FairPoint Communications 2009 Annual Report Download - page 165

Table of Contents
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The Fair Value Measurements and Disclosures Topic of the ASC (formerly SFAS No. 157,  ("SFAS No. 157"))
defines fair value, establishes a framework for measuring fair value and establishes a hierarchy that categorizes and prioritizes the sources to be used to
estimate fair value. The Fair Value Measurements and Disclosures Topic of the ASC also expands financial statement disclosures about fair value
measurements. On February 12, 2008, the FASB issued FASB Staff Position (FSP) 157-2, which delayed the effective date of SFAS No. 157 for one
year for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a
recurring basis. The Company elected a partial deferral of SFAS No. 157 under the provisions of FSP 157-2 related to the measurement of fair value
used when evaluating goodwill, investments, other intangible assets and other long-lived assets for impairment and valuing asset retirement obligations
and liabilities for exit or disposal activities. The Company is currently evaluating the impact of FSP 157-2 on its financial statements. The impact of
partially adopting SFAS No. 157 effective January 1, 2008 was not material to the Company's financial statements.
The carrying value of the Swaps at December 31, 2009 represents the termination value of the Swaps as determined by the respective
counterparties following the event of default described herein. See note 8 for more information.
The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis (at least annually) as of
December 31, 2008 (in thousands):
(1) Fair value of the Swaps at December 31, 2008 was calculated by the Company using valuation methodologies consistent with those of the
counterparties to the underlying contracts. These market values were then discounted for the Company's risk of non-performance, which is
represented by the market spread on the Company's debt as of December 31, 2008. See note 8 for more information.
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As of December 31, 2009, approximately 86% of the Company's access line equivalents were located in Maine, New Hampshire and Vermont. As
a result of this geographic concentration, the Company's financial results will depend significantly upon economic conditions in these markets. A
deterioration or recession in any of these markets could result in a decrease in demand for the Company's services and resulting loss of access lines
which could have a material adverse effect on the Company's business, financial condition, results of operations and liquidity.
In addition, if state regulators in Maine, New Hampshire or Vermont were to take an action that is adverse to the Company's operations in those
states, the Company could suffer greater harm from that action by state regulators than it would from action in other states because of the concentration
of operations in those states.
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Interest rate swaps(1) (82,955) — (82,955) —