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8-K - FORM 8-K - FAIRPOINT COMMUNICATIONS INC | g26746e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
|
News Release | |||
Investor Relations Contact: | ||||
Lee Newitt | ||||
704.344.8150 | ||||
lnewitt@fairpoint.com | ||||
Media Contact: | ||||
Rose Cummings | ||||
704.602.7304 | ||||
rcummings@fairpoint.com |
FAIRPOINT COMMUNICATIONS REPORTS
2010 FOURTH QUARTER AND FULL YEAR RESULTS
2010 FOURTH QUARTER AND FULL YEAR RESULTS
| Consolidated EBITDAR1 increases over 22 percent to $84.0 million versus fourth quarter 2009 | ||
| Operational improvements drive a $12.7 million one-time revenue benefit in the quarter | ||
| Loss from Operations for the quarter improves to $18.2 million from $31.2 million a year earlier | ||
| High-speed Internet subscribers increase annually for the first time since mid-2009 | ||
| Company reiterates full year 2011 guidance |
Charlotte, N.C. (March 31, 2011) FairPoint Communications, Inc. (NASDAQ: FRP) (FairPoint or the
Company), a leading provider of communications services, today announced its financial results for
the fourth quarter and full year ended December 31, 2010. The announcement marks the first
earnings release by FairPoint since it emerged from Chapter 11 on January 24, 2011.
We are pleased to have the restructuring process behind us and are devoting our full attention to
driving revenue growth and operational improvements, said Paul H. Sunu, CEO of FairPoint. While
we expect 2011 will be a transition year, we are excited about the organic growth opportunities we
see in our northern New England markets, he added.
Broadband service is now available to more than 80 percent of the Companys northern New England
customers and more than 90 percent of Telecom Group (legacy FairPoint) customers. Company-wide,
year-over-year voice access line loss slowed for the third consecutive quarter to 10.3 percent and
was the lowest rate of annual loss since April 2008. In addition, the Company made many
operational improvements, which facilitated the reversal of certain service quality penalties in
northern New England in the fourth quarter, resulting in a $12.7 million one-time revenue benefit.
This one-time benefit contributed to fourth quarter revenue of $268.0 million and full year revenue
of $1,071.0 million. Operational efficiencies and cost reduction initiatives contributed to fourth
quarter Consolidated EBITDAR1 (earnings before interest, taxes, depreciation,
amortization and restructuring items as defined in the Companys new credit facility) of $84.0
million and full year Consolidated EBITDAR1 of $276.3 million.
Operating and Regulatory Highlights
Improvements in service quality indicators such as faster call center answer times and shorter
installation and repair intervals allowed FairPoint to reverse $12.7 million of accrued penalties
related to the 2008 and 2009 service quality measurement periods in New Hampshire and Vermont. The
Company was able to reverse these accrued penalties in the fourth quarter of 2010 pursuant to state
regulatory settlements in New Hampshire and Vermont and because of improved operating performance
throughout 2010.
1 | Consolidated EBITDAR means earnings before interest, taxes, depreciation, amortization and restructuring items as defined in the Companys new credit facility. Consolidated EBITDAR is a non-GAAP financial measure. A reconciliation of Consolidated EBITDAR to Net Loss is contained in the attachments to this press release. |
1
High-speed Internet subscribers increased 0.4 percent year-over-year, compared to a 2.3 percent
decline in 2009. The annual rate of loss in voice access lines slowed to 10.3 percent versus 11.8
percent a year earlier.
FairPoints continued commitment to broadband expansion in northern New England, and in particular
its satisfaction of all 2010 broadband availability milestones, has contributed to a better state
regulatory environment. FairPoint now offers broadband service to more than 83 percent of
customers in Maine, more than 85 percent of customers in New Hampshire
and more than 80 percent of customers in Vermont. The Company continues to invest in its network to
expand broadband availability. Broadband is also available to more than 90 percent of Telecom
Group customers throughout the other 15 states in which FairPoint operates.
