FairPoint Communications 2010 Annual Report Download - page 133

Table of Contents
Stock, designation of restricted cash to satisfy allowed claims, the cancellation of predecessor Old Common Stock resulting in a gain of approximately
$1,341.0 million on extinguishment of obligations pursuant to the Plan and the related tax effects.
(b) Records the issuance of senior secured debt and related debt financing. Debt issuance costs of $2.4 million related to both the Exit Term Loan and the
Exit Revolving Facility are recorded in Debt issue costs, net and will be amortized over the terms of the respective agreements.
(c) Records the adjustments for fresh start accounting. This includes the adjustment of inventory and property, plant and equipment to appraised values.
Fresh start adjustments for intangible assets, goodwill, and stockholders’ equity are also included and are based on valuation studies. The fresh start
adjustments also include the elimination of the predecessor retained deficit and accumulated other comprehensive loss.
(d) The goodwill of the predecessor has been eliminated and the reorganization value of the assets and liabilities in excess of fair market value has been
allocated to long-term assets as shown above. The excess of the Company’s reorganization value over the fair value of its assets is estimated to be
approximately $272.3 million and is recorded as goodwill.
(e) Records the impact of fresh start accounting on the Company’s deferred taxes.
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Not applicable.
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 
As of the end of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation of our
management, including our principal executive officer and principal financial officer, of the effectiveness of our “disclosure controls and procedures” (as
defined in Rule 13a-15(e) of the Exchange Act). Our management, including our principal executive officer and principal financial officer, concluded that our
disclosure controls and procedures were not effective as of December 31, 2010 because of the material weaknesses described below.
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-
15(f) of the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and
principal financial officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility
that a material misstatement in the reporting company’s annual or interim financial statements will not be prevented or detected on a timely basis.
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