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FairPoint Communications Reports 2012 Fourth Quarter And Full Year Results
CHARLOTTE, N.C., March 6, 2013 /PRNewswire via COMTEX/ --
FairPoint Communications, Inc. (NasdaqCM: FRP) ("FairPoint" or the "Company"), a leading communications provider, today announced its financial results for the fourth quarter and full year ended Dec. 31, 2012. As previously announced, the Company will host a conference call and simultaneous webcast to discuss its results at 8:30 a.m. (ET) on Thursday, March 7, 2013.
"We're pleased with our 2012 performance," said Paul H. Sunu, Chief Executive Officer of FairPoint. "Successful execution on our 'four pillar' strategy allowed us to generate free cash flow in 2012 and begin the transformation of our revenue composition for growth. In 2013, we expect to flatten our top line trend and, by year-end, start to grow revenue on a sequential quarterly basis."
Operating Highlights
FairPoint continues to see positive momentum in its growth-oriented business and broadband products. Data and Internet services revenue in the fourth quarter grew 13.1% versus a year ago and products like FairPoint's Ethernet service offerings attracted new customers. Growth in business and broadband products is a key component of FairPoint's strategy to transform its revenue composition and offset continued erosion in the Company's legacy access products like residential voice.
Ethernet services contributed approximately $12 million of revenue in the fourth quarter of 2012 as compared to $7 million in the fourth quarter of 2011. Growth in the Company's Ethernet products is expected to continue as regional banks, healthcare networks and wireless carriers transition away from legacy technologies like frame relay.
Broadband subscribers grew 3.9% year-over-year and 1.2% sequentially--an acceleration versus the third quarter of 2012. FairPoint added more than 12,000 broadband subscribers in 2012, as penetration reached 34.3% of voice access lines at year end.
Voice access lines declined 7.8% in 2012 as compared to 8.4% in 2011. The improvement was driven largely by a slowdown in the rate of loss in business voice access lines, which declined 3.7% in 2012 as compared to 5.1% in 2011.
As of Dec. 31, 2012, FairPoint had approximately 3,369 employees, a decrease of 4.9% and 16.4% from Dec. 31, 2011 and Dec. 31, 2010, respectively. Headcount declined by 29 in the fourth quarter of 2012.
Financial Highlights
Fourth Quarter 2012 as compared to Third Quarter 2012
Revenue was $240 million in the fourth quarter of 2012 as compared to $242 million in the third quarter of 2012. The change was due in part to a loss of voice access lines in the quarter, which led to a decrease in voice services revenue. In addition, management estimates that Superstorm Sandy, which caused service interruption during the fourth quarter, resulted in an increase in wholesale service quality penalties of nearly $1 million.
Operating expenses, excluding depreciation, amortization and reorganization, were $195 million in the fourth quarter of 2012 as compared to $186 million in the third quarter of 2012. The increase was primarily the result of higher bad debt expense, the impact of Superstorm Sandy and higher employee benefits expense. Bad debt expense increased approximately $3 million sequentially, being low in the third quarter. Management estimates that costs associated with Superstorm Sandy were approximately $2 million in the fourth quarter. Employee benefits expense increased $3 million sequentially due primarily to higher claims.
Adjusted EBITDA, before storm impact, was $66 million in the fourth quarter of 2012 as compared to $74 million in the third quarter of 2012. The sequential decline was primarily the result of the changes in voice services revenue, bad debt expense and employee benefits expense described above.
Net loss decreased sequentially to $32 million in the fourth quarter of 2012 as compared to a net loss of $37 million in the third quarter of 2012. The improvement was due primarily to a higher income tax benefit in the fourth quarter.
Capital expenditures were $49 million in the fourth quarter of 2012 as compared to $38 million in the third quarter of 2012. FairPoint continued to expand its broadband footprint in New Hampshire during the fourth quarter in accordance with a regulatory commitment to reach 95% of its customers in the state by Dec. 31, 2013. As of Dec. 31, 2012, the Company estimates its broadband coverage in New Hampshire was approximately 94%.