The telecommunications industry is becoming more data-centric, and FairPoint expects to capture the
growth in broadband demand by leveraging its ubiquitous network in the northern New England service
area. The next-generation IP/MPLS network, branded as VantagePoint(sm), is ideally suited to meet
the demand for broadband and Ethernet-based services from businesses and wireless carriers. For
example, FairPoint currently serves over 1,600 of the estimated 1,800 wireless communication towers
in its northern New England service footprint with a combination of copper and fiber. The Company
views Ethernet-based wireless backhaul as a significant organic revenue growth opportunity.
Financial Highlights
Revenues were $268.0 million in the fourth quarter of 2010, compared to $270.2 million in the same
period of 2009. Service quality penalties, which reduce revenue, decreased $19.5 million versus a
year earlier, including the one-time benefit from the $12.7 million reversal described above.
Offsetting the favorable impact from the reduction in service quality penalties, total voice access
lines declined by 10.3 percent versus a year earlier leading to decreases in local calling services
revenue, long distance services revenue and access revenue. The revenue decreases tied to voice
access line declines were partially offset by an increase in data and Internet services revenue.
Operating expenses, excluding depreciation and amortization, were $211.6 million in the fourth
quarter of 2010, compared to $230.8 million in the same period of 2009. This favorable variance of
$19.2 million, or 8.3 percent, was primarily the result of a reduction in bad debt expense. In
addition, certain one-time non-cash charges related to project abandonment, inventory obsolescence
and other non-recurring items in the fourth quarter of 2010 were offset by a reduction in pension
expense versus a year earlier. The fourth quarter of 2009 was unfavorably impacted by a large
non-cash pension liability true-up.
Consolidated EBITDAR1 was $84.0 million in the fourth quarter of 2010, compared to $68.8
million in the same period of 2009. After adjusting fourth quarter 2010 Consolidated
EBITDAR1 for the $12.7 million one-time revenue benefit related to the service quality
penalties reversal and other one-time charges, the Company estimates that Consolidated
EBITDAR1 would have been between $65.0 and $70.0 million.
Capital expenditures were $40.9 million in the fourth quarter of 2010, compared to $48.6 million in
the same period for 2009. Full year 2010 capital expenditures were $197.8 million, compared to
$178.8 million in 2009. Major capital initiatives in 2010 included the expansion of the
VantagePoint(sm) network, regulatory broadband commitments in northern New England, continued
information technology improvements and enhancements, success-based capital projects for targeted
revenue opportunities, and network and facilities maintenance.
2011 Guidance
Based on its current plans and outlook, the Company reiterates its full year 2011 guidance as
follows:
Revenue:
|
$1,060 million to $1,090 million | |
Consolidated EBITDAR1:
|
$260 million to $280 million | |
Capital expenditures:
|
$180 million to $200 million |
The Company originally furnished this guidance pursuant to an investor presentation contained in a
Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on February 11,
2011. The Company furnished such guidance in order to synthesize a variety of projected financial
information which was provided in connection with the Companys Chapter 11 proceedings and to
establish a baseline to assist investors in evaluating the Company. While
1 | Consolidated EBITDAR means earnings before interest, taxes, depreciation, amortization and restructuring items as defined in the Companys new credit facility. Consolidated EBITDAR is a non-GAAP financial measure. A reconciliation of Consolidated EBITDAR to Net Loss is contained in the attachments to this press release. |
2
the Company does not
intend to provide guidance in the ordinary course, management believes that level-setting is
appropriate at this time given the length of the Chapter 11 process and its effects on the
Companys operations, as well as the recent restatement of the Companys financial results for the
first, second and third quarters of 2010. However, management will continue to assess the
Companys financial and operational trends, and accordingly actual results may vary from this
guidance and the variations may be material.
The 2011 financial targets reiterated herein represent full year figures and the 2011 quarterly
results may be subject to significant fluctuation. For example, the majority of the Companys
employees are entitled to their annual vacation allowance on January 1st of each year.
Accordingly, the Company recognized approximately $13.5 million of vacation expense on January 1,
2011, which will be amortized over the balance of the year as vacation is used.
