FairPoint Communications, Inc (NasdaqCM: FRP), based in North Carolina and the largest telecommunications company in Vermont, has announced its financial results for the second quarter ended June 30, 2013. In response to the results, FairPoint's shares were up over half-a-point following the release. As of Friday morning, shares were trading at just over $9.20. Its 52-week range is $5.76 - $10.04.
"Our performance this quarter demonstrates continued success in the execution of our four-pillar strategy," said CEO Paul H. Sunu. "Our revenue trend is very encouraging and we believe we have entered into a period of revenue stabilization while generating sustainable cash flow to create long-term value for our shareholders."
Those four pillars Sunu refers to are: the four pillars are: One, to improve operations; two, to change the regulatory environment; three, to transform and grow revenue; and four, to execute on its human resources strategy.
During a conference call Tuesday, Sunu said, Year-over-year, "Ethernet circuits grew by 49.2 percent and Ethernet revenues increased by 40 percent. Growth is expected to continue based on demand from customers like regional banks, health care institutions and wireless carriers. Broadband subscribers grew 4.2 percent, an acceleration of year-over-year growth for the fourth consecutive quarter. As for our legacy services, we've been successful in slowing the rate of decline of voice access lines to 7.5 percent in the last 12 months. And it's worth noting that we lost less than 200 business lines in the second quarter."
Operating Highlights
FairPoint continued the positive momentum in its growth-oriented business and broadband products. Growth in business and broadband products is a key component of FairPoint's strategy to transform its revenue composition and offset continued erosion in the Company's legacy access products like residential voice. In the second quarter, data and Internet services revenue grew 11% versus a year ago as products like FairPoint's Ethernet retail service offerings continued to attract new customers. In fact, data and Internet services revenue increased 5% sequentially in the second quarter, marking the Company's largest sequential growth rate since this time last year.
Ethernet services contributed approximately $14 million of revenue in the second quarter of 2013 as compared to $10 million a year ago, as retail and wholesale Ethernet circuits grew 49.2% year-over-year. Growth in the Company's Ethernet products is expected to continue based on demand from customers like regional banks, healthcare networks and wireless carriers.
Broadband subscribers, pro forma for divestitures, grew 4.2% year-over-year and 0.8% sequentially - an acceleration of year-over-year growth for the fourth consecutive quarter. FairPoint added more than 13,000 broadband subscribers during the last 12 months, as penetration reached 36.4% of the Company's voice access lines at June 30, 2013.
Voice access lines, pro forma for divestitures, declined 7.5% year-over-year as compared to 7.8% a year ago. The improvement was driven largely by a slowdown in the rate of loss in business voice access lines, which declined 2.1% year-over-year as compared to 3.3% a year ago.
As of June 30, 2013, FairPoint had 3,255 employees, a decrease of 4.5% versus a year ago. Headcount declined by 66 employees, or 2.0%, in the second quarter of 2013 due in part to a previously announced workforce reduction. In that announcement, FairPoint disclosed its reduction of approximately 30 management personnel during the first quarter of 2013 and 90 bargained-for positions thereafter in fiscal year 2013. The management and bargained-for reductions are expected to result in annualized operating expense savings of approximately $11 million, with the full benefit realized beginning in 2014.
FairPoint plans to discontinue its participation with the National Exchange Carrier Association (NECA) in its special access rate of return pool for wholesale DSL services for certain of its rural operating companies. This regulatory election will have the impact of lowering revenue from the pool, which will be more than offset by the expenses no longer required to be paid into the pool. Beginning in the third quarter of 2013, the change is anticipated to decrease revenue by $1.7 million per quarter while increasing Adjusted EBITDA by over $140,000 per quarter.
Financial Highlights
Second Quarter 2013 as compared to First Quarter 2013
Revenue decreased less than $1 million during the second quarter of 2013 to $235 million. Adjusting for the impact of the sale of the Idaho-based operations on Jan. 31, 2013, revenue was nearly equal to that in the first quarter of 2013. Minor declines in voice services and access revenues were offset by growth in data and Internet services and other services revenues. Data and Internet services revenue increased as subscribers and retail Ethernet circuits grew. Other services revenues increased due to the completion of certain construction projects.