FairPoint's cash position was $23 million as of Dec. 31, 2012, as compared to $22 million as of Sept. 30, 2012 and $17 million as of Dec. 31, 2011. The Company reported $957 million of debt outstanding under the former credit facility at year end, after further voluntary prepayments made during the fourth quarter. On Jan. 31, 2013, FairPoint closed the sale of its Idaho operations for $30 million in gross proceeds and used $8 million to repay debt under the former credit facility. On February 14, 2013, FairPoint refinanced its former credit facility with $300 million aggregate principal amount of 8.75% senior secured notes due 2019 and a new credit facility comprised of a $640 million term loan and $75 million revolving credit facility. In addition, the Company used cash on hand to pay the remaining principal, accrued interest, fees, expenses and other costs related to the refinancing. The Company's $75 million revolving credit facility is undrawn, with $63 million available for additional borrowing after applying $12 million for outstanding letters of credit.
Fourth Quarter 2012 as compared to Fourth Quarter 2011
Revenue was $240 million in the fourth quarter of 2012 as compared to $254 million a year earlier. The change was due primarily to a decline in voice services revenue and access revenue. The loss of voice access lines versus a year ago led to a decrease in voice services revenue, while a decline in switched access minutes of use led to lower switched access revenue. In addition, special access revenue declined as customers migrated from legacy access products such as DS1, DS3, frame relay and private line to wholesale Ethernet-based products, which tend to have lower average revenue per unit. Service quality penalties, which normally reduce revenue, were $2 million in the fourth quarter of 2012 as compared to a revenue benefit of $3 million a year earlier when the Company reversed certain previously accrued penalties following the favorable outcome of various regulatory proceedings. Data and Internet services revenue grew as broadband subscribers and retail Ethernet product revenues increased year-over-year.
Operating expenses, excluding depreciation, amortization and reorganization, were $195 million in the fourth quarter of 2012 as compared to $204 million a year earlier. The decrease was primarily the result of decreases in contracted services and costs of goods sold.
Adjusted EBITDA, before storm impact, was $66 million in the fourth quarter of 2012 as compared to $70 million a year earlier when the Company recognized a $2 million benefit from the reversal of certain bankruptcy claims. FairPoint implemented a number of cost reduction initiatives during 2012 which largely offset the $14 million decline in revenue year-over-year.
Capital expenditures were $49 million in the fourth quarter of 2012 as compared to $35 million a year earlier. The Company continued to expand its broadband footprint in New Hampshire as discussed above.
Net loss was $32 million in the fourth quarter of 2012 as compared to a net loss of $84 million in the fourth quarter of 2011, when FairPoint recognized a book income tax charge to true-up its deferred tax liability.
2013 Guidance
The Company expects to generate $100 to 110 million of Unlevered Free Cash Flow in 2013. Unlevered Free Cash Flow refers to Adjusted EBITDA minus capital expenditures, cash pension contributions and cash payments for other post-employment benefits ("OPEB"). In addition, for fiscal 2013, Adjusted EBITDA is expected to be $255 to 265 million, capital expenditures are expected to be approximately $135 million and aggregate cash pension contributions and cash OPEB payments are expected to be approximately $20 million.
The financial guidance provided above is after the impact of the sale of FairPoint's Idaho operations, which closed on Jan. 31, 2013. On an annual basis, the properties contributed approximately $8 million in revenue and approximately $5 million in Adjusted EBITDA, with capital expenditures of approximately $1 million. Neither the gain on the sale nor the cash proceeds received will be counted towards Unlevered Free Cash Flow or Adjusted EBITDA in 2013.
Annual Report
The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's annual report on Form 10-K for the fiscal year ended Dec. 31, 2012, which will be filed with the SEC no later than March 18, 2013. The Company's results for the quarter and fiscal year ended Dec. 31, 2012, are subject to the completion of such annual report.
Fresh Start Accounting
On Jan. 24, 2011, the Company emerged from Chapter 11 bankruptcy protection and its Plan of Reorganization became effective. In accordance with generally accepted accounting principles, the Company adopted fresh start accounting as of Jan. 24, 2011, whereby the Company's assets and liabilities were marked to their fair value as of the date of emergence. Accordingly, the Company's consolidated statements of financial position and operations for periods after Jan. 24, 2011 are not comparable in many respects to periods prior to the adoption of fresh start accounting.