Fresh Start Accounting
As a result of its emergence from Chapter 11 on January 24, 2011, FairPoint adopted Fresh Start
Accounting for generally accepted accounting principles (GAAP) purposes whereby the Companys
assets and liabilities are marked to their fair market values as of the emergence date. Since
FairPoint emerged from bankruptcy after December 31, 2010, results for the fourth quarter and full
year ended December 31, 2010 do not incorporate the effect of Fresh Start Accounting. FairPoints
Annual Report on Form 10-K for the year ended December 31, 2010 includes a pro forma balance sheet
as of December 31, 2010. Management believes this pro forma balance sheet is a reasonable
representation of the fair market value of its assets, liabilities and equity as of December 31,
2010 as if the adoption of Fresh Start Accounting had occurred on December 31, 2010; however, no
assurances can be made regarding the impact of adopting Fresh Start Accounting until it is
completed for the first quarter of 2011. The impact of Fresh Start Accounting will be included in
the Companys financial results for the quarter ended March 31, 2011.
Conference Call Information
As previously announced, FairPoint will host a conference call and simultaneous webcast to discuss
its 2010 fourth quarter and full year results at 2:00 p.m. (EDT) on Friday, April 1, 2011.
Participants should call (877) 556-5921 (US/Canada) or (617) 597-5474 (international) at 1:50 p.m.
(EDT) and enter the passcode 36853706 when prompted. The title of the call is the Q4 2010
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 19847662 when prompted. The recording will be available from Friday, April 1, 2011 at
5:00 p.m. (EDT) through Friday, April 15, 2011 at 11:59 p.m. (EDT).
A live broadcast of the earnings conference call will be available via the Internet at
www.fairpoint.com/investors. An online replay will be available shortly thereafter.
The information in this press release should be read in conjunction with the consolidated financial
statements, footnotes and other information contained in FairPoints Annual Report on Form 10-K for
the year ended December 31, 2010 filed with the SEC on March 31, 2011.
Use of Non-GAAP Financial Measures
Consolidated EBITDAR, or EBITDAR, is a non-GAAP financial measure. Management believes that EBITDAR
may be useful in assessing the Companys operating performance and its ability to meet its debt
service requirements, and the maintenance covenants contained in the Companys credit facility are
based on EBITDAR. EBITDAR, as used herein, however, is not necessarily comparable to similarly
titled measures of other companies. Furthermore, EBITDAR has limitations as an analytical tool 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, EBITDAR and related ratios should not be considered as measures of
discretionary cash available to invest in business growth or reduce indebtedness. FairPoint
compensates for these limitations by relying primarily on its GAAP results using EBITDAR only
supplementally. A reconciliation of Consolidated EBITDAR to Net Loss is contained in the
attachments to this press release.
3
About FairPoint
FairPoint Communications, Inc., (NASDAQ: FRP) (www.FairPoint.com) is a leading communications
provider of high-speed Internet access, local and long-distance phone, television and other
broadband services to customers in communities across 18 states. Through its fast, reliable data
network, FairPoint delivers data and voice networking communications solutions to residential,
business and wholesale customers. VantagePoint(sm), FairPoints resilient IP-based network in
northern New England, provides business customers a fast, flexible, affordable Ethernet connection.
VantagePoint(sm) supports applications like video conferencing and e-learning. Additional
information about FairPoint products and services is available at
www.FairPoint.com.
Cautionary Note Regarding Forward-looking Statements
Some statements herein 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
Companys 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 Companys 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. FairPoint 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 Companys subsequent reports filed with the SEC.
Certain information contained herein may constitute guidance as to projected financial results and
FairPoints future performance that represents managements estimates as of the date hereof. This
guidance, which consists of forward-looking statements, is prepared by the Companys 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 FairPoints 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 Companys 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 FairPoints business outlook with analysts and investors. FairPoint 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 Companys 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.
