##### 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, 2009
 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)
 
 Yes o No þ
 Yes o No þ
 þ o
 o 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, 2009
Table of Contents
 PagePART IItem 1 Business
    
    
    4Item 1A Risk Factors
    
    
    17Item 1B Unresolved Staff Comments
    
    
    21Item 2 Properties
    
    
    21Item 3 Legal Proceedings
    
    
    21Item 4
Reserved
    
    
    21PART IIItem 5 Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    21Item 6 Selected Financial Data
    
    
    23Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 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, and Director
Independence
    
    
    36Item 14
Principal Accounting Fees and Services
    
    
    36PART IVItem 15 Exhibits and Financial Statement Schedules
    
    
    37SIGNATURES
    
    
    S-1INDEX TO EXHIBITS
    
    
    E-1INDEX TO FINANCIAL STATEMENTS
    
    
    F-1Exhibit 10.22Exhibit 10.24Exhibit 10.35Exhibit 10.36Exhibit 10.37Exhibit 10.38Exhibit 10.41Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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Cautionary Statements 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 and the effect of competition in our markets;
 
    
    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 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 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 Part 1, Item 1A Risk Factors below.
   3




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##### Table of Contents



PART I
 
 ITEM 1.
    
    BUSINESS
 Introduction
    Segment
Reporting (ASC Topic 280)
  Available Information and Websites
  General Development of Business
  
    
    Consolidated revenue of $763.8 million, representing 3.3% growth compared to 2008,
comprised of 1.1% growth in our Residential/SMB segment and 10.7% growth in our RCN Metro segment
  4




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##### Table of Contents




    
    Consolidated Operating Income before depreciation and amortization, stock-based
compensation, exit costs and restructuring charges of $218.8 million, representing 12.7%
growth compared to 2008, comprised of 6.8% growth in our Residential/SMB segment and 30.0% growth
in our RCN Metro segment
 
    
    Significant growth in cash flow, as net cash provided by operating activities increased
by $12.9 million, and additions to property, plant and equipment decreased by $25.0
million, driving the combined balance of our cash and cash equivalents plus short-term
investments to $86.9 million
 
    
    Completion of Project Analog Crush in all of our Residential/SMB markets; RCN is now 100%
digital in all markets, a first among major market MSOs
 
    
    Launched DOCSIS 3.0 in New York during the quarter ended December 31, 2009
 
    
    Repurchased approximately 1.3 million shares at an average price of $5.49 per share;
program-to-date, approximately 2.6 million shares have been repurchased, representing
nearly 7% of the total outstanding shares, at an average price of $7.10 per share
 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 delivered in a 100% digital
viewing format for all customers.
 
    
    Enhanced Digital Services: We offer additional programming content to customers who
desire broader programming choices through our Premiere service package, which includes
nearly a hundred additional channels, such as special interest networks, movie and
entertainment networks.
 
    
    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 related video on demand content as part of the monthly subscription.
We also provide foreign language programming for an additional monthly fee.
  5




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
    
    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 100+
high-definition channels in most areas, including most broadcast networks, leading
national cable networks, regional sports networks, and premium channels. In addition, our
HDTV customers have access to selected VOD content in high-definition format.
 
    
    Video on Demand (VOD) 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, 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. In 2009, RCN entered into an agreement with TiVo Inc. whereby RCN will offer
co-branded, uniquely configured TiVo High Definition DVRs to its Residential and SMB customers. Expected to
launch in the second quarter of 2010, the RCN TiVo DVR is a truly innovative convergence of video and broadband
programming controlled through a single user interface that is simple, intuitive, and dramatically different
from that of other DVRs.  The RCN TiVo DVR will give customers a first of its kind video experience by fully
integrating RCNs digital programming and VOD library with a wide variety of broadband delivered
video programming, providing access to a vast library of programming not available through
traditional cable or satellite services.
 
    
    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.
 
    
    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.
 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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Sources of Supply
    RCN Metro Segment
     8




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##### Table of Contents



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 1.25, 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.
 RCN Metro Network
    Sales and Customer Support
  Pricing
   9




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Competition
  Regulation
 Overview
  Regulation of Video Services
 Cable Television Systems
    10




---



##### Table of Contents



OVS
  Cable and OVS Regulation
      11




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Regulation of Information Services
   12




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##### Table of Contents



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.
 
    
    Co-location 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.
      13




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Reciprocal Compensation
  Access Charges
  Special Access
  Slamming and Cramming
     14




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Digital Phone
  State Regulation
   Taxes and Regulatory Fees
  Other Regulatory Issues
 Digital Set-Top Box Regulation
  Right-of-Way Access
   15




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##### Table of Contents



Pole and Conduit Attachments
  Program Access
  Commercial Leased Access
  Building Access
     16




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##### Table of Contents



Customer Proprietary Network Information
   Red Flag Rules
  Employees
 .
 
 ITEM 1A.
    
    RISK FACTORS
 We have a history of net losses and we emerged from Chapter 11 reorganization in 2004.
  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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We are subject to regulation by federal, state and local governments, which may impose costs and
restrictions.
      18




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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, 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 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.
   19




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Our inability to respond to technological developments and meet customer demand for new products
and services could limit our ability to compete effectively.
  Turnover among our executive officers and key employees could result in our inability to continue
performing certain functions and completing certain initiatives in accordance with our existing
budgets and operating plans.
  An ownership change could limit our ability to utilize our federal net operating loss
carryforwards.
  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.
   20




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Future sales of our common stock could adversely affect the price of our stock and our ability to
raise capital.
  
 Failure to consummate our proposed
merger could negatively impact our stock price, business and financial results.
   
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
 Real Estate
   
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    RESERVED
 
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
   21




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Period
    
    High Price
    
    
    Low Price2009First Quarter
    
    $
    6.00
    
    
    $
    3.13Second Quarter
    
    $
    6.26
    
    
    $
    3.75Third Quarter
    
    $
    9.85
    
    
    $
    5.69Fourth Quarter
    
    $
    11.05
    
    
    $
    8.10
 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
  Purchases of Equity Securities
 (c) Total Numberof Shares
    
    
    (d) ApproximatePurchased as Part
    
    
    Dollar Value of Shares(b) Average
    
    
    of Publicly
    
    
    That May Yet Be(a) Total Number of
    
    
    Price Paid per
    
    
    Announced
    
    
    Repurchased UnderShares Purchased
    
    
    Share
    
    
    Program (1)
    
    
    the Program (2)Prior to 4th Qtr 2009
    
    
    
    
    
    
    
    
    
    
    2,446,005
    
    
    
    7,948,15510.1.09  10.31.09
    
    
    66,287
    
    
    $
    9.06
    
    
    
    2,512,292
    
    
    
    7,347,56311.1.09  11.30.09
    
    
    74,523
    
    
    $
    8.48
    
    
    
    2,586,815
    
    
    
    6,715,49512.1.09  12.31.09
    
    
    40,802
    
    
    $
    9.25
    
    
    
    2,627,617
    
    
    
    6,337,941
 
 (1)
    
    Our repurchase plan was established in 2007 and authorizes the repurchase of up to
$25 million of our shares of common stock. The repurchase plan does not have a specified
expiration date.(2)
    
    The approximate dollar value of shares that may yet be repurchased under the program
shown in the schedule above includes commissions paid. Dividends
   22




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Description of RCN Corporations Equity Securities
   RCN STOCK PERFORMANCE
  
 
 ITEM 6.
    