Conference Call Information
As previously announced, FairPoint will host a conference call and simultaneous webcast to discuss its fourth quarter 2012 results at 8:30 a.m. (ET) on Thursday, March 7, 2013.
Participants should call (866) 272-9941 (US/Canada) or (617) 213-8895 (international) at 8:20 a.m. (ET) and enter the passcode 53958194 when prompted. The title of the call is the Q4 2012 FairPoint Communications, Inc. Earnings Conference Call.
A telephonic replay will be available for anyone unable to participate in the live call. To access the replay, call (888) 286-8010 (US/Canada) or (617) 801-6888 (international) and enter the passcode 13187041 when prompted. The recording will be available from Thursday, March 7, 2013, at 10:30 a.m. (ET) through Thursday, March 14, 2013, at 11:59 p.m. (ET).
A live broadcast of the earnings conference call will be available online at www.fairpoint.com/investors. An online replay will be available shortly thereafter.
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures, including but not limited to Adjusted EBITDA and Unlevered Free Cash Flow, and adjustments to GAAP and non-GAAP measures to exclude the effect of special items. Management believes that Adjusted EBITDA provides a useful measure of operational and financial performance and removes variability related to pension contributions and payments for other post-employment benefits and that Unlevered Free Cash Flow may be useful to investors in assessing the Company's ability to generate cash and meet its debt service requirements. The maintenance covenants contained in the Company's new credit facility are based on Consolidated EBITDA, which is consistent with the pro forma calculation of Adjusted EBITDA included in the attachment to this press release. In addition, management believes that the adjustments to GAAP and non-GAAP measures to exclude the effect of special items may be useful to investors in understanding period-to-period operating performance and in identifying historical and prospective trends.
However, the non-GAAP financial measures, as used herein, are not necessarily comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA and Unlevered Free Cash Flow have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income or loss, operating income, cash flow or other combined income or cash flow data prepared in accordance with GAAP. Because of these limitations, Adjusted EBITDA, Unlevered Free Cash Flow and related ratios should not be considered as measures of discretionary cash available to invest in business growth or reduce indebtedness. The Company compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA and Unlevered Free Cash Flow only supplementally. A reconciliation of Adjusted EBITDA and Unlevered Free Cash Flow to net loss or income is contained in the attachments to this press release.
About FairPoint Communications, Inc.
FairPoint Communications, Inc. (NasdaqCM: FRP) is a leading communications provider of broadband Internet access, local and long-distance phone, television and other high-capacity data services to customers in communities across 17 states. Through its fast, reliable fiber network, FairPoint delivers high-quality data and voice networking communications solutions to residential, business and wholesale customers. FairPoint delivers VantagePointSM services through its resilient IP-based network in northern New England. This state-of-the-art fiber network provides carrier Ethernet connections to support the surging bandwidth and performance requirements for cloud-based applications like network storage, disaster recovery, distance learning, medical imaging, video conferencing and CAD/CAM along with traditional voice, VoIP, video and Internet access solutions. Additional information about FairPoint products and services is available at www.FairPoint.com.
Cautionary Note Regarding Forward-looking Statements
Some statements herein or discussed on our earnings conference call are known as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements about the Company's plans, objectives, expectations and intentions and other statements contained herein that are not historical facts. When used herein, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including the Company's plans, objectives, expectations and intentions and other factors. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of the date hereof. The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in the Company's subsequent reports filed with the SEC.
