FairPoint Communications 2010 Annual Report Download - page 5

Table of Contents
Risk Factors” and other parts of this Annual Report. You should not place undue reliance on such forward-looking statements, which are based on the
information currently available to us and speak only as of the date on which this Annual Report was filed with the SEC. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is
directed to any further disclosures made on related subjects in our periodic reports filed with the SEC on Forms 10-K, 10-Q and 8-K and Schedule 14A.
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In this Annual Report on Form 10-K for our fiscal year ended December 31, 2010 (this “Annual Report”), FairPoint Communications, Inc. (the
“Company”) is restating its unaudited quarterly financial statements for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010
(collectively, the “2010 Interim Consolidated Financial Statements”).
The Company’s previously filed Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010
(collectively, the “2010 Quarterly Reports”) impacted by the restatement have not been and will not be amended. Accordingly, the Company cautions you that
certain information contained in the 2010 Quarterly Reports should no longer be relied upon, including the Company’s previously issued and filed 2010
Interim Consolidated Financial Statements and any financial information derived therefrom. In addition, the Company cautions you that other
communications or filings related to the 2010 Interim Consolidated Financial Statements should no longer be relied upon. See note 17 to the consolidated
financial statements in this Annual Report for more information regarding the impact of these adjustments on the 2010 Interim Consolidated Financial
Statements. All of the Company’s Quarterly Reports on Form 10-Q that will be filed for fiscal year 2011 will include restated results for the corresponding
interim periods of 2010. All amounts in this Annual Report affected by the restatement adjustments reflect such amounts as restated.
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As previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on March 22, 2011, management of the Company, with the
concurrence of the Audit Committee of the Company’s Board of Directors (the “Audit Committee”), concluded that the Company would restate the 2010
Interim Consolidated Financial Statements.
In connection with the preparation of the Company’s audited financial statements for the year ended December 31, 2010, management has discovered
accounting errors that impact the accuracy of the Company’s previously issued 2010 Interim Consolidated Financial Statements. These errors were detected in
areas in which the Company had previously identified and disclosed material weaknesses in internal controls.
The restated financial statements correct the following errors:
Project Abandonment Adjustment
Certain capital projects, principally a wireless broadband fixed asset project, had been abandoned but the write-off of all of the related capitalized costs had
not occurred in a timely manner.
Costs Capitalized to Property, Plant and Equipment Adjustment
Due to a backlog of capital projects not yet closed, certain costs (principally labor expenses) remained capitalized to property, plant and equipment rather
than expensed.
Application of Overhead Costs Adjustment
An error was discovered in the application of overhead costs to capital projects.
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