FairPoint Communications 2010 Annual Report Download - page 113

Table of Contents
Prior to the Merger, Verizon and its domestic subsidiaries, including the operations of the Verizon Companies, filed a consolidated federal income tax return
and combined state income tax returns in the states of Maine, New Hampshire and Vermont. The operations of the Verizon Companies, including the Verizon
Northern New England business, for periods prior to the Merger were included in a Tax Sharing Agreement with Verizon and were allocated tax payments
based on the respective tax liability as if they were filing on a separate company basis. Current and deferred tax expense was determined by applying the
provisions of the Income Taxes Topic of the ASC to each company as if it were a separate taxpayer.
The Verizon Northern New England business used the deferral method of accounting for investment tax credits earned prior to the repeal of investment tax
credits by the Tax Reform Act of 1986. The Verizon Northern New England business also deferred certain transitional credits earned after the repeal and
amortized these credits over the estimated service lives of the related assets as a reduction to the provision for income taxes.
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Changes in the components of accumulated other comprehensive income were as follows (in thousands):
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Accumulated other comprehensive loss, net of taxes:
Defined benefit pension and post-retirement healthcare plans $(212,804) $(124,924)
Total other accumulated comprehensive loss $(212,804) $(124,924)
Defined benefit pension and post-retirement healthcare plan activity during 2008 included $49.5 million (net of $32.8 million taxes) in connection with the
Merger, which is reflected as a reduction to Accumulated Other Comprehensive Loss. This amount represents the allocation of previously existing plan assets,
obligations and prior service costs to the surviving benefit plans upon Merger. Other Comprehensive Loss for the years ended December 31, 2010, 2009 and
2008 also includes amortization of defined benefit pension and post-retirement healthcare plan related prior service costs and actuarial gains and losses
included in Accumulated Other Comprehensive Loss.
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Earnings per share has been computed in accordance with the Earnings Per Share Topic of the ASC. Basic earnings per share is computed by dividing net
income by the weighted average number of shares of common stock outstanding for the period. Except when the effect would be anti-dilutive, the diluted
earnings per share calculation calculated using the treasury stock method includes the impact of stock units, shares of non-vested common stock and shares
that could be issued under outstanding stock options. The weighted average number of common shares outstanding for all periods presented have been restated
to reflect the issuance of 53,760,623 shares to the stockholders of Spinco in connection with the Merger.
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