Certain information contained herein or discussed on our earnings conference call may constitute guidance as to projected financial results and the Company's future performance that represent management's estimates as of the date hereof. This guidance, which consists of forward-looking statements, is prepared by the Company's management and is qualified by, and subject to, certain assumptions. Guidance is not prepared with a view toward compliance with published guidelines of the American Institute of Certified Public Accountants, and neither the Company's independent registered public accounting firm nor any other independent expert or outside party compiles or examines the guidance and, accordingly, no such person expresses any opinion or any other form of assurance with respect thereto. Guidance is based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control and are based upon specific assumptions with respect to future business decisions, some of which will change. Management generally states possible outcomes as high and low ranges which are intended to provide a sensitivity analysis as variables are changed but are not intended to represent actual results, which could fall outside of the suggested ranges. The principal reason that the Company releases this data is to provide a basis for management to discuss the Company's business outlook with analysts and investors. The Company does not accept any responsibility for any projections or reports published by any such outside analysts or investors. Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will not materialize or will vary significantly from actual results. Accordingly, the Company's guidance is only an estimate of what management believes is realizable as of the date hereof. Actual results will vary from the guidance and the variations may be material. Investors should also recognize that the reliability of any forecasted financial data diminishes the farther in the future that the data is forecast. In light of the foregoing, investors are urged to put the guidance in context and not to place undue reliance on it.
1 Unlevered Free Cash Flow and Adjusted EBITDA are non-GAAP financial measures. Additional information regarding the calculation of Unlevered Free Cash Flow and Adjusted EBITDA and a reconciliation to net income or loss are contained in the attachment to this press release.
FAIRPOINT COMMUNICATIONS, INC.
Supplemental Financial Information
(Unaudited)
(in thousands, except per unit and percentage data)
FY2012 FY2011 4Q12 3Q12 2Q12 1Q12 4Q11
Summary Income Statement:
Revenue:
Voice services $ 446,126 $ 483,766 $ 108,487 $ 111,337 $ 111,525 $ 114,777 $ 118,580
Access 336,000 369,336 82,476 82,015 84,686 86,823 90,204
Data and Internet services 142,911 127,323 36,668 36,793 36,118 33,332 32,418
Other services 48,612 49,065 12,039 11,907 11,124 13,542 12,960
Total revenue 973,649 1,029,490 239,670 242,052 243,453 248,474 254,162
Operating expenses:
Operating expenses, excluding depreciation, amortization and reorganization 782,684 836,566 194,692 186,417 190,672 210,903 203,717
Depreciation and amortization 376,614 358,406 99,845 89,782 93,780 93,207 91,951
Reorganization expense (income) (3,666) (232) 377 172 (2,823) (1,392) (1,743)
(post-emergence)
Impairment of intangible assets and goodwill -- 262,019 -- -- -- -- --
Total operating expenses 1,155,632 1,456,759 294,914 276,371 281,629 302,718 293,925
Loss from operations (181,983) (427,269) (55,244) (34,319) (38,176) (54,244) (39,763)
Other income (expense):
Interest expense (67,610) (73,128) (16,608) (16,991) (16,983) (17,028) (17,173)
Other income (expense), net 739 1,659 14 548 (125) 302 472
Total other expense (66,871) (71,469) (16,594) (16,443) (17,108) (16,726) (16,701)
Loss before reorganization items and income taxes (248,854) (498,738) (71,838) (50,762) (55,284) (70,970) (56,464)
Reorganization items -- 897,313 -- -- -- -- --
(Loss) income before income taxes (248,854) 398,575 (71,838) (50,762) (55,284) (70,970) (56,464)
Income tax benefit (expense) 95,560 (226,613) 39,658 13,433 18,211 24,258 (27,520)
