##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
  þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 
 Commission file number 1-16805
 
 
 RCN Corporation
 (Exact name of registrant as specified in charter)
 Delaware
    
    22-3498533(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)196 Van Buren Street, Herndon, VA
    
    20170(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (703) 434-8200
 Securities Registered Pursuant to Section 12(b) of the Act: None
 Securities Registered Pursuant to Section 12(g) of the Act:
Common stock, par value $0.01 per share
(Title of Classes)
 
  o þ
  o þ
  þ o
 o
  o Large accelerated filer
    
    þ Accelerated filer
    
    o Non-accelerated filer
    
    o Smaller reporting company
 Yes o No þ
  þ o
 DOCUMENTS INCORPORATED BY REFERENCE




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##### 



RCN CORPORATION AND SUBSIDIARIES
For the year ended December 31, 2008
 Table of Contents
 PagePART IItem 1 Business
    
    
    4Item 1A Risk Factors
    
    
    16Item 1B Unresolved Staff Comments
    
    
    19Item 2 Properties
    
    
    19Item 3 Legal Proceedings
    
    
    20Item 4 Submission of Matters to a Vote of Security Holders
    
    
    20PART IIItem 5 Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    20Item 6 Selected Financial Data
    
    
    22Item 7 Managements Discussion and Analysis of Financial Condition And Results of Operations
    
    
    23Item 7A Quantitative and Qualitative Disclosures about Market Risk
    
    
    34Item 8 Financial Statements and Supplementary Data
    
    
    35Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    35Item 9A Controls and Procedures
    
    
    35Item 9B Other Information
    
    
    36PART IIIItem 10 Directors, Executive Officers and Corporate Governance
    
    
    36Item 11 Executive Compensation
    
    
    36Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    36Item 13 Certain Relationships and Related Transactions
    
    
    36Item 14 Principal Accountants Fees and Services
    
    
    36PART IVItem 15 Exhibits and Financial Statement Schedules
    
    
    36SIGNATURES
    
    
    S-1INDEX TO EXHIBITS
    
    
    E-1INDEX TO FINANCIAL STATEMENTS
    
    
    F-1Exhibit 10.5Exhibit 10.6Exhibit 10.52Exhibit 21.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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Cautionary Statement Regarding Forward Looking Statements:
   
    
    our ability to operate in compliance with the terms of our financing facilities (particularly the financial covenants);
    
    our ability to maintain adequate liquidity and produce sufficient cash flow to fund our capital expenditures and debt service;
    
    our ability to attract and retain qualified management and other personnel;
    
    our ability to maintain current price levels;
    
    our ability to acquire new customers and retain existing customers;
    
    changes in the competitive environment in which we operate, including the emergence of new competitors;
    
    changes in government and regulatory policies;
    
    deterioration in and uncertainty relating to economic conditions
generally and in particular, affecting the markets in which we
operate;
    
    pricing and availability of equipment and programming;
    
    our ability to obtain regulatory approvals and our ability to meet the requirements in our license agreements;
    
    our ability to complete acquisitions or divestitures and to integrate any business or operation acquired;
    
    our ability to enter into strategic alliances or other business relationships;
    
    our ability to overcome significant operating losses;
    
    our ability to expand our operating margins;
    
    our ability to develop products and services and to penetrate existing and new markets;
    
    technological developments and changes in the industry; and
    
    the risks discussed in Risk Factors under Item 1A below.
   3




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##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 Introduction
       Available Information and Websites
 www.sec.gov www.rcn.com
 2008 Highlights
 Consolidated RCN
  4




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##### Table of Contents



Residential / SMB Segment
 RCN Metro Segment.
 Description of our Businesses
 Residential / SMB Segment
  Video Services
  Our video services include:
 
    
    Basic and Signature Services:Our video customers receive a package of basic
programming that generally consists of local broadcast television stations, local
community programming (including governmental and public access), and limited
satellite-delivered or non-broadcast channels. The basic channel line-up generally
includes up to 50 channels. Our Signature or expanded basic programming package
includes approximately 150 additional channels, including many popular regional and
national cable networks. Both of these service levels are available in a 100%
digital viewing format for our customers who utilize a digital set-top box which,
following the completion of project Analog Crush, is now required for customers in
all markets except Lehigh Valley, where digital set-top boxes remain optional.
    
    Enhanced Digital Services:We offer additional programming content to customers
who utilize a digital set-top box and desire broader programming choices. With the
use of the digital-set top box, our customers enjoy an interactive program guide and
access to our video on demand (VOD) library, as well as the ability to access
hundreds of additional channels through our Premiere service package, which
includes special interest networks, movie and entertainment networks, and digital
music.
    
    Premium Channels:Our customers can also purchase premium movie and entertainment
channels, such as Showtime, HBO, Starz, and Encore on an a la carte basis for a
monthly fee. All such services include Video-on-Demand content as part of the
monthly subscription. We also provide foreign language programming and adult
content for an additional monthly fee.
    
    High-Definition Television (HDTV): Our HDTV service provides customers who
utilize advanced digital set-top boxes with improved, high-resolution picture
quality, improved audio quality and a wide screen format. We currently offer our
HDTV customers approximately 75 high-definition channels in most areas, including
most broadcast networks, leading
national cable networks, regional sports networks, and premium channels, and we expect
to increase our offering to 100 or more high-definition channels in 2009. In addition,
our HDTV customers have access to selected video on demand content in high-definition
format.
  5




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##### Table of Contents




    
    Video on Demand and Subscription Video on Demand (SVOD):Our VOD service
provides customers with access to an extensive library of movies and other television
content with control over the timing and playback of that content. A substantial
portion of this content is free to our customers who utilize digital set-top boxes,
and we continue to expand our library as more content becomes available. RCN also
offers SVOD services which provide our customers with on demand access to additional
content that is either associated with premium content to which they subscribe, or
made available for an additional fee.
    
    Digital Video Recorder (DVR):RCN offers a dual-tuner High-Definition DVR
set-top box that allows our customers to record one program while viewing another
whether it is recorded in standard definition or high-definition. DVR technology
affords the ability to our customers to digitally record, store and play television
programs without the inconvenience of tapes or DVDs.
    
    Pay-Per-View (PPV):Our PPV service provides customers with the ability to
order, for a separate fee, movies as well as Big Event programming such as sporting
events or music concerts on an unedited, commercial-free basis.
    
    Lehigh Valley Studio:We operate a video production studio located in Lehigh
Valley, Pennsylvania, where we produce sports, news, and entertainment programs
focused on community and local interest in our markets. Much of this RCN-produced
content is made available on an on-demand basis through our VOD platform. We plan to
continue to utilize our ability to produce original programming to distinguish our
video offerings from our competitors.
    
    Bulk Video Services:We provide video services to hotels, hospitals, universities,
and other organizations seeking to deliver multiple video connections by means of a
single relationship with a video provider. Our bulk video products generally offer
more limited video lineups than available to our residential customers. These
services, however, generally involve more extensive installation and network design /
development than residential applications, and are often combined with voice,
Internet and data transport services as a bundled, customized communications
solution.
 High-Speed Data Services
  Voice Services
  RCN and RCN Business Services Network
    6




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Customer Service
  Sales and Marketing
  Pricing of Our Products and Services
  Competition
    7




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##### Table of Contents



Sources of Supply
    RCN Metro Segment
    RCN Metro Products
  
    
    Transport Services: We provide SONET and Ethernet-based data transport services both
within our metro markets and between cities over our intercity fiber network. Specific
service offerings include: SONET Private Line services at bandwidth levels including DS-1,
DS-3, OC-3, OC-12, OC-48, and OC-192; Wavelength (DWDM) services enabling flexible and
scalable high-capacity transport at 2.5 and 10 Gbps; and Ethernet services via dedicated,
point-to-point as well as point-to-multipoint connectivity. We offer these services
utilizing a variety of equipment platforms, enabling us to deliver services to customers in
their preferred telecommunications architecture, including Cisco, Nortel, Lucent, and Ciena
equipment.
    
    Co-Location Services: We offer co-location services to our customers by maintaining
secured and monitored technical space in the same facilities as several of our larger
network operations locations. We offer full disaster recovery and data back-up
capabilities in facilities that help assure maximum server and data availability, as well
as customized monitoring, maintenance and hosting services,
and provide cost-effective pricing for customers who desire to combine co-location and
hosting services with our data transport services.
    
    Internet Access: Our Internet access offerings include dedicated access services
targeted at businesses that desire single or multipoint high-speed, dedicated connections
to the Internet. Our dedicated Internet access service provides internet speeds of up to a
Gigabit per second. We maintain numerous public and private peering arrangements with
other Internet backbone networks in our geographic footprint.
  8




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RCN Metro Network
    Sales and Customer Support
  Pricing
  Competition
   9




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##### Table of Contents



Regulation
 Overview
  Regulation of Video Services
 Cable Television Systems
    OVS
   10




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##### Table of Contents



Cable and OVS Regulation
         11




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##### Table of Contents



Regulation of Information Services
  Regulation of Telecommunications Services
 Federal Regulation
   
    
    InterconnectionRequires the ILECs to permit their competitors to interconnect with ILEC
facilities at any technically feasible point in the ILECs network.
    
    Reciprocal CompensationRequires all ILECs and CLECs to complete calls originated by
competing local exchange carriers under reciprocal arrangements at prices set by the FCC,
PUCs or negotiated prices.
    
    Access to Unbundled Network ElementsRequires ILECs to provide nondiscriminatory access
to unbundled network elements (UNEs), including network facilities, equipment, features,
functions and capabilities, at any technical feasible point within their networks, on
nondiscriminatory terms, at prices based on the ILECs forward looking costs, which may
include a reasonable profit.
    
    Collocation of EquipmentAllows CLECs to install and maintain their own network
equipment in ILEC central offices.
    
    ResaleRequires the ILEC to establish wholesale discounted rates for services it
provides to end-users at retail rates.
    
    Number PortabilityRequires all ILECs and CLECs to permit users of telecommunications
services to retain existing telephone numbers without impairment of quality, reliability or
convenience when switching from one telecommunications provider to another.
    
    Dialing ParityRequires the ILECs and CLECs to establish dialing parity so that all
customers must dial the same number of digits to place the same type of call.
    
    Access to Rights-of-WayRequires all ILECs to permit competing carriers access to poles,
ducts, conduits and rights-of-way at regulated prices.
  12




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##### Table of Contents



Reciprocal Compensation
  Access Charges
  Slamming and Cramming
     13




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##### Table of Contents



Digital Phone
  State Regulation
   Taxes and Regulatory Fees
  Other Regulatory Issues
 Digital Set-Top Box Regulation
  Right-of-Way Access
   14




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##### Table of Contents



Pole and Conduit Attachments
  Program Access
  Commercial Leased Access
  Building Access
    Customer Proprietary Network Information
   15




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Red Flag Rules
  Employees
 .
 
 ITEM 1A. RISK FACTORS
 We have a history of net losses and we emerged from Chapter 11 reorganization in 2004.
  We are subject to regulation by federal, state and local governments, which may impose costs
and restrictions.
      16




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We depend on certain third party suppliers for equipment, software and outsourced services,
and in some cases, a single vendor in order to obtain economies of scale. If we are unable to
receive quality goods or services from these vendors on reasonable terms and on a
timely basis, our ability to offer services could be impaired, and our brand, growth,
operations, and financial results could be materially adversely affected.
  In the event of a substantial failure or disruption of our network or information systems, or
loss of key facilities or personnel, we may not be able to fully recover our services for an
extended period, which would adversely affect our financial position and future results of
operations.
  Programming costs have risen in past years and are expected to continue to rise, and we may
not be able to pass such programming costs through to our customers, which could adversely affect
our cash flow and operating margins.
  Our markets are highly competitive, and many of our competitors have significant advantages.
We may not be able to respond quickly or effectively to changes in the competitive environment,
which could have a material adverse impact on our results of operations and financial position.
  
    
    significant economies of scale;
    
    greater brand recognition;
    
    greater financial, technical, marketing and other resources;
    
    well-established customer and vendor relationships;
    
    significant control over limited conduit and pole space (in the case of incumbent cable and
telephone companies); and
    
    ownership of content and/or significant cost advantages in the acquisition of content.
   17




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Our business is highly susceptible to changes in general economic conditions, and any
significant downturn in the U.S. economy as a whole, or in any geographic market in which we
provide services, could substantially impact our sales, customer churn, bad debt and collections,
and overall results of operations.
  Our inability to respond to technological developments and meet customer demand for new
products and services could limit our ability to compete effectively.
  We experience turnover among our experienced and trained employee base, which could result in
our inability to continue performing certain functions and completing certain initiatives in
accordance with our existing budgets and operating plans.
  Future sales of our common stock could adversely affect the price of our stock and our ability
to raise capital.
  An ownership change could limit our ability to utilize our federal net operating loss
carryforwards.
   18




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We and our subsidiaries have had, and may in the future incur, a significant amount of
indebtedness, which could adversely affect our financial position and our ability to react to
changes in our business.
    The covenants in our credit agreement restrict our financial and operational flexibility.
  
    
    incur additional debt;
    
    create liens on our assets;
    
    make particular types of investments or other restricted payments;
    
    engage in transactions with affiliates;
    
    acquire assets or make certain capital expenditures;
    
    utilize proceeds from asset sales for purposes other than debt reduction, except for limited
exceptions for reinvestment in our business;
    
    merge or consolidate or sell substantially all of our assets; and
    
    pay dividends or repurchase shares of our common stock.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
 Real Estate
    19




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ITEM 3. LEGAL PROCEEDINGS
 City of Chicago Franchise Fee
    
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
 Market Information
   Period
    