Adjusting for items that are added back in the computation of Adjusted EBITDA, operating expenses were $169 million in the second quarter of 2013 as compared to $172 million in the first quarter of 2013. The decrease was primarily the result of lower building-related expenses, cost of services and bad debt expense, partially offset by higher contracted services.
Adjusted EBITDA was $66 million in the second quarter of 2013 as compared to $64 million in the first quarter of 2013. The reduction in adjusted operating expenses more than offset the sequential decline in revenue as described above.
Capital expenditures were $27 million in the second quarter of 2013 as compared to $30 million in the first quarter of 2013.
Unlevered Free Cash Flow, which measures Adjusted EBITDA minus capital expenditures, pension contributions and cash payments for other post-employment benefits ("OPEB"), was $35 million in the second quarter of 2013 as compared to $33 millionin the first quarter of 2013. Unlevered Free Cash Flow was higher in the second quarter of 2013 as higher Adjusted EBITDA and lower capital expenditures more than offset the pension contribution in the second quarter of 2013. Aggregate pension and OPEB payments are expected to be $20 million for the full year, which includes FairPoint's intention to make voluntary contributions to its pension plans in fiscal year 2013.
Net loss was $43 million in the second quarter of 2013 as compared to a net loss of $47 million in the first quarter of 2013. The change was due primarily to lower total operating expenses and first quarter's loss on the debt refinancing, partially offset by a lower tax benefit and first quarter's gain from the sale of the Idaho-based operations.
Cash was $27 million as of June 30, 2013, as compared to $17 million as of March 31, 2013. Total debt outstanding was $938 million after taking into consideration the regularly scheduled amortization payment of $1.6 million during the second quarter of 2013, as compared to $940 million as of March 31, 2013. The Company's $75 million revolving credit facility is undrawn, with $57 million available for borrowing after applying $18 million for outstanding letters of credit.
Second Quarter 2013 as compared to Second Quarter 2012
Revenue was $235 million in the second quarter of 2013 as compared to $243 million a year earlier. Adjusting for the impact of the sale of the Idaho-based operations on Jan. 31, 2013, revenue declined $7 million versus a year earlier. The change was due primarily to a decline in voice services and access revenues, which was partially offset by growth in data and Internet services revenue. The loss of voice access lines versus a year ago led to a decrease in voice services revenue, while a decline in switched access minutes of use led to lower switched access revenue. In addition, customers continued to migrate from legacy access products such as DS1, DS3, frame relay and private line to wholesale Ethernet-based products, which tend to have lower average revenue per unit.
Adjusting for items that are added back in the computation of Adjusted EBITDA, operating expenses were $169 million in the second quarter of 2013 as compared to $173 million a year earlier. The decrease was primarily the result of lower cost of services and lower bad debt expense, partially offset by lower capitalized labor. Although FairPoint had reduced its workforce, labor intensive capital projects were also lower in fiscal year 2013 resulting in a reduction of capitalized labor and a corresponding increase in operating expenses.
Adjusted EBITDA was $66 million in the second quarter of 2013 as compared to $73 million a year earlier. The second quarter of 2012 was favorably impacted by a reversal of certain bankruptcy claims, which resulted in a $3 million increase to Adjusted EBITDA as compared to the second quarter of 2013. The remaining variance is explained by the revenue decline discussed above, partially offset by improvement in adjusted operating expenses.
Capital expenditures were $27 million in the second quarter of 2013 as compared to $32 million a year earlier. The decrease year-over-year was due primarily to regulatory build-out requirements in fiscal year 2012.
Unlevered Free Cash Flow of $35 million in the second quarter of 2013 was equal to the $35 million a year earlier. The stability was due primarily to lower Adjusted EBITDA, which was offset by lower capital expenditures and smaller pension contributions in the second quarter of 2013.
