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8-K - FORM 8-K - FAIRPOINT COMMUNICATIONS INC | d250289d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Relations Contact:
Lee Newitt
(704) 344-8150
lnewitt@fairpoint.com
Media Contact:
Meghan Woodlief
(704) 817-1271
mwoodlief@fairpoint.com
FAIRPOINT COMMUNICATIONS REPORTS
2011 THIRD QUARTER RESULTS
Strong Consecutive Quarters Operationally and Financially
| Consolidated EBITDAR1 before pension contribution and storm-related expenses of $70.6 million |
| High-speed Internet subscriber growth accelerates to 8.2% year-over-year, versus a 1.7% loss a year earlier |
| Voice access line loss slows to 8.8% year-over-year, versus 11.0% a year earlier |
| Net loss of $279.4 million driven by non-cash accounting charge of $262.0 million |
Charlotte, N.C. (Nov. 2, 2011) FairPoint Communications, Inc. (NasdaqCM: FRP) (FairPoint or the Company), a leading provider of communications services, today announced its financial results for the third quarter ended Sept. 30, 2011. As previously announced, the Company will host a conference call and simultaneous webcast to discuss its results at 10:00 a.m. (EDT) on Thursday, Nov. 3, 2011.
We accomplished great things this quarter, said Paul H. Sunu, CEO of FairPoint. Despite a major storm affecting much of our footprint, we delivered a solid quarter operationally and financially. High-speed Internet subscriber growth remains strong and we continue to improve the rate of voice access line loss. Im impressed with the Companys resolve and our teams ability to execute.
Operating and Regulatory Highlights
High-speed Internet subscriber growth accelerated to 8.2% year-over-year, compared to a 5.4% increase in the second quarter of 2011 and a 1.7% decline in the third quarter of 2010. FairPoint has added more than 22,000 high-speed Internet subscribers year-to-date, compared to less than 400 for the first nine months of 2010. High-speed Internet penetration reached 29.6% of voice access lines at Sept. 30, 2011, as the Company surpassed 312,000 high-speed Internet subscribers in serviceanother all-time high.
Voice access line loss slowed for the sixth consecutive quarter, reaching 8.8% year-over-year versus 9.3% in the second quarter of 2011 and 11.0% in the third quarter of 2010.
On Sept. 8, 2011, the Company announced it would reduce its work force by approximately 400 employees by year-end. The initiative is expected to result in operating expense savings of approximately $34 million annually, with the full benefit realized in 2012. As of Sept. 30, 2011, the Company had approximately 3,700 employees, compared to approximately 4,000 at June 30, 2011, with most of the reduction occurring in late September. FairPoint incurred $3.3 million in severance and incentive payments in the third quarter. The Company expects the total severance and incentive payments related to this work force reduction initiative will range from $7 million to $13 million.
1 | Consolidated EBITDAR means earnings before interest, taxes, depreciation, amortization and restructuring items as defined in the Companys credit facility. Consolidated EBITDAR is a non-GAAP financial measure. A reconciliation of Consolidated EBITDAR to net income is contained in the attachments to this press release. |
1
FairPoint continued its fiber-to-the-tower expansion during the quarter. As of Sept. 30, 2011, fiber had been placed to more than 700 of the approximately 800 towers that the Company has announced it intends to serve with fiber.
Financial Highlights
Third Quarter 2011 as compared to Second Quarter 2011
Revenue was $257.9 million in the third quarter of 2011 as compared to $262.6 million in the second quarter of 2011. The unfavorable variance of $4.7 million was primarily the result of two items. First, the Company recognized a one-time revenue benefit of $4.0 million in the second quarter related to the reversal of retail and wholesale service quality penalties. Second, service outages related to Hurricane Irene resulted in approximately $0.8 million of incremental service quality penalties during the third quarter. Excluding these two items, revenue was essentially flat on a sequential basis as declines in voice services revenue were offset by increases in access revenue, data and Internet services revenue and other revenue.