    High Price
    
    
    Low Price2008First Quarter
    
    $
    15.09
    
    
    $
    9.85Second Quarter
    
    $
    12.51
    
    
    $
    10.48Third Quarter
    
    $
    13.91
    
    
    $
    10.82Fourth Quarter
    
    $
    11.61
    
    
    $
    5.04
 Period
    
    High Price
    
    
    Low Price2007First Quarter
    
    $
    30.49
    
    
    $
    25.13Second Quarter
    
    $
    28.76
    
    
    $
    18.00
    *Third Quarter
    
    $
    19.02
    
    
    $
    12.21Fourth Quarter
    
    $
    16.23
    
    
    $
    12.15
 *
    
    See discussion below regarding the special cash dividend paid on June 11, 2007.   20




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##### Table of Contents



Purchases of Equity Securities
 (c) Total Numberof Shares
    
    
    (d) ApproximatePurchased as Part
    
    
    Dollar Value of(b) Average
    
    
    of Publicly
    
    
    Shares That May(a) Total Number of
    
    
    Price Paid Per
    
    
    Announced
    
    
    Yet Be RepurchasedShares Purchased
    
    
    Share
    
    
    Program
    
    
    Under the ProgramPrior to 4th Qtr
2008
    
    
    
    
    
    
    
    
    
    
    491,600
    
    
    $
    18,607,10110.1.08  10.31.08
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    18,607,10111.1.08  11.30.08
    
    
    360,800
    
    
    $
    5.79
    
    
    
    852,400
    
    
    $
    16,519,19512.1.08  12.31.08
    
    
    445,000
    
    
    $
    6.42
    
    
    
    1,297,400
    
    
    $
    13,663,162
  Dividends
  Description of RCN Corporations Equity Securities
    21




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
     RCN CORPORATION
SELECTED FINANCIAL DATA
(dollars in thousands, except per share amounts)
 Successor
    
    
    PredecessorDec. 21 to
    
    
    Jan. 1 toDec. 31,
    
    
    Dec. 20,2008
    
    
    2007 (1)
    
    
    2006 (2)
    
    
    2005
    
    
    2004 (3)
    
    
    2004Revenues
    
    $
    739,243
    
    
    $
    636,097
    
    
    $
    585,476
    
    
    $
    530,412
    
    
    $
    15,501
    
    
    $
    442,514(Loss) income from
continuing operations
    
    $
    (70,726
    )
    
    $
    (169,642
    )
    
    $
    (14,320
    )
    
    $
    (138,731
    )
    
    $
    (3,427
    )
    
    $
    976,709
    (4)(Loss) income from
continuing operations per
common share:Basic
    
    $
    (1.91
    )
    
    $
    (4.58
    )
    
    $
    (0.39
    )
    
    $
    (3.85
    )
    
    $
    (0.09
    )
    
    $
    8.39Diluted
    
    $
    (1.91
    )
    
    $
    (4.58
    )
    
    $
    (0.39
    )
    
    $
    (3.85
    )
    
    $
    (0.09
    )
    
    $
    6.45Total assets
    
    $
    1,025,460
    
    
    $
    1,097,889
    
    
    $
    975,381
    
    
    $
    1,253,940
    
    
    $
    1,400,510
    
    
    $
    1,254,689Total debt
    
    $
    742,607
    
    
    $
    744,945
    
    
    $
    202,792
    
    
    $
    492,097
    
    
    $
    493,568
    
    
    $
    1,669,560Redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,825,212Preferred stock dividend
and accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,902Dividends declared per share
    
    
    
    
    
    $
    9.33
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    The results of operations from NEON (see Item 7) are included in the
above financial information from the date of acquisition (November
13, 2007) and all periods thereafter.(2)
    
    The results of operations from CEC (see Item 7) are included in the
above financial information from the date of acquisition (March 17,
2006) and all periods thereafter.  22




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##### Table of Contents



(3)
    
    On December 21, 2004, we increased our ownership interest in
Starpower Communications, LLC (Starpower) from 50% to 100%. The 11
day period from December 21, 2004 to December 31, 2004 and all
periods thereafter include consolidated Starpower results.(4)
    
    Includes a gain from fresh start adjustments of approximately
$173.2 million as well as a gain on the settlement of liabilities as
a result of RCNs bankruptcy restructuring under Chapter 11 of the
Bankruptcy Code of approximately $1.2 billion. 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Overview
    Basis of reporting
  Key Transactions
    23




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Critical Accounting Policies and Estimates
   Results of Operations
     24




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##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share and per share data)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Revenues
    
    $
    739,243
    
    
    $
    636,097
    
    
    $
    585,476Costs and expenses:Direct expenses
    
    
    264,219
    
    
    
    224,770
    
    
    
    201,370Selling, general and administrative (including
stock-based compensation of $13,335, $33,206, and
$18,162)
    
    
    294,100
    
    
    
    288,426
    
    
    
    276,471Exit costs and restructuring charges, net of recoveries
    
    
    2,314
    
    
    
    8,194
    
    
    
    6,702Depreciation and amortization
    
    
    198,734
    
    
    
    195,239
    
    
    
    192,964Operating loss
    
    
    (20,124
    )
    
    
    (80,532
    )
    
    
    (92,031
    )Investment income
    
    
    2,880
    
    
    
    9,424
    
    
    
    5,983Interest expense
    
    
    (53,301
    )
    
    
    (34,510
    )
    
    
    (24,659
    )Gain on sale of investment in unconsolidated entity
    
    
    
    
    
    
    
    
    
    
    125,370Loss on sale of assets
    
    
    (181
    )
    
    
    (827
    )
    
    
    (2,119
    )Loss on the early extinguishment of debt
    
    
    
    
    
    
    (63,795
    )
    
    
    (19,287
    )Other (expense) income, net
    
    
    
    
    
    
    (451
    )
    
    
    35Loss from continuing operations before income taxes
    
    
    (70,726
    )
    
    
    (170,691
    )
    
    
    (6,708
    )Income tax (benefit) expense
    
    
    
    
    
    
    (1,049
    )
    
    
    7,612Net loss from continuing operations
    
    
    (70,726
    )
    
    
    (169,642
    )
    
    
    (14,320
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    1,684
    
    
    
    2,464Gain on sale of discontinued operations, net of tax
    
    
    
    
    
    
    15,921
    
    
    
    Net loss
    
    $
    (70,726
    )
    
    $
    (152,037
    )
    
    $
    (11,856
    )
 Consolidated Operating Results
 Consolidated Revenues
   Consolidated Direct Expenses
    25




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##### Table of Contents



Consolidated Selling, General and Administrative Expenses
   Segment Operating Results
  Residential / SMB Segment Operating Results
 Residential/SMBFor the year ended December 31,Fav(unfav)
    
    
    
    
    
    
    Fav(unfav)2008
    
    
    2007
    
    
    Var%
    
    
    2006
    
    
    Var %Revenue:Video
    
    $
    294,650
    
    
    $
    271,330
    
    
    
    8.6
    %
    
    $
    250,655
    
    
    
    8.2
    %Data
    
    
    142,704
    
    
    
    133,406
    
    
    
    7.0
    %
    
    
    121,407
    
    
    
    9.9
    %Voice
    
    
    114,386
    
    
    
    117,477
    
    
    
    (2.6
    %)
    
    
    126,990
    
    
    
    (7.5
    %)Recip Comp/Other
    
    
    16,191
    
    
    
    24,050
    
    
    
    (32.7
    %)
    
    
    26,108
    
    
    
    (7.9
    %)Total Revenue
    
    
    567,931
    
    
    
    546,263
    
    
    
    4.0
    %
    
    
    525,160
    
    
    
    4.0
    %Direct expenses
    
    
    199,367
    
    
    
    190,093
    
    
    
    4.9
    %
    
    
    177,844
    
    
    
    6.9
    %Selling, general
and administrative
(excluding
stock-based
compensation)
    
    
    223,143
    
    
    
    220,700
    
    
    
    1.1
    %
    
    
    227,614
    
    
    
    (3.0
    %)Operating income
before depreciation
and amortization,
stock-based
compensation, exit
costs and
restructuring
charges
    
    $
    145,421
    
    
    $
    135,470
    
    
    
    7.3
    %
    
    $
    119,702
    
    
    
    13.2
    %
  26




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##### Table of Contents



Reconciliation to Operating Loss
 2008
    
    
    2007
    
    
    2006Operating income
before depreciation
and amortization,
stock-based
compensation, exit
costs and
restructuring
charges
    
    $
    145,421
    
    
    $
    135,470
    
    
    $
    119,702Less: Stock-based
compensation
    
    
    10,364
    
    
    
    28,205
    
    
    
    16,452Less: Depreciation
and amortization
    
    
    167,355
    
    
    
    183,038
    
    
    
    187,025Less: Exit costs
and restructuring
charges
    
    
    1,602
    
    
    
    8,089
    
    
    
    6,449Operating loss
    
    $
    (33,900
    )
    
    $
    (83,862
    )
    
    $
    (90,224
    )
 Residential / SMB Revenues
  Residential / SMB Metrics4
    
    December 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Video RGUs 1
    
    
    366,000
    
    
    
    358,000
    
    
    
    355,000Data RGUs 1
    
    
    302,000
    
    
    
    285,000
    
    
    
    259,000Voice RGUs 1
    
    
    244,000
    
    
    
    250,000
    
    
    
    249,000Total RGUs 1
    
    
    911,000
    
    
    
    893,000
    
    
    
    863,000Customers 2
    
    
    428,000
    
    
    
    416,000
    
    
    
    406,000ARPC 3
    
    $
    110
    
    
    $
    109
    
    
    $
    107
 (1)
    
    RGUs are all video, high-speed data, and voice connections provided to residential households
and SMB customers. Dial-up Internet and long distance voice services are not included. Additional
telephone lines are each counted as an RGU, but additional room outlets for video service are not
counted. For bulk arrangements in residential multiple dwelling units (MDUs), including
dormitories, the number of RGUs is based on the number of video, high-speed data and voice
connections provided and paid for in that MDU. Commercial structures such as hotels and offices are
counted as one RGU regardless of how many units are in the structure. Delinquent accounts are
generally disconnected and no longer counted as RGUs after a set period of time in accordance with
our credit and disconnection policies. RGUs may include customers receiving some services for free
or at a reduced rate in connection with promotional offers or bulk arrangements. RGUs provided free
of charge under courtesy account arrangements are not counted, but additional services paid for are
counted.  27




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##### Table of Contents



(2)
    
    A Customer is a residential household or SMB that has at least one paid video, high-speed
data or local voice connection. Customers with only dial-up Internet or long distance voice service
are not included. For bulk arrangements in residential MDUs, including dormitories, each unit or
outlet for which service is provided and separately paid for is counted as a Customer. Commercial
structures such as hotels and offices are counted as one Customer regardless of how many units are
in the structure. Delinquent accounts are generally disconnected and no longer counted as Customers
after a set period of time in accordance with our credit and disconnection policies.(3)
    
    ARPC is total revenue for a given monthly period (excluding Dial-up Internet, reciprocal
compensation and certain commercial revenue) divided by the average number of Customers for the
period. This definition of ARPC may not be similar to ARPC measures of other companies.(4)
    
    In connection with our transition to segment reporting, effective January 1, 2008, we have
reclassified certain customers, RGUs and revenue related to our RCN Metro business unit, such that
they are no longer included in our reported Residential and SMB metrics. The impact on customers
and RGUs is de minimis, and the impact on ARPC would be to reduce historical reported amounts by
approximately $1. Therefore, this change will only be reflected for periods after January 1, 2008,
and historical results will remain as previously presented.  Residential / SMB Direct Expenses
   Residential / SMB Selling, General and Administrative Expenses
    28




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##### Table of Contents



RCN Metro Optical Networks Operating Results
 RCN MetroFor the year ended December 31,Fav(unfav)
    
    
    
    
    
    
    Fav(unfav)2008
    
    
    2007
    
    
    Var%
    
    
    2006
    
    
    Var%Revenue: (1)Transport Services
    
    $
    131,448
    
    
    $
    60,707
    
    
    
    116.5
    %
    
    $
    36,255
    
    
    
    67.4
    %Data and Internet
Services
    
    
    2,581
    
    
    
    2,875
    
    
    
    (10.2
    %)
    
    
    3,108
    
    
    
    (7.5
    %)Leased Services
    
    
    31,759
    
    
    
    22,807
    
    
    
    39.3
    %
    
    
    18,467
    
    
    
    23.5
    %Installation and other
    
    
    5,524
    
    
    
    3,445
    
    
    
    60.3
    %
    
    
    2,486
    
    
    
    38.6
    %Total Revenue
    
    
    171,312
    
    
    
    89,834
    
    
    
    90.7
    %
    
    
    60,316
    
    
    
    48.9
    %Direct expenses
    
    
    64,852
    
    
    
    34,677
    
    
    
    87.0
    %
    
    
    23,526
    
    
    
    47.4
    %Selling, general and
administrative
(excluding
stock-based
compensation)
    
    
    57,622
    
    
    
    34,520
    
    
    
    66.9
    %
    
    
    30,695
    
    
    
    12.5
    %Operating income
before depreciation
and amortization,
stock-based
compensation, exit
costs and
restructuring charges
    
    $
    48,838
    
    
    $
    20,637
    
    
    
    136.7
    %
    
    $
    6,095
    
    
    
    238.6
    %
 Reconciliation to Operating Income (Loss)
 2008
    
    
    2007
    
    
    2006Operating income before
depreciation and
amortization,
stock-based
compensation, exit
costs and restructuring
charges
    
    $
    48,838
    
    
    $
    20,637
    
    
    $
    6,095Less: Stock-based
compensation
    
    
    2,971
    
    
    
    5,001
    
    
    
    1,710Less: Depreciation and
amortization
    
    
    31,379
    
    
    
    12,201
    
    
    
    5,939Less: Exit costs and
restructuring charges
    
    
    712
    
    
    
    105
    
    
    
    253Operating income (loss)
    
    $
    13,776
    
    
    $
    3,330
    
    
    $
    (1,807
    )
 (1)
    
    Certain prior period revenue amounts have been reclassified to conform with the current
presentation. RCN Metro Revenues
   29




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##### Table of Contents



RCN Metro Direct Expenses
   RCN Metro Selling, General and Administrative Expenses
   Consolidated Stock-Based Compensation
    Consolidated Depreciation and Amortization
    30