    SELECTED FINANCIAL DATA
   2009
    
    
    2008
    
    
    2007(1)
    
    
    2006(2)
    
    
    2005(dollars in thousands, except per share amount)Revenues
    
    $
    763,770
    
    
    $
    739,243
    
    
    $
    636,097
    
    
    $
    585,476
    
    
    $
    530,412Loss from continuing operations
    
    
    (28,618
    )
    
    
    (70,726
    )
    
    
    (169,642
    )
    
    
    (14,320
    )
    
    
    (138,731
    )Basic loss from continuing
operations per common share
    
    $
    (0.80
    )
    
    $
    (1.91
    )
    
    $
    (4.58
    )
    
    $
    (0.39
    )
    
    $
    (3.85
    )Dividends declared per share
    
    
    
    
    
    
    
    
    
    
    9.33
    
    
    
    
    
    
    
    Total assets
    
    $
    970,451
    
    
    $
    1,016,763
    
    
    $
    1,097,889
    
    
    $
    975,381
    
    
    $
    1,253,940Total debt
    
    
    735,255
    
    
    
    742,607
    
    
    
    744,945
    
    
    
    202,792
    
    
    
    492,097
 
 (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 Consolidated Edison Communications
Holding Company, Inc. (CEC) are included in the above financial
information from the date of acquisition (March 17, 2006) and all
periods thereafter.  23




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
   Overview
    Basis of Reporting
  Key Transactions
   24




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Critical Accounting Policies and Estimates
   Results of Operations
    25




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##### Table of Contents



Year Ended December 31,2009
    
    
    2008
    
    
    2007(dollars in thousands)Revenues
    
    $
    763,770
    
    
    $
    739,243
    
    
    $
    636,097Costs and expenses:Direct expenses
    
    
    275,240
    
    
    
    264,219
    
    
    
    224,770Selling, general and administrative
(including stock-based compensation of
$10,228, $13,335 and $33,206)
    
    
    279,916
    
    
    
    294,100
    
    
    
    288,426Exit costs and restructuring charges
    
    
    575
    
    
    
    2,314
    
    
    
    8,194Depreciation and amortization
    
    
    193,273
    
    
    
    198,915
    
    
    
    196,066Operating income (loss)
    
    
    14,766
    
    
    
    (20,305
    )
    
    
    (81,359
    )Investment income
    
    
    395
    
    
    
    2,880
    
    
    
    9,424Interest expense
    
    
    (42,344
    )
    
    
    (53,301
    )
    
    
    (34,510
    )Loss on the early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (63,795
    )Other expense, net
    
    
    (363
    )
    
    
    
    
    
    
    (451
    )Loss before income taxes
    
    
    (27,546
    )
    
    
    (70,726
    )
    
    
    (170,691
    )Income tax expense (benefit)
    
    
    1,072
    
    
    
    
    
    
    
    (1,049
    )Net loss from continuing operations
    
    
    (28,618
    )
    
    
    (70,726
    )
    
    
    (169,642
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    1,684Gain on sale of discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    15,921Net loss
    
    $
    (28,618
    )
    
    $
    (70,726
    )
    
    $
    (152,037
    )
 Consolidated Operating Results
 Consolidated Revenues
   Consolidated Direct Expenses
   Consolidated Selling, General and Administrative Expenses
    26




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Segment Operating Results
  Residential/SMB Segment Operating Results
 Year Ended December 31Fav(unfav)
    
    
    
    
    
    
    Fav(unfav)2009
    
    
    2008
    
    
    Var%
    
    
    2007
    
    
    Var %(in thousands)Revenue:Video
    
    $
    311,860
    
    
    $
    294,650
    
    
    
    5.8
    %
    
    $
    271,330
    
    
    
    8.6
    %Data
    
    
    140,816
    
    
    
    142,704
    
    
    
    (1.3
    )%
    
    
    133,406
    
    
    
    7.0
    %Voice
    
    
    107,791
    
    
    
    114,386
    
    
    
    (5.8
    )%
    
    
    117,477
    
    
    
    (2.6
    )%Recip Comp/Other
    
    
    13,590
    
    
    
    16,191
    
    
    
    (16.1
    )%
    
    
    24,050
    
    
    
    (32.7
    )%Total Revenue
    
    
    574,057
    
    
    
    567,931
    
    
    
    1.1
    %
    
    
    546,263
    
    
    
    4.0
    %Direct expenses
    
    
    206,307
    
    
    
    199,367
    
    
    
    (3.5
    )%
    
    
    190,093
    
    
    
    (4.9
    )%Selling, general
and administrative
(excluding
stock-based
compensation)
    
    
    212,395
    
    
    
    223,143
    
    
    
    4.8
    %
    
    
    220,700
    
    
    
    (1.1
    )%Operating income
before depreciation
and amortization,
stock-based
compensation, exit
costs and
restructuring
charges
    
    $
    155,355
    
    
    $
    145,421
    
    
    
    6.8
    %
    
    $
    135,470
    
    
    
    7.3
    %
 Reconciliation to Operating Loss
 2009
    
    
    2008
    
    
    2007(in thousands)Operating income before depreciation and
amortization, stock-based compensation,
exit costs and restructuring charges
    
    $
    155,355
    
    
    $
    145,421
    
    
    $
    135,470Less: Stock-based compensation
    
    
    7,676
    
    
    
    10,364
    
    
    
    28,205Less: Depreciation and amortization
    
    
    158,036
    
    
    
    167,532
    
    
    
    183,855Less: Exit costs and restructuring charges
    
    
    674
    
    
    
    1,602
    
    
    
    8,089Operating loss
    
    $
    (11,031
    )
    
    $
    (34,077
    )
    
    $
    (84,679
    )
 Residential/SMB Metrics
 2009
    
    
    2008
    
    
    2007Video RGUs (1)
    
    
    364,000
    
    
    
    366,000
    
    
    
    358,000Data RGUs (1)
    
    
    312,000
    
    
    
    302,000
    
    
    
    285,000Voice RGUs (1)
    
    
    223,000
    
    
    
    244,000
    
    
    
    250,000Total RGUs (1)
    
    
    899,000
    
    
    
    911,000
    
    
    
    893,000Customers (2)
    
    
    429,000
    
    
    
    428,000
    
    
    
    416,000ARPC (3)
    
    $
    110
    
    
    $
    110
    
    
    $
    109
 
 (1)
    
    Revenue Generating Units (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 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)
    
    Average revenue per customer (ARPC) is total revenue for a given monthly period
(excluding dial-up Internet, reciprocal compensation and 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. Residential/SMB Revenues
   Residential/SMB Direct Expenses
    28




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##### Table of Contents



Residential/SMB Selling, General and Administrative Expenses
   RCN Metro Optical Networks Operating Results
 Year Ended December 31Fav(unfav)
    
    
    
    
    
    
    Fav(unfav)2009
    
    
    2008
    
    
    Var%
    
    
    2007
    
    
    Var %(in thousands)Revenue:Transport Services
    
    $
    145,226
    
    
    $
    131,448
    
    
    
    10.5
    %
    
    $
    60,707
    
    
    
    116.5
    %Data and Internet Services
    
    
    5,240
    
    
    
    2,581
    
    
    
    103.0
    %
    
    
    2,875
    
    
    
    (10.2
    )%Co-location
    
    
    11,790
    
    
    
    12,091
    
    
    
    (2.5
    )%
    
    
    9,455
    
    
    
    27.9
    %Leased Services
    
    
    20,369
    
    
    
    19,668
    
    
    
    3.6
    %
    
    
    13,352
    
    
    
    47.3
    %Installation and Other
    
    
    7,088
    
    
    
    5,524
    
    
    
    28.3
    %
    
    
    3,445
    
    
    
    60.3
    %Total Revenue
    
    
    189,713
    
    
    
    171,312
    
    
    
    10.7
    %
    
    
    89,834
    
    
    
    90.7
    %Direct expenses
    
    
    68,933
    
    
    
    64,852
    
    
    
    (6.3
    )%
    
    
    34,677
    
    
    
    (87.0
    )%Selling, general and
administrative (excluding
stock-based compensation)
    
    
    57,293
    
    
    
    57,622
    
    
    
    0.6
    %
    
    
    34,520
    
    
    
    (66.9
    )%Operating income before
depreciation and
amortization, stock-based
compensation, exit costs
and restructuring charges
    
    $
    63,487
    
    
    $
    48,838
    
    
    
    30.0
    %
    
    $
    20,637
    
    
    
    136.7
    %
 Reconciliation to Operating Loss
 2009
    
    
    2008
    
    
    2007(in thousands)Operating income before depreciation and
amortization, stock-based compensation,
exit costs and restructuring charges
    