Net loss was $43 million in the second quarter of 2013 as compared to a net loss of $37 million in the second quarter of 2012. The change was due primarily to a combination of lower revenues described above and higher interest expense, partially offset by lower depreciation expense and the absence of the significant reversal of certain bankruptcy claims that occurred in the second quarter of 2012.
2013 Guidance
FairPoint's fiscal year 2013 guidance remains unchanged.
The Company expects to generate $100 million to $110 million of Unlevered Free Cash Flow in 2013. In addition, Adjusted EBITDA is expected to be $255 million to $265 million, capital expenditures are expected to be approximately $135 million and aggregate pension contributions and cash OPEB payments are expected to be approximately $20 million.
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 on Form 10-Q for the quarter ended June 30, 2013, which will be filed with the SEC no later than August 9, 2013. The Company's results for the quarter ended June 30, 2013 are subject to the completion of the quarterly report.
Conference Call Information
The earnings conference call isavailable online at www.fairpoint.com/investors.
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures, including but not limited to Adjusted EBITDA and Unlevered Free Cash Flow, and adjustments to GAAP and non-GAAP measures to exclude the effect of special items. Management believes that Adjusted EBITDA provides a useful measure of operational and financial performance and removes variability related to pension contributions and OPEB payments and that Unlevered Free Cash Flow may be useful to investors in assessing the Company's ability to generate cash and meet its debt service requirements. The maintenance covenants contained in the Company's credit facility are based on Consolidated EBITDA, which is consistent with the calculation of Adjusted EBITDA included in the attachments to this press release. In addition, management believes that the adjustments to GAAP and non-GAAP measures to exclude the effect of special items may be useful to investors in understanding period-to-period operating performance and in identifying historical and prospective trends.
However, the non-GAAP financial measures, as used herein, are not necessarily comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA and Unlevered Free Cash Flow have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income or loss, operating income, cash flow or other combined income or cash flow data prepared in accordance with GAAP. Because of these limitations, Adjusted EBITDA, Unlevered Free Cash Flow and related ratios should not be considered as measures of discretionary cash available to invest in business growth or reduce indebtedness. The Company compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA and Unlevered Free Cash Flow only supplementally. A reconciliation of Adjusted EBITDA and Unlevered Free Cash Flow to net loss or income is contained in the attachments to this press release.
About FairPoint Communications, Inc.
FairPoint Communications, Inc. (NasdaqCM: FRP) is a leading communications provider of broadband Internet access, local and long-distance phone, television and other high-capacity data services to customers in communities across 17 states. Through its fast, reliable fiber network, FairPoint delivers high-quality data and voice networking communications solutions to residential, business and wholesale customers. FairPoint delivers VantagePointSM services through its resilient IP-based network in northernNew England. This state-of-the-art fiber network provides carrier Ethernet connections to support the surging bandwidth and performance requirements for cloud-based applications like network storage, disaster recovery, distance learning, medical imaging, video conferencing and CAD/CAM along with traditional voice, VoIP, video and Internet access solutions. Additional information about FairPoint products and services is available at www.FairPoint.com.
1 Unlevered Free Cash Flow and Adjusted EBITDA are non-GAAP financial measures. Additional information regarding the calculation of Unlevered Free Cash Flow and Adjusted EBITDA and a reconciliation to net income or loss are contained in the attachments to this press release.
FAIRPOINT COMMUNICATIONS, INC.
