FairPoint Communications 2013 Annual Report Download - page 40

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accrued interest and (ii) pay $32.6 million of fees, expenses and other costs related to the Refinancing. For further information
regarding the New Credit Agreement, the Notes and our repayment of the Old Credit Agreement Loans, see "—Liquidity and
Capital Resources" herein and note (8) "Long-term Debt" to our consolidated financial statements in "Item 8. Financial Statements
and Supplementary Data" included elsewhere in this Annual Report.
Regulatory and Legislative
We are generally subject to common carrier regulation primarily by federal and state governmental agencies. At the federal
level, the FCC generally exercises jurisdiction over communications common carriers, such as FairPoint, to the extent those carriers
provide, originate or terminate interstate or international communications. State regulatory commissions generally exercise
jurisdiction over common carriers to the extent those carriers provide, originate or terminate intrastate communications. In addition,
pursuant to the Communications Act, state and federal regulators share responsibility for implementing and enforcing the domestic
pro-competitive policies introduced by that legislation.
We are required to comply with the Communications Act which requires, among other things, that telecommunication carriers
offer telecommunication services at just and reasonable rates and on terms and conditions that are not unreasonably discriminatory.
The Communications Act also contains requirements intended to promote competition in the provision of local services and lead
to deregulation as markets become more competitive.
For a detailed description of the federal and state regulatory environment in which we operate and the FCC's recently
promulgated CAF/ICC Order and other recent regulatory changes, as well as the effects and potential effects of such regulation
on us, see "Item 1. Business—Regulatory Environment" included elsewhere in this Annual Report. We anticipate that the significant
changes in both federal and state regulation described therein will not have a material impact in 2014. However, in the long run,
we are uncertain of the ultimate impact as federal and state regulation continues to evolve.
Fresh Start Accounting
On October 26, 2009, we filed the Chapter 11 Cases. On January 13, 2011, the Bankruptcy Court entered the Confirmation
Order, which confirmed the Plan.
On the Effective Date, we substantially consummated our reorganization through a series of transactions contemplated by
the Plan and the Plan became effective pursuant to its terms.
As of the Effective Date, we were required to adopt fresh start accounting in accordance with guidance under the applicable
reorganization accounting rules, pursuant to which our reorganization value, which represents the fair value of an entity before
considering liabilities and approximates 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 was subject
to periodic evaluation for impairment and was later determined to be completely impaired at September 30, 2011. In addition to
fresh start accounting, our consolidated financial statements after the Effective Date reflect all effects of the transactions
contemplated by the Plan. Therefore, our consolidated statements of financial position and consolidated statements of operations
subsequent to the Effective Date are not comparable in many respects to our consolidated statements of financial position and
consolidated statements of operations for periods prior to the Effective Date.
Basis of Presentation
We view our business of providing data, voice and communications services to business, wholesale and residential customers
as one reportable segment as defined in the Segment Reporting Topic of the Accounting Standards Codification ("ASC").
Beginning in the second quarter of 2012, we reclassified certain revenues from voice services revenues to data and Internet
services revenues to more accurately reflect the underlying services provided. In addition, certain computer and customer service
expenses have been reclassified from selling, general and administrative expense, excluding depreciation and amortization, to cost
of services and sales, excluding depreciation and amortization, for the years ended December 31, 2012 and December 31, 2011
to be consistent with the current period presentation.
Results of Operations
The following table sets forth our consolidated operating results reflected in our consolidated statements of operations for
the year ended December 31, 2013, the year ended December 31, 2012 and the combined results of the twenty-four days ended
January 24, 2011 and the three hundred forty-one days ended December 31, 2011. We believe the comparison of combined results
of the year ended December 31, 2011 provides the best analysis of our results of operations. While the adoption of fresh start