Operating expenses, excluding depreciation, amortization and reorganization, were $213.5 million in the third quarter of 2011 as compared to $202.8 million in the second quarter of 2011. The unfavorable variance of $10.7 million was primarily the result of three items that impacted the third quarter. First, non-cash other post-employment benefit (OPEB) expense increased by approximately $4.9 million after the Company received its annual actuarial study and booked a true-up to the liability. Second, FairPoint recognized severance charges of $3.3 million related to the work force reduction initiative. Both non-cash OPEB and severance expense are add-backs for Consolidated EBITDAR as defined in the Companys credit facility. Third, storm-related activities following Hurricane Irene resulted in approximately $3.2 million of increased overtime and contracted services expense.
Consolidated EBITDAR was $60.5 million in the third quarter of 2011 as compared to $70.5 million in the second quarter of 2011. The $10.0 million unfavorable variance was primarily the result of two items. First, the Company made a $6.8 million cash contribution to its pension plan during the third quarter, of which approximately $6.2 million was related to operating expenses. Prior to the third quarter, FairPoint had not made a cash contribution to the pension plan. As a result, Consolidated EBITDAR declined $6.2 million sequentially for this item. Second, the impact of Hurricane Irene totaled approximately $4.0 million between revenue and operating expenses in the third quarter.
Net loss was $279.4 million in the third quarter of 2011 as compared to $27.1 million in the second quarter of 2011. Net loss increased due to a non-cash goodwill and trade name impairment charge booked in the third quarter of $262.0 million, which was precipitated by the decline of FairPoints stock price in recent months.
Capital expenditures were $35.2 million in the third quarter of 2011 as compared to $52.1 million in the second quarter of 2011. FairPoint completed its Vermont broadband buildout during the second quarter of 2011 and has now satisfied its regulatory broadband commitment in the state. In addition, spending on the Companys fiber-to-the-tower initiative was lower in the third quarter as compared to the second quarter.
FairPoints cash position was $9.9 million as of Sept. 30, 2011, versus $13.1 million at June 30, 2011. The Company has not drawn on its $75 million revolving credit facility and, as of Sept. 30, 2011, it had $62.6 million available for borrowing, net of $12.4 million of outstanding letters of credit.
Third Quarter 2011 as compared to Third Quarter 2010
Revenue was $257.9 million in the third quarter of 2011 as compared to $260.6 million a year earlier. The decrease was primarily the result of an 8.8% decline in voice access lines year-over-year, which led to decreases in voice services and access revenue. Partially offsetting the decline was a $3.4 million reduction in service quality penalties and a 12.6% increase in data and Internet services revenue.
Operating expenses, excluding depreciation, amortization and reorganization, were $213.5 million in the third quarter of 2011 as compared to $218.2 million a year earlier. The favorable variance of $4.7 million would have been greater if not for three items in the third quarter of 2011. First, non-cash OPEB expense increased versus a year earlier by approximately $3.3 million after the Company received its annual actuarial study and booked a true-up to the liability. Second, severance charges increased approximately $3.0 million versus a year earlier as a result of the work force reduction initiative. Both non-cash OPEB and severance expense are add-backs for Consolidated EBITDAR as defined in the Companys credit facility. Third, overtime and contracted services expense were higher by approximately $4.0 million due primarily to storm-related activities following Hurricane Irene. If not for these three items, expenses would have declined by more than $15.0 million versus a year ago. The primary drivers of the decrease were a reduction in bad debt expense, a reduction in employee costs and other operating expense reductions.
2
Consolidated EBITDAR was $60.5 million in the third quarter of 2011 as compared to $59.2 million a year earlier. The benefit from operating expense reductions made during the last 12 months was offset primarily by two items in the third quarter of 2011. First, the Company made a $6.8 million cash contribution to its pension plan during the third quarter, of which approximately $6.2 million was related to operating expenses. Prior to the third quarter of 2011, FairPoint had not made a cash contribution to the pension plan. As a result, Consolidated EBITDAR declined $6.2 million for this item. Second, the impact of Hurricane Irene totaled approximately $4.0 million between revenue and operating expenses.
Capital expenditures were $35.2 million in the third quarter of 2011 as compared to $53.7 million a year earlier, when the Company was aggressively expanding its broadband network to meet certain regulatory commitments in Maine, New Hampshire and Vermont by year end 2010.
