FairPoint Communications 2009 Annual Report Download - page 81

Table of Contents
obligations under the Pre-petition Credit Facility, the Notes and the Swaps have been classified as liabilities subject to compromise in the
consolidated financial statements. See note 9 to the consolidated financial statements for more information.
(b) Excludes amortization of estimated capitalized debt issuance costs.
(c) Interest payments on long-term debt represent the normal contractual interest payment schedule, based on default rates as defined in the Pre-
petition Credit Facility. All payments have been stayed by the filing of the Chapter 11 Cases.
The following table discloses aggregate information about our derivative financial instruments as of December 31, 2009, the source of carrying
value of these instruments and their maturities.
(1) Upon filing Chapter 11 bankruptcy, the derivative financial instruments were terminated by the counterparties. Accordingly, 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 to the consolidated financial statements for more information.
(2) The Swaps have been classified as liabilities subject to compromise in the consolidated financial statements. See note 8 to the consolidated
financial statements for more information.
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Our critical accounting policies are as follows:
•Revenue recognition;
•Allowance for doubtful accounts;
•Accounting for pension and other post-retirement benefits;
•Accounting for income taxes;
•Depreciation of property, plant and equipment;
•Valuation of long-lived assets, including goodwill;
•Accounting for software development costs; and
•Purchase accounting.
Revenue Recognition. We recognize service revenues based upon usage of our local exchange network and facilities and contract fees. Fixed
fees for local telephone, long distance, Internet services and certain other services are recognized in the month the service is provided. Revenue from
other services that are not fixed fee or that exceed contracted amounts is recognized when those services are provided. Non-recurring customer
activation fees, along with the related costs up to, but not exceeding the activation fees, are deferred and amortized over the customer relationship period.
We make estimated adjustments, as necessary, to revenue or accounts receivable for known billing errors. At December 31, 2009, we recorded revenue
reserves of $22.6 million.
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       
   
Source of fair value:
Derivative financial
instruments(1)(2) $ (98,833) (98,833) — — —