Supplemental Financial Information
(Unaudited)
(in thousands, except operating and financial metrics)
2Q13
1Q13
4Q12
3Q12
2Q12
YTD 2Q13
YTD 2Q12
Summary Income Statement:
Revenue:
Voice services
$
101,660
$
103,717
$
108,487
$
111,337
$
111,525
$
205,377
$
226,302
Access
79,235
81,632
82,476
82,015
84,686
160,867
171,509
Data and Internet services
40,054
38,174
36,668
36,793
36,118
78,228
69,450
Other services
13,551
11,946
12,039
11,907
11,124
25,497
24,666
Total revenue
234,500
235,469
239,670
242,052
243,453
469,969
491,927
Operating expenses:
Operating expenses, excluding depreciation,
amortization and reorganization
192,246
205,497
194,692
186,417
190,672
397,743
401,575
Depreciation and amortization
84,523
91,433
99,845
89,782
93,780
175,956
186,987
Reorganization (income) expense (post-
emergence)
(398)
(163)
377
172
(2,823)
(561)
(4,215)
Total operating expenses
276,371
296,767
294,914
276,371
281,629
573,138
584,347
Loss from operations
(41,871)
(61,298)
(55,244)
(34,319)
(38,176)
(103,169)
(92,420)
Other income (expense):
Interest expense
(20,097)
(18,002)
(16,608)
(16,991)
(16,983)
(38,099)
(34,011)
Loss on debt refinancing
‘
(6,787)
‘
‘
‘
(6,787)
‘
Other income (expense), net
10
425
14
548
(125)
435
177
Total other expense
(20,087)
(24,364)
(16,594)
(16,443)
(17,108)
(44,451)
(33,834)
Loss from continuing operations before income taxes
(61,958)
(85,662)
(71,838)
(50,762)
(55,284)
(147,620)
(126,254)
Income tax benefit
18,850
28,133
39,658
13,433
18,211
46,983
42,469
Net loss from continuing operations
(43,108)
(57,529)
(32,180)
(37,329)
(37,073)
(100,637)
(83,785)
Gain on sale of discontinued operations
‘
10,044
‘
‘
‘
10,044
‘
Net loss
$
(43,108)
$
(47,485)
$
(32,180)
$
(37,329)
$
(37,073)
$
(90,593)
$
(83,785)
Reconciliation of Adjusted EBITDA and
Unlevered Free Cash Flow to Net Loss:
Net loss
$
(43,108)
$
(47,485)
$
(32,180)
$
(37,329)
$
(37,073)
$
(90,593)
$
(83,785)
Income tax benefit
(18,850)
(28,133)
(39,658)
(13,433)
(18,211)
(46,983)
(42,469)
Interest expense
20,097
18,002
16,608
16,991
16,983
38,099
34,011
Depreciation and amortization
84,523
91,433
99,845
89,782
93,780
175,956
186,987
Pension expense (1a)
6,980
5,884
4,005
4,166
4,573
12,864
9,638
OPEB expense (1a)
15,247
15,076
11,899
11,729
13,373
30,323
27,247
Compensated absences (1b)
(3,048)
11,122
(3,925)
(4,490)
(2,864)
8,074
8,744
Severance
3,430
698
938
592
1,907
4,128
4,850
Restructuring costs (1c)
101
17
258
338
276
118
739
Storm expenses (1d)
‘
‘
3,000
‘
‘
‘
‘
Other non-cash items, net (1e)
351
826
2,068
1,211
395
1,177
239
Gain on sale of assets
207
(10,044)
‘
‘
‘
(9,837)
‘
Early debt payment expenses
‘
6,787
‘
‘
‘
6,787
‘
All other allowed adjustments, net (1f)
507
(314)
(288)
(358)
143
193
(29)
Adjusted EBITDA
$
66,437
$
63,869
$
62,570
$
69,199
$
73,282
$
130,306
$
146,172
Adjusted EBITDA margin
28.3
%
27.1
%
26.1
%
28.6
%
30.1
%
27.7
%
29.7
%
Pension contributions
$
(3,527)
$
‘
$
‘
$
(7,344)
$
(5,156)
$
(3,527)
$
(10,506)
OPEB payments
(726)
(1,020)
(1,125)
(656)
(794)
(1,746)
(1,402)
Capital expenditures
(27,413)
(29,910)
(49,070)
(37,669)
(32,070)
(57,323)
(58,327)
Unlevered Free Cash Flow
$
34,771
$
32,939
$
12,375
$
23,530
$
35,262
$
67,710
$
75,937
Reconciliation of Adjusted EBITDA to Revenue:
Total revenue
$
234,500
$
235,469
$
239,670
$
242,052
$
243,453
$
469,969
$
491,927
Storm expenses (1d)
‘
‘
812
