FairPoint Communications, Inc. (NasdaqCM: FRP) (FairPoint or the Company), a leading provider of communications services, November 2 announced its financial results for the third quarter ended
Sept. 30, 2011
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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. I'm impressed with the Company's resolve and our team's ability to execute."
Consolidated EBITDAR(1) 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
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 service’another 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.
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 Company's 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 FairPoint's 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 Company's fiber-to-the-tower initiative was lower in the third quarter as compared to the second quarter.
FairPoint's 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 Company's 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.
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 Company's quarterly report for the quarter ended Sept. 30, 2011, which will be filed with the SEC on or prior to Nov. 15, 2011. The Company's 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 Company's assets and liabilities were marked to their fair value as of the date of emergence. Accordingly, the Company's 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 Company's operating performance and its ability to meet its debt service requirements, and the maintenance covenants contained in the Company's 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.
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 VantagePoint(SM) 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 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 represents 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) Consolidated EBITDAR means earnings before interest, taxes, depreciation, amortization and restructuring items as defined in the Company's 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.
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,
December 31,
2011
2010
Assets
(unaudited)
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
Total assets
$
2,068,771
$
2,973,794
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
Total current liabilities
166,434
131,160
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
‘
Total long-term liabilities
1,731,931
524,741
Total liabilities not subject to compromise
1,898,365
655,901
Liabilities subject to compromise
‘
2,905,311
Total liabilities
1,898,365
3,561,212
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)
Total stockholders' equity (deficit)
170,406
(587,418)
Total liabilities and stockholders' equity (deficit)
$
2,068,771
$
2,973,794
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
Predecessor
Successor
Company
Company
Company
Predecessor Company
Three Months
Three Months
Two Hundred Forty-
Twenty-Four
Nine Months
Ended
Ended
Nine Days Ended
Days Ended
Ended
September 30, 2011
September 30, 2010
September 30, 2011
January 24, 2011
September 30, 2010
(Restated)
(Restated)
Revenues
$
257,912
$
260,630
$
708,950
$
66,378
$
802,994
Operating expenses:
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
‘
‘
Total operating expenses
563,314
290,541
1,075,392
87,442
894,721
Loss from operations
(305,402)
(29,911)
(366,442)
(21,064)
(91,727)
Other income (expense):
Interest expense
(17,147)
(35,358)
(46,634)
(9,321)
(105,709)
Other
488
2,207
1,319
(132)
2,338
Total other expense
(16,659)
(33,151)
(45,315)
(9,453)
(103,371)
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)
(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
Net (loss) income
$
(279,441)
$
(66,084)
$
(330,961)
$
586,907
$
(206,592)
Weighted average shares outstanding:
Basic
25,654
89,424
25,648
89,424
89,424
Diluted
25,654
89,424
25,648
89,695
89,424
(Loss) earnings per share:
Basic
$
(10.89)
$
(0.74)
$
(12.90)
$
6.56
$
(2.31)
Diluted
$
(10.89)
$
(0.74)
$
(12.90)
$
6.54
$
(2.31)
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-
Twenty-Four
Nine Months
Nine Days Ended
Days Ended
Ended
September 30, 2011
January 24, 2011
September 30, 2010
(Restated)
Cash flows from operating activities:
Net income (loss)
$
(330,961)
$
586,907
$
(206,592)
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)
‘
Total adjustments
458,471
(667,998)
350,684
Net cash provided by (used in) operating activities
127,510
(81,091)
144,092
Cash flows from investing activities:
Net capital additions
(128,538)
(12,477)
(156,927)
Distributions from investments
636
‘
449
Net cash used in investing activities
(127,902)
(12,477)
(156,478)
Cash flows from financing activities:
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)
Net cash (used in) provided by financing activities
(18)
(1,667)
2,737
Net change
(410)
(95,235)
(9,649)
Cash, beginning of period
10,262
105,497
109,355
Cash, end of period
$
9,852
$
10,262
$
99,706
Supplemental disclosure of cash flow information:
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
Summary Income Statement:
Revenue:
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
Total revenue
257,912
262,636
254,780
267,992
260,630
Operating expenses:
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
-
-
-
-
Total operating expenses
563,314
295,908
303,612
286,204
290,541
Loss from operations
(305,402)
(33,272)
(48,832)
(18,212)
(29,911)
Other income (expense):
Interest expense
(17,147)
(16,996)
(21,812)
(35,187)
(35,358)
Other income (expense), net
488
350
349
377
2,207
Total other income (expense)
(16,659)
(16,646)
(21,463)
(34,810)
(33,151)
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)
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
Net income (loss)
$ (279,441)
$ (27,097)
$ 562,484
$ (74,987)
$ (66,084)
Consolidated EBITDAR Reconciliation:
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)
Consolidated EBITDAR
$ 60,453
$ 70,499
$ 49,085
$ 83,987
$ 59,203
Consolidated EBITDAR margin
23.4%
26.8%
19.3%
31.3%
22.7%
Select Operating and Financial Metrics:
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
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%
Access line equivalents
1,369,352
1,385,159
1,400,180
1,417,290
1,447,520
% 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 FairPoint's 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, FairPoint's 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.