FairPoint Communications 2009 Annual Report Download - page 86

Table of Contents
On December 15, 2009, we adopted the update to the accounting standard regarding employers' disclosures about postretirement benefit plan
assets which requires the Company, as a plan sponsor, to provide disclosures about plan assets, including categories of plan assets, the nature of
concentrations of risk and disclosures about fair value measurements of plan assets. This standard is effective for fiscal years ending after December 15,
2009. The adoption of this standard had no impact on our consolidated results of operations and financial position.
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We do not believe inflation has a significant effect on our operations.
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As of December 31, 2009, we had total debt of $2,515.4 million, consisting of both fixed rate and variable rate debt with interest rates ranging
from 6.750% to 13.125% per annum, including applicable margins. As of December 31, 2009, the fair value of our debt was approximately
$1,619.9 million. Our Term Loan A Facility and Revolving Credit Facility mature in 2014, our Term Loan B Facility and Delayed Draw Term Loan
mature in 2015 and the Notes mature in 2018.
We use variable and fixed rate debt to finance our operations, capital expenditures and acquisitions. The variable rate debt obligations expose us to
variability in interest payments due to changes in interest rates. We believe it is prudent to limit the variability of a portion of our interest payments. To
meet this objective, from time to time, we entered into interest rate swap agreements to manage fluctuations in cash flows resulting from interest rate
risk. These Swaps effectively changed the variable rate on the debt obligations to a fixed rate. Under the terms of the Swaps, we made a payment if the
variable rate was below the fixed rate, or we received a payment if the variable rate was above the fixed rate. Pursuant to our Pre-petition Credit Facility,
we were required to reduce the risk of interest rate volatility with respect to at least 50% of our Term Loan borrowings.
In connection with the Chapter 11 Cases, all of the Swaps were terminated by the respective counterparties thereto.
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