###
4
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
(Debtors-In-Possession)
Consolidated Balance Sheets
December 31, 2010 and 2009
(in thousands, except share data)
(Debtors-In-Possession)
Consolidated Balance Sheets
December 31, 2010 and 2009
(in thousands, except share data)
2010 | 2009 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash |
$ | 105,497 | $ | 109,355 | ||||
Restricted cash |
2,420 | 2,558 | ||||||
Accounts receivable, net |
125,170 | 154,095 | ||||||
Materials and supplies |
22,193 | 18,884 | ||||||
Prepaid expenses |
18,841 | 15,198 | ||||||
Other current assets |
6,092 | 8,844 | ||||||
Deferred income tax, net |
31,400 | 75,713 | ||||||
Total current assets |
311,613 | 384,647 | ||||||
Property, plant and equipment, net |
1,859,700 | 1,950,435 | ||||||
Goodwill |
595,120 | 595,120 | ||||||
Intangibles assets, net |
189,247 | 211,819 | ||||||
Prepaid pension asset |
2,960 | 8,808 | ||||||
Debt issue costs, net |
119 | 680 | ||||||
Restricted cash |
1,678 | 1,478 | ||||||
Other assets |
13,357 | 19,135 | ||||||
Total assets |
$ | 2,973,794 | $ | 3,172,122 | ||||
Liabilities and Stockholders Deficit |
||||||||
Liabilities not subject to compromise: |
||||||||
Current portion of capital lease obligations |
$ | 1,321 | $ | | ||||
Accounts payable |
66,557 | 61,681 | ||||||
Accrued interest payable |
3 | 36 | ||||||
Other accrued liabilities |
63,279 | 44,004 | ||||||
Total current liabilities |
131,160 | 105,721 | ||||||
Capital lease obligations |
3,943 | | ||||||
Accrued pension obligation |
92,246 | 51,438 | ||||||
Employee benefit obligations |
344,463 | 261,420 | ||||||
Deferred income taxes |
67,381 | 115,742 | ||||||
Unamortized investment tax credits |
4,310 | 4,788 | ||||||
Other long-term liabilities |
12,398 | 15,100 | ||||||
Total long-term liabilities |
524,741 | 448,488 | ||||||
Total liabilities not subject to compromise |
655,901 | 554,209 | ||||||
Liabilities subject to compromise |
2,905,311 | 2,836,340 | ||||||
Total liabilities |
3,561,212 | 3,390,549 | ||||||
Stockholders deficit: |
||||||||
Common stock, $0.01 par value, 200,000,000 shares
authorized, issued and
outstanding 89,440,334 and
90,002,026
shares at December 31,
2010 and 2009,
respectively |
894 | 900 | ||||||
Additional paid-in capital |
725,786 | 725,312 | ||||||
Retained deficit |
(1,101,294 | ) | (819,715 | ) | ||||
Accumulated other comprehensive loss |
(212,804 | ) | (124,924 | ) | ||||
Total stockholders deficit |
(587,418 | ) | (218,427 | ) | ||||
Total liabilities and stockholders deficit |
$ | 2,973,794 | $ | 3,172,122 | ||||
See accompanying notes to consolidated financial statements in FairPoints Annual Report
on Form 10-K for the year ended December 31, 2010 as filed with the SEC on March 31, 2011.
on Form 10-K for the year ended December 31, 2010 as filed with the SEC on March 31, 2011.