Net (loss) income $ (153,294) $ 171,962 $ (32,180) $ (37,329) $ (37,073) $ (46,712) $ (83,984)
Reconciliation of Adjusted EBITDA (before storm impact) and Unlevered Free Cash Flow (before storm impact):
Net (loss) income $ (153,294) $ 171,962 $ (32,180) $ (37,329) $ (37,073) $ (46,712) $ (83,984)
Income tax (benefit) expense (95,560) 226,613 (39,658) (13,433) (18,211) (24,258) 27,520
Interest expense 67,610 73,128 16,608 16,991 16,983 17,028 17,173
Depreciation and amortization 376,614 358,406 99,845 89,782 93,780 93,207 91,951
Pension expense (1a) 17,809 12,185 4,005 4,166 4,573 5,065 3,313
OPEB expense (1a) 50,875 39,601 11,899 11,729 13,373 13,874 10,153
Severance 6,380 8,006 938 592 1,907 2,943 4,360
Restructuring costs (1b) 1,335 21,053 258 338 276 463 275
Storm expenses (1c) 3,000 4,040 3,000 -- -- -- --
Other non-cash items, net (1d) 3,518 (651,943) 2,068 1,211 395 (156) (53)
All other allowed adjustments, net (1e) (675) (1,055) (288) (358) 143 (172) (248)
Adjusted EBITDA, before storm impact $ 277,612 $ 261,996 $ 66,495 $ 73,689 $ 76,146 $ 61,282 $ 70,460
Adjusted EBITDA margin 28.5 % 25.4 % 27.7 % 30.4 % 31.3 % 24.7 % 27.7 %
Pension contributions (17,850) (6,178) -- (7,344) (5,156) (5,350) --
OPEB payments (3,183) (1,763) (1,125) (656) (794) (608) (482)
Capital expenditures (145,066) (176,125) (49,070) (37,669) (32,070) (26,257) (35,110)
Unlevered Free Cash Flow, before storm impact $ 111,513 $ 77,930 $ 16,300 $ 28,020 $ 38,126 $ 29,067 $ 34,868
Pro Forma Reconciliation of Adjusted EBITDA (new definition)(2) and Unlevered Free Cash Flow:
Adjusted EBITDA, before storm impact $ 277,612 $ 261,996 $ 66,495 $ 73,689 $ 76,146 $ 61,282 $ 70,460
Compensated absences (2a) 329 (462) (3,925) (4,490) (2,864) 11,608 (2,966)
Adjusted EBITDA (new definition)(2) $ 277,941 $ 261,534 $ 62,570 $ 69,199 $ 73,282 $ 72,890 $ 67,494
Adjusted EBITDA margin 28.5 % 25.4 % 26.1 % 28.6 % 30.1 % 29.3 % 26.6 %
Pension contributions (17,850) (6,178) -- (7,344) (5,156) (5,350) --
OPEB payments (3,183) (1,763) (1,125) (656) (794) (608) (482)
Capital expenditures (145,066) (176,125) (49,070) (37,669) (32,070) (26,257) (35,110)
Unlevered Free Cash Flow $ 111,842 $ 77,468 $ 12,375 $ 23,530 $ 35,262 $ 40,675 $ 31,902
Select Operating and Financial Metrics:
Residential access lines 586,725 645,453 586,725 602,530 619,240 631,724 645,453
Business access lines 299,701 311,241 299,701 303,904 306,682 309,078 311,241
Wholesale access lines (3) 65,641 76,065 65,641 67,886 69,375 72,233 76,065
Total switched access lines 952,067 1,032,759 952,067 974,320 995,297 1,013,035 1,032,759
% change y-o-y (7.8)% (8.4)% (7.8)% (7.8)% (7.8)% (8.1)% (8.4)%
% change q-o-q N/A N/A (2.3)% (2.1)% (1.8)% (1.9)% (2.3)%
Broadband subscribers (4) 326,367 314,135 326,367 322,551 320,812 318,510 314,135
% change y-o-y 3.9 % 8.4 % 3.9 % 3.2 % 5.1 % 7.1 % 8.4 %
% change q-o-q N/A N/A 1.2 % 0.5 % 0.7 % 1.4 % 0.5 %
penetration of access lines 34.3 % 30.4 % 34.3 % 33.1 % 32.2 % 31.4 % 30.4 %
Access line equivalents 1,278,434 1,346,894 1,278,434 1,296,871 1,316,109 1,331,545 1,346,894
% change y-o-y (5.1)% (5.0)% (5.1)% (5.3)% (5.0)% (4.9)% (5.0)%
% change q-o-q N/A N/A (1.4)% (1.5)% (1.2)% (1.1)% (1.6)%
(1) For purposes of calculating Adjusted EBITDA, the Company adjusts net (loss) income for interest, income taxes, depreciation and amortization, in addition to:
a) the add-back of aggregate pension and other post-employment benefits (OPEB) expense,
b) the add-back of costs related to the restructuring, including professional fees for advisors and consultants,
c) the add-back of costs and expenses, including those imposed by regulatory authorities, with respect to casualty events, acts of God or force majeure to the extent they are not reimbursed from proceeds of insurance,
d) the add-back of other non-cash items except to the extent they will require a cash payment in a future period, and
e) the add-back (or subtraction) of other items including non-cash gains/losses, non-operating dividend and interest income and other extraordinary gains/losses.