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##### Table of Contents



Consolidated Exit Costs and Restructuring Charges
    Consolidated Other Income (Expense) Items
 Consolidated Investment Income
   Consolidated Interest Expense
    Consolidated Gain on Sale of Investment in Unconsolidated Entity
  Consolidated Loss on Sale of Assets
   31




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##### Table of Contents



Consolidated Loss on the Early Extinguishment of Debt
   Other Income (Expense), Net
  Discontinued Operations
  Liquidity and Capital Resources
 December 31,
    
    
    December 31,2008
    
    
    2007Cash, cash equivalents and short-term investments
    
    $
    63,684
    
    
    $
    67,692Debt (including current maturities and capital lease obligations)
    
    $
    742,607
    
    
    $
    744,945
  Operating Activities
   Investing Activities
   32




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##### Table of Contents



Financing Activities
  Off Balance Sheet Arrangements and Contractual Obligations
 Contractual Obligations and Commercial Commitments
  (dollars in thousands)Payments Due By PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 yearsTotal bank borrowings
    
    $
    739,694
    
    
    $
    7,205
    
    
    $
    14,410
    
    
    $
    44,410
    
    
    $
    673,669Capital lease obligations
    
    
    2,913
    
    
    
    147
    
    
    
    343
    
    
    
    418
    
    
    
    2,005Total debt
    
    
    742,607
    
    
    
    7,352
    
    
    
    14,753
    
    
    
    44,828
    
    
    
    675,674Interest on long-term debt (1)
    
    
    220,321
    
    
    
    42,111
    
    
    
    82,944
    
    
    
    80,137
    
    
    
    15,129Operating leases
    
    
    74,666
    
    
    
    16,461
    
    
    
    24,632
    
    
    
    16,208
    
    
    
    17,365Purchase obligations (2)
    
    
    180,540
    
    
    
    28,526
    
    
    
    46,455
    
    
    
    39,178
    
    
    
    66,381Dividend payable
    
    
    591
    
    
    
    
    
    
    
    591
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    1,218,725
    
    
    $
    94,450
    
    
    $
    169,375
    
    
    $
    180,351
    
    
    $
    774,549
 (1)
    
    Interest payments are based on interest rates in effect at December 31, 2008 and include
payments on our interest rate swap agreements.(2)
    
    Purchase obligations consist of agreements to purchase goods and services that are
enforceable and legally binding on us and that specify all significant terms, including
fixed or minimum quantities to be purchased, price provisions and timing. Our purchase
obligations principally consist of contracts with customer premise equipment manufacturers,
telecommunications providers, and other contracts entered into in the normal course of
business. Amounts reflected as accounts payable and accrued expenses in the consolidated
balance sheets at December 31, 2008 are excluded from the table above. Off Balance Sheet Arrangements
  Description of Outstanding Debt
   33




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##### Table of Contents



First-Lien Credit Agreement
     Letters of Credit
  Recently Issued Accounting Pronouncements
  Inflation
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    34




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
    Disclosure Controls and Procedures
   35




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##### Table of Contents



Managements Report on Internal Control over Financial Reporting
 Internal Control  Integrated
Framework Internal Control  Integrated Framework
  Changes in Internal Control over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES
   
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    The following documents are filed as part of this Annual Report:
 (1)
    
    Financial Statements.A listing of the financial statements, notes and reports of independent registered public
accountants required by Item 8 begins on page F-1 of this annual report.(2)
    
    Financial Statement SchedulesSee Schedule IIValuation and Qualifying Accounts on page F-29(3)
    
    The index to the Exhibits begins on page E-1 of this Annual Report.
  36




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##### Table of Contents



SIGNATURES
  Date: February 24, 2009
    RCN CorporationBy:
    /s/ Peter D. AquinoPeter D. AquinoPresident and Chief Executive Officer  Name
    
    Title
    
    Date/s/ Peter D. Aquino
    
    President and Chief Executive Officer, Director
    
    February 24, 2009Peter D. Aquino/s/ Michael T. Sicoli
    
    Executive Vice President and Chief Financial
Officer
    
    February 24, 2009Michael T. Sicoli/s/ Leslie J. Sears
    
    Senior Vice President and Controller
    
    February 24, 2009Leslie J. Sears/s/ Benjamin C. Duster IV
    
    Director
    
    February 24, 2009Benjamin C. Duster IV/s/ Lee S. Hillman
    
    Director
    
    February 24, 2009Lee S. Hillman/s/ Charles E. Levine
    
    Director
    
    February 24, 2009Charles E. Levine/s/ Michael E. Katzenstein
    
    Non Executive Chairman, Director
    
    February 24, 2009Michael E. Katzenstein/s/ Theodore H. Schell
    
    Director
    
    February 24, 2009Theodore H. Schell/s/ Daniel Tseung
    
    Director
    
    February 24, 2009Daniel Tseung
  S-1




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##### Table of Contents



EXHIBITS INDEX
 (Exhibits are listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).
 Exhibit No.
    
    Description2.1
    
    
    Joint Plan of Reorganization of RCN Corporation and Certain
Subsidiaries, dated as of December 21, 2004 (incorporated by reference
to Exhibit 2.1 of RCNs Current Report on Form 8-K filed on December
14, 2004).2.2
    
    
    Order Confirming the Joint Plan of Reorganization of RCN Corporation
and Certain Subsidiaries, dated as of December 8, 2004 (incorporated
by reference to Exhibit 2.2 of RCNs Current Report on Form 8-K filed
on December 14, 2004).3.1
    
    
    Amended and Restated Certificate of Incorporation of RCN Corporation,
dated as of December 21, 2004 (incorporated by reference to Exhibit
3.1 of RCNs Current Report on Form 8-K filed on December 27, 2004
8-K).3.2
    
    
    Amended and Restated Bylaws of RCN Corporation (incorporated by
reference to Exhibit 3.2 of RCNs Current Report on Form 8-K filed on
December 27, 2004).4.1
    
    
    Registration Rights Agreement, dated as of December 21, 2004, by and
between RCN Corporation and the Stockholders listed on the signature
pages thereto (incorporated by reference to Exhibit 4.2 of RCNs
Current Report on Form 8-K filed on December 27, 2004).4.2
    
    
    Warrant Agreement, dated as of May 25, 2007, by and RCN Corporation
and HSBC Bank USA, National Association (incorporated by reference to
Exhibit 4.1 of RCNs Current Report on Form 8-K filed on May 25,
2007).4.3
    
    
    Registration Rights Agreement, dated as of May 25, 2007, by and among
RCN Corporation, and the Holders, as defined therein (incorporated by
reference to Exhibit 4.2 of RCNs Current Report on Form 8-K filed on
May 25, 2007).10.1
    
    
    Dark Fiber IRU Agreement dated as of May 8, 1997 among Metropolitan
Fiber Systems/McCourt, Inc. and RCN Telecom Services of Massachusetts,
Inc. (incorporated by reference to Exhibit 10.2 to RCNs Amendment No.
2 to Form 10/A filed on September 5, 1997 (Commission File No.
0-22825)).10.2
    (**)
    
    First Amendment dated as of November 28, 2006 between MCImetro Access
Transmission Services of Massachusetts, as successor-in-interest to
Metropolitan Fiber Systems McCourt, Inc. and RCN Telecom Services,
Inc. as successor-in-interest to RCN Telecom Services of
Massachusetts, Inc. amending the Dark Fiber IRU Agreement dated as of
May 8, 1997 among Metropolitan Fiber Systems/McCourt, Inc. and RCN
Telecom Services of Massachusetts, Inc. (incorporated by reference to
Exhibit 10.20 of RCNs Annual Report on Form 10-K filed on March 15,
2007).10.3
    
    
    Dark Fiber IRU Agreement dated as of May 8, 1997 among Metropolitan
Fiber Systems of New York, Inc. and RCN Telecom Services of New York,
Inc. (incorporated by reference to Exhibit 10.3 to RCNs Amendment No.
2 to Form 10/A filed on September 5, 1997 (Commission File No.
0-22825)).10.4
    (**)
    
    First Amendment to Dark Fiber IRU Agreement between Metropolitan Fiber
Systems of New York, Inc. and RCN Telecom Services, Inc. dated as of
December 5, 2007, amending the May 8, 1997 Dark Fiber IRU Agreement
between Metropolitan Fiber Systems of New York, Inc. and RCN Telecom
Services, Inc. (incorporated by reference to Exhibit 10.4 of RCNs
Amendment No. 1 to Form 10-K/A filed on March 26, 2008).10.5
    (*)
    
    Second Amendment to Dark Fiber IRU Agreement between Metropolitan
Fiber Systems of New York, Inc. and RCN Telecom Services, Inc. dated
as of June 18, 2008, amending the May 8, 1997 Dark Fiber IRU Agreement
between Metropolitan Fiber Systems of New York, Inc. and RCN Telecom
Services, Inc.10.6
    (*)
    
    Third Amendment to Dark Fiber IRU Agreement between Metropolitan Fiber
Systems of New York, Inc. and RCN Telecom Services, Inc. dated as of
November 18, 2008, amending the May 8, 1997 Dark Fiber IRU Agreement
between Metropolitan Fiber Systems of New York, Inc. and RCN Telecom
Services, Inc.10.7
    
    
    Second Amended and Restated Operating Agreement of RCN-Becocom, LLC
made and effective as of June 19, 2002 (incorporated by reference to
Exhibit 10.01 of RCNs Current Report on Form 8-K filed on June 21,
2002).
  E-1




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##### Table of Contents



Exhibit No.
    
    Description10.8
    
    
    Management Agreement dated as of June 17, 1997 among RCN Operating
Services, Inc. and RCN-Becocom, Inc. (incorporated herein by reference
to Exhibit 10.9 to RCNs Amendment No. 2 to Form 10K/A filed on
September 5, 1997 (Commission File No. 0-22825)).10.9
    
    
    Construction and Indefeasible Right of Use Agreement dated as of June
17, 1997 between RCN-Becocom, Inc. and RCN-Becocom, LLC (incorporated
herein by reference to Exhibit 10.10 to RCNs Amendment No. 2 to Form
10/A filed on September 5, 1997 (Commission File No. 0-22825)).10.10
    
    
    License Agreement dated as of June 17, 1997 between Boston Edison
Company and RCN-Becocom, Inc. (incorporated by reference to Exhibit
10.11 to RCNs Amendment No. 2 to Form 10/A filed on September 5, 1997
(Commission File No. 0-22825)).10.11
    
    
    Joint Investment and Non-Competition Agreement dated as of June 17,
1997 among RCN Telecom Services of Massachusetts, Inc., RCN-Becocom,
Inc. and RCN-BecoCom, LLC (incorporated by reference to Exhibit 10.12
to RCNs Amendment No. 2 to Form 10/A filed on September 5, 1997
(Commission File No. 0-22825)).10.12
    
    
    Amended and Restated Operating Agreement of Starpower Communications,
L.L.C. by and between Pepco Communications, L.L.C. and RCN Telecom
Services of Washington, D.C. Inc. dated December 18, 1997
(incorporated by reference to Exhibit 10(m) to RCNs Annual Report on
Form 10-K 405A filed on March 31, 1998 (Commission File No. 0-22825)).10.13
    
    
    Form of Second Amended and Restated Agreement for the Provision of
Fiber Optic Facilities and Services between Northeast Utilities
Service Company, The Connecticut Light & Power Company, Western
Massachusetts Electric Company, Public Service Company of New
Hampshire, and Neon Optica, Inc. as Successor in Interest to Necom LLC
dated as of December 23, 2002  Phase One (incorporated by reference
to Exhibit 10.11 of RCNs Amendment No. 1 to Form 10-K/A filed on
March 26, 2008).10.14
    
    
    Form of Second Amended and Restated Agreement for the Provision of
Fiber Optic Facilities and Services between Northeast Utilities
Service Company, The Connecticut Light & Power Company, Western
Massachusetts Electric Company, Public Service Company of New
Hampshire, and Neon Optica, Inc. as Successor in Interest to Necom LLC
dated as of December 23, 2002  Phase Two (incorporated by reference
to Exhibit 10.4 of RCNs Amendment No. 1 to Form 10-K/A filed on March
26, 2008).10.15
    
    
    Form of Agreement Concerning the Reimbursement of Fees Among The
Connecticut Light & Power Company, Western Massachusetts Electric
Company, Public Service Company of New Hampshire and Mode
1 Communications, Inc. and Neon Optica, Inc. dated as of November 5,
2004 (incorporated by reference to Exhibit 10.13 of RCNs Amendment
No. 1 to Form 10-K/A filed on March 26, 2008).10.16
    (**)
    
    Master Service Agreement, dated as of September 27, 2007, by and
between RCN Telecom Services and Sitel Operating Corporation
(incorporated by reference to Exhibit 10.1 of RCNs Quarterly Report
on Form 10-Q filed on November 8, 2007).10.17
    
    
    Credit Agreement, dated as of May 25, 2007, by and among RCN
Corporation, the various lenders party to the Credit Agreement, and
Deutsche Bank Trust Company Americas, as Administrative Agent
(incorporated by reference to Exhibit 10.1 of RCNs Current Report on
Form 8-K filed on May 25, 2007).10.18
    
    
    Incremental Commitment Agreement, dated as of November 13, 2007, by
and among RCN Corporation, the various lenders party to the Credit
Agreement, and Deutsche Bank Trust Company Americas, as Administrative
Agent (incorporated by reference to Exhibit 10.1 of RCNs Current
Report on Form 8-K filed on November 13, 2007).10.19
    
    
    Security Agreement, dated as of May 25, 2007, by and among RCN
Corporation, certain subsidiaries of RCN Corporation, and Deutsche
Bank Trust Company Americas, as First-Lien Collateral Agent
(incorporated by reference to Exhibit 10.2 of RCNs Current Report on
Form 8-K filed on May 25, 2007).10.20
    
    
    Pledge Agreement, dated as of May 25, 2007, by and among RCN
Corporation, certain subsidiaries of RCN Corporation, and Deutsche
Bank Trust Company Americas, as First-Lien Collateral Agent
(incorporated by reference to Exhibit 10.3 of RCNs Current Report on
Form 8-K filed on May 25, 2007).
  E-2




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##### Table of Contents



Exhibit No.
    