Quarterly Report
The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Companys quarterly report for the quarter ended Sept. 30, 2011, which will be filed with the SEC on or prior to Nov. 15, 2011. The Companys results for the quarter ended Sept. 30, 2011, are subject to the completion of its quarterly report for such period.
Fresh Start Accounting
On Jan. 24, 2011, the Company emerged from Chapter 11 bankruptcy protection and its Plan of Reorganization became effective. For purposes of generally accepted accounting principles, the Company adopted fresh start accounting as of Jan. 24, 2011, whereby the Companys assets and liabilities were marked to their fair value as of the date of emergence. Accordingly, the Companys condensed consolidated statements of financial position and operations for periods after Jan. 24, 2011, will not be 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 third quarter 2011 results at 10:00 a.m. (EDT) on Thursday, Nov. 3, 2011.
Participants should call (866) 804-6920 (US/Canada) or (857) 350-1666 (international) at 9:50 a.m. (EDT) and enter the passcode 70534871 when prompted. The title of the call is the Q3 2011 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 31962362 when prompted. The recording will be available from Thursday, Nov. 3, 2011, at 1:00 p.m. (EDT) through Friday, Nov. 11, 2011, at 11:59 p.m. (EST).
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 Consolidated EBITDAR and adjustments to GAAP measures to exclude the effect of special items. Management believes that Consolidated EBITDAR may be useful to investors 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 Consolidated EBITDAR. In addition, management believes that the adjustments to 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, Consolidated 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, Consolidated EBITDAR 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 Consolidated EBITDAR only supplementally. A reconciliation of Consolidated EBITDAR to net income is contained in the attachments to this press release.
3
About FairPoint Communications, Inc.
FairPoint Communications, Inc. (NasdaqCM: 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 network, FairPoint delivers affordable 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 network provides Ethernet connections that support applications like video conferencing, e-learning and other broadband based applications. 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 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. 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 Companys 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 Companys 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 the Companys 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 the Companys 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 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
Condensed Consolidated Balance Sheets
September 30, 2011 and December 31, 2010
(in thousands, except share data)
Successor Company | Predecessor Company | |||||||||
September 30, 2011 | December 31, 2010 | |||||||||
(unaudited) | ||||||||||
Assets | ||||||||||
Current assets: |
||||||||||
Cash |
$ | 9,852 | $ | 105,497 | ||||||
Restricted cash |
27,886 | 2,420 | ||||||||
Accounts receivable, net |
113,034 | 125,170 | ||||||||
Materials and supplies |
904 | 22,193 | ||||||||
Prepaid expenses |
14,963 | 18,841 | ||||||||
Other current assets |
1,991 | 6,092 | ||||||||
Deferred income tax, net |
33,972 | 31,400 | ||||||||
|
|
|
|
|||||||
Total current assets |
202,602 | 311,613 | ||||||||
Property, plant and equipment, net |
1,718,352 | 1,859,700 | ||||||||
Goodwill |
| 595,120 | ||||||||
Intangible assets, net |
130,933 | 189,247 | ||||||||
Prepaid pension asset |
4,296 | 2,960 | ||||||||
Debt issue costs, net |
1,944 | 119 | ||||||||
Restricted cash |
723 | 1,678 | ||||||||
Other assets |
9,921 | 13,357 | ||||||||
|
|
|
|
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Total assets |
$ | 2,068,771 | $ | 2,973,794 | ||||||
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|
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Liabilities and Stockholders Equity (Deficit) |
||||||||||
Liabilities not subject to compromise: |
||||||||||
Current portion of long-term debt |
$ | 7,500 | $ | | ||||||
Current portion of capital lease obligations |
1,250 | 1,321 | ||||||||
Accounts payable |
70,323 | 66,557 | ||||||||
Claims payable and estimated claims accrual |
27,575 | | ||||||||
Accrued interest payable |
183 | 3 | ||||||||
Other accrued liabilities |
59,603 | 63,279 | ||||||||
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|
|
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Total current liabilities |
166,434 | 131,160 | ||||||||
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|