5
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
(Debtors-In-Possession)
Consolidated Statements of Operations
Years ended December 31, 2010 and 2009
(in thousands, except per share data)
(Debtors-In-Possession)
Consolidated Statements of Operations
Years ended December 31, 2010 and 2009
(in thousands, except per share data)
2010 | 2009 | |||||||
Revenues |
$ | 1,070,986 | $ | 1,119,090 | ||||
Operating expenses: |
||||||||
Cost of services and sales, excluding
depreciation and amortization |
525,728 | 515,394 | ||||||
Selling, general and administrative
expense, excluding depreciation
and amortization |
365,373 | 417,512 | ||||||
Depreciation and amortization |
289,824 | 275,334 | ||||||
Total operating expenses |
1,180,925 | 1,208,240 | ||||||
Income (loss) from operations |
(109,939 | ) | (89,150 | ) | ||||
Other income (expense): |
||||||||
Interest expense |
(140,896 | ) | (204,919 | ) | ||||
Gain (loss) on derivative instruments |
| 12,320 | ||||||
Gain on early retirement of debt |
| 12,357 | ||||||
Other income, net |
2,715 | 2,000 | ||||||
Total other expense |
(138,181 | ) | (178,242 | ) | ||||
Loss before reorganization items and income taxes |
(248,120 | ) | (267,392 | ) | ||||
Reorganization items |
(41,120 | ) | (53,018 | ) | ||||
Loss before income taxes |
(289,240 | ) | (320,410 | ) | ||||
Income tax benefit |
7,661 | 79,014 | ||||||
Net loss |
$ | (281,579 | ) | $ | (241,396 | ) | ||
Weighted average shares outstanding: |
||||||||
Basic |
89,424 | 89,271 | ||||||
Diluted |
89,424 | 89,271 | ||||||
Loss per share: |
||||||||
Basic |
$ | (3.15 | ) | $ | (2.70 | ) | ||
Diluted |
(3.15 | ) | (2.70 | ) | ||||
See accompanying notes to consolidated financial statements in FairPoints Annual Report
on Form 10-K for the year ended December 31, 2010 as filed with the SEC on March 31, 2011.
on Form 10-K for the year ended December 31, 2010 as filed with the SEC on March 31, 2011.
6
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
(Debtors-In-Possession)
Consolidated Statements of Cash Flows
Years ended December 31, 2010 and 2009
(in thousands)
(Debtors-In-Possession)
Consolidated Statements of Cash Flows
Years ended December 31, 2010 and 2009
(in thousands)
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (281,579 | ) | $ | (241,396 | ) | ||
Adjustments to reconcile net income to net cash provided by
operating activities excluding impact of acquisitions: |
||||||||
Deferred income taxes |
(7,915 | ) | (78,722 | ) | ||||
Provision for uncollectible revenue |
20,525 | 48,402 | ||||||
Depreciation and amortization |
289,824 | 275,334 | ||||||
Non-cash interest expense |
| 31,137 | ||||||
Post-retirement expenses |
33,216 | 34,151 | ||||||
Pension expenses |
10,017 | 24,274 | ||||||
(Gain) loss on derivative instruments |
| (12,320 | ) | |||||
Gain on early retirement of debt, excluding cash fees |
| (12,477 | ) | |||||
Loss on abandoned projects |
15,132 | | ||||||
Non-cash reorganization items |
(20,004 | ) | 43,964 | |||||
Other non cash items |
4,045 | 4,468 | ||||||
Changes in assets and liabilities arising from operations: |
||||||||
Accounts receivable |
12,706 | (24,799 | ) | |||||
Prepaid and other assets |
(6,834 | ) | 19,063 | |||||
Accounts payable and accrued liabilities |
(10,802 | ) | (12,435 | ) | ||||
Accrued interest payable |
137,111 | 61,312 | ||||||
Other assets and liabilities, net |
(3,816 | ) | (9,633 | ) | ||||
Other |
| | ||||||
Total adjustments |
473,205 | 391,719 | ||||||
Net cash provided
by operating
activities |
191,626 | 150,323 | ||||||
Cash flows from investing activities: |
||||||||
Acquired cash balance, net |
| | ||||||
Net capital additions |
(197,795 | ) | (178,752 | ) | ||||
Net proceeds from sales of investments and other assets |
527 | 1,361 | ||||||
Net cash used in investing activities |
(197,268 | ) | (177,391 | ) | ||||
Cash flows from financing activities: |
||||||||
Loan origination costs |
(1,475 | ) | (3,046 | ) | ||||
Proceeds from issuance of long-term debt |
5,513 | 50,000 | ||||||
Repayments of long-term debt |
| (20,848 | ) | |||||
Contributions from Verizon |
| | ||||||
Restricted cash |
(62 | ) | 65,114 | |||||
Repayment of capital lease obligations |
(2,192 | ) | (2,126 | ) | ||||
Dividends paid to stockholders |
| (22,996 | ) | |||||
Net cash provided by financing activities |
1,784 | 66,098 | ||||||
Net increase (decrease) in cash |
(3,858 | ) | 39,030 | |||||
Cash, beginning of period |
109,355 | 70,325 | ||||||
Cash, end of period |
$ | 105,497 | $ | 109,355 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Interest paid, net of capitalized interest |
$ | 1,005 | $ | 106,861 | ||||
Income taxes paid, net of refunds |
361 | (563 | ) | |||||
Non-cash equity consideration |
| | ||||||
Non-cash issuance of senior notes |
| 18,911 | ||||||
Capital additions included in accounts payable or liabilities
subject to compromise at period-end |
1,961 | 31,621 | ||||||
Reorganization costs paid |
41,699 | 1,182 |
See accompanying notes to consolidated financial statements in FairPoints Annual Report
on Form 10-K for the year ended December 31, 2010 as filed with the SEC on March 31, 2011.