    Description10.21
    
    
    Subsidiary Guaranty, dated as of May 25, 2007, by and among certain
subsidiaries of RCN Corporation and Deutsche Bank Trust Company
Americas, as Collateral Agent (incorporated by reference to Exhibit
10.4 of RCNs Current Report on Form 8-K filed on May 25, 2007).10.22
    
    
    RCN Corporation Senior Executive Annual Bonus Plan (incorporated by
reference to Exhibit 99.1 of RCNs Current Report on Form 8-K filed on
July 26, 2005).10.23
    +
    
    RCN Corporation 2005 Stock Compensation Plan, as amended (incorporated
by reference to Annex A to RCNs Definitive Proxy Statement for the
2007 Annual Meeting of Stockholders filed on April 27, 2007).10.24
    +
    
    RCN Amended and Restated Change of Control Severance Plan dated July
3, 2008 (incorporated by reference to Exhibit 10.1 to RCNs Quarterly
Report on Form 10-Q filed on August 7, 2008).10.25
    +
    
    RCN Corporation 2007 Short-Term Incentive Plan (incorporated by
reference to Exhibit 10.28 of RCNs Amended Quarterly Report on Form
10-Q/A filed on May 14, 2007).10.26
    +
    
    Amended Form Non-Qualified Option Agreement (incorporated by reference
to Exhibit 10.29 to RCNs Amendment No. 1 to its Annual Report on Form
10-K filed on April 10, 2006).10.27
    +
    
    Amended Form Incentive Stock Option Agreement (incorporated by
reference to Exhibit 10.30 to RCNs Amendment No. 1 to its Annual
Report on Form 10-K filed on April 10, 2006).10.28
    +
    
    Form Director Restricted Stock Agreement (incorporated by reference to
Exhibit 10.3 of RCNs Current Report on Form 8-K filed on January 6,
2006).10.29
    +
    
    Amended Form Executive Restricted Stock Agreement (incorporated by
reference to Exhibit 10.20 of RCNs Annual Report on Form 10-K filed
on March 15, 2007).10.30
    +
    
    Form of Director Restricted Stock Unit Agreement (incorporated by
reference to Exhibit 10.1 of RCNs Current Report on Form 8-K filed on
February 7, 2008).10.31
    +
    
    Form of Deferral Election Form (incorporated by reference to Exhibit
10.2 of RCNs Current Report on Form 8-K filed on February 7, 2008).10.32
    +
    
    Form of Executive Restricted Stock Unit Agreement (incorporated by
reference to Exhibit 10.30 of RCNs Amendment No. 1 to Form 10-K/A
filed on March 26, 2008).10.33
    +
    
    Form of Performance-Based Restricted Stock Unit Award Agreement
(incorporated by reference to Exhibit 10.1 of RCNs Quarterly Report
on Form 10-Q filed on May 8, 2008).10.34
    +
    
    Form of Restricted Stock Unit Award for Officer  RSU Deferral
Election Form (incorporated by reference to Exhibit 10.2 of RCNs
Quarterly Report on Form 10-Q filed on May 8, 2008).10.35
    +
    
    Amended and Restated Employment Agreement, effective as of December
21, 2007, by and between RCN Corporation and Peter D. Aquino
(incorporated by reference to Exhibit 10.1 of RCNs Current Report on
Form 8-K filed on December 27, 2007).10.36
    +
    
    Employment Letter by and between RCN Corporation and Michael Sicoli,
dated May 12, 2005 (incorporated by reference to Exhibit 99.2 of RCNs
Current Report on Form 8-K filed on May 12, 2005).10.37
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Michael E. Katzenstein (incorporated by reference to
Exhibit 10.1 of RCNs Current Report on Form 8-K filed on May 31,
2006).10.38
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Theodore H. Schell (incorporated by reference to
Exhibit 10.2 of RCNs Current Report on Form 8-K filed on May 31,
2006).10.39
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Benjamin C. Duster, IV (incorporated by reference to
Exhibit 10.3 of RCNs Current Report on Form 8-K filed on May 31,
2006).
  E-3




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##### Table of Contents



Exhibit No.
    
    Description10.40
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Lee S. Hillman (incorporated by reference to Exhibit
10.4 of RCNs Current Report on Form 8-K filed on May 31, 2006).10.41
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Daniel Tseung (incorporated by reference to Exhibit
10.5 of RCNs Current Report on Form 8-K filed on May 31, 2006).10.42
    +
    
    Restricted Stock Agreement by and between RCN Corporation and Peter D.
Aquino (incorporated by reference to Exhibit 10.3 of RCNs Current
Report on Form 8-K filed on June 6, 2006).10.43
    +
    
    Restricted Stock Agreement by and between RCN Corporation and Michael
T. Sicoli (incorporated by reference to Exhibit 10.4 of RCNs Current
Report of Form 8-K filed on June 6, 2006).10.44
    +
    
    Employment Letter by and between RCN Corporation and Benjamin R.
Preston dated April 5, 2006 (incorporated by reference to Exhibit 99.2
of RCNs Current Report on Form 8-K filed on April 5, 2006).10.45
    +
    
    Severance Agreement and Release, dated as of February 4, 2008, by and
between RCN Corporation and James F. Mooney (incorporated by reference
to Exhibit 10.3 of RCNs Current Report on Form 8-K filed on February
7, 2008).10.46
    
    
    Severance Agreement and Release, dated as of November 4, 2008, by and
between RCN Corporation and Benjamin Preston (incorporated by
reference to Exhibit 10.1 of RCNs Quarterly Report on Form 10-Q filed
on November 4, 2008).10.47
    
    
    Stock Purchase Agreement between RCN Corporation and Consolidated
Edison, Inc., dated as of December 5, 2005 (incorporated by reference
to Exhibit 10.33 to RCNs Amendment No. 1 to its Annual Report on Form
10-K filed on April 10, 2006).10.48
    
    
    Stock Purchase Agreement, dated March 6, 2006, entered into by and
among RCN International Holdings, Inc, Teleholding, S.A. de C.V., Mega
Cable, S.A. de C.V. and MCM Holding, S.A. de C.V. (incorporated by
reference to Exhibit 99.2 of RCNs Current Report on Form 8-K filed on
March 8, 2006).10.49
    
    
    Settlement Agreement, dated March 6, 2006, entered into by and among
RCN International Holdings, Inc., Teleholding, S.A. de C.V., Mega
Cable, S.A. de C.V., MCM Holding, S.A. de C.V. and the Private
Shareholders listed therein (incorporated by reference to Exhibit
10.35 to RCNs Amendment No. 1 to its Annual Report on Form 10-K filed
on April 10, 2006).10.50
    
    
    Asset Purchase Agreement by and among RCN Telecom Services, Inc., RCN
Corporation and Astound Broadband, LLC (incorporated by reference to
Exhibit 99.2 of RCNs Current Report on Form 8-K filed on August 18,
2006).10.51
    
    
    Agreement and Plan of Merger, dated as of June 24, 2007, by and among
RCN Corporation, Raven Acquisition Corporation, and NEON
Communications Group, Inc. (incorporated by reference to Exhibit 2.1
of RCNs Current Report on Form 8-K filed on June 25, 2007).10.52
    (*)
    
    Form of Director Restricted Stock Unit Agreement dated March 2, 2009.21.1
    (*)
    
    Subsidiaries of Registrant.23.2
    (*)
    
    Consent of Friedman LLP, Independent Registered Public Accounting Firm.
  E-4




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##### Table of Contents



Exhibit No.
    
    Description31.1
    (*)
    
    Certification of Chief Executive Officer pursuant to Rules 13a-14 and
15d-14 promulgated under the Securities and Exchange Act of 1934, as
amended, as adopted pursuant to section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    (*)
    
    Certification of the Executive Vice President and Chief Financial
Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the
Securities and Exchange Act of 1934, as amended, as adopted pursuant
to section 302 of the Sarbanes-Oxley Act of 2002.32.1
    (*)
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.32.2
    (*)
    
    Certification of Executive Vice President and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 *
    
    Document attached.**
    
    Confidential treatment requested as to certain portions of the document, which portions have
been omitted and filed separately with the Securities and Exchange Commission.+
    
    Management compensatory plan or arrangement.  E-5




---



##### Table of Contents



Index to Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006
    
    
    F-3Consolidated Balance Sheets as of December 31, 2008 and December 31, 2007
    
    
    F-4Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
    
    
    F-5Consolidated Statements of Changes in Common Stockholders Equity (Deficit) for the years
ended December 31, 2008, 2007 and 2006
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Schedule IIValuation and Qualifying Accounts
    
    
    F-30
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  F-2




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##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (dollars in thousands, except share and per share data)
 Year ended December 31,2008
    
    
    2007
    
    
    2006Revenues
    
    $
    739,243
    
    
    $
    636,097
    
    
    $
    585,476Costs and expenses:Direct expenses
    
    
    264,219
    
    
    
    224,770
    
    
    
    201,370Selling, general and administrative (including
stock-based compensation of $13,335, $33,206, and
$18,162)
    
    
    294,100
    
    
    
    288,426
    
    
    
    276,471Exit costs and restructuring charges, net of recoveries
    
    
    2,314
    
    
    
    8,194
    
    
    
    6,702Depreciation and amortization
    
    
    198,734
    
    
    
    195,239
    
    
    
    192,964Operating loss
    
    
    (20,124
    )
    
    
    (80,532
    )
    
    
    (92,031
    )Investment income
    
    
    2,880
    
    
    
    9,424
    
    
    
    5,983Interest expense
    
    
    (53,301
    )
    
    
    (34,510
    )
    
    
    (24,659
    )Gain on sale of investment in unconsolidated entity
    
    
    
    
    
    
    
    
    
    
    125,370Loss on sale of assets
    
    
    (181
    )
    
    
    (827
    )
    
    
    (2,119
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    (63,795
    )
    
    
    (19,287
    )Other (expense) income, net
    
    
    
    
    
    
    (451
    )
    
    
    35Loss from continuing operations before income taxes
    
    
    (70,726
    )
    
    
    (170,691
    )
    
    
    (6,708
    )Income tax (benefit) expense
    
    
    
    
    
    
    (1,049
    )
    
    
    7,612Net loss from continuing operations
    
    
    (70,726
    )
    
    
    (169,642
    )
    
    
    (14,320
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    1,684
    
    
    
    2,464Gain on sale of discontinued operations, net of tax
    
    
    
    
    
    
    15,921
    
    
    
    Net loss
    
    $
    (70,726
    )
    
    $
    (152,037
    )
    
    $
    (11,856
    )Net (loss) income per common share:Basic and Diluted:Loss from continuing operations
    
    $
    (1.91
    )
    
    $
    (4.58
    )
    
    $
    (0.39
    )Income from discontinued operations
    
    
    
    
    
    
    0.05
    
    
    
    0.07Gain on sale of discontinued operations
    
    
    
    
    
    
    0.43
    
    
    
    Net loss
    
    $
    (1.91
    )
    
    $
    (4.11
    )
    
    $
    (0.32
    )Weighted average shares outstanding, Basic and Diluted
    
    
    36,981,078
    
    
    
    37,033,456
    
    
    
    36,756,494
   F-3




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##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (dollars in thousands)
 December 31,2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    40,879
    
    
    $
    21,793Short-term investments
    
    
    22,805
    
    
    
    45,899Accounts receivable, net of allowance for doubtful accounts of $3,770 and $4,298
    
    
    72,294
    
    
    
    66,793Prepaid expenses and other current assets
    
    
    11,446
    
    
    
    22,799Total current assets
    
    
    147,424
    
    
    
    157,284Property, plant and equipment, net of accumulated depreciation of $672,821 and $502,905
    
    
    718,026
    
    
    
    793,407Goodwill
    
    
    15,479
    
    
    
    Intangible assets, net of accumulated amortization of $78,567 and $58,676
    
    
    112,317
    
    
    
    107,511Long-term restricted investments
    
    
    15,371
    
    
    
    22,767Deferred charges and other assets
    
    
    16,843
    
    
    
    16,920Total assets
    
    $
    1,025,460
    
    
    $
    1,097,889LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    37,752
    
    
    $
    26,133Advanced billings and customer deposits
    
    
    42,943
    
    
    
    41,937Accrued expenses and other
    
    
    54,317
    
    
    
    78,012Accrued employee compensation and related expenses
    
    
    18,351
    
    
    
    17,662Accrued exit costs
    
    
    2,183
    
    
    
    2,618Current portion of long-term debt and capital lease obligations
    
    
    7,352
    
    
    
    7,338Total current liabilities
    
    
    162,898
    
    
    
    173,700Long-term debt and capital lease obligations, net of current maturities
    
    
    735,255
    
    
    
    737,607Other long-term liabilities
    
    
    110,936
    
    
    
    69,707Total liabilities
    
    
    1,009,089
    
    
    
    981,014Commitments and contingenciesStockholders Equity:Common stock, par value $0.01 per share, 100,000,000 shares
authorized, 36,631,222 and 37,654,546 shares issued and outstanding
    
    
    366
    
    
    
    377Additional paid-in-capital
    
    
    451,152
    
    
    
    444,738Treasury stock, 276,471 and 194,184 shares at cost
    
    
    (5,702
    )
    
    
    (4,709
    )Accumulated deficit
    
    
    (374,419
    )
    
    
    (303,693
    )Accumulated other comprehensive loss
    
    
    (55,026
    )
    
    
    (19,838
    )Total stockholders equity
    
    
    16,371
    
    
    
    116,875Total liabilities and stockholders equity
    
    $
    1,025,460
    
    
    $
    1,097,889
   F-4




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##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (dollars in thousands)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (70,726
    )
    
    $
    (152,037
    )
    
    $
    (11,856
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    (1,684
    )
    