(2) On February 14, 2013, the Company refinanced its former credit facility with a new credit agreement. Going forward, Adjusted EBITDA will be calculated in accordance with the definition of Consolidated EBITDA in the Company's new credit agreement. Accordingly, the new definition of Adjusted EBITDA will also adjust for:
a) the add-back (or subtraction) of the adjustment to the compensated absences accrual to eliminate the impact of changes in the accrual.
(3) Wholesale access lines include Resale and UNE-P, but exclude UNE-L and special access circuits.
(4) Broadband subscribers include DSL, fiber-to-the-premise, cable modem and fixed wireless broadband, but exclude Ethernet and other high-capacity circuits.
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2012 and 2011
(in thousands, except share data)
December 31, 2012 December 31, 2011
Assets:
Cash $ 23,203 $ 17,350
Restricted cash 6,818 24,446
Accounts receivable, net 86,999 100,324
Prepaid expenses 20,128 18,346
Other current assets 4,219 3,312
Deferred income tax, net 16,376 17,915
Assets held for sale 12,549 --
Total current assets 170,292 181,693
Property, plant and equipment, net 1,438,309 1,663,065
Intangible assets, net 116,992 128,145
Debt issue costs, net 1,111 1,779
Restricted cash 651 651
Other assets 5,006 10,338
Total assets $ 1,732,361 $ 1,985,671
Liabilities and Stockholders' Deficit:
Current portion of long-term debt $ 10,000 $ 10,000
Current portion of capital lease obligations 1,220 1,252
Accounts payable 57,832 65,184
Claims payable and estimated claims accrual 1,282 22,839
Accrued interest payable 176 508
Other accrued liabilities 72,036 50,374
Liabilities held for sale 407 --
Total current liabilities 142,953 150,157
Capital lease obligations 1,470 2,690
Accrued pension obligation 203,537 157,961
Employee benefit obligations 619,108 531,634
Deferred income taxes 127,361 245,369
Other long-term liabilities 8,745 14,003
Long-term debt, net of current portion 947,000 990,000
Total long-term liabilities 1,907,221 1,941,657
Total liabilities 2,050,174 2,091,814
Commitments and contingencies (See Note 19)
Stockholders' deficit:
Common stock, $0.01 par value, 37,500,000 shares authorized, 26,288,998 and 26,197,142 shares issued and outstanding at December 31, 2012 and 2011, respectively 262 262
Additional paid-in capital 506,153 502,034
Retained deficit (568,239) (414,945)
Accumulated other comprehensive loss (255,989) (193,494)
Total stockholders' deficit (317,813) (106,143)
Total liabilities and stockholders' deficit $ 1,732,361 $ 1,985,671
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Year Ended December 31, 2012, Three Hundred Forty-One Days Ended December 31, 2011,
Twenty-Four Days Ended January 24, 2011 and Year Ended December 31, 2010
(in thousands, except per share data)
Predecessor Company
Three Hundred Twenty-Four
Forty-One Days Ended
Days Ended January 24, 2011
December 31, 2011
Year Ended Year Ended
December 31, 2012 December 31, 2010
Revenues $ 973,649 $ 963,112 $ 66,378 $ 1,070,986
Operating expenses:
Cost of services and sales, excluding depreciation and amortization 440,271 438,619 38,766 525,728
Selling, general and administrative expense, excluding depreciation and amortization 342,413 332,020 27,161 365,373
Depreciation and amortization 376,614 336,891 21,515 289,824
Reorganization related income (3,666) (232) -- --
Impairment of intangible assets and goodwill -- 262,019 -- --
Total operating expenses 1,155,632 1,369,317 87,442 1,180,925
Loss from operations (181,983) (406,205) (21,064) (109,939)
Other income (expense):
Interest expense (67,610) (63,807) (9,321) (140,896)
