future.
Through the claims resolution process, differences in amounts scheduled by the Company and claims filed by creditors will be investigated and
resolved, including through the filing of objections with the Bankruptcy Court where appropriate. In light of the substantial number and amount of
claims filed, the claims resolution process may take considerable time to complete, and we expect that it will continue after the Company's emergence
from Chapter 11. Accordingly, the ultimate number and amount of allowed claims is not presently known, nor is the exact recovery with respect to
allowed claims presently known.
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(a) Use of Estimates
The Company's management has made a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the
reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in
conformity with U.S. generally accepted accounting principles, or GAAP. Actual results could differ from those estimates.
(b) Revenue Recognition
Revenues are recognized as services are rendered and are primarily derived from the usage of the Company's networks and facilities or under
revenue-sharing arrangements with other communications carriers. Revenues are primarily derived from: access, pooling, local calling services,
Universal Service Fund receipts, long distance services, Internet and broadband services, and other miscellaneous services. Local access charges are
billed to local end users under tariffs approved by each state's PUC. Access revenues are derived for the intrastate jurisdiction by billing access charges
to interexchange carriers and to other LECs. These charges are billed based on toll or access tariffs approved by the local state's PUC. Access charges
for the interstate jurisdiction are billed in accordance with tariffs filed by the National Exchange Carrier Association or by the individual company and
approved by the FCC.
Revenues are determined on a bill-and-keep basis or a pooling basis. If on a bill-and-keep basis, the Company bills the charges to either the access
provider or the end user and keeps the revenue. If the Company participates in a pooling environment (interstate or intrastate), the toll or access billed is
contributed to a revenue pool. The revenue is then distributed to individual companies based on their company-specific revenue requirement. This
distribution is based on individual state PUCs' (intrastate) or the FCC's (interstate) approved separation rules and rates of return. Distribution from these
pools can change relative to changes made to expenses, plant investment, or rate of return. Some companies participate in federal and certain state
universal service programs that are pooling in nature but are regulated by rules separate from those described above. These rules vary by state.
Revenues earned through the various pooling arrangements are initially recorded based on the Company's estimates.
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