    
    (2,464
    )Gain on sale of discontinued operations
    
    
    
    
    
    
    (15,921
    )
    
    
    Net loss from continuing operations
    
    
    (70,726
    )
    
    
    (169,642
    )
    
    
    (14,320
    )Adjustments to reconcile net loss to net cash provided by
operating activities:Accretion of discounted debt
    
    
    
    
    
    
    
    
    
    
    1,663Loss on early extinguishment of debt
    
    
    
    
    
    
    63,795
    
    
    
    19,287Amortization of finance costs
    
    
    1,685
    
    
    
    740
    
    
    
    1,304Non-cash stock-based compensation
    
    
    13,335
    
    
    
    33,206
    
    
    
    18,162Loss on sale of assets
    
    
    181
    
    
    
    827
    
    
    
    2,119Gain on sale of investment in unconsolidated entity
    
    
    
    
    
    
    
    
    
    
    (125,370
    )Depreciation and amortization
    
    
    198,734
    
    
    
    195,239
    
    
    
    192,964Deferred income taxes, net
    
    
    
    
    
    
    (1,049
    )
    
    
    145Provision for doubtful accounts
    
    
    16,384
    
    
    
    10,880
    
    
    
    11,039Exit costs and restructuring charges
    
    
    (2,699
    )
    
    
    2,460
    
    
    
    4,402Net change in certain assets and liabilities, net of
business acquisitions:Accounts receivable and unpaid revenues
    
    
    (22,002
    )
    
    
    (12,560
    )
    
    
    (15,642
    )Accounts payable and accrued expenses
    
    
    (117
    )
    
    
    (13,744
    )
    
    
    (7,284
    )Advanced billing and customer deposits
    
    
    1,027
    
    
    
    338
    
    
    
    4,512Other assets and liabilities
    
    
    4,169
    
    
    
    (1,802
    )
    
    
    (1,464
    )Net cash provided by continuing operations
    
    
    139,971
    
    
    
    108,688
    
    
    
    91,517Cash provided by discontinued operations
    
    
    
    
    
    
    476
    
    
    
    3,498Net cash provided by operating activities
    
    
    139,971
    
    
    
    109,164
    
    
    
    95,015Cash flows from investing activities:Additions to property, plant and equipment
    
    
    (143,252
    )
    
    
    (115,510
    )
    
    
    (86,195
    )Investment in acquisitions and intangibles, net of cash
acquired
    
    
    
    
    
    
    (261,843
    )
    
    
    (40,854
    )Net proceeds from sale of discontinued operations and
other assets
    
    
    2,500
    
    
    
    46,877
    
    
    
    Decrease in short-term investments
    
    
    22,957
    
    
    
    12,268
    
    
    
    13,828Proceeds from sale of assets
    
    
    1,850
    
    
    
    1,955
    
    
    
    999Proceeds from sale of investment in unconsolidated entity
    
    
    
    
    
    
    
    
    
    
    307,467Decrease in restricted investments
    
    
    7,396
    
    
    
    754
    
    
    
    1,537Net cash (used in) provided by continuing operations
    
    
    (108,549
    )
    
    
    (315,499
    )
    
    
    196,782Cash used in discontinued operations
    
    
    
    
    
    
    (243
    )
    
    
    (2,156
    )Net cash (used in) provided by investing activities
    
    
    (108,549
    )
    
    
    (315,742
    )
    
    
    194,626Cash flows from financing activities:Repayments of long-term debt, including debt premium and capital lease obligations
    
    
    (7,338
    )
    
    
    (219,480
    )
    
    
    (372,532
    )Payment of debt issuance cost
    
    
    (67
    )
    
    
    (13,944
    )
    
    
    (4,412
    )Proceeds from bank debt
    
    
    5,000
    
    
    
    745,000
    
    
    
    75,000Dividends paid
    
    
    (1,613
    )
    
    
    (348,380
    )
    
    
    Proceeds from the exercise of stock options
    
    
    397
    
    
    
    5,793
    
    
    
    9,127Cost of common shares repurchased
    
    
    (7,722
    )
    
    
    (3,639
    )
    
    
    (1,388
    )Purchase of treasury stock
    
    
    (993
    )
    
    
    (3,321
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (12,336
    )
    
    
    162,029
    
    
    
    (294,205
    )Net increase (decrease) in cash and cash equivalents
    
    
    19,086
    
    
    
    (44,549
    )
    
    
    (4,564
    )Cash and cash equivalents at beginning of period
    
    
    21,793
    
    
    
    66,342
    
    
    
    70,906Cash and cash equivalents at end of period
    
    $
    40,879
    
    
    $
    21,793
    
    
    $
    66,342
   F-5




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##### Table of Contents



RCN CORPORATION
 
 Consolidated Statements of Stockholders Equity/(Deficit)
 (dollars in thousands, except share and per share data)
 Committed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon Stock
    
    
    Committed
    
    
    Committed
    
    
    Capital
    
    
    
    
    
    
    
    
    
    
    Treasury
    
    
    
    
    
    
    Other
    
    
    Total CommonCommon Stock
    
    
    Class A
    
    
    Capital
    
    
    Capital
    
    
    in Excess
    
    
    Additional
    
    
    Accumulated
    
    
    Stock
    
    
    Treasury
    
    
    Comprehensive
    
    
    StockholdersClass A Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    of Par
    
    
    Paid in Capital
    
    
    Deficit
    
    
    Shares
    
    
    Stock Amount
    
    
    Income (Loss)
    
    
    Equity (Deficit)Balance December 31, 2005
    
    
    36,028,116
    
    
    $
    360
    
    
    
    797,938
    
    
    $
    8
    
    
    $
    25,549
    
    
    $
    669,762
    
    
    $
    (139,800
    )
    
    
    
    
    
    $
    
    
    
    $
    7,023
    
    
    $
    562,902Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,856
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,856
    )Issuance of restricted stock, net of forfeitures
    
    
    168,379
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Return of committed shares
    
    
    (113
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of committed shares in payment of claims
    
    
    797,938
    
    
    
    8
    
    
    
    (797,938
    )
    
    
    (8
    )
    
    
    (25,550
    )
    
    
    25,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of warrants
    
    
    179
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,758
    
    
    
    (1,388
    )
    
    
    
    
    
    
    (1,388
    )Stock options exercised
    
    
    461,413
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,122
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,126Amortization of restricted stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,791
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,791Amortization of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,371
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,371Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,896
    )
    
    
    (6,896
    )Unrealized depreciation on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    (110
    )Balance December 31, 2006
    
    
    37,455,912
    
    
    $
    374
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    722,589
    
    
    $
    (151,656
    )
    
    
    56,758
    
    
    $
    (1,388
    )
    
    $
    17
    
    
    $
    569,936Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (152,037
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (152,037
    )Issuance of restricted stock, net of forfeitures
    
    
    145,110
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock options exercised
    
    
    315,124
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,821Issuance of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,450
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,450Repurchase of common stock
    
    
    (261,600
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,639
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,641
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,426
    
    
    
    (3,321
    )
    
    
    
    
    
    
    (3,321
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,206
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,206Dividends declared: $9.33 per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (351,684
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (351,684
    )Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73
    )
    
    
    (73
    )Change in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,817
    )
    
    
    (19,817
    )Unrealized appreciation on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    35Balance December 31, 2007
    
    
    37,654,546
    
    
    $
    377
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    444,738
    
    
    $
    (303,693
    )
    
    
    194,184
    
    
    $
    (4,709
    )
    
    $
    (19,838
    )
    
    $
    116,875Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,726
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,726
    )Restricted stock activity, net of forfeitures
    
    
    (19,605
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock options exercised
    
    
    32,081
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397Repurchase of common stock
    
    
    (1,035,800
    )
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,711
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,722
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,287
    
    
    
    (993
    )
    
    
    
    
    
    
    (993
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,335
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,335Forfeited dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    393
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    393Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (398
    )
    
    
    (398
    )Change in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,653
    )
    
    
    (34,653
    )Unrealized depreciation on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (137
    )Balance December 31, 2008
    
    
    36,631,222
    
    
    $
    366
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    451,152
    
    
    $
    (374,419
    )
    
    
    276,471
    
    
    $
    (5,702
    )
    
    $
    (55,026
    )
    
    $
    16,371
   F-6




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##### Table of Contents



RCN CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (dollars in thousands, except share and per share data)
 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
    2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  Use of Estimates and Assumptions
  Revisions and Reclassifications
    F-7




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##### Table of Contents



Fresh Start Accounting
 Financial Reporting By Entities in Reorganization Under
the Bankruptcy Code
 Cash and Cash Equivalents
  Short-term Investments
 Accounting for Certain Investments in Debt and Equity
Securities
 2008
    
    
    2007Commercial Paper
    
    $
    
    
    
    $
    29,679Federal Agency
    
    
    5,031
    
    
    
    16,220U.S. Treasuries
    
    
    17,774
    
    
    
    Total
    
    $
    22,805
    
    
    $
    45,899
 Concentration and Monitoring of Credit Risk
      Accounts Receivable
   F-8




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##### Table of Contents



Long-Term Restricted Investments
  Property, Plant and Equipment
   Useful Life
    
    
    2008
    
    
    2007Telecommunications plant
    
    5-23 years
    
    $
    1,022,514
    
    
    $
    1,027,418Indefeasible rights of use
    
    5-15 years
    
    
    139,529
    
    
    
    84,456Computer equipment
    
    3-5 years
    
    
    68,046
    
    
    
    64,316Buildings, leasehold improvements and land
    
    5-30 years
    
    
    88,832
    
    
    
    45,810Furniture, fixtures and vehicles
    
    3-10 years
    
    
    27,390
    
    
    
    28,070Construction materials and other
    
    5-10 years
    
    
    44,536
    
    
    
    46,242Total property, plant and equipment
    
    
    
    
    
    
    1,390,847
    
    
    
    1,296,312Less: accumulated depreciation
    
    
    
    
    
    
    (672,821
    )
    
    
    (502,905
    )Property, plant and equipment, net
    
    
    
    
    
    $
    718,026
    
    
    $
    793,407
   Accounting
for the Impairment or Disposal of Long-Lived Assets
  F-9




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##### Table of Contents



Goodwill and Other Intangible Assets
   Asset Retirement Obligations
 Accounting for Asset Retirement Obligations Accounting for Conditional Asset Retirement Obligations  an
Interpretation of FASB Statement No. 143
 Legal Contingencies
 Accounting for Contingencies
 Revenue Recognition
   Direct Expenses
   F-10




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##### Table of Contents



Selling, General and Administrative Expenses
  Non-Cash Stock-Based Compensation
 Share-Based
Payments (
 Exit and Restructuring Costs
 Accounting for
Costs Associated with Exit or Disposal Activities
   Debt Issuance Costs
  Income Taxes
 Accounting for Income
Taxes
  F-11




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##### Table of Contents



Accounting for Uncertainty in Income Taxes an
Interpretation of FASB Statement No. 109 Accounting for Contingencies
 Derivative Instruments and Hedging Activities
 Accounting
for Derivative Instruments and Hedging Activities
 Comprehensive Income (Loss)
  Year ended December 31,(dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Net loss
    
    $
    (70,726
    )
    
    $
    (152,037
    )
    
    $
    (11,856
    )Reversal of accumulated translation gains
upon sale of investment in unconsolidated
subsidiary
    
    
    
    
    
    
    
    
    
    
    (6,896
    )Foreign currency translation loss
    
    
    (398
    )
    
    
    (73
    )
    
    
    Change in fair value of interest rate swaps
    
    
    (34,653
    )
    
    
    (19,817
    )
    
    
    Unrealized (depreciation) appreciation on
investments
    
    
    (137
    )
    
    
    35
    
    
    
    (110
    )Comprehensive loss
    
    $
    (105,914
    )
    
    $
    (171,892
    )
    
    $
    (18,862
    )
   Recently Issued Accounting Pronouncements
 Determining the Fair
Value of a Financial Asset when the Market for that Asset is Not Active, Fair Value Measurements
 , Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own
Stock
  F-12




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##### Table of Contents



The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
    F-13




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##### Table of Contents



3. ACQUISITIONS AND DISPOSITIONS
 Acquisition of NEON Communications Group, Inc.
   Current assets
    
    $
    32,790Property and equipment
    
    
    210,520Goodwill
    
    
    15,479Other intangible assets
    
    
    53,697Other non-current assets
    
    
    11,591Total assets acquired
    
    
    324,077Total liabilities assumed
    
    
    (42,690
    )Net assets acquired
    
    
    281,387Less: cash acquired
    
    
    (21,794
    )Total purchase price, net of cash acquired
    
    $
    259,593
  2007
    
    
    2006Revenues, net *
    
    $
    702,394
    
    
    $
    654,730Operating loss * (1)
    
    $
    (95,408
    )
    
    $
    (118,467
    )Net loss * (1)
    
    $
    (197,330
    )
    
    $
    (38,414
    )Net loss per common share, basic and diluted *
    
    $
    (5.33
    )
    
    $
    (1.05
    )
 *
    
    from continuing operations(1)
    
    Includes non recurring charges incurred by NEON including deal-related costs and
stock-based compensation expense totaling $5.4 million during 2007. Sale of San Francisco Operations and Exit of Los Angeles Operations
   F-14




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##### Table of Contents



Sale of Megacable, S.A. de C.V.
  Acquisition of Consolidated Edison Communications Holding Company, Inc.
  4. EXIT COSTS AND RESTRUCTURING CHARGES
  Year ended December 31,2008
    
    
    2007
    
    
    2006Exit costs for excess facilities
    
    $
    164
    
    
    $
    7,875
    
    
    $
    4,402Restructuring charges
    
    
    2,150
    
    
    
    3,443
    
    
    
    2,300Recoveries, net
    
    
    
    
    
    
    (3,124
    )
    
    
    Total
    
    $
    2,314
    
    
    $
    8,194
    
    
    $
    6,702
     Lease FairValue
    
    
    Exit Costs
    
    
    TotalBalance, December 31, 2006
    
    $
    4,926
    
    
    $
    9,350
    
    
    $
    14,276Additional accrued costs
    
    
    
