FairPoint Communications 2011 Annual Report Download - page 83
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Table of Contents
The Company received approval from the Bankruptcy Court to pay or otherwise honor certain of its pre-petition obligations, including employee related
obligations such as accrued vacation and pension related benefits. As such, these obligations were excluded from liabilities subject to compromise as of
December 31, 2010.
Upon the Effective Date, the Company adopted fresh start accounting in accordance with guidance under the applicable reorganization accounting rules,
pursuant to which the Company’s reorganization value, which represented the fair value of the entity before considering liabilities and approximated the
amount a willing buyer would pay for the assets of the entity immediately after the reorganization, was allocated to the fair value of assets in conformity with
guidance under the applicable accounting rules for business combinations, using the purchase method of accounting for business combinations. The amount
remaining after allocation of the reorganization value to the fair value of identified tangible and intangible assets was reflected as goodwill, which is subject to
periodic evaluation for impairment and was determined to be entirely impaired at September 30, 2011. See note 3(n) for further details of the goodwill
impairment. In addition to fresh start accounting, the Company’s post-emergence consolidated financial statements reflect all effects of the transactions
contemplated by the Plan. Accordingly, the Company’s post-emergence consolidated statements of financial position and consolidated statements of operations
are not comparable in many respects to the Company’s consolidated statements of financial position and consolidated statements of operations for periods
prior to the adoption of fresh start accounting and prior to accounting for the effects of the reorganization.
Reorganization Items
Reorganization items represent expense or income amounts that have been recognized as a direct result of the Chapter 11 Cases and are presented
separately in the consolidated statements of operations pursuant to the Reorganizations Topic of the ASC. Such items consist of the following (amounts in
thousands):
Professional fees (a) $(13,965) $(59,870) $(8,365)
Success bonus (b) — (1,111) (689)
Non-cash allowed claim adjustments (c) — (977) (43,964)
Cancellation of debt income (d) 1,351,057 20,838 —
Goodwill adjustment (e) (351,931) — —
Intangible assets adjustment (e) (30,381) — —
Property, plant and equipment adjustment (e) (56,258) — —
Pension and post-retirement healthcare adjustment (e) 22,076 — —
Other assets and liabilities adjustment (e) (16,037) — —
Tax account adjustments (e) 4,313 — —
Other (f) (11,561) — —
$ 897,313 $(41,120) $(53,018)
(a) Professional fees relate to legal, financial advisory and other professional costs directly associated with the reorganization process.
(b) Success bonus represents charges incurred relating to the Success Bonus Plan in accordance with the plan of reorganization.
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