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Capital lease obligations |
3,004 | 3,943 | ||||||||
Accrued pension obligation |
87,915 | 92,246 | ||||||||
Employee benefit obligations |
360,779 | 344,463 | ||||||||
Deferred income taxes |
269,912 | 67,381 | ||||||||
Unamortized investment tax credits |
| 4,310 | ||||||||
Other long-term liabilities |
17,821 | 12,398 | ||||||||
Long-term debt, net of current portion |
992,500 | | ||||||||
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|
|
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Total long-term liabilities |
1,731,931 | 524,741 | ||||||||
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|
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Total liabilities not subject to compromise |
1,898,365 | 655,901 | ||||||||
Liabilities subject to compromise |
| 2,905,311 | ||||||||
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|
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Total liabilities |
1,898,365 | 3,561,212 | ||||||||
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|
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Stockholders equity (deficit): |
||||||||||
Predecessor Company common stock, $0.01 par value, 200,000,000 shares authorized, issued and outstanding 89,440,334 shares at December 31, 2010 |
| 894 | ||||||||
Additional paid-in capital, Predecessor Company |
| 725,786 | ||||||||
Successor Company common stock, $0.01 par value, 37,500,000 shares authorized, 26,198,640 shares issued and outstanding at September 30, 2011 |
262 | | ||||||||
Additional paid-in capital, Successor Company |
501,105 | | ||||||||
Retained deficit |
(330,961 | ) | (1,101,294 | ) | ||||||
Accumulated other comprehensive loss |
| (212,804 | ) | |||||||
|
|
|
|
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Total stockholders equity (deficit) |
170,406 | (587,418 | ) | |||||||
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|
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Total liabilities and stockholders equity (deficit) |
$ | 2,068,771 | $ | 2,973,794 | ||||||
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FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Months ended September 30, 2011, 249 Days ended September 30, 2011,
24 Days ended January 24, 2011 and Three and Nine Months ended September 30, 2010
(Unaudited)
(in thousands)
Successor Company |
Predecessor Company |
Successor Company |
Predecessor Company |
|||||||||||||||||||||
Three Months Ended September 30, 2011 |
Three Months Ended September 30, 2010 |
Two Hundred Forty- Nine Days Ended September 30, 2011 |
Twenty-Four Days Ended January 24, 2011 |
Nine
Months Ended September 30, 2010 |
||||||||||||||||||||
(Restated) | (Restated) | |||||||||||||||||||||||
Revenues |
$ | 257,912 | $ | 260,630 | $ | 708,950 | $ | 66,378 | $ | 802,994 | ||||||||||||||
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Operating expenses: |
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Cost of services and sales, excluding depreciation and amortization |
120,149 | 118,765 | 321,790 | 38,766 | 389,445 | |||||||||||||||||||
Selling, general and administrative expense, excluding depreciation and amortization |
93,334 | 99,412 | 245,132 | 27,161 | 290,058 | |||||||||||||||||||
Depreciation and amortization |
91,547 | 72,364 | 244,940 | 21,515 | 215,218 | |||||||||||||||||||
Reorganization related (income) expense |
(3,735 | ) | | 1,511 | | | ||||||||||||||||||
Impairment of intangible assets and goodwill |
262,019 | | 262,019 | | | |||||||||||||||||||
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|
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Total operating expenses |
563,314 | 290,541 | 1,075,392 | 87,442 | 894,721 | |||||||||||||||||||
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Loss from operations |
(305,402 | ) | (29,911 | ) | (366,442 | ) | (21,064 | ) | (91,727 | ) | ||||||||||||||
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Other income (expense): |
||||||||||||||||||||||||
Interest expense |
(17,147 | ) | (35,358 | ) | (46,634 | ) | (9,321 | ) | (105,709 | ) | ||||||||||||||
Other |
488 | 2,207 | 1,319 | (132 | ) | 2,338 | ||||||||||||||||||
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Total other expense |
(16,659 | ) | (33,151 | ) | (45,315 | ) | (9,453 | ) | (103,371 | ) | ||||||||||||||
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Loss before reorganization items and income taxes |
(322,061 | ) | (63,062 | ) | (411,757 | ) | (30,517 | ) | (195,098 | ) | ||||||||||||||
Reorganization items |
| (10,352 | ) | | 897,313 | (25,568 | ) | |||||||||||||||||
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(Loss) income before income taxes |
(322,061 | ) | (73,414 | ) | (411,757 | ) | 866,796 | (220,666 | ) | |||||||||||||||
Income tax benefit (expense) |
