FairPoint Communications 2011 Annual Report Download - page 125
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Table of Contents
Beginning in March 2010, the Company began to issue SQI rebates related to the Maine 2008 and 2009 SQI penalties to customers over a twelve month
period. The liabilities recorded as a reduction (increase) to revenue and the SQI penalties paid out in the form of customer rebates are as follows (in thousands):
Increase (decrease) in liability recorded as a reduction (increase) to revenue $(4,145) $401 $(952) $25,362
SQI penalties paid out in the form of customer rebates $(8,921) $(631) $(5,750) $ —
The Company has recorded a total liability of $7.5 million and $20.8 million on the consolidated balance sheets at December 31, 2011 and 2010,
respectively, of which $3.9 million and $12.5 million, respectively, are included in other accrued liabilities. The remainder of the December 31, 2011 and
2010 liability is included in the Claims Reserve and liabilities subject to compromise, respectively.
(d) Performance Assurance Plan Credits
As part of the Merger Orders, the Company adopted a PAP for certain services provided on a wholesale basis to CLECs in the states of Maine, New
Hampshire and Vermont. Failure to meet specified performance standards in any of these states may result in performance credits being assessed in
accordance with the provisions of the PAP in each state. As of December 31, 2011 and 2010, the Company has recorded a reserve for the estimated amount of
PAP credits based on metrics defined by the PAP. Credits assessed in Maine and New Hampshire are recorded as a reduction to accounts receivable since they
are paid by the Company in the form of credits applied to CLEC bills. PAP credits for Vermont are recorded as liabilities since a majority of these credits are
paid to the Vermont Universal Service Fund, while the remaining credits assessed in Vermont are paid by the Company in the form of credits applied to
CLEC bills. Based on the Company’s current estimate of its PAP credits in these states, reserves recorded as a reduction (increase) to revenue and the PAP
credits paid are as follows (in thousands):
Increase (decrease) in estimated reserve recorded as a reduction (increase) to revenue $1,086 $629 $7,160 $21,456
PAP credits paid out $(4,778) $(531) $(12,421) $(7,796)
The Company has recorded a total reserve of $4.9 million and $8.4 million on the consolidated balance sheets at December 31, 2011 and 2010,
respectively. At December 31, 2011 and 2010, $4.1 million of the total reserve is recorded to the Claims Reserve and liabilities subject to compromise.
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