‘
‘
‘
‘
Adjusted total revenue
$
234,500
$
235,469
$
240,482
$
242,052
$
243,453
$
469,969
$
491,927
Operating expenses, excluding depreciation, amortization and reorganization
$
192,246
$
205,497
$
194,692
$
186,417
$
190,672
$
397,743
$
401,575
Pension expense (1a)
(6,980)
(5,884)
(4,005)
(4,166)
(4,573)
(12,864)
(9,638)
OPEB expense (1a)
(15,247)
(15,076)
(11,899)
(11,729)
(13,373)
(30,323)
(27,247)
Compensated Absences (1b)
3,048
(11,122)
3,925
4,490
2,864
(8,074)
(8,744)
Severance
(3,430)
(698)
(938)
(592)
(1,907)
(4,128)
(4,850)
Storm expenses (1d)
‘
‘
(2,188)
‘
‘
‘
‘
Other non-cash items, net (1e)
(493)
(937)
(1,793)
(1,402)
(412)
(1,430)
(441)
All other allowed adjustments, net (1f)
(581)
‘
‘
‘
‘
(581)
‘
Adjusted operating expenses, excluding depreciation, amortization and reorganization
$
168,563
$
171,780
$
177,794
$
173,018
$
173,271
$
340,343
$
350,655
Adjusted operating expenses margin
71.9
%
73.0
%
74.2
%
71.5
%
71.2
%
72.4
%
71.3
%
Adjusted income from continuing operations, excluding depreciation, amortization and reorganization
$
65,937
$
63,689
$
62,688
$
69,034
$
70,182
$
129,626
$
141,272
Adjusted income from continuing operations
margin
28.1
%
27.0
%
26.2
%
28.5
%
28.8
%
27.6
%
28.7
%
Reversal of certain bankruptcy claims
500
180
(118)
165
3,100
680
4,900
Adjusted EBITDA
$
66,437
$
63,869
$
62,570
$
69,199
$
73,282
$
130,306
$
146,172
Adjusted EBITDA margin
28.3
%
27.1
%
26.1
%
28.6
%
30.1
%
27.7
%
29.7
%
Select Operating and Financial Metrics:
Residential access lines (2)
556,584
568,594
584,211
599,995
616,564
556,584
616,564
Business access lines (2)
294,183
294,353
295,134
298,055
300,437
294,183
300,437
Wholesale access lines (3)
61,911
63,068
65,641
67,886
69,375
61,911
69,375
Total switched access lines (2)
912,678
926,015
944,986
965,936
986,376
912,678
986,376
% change y-o-y
(7.5)
%
(7.8)
%
(7.7)
%
(7.7)
%
(7.8)
%
(7.5)
%
(7.8)
%
% change q-o-q
(1.4)
%
(2.0)
%
(2.2)
%
(2.1)
%
(1.8)
%
N/A
N/A
Broadband subscribers (2) (4)
332,620
330,082
324,977
321,102
319,296
332,620
319,296
% change y-o-y
4.2
%
4.1
%
3.9
%
3.3
%
5.2
%
4.2
%
5.2
%
% change q-o-q
0.8
%
1.6
%
1.2
%
0.6
%
0.7
%
N/A
N/A
penetration of access lines
36.4
%
35.6
%
34.4
%
33.2
%
32.4
%
36.4
%
32.4
%
Access line equivalents (2)
1,245,298
1,256,097
1,269,963
1,287,038
1,305,672
1,245,298
1,305,672
% change y-o-y
(4.6)
%
(4.9)
%
(5.0)
%
(5.2)
%
(4.9)
%
(4.6)
%
(4.9)
%
% change q-o-q
(0.9)
%
(1.1)
%
(1.3)
%
(1.4)
%
(1.2)
%
N/A
N/A
Retail Ethernet
3,857
3,532
3,192
2,826
2,417
3,857
2,417
Wholesale Ethernet
3,374
2,933
2,753
2,561
2,429
3,374
2,429
Ethernet Circuits
7,231
6,465
5,945
5,387
4,846
7,231
4,846
% change y-o-y
49.2
%
44.9
%
N/A
N/A
N/A
49.2
%
N/A
% change q-o-q
11.8
%
8.7
%
10.4
%
11.2
%
8.6
%
N/A
N/A
Employee Headcount
3,255
3,321
3,369
3,398
3,410
3,255
3,410
% change y-o-y
(4.5)
%
(3.9)
%
(4.9)
%
(7.9)
%
(14.8)
%
(4.5)
%
(14.8)
%
(1) For purposes of calculating Adjusted EBITDA (in accordance with the definition of Consolidated EBITDA in the Company's credit agreement), the Company adjusts net (loss) income for interest, income taxes, depreciation and amortization, in addition to:
a) the add-back of aggregate pension and other post-employment benefits (OPEB) expense,
b) the add-back (or subtraction) of the adjustment to the compensated absences accrual to eliminate the impact of changes in the accrual,