42,620 | 7,330 | 80,796 | (279,889 | ) | 14,074 | ||||||||||||||||||
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Net (loss) income |
$ | (279,441 | ) | $ | (66,084 | ) | $ | (330,961 | ) | $ | 586,907 | $ | (206,592 | ) | ||||||||||
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Weighted average shares outstanding: |
||||||||||||||||||||||||
Basic |
25,654 | 89,424 | 25,648 | 89,424 | 89,424 | |||||||||||||||||||
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Diluted |
25,654 | 89,424 | 25,648 | 89,695 | 89,424 | |||||||||||||||||||
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(Loss) earnings per share: |
||||||||||||||||||||||||
Basic |
$ | (10.89 | ) | $ | (0.74 | ) | $ | (12.90 | ) | $ | 6.56 | $ | (2.31 | ) | ||||||||||
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Diluted |
$ | (10.89 | ) | $ | (0.74 | ) | $ | (12.90 | ) | $ | 6.54 | $ | (2.31 | ) | ||||||||||
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FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
249 Days ended September 30, 2011, 24 Days ended January 24, 2011
and the Nine Months ended September 30, 2010
(Unaudited)
(in thousands)
Successor Company | Predecessor Company | |||||||||||||
Two Hundred Forty- Nine Days Ended September 30, 2011 |
Twenty-Four Days Ended January 24, 2011 |
Nine Months Ended September 30, 2010 |
||||||||||||
(Restated) | ||||||||||||||
Cash flows from operating activities: |
||||||||||||||
Net income (loss) |
$ | (330,961 | ) | $ | 586,907 | $ | (206,592 | ) | ||||||
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Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||
Deferred income taxes |
(80,119 | ) | 276,204 | (14,375 | ) | |||||||||
Provision for uncollectible revenue |
15,713 | 3,454 | 27,524 | |||||||||||
Depreciation and amortization |
244,940 | 21,515 | 215,218 | |||||||||||
Post-retirement accruals |
25,512 | 2,654 | 24,746 | |||||||||||
Pension accruals |
1,709 | 986 | 7,509 | |||||||||||
Loss on abandoned projects |
| | 13,049 | |||||||||||
Impairment of intangible assets and goodwill |
262,019 | | | |||||||||||
Other non cash items |
(150 | ) | 130 | 1,737 | ||||||||||
Changes in assets and liabilities arising from operations: |
||||||||||||||
Accounts receivable |
1,839 | (7,752 | ) | (721 | ) | |||||||||
Prepaid and other assets |
2,030 | (3,423 | ) | (13,350 | ) | |||||||||
Accounts payable and accrued liabilities |
(2,636 | ) | 30,258 | 11,488 | ||||||||||
Accrued interest payable |
183 | 9,017 | 102,535 | |||||||||||
Other assets and liabilities, net |
268 | 177 | (4,457 | ) | ||||||||||
Reorganization adjustments: |
||||||||||||||
Non-cash reorganization income |
(5,290 | ) | (917,358 | ) | (20,219 | ) | ||||||||
Claims payable and estimated claims accrual |
(64,091 | ) | (1,096 | ) | | |||||||||
Restricted cash - cash claims reserve |
56,544 | (82,764 | ) | | ||||||||||
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Total adjustments |
458,471 | (667,998 | ) | 350,684 | ||||||||||
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Net cash provided by (used in) operating activities |
127,510 | (81,091 | ) | 144,092 | ||||||||||
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Cash flows from investing activities: |
||||||||||||||
Net capital additions |
(128,538 | ) | (12,477 | ) | (156,927 | ) | ||||||||
Distributions from investments |
636 | | 449 | |||||||||||
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Net cash used in investing activities |
(127,902 | ) | (12,477 | ) | (156,478 | ) | ||||||||
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Cash flows from financing activities: |
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Loan origination costs |
(884 | ) | (1,500 | ) | (1,100 | ) | ||||||||
Proceeds from issuance of long-term debt |
| | 5,513 | |||||||||||
Restricted cash |
1,675 | 34 | (68 | ) | ||||||||||
Repayment of capital lease obligations |
(809 | ) | (201 | ) | (1,608 | ) | ||||||||
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Net cash (used in) provided by financing activities |
(18 | ) | (1,667 | ) | (2,737 | ) | ||||||||
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Net change |
(410 | ) | (95,235 | ) | (9,649 | ) | ||||||||
Cash, beginning of period |
10,262 | 105,497 | 109,355 | |||||||||||
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Cash, end of period |
$ | 9,852 | $ | 10,262 | $ | 99,706 | ||||||||
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Supplemental disclosure of cash flow information: |
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Capital additions included in accounts payable, claims payable and estimated claims accrual or liabilities subject to compromise at period-end |
2,777 | 1,818 | 1,250 | |||||||||||
Reorganization costs paid |
19,282 | 11,110 | 31,152 |
FAIRPOINT COMMUNICATIONS, INC.