    
    
    
    2,731
    
    
    
    2,731Amortization
    
    
    (773
    )
    
    
    (2,344
    )
    
    
    (3,117
    )Reversals/Settlements
    
    
    (808
    )
    
    
    
    
    
    
    (808
    )Balance, December 31, 2007
    
    
    3,345
    
    
    
    9,737
    
    
    
    13,082Additional accrued costs
    
    
    
    
    
    
    485
    
    
    
    485Amortization
    
    
    (654
    )
    
    
    (2,207
    )
    
    
    (2,861
    )Reversals/Settlements
    
    
    
    
    
    
    (2,865
    )
    
    
    (2,865
    )Balance, December 31, 2008
    
    
    2,691
    
    
    
    5,150
    
    
    
    7,841Less current portion
    
    
    621
    
    
    
    1,562
    
    
    
    2,183Long-term portion December 31, 2008
    
    $
    2,070
    
    
    $
    3,588
    
    
    $
    5,658
  F-15




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##### Table of Contents



5. FAIR VALUE OF FINANCIAL INSTRUMENTS
  
    
    Level 1: Observable inputs such as quoted prices in active markets for identical assets
or liabilities;
    
    Level 2: Inputs other than quoted prices that are observable for the asset or liability,
either directly or indirectly; these include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar assets or
liabilities in markets that are not active ;
    
    Level 3: Unobservable inputs that are supported by little or no market activity, which
require the reporting entitys judgment or estimation.
  December 31, 2008Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalLiabilitiesInterest rate swap agreements
    
    $
    
    
    
    $
    54,570
    
    
    $
    
    
    
    $
    54,570Borrowings under the
First-Lien Credit Agreement
    
    
    
    
    
    
    474,744
    
    
    
    
    
    
    
    474,744Total Liabilities
    
    $
    
    
    
    $
    529,314
    
    
    $
    
    
    
    $
    529,314
    F-16




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##### Table of Contents



6. INTANGIBLE ASSETS
  December 31, 2008
    
    
    December 31, 2007Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedUseful Life
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAmortizable intangible assets:Customer relationships
    
    4 -10 years
    
    $
    88,072
    
    
    $
    (67,318
    )
    
    $
    97,472
    
    
    $
    (50,160
    )Trademarks/tradenames
    
    5 years
    
    
    13,573
    
    
    
    (10,958
    )
    
    
    13,573
    
    
    
    (8,263
    )Software
    
    3 years
    
    
    540
    
    
    
    (291
    )
    
    
    300
    
    
    
    (253
    )Subtotal
    
    
    
    
    
    $
    102,185
    
    
    $
    (78,567
    )
    
    $
    111,345
    
    
    $
    (58,676
    )Indefinite-lived intangible assets:Franchise Rights
    
    Indefinite life
    
    
    54,842
    
    
    
    
    
    
    
    54,842
    
    
    
    Rights-of-Way
    
    Indefinite life
    
    
    33,857
    
    
    
    
    
    
    
    
    
    
    
    Total intangible assets
    
    
    
    
    
    $
    190,884
    
    
    $
    (78,567
    )
    
    $
    166,187
    
    
    $
    (58,676
    )Goodwill
    
    Indefinite life
    
    $
    15,479
    
    
    $
    
    
    
    $
    
    
    
    $
    
   Amortizable intangible assets, net:
    
    Resi/SMB
    
    
    RCN Metro
    
    
    TotalBalance, December 31, 2006
    
    $
    39,555
    
    
    $
    2,571
    
    
    $
    42,126Acquisitions
    
    
    2,251
    
    
    
    29,000
    
    
    
    31,251Amortization
    
    
    (18,384
    )
    
    
    (2,324
    )
    
    
    (20,708
    )Balance, December 31, 2007
    
    
    23,422
    
    
    
    29,247
    
    
    
    52,669Adjustments
    
    
    
    
    
    
    (9,160
    )
    
    
    (9,160
    )Amortization
    
    
    (17,871
    )
    
    
    (2,020
    )
    
    
    (19,891
    )Balance, December 31, 2008
    
    $
    5,551
    
    
    $
    18,067
    
    
    $
    23,618
   Year ended December 31,2009
    
    $
    6,1532010
    
    
    2,8102011
    
    
    2,2412012
    
    
    2,2412013
    
    
    2,241Thereafter
    
    
    7,932Total
    
    $
    23,618
  F-17




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##### Table of Contents



7. DEFERRED CHARGES AND OTHER ASSETS
  2008
    
    
    2007Debt issuance cost, net of accumulated amortization
    
    $
    9,104
    
    
    $
    10,722Security deposits
    
    
    3,368
    
    
    
    3,558Other long-term assets
    
    
    4,371
    
    
    
    2,640Total deferred charges and other assets
    
    $
    16,843
    
    
    $
    16,920
 8. OTHER LONG-TERM LIABILITIES
  2008
    
    
    2007Interest rate swaps
    
    $
    54,470
    
    
    $
    19,817Deferred taxes
    
    
    36,154
    
    
    
    22,763Unearned revenue
    
    
    11,385
    
    
    
    12,398Exit costs
    
    
    3,588
    
    
    
    7,775Other deferred credits
    
    
    2,678
    
    
    
    2,716Lease cost/fair value reserve
    
    
    2,070
    
    
    
    2,690Dividend payable
    
    
    591
    
    
    
    1,548Total other long-term liabilities
    
    $
    110,936
    
    
    $
    69,707
  9. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
  2008
    
    
    2007Term Loans under the First-Lien Credit Agreement
    
    $
    709,694
    
    
    $
    716,899Revolving Line of Credit
    
    
    30,000
    
    
    
    25,000Capital Leases
    
    
    2,913
    
    
    
    3,046Total
    
    
    742,607
    
    
    
    744,945Due within one year
    
    
    7,352
    
    
    
    7,338Total long-term debt
    
    $
    735,255
    
    
    $
    737,607
  For the year ending December 31,2009
    
    $
    7,3522010
    
    
    7,3682011
    
    
    7,3852012
    
    
    7,4032013
    
    
    37,4252014
    
    
    673,912Thereafter
    
    
    1,762Total
    
    $
    742,607
  F-18




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##### Table of Contents



First-Lien Credit Agreement
     Recapitalization
  10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
    F-19




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##### Table of Contents



11. STOCKHOLDERS EQUITY AND STOCK PLANS
 Income (Loss) Per Share
    2008
    
    
    2007
    
    
    2006Options
    
    
    4,057,561
    
    
    
    3,884,652
    
    
    
    2,963,674Warrants
    
    
    8,018,276
    
    
    
    8,018,276
    
    
    
    Shares issuable upon conversion of convertible debt
    
    
    
    
    
    
    
    
    
    
    4,968,204Unvested restricted stock units
    
    
    653,923
    
    
    
    
    
    
    
    Unvested restricted stock awards
    
    
    162,128
    
    
    
    437,482
    
    
    
    655,103Total
    
    
    12,891,888
    
    
    
    12,340,410
    
    
    
    8,586,981
 RCN Common Stock and Dividends
     Stock Repurchase Program
   F-20




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##### Table of Contents



RCN Stock-Based Compensation
    Year ended December 31,2008
    
    
    2007
    
    
    2006Restricted stock awards
    
    $
    2,832
    
    
    $
    10,093
    
    
    $
    5,791Restricted stock units
    
    
    2,506
    
    
    
    
    
    
    
    Stock options
    
    
    7,997
    
    
    
    23,113
    
    
    
    12,371Total stock-based compensation expense
    
    $
    13,335
    
    
    $
    33,206
    
    
    $
    18,162
  Stock Options
   2008
    
    
    2007
    
    
    2006WeightedaverageWeighted
    
    
    remaining
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    contractual
    
    
    Number
    
    
    Average
    
    
    Number
    
    
    AverageNumber
    
    
    Exercise
    
    
    life
    
    
    of
    
    
    Exercise
    
    
    of
    
    
    Exerciseof Shares
    
    
    Price
    
    
    (in years)
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceAwards Outstanding
at January 1
    
    
    3,884,652
    
    
    $
    15.49
    
    
    
    
    
    
    
    2,963,674
    
    
    $
    23.37
    
    
    
    3,433,951
    
    
    $
    21.64Granted
    
    
    1,362,702
    
    
    
    11.10
    
    
    
    
    
    
    
    330,677
    
    
    
    14.39
    
    
    
    674,900
    
    
    
    27.16Exercised
    
    
    (32,081
    )
    
    
    12.36
    
    
    
    
    
    
    
    (315,130
    )
    
    
    18.38
    
    
    
    (461,413
    )
    
    
    19.78Forfeitures
    
    
    (1,157,712
    )
    
    
    15.97
    
    
    
    
    
    
    
    (422,368
    )
    
    
    18.76
    
    
    
    (683,764
    )
    
    
    20.86Special cash
dividend
Adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,327,799
    
    
    
    15.57Awards Outstanding
at December 31
    
    
    4,057,561
    
    
    $
    13.94
    
    
    
    4.50
    
    
    
    3,884,652
    
    
    $
    15.49
    
    
    
    2,963,674
    
    
    $
    23.37Awards Exercisable
at December 31
    
    
    2,552,767
    
    
    $
    14.98
    
    
    
    3.64
    
    
    
    2,283,819
    
    
    $
    15.77
    
    
    
    670,249
    
    
    $
    23.16
  F-21




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##### Table of Contents



Options Outstanding
    
    
    Options ExercisableNumberExercise price
    
    
    outstanding
    
    
    Remaining
    
    
    Exercise
    
    
    
    
    
    
    Exerciseof
    
    
    at
    
    
    contractual life
    
    
    price per
    
    
    As of
    
    
    price peroptions
    
    
    12/31/2008
    
    
    (years)
    
    
    option
    
    
    12/31/2008
    
    
    option$
    5.77
    
    
    
    31,136
    
    
    
    6.92
    
    
    $
    5.77
    
    
    
    
    
    
    $
    5.77$
    11.22
    
    
    
    1,163,635
    
    
    
    6.20
    
    
    $
    11.22
    
    
    
    
    
    
    $
    11.22$
    12.36
    
    
    
    457,828
    
    
    
    3.39
    
    
    $
    12.36
    
    
    
    457,828
    
    
    $
    12.36$
    13.79
    
    
    
    1,088,647
    
    
    
    3.39
    
    
    $
    13.79
    
    
    
    1,088,647
    
    
    $
    13.79$
    14.29
    
    
    
    250,064
    
    
    
    3.91
    
    
    $
    14.29
    
    
    
    250,064
    
    
    $
    14.29$
    14.39
    
    
    
    203,794
    
    
    
    5.67
    
    
    $
    14.39
    
    
    
    69,390
    
    
    $
    14.39$
    16.63
    
    
    
    121,739
    
    
    
    4.24
    
    
    $
    16.63
    
    
    
    81,158
    
    
    $
    16.63$
    17.42
    
    
    
    335,980
    
    
    
    4.43
    
    
    $
    17.42
    
    
    
    243,057
    
    
    $
    17.42$
    19.78
    
    
    
    126,590
    
    
    
    4.93
    
    
    $
    19.78
    
    
    
    84,475
    
    
    $
    19.78$
    20.68
    
    
    
    278,148
    
    
    
    3.00
    
    
    $
    20.68
    
    
    
    278,148
    
    
    $
    20.68$
    5.77  $20.68
    
    
    
    4,057,561
    
    
    
    4.50
    
    
    $
    13.94
    *
    
    
    2,552,767
    
    
    $
    14.98
    *
    F-22




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##### Table of Contents



2008
    
    
    2006Fair Value
    
    $
    4.95
    
    
    $
    10.99Dividend yield
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    54.0
    %
    
    
    58.0
    %Risk-free interest rate
    
    
    2.5
    %
    
    
    3.7
    %Expected life (in years)
    
    
    4.5
    
    
    
    4.7
   2008
    
    
    2007
    
    
    2006Fair Value
    
    $
    4.53
    
    
    $
    5.87
    
    
    $
    9.60Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    53.4
    %
    
    
    53.1
    %
    
    
    46.3
    %Risk-free interest rate
    
    
    2.7
    %
    
    
    4.3
    %
    
    
    5.0
    %Expected life (in years)
    
    
    3.4
    
    
    
    4.1
    
    
    
    4.3
  Restricted Stock
   2008
    
    
    2007
    
    
    2006Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage fair
    
    
    
    
    
    
    average fair
    
    
    
    
    
    
    average fairNumber
    
    
    value per
    
    
    Number
    
    
    value per
    
    
    Number
    
    
    value perof Shares
    
    
    share
    
    
    of Shares
    
    
    share
    
    
    of Shares
    
    
    shareNonvested, January 1
    
    
    437,482
    
    
    $
    26.50
    
    
    
    599,159
    
    
    $
    25.25
    
    
    
    730,086
    
    
    $
    23.96Granted
    
    
    
    
    
    
    
    
    
    
    220,000
    
    
    
    27.27
    
    
    
    168,379
    
    
    
    28.58Vested
    
    
    (239,506
    )
    
    
    25.59
    
    
    
    (362,731
    )
    
    
    24.71
    
    
    
    (243,362
    )
    
    
    23.96Forfeited
    
    
    (35,848
    )
    
    
    27.83
    
    
    
    (18,946
    )
    
    
    30.10
    
    
    
    (55,944
    )
    
    
    24.01Nonvested, December
31
    
    
    162,128
    
    
    $
    26.52
    
    
    
    437,482
    
    
    $
    26.50
    
    
    
    599,159
    
    
    $
    25.25
   F-23




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##### Table of Contents



Restricted Stock Units
   2008Weightedaverage fairNumber
    
    
    value perof Shares
    
    
    shareNonvested, January 1
    
    
    
    
    
    $
    Granted
    
    
    719,231
    
    
    
    11.15Vested
    
    
    (16,243
    )
    
    
    11.97Forfeited
    
    
    (49,065
    )
    
    
    11.22Nonvested, December 31
    
    
    653,923
    
    
    $
    11.13
    12. INCOME TAXES
  Year ended December 31,2008
    
    
    2007
    
    
    2006Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    7,467
    
    
    
    
    
    
    
    7,467Deferred:Federal
    
    
    
    
    
    
    (408
    )
    
    
    (1,267
    )State
    
    
    
    
    
    
    (641
    )
    
    
    1,412
    
    
    
    (1,049
    )
    
    
    145Total
    
    $
    
    
    
    $
    (1,049
    )
    
    $
    7,612
  F-24




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##### Table of Contents



2008
    
    
    2007Net operating loss carryforwards
    
    $
    582,388
    
    
    $
    552,924Capital loss carryforward
    
    
    7,283
    
    
    
    7,283Employee benefit plan
    
    
    2,667
    
    
    
    2,786Allowance for doubtful accounts
    
    
    1,541
    
    
    
    1,754Stock-based compensation
    
    
    16,504
    
    
    
    13,087Unearned revenue
    
    
    5,123
    
    
    
    5,166Deferred rent
    
    
    2,037
    
    
    
    2,376Reserve for obsolete inventory
    
    
    1,153
    
    
    
    557Accruals for non-recurring charges and
contract settlements
    
    
    2,427
    
    
    
    5,951Other, net
    
    
    2,860
    
    
    
    3,071Subtotal
    
    
    623,983
    
    
    
    594,955Valuation allowance
    
    
    (570,222
    )
    
    
    (531,314
    )Total deferred tax asset
    
    
    53,761
    
    
    
    63,641Property, plant, and equipment
    
    
    (53,443
    )
    
    
    (54,481
    )Intangibles
    
    
    (36,472
    )
    
    
    (31,923
    )Total long-term deferred tax liabilities
    
    
    (89,915
    )
    
    
    (86,404
    )Net long-term deferred tax liabilities
    
    $
    (36,154
    )
    
    $
    (22,763
    )
  Year ended December 31,2008
    
    
    2007
    
    
    2006Net loss
    
    $
    (70,726
    )
    
    $
    (152,037
    )
    
    $
    (11,856
    )Total (benefit) provision for income taxes
    
    
    
    
    
    
    (1,049
    )
    
    
    7,612Loss before provision for income taxes
    
    $
    (70,726
    )
    
    $
    (153,086
    )
    
    $
    (4,244
    )Federal income tax benefit at statutory rate
    
    $
    (24,754
    )
    
    $
    (53,580
    )
    
    $
    (1,485
    )State income taxes, net of federal income
tax provision
    
    
    (4,328
    )
    
    
    (8,864
    )
    
    
    918Valuation allowance
    
    
    28,779
    
    
    
    44,927
    
    
    
    2,642Restructuring costs
    
    
    
    
    
    
    15,282
    
    
    
    Nondeductible expenses
    
    
    303
    
    
    
    746
    
    
    
    359Reversal of stock-based compensation
    
    
    
    
    
    
    440
    
    
    
    324Foreign income tax, net of federal income
tax provision
    
    
    
    
    
    
    
    
    
    
    4,854Total (benefit) provision for income taxes
    
    $
    
    
    
    $
    (1,049
    )
    
    $
    7,612
 
  F-25




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##### Table of Contents



13. EMPLOYEE BENEFIT PLANS
  14. COMMITMENTS AND CONTINGENCIES
 Rent Expense
   F-26




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##### Table of Contents



For the Year Ended
    
    December 31,2009
    
    $
    16,4612010
    
    
    13,6252011
    
    
    11,0072012
    
    
    8,8932013
    
    
    7,315Thereafter
    
    
    17,365
 Letters of Credit
  Guarantees
  Self Insurance
  Litigation
 City of Chicago Franchise Fee
 
    F-27




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##### Table of Contents



15. FINANCIAL DATA BY BUSINESS SEGMENT
  For the year ended December 31,2008
    
    
    2007
    
    
    2006Net Operating Revenues: (1)Residential/SMB (1)
    
    $
    567,931
    
    
    $
    546,263
    
    
    $
    525,160RCN Metro (1)
    
    
    171,312
    
    
    
    89,834
    
    
    
    60,316Total
    
    $
    739,243
    
    
    $
    636,097
    
    
    $
    585,476Operating Expenses: (2)Residential/SMB (2)
    
    $
    601,831
    
    
    $
    630,125
    
    
    $
    615,384RCN Metro (2)
    
    
    157,536
    
    
    
    86,504
    
    
    
    62,123Total
    
    $
    759,367
    
    
    $
    716,629
    
    
    $
    677,507Operating (Loss) Income:Residential/SMB
    
    $
    (33,900
    )
    
    $
    (83,862
    )
    
    $
    (90,224
    )RCN Metro
    
    
    13,776
    
    
    
    3,330
    
    
    
    (1,807
    )Total
    
    $
    (20,124
    )
    
    $
    (80,532
    )
    
    $
    (92,031
    )Depreciation and Amortization:Residential/SMB
    
    $
    167,355
    
    
    $
    183,038
    
    
    $
    187,025RCN Metro
    
    
    31,379
    
    
    
    12,201
    
    
    
    5,939Total
    
    $
    198,734
    
    
    $
    195,239
    
    
    $
    192,964Exit Costs and Restructuring Charges:Residential/SMB
    
    $
    1,602
    
    
    $
    8,089
    
    
    $
    6,449RCN Metro
    
    
    712
    
    
    
    105
    
    
    
    253Total
    
    $
    2,314
    
    
    $
    8,194
    
    
    $
    6,702Capital Expenditures:Residential/SMB
    
    $
    112,883
    
    
    $
    94,942
    
    
    $
    79,834RCN Metro
    
    
    30,369
    
    
    
    20,568
    
    
    
    6,361Total
    
    $
    143,252
    
    
    $
    115,510
    
    
    $
    86,195
 (1)
    
    All revenues reported for the individual segments are from external customers.(2)
    
    Operating expenses include stock-based compensation expense
totaling $10.4 million for
Residential/SMB and $3.0 million for RCN Metro for the year ended December 31, 2008; $28.2 million
for Residential/SMB and $5.0 million for RCN Metro for the year ended December 31, 2007; and $16.5
million for Residential/SMB and $1.7 million for RCN Metro for the year ended December 31, 2006. 16. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
  Supplemental disclosures of cash flow information
    
    2008
    
    
    2007
    
    
    2006Cash paid during the periods for:Interest, net of capitalized interest of $0
    
    $
    51,213
    
    
    $
    38,663
    
    
    $
    21,477Income taxes
    
    $
    0
    
    
    $
    0
    
    
    $
    7,467
    F-28




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##### Table of Contents



17. SELECTED FINANCIAL DATA
  20081st Quarter
    
    
    2nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    TotalRevenues
    
    $
    179,815
    
    
    $
    184,352
    
    
    $
    187,054
    
    
    $
    188,022
    
    
    $
    739,243Operating loss
    
    $
    (12,723
    )
    
    $
    (5,119
    )
    
    $
    (2,414
    )
    
    $
    131
    
    
    $
    (20,125
    )Net loss
    
    $
    (26,204
    )
    
    $
    (16,651
    )
    
    $
    (14,725
    )
    
    $
    (13,146
    )
    
    $
    (70,726
    )Basic and Diluted:Net loss per share (1)
    
    $
    (0.71
    )
    
    $
    (0.45
    )
    
    $
    (0.40
    )
    
    $
    (0.36
    )
    
    $
    (1.91
    )
 20071st Quarter
    
    
    2nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    TotalRevenues
    
    $
    153,337
    
    
    $
    159,153
    
    
    $
    155,701
    
    
    $
    167,906
    
    
    $
    636,097Operating loss
    
    $
    (20,506
    )
    
    $
    (10,229
    )
    
    $
    (26,702
    )
    
    $
    (23,095
    )
    
    $
    (80,532
    )Net loss from continuing operations
    
    $
    (22,439
    )
    
    $
    (79,505
    )
    
    $
    (34,933
    )
    
    $
    (32,765
    )
    
    $
    (169,642
    )Net income (loss) from discontinued operations
    
    
    2,047
    
    
    
    (260
    )
    
    
    (305
    )
    
    
    202
    
    
    
    1,684Gain on sale of discontinued operations
    
    
    15,744
    
    
    
    
    
    
    
    45
    
    
    
    132
    
    
    
    15,921Net loss
    
    $
    (4,648
    )
    
    $
    (79,765
    )
    
    $
    (35,193
    )
    
    $
    (32,431
    )
    
    $
    (152,037
    )Basic and Diluted:Net loss from continuing operations per share (1)
    
    $
    (0.62
    )
    
    $
    (2.15
    )
    
    $
    (0.93
    )
    
    $
    (0.89
    )
    
    $
    (4.58
    )Net income (loss) from discontinued operations
per share
    
    
    0.06
    
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    0.01
    
    
    
    0.05Gain on sale of discontinued operations per share
    
    
    0.43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.43Net loss per share
    
    $
    (0.13
    )
    
    $
    (2.16
    )
    
    $
    (0.94
    )
    
    $
    (0.88
    )
    
    $
    (4.11
    )
 (1)
    
    As a result of rounding, the total of the four quarters earnings per share does not
equal the earnings per share for the year.  F-29




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##### Table of Contents



SCHEDULE II
 RCN CORPORATION
 
 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 (DOLLARS IN THOUSANDS)
 AdditionsBalance at
    
    
    Charged
    
    
    Charged
    
    
    Accounts
    
    
    Balance atBeginning of
    
    
    to Cost and
    
    
    to Other
    
    
    Written
    
    
    End ofDescription
    
    Period
    
    
    Expense
    
    
    Accounts (2)
    
    
    Off (1)
    
    
    PeriodAllowance for Doubtful Accounts ReceivableDecember 31, 2008
    
    $
    4,298
    
    
    $
    16,384
    
    
    $
    (334
    )
    
    $
    16,578
    
    
    $
    3,770December 31, 2007
    
    $
    4,205
    
    
    $
    10,880
    
    
    $
    396
    
    
    $
    11,183
    
    
    $
    4,298December 31, 2006
    
    $
    3,535
    
    
    $
    11,039
    
    
    $
    1,126
    
    
    $
    11,495
    
    
    $
    4,205
 (1)
    
     Consists of write-offs, net of recoveries and collection fees in each year.(2)
    
     Includes adjustments and additions for acquisitions.  F-30




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##### Table of Contents



EXHIBITS INDEX
 (Exhibits are listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).
 Exhibit No.
    
    Description2.1
    
    
    Joint Plan of Reorganization of RCN Corporation and Certain
Subsidiaries, dated as of December 21, 2004 (incorporated by reference
to Exhibit 2.1 of RCNs Current Report on Form 8-K filed on December
14, 2004).2.2
    
    
    Order Confirming the Joint Plan of Reorganization of RCN Corporation
and Certain Subsidiaries, dated as of December 8, 2004 (incorporated
by reference to Exhibit 2.2 of RCNs Current Report on Form 8-K filed
on December 14, 2004).3.1
    
    
    Amended and Restated Certificate of Incorporation of RCN Corporation,
dated as of December 21, 2004 (incorporated by reference to Exhibit
3.1 of RCNs Current Report on Form 8-K filed on December 27, 2004
8-K).3.2
    
    
    Amended and Restated Bylaws of RCN Corporation (incorporated by
reference to Exhibit 3.2 of RCNs Current Report on Form 8-K filed on
December 27, 2004).4.1
    
    
    Registration Rights Agreement, dated as of December 21, 2004, by and
between RCN Corporation and the Stockholders listed on the signature
pages thereto (incorporated by reference to Exhibit 4.2 of RCNs
Current Report on Form 8-K filed on December 27, 2004).4.2
    
    
    Warrant Agreement, dated as of May 25, 2007, by and RCN Corporation
and HSBC Bank USA, National Association (incorporated by reference to
Exhibit 4.1 of RCNs Current Report on Form 8-K filed on May 25,
2007).4.3
    
    
    Registration Rights Agreement, dated as of May 25, 2007, by and among
RCN Corporation, and the Holders, as defined therein (incorporated by
reference to Exhibit 4.2 of RCNs Current Report on Form 8-K filed on
May 25, 2007).10.1
    
    
    Dark Fiber IRU Agreement dated as of May 8, 1997 among Metropolitan
Fiber Systems/McCourt, Inc. and RCN Telecom Services of Massachusetts,
Inc. (incorporated by reference to Exhibit 10.2 to RCNs Amendment No.
2 to Form 10/A filed on September 5, 1997 (Commission File No.
0-22825)).10.2
    (**)
    
    First Amendment dated as of November 28, 2006 between MCImetro Access
Transmission Services of Massachusetts, as successor-in-interest to
Metropolitan Fiber Systems McCourt, Inc. and RCN Telecom Services,
Inc. as successor-in-interest to RCN Telecom Services of
Massachusetts, Inc. amending the Dark Fiber IRU Agreement dated as of
May 8, 1997 among Metropolitan Fiber Systems/McCourt, Inc. and RCN
Telecom Services of Massachusetts, Inc. (incorporated by reference to
Exhibit 10.20 of RCNs Annual Report on Form 10-K filed on March 15,
2007).10.3
    
    
    Dark Fiber IRU Agreement dated as of May 8, 1997 among Metropolitan
Fiber Systems of New York, Inc. and RCN Telecom Services of New York,
Inc. (incorporated by reference to Exhibit 10.3 to RCNs Amendment No.
2 to Form 10/A filed on September 5, 1997 (Commission File No.
0-22825)).10.4
    (**)
    
    First Amendment to Dark Fiber IRU Agreement between Metropolitan Fiber
Systems of New York, Inc. and RCN Telecom Services, Inc. dated as of
December 5, 2007, amending the May 8, 1997 Dark Fiber IRU Agreement
between Metropolitan Fiber Systems of New York, Inc. and RCN Telecom
Services, Inc. (incorporated by reference to Exhibit 10.4 of RCNs
Amendment No. 1 to Form 10-K/A filed on March 26, 2008).10.5
    (*)
    
    Second Amendment to Dark Fiber IRU Agreement between Metropolitan
Fiber Systems of New York, Inc. and RCN Telecom Services, Inc. dated
as of June 18, 2008, amending the May 8, 1997 Dark Fiber IRU Agreement
between Metropolitan Fiber Systems of New York, Inc. and RCN Telecom
Services, Inc.10.6
    (*)
    
    Third Amendment to Dark Fiber IRU Agreement between Metropolitan Fiber
Systems of New York, Inc. and RCN Telecom Services, Inc. dated as of
November 18, 2008, amending the May 8, 1997 Dark Fiber IRU Agreement
between Metropolitan Fiber Systems of New York, Inc. and RCN Telecom
Services, Inc.10.7
    
    
    Second Amended and Restated Operating Agreement of RCN-Becocom, LLC
made and effective as of June 19, 2002 (incorporated by reference to
Exhibit 10.01 of RCNs Current Report on Form 8-K filed on June 21,
2002).




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##### Table of Contents



Exhibit No.
    
    Description10.8
    
    
    Management Agreement dated as of June 17, 1997 among RCN Operating
Services, Inc. and RCN-Becocom, Inc. (incorporated herein by reference
to Exhibit 10.9 to RCNs Amendment No. 2 to Form 10K/A filed on
September 5, 1997 (Commission File No. 0-22825)).10.9
    
    
    Construction and Indefeasible Right of Use Agreement dated as of June
17, 1997 between RCN-Becocom, Inc. and RCN-Becocom, LLC (incorporated
herein by reference to Exhibit 10.10 to RCNs Amendment No. 2 to Form
10/A filed on September 5, 1997 (Commission File No. 0-22825)).10.10
    
    
    License Agreement dated as of June 17, 1997 between Boston Edison
Company and RCN-Becocom, Inc. (incorporated by reference to Exhibit
10.11 to RCNs Amendment No. 2 to Form 10/A filed on September 5, 1997
(Commission File No. 0-22825)).10.11
    
    
    Joint Investment and Non-Competition Agreement dated as of June 17,
1997 among RCN Telecom Services of Massachusetts, Inc., RCN-Becocom,
Inc. and RCN-BecoCom, LLC (incorporated by reference to Exhibit 10.12
to RCNs Amendment No. 2 to Form 10/A filed on September 5, 1997
(Commission File No. 0-22825)).10.12
    
    
    Amended and Restated Operating Agreement of Starpower Communications,
L.L.C. by and between Pepco Communications, L.L.C. and RCN Telecom
Services of Washington, D.C. Inc. dated December 18, 1997
(incorporated by reference to Exhibit 10(m) to RCNs Annual Report on
Form 10-K 405A filed on March 31, 1998 (Commission File No. 0-22825)).10.13
    
    
    Form of Second Amended and Restated Agreement for the Provision of
Fiber Optic Facilities and Services between Northeast Utilities
Service Company, The Connecticut Light & Power Company, Western
Massachusetts Electric Company, Public Service Company of New
Hampshire, and Neon Optica, Inc. as Successor in Interest to Necom LLC
dated as of December 23, 2002  Phase One (incorporated by reference
to Exhibit 10.11 of RCNs Amendment No. 1 to Form 10-K/A filed on
March 26, 2008).10.14
    
    
    Form of Second Amended and Restated Agreement for the Provision of
Fiber Optic Facilities and Services between Northeast Utilities
Service Company, The Connecticut Light & Power Company, Western
Massachusetts Electric Company, Public Service Company of New
Hampshire, and Neon Optica, Inc. as Successor in Interest to Necom LLC
dated as of December 23, 2002  Phase Two (incorporated by reference
to Exhibit 10.4 of RCNs Amendment No. 1 to Form 10-K/A filed on March
26, 2008).10.15
    
    
    Form of Agreement Concerning the Reimbursement of Fees Among The
Connecticut Light & Power Company, Western Massachusetts Electric
Company, Public Service Company of New Hampshire and Mode
1 Communications, Inc. and Neon Optica, Inc. dated as of November 5,
2004 (incorporated by reference to Exhibit 10.13 of RCNs Amendment
No. 1 to Form 10-K/A filed on March 26, 2008).10.16
    (**)
    
    Master Service Agreement, dated as of September 27, 2007, by and
between RCN Telecom Services and Sitel Operating Corporation
(incorporated by reference to Exhibit 10.1 of RCNs Quarterly Report
on Form 10-Q filed on November 8, 2007).10.17
    
    
    Credit Agreement, dated as of May 25, 2007, by and among RCN
Corporation, the various lenders party to the Credit Agreement, and
Deutsche Bank Trust Company Americas, as Administrative Agent
(incorporated by reference to Exhibit 10.1 of RCNs Current Report on
Form 8-K filed on May 25, 2007).10.18
    
    
    Incremental Commitment Agreement, dated as of November 13, 2007, by
and among RCN Corporation, the various lenders party to the Credit
Agreement, and Deutsche Bank Trust Company Americas, as Administrative
Agent (incorporated by reference to Exhibit 10.1 of RCNs Current
Report on Form 8-K filed on November 13, 2007).10.19
    
    
    Security Agreement, dated as of May 25, 2007, by and among RCN
Corporation, certain subsidiaries of RCN Corporation, and Deutsche
Bank Trust Company Americas, as First-Lien Collateral Agent
(incorporated by reference to Exhibit 10.2 of RCNs Current Report on
Form 8-K filed on May 25, 2007).10.20
    
    
    Pledge Agreement, dated as of May 25, 2007, by and among RCN
Corporation, certain subsidiaries of RCN Corporation, and Deutsche
Bank Trust Company Americas, as First-Lien Collateral Agent
(incorporated by reference to Exhibit 10.3 of RCNs Current Report on
Form 8-K filed on May 25, 2007).10.21
    
    
    Subsidiary Guaranty, dated as of May 25, 2007, by and among certain
subsidiaries of RCN Corporation and Deutsche Bank Trust Company
Americas, as Collateral Agent (incorporated by reference to Exhibit
10.4 of RCNs Current Report on Form 8-K filed on May 25, 2007).




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##### Table of Contents



Exhibit No.
    
    Description10.22
    
    
    RCN Corporation Senior Executive Annual Bonus Plan (incorporated by
reference to Exhibit 99.1 of RCNs Current Report on Form 8-K filed on
July 26, 2005).10.23
    +
    
    RCN Corporation 2005 Stock Compensation Plan, as amended (incorporated
by reference to Annex A to RCNs Definitive Proxy Statement for the
2007 Annual Meeting of Stockholders filed on April 27, 2007).10.24
    +
    
    RCN Amended and Restated Change of Control Severance Plan dated July
3, 2008 (incorporated by reference to Exhibit 10.1 to RCNs Quarterly
Report on Form 10-Q filed on August 7, 2008).10.25
    +
    
    RCN Corporation 2007 Short-Term Incentive Plan (incorporated by
reference to Exhibit 10.28 of RCNs Amended Quarterly Report on Form
10-Q/A filed on May 14, 2007).10.26
    +
    
    Amended Form Non-Qualified Option Agreement (incorporated by reference
to Exhibit 10.29 to RCNs Amendment No. 1 to its Annual Report on Form
10-K filed on April 10, 2006).10.27
    +
    
    Amended Form Incentive Stock Option Agreement (incorporated by
reference to Exhibit 10.30 to RCNs Amendment No. 1 to its Annual
Report on Form 10-K filed on April 10, 2006).10.28
    +
    
    Form Director Restricted Stock Agreement (incorporated by reference to
Exhibit 10.3 of RCNs Current Report on Form 8-K filed on January 6,
2006).10.29
    +
    
    Amended Form Executive Restricted Stock Agreement (incorporated by
reference to Exhibit 10.20 of RCNs Annual Report on Form 10-K filed
on March 15, 2007).10.30
    +
    
    Form of Director Restricted Stock Unit Agreement (incorporated by
reference to Exhibit 10.1 of RCNs Current Report on Form 8-K filed on
February 7, 2008).10.31
    +
    
    Form of Deferral Election Form (incorporated by reference to Exhibit
10.2 of RCNs Current Report on Form 8-K filed on February 7, 2008).10.32
    +
    
    Form of Executive Restricted Stock Unit Agreement (incorporated by
reference to Exhibit 10.30 of RCNs Amendment No. 1 to Form 10-K/A
filed on March 26, 2008).10.33
    +
    
    Form of Performance-Based Restricted Stock Unit Award Agreement
(incorporated by reference to Exhibit 10.1 of RCNs Quarterly Report
on Form 10-Q filed on May 8, 2008).10.34
    +
    
    Form of Restricted Stock Unit Award for Officer  RSU Deferral
Election Form (incorporated by reference to Exhibit 10.2 of RCNs
Quarterly Report on Form 10-Q filed on May 8, 2008).10.35
    +
    
    Amended and Restated Employment Agreement, effective as of December
21, 2007, by and between RCN Corporation and Peter D. Aquino
(incorporated by reference to Exhibit 10.1 of RCNs Current Report on
Form 8-K filed on December 27, 2007).10.36
    +
    
    Employment Letter by and between RCN Corporation and Michael Sicoli,
dated May 12, 2005 (incorporated by reference to Exhibit 99.2 of RCNs
Current Report on Form 8-K filed on May 12, 2005).10.37
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Michael E. Katzenstein (incorporated by reference to
Exhibit 10.1 of RCNs Current Report on Form 8-K filed on May 31,
2006).10.38
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Theodore H. Schell (incorporated by reference to
Exhibit 10.2 of RCNs Current Report on Form 8-K filed on May 31,
2006).10.39
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Benjamin C. Duster, IV (incorporated by reference to
Exhibit 10.3 of RCNs Current Report on Form 8-K filed on May 31,
2006).




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##### Table of Contents



Exhibit No.
    
    Description10.40
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Lee S. Hillman (incorporated by reference to Exhibit
10.4 of RCNs Current Report on Form 8-K filed on May 31, 2006).10.41
    +
    
    Restricted Stock Agreement dated May 25, 2006 by and between RCN
Corporation and Daniel Tseung (incorporated by reference to Exhibit
10.5 of RCNs Current Report on Form 8-K filed on May 31, 2006).10.42
    +
    
    Restricted Stock Agreement by and between RCN Corporation and Peter D.
Aquino (incorporated by reference to Exhibit 10.3 of RCNs Current
Report on Form 8-K filed on June 6, 2006).10.43
    +
    
    Restricted Stock Agreement by and between RCN Corporation and Michael
T. Sicoli (incorporated by reference to Exhibit 10.4 of RCNs Current
Report of Form 8-K filed on June 6, 2006).10.44
    +
    
    Employment Letter by and between RCN Corporation and Benjamin R.
Preston dated April 5, 2006 (incorporated by reference to Exhibit 99.2
of RCNs Current Report on Form 8-K filed on April 5, 2006).10.45
    +
    
    Severance Agreement and Release, dated as of February 4, 2008, by and
between RCN Corporation and James F. Mooney (incorporated by reference
to Exhibit 10.3 of RCNs Current Report on Form 8-K filed on February
7, 2008).10.46
    
    
    Severance Agreement and Release, dated as of November 4, 2008, by and
between RCN Corporation and Benjamin Preston (incorporated by
reference to Exhibit 10.1 of RCNs Quarterly Report on Form 10-Q filed
on November 4, 2008).10.47
    
    
    Stock Purchase Agreement between RCN Corporation and Consolidated
Edison, Inc., dated as of December 5, 2005 (incorporated by reference
to Exhibit 10.33 to RCNs Amendment No. 1 to its Annual Report on Form
10-K filed on April 10, 2006).10.48
    
    
    Stock Purchase Agreement, dated March 6, 2006, entered into by and
among RCN International Holdings, Inc, Teleholding, S.A. de C.V., Mega
Cable, S.A. de C.V. and MCM Holding, S.A. de C.V. (incorporated by
reference to Exhibit 99.2 of RCNs Current Report on Form 8-K filed on
March 8, 2006).10.49
    
    
    Settlement Agreement, dated March 6, 2006, entered into by and among
RCN International Holdings, Inc., Teleholding, S.A. de C.V., Mega
Cable, S.A. de C.V., MCM Holding, S.A. de C.V. and the Private
Shareholders listed therein (incorporated by reference to Exhibit
10.35 to RCNs Amendment No. 1 to its Annual Report on Form 10-K filed
on April 10, 2006).10.50
    
    
    Asset Purchase Agreement by and among RCN Telecom Services, Inc., RCN
Corporation and Astound Broadband, LLC (incorporated by reference to
Exhibit 99.2 of RCNs Current Report on Form 8-K filed on August 18,
2006).10.51
    
    
    Agreement and Plan of Merger, dated as of June 24, 2007, by and among
RCN Corporation, Raven Acquisition Corporation, and NEON
Communications Group, Inc. (incorporated by reference to Exhibit 2.1
of RCNs Current Report on Form 8-K filed on June 25, 2007).10.52
    (*)
    
    Form of Director Restricted Stock Unit Agreement dated March 2, 2009.21.1
    (*)
    
    Subsidiaries of Registrant.23.2
    (*)
    
    Consent of Friedman LLP, Independent Registered Public Accounting Firm.




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##### Table of Contents



Exhibit No.
    
    Description31.1
    (*)
    
    Certification of Chief Executive Officer pursuant to Rules 13a-14 and
15d-14 promulgated under the Securities and Exchange Act of 1934, as
amended, as adopted pursuant to section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    (*)
    
    Certification of the Executive Vice President and Chief Financial
Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the
Securities and Exchange Act of 1934, as amended, as adopted pursuant
to section 302 of the Sarbanes-Oxley Act of 2002.32.1
    (*)
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.32.2
    (*)
    
    Certification of Executive Vice President and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 *
    
    Document attached.**
    
    Confidential treatment requested as to certain portions of the document, which portions have
been omitted and filed separately with the Securities and Exchange Commission.+
    
    Management compensatory plan or arrangement.