c) the add-back of costs related to the restructuring, including professional fees for advisors and consultants,
d) the add-back of costs and expenses, including those imposed by regulatory authorities, with respect to casualty events, acts of God or force majeure to the extent they are not reimbursed from proceeds of insurance,
e) the add-back of other non-cash items, except to the extent they will require a cash payment in a future period, and
f) the add-back (or subtraction) of other items, including facility and office closures, labor negotiation expenses, non-cash gains/losses, non-operating dividend and interest income and other extraordinary gains/losses.
(2) Access and subscriber lines are presented pro forma for the divestiture of our Idaho-based operations and pay phone operations in our northern New England footprint.
(3) Wholesale access lines include Resale and UNE-P, but exclude UNE-L and special access circuits.
(4) Broadband subscribers include DSL, fiber-to-the-premise, cable modem and fixed wireless broadband, but exclude Ethernet and other high-capacity circuits.
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 2013 and December 31, 2012
(in thousands, except share data)
June 30, 2013
December 31, 2012
(unaudited)
Assets:
Cash
$
26,982
$
23,203
Restricted cash
2,271
6,818
Accounts receivable (net of $16.7 million and $18.9 million allowance for doubtful accounts,
respectively)
86,800
86,999
Prepaid expenses
17,928
20,128
Other current assets
4,064
4,219
Deferred income tax, net
16,011
16,376
Assets held for sale
‘
12,549
Total current assets
154,056
170,292
Property, plant and equipment (net of $806.6 million and $642.1 million accumulated
depreciation, respectively)
1,328,525
1,438,309
Intangible assets (net of $27.2 million and $21.6 million accumulated amortization, respectively)
111,415
116,992
Debt issue costs, net
7,678
1,111
Restricted cash
651
651
Other assets
4,123
5,006
Total assets
$
1,606,448
$
1,732,361
Liabilities and Stockholders' Deficit:
Current portion of long-term debt
$
6,400
$
10,000
Current portion of capital lease obligations
1,348
1,220
Accounts payable
60,702
57,832
Claims payable and estimated claims accrual
682
1,282
Accrued interest payable
10,285
176
Other accrued liabilities
55,067
72,036
Liabilities held for sale
‘
407
Total current liabilities
134,484
142,953
Capital lease obligations
1,204
1,470
Accrued pension obligations
212,350
203,537
Accrued post-retirement healthcare obligations
645,420
616,379
Deferred income taxes
86,922
127,361
Other long-term liabilities
13,010
11,474
Long-term debt, net of current portion
913,549
947,000
Total long-term liabilities
1,872,455
1,907,221
Total liabilities
2,006,939
2,050,174
Commitments and contingencies
Stockholders' deficit:
Common stock, $0.01 par value, 37,500,000 shares authorized, 26,483,483 and 26,288,998 shares
issued and outstanding at June 30, 2013 and December 31, 2012, respectively
264
262
Additional paid-in capital
509,348
506,153
Retained deficit
(658,832)
(568,239)
Accumulated other comprehensive loss
(251,271)
(255,989)
Total stockholders' deficit
(400,491)
(317,813)
Total liabilities and stockholders' deficit
$
1,606,448
$
1,732,361
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 2013 and 2012
(Unaudited)
(in thousands, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2013