Supplemental Financial Information
(Unaudited)
($ in thousands, except per unit)
3Q11 Reported |
2Q11 Reported |
1Q11 Reported |
4Q10 Reported |
3Q10 Restated |
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Summary Income Statement: |
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Revenue: |
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Voice services |
$ | 120,388 | $ | 127,085 | $ | 124,225 | $ | 136,664 | $ | 125,598 | ||||||||||
Access |
94,646 | 93,128 | 91,358 | 92,128 | 95,923 | |||||||||||||||
Data and Internet services |
30,049 | 29,849 | 28,495 | 27,504 | 26,691 | |||||||||||||||
Other services |
12,829 | 12,574 | 10,702 | 11,696 | 12,418 | |||||||||||||||
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Total revenue |
257,912 | 262,636 | 254,780 | 267,992 | 260,630 | |||||||||||||||
Operating expenses: |
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Operating expenses, excluding depreciation, amortization and reorganization |
213,483 | 202,784 | 216,582 | 211,598 | 218,177 | |||||||||||||||
Depreciation and amortization |
91,547 | 90,614 | 84,294 | 74,606 | 72,364 | |||||||||||||||
Reorganization expense (post-emergence) (1) |
(3,735 | ) | 2,510 | 2,736 | | | ||||||||||||||
Impairment of intangible assets and goodwill |
262,019 | | | | | |||||||||||||||
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Total operating expenses |
563,314 | 295,908 | 303,612 | 286,204 | 290,541 | |||||||||||||||
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Loss from operations |
(305,402 | ) | (33,272 | ) | (48,832 | ) | (18,212 | ) | (29,911 | ) | ||||||||||
Other income (expense): |
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Interest expense |
(17,147 | ) | (16,996 | ) | (21,812 | ) | (35,187 | ) | (35,358 | ) | ||||||||||
Other income (expense), net |
488 | 350 | 349 | 377 | 2,207 | |||||||||||||||
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Total other income (expense) |
(16,659 | ) | (16,646 | ) | (21,463 | ) | (34,810 | ) | (33,151 | ) | ||||||||||
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Loss before reorganization items and income taxes |
(322,061 | ) | (49,918 | ) | (70,295 | ) | (53,022 | ) | (63,062 | ) | ||||||||||
Reorganization items (1) |
| | 897,313 | (15,552 | ) | (10,352 | ) | |||||||||||||
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Income (loss) before income taxes |
(322,061 | ) | (49,918 | ) | 827,018 | (68,574 | ) | (73,414 | ) | |||||||||||
Income tax benefit (expense) |
42,620 | 22,821 | (264,534 | ) | (6,413 | ) | 7,330 | |||||||||||||
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Net income (loss) |
$ | (279,441 | ) | $ | (27,097 | ) | $ | 562,484 | $ | (74,987 | ) | $ | (66,084 | ) | ||||||
Consolidated EBITDAR Reconciliation: |
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Net income (loss) |
$ | (279,441 | ) | $ | (27,097 | ) | $ | 562,484 | $ | (74,987 | ) | $ | (66,084 | ) | ||||||
Income tax (benefit) expense |
(42,620 | ) | (22,821 | ) | 264,534 | 6,413 | (7,330 | ) | ||||||||||||
Interest expense |
17,147 | 16,996 | 21,812 | 35,187 | 35,358 | |||||||||||||||
Depreciation and amortization |
91,547 | 90,614 | 84,294 | 74,606 | 72,364 | |||||||||||||||
Non-cash pension and OPEB expense (2a) |
9,592 | 10,583 | 10,686 | 10,992 | 12,036 | |||||||||||||||