    $
    63,487
    
    
    $
    48,838
    
    
    $
    20,637Less: Stock-based compensation
    
    
    2,552
    
    
    
    2,971
    
    
    
    5,001Less: Depreciation and amortization
    
    
    35,237
    
    
    
    31,383
    
    
    
    12,211Less: Exit costs and restructuring charges
    
    
    (99
    )
    
    
    712
    
    
    
    105Operating income
    
    $
    25,797
    
    
    $
    13,772
    
    
    
    3,320
 RCN Metro Revenues
    29




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##### Table of Contents



RCN Metro Direct Expenses
   RCN Metro Selling, General and Administrative Expenses
   Consolidated Depreciation and Amortization
       30




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##### Table of Contents



Consolidated Exit Costs and Restructuring Charges
   Consolidated Stock-Based Compensation
    Consolidated Other Income (Expense) Items
 Consolidated Investment Income
   Consolidated Interest Expense
    Consolidated Loss on the Early Extinguishment of Debt
   31




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##### Table of Contents



Consolidated Other Expense, Net
  Consolidated Discontinued Operations
  Liquidity and Capital Resources
 December 31,2009
    
    
    2008(in thousands)Cash, cash equivalents and short-term investments
    
    $
    86,943
    
    
    $
    63,684Debt (including current maturities and capital lease obligations)
    
    $
    735,255
    
    
    $
    742,607
  Operating Activities
   Investing Activities
    32




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##### Table of Contents



Financing Activities
  Contractual Obligations and Commercial Commitments
  Payments Due By PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    

3-5 years
    
    
    5 years(in thousands)Total bank
borrowings (1)
    
    $
    732,489
    
    
    $
    25,784
    
    
    $
    14,410
    
    
    $
    692,295
    
    
    $
    Capital lease obligations
    
    
    2,766
    
    
    
    163
    
    
    
    379
    
    
    
    462
    
    
    
    1,762Total debt
    
    
    735,255
    
    
    
    25,947
    
    
    
    14,789
    
    
    
    692,757
    
    
    
    1,762Interest on
long-term debt (2)
    
    
    198,106
    
    
    
    39,719
    
    
    
    89,486
    
    
    
    67,359
    
    
    
    1,542Operating
leases (3)(5)
    
    
    84,711
    
    
    
    16,223
    
    
    
    26,066
    
    
    
    20,596
    
    
    
    21,826Purchase
obligations (4)(5)
    
    
    196,257
    
    
    
    40,555
    
    
    
    52,552
    
    
    
    29,805
    
    
    
    73,345Total contractual obligations
    
    $
    1,214,329
    
    
    $
    122,444
    
    
    $
    182,893
    
    
    $
    810,517
    
    
    $
    98,475
 
 (1)
    
 In addition to scheduled mandatory repayments under the First-Lien Credit Agreement, the Company is also
required to repay 50% of Excess Cash Flow (as defined in the First-Lien Credit Agreement) if the Companys
Total Leverage Ratio for the period is greater than 3:00:1.  Pursuant to this Excess Cash Flow provision, the
Company expects to repay $18.6 million on or before April 15, 2010, related to the year ended December 31, 2009.(2)
    
    Interest payments are based on interest rates in effect at December 31, 2009 and
include payments on our interest rate swap agreements.(3)
    
    Net of contractual sublease income of $1.9 million in total through 2015.(4)
    
    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 telecommunications providers, and other contracts entered into in the
normal course of business. Amounts reflected as liabilities in
the consolidated balance sheet at December 31, 2009 are excluded from the table above.(5)
    
    A total of $30.5 million of our purchase obligations and operating lease obligations
are collateralized via letters of credit at December 31, 2009. Off Balance Sheet Arrangements
  Description of Outstanding Debt
  First-Lien Credit Agreement
   33




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##### Table of Contents



Recently Issued Accounting Pronouncements
  Inflation
  Letters of Credit
  Subsequent Event
  
 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
  Report of Independent Registered Public Accounting Firm
 
        
 
 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 AND RELATED STOCKHOLDER MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
   36




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##### Table of Contents



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-30(3)
    
    The index to the Exhibits begins on page E-1 of this Annual Report.
  37




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##### Table of Contents



SIGNATURES
  Date: March 9, 2010
    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
    
    March 9, 2010Peter D. Aquino/s/ Michael T. Sicoli
    
    Executive Vice President and Chief Financial Officer
    
    March 9, 2010Michael T. Sicoli/s/ Leslie J. Sears
    
    Senior Vice President and Controller
    
    March 9, 2010Leslie J. Sears/s/ Jose A. Cecin, Jr.
    
    Director
    
    March 9, 2010Jose A. Cecin, Jr./s/ Kurt Cellar
    
    Director
    
    March 9, 2010Kurt Cellar/s/ Benjamin C. Duster IV
    
    Director
    
    March 9, 2010Benjamin C. Duster IV/s/ Lee S. Hillman
    
    Non Executive Chairman, Director
    
    March 9, 2010Lee S. Hillman/s/ Charles E. Levine
    
    Director
    
    March 9, 2010Charles E. Levine/s/ Casimir Skrzypczak
    
    Director
    
    March 9, 2010Casimir Skrzypczak/s/ Daniel Tseung
    
    Director
    
    March 9, 2010Daniel 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.
    
    Description3.1
    
    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 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 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 (incorporated by reference to Exhibit 10.4 of RCNs
Amendment No. 1 to Form 10-K/A filed on March 26, 2008).
  E-1




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##### Table of Contents



Exhibit No.
    
    Description10.5
    
    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 (incorporated by reference to Exhibit 10.5 of RCNs Annual
Report on Form 10-K filed on February 24, 2009).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 (incorporated by reference to Exhibit 10.6 of RCNs
Annual Report on Form 10-K filed on February 24, 2009).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).10.8
    
    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 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
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 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 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 October 28, 1997(incorporated by
reference to Exhibit 10.13 to RCNs Annual Report on Form 10-K for the
year ended December 31, 1997 (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 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 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).
  E-2




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##### Table of Contents



Exhibit No.
    
    Description10.15
    
    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).10.22*+
    
    RCN Corporation 2005 Stock Compensation Plan, as amended effective
December 29, 2009.10.23+
    
    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).10.24*+
    
    RCN
Corporation 2009 Short-Term Incentive Plan.10.25+
    
    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
as filed on April 10, 2006).10.26+
    
    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 as filed on April 10, 2006).10.27+
    
    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).
  E-3




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##### Table of Contents



Exhibit No.
    
    Description10.28+
    
    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).10.29+
    
    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).10.30+
    
    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).10.31+
    
    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).10.32+
    
    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).10.33+
    
    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).10.34+
    
    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).10.35*+
    
    Restricted
Stock Unit Agreement effective as of August 20, 2009 by and
between RCN Corporation and Peter D. Aquino.10.36*+
    
    Form of
Director Restricted Stock Unit Agreement.10.37*+
    
    Form
of Director Deferral Election Form.10.38*+
    
    Form of Executive
 Officer Restricted Stock Unit Agreement.10.39+
    
    Employment Agreement effective as of September 28, 2009 by and between
RCN Corporation and José A, Cecin, Jr. (incorporated by reference to
Exhibit 10.1 of RCNs Current Report on Form 8-K filed on October 1,
2009).10.40+
    
    Employment Agreement effective as of September 28, 2009 by and between
RCN Corporation and Michael T. Sicoli (incorporated by reference to
Exhibit 10.2 of RCNs Current Report on Form 8-K filed on October 1,
2009).10.41*+
    
    Restricted Stock Unit Agreement effective as of September 28,
2009 by and between RCN Corporation and José A. Cecin.21.1 (*)
    
    Subsidiaries of Registrant.23.1 (*)
    
    Consent of BDO Seidman, LLP, Independent Registered Public Accounting Firm.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




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##### Table of Contents



Index to Financial Statements
 PageReports of Independent Registered Public Accounting Firms
    
