FairPoint Communications, Inc. (NasdaqCM: FRP) ("FairPoint" or the "Company"), a leading communications provider, today announced its financial results for the quarter endedMarch 31, 2012. As previously announced, the Company will host a conference call and simultaneous webcast to discuss its results at8:30 a.m. (EDT)onThursday, May 3, 2012.
-- Strong Unlevered Free Cash Flow[1] of $29.1 million
-- Cash balance more than doubled since year-end to $35.8 million
-- Consolidated EBITDAR[2] before vacation expense of $66.9 million, up 12% from a year ago
-- Net loss of $46.7 million versus net loss of $84.0 million in the fourth quarter of 2011
-- Broadband subscribers grew by more than 21,000, or 7.1%, in the last twelve months
-- Landmark deregulation in Maine
"We're off to a solid start in 2012 and our financial results reflect that," saidPaul H. Sunu, CEO of FairPoint. "Free cash flow growth is the result of our 'four pillars' strategy for increasing shareholder value: operational gains, regulatory progress, revenue transformation and human resource strategy. I'm pleased to report progress in all four areas this quarter and I look forward to sharing our successes going forward."
Operating Highlights
Broadband subscribers grew 7.1% year-over-year and 1.4% sequentially. FairPoint added more than 21,000 broadband subscribers in the last twelve months and penetration reached 31.4% of voice access lines atMarch 31, 2012. The Company reported the highest percentage increase in broadband subscribers of any major telephone or cable company in 2011.
Voice access line loss slowed for the eighth consecutive quarter, reaching 8.1% year-over-year and 1.9% sequentially.
Regulatory Highlights
"We had a significant win in the state ofMainelast month with the substantive deregulation of retail products and services," said Sunu. "The landmark legislation inMainecame right on the heels of the breakthrough Incentive Regulation Plan inVermontwe reported earlier this year. Without our early operational gains, we could not have been so effective changing our regulatory environment. We believe these important steps forward inMaineandVermontwill allow us to compete more effectively for business and broadband customers in order to transform our revenue composition for growth," Sunu said.
OnApril 12, 2012, Governor LePage ofMainesigned into law historic legislation that substantially deregulates FairPoint's retail operations in Maine. Among other benefits, FairPoint now has greater regulatory flexibility for all products and services except unbundled basic local voice calling. The regulatory framework has been dramatically simplified. Retail service quality penalties are now capped at$2 millionper yearâ down from$12.5millionâ which serves to de-risk the business going forward.
Revenue Highlights
"With the operational and regulatory gains we have already achieved, we now have the proper foundation to transform our revenue composition for growth," said Sunu. "This solid foundation, along with our next-generation network and an insurgent's market share, represents fertile ground for revenue growth," he added.
FairPoint recently announced the addition ofTony Tomaeas Executive Vice President and Chief Revenue Officer. In this role, Mr. Tomae will spearhead the development and implementation of FairPoint's revenue transformation strategy. His past experience leading revenue growth in the competitive telecom marketplace gives him a unique perspective and key skills that will help the Company transform its top lineâ especially in northern New England where FairPoint now has over 14,000 fiber route miles and only 26% of the retail business market.
Mr. Tomae will continue to build upon FairPoint's early successes in the business segment. Since the launch of a new small business bundle in early 2011, FairPoint has seen a steady improvement in its ability to attract and retain business customers, which contributed to an improvement in the rate of business voice access line loss. The rate of loss in business voice access lines, which stood at 4.0% for the twelve months endedMarch 31, 2012, is nearly half the 7.8% loss FairPoint experienced for the twelve months endedMarch 31, 2011. Business voice access lines declined only 0.7% sequentially versusDec. 31, 2011.
In addition, the Company is pleased by the early adoption of its new Ethernet services. For example, FairPoint's carrier Ethernet offering contributed approximately$9 millionof revenue in the first quarter of 2012 as compared to$7 millionin the fourth quarter of 2011 and$2 millionin the first quarter of 2011. Growth in the Company's Ethernet products is expected to continue as regional banks, healthcare networks and wireless carriers transition away from legacy technologies like frame relay.
Human Resource Highlights
As ofMarch 31, 2012, FairPoint had approximately 3,454 employees, a decrease from 3,541 atDec. 31, 2011, and 4,032 atDec. 31, 2010â a reduction of 2% and 14% respectively. Continued operational improvements allowed the Company to announce further workforce reductions during the quarter, which impacted 78 employees and are expected to result in annualized savings of approximately$6.6 million.
Financial Highlights
First Quarter 2012 as compared to Fourth Quarter 2011
Revenue was$248.5 millionin the first quarter of 2012 as compared to$254.2 millionin the fourth quarter of 2011. The fourth quarter of 2011 included a reversal of service quality penalties totaling$3.9 million, while the first quarter of 2012 included a reversal of$1.2 millionin penalties. Service quality penalties impact voice services revenue. A decline in voice access lines led to a further decline in voice services and access revenue, while an increase in broadband subscribers led to a$0.6 millionincrease in data and Internet services revