FairPoint Communications 2009 Annual Report Download - page 115

Table of Contents
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calendar year on service quality improvements under a performance enhancement plan in Vermont. The Company failed to fulfill its obligation to spend
the full $12.5 million allocated for such projects in the 2009 calendar year. As a result, the Company accrued and subsequently paid an additional
$0.5 million forfeiture to the Vermont Board. As of December 31, 2009, $2.6 million of the Merger Restricted Cash remains for removal of double
poles in Vermont. As of December 31, 2009, the Company also had $1.4 million of cash restricted for other purposes.
As of December 31, 2009, the Company had $4.0 million of restricted cash of which $2.5 million is shown in current assets and $1.5 million is
shown as a non-current asset on the Consolidated Balance Sheet.
However, at this time, it is unclear what effect the filing of the Chapter 11 Cases will have on the requirements imposed by the PUCs in Maine,
New Hampshire and Vermont as a condition to the approval of the Merger and whether such requirements will be enforceable against the Company in
the future.
(f) Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best
estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Receivable balances are reviewed
on an aged basis and account balances are written off against the allowance after all means of collection have been exhausted and the potential for
recovery is considered remote.
The following is activity in the Company's allowance for doubtful accounts receivable for the years ended December 31 (in thousands):
(g) Credit Risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade receivables. The
Company places its cash with high-quality financial institutions. Concentrations of credit risk with respect to trade receivables are principally
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   
Balance, beginning of period $ 20,340 $ 25,585 $ 19,514
Acquisition of Legacy FairPoint — 1,832 —
Contributed back to Verizon — (9,356) —
Provision charged to expense 56,073 25,234 21,765
Provision charged to other accounts (a) (91) 5,419 4,728
Amounts written off, net of recoveries (10,293) (28,374) (20,422)
Balance, end of period $ 66,029 $ 20,340 $ 25,585
(a) Provision charged to other accounts includes accruals charged to accounts payable for anticipated uncollectible
charges on purchase of accounts receivable from others which were billed by the Company.