    
    F-2Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    F-4Consolidated Balance Sheets at December 31, 2009 and December 31, 2008
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    F-6Consolidated Statements of Stockholders Equity for the years ended December 31, 2009, 2008 and 2007
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8Schedule II  Valuation and Qualifying Accounts and Reserves
    
    
    F-30
  F-1




---



##### Table of Contents



REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
 
   ,
  Internal Control  Integrated Framework
     F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  F-3




---



##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in thousands, except share and per share data)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Revenues
    
    $
    763,770
    
    
    $
    739,243
    
    
    $
    636,097Costs and expenses:Direct expenses
    
    
    275,240
    
    
    
    264,219
    
    
    
    224,770Selling, general and administrative (including
stock-based compensation of $10,228, $13,335
and $33,206)
    
    
    279,916
    
    
    
    294,100
    
    
    
    288,426Exit costs and restructuring charges
    
    
    575
    
    
    
    2,314
    
    
    
    8,194Depreciation and amortization
    
    
    193,273
    
    
    
    198,915
    
    
    
    196,066Operating income (loss)
    
    
    14,766
    
    
    
    (20,305
    )
    
    
    (81,359
    )Investment income
    
    
    395
    
    
    
    2,880
    
    
    
    9,424Interest expense
    
    
    (42,344
    )
    
    
    (53,301
    )
    
    
    (34,510
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (63,795
    )Other expense, net
    
    
    (363
    )
    
    
    
    
    
    
    (451
    )Loss from continuing operations before taxes
    
    
    (27,546
    )
    
    
    (70,726
    )
    
    
    (170,691
    )Income tax expense (benefit)
    
    
    1,072
    
    
    
    
    
    
    
    (1,049
    )Net loss from continuing operations
    
    
    (28,618
    )
    
    
    (70,726
    )
    
    
    (169,642
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    1,684Gain on sale of discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    15,921Net loss
    
    $
    (28,618
    )
    
    $
    (70,726
    )
    
    $
    (152,037
    )Net loss per common share:Basic and diluted:Loss from continuing operations
    
    $
    (0.80
    )
    
    $
    (1.91
    )
    
    $
    (4.58
    )Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.05Gain on sale of discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.43Net loss
    
    $
    (0.80
    )
    
    $
    (1.91
    )
    
    $
    (4.11
    )Weighted average shares outstanding, Basic and Diluted
    
    
    35,632,786
    
    
    
    36,981,078
    
    
    
    37,033,456
   F-4




---



##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands)
 December 31,2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    71,808
    
    
    $
    10,778Short-term investments
    
    
    15,135
    
    
    
    52,906Accounts receivable, net of allowance for doubtful accounts of $6,932
and $3,770
    
    
    65,734
    
    
    
    63,597Prepayments and other current assets
    
    
    14,727
    
    
    
    11,446Total current assets
    
    
    167,404
    
    
    
    138,727Property, plant and equipment, net of accumulated depreciation of
$839,998 and $672,821
    
    
    654,678
    
    
    
    718,026Goodwill
    
    
    15,479
    
    
    
    15,479Intangible assets, net of accumulated amortization of $84,720 and $78,567
    
    
    106,164
    
    
    
    112,317Long-term restricted investments
    
    
    11,666
    
    
    
    15,371Deferred charges and other assets
    
    
    15,060
    
    
    
    16,843Total assets
    
    $
    970,451
    
    
    $
    1,016,763LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    25,667
    
    
    $
    37,752Advanced billings and customer deposits
    
    
    33,908
    
    
    
    34,246Accrued expenses and other
    
    
    56,472
    
    
    
    53,754Accrued employee compensation and related expenses
    
    
    18,289
    
    
    
    18,351Accrued exit costs
    
    
    2,093
    
    
    
    2,746Current portion of long-term debt and capital lease obligations
    
    
    25,947
    
    
    
    7,352Total current liabilities
    
    
    162,376
    
    
    
    154,201Long-term debt and capital lease obligations, net of current maturities
    
    
    709,308
    
    
    
    735,255Other long-term liabilities
    
    
    90,633
    
    
    
    110,936Total liabilities
    
    
    962,317
    
    
    
    1,000,392Commitments and contingenciesStockholders Equity:Common stock, par value $0.01 per share, 100,000,000 shares
authorized, 35,616,512 and 36,631,222 shares issued and outstanding
    
    
    356
    
    
    
    366Additional paid in capital
    
    
    454,215
    
    
    
    451,152Treasury stock, 404,339 and 276,471 shares at cost
    
    
    (6,366
    )
    
    
    (5,702
    )Accumulated deficit
    
    
    (403,037
    )
    
    
    (374,419
    )Accumulated other comprehensive loss
    
    
    (37,034
    )
    
    
    (55,026
    )Total stockholders equity
    
    
    8,134
    
    
    
    16,371Total liabilities and stockholders equity
    
    $
    970,451
    
    
    $
    1,016,763
   F-5




---



##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (28,618
    )
    
    $
    (70,726
    )
    
    $
    (152,037
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (1,684
    )Gain on sale of discontinued operations
    
    
    
    
    
    
    
    
    
    
    (15,921
    )Net loss from continuing operations
    
    
    (28,618
    )
    
    
    (70,726
    )
    
    
    (169,642
    )Adjustments to reconcile net loss to net cash provided by operating
activities:Non-cash
stock-based compensation expense
    
    
    10,228
    
    
    
    13,335
    
    
    
    33,206Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    63,795Amortization
of debt issuance costs
    
    
    1,687
    
    
    
    1,685
    
    
    
    740Deferred income taxes, net
    
    
    764
    
    
    
    
    
    
    
    (1,049
    )Depreciation and amortization
    
    
    193,273
    
    
    
    198,915
    
    
    
    196,066Provision for doubtful accounts
    
    
    16,387
    
    
    
    16,384
    
    
    
    10,880Exit costs and restructuring charges
    
    
    84
    
    
    
    (2,699
    )
    
    
    2,460Net change in certain assets and liabilities, net of business
acquisitions:Accounts receivable and unpaid revenues
    
    
    (18,933
    )
    
    
    (13,305
    )
    
    
    (12,560
    )Accounts payable and accrued expenses
    
    
    (17,142
    )
    
    
    (117
    )
    
    
    (13,744
    )Advanced billing and customer deposits
    
    
    (1,868
    )
    
    
    (7,670
    )
    
    
    338Other assets and liabilities
    
    
    (2,945
    )
    
    
    4,169
    
    
    
    (1,802
    )Net cash provided by continuing operations
    
    
    152,917
    
    
    
    139,971
    
    
    
    108,688Cash provided by discontinued operations
    
    
    
    
    
    
    
    
    
    
    476Net cash provided by operating activities
    
    
    152,917
    
    
    
    139,971
    
    
    
    109,164Cash flows from investing activities:Additions to property, plant and equipment
    
    
    (118,255
    )
    
    
    (143,252
    )
    
    
    (115,510
    )Investment in acquisitions and intangibles, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (261,843
    )Decrease (increase) in short-term investments
    
    
    37,841
    
    
    
    (7,144
    )
    
    
    12,268Proceeds from sales of property, plant and equipment
    
    
    974
    
    
    
    1,850
    
    
    
    1,955Proceeds from sale of discontinued operations and other assets
    
    
    
    
    
    
    2,500
    
    
    
    46,877Decrease in restricted investments
    
    
    3,705
    
    
    
    7,396
    
    
    
    754Net cash used in continuing operations
    
    
    (75,735
    )
    
    
    (138,650
    )
    
    
    (315,499
    )Cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    (243
    )Net cash used in investing activities
    
    
    (75,735
    )
    
    
    (138,650
    )
    
    
    (315,742
    )Cash flows from financing activities:Payments of long-term debt, including debt premium and capital
lease obligations
    
    
    (7,352
    )
    
    
    (7,338
    )
    
    
    (219,480
    )Payment of debt issuance cost
    
    
    (16
    )
    
    
    (67
    )
    
    
    (13,944
    )Proceeds from bank debt
    
    
    
    
    
    
    5,000
    
    
    