Other non-cash items, net (2b) |
260,518 | (138 | ) | (912,270 | ) | 16,096 | 1,066 | |||||||||||||
Restructuring costs (2c) |
844 | 2,608 | 17,326 | 14,948 | 11,395 | |||||||||||||||
Restatement impact, net (2d) |
| | | | 1,397 | |||||||||||||||
All other allowed adjustments, net (2e) |
2,866 | (246 | ) | 219 | 732 | (999 | ) | |||||||||||||
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Consolidated EBITDAR |
$ | 60,453 | $ | 70,499 | $ | 49,085 | $ | 83,987 | $ | 59,203 | ||||||||||
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Consolidated EBITDAR margin |
23.4 | % | 26.8 | % | 19.3 | % | 31.3 | % | 22.7 | % | ||||||||||
Select Operating and Financial Metrics: |
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Residential access lines |
662,562 | 680,189 | 695,916 | 712,591 | 734,260 | |||||||||||||||
Business access lines |
314,290 | 317,584 | 322,106 | 327,812 | 335,334 | |||||||||||||||
Wholesale access lines (3) |
80,025 | 82,231 | 84,667 | 87,142 | 89,035 | |||||||||||||||
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Total switched access lines |
1,056,877 | 1,080,004 | 1,102,689 | 1,127,545 | 1,158,629 | |||||||||||||||
% change y-o-y |
-8.8 | % | -9.3 | % | -9.6 | % | -10.3 | % | -11.0 | % | ||||||||||
% change q-o-q |
-2.1 | % | -2.1 | % | -2.2 | % | -2.7 | % | -2.6 | % | ||||||||||
High-speed data subscribers (4) |
312,475 | 305,155 | 297,491 | 289,745 | 288,891 | |||||||||||||||
% change y-o-y |
8.2 | % | 5.4 | % | 4.8 | % | 0.4 | % | -1.7 | % | ||||||||||
% change q-o-q |
2.4 | % | 2.6 | % | 2.7 | % | 0.3 | % | -0.2 | % | ||||||||||
penetration of access lines |
29.6 | % | 28.3 | % | 27.0 | % | 25.7 | % | 24.9 | % | ||||||||||
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Access line equivalents |
1,369,352 | 1,385,159 | 1,400,180 | 1,417,290 | 1,447,520 | |||||||||||||||
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% change y-o-y |
-5.4 | % | -6.4 | % | -6.8 | % | -8.3 | % | -9.3 | % | ||||||||||
% change q-o-q |
-1.1 | % | -1.1 | % | -1.2 | % | -2.1 | % | -2.2 | % | ||||||||||
Capital expenditures |
$ | 35,170 | $ | 52,121 | $ | 53,725 | $ | 40,868 | $ | 53,705 |
(1) | Following FairPoints emergence from Chapter 11 on January 24, 2011, all reorganization items are reported in total operating expenses. During Chapter 11, all reorganization items were reported below operating income in Reorganization Items. |
(2) | For purposes of calculating Consolidated EBITDAR, FairPoints credit facility allows it to adjust for: |
a) | aggregate pension and other post-employment benefits expense (OPEB), net of pension contributions and OPEB cash payments in the period, |
b) | other non-cash items except to the extent they will require a cash payment in a future period, |
c) | costs related to the restructuring, including professional fees for advisors and consultants, |
d) | the impact from any restatement of financial statements for the periods ending on or prior to January 24, 2011, and |
e) | other items including success bonuses, severance, non-cash gains/losses, non-operating dividend and interest income and other extraordinary gains/losses. |
(3) | Wholesale access lines include Resale and UNE-P, but exclude UNE-L and special access circuits. |
(4) | High-speed data subscribers include DSL, fiber-to-the-premise, cable modem and fixed wireless broadband. |