on Form 10-K for the year ended December 31, 2010 as filed with the SEC on March 31, 2011.
7
FAIRPOINT COMMUNICATIONS, INC.
(Debtors-In-Possession)
Supplemental Financial Information
(Unaudited)
($ in thousands, except per unit)
(Debtors-In-Possession)
Supplemental Financial Information
(Unaudited)
($ in thousands, except per unit)
Quarter ended | ||||||||||||||||||||
4Q10 | 3Q10 | 2Q10 | 1Q10 | 4Q09 | ||||||||||||||||
as Reported | Restated | Restated | Restated | Recast | ||||||||||||||||
Summary Income Statement: |
||||||||||||||||||||
Revenue: |
||||||||||||||||||||
Voice services |
$ | 136,664 | $ | 125,598 | $ | 134,943 | $ | 134,418 | $ | 133,502 | ||||||||||
Access |
92,128 | 95,923 | 96,182 | 96,856 | 98,893 | |||||||||||||||
Data and Internet services |
27,504 | 26,691 | 28,961 | 27,067 | 26,073 | |||||||||||||||
Other services |
11,696 | 12,418 | 11,477 | 12,460 | 11,722 | |||||||||||||||
Total revenue |
267,992 | 260,630 | 271,563 | 270,801 | 270,190 | |||||||||||||||
Operating expenses: |
||||||||||||||||||||
Operating
expenses, excluding depreciation and amortization |
211,598 | 218,177 | 230,273 | 231,053 | 230,792 | |||||||||||||||
Depreciation and amortization |
74,606 | 72,364 | 71,472 | 71,382 | 70,594 | |||||||||||||||
Total operating expenses |
286,204 | 290,541 | 301,745 | 302,435 | 301,386 | |||||||||||||||
Loss from operations |
(18,212 | ) | (29,911 | ) | (30,182 | ) | (31,634 | ) | (31,196 | ) | ||||||||||
Other income (expense): |
||||||||||||||||||||
Interest expense |
(35,187 | ) | (35,358 | ) | (35,721 | ) | (34,630 | ) | (39,757 | ) | ||||||||||
Other income (expense), net |
377 | 2,207 | 105 | 26 | (708 | ) | ||||||||||||||
Total other income (expense) |
(34,810 | ) | (33,151 | ) | (35,616 | ) | (34,604 | ) | (40,465 | ) | ||||||||||
Loss before reorganization items and income taxes |
(53,022 | ) | (63,062 | ) | (65,798 | ) | (66,238 | ) | (71,661 | ) | ||||||||||
Reorganization items |
(15,552 | ) | (10,352 | ) | 1,375 | (16,591 | ) | (53,018 | ) | |||||||||||
Loss before income taxes |
(68,574 | ) | (73,414 | ) | (64,423 | ) | (82,829 | ) | (124,679 | ) | ||||||||||
Income tax benefit (expense) |
(6,413 | ) | 7,330 | 10,245 | (3,501 | ) | 8,953 | |||||||||||||
Net loss |
$ | (74,987 | ) | $ | (66,084 | ) | $ | (54,178 | ) | $ | (86,330 | ) | $ | (115,726 | ) | |||||
Consolidated EBITDAR Reconciliation: |
||||||||||||||||||||
Net loss |
$ | (74,987 | ) | $ | (66,084 | ) | $ | (54,178 | ) | $ | (86,330 | ) | $ | (115,726 | ) | |||||
Income tax (benefit) expense |
6,413 | (7,330 | ) | (10,245 | ) | 3,501 | (8,953 | ) | ||||||||||||
Interest expense |
35,187 | 35,358 | 35,721 | 34,630 | 39,757 | |||||||||||||||
Depreciation and amortization |
74,606 | 72,364 | 71,472 | 71,382 | 70,594 | |||||||||||||||
Non-cash pension and OPEB expense (1) |
10,992 | 12,036 | 9,979 | 10,240 | 25,172 | |||||||||||||||
Other non-cash items, net (2) |
16,096 | 1,066 | (8,509 | ) | 1,327 | 45,466 | ||||||||||||||
Restructuring costs (3) |