    745,000Dividend payments
    
    
    (819
    )
    
    
    (1,613
    )
    
    
    (348,380
    )Proceeds from the exercise of stock options
    
    
    
    
    
    
    397
    
    
    
    5,793Cost of common shares repurchased
    
    
    (7,301
    )
    
    
    (7,722
    )
    
    
    (3,639
    )Purchase of treasury stock
    
    
    (664
    )
    
    
    (993
    )
    
    
    (3,321
    )Net cash (used in) provided by financing activities
    
    
    (16,152
    )
    
    
    (12,336
    )
    
    
    162,029Net increase (decrease) in cash and cash equivalents
    
    
    61,030
    
    
    
    (11,015
    )
    
    
    (44,549
    )Cash and cash equivalents at beginning of period
    
    
    10,778
    
    
    
    21,793
    
    
    
    66,342Cash and cash equivalents at end of period
    
    $
    71,808
    
    
    $
    10,778
    
    
    $
    21,793
   F-6




---



##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF  STOCKHOLDERS EQUITY
 (Dollars in thousands, except share and per share data)
 AccumulatedTreasury
    
    
    
    
    
    
    
    
    

    Other
    
    
    TotalCommon Stock
    
    
    Common Stock
    
    
    Additional
    
     
    Stock
    

    
    
    

    Accumulated
    
    
    Comprehensive
    
    
    StockholdersClass A Shares
    
    
    Class A
    
    
    Paid in Capital
    
    

    Shares
    
    
    Treasury Stock
    
    
Deficit
 
    
Loss
    
    
    EquityBalance December 31, 2006
    
    
    37,455,912
    
    
    $
    374
    
    
    $
    722,589
    
    
    
    56,758
    
    
    $
    (1,388
    )
    
$
    (151,656
    )
    

$
    17
    
    
    $
    569,936Net loss
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    
    

    
    
    (152,037
    )
    
    
    
    
    
    
    (152,037
    )Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73
    )
    
    
    (73
    )Change in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,817
    )
    
    
    (19,817
    )Unrealized appreciation on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    35Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (152,037
    )
    
    $
    (19,855
    )
    
    $
    (171,892
    )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
    )Balance December 31, 2007
    
    
    37,654,546
    
    
    $
    377
    
    
    $
    444,738
    
    
    
    194,184
    
    
    $
    (4,709
    )
    
$
    (303,693
    )
    
    $
    (19,838
    )
    
    $
    116,875Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    

   
    
    
    
 
    
    
    
    (70,726
    )
    

    
    
    
    
    
    (70,726
    )Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (398
    )
    
    
    (398
    )Change in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,653
    )
    
    
    (34,653
    )Unrealized depreciation on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (137
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (70,726
    )
    
    $
    (35,188
    )
    
    $
    (105,914
    )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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    393Balance December 31, 2008
    
    
    36,631,222
    
    
    $
    366
    
    
    $
    451,152
    
    
    
    276,471
    
    
    $
    (5,702
    )
    
    $
    (374,419
    )
    
    $
    (55,026
    )
    
    $
    16,371Net loss
    
    
    
    
    
    
    
    
     
    
    
    


    
    
    
    
    
    
    
    
    (28,618
    )
    
    
    

    
    
    
    (28,618
    )Foreign
currency translation reversal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470
    
    
    
    470Change in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,452
    
    
    
    17,452Unrealized depreciation on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    70Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (28,618
    )
    
    $
    17,992
    
    
    $
    (10,626
    )Restricted stock activity, net of forfeitures
    
    
    315,507
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Repurchase of common stock
    
    
    (1,330,217
    )
    
    
    (13
    )
    
    
    (7,288
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,301
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    127,868
    
    
    
    (664
    )
    
    
    
    
    

    
    
    
    
    (664
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    10,228
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,228Forfeited dividends
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123Balance December 31, 2009
    
    
    35,616,512
    
    
    $
    356
    
    
    $
    454,215
    
    
 
    404,339
    
    
    $
    (6,366
    )
    
    $
    (403,037
    )
    
       $
    (37,034
    )
    
    $
    8,134
   F-7




---



##### Table of Contents



RCN CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
    NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  Use of Estimates and Assumptions
  Revisions and Reclassifications
    F-8




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##### Table of Contents



Cash and Cash Equivalents
  Short-term Investments
 Investments  Debt and Equity Securities
 December 31,2009
    
    
    2008(in thousands)U.S. Treasuries
    
    $
    4,911
    
    
    $
    44,150Federal Agency
    
    
    10,224
    
    
    
    7,065Commercial paper
    
    
    
    
    
    
    1,691Total
    
    $
    15,135
    
    
    $
    52,906
 Concentration and Monitoring of Credit Risk
      Accounts Receivable
   F-9




---



##### Table of Contents



Long-Term Restricted Investments
  Property, Plant and Equipment
   December 31,Useful Life
    
    2009
    
    
    2008(in thousands)Telecommunications plant
    
    5  22.5 years
    
    $
    1,118,512
    
    
    $
    1,022,514Indefeasible rights of use
    
    5  15 years
    
    
    139,757
    
    
    
    139,529Computer equipment
    
    3  5 years
    
    
    68,024
    
    
    
    68,046Buildings, leasehold improvements and land
    
    0  30 years
    
    
    91,462
    
    
    
    88,832Furniture, fixtures and vehicles
    
    3  10 years
    
    
    28,270
    
    
    
    27,390Construction materials and other
    
    3  10 years
    
    
    48,651
    
    
    
    44,536Total property, plant and equipment
    
    
    
    
    1,494,676
    
    
    
    1,390,847Less: accumulated depreciation
    
    
    
    
    (839,998
    )
    
    
    (672,821
    )Property, plant and equipment, net
    
    
    
    $
    654,678
    
    
    $
    718,026
   Property,
Plant and Equipment
  F-10




---



##### Table of Contents



Goodwill and Other Intangible Assets
 Goodwill
 Intangibles  Goodwill and Other (ASC Topic 350)
 Indefinite-Lived Intangibles
  Other Intangibles
  Asset Retirement Obligations
 Asset Retirement and Environmental (ASC Topic 410)
 Legal Contingencies
 Contingencies.
  F-11




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##### Table of Contents



Revenue Recognition
    Direct Expenses
     Selling, General and Administrative Expenses
 Exit or Disposal Cost
Obligations (ASC Topic 420),
 Non-Cash Stock-Based Compensation
 Compensation  Stock Compensation (ASC Topic 718)
  F-12




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##### Table of Contents



Exit and Restructuring Costs
   Financial Reporting By Entities in Reorganization Under the
Bankruptcy Code
 Debt Issuance Costs
  Income Taxes
 Income Taxes (ASC
Topic 740)
  Derivative Instruments and Hedging Activities
 Derivatives and Hedging (ASC Topic 815)
  F-13




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##### Table of Contents



Accumulated Other Comprehensive Income (Loss)
  2009
    
    
    2008
    
    
    2007(in thousands)Fair value of interest rate swaps
    
    $
    (37,018
    )
    
    $
    (54,470
    )
    
    $
    (19,817
    )Foreign currency translation loss
    
    
    
    
    
    
    (471
    )
    
    
    (73
    )Unrealized (depreciation) appreciation on investments
    
    
    (16
    )
    
    
    (85
    )
    
    
    52Accumulated other comprehensive loss
    
    $
    (37,034
    )
    
    $
    (55,026
    )
    
    $
    (19,838
    )
 Recently Issued Accounting Pronouncements
  Fair Value
Measurements and Disclosures
 Multiple-Deliverable Revenue Arrangements
 Measuring Liabilities at Fair Value
  F-14




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##### Table of Contents



Subsequent Events
 Financial Instruments
 Investments - Debt and
Equity Securities intent and
ability
 NOTE 3. ACQUISITIONS AND DISPOSITIONS
 NEON Communications Group, Inc.
  Business Combinations
 2007(dollars in thousands,except per share data)Revenues, net*
    
    $
    702,394Operating loss*(1)
    
    
    (95,408
    )Net loss*(1)
    