2012
2013
2012
Revenues
$
234,500
$
243,453
$
469,969
$
491,927
Operating expenses:
Cost of services and sales, excluding depreciation and
amortization
108,163
103,960
224,774
225,435
Selling, general and administrative expense, excluding
depreciation and amortization
84,083
86,712
172,969
176,140
Depreciation and amortization
84,523
93,780
175,956
186,987
Reorganization related income
(398)
(2,823)
(561)
(4,215)
Total operating expenses
276,371
281,629
573,138
584,347
Loss from operations
(41,871)
(38,176)
(103,169)
(92,420)
Interest expense
(20,097)
(16,983)
(38,099)
(34,011)
Loss on debt refinancing
‘
‘
(6,787)
‘
Other (expense) income
10
(125)
435
177
Loss from continuing operations before income taxes
(61,958)
(55,284)
(147,620)
(126,254)
Income tax benefit
18,850
18,211
46,983
42,469
Loss from continuing operations
(43,108)
(37,073)
(100,637)
(83,785)
Gain on sale of discontinued operations, net of taxes
‘
‘
10,044
‘
Net loss
$
(43,108)
$
(37,073)
$
(90,593)
$
(83,785)
(Loss) earnings per share, basic:
Continuing operations
$
(1.64)
$
(1.43)
$
(3.84)
$
(3.23)
Discontinued operations
‘
‘
0.38
‘
Loss per share, basic
$
(1.64)
$
(1.43)
$
(3.46)
$
(3.23)
(Loss) earnings per share, diluted:
Continuing operations
$
(1.64)
$
(1.43)
$
(3.84)
$
(3.23)
Discontinued operations
‘
‘
0.38
‘
Loss per share, diluted
$
(1.64)
$
(1.43)
$
(3.46)
$
(3.23)
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2013 and 2012
(Unaudited)
(in thousands)
Six Months Ended June 30,
2013
2012
Cash flows from operating activities:
Net loss
$
(90,593)
$
(83,785)
Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income taxes
(41,003)
(43,315)
Provision for uncollectible revenue
4,189
1,297
Depreciation and amortization
175,956
186,987
Post-retirement healthcare
28,656
25,846
Qualified pension
9,337
(869)
Gain on sale of business
(16,774)
‘
Loss on debt refinancing
6,787
‘
Other non-cash items
2,900
457
Changes in assets and liabilities arising from operations:
Accounts receivable
(4,063)
401
Prepaid and other assets
1,392
(1,269)
Restricted cash
3,971
(9,966)
Accounts payable and accrued liabilities
(14,172)
6,389
Accrued interest payable
10,109
(6)
Other assets and liabilities, net
5,487
(440)
Reorganization adjustments:
Non-cash reorganization income
(680)
(4,954)
Claims payable and estimated claims accrual
80
(7,518)
Restricted cash - cash claims reserve
577
20,041
Total adjustments
172,749
173,081
Net cash provided by operating activities
82,156
89,296
Cash flows from investing activities:
Net capital additions
(57,323)
(58,327)
Proceeds from sale of business
30,315
‘
Distributions from investments
417
572
Net cash used in investing activities
(26,591)
(57,755)
Cash flows from financing activities:
Refinancing costs
(13,217)
‘
Proceeds from issuance of long-term debt
920,590
‘
Repayments of long-term debt
(958,600)
(5,000)
Restricted cash
‘
483
Proceeds from exercise of stock options
46
30
Repayment of capital lease obligations
(605)
(634)
Net cash used in financing activities
(51,786)
(5,121)
Net change
3,779
26,420
Cash, beginning of period
23,203
17,350
Cash, end of period
$
26,982
$
43,770
Supplemental disclosure of cash flow information:
Reorganization costs paid
$
235
$
620
Non-cash settlement of claims payable
$
‘
$
7,668
SOURCE CHARLOTTE, N.C., Aug. 5, 2013 /PRNewswire/ -- FairPoint Communications, Inc.