14,948 | 11,395 | 18,788 | 14,739 | 12,111 | |||||||||||||||
Restatement impact, net (4) |
| 1,397 | 8,307 | 10,436 | | |||||||||||||||
All other allowed adjustments, net (5) |
732 | (999 | ) | 959 | 859 | 401 | ||||||||||||||
Consolidated EBITDAR |
$ | 83,987 | $ | 59,203 | $ | 72,294 | $ | 60,784 | $ | 68,822 | ||||||||||
Consolidated EBITDAR margin |
31.3 | % | 22.7 | % | 26.6 | % | 22.4 | % | 25.5 | % | ||||||||||
Select Operating and Financial Metrics: |
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Residential access lines |
712,591 | 734,260 | 758,005 | 776,254 | 802,668 | |||||||||||||||
Business access lines |
327,812 | 335,334 | 340,988 | 349,179 | 357,605 | |||||||||||||||
Wholesale access lines (6) |
87,142 | 89,035 | 91,138 | 93,827 | 97,161 | |||||||||||||||
Total switched access lines |
1,127,545 | 1,158,629 | 1,190,131 | 1,219,260 | 1,257,434 | |||||||||||||||
% change y-o-y |
-10.3 | % | -11.0 | % | -11.6 | % | -12.4 | % | -11.8 | % | ||||||||||
High-speed data subscribers (7) |
289,745 | 288,891 | 289,609 | 283,806 | 288,542 | |||||||||||||||
% change y-o-y |
0.4 | % | -1.7 | % | -1.9 | % | -5.5 | % | -2.3 | % | ||||||||||
Access line equivalents |
1,417,290 | 1,447,520 | 1,479,740 | 1,503,066 | 1,545,976 | |||||||||||||||
% change y-o-y |
-8.3 | % | -9.3 | % | -9.9 | % | -11.2 | % | -10.2 | % | ||||||||||
Capital expenditures |
$ | 40,868 | $ | 53,705 | $ | 62,815 | $ | 40,407 | $ | 48,630 |
(1) | For purposes of calculating Consolidated EBITDAR, FairPoints new credit facility allows it to add back the aggregate pension and | |
other post-employment benefits expense (OPEB), net of pension contributions and OPEB cash payments in the period. | ||
(2) | For purposes of calculating Consolidated EBITDAR, FairPoints new credit facility allows it to add back other non-cash charges except | |
to the extent they will require a cash payment in a future period. 4Q10 included a one-time, non-cash charge related to a prior period. | ||
(3) | For purposes of calculating Consolidated EBITDAR, FairPoints new credit facility allows it to add back costs, including professional fees for advisors and consultants, related to the restructuring. These items are included in Reorganization items on the Income Statement in 2010. | |
(4) | For purposes of calculating Consolidated EBITDAR, FairPoints new credit facility allows it to adjust for the impact from any | |
restatement of financial statements for the periods ending on or prior to January 24, 2011. | ||
(5) | For purposes of calculating Consolidated EBITDAR, FairPoints new credit facility allows it to adjust for other items including | |
success bonuses, severance, non-cash gains and losses, non-operating dividend and interest income and other extraordinary gains or losses. | ||
(6) | Wholesale access lines include Resale and UNE-P, but excludes UNE-L and special access circuits. | |
(7) | High-speed data subscribers include DSL, fiber-to-the-home, cable modem and fixed wireless broadband. |
8