    
    (197,330
    )Net loss per common share, basic and diluted*
    
    
    (5.33
    )
 
 *
    
    from continuing operations(1)
    
    Includes non-recurring charges incurred by NEON (primarily deal-related costs), and
stock-based compensation expense totaling $5.4 million during 2007. San Francisco and Los Angeles Operations
   F-15




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##### Table of Contents



NOTE 4. EXIT COSTS AND RESTRUCTURING CHARGES
  2009
    
    
    2008
    
    
    2007(in thousands)Exit costs for excess facilities
    
    $
    84
    
    
    $
    164
    
    
    $
    7,875Severance and retention
    
    
    491
    
    
    
    2,150
    
    
    
    3,443Recoveries, net
    
    
    
    
    
    
    
    
    
    
    (3,124
    )Total
    
    $
    575
    
    
    $
    2,314
    
    
    $
    8,194
    Exit Costs andLease Fair
    
    
    RestructuringValue
    
    
    Charges
    
    
    Total(in thousands)Balance, December 31, 2007
    
    $
    3,345
    
    
    $
    10,300
    
    
    $
    13,645Additional accrued costs
    
    
    
    
    
    
    2,314
    
    
    
    2,314Amortization
    
    
    (654
    )
    
    
    (2,207
    )
    
    
    (2,861
    )Reversals / Settlements
    
    
    
    
    
    
    (4,694
    )
    
    
    (4,694
    )Balance, December 31, 2008
    
    
    2,691
    
    
    
    5,713
    
    
    
    8,404Additional accrued costs
    
    
    
    
    
    
    575
    
    
    
    575Amortization
    
    
    (621
    )
    
    
    (1,351
    )
    
    
    (1,972
    )Reversals / Settlements
    
    
    
    
    
    
    (1,187
    )
    
    
    (1,187
    )Balance, December 31, 2009
    
    
    2,070
    
    
    
    3,750
    
    
    
    5,820Less: current portion
    
    
    550
    
    
    
    1,543
    
    
    
    2,093Long-term portion December 31, 2009
    
    $
    1,520
    
    
    $
    2,207
    
    
    $
    3,727
  NOTE 5. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
   F-16




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##### Table of Contents



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(in thousands)Assets:Cash and cash equivalents
    
    $
    71,808
    
    
    $
    
    
    
    $
    
    
    
    $
    71,808Short-term investments
    
    
    15,135
    
    
    
    
    
    
    
    
    
    
    
    15,135Restricted investments
    
    
    11,666
    
    
    
    
    
    
    
    
    
    
    
    11,666Total financial assets
    
    $
    98,609
    
    
    $
    
    
    
    $
    
    
    
    $
    98,609Liabilities:Interest rate swap agreements
    
    $
    
    
    
    $
    37,018
    
    
    $
    
    
    
    $
    37,018Total financial liabilities
    
    $
    
    
    
    $
    37,018
    
    
    $
    
    
    
    $
    37,018
    NOTE 6. INTANGIBLE ASSETS
  December 31, 2009
    
    
    December 31, 2008Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedUseful Life
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(in thousands)Amortizable intangible assets:Customer relationships
    
    4  10 years
    
    $
    88,072
    
    
    $
    (70,676
    )
    
    $
    88,072
    
    
    $
    (67,318
    )Trademarks/tradenames
    
    5 years
    
    
    13,573
    
    
    
    (13,573
    )
    
    
    13,573
    
    
    
    (10,958
    )Software
    
    3 years
    
    
    540
    
    
    
    (471
    )
    
    
    540
    
    
    
    (291
    )Subtotal
    
    
    
    
    
    
    102,185
    
    
    
    (84,720
    )
    
    
    102,185
    
    
    
    (78,567
    )Indefinite-lived intangible assets:Franchise rights
    
    Indefinite
    
    
    54,842
    
    
    
    
    
    
    
    54,842
    
    
    
    Rights-of-way
    
    Indefinite
    
    
    33,857
    
    
    
    
    
    
    
    33,857
    
    
    
    Total intangible assets
    
    
    
    
    
    $
    190,884
    
    
    $
    (84,720
    )
    
    $
    190,884
    
    
    $
    (78,567
    )Goodwill
    
    
    
    
    
    $
    15,479
    
    
    $
    
    
    
    $
    15,479
    
    
    $
    
  Resi/SMB
    
    
    RCN Metro
    
    
    Total(in thousands)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
    
    
    
    23,618Amortization
    
    
    (2,981
    )
    
    
    (3,172
    )
    
    
    (6,153
    )Balance, December 31, 2009
    
    $
    2,570
    
    
    $
    14,895
    
    
    $
    17,465
  F-17




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##### Table of Contents



For the Year Ended December 31,
    
    (in thousands)2010
    
    $
    2,8102011
    
    
    2,2412012
    
    
    2,2412013
    
    
    2,2412014
    
    
    2,241Thereafter
    
    
    5,691Total
    
    $
    17,465
 NOTE 7. DEFERRED CHARGES AND OTHER ASSETS
  December 31,2009
    
    
    2008(in thousands)Debt issuance cost, net of accumulated amortization
    
    $
    7,433
    
    
    $
    9,104Security deposits
    
    
    3,215
    
    
    
    3,368Other long-term assets
    
    
    4,412
    
    
    
    4,371Total deferred charges and other assets
    
    $
    15,060
    
    
    $
    16,843
 NOTE 8. OTHER LONG-TERM LIABILITIES
  December 31,2009
    
    
    2008(in thousands)Interest rate swaps
    
    $
    37,018
    
    
    $
    54,470Deferred taxes
    
    
    36,918
    
    
    
    36,154Unearned revenue
    
    
    9,856
    
    
    
    11,385Exit costs
    
    
    2,207
    
    
    
    3,588Other deferred credits
    
    
    3,114
    
    
    
    2,678Lease cost/fair value reserve
    
    
    1,520
    
    
    
    2,070Dividend payable
    
    
    
    
    
    
    591Total other long-term liabilities
    
    $
    90,633
    
    
    $
    110,936
  F-18




---



##### Table of Contents



NOTE 9. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
  December 31,2009
    
    
    2008(in thousands)First-lien term loan
    
    $
    702,489
    
    
    $
    709,694Revolving line of credit
    
    
    30,000
    
    
    
    30,000Capital leases
    
    
    2,766
    
    
    
    2,913Total
    
    
    735,255
    
    
    
    742,607Due within
one year (1)
    
    
    25,947
    
    
    
    7,352Total long-term debt
    
    $
    709,308
    
    
    $
    735,255
  For the year ending December 31,2010 (1)
    
    $
    25,9472011
    
    
    7,3852012
    
    
    7,4042013
    
    
    37,4252014
    
    
    655,332Thereafter
    
    
    1,762Total
    
    $
    735,255
 (1)
    
    In addition to scheduled mandatory repayments under the First-Lien
Credit Agreement, the Company is also required to repay 50% of Excess Cash Flow
(as defined in the First-Lien Credit Agreement) if the Companys Total Leverage
Ratio for the period is greater than 3:00:1.  Pursuant to this Excess Cash Flow
provision, the Company expects to repay $18.6 million on or before April 15, 2010,
related to the year ended December 31, 2009.  First-Lien Credit Agreement
      F-19




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##### Table of Contents



NOTE 10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
    Derivatives Designated as HedgingInstruments
    
    Type of Hedge
    
    
    Balance Sheet Location
    
    
    Fair Value of HedgeInterest rate swap agreements
    
    Cash flow
    
    Other long-term liabilities
    
    
    $
    37,018
  Gain Recognized in OCI on
    
    
    Gain or (Loss) Reclassified
    
    
    Gain or (Loss) ReclassifiedDerivatives Designated as Hedging
    
    Derivatives (Effective
    
    
    from Accumulated OCI into
    
    
    from Accumulated OCI intoInstruments
    
    Portion)
    
    
    Income (Effective Portion)
    
    
    Income (Ineffective Portion)Interest rate swap agreements
    
    $
    17,452
    
    
    $
    
    
    