Other 739 1,791 (132) 2,715
Total other expense (66,871) (62,016) (9,453) (138,181)
Loss before reorganization items and income taxes (248,854) (468,221) (30,517) (248,120)
Reorganization items -- -- 897,313 (41,120)
(Loss) income before income taxes (248,854) (468,221) 866,796 (289,240)
Income tax benefit (expense) 95,560 53,276 (279,889) 7,661
Net (loss) income $ (153,294) $ (414,945) $ 586,907 $ (281,579)
Weighted average shares outstanding:
Basic 25,987 25,838 89,424 89,424
Diluted 25,987 25,838 89,695 89,424
(Loss) earnings per share:
Basic $ (5.90) $ (16.06) $ 6.56 $ (3.15)
Diluted (5.90) (16.06) 6.54 (3.15)
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Year Ended December 31, 2012, Three Hundred Forty-One Days Ended December 31, 2011,
Twenty-Four Days Ended January 24, 2011 and Year Ended December 31, 2010
(in thousands)
Predecessor Company
Year Ended Three Hundred Twenty-Four Year Ended
December 31, 2012 Forty-One Days Ended December 31, 2010
Days Ended January 24, 2011
December 31, 2011
Cash flows from operating activities:
Net (loss) income $ (153,294) $ (414,945) $ 586,907 $ (281,579)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred income taxes (96,778) (52,203) 279,868 (7,915)
Provision for uncollectible revenue 7,506 18,344 3,454 20,525
Depreciation and amortization 376,614 336,891 21,515 289,824
Post-retirement healthcare 47,692 35,183 2,654 33,216
Qualified pension (42) 5,021 986 10,017
Loss on abandoned projects 2,862 -- -- 15,132
Impairment of intangible assets and goodwill -- 262,019 -- --
Other non-cash items 866 (288) 97 4,045
Changes in assets and liabilities arising from operations:
Accounts receivable 9,587 7,863 (7,752) 12,706
Prepaid and other assets (3,301) (1,926) (3,423) (6,834)
Restricted cash (6,164) -- -- --
Accounts payable and accrued liabilities 3,364 (12,303) 26,627 (10,802)
Accrued interest payable (332) 508 9,017 137,111
Other assets and liabilities, net (4,198) 67 177 (3,816)
Reorganization adjustments:
Non-cash reorganization income (5,002) (7,308) (917,358) (20,004)
Claims payable and estimated claims accrual (8,824) (66,712) (1,096) --
Restricted cash--Cash Claims Reserve 22,219 59,888 (82,764) --
Total adjustments 346,069 585,044 (667,998) 473,205
Net cash provided by (used in) operating activities 192,775 170,099 (81,091) 191,626
Cash flows from investing activities:
Net capital additions (145,066) (163,648) (12,477) (197,795)
Distributions from investments 759 798 -- 527
Net cash used in investing activities (144,307) (162,850) (12,477) (197,268)
Cash flows from financing activities:
Loan origination costs -- (884) (1,500) (1,475)
Proceeds from issuance of long-term debt -- -- -- 5,513
Repayments of long-term debt (43,000) -- -- --
Restricted cash 1,573 1,843 34 (62)
Proceeds from exercise of stock options 64 -- -- --
Repayment of capital lease obligations (1,252) (1,120) (201) (2,192)
Net cash (used in) provided by financing activities (42,615) (161) (1,667) 1,784
Net change 5,853 7,088 (95,235) (3,858)
Cash, beginning of period 17,350 10,262 105,497 109,355
Cash, end of period $ 23,203 $ 17,350 $ 10,262 $ 105,497
Supplemental disclosure of cash flow information:
Interest paid, net of capitalized interest $ 66,619 $ 62,290 $ -- $ 1,005
Income tax paid, net of refunds 562 218 -- 361
Capital additions included in accounts payable, claims payable and estimated claims accrual or liabilities subject to compromise at period-end -- 854 1,818 1,961
Reorganization costs paid 1,197 20,069 11,110 41,699
Non-cash settlement of claims payable 7,668 -- -- --
SOURCE FairPoint Communications, Inc.
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