    $
    
 NOTE 11. STOCKHOLDERS EQUITY AND STOCK PLANS
 Income (Loss) Per Share
    December 31,2009
    
    
    2008
    
    
    2007Options
    
    
    2,560,774
    
    
    
    4,057,561
    
    
    
    3,884,652Warrants
    
    
    8,018,276
    
    
    
    8,018,276
    
    
    
    8,018,276Unvested restricted stock units
    
    
    2,274,391
    
    
    
    653,923
    
    
    
    Unvested restricted stock awards
    
    
    51,672
    
    
    
    162,128
    
    
    
    437,482Total
    
    
    12,905,113
    
    
    
    12,891,888
    
    
    
    12,340,410
  F-20




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##### Table of Contents



Common
Stock, Warrants and Dividends
   Stock Repurchase Program
  Stock-Based Compensation
    F-21




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007(in thousands)Restricted stock awards
    
    $
    2,082
    
    
    $
    2,832
    
    
    $
    10,093Restricted stock units
    
    
    5,182
    
    
    
    2,506
    
    
    
    Stock options
    
    
    2,964
    
    
    
    7,997
    
    
    
    23,113Total
    
    $
    10,228
    
    
    $
    13,335
    
    
    $
    33,206
  Stock Options
   2009
    
    
    2008
    
    
    2007Weighted AverageWeighted
    
    
    Remaining Contractual
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average Exercise
    
    
    Life
    
    
    Number of
    
    
    Average Exercise
    
    
    Number of
    
    
    Average ExerciseShares
    
    
    Price
    
    
    (In Years)
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceAwards Outstanding at January 1
    
    
    4,057,561
    
    
    $
    13.94
    
    
    
    
    
    
    
    3,884,652
    
    
    $
    15.49
    
    
    
    2,963,674
    
    
    $
    23.37Granted
    
    
    383,975
    
    
    
    9.05
    
    
    
    
    
    
    
    1,362,702
    
    
    
    11.10
    
    
    
    330,677
    
    
    
    14.39Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,081
    )
    
    
    12.36
    
    
    
    (315,130
    )
    
    
    18.38Forfeited
    
    
    (1,880,762
    )
    
    
    15.10
    
    
    
    
    
    
    
    (1,157,712
    )
    
    
    15.97
    
    
    
    (422,368
    )
    
    
    18.76Special cash dividend adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,327,799
    
    
    
    15.57Awards Outstanding at December 31
    
    
    2,560,774
    
    
    $
    12.35
    
    
    
    4.02
    
    
    
    4,057,561
    
    
    $
    13.94
    
    
    
    3,884,652
    
    
    $
    15.49Awards Exercisable at December 31
    
    
    1,627,713
    
    
    $
    13.44
    
    
    
    3.02
    
    
    
    2,552,767
    
    
    $
    14.98
    
    
    
    2,283,819
    
    
    $
    15.77
    F-22




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##### Table of Contents



Stock Option Exchange Program
     Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    
    
    
    
    WeightedNumber
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageOutstanding
    
    
    Remaining
    
    
    Exercise
    
    
    Number
    
    
    Exerciseat
    
    
    Contractual
    
    
    Price per
    
    
    Exercisable
    
    
    Price perExercise Price per Option
    
    12/31/2009
    
    
    Life (Years)
    
    
    Option
    
    
    at 12/31/2009
    
    
    Option$9.05
    
    
    379,881
    
    
    
    6.62
    
    
    
    
    
    
    
    $11.22
    
    
    783,622
    
    
    
    5.20
    
    
    
    
    
    
    
    262,147$12.36
    
    
    240,370
    
    
    
    2.39
    
    
    
    
    
    
    
    240,370$13.79
    
    
    894,419
    
    
    
    2.39
    
    
    
    
    
    
    
    894,419$14.29
    
    
    82,171
    
    
    
    2.91
    
    
    
    
    
    
    
    82,171$14.39
    
    
    95,748
    
    
    
    4.67
    
    
    
    
    
    
    
    64,043$17.42
    
    
    58,027
    
    
    
    3.43
    
    
    
    
    
    
    
    58,027$19.78
    
    
    26,536
    
    
    
    3.93
    
    
    
    
    
    
    
    26,536$9.05  $19.78
    
    
    2,560,774
    
    
    
    4.02
    
    
    $
    12.35
    
    
    
    1,627,713
    
    
    $
    13.44
    2008Dividend yield
    
    
    0
    %Expected volatility
    
    
    54.0
    %Risk-free interest rate
    
    
    2.5
    %Expected life (in years)
    
    
    4.5
   F-23




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    53.3
    %
    
    
    53.4
    %
    
    
    53.1
    %Risk-free interest rate
    
    
    3.3
    %
    
    
    2.7
    %
    
    
    4.3
    %Expected life (in years)
    
    
    3.4
    
    
    
    3.4
    
    
    
    4.1
  Restricted Stock Awards
   2009
    
    
    2008
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageNumber of
    
    
    Fair Value
    
    
    Number of
    
    
    Fair Value
    
    
    Number of
    
    
    Fair ValueShares
    
    
    per Share
    
    
    Shares
    
    
    per Share
    
    
    Shares
    
    
    per ShareNonvested, January 1
    
    
    162,128
    
    
    $
    27.57
    
    
    
    437,482
    
    
    $
    26.50
    
    
    
    599,159
    
    
    $
    25.25Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220,000
    
    
    
    27.27Vested
    
    
    (104,477
    )
    
    
    27.65
    
    
    
    (239,506
    )
    
    
    25.59
    
    
    
    (362,731
    )
    
    
    24.71Forfeited
    
    
    (5,979
    )
    
    
    27.99
    
    
    
    (35,848
    )
    
    
    27.83
    
    
    
    (18,946
    )
    
    
    30.10Nonvested, December 31
    
    
    51,672
    
    
    $
    27.35
    
    
    
    162,128
    
    
    $
    27.57
    
    
    
    437,482
    
    
    $
    26.50
  Restricted Stock Units
    F-24




---



##### Table of Contents



2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageNumber of
    
    
    Fair Value
    
    
    Number of
    
    
    Fair ValueShares
    
    
    per Share
    
    
    Shares
    
    
    per ShareNonvested, January 1
    
    
    653,923
    
    
    $
    11.13
    
    
    
    
    
    
    $
    Granted
    
    
    2,024,512
    
    
    
    8.91
    
    
    
    719,231
    
    
    
    11.15Vested
    
    
    (321,486
    )
    
    
    9.25
    
    
    
    (16,243
    )
    
    
    11.97Forfeited
    
    
    (82,558
    )
    
    
    9.37
    
    
    
    (49,065
    )
    
    
    11.22Nonvested, December 31
    
    
    2,274,391
    
    
    $
    9.50
    
    
    
    653,923
    
    
    $
    11.13
  NOTE 12. INCOME TAXES
  2009
    
    
    2008
    
    
    2007(in thousands)Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    308
    
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    308
    
    
    
    
    
    
    
    Deferred:Federal
    
    
    
    
    
    
    
    
    
    
    (408
    )State
    
    
    764
    
    
    
    
    
    
    
    (641
    )764
    
    
    
    
    
    
    
    (1,049
    )Total
    
    $
    1,072
    
    
    $
    
    
    
    $
    (1,049
    )
   December 31,2009
    
    
    2008(in thousands)Net operating loss carryforwards
    
    $
    584,265
    
    
    $
    582,388Capital loss carryforward
    
    
    7,283
    
    
    
    7,283Employee benefit plan
    
    
    5,953
    
    
    
    2,667Allowance for doubtful accounts
    
    
    2,873
    
    
    
    1,541Stock-based compensation
    
    
    13,318
    
    
    
    16,504Unearned revenue
    
    
    5,107
    
    
    
    5,123Other, net
    
    
    8,015
    
    
    
    8,477Subtotal
    
    
    626,814
    
    
    
    623,983Valuation allowance
    
    
    (578,127
    )
    
    
    (570,222
    )Total deferred tax assets
    
    
    48,687
    
    
    
    53,761Property, plant, and equipment
    
    
    (47,878
    )
    
    
    (53,443
    )Intangibles
    
    
    (37,727
    )
    
    
    (36,472
    )Total long-term deferred tax liabilities
    
    
    (85,605
    )
    
    
    (89,915
    )Net long-term deferred tax liabilities
    
    $
    (36,918
    )
    
    $
    (36,154
    )
  F-25




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##### Table of Contents



2009
    
    
    2008
    
    
    2007(in thousands)Net loss
    
    $
    (28,618
    )
    
    $
    (70,726
    )
    
    $
    (152,037
    )Total provision (benefit) for income taxes
    
    
    1,072
    
    
    
    
    
    
    
    (1,049
    )Loss before provision for income taxes
    
    $
    (27,546
    )
    
    $
    (70,726
    )
    
    $
    (153,086
    )Federal income tax benefit at statutory rate
    
    $
    (9,641
    )
    
    $
    (24,754
    )
    
    $
    (53,580
    )State income taxes, net of federal income tax provision
    
    
    964
    
    
    
    (4,328
    )
    
    
    (8,864
    )Valuation allowance
    
    
    9,633
    
    
    
    28,779
    
    
    
    44,927Restructuring costs
    
    
    
    
    
    
    
    
    
    
    15,282Nondeductible expenses
    
    
    116
    
    
    
    303
    
    
    
    746Reversal of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    440Total provision (benefit) for income taxes
    
    $
    1,072
    
    
    $
    
    
    
    $
    (1,049
    )
     NOTE 13. EMPLOYEE BENEFIT PLANS
   F-26




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##### Table of Contents



NOTE 14. COMMITMENTS AND CONTINGENCIES
 Rent Expense
   Year
    
    (in thousands)2010
    
    $
    16,2232011
    
    
    14,0202012
    
    
    12,0462013
    
    
    10,9712014
    
    
    9,625Thereafter
    
    
    21,826
 Letters of Credit
  Guarantees
  Self Insurance
  Litigation
   F-27




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##### Table of Contents



NOTE 15. FINANCIAL DATA BY BUSINESS SEGMENT
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Net Operating Revenues:(1)Residential/SMB(1)
    
    $
    574,057
    
    
    $
    567,931
    
    
    $
    546,263RCN Metro(1)
    
    
    189,713
    
    
    
    171,312
    
    
    
    89,834Total
    
    $
    763,770
    
    
    $
    739,243
    
    
    $
    636,097Operating Expenses:(2)Residential/SMB(2)
    
    $
    585,088
    
    
    $
    602,008
    
    
    $
    630,942RCN Metro(2)
    
    
    163,916
    
    
    
    157,540
    
    
    
    86,514Total
    
    $
    749,004
    
    
    $
    759,548
    
    
    $
    717,456Operating Income before Depreciation &
Amortization, Stock-Based Compensation,
Exit Costs and Restructuring Charges:Residential/SMB
    
    $
    155,355
    
    
    $
    145,421
    
    
    $
    135,470RCN Metro
    
    
    63,487
    
    
    
    48,838
    
    
    
    20,637Total
    
    $
    218,842
    
    
    $
    194,259
    
    
    $
    156,107Stock-Based Compensation:Residential/SMB
    
    $
    7,676
    
    
    $
    10,364
    
    
    $
    28,205RCN Metro
    
    
    2,552
    
    
    
    2,971
    
    
    
    5,001Total
    
    $
    10,228
    
    
    $
    13,335
    
    
    $
    33,206Depreciation and Amortization:Residential/SMB
    
    $
    158,036
    
    
    $
    167,532
    
    
    $
    183,855RCN Metro
    
    
    35,237
    
    
    
    31,383
    
    
    
    12,211Total
    
    $
    193,273
    
    
    $
    198,915
    
    
    $
    196,066Exit Costs and Restructuring Charges:Residential/SMB
    
    $
    674
    
    
    $
    1,602
    
    
    $
    8,089RCN Metro
    
    
    (99
    )
    
    
    712
    
    
    
    105Total
    
    $
    575
    
    
    $
    2,314
    
    
    $
    8,194Operating (Loss) Income:Residential/SMB
    
    $
    (11,031
    )
    
    $
    (34,077
    )
    
    $
    (84,679
    )RCN Metro
    
    
    25,797
    
    
    
    13,772
    
    
    
    3,320Total
    
    $
    14,766
    
    
    $
    (20,305
    )
    
    $
    (81,359
    )Additions to Property, Plant and Equipment:Residential/SMB
    
    $
    81,713
    
    
    $
    112,883
    
    
    $
    94,942RCN Metro
    
    
    36,542
    
    
    
    30,369
    
    
    
    20,568Total
    
    $
    118,255
    
    
    $
    143,252
    
    
    $
    115,510
 
 (1)
    
    All revenues reported for the individual segments are from
external customers.(2)
    
    Operating expenses include stock-based compensation expense. NOTE 16. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
  Supplemental Disclosures of Cash Flow Information
    
    2009
    
    
    2008
    
    
    2007(in thousands)Cash paid during the period for:Interest, net of capitalized interest of $0
    
    $
    40,059
    
    
    $
    51,213
    
    
    $
    38,663Income taxes
    
    $
    300
    
    
    
    
    
    
    
    
  F-28




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##### Table of Contents



NOTE 17. SELECTED FINANCIAL DATA (Unaudited)
  20091st Quarter
    
    
    2nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    Total(in thousands, except per share data)Revenues
    
    $
    189,228
    
    
    $
    192,332
    
    
    $
    191,921
    
    
    $
    190,289
    
    
    $
    763,770Operating
income (2)
    
    
    879
    
    
    
    2,534
    
    
    
    4,689
    
    
    
    6,664
    
    
    
    14,766Net loss
    
    
    (9,632
    )
    
    
    (9,401
    )
    
    
    (5,668
    )
    
    
    (3,917
    )
    
    
    (28,618
    )Basic and Diluted: net loss per share
    
    $
    (0.27
    )
    
    $
    (0.26
    )
    
    $
    (0.16
    )
    
    $
    (0.11
    )
    
    $
    (0.80
    )
 20081st Quarter
    
    
    2nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    Total(in thousands, except per share data)Revenues
    
    $
    179,815
    
    
    $
    184,352
    
    
    $
    187,054
    
    
    $
    188,022
    
    
    $
    739,243Operating (loss) income
    
    
    (12,845
    )
    
    
    (5,088
    )
    
    
    (2,631
    )
    
    
    259
    
    
    
    (20,305
    )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
    )
 
 (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.(2)
    
    In the second quarter of 2009, the Company recorded an impairment adjustment totaling $4.5 million
related to equipment which has not been returned by former customers. Included in this impairment adjustment
is $1.6 million that relates to periods prior to January 1, 2009. NOTE 18. SUBSEQUENT EVENT
   F-29




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##### Table of Contents



RCN CORPORATION AND SUBSIDIARIES
 
 SCHEDULE II
 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
 AdditionsCharged toBalance at
    
    
    Charged to
    
    
    Other
    
    
    Accounts
    
    
    Balance atBeginning
    
    
    Cost and
    
    
    Accounts
    
    
    Written Off
    
    
    End ofof Period
    
    
    Expense
    
    
    (2)
    
    
    (1)
    
    
    Period(in thousands, except per share data)Allowance for doubtful accounts receivableDecember 31, 2009
    
    $
    3,770
    
    
    $
    16,387
    
    
    $
    3,240
    
    
    $
    16,465
    
    
    $
    6,932December 31, 2008
    
    
    4,298
    
    
    
    16,384
    
    
    
    (334
    )
    
    
    16,578
    
    
    
    3,770December 31, 2007
    
    
    4,205
    
    
    
    10,880
    
    
    
    396
    
    
    
    11,183
    
    
    
    4,298
 
 (1)
    
    Consists of write-offs, net of recoveries and collection fees in each year.(2)
    
    Includes certain intercarrier compensation receivables fully
reserved for at time of billing in 2009, as well as
adjustments and additions for acquisitions in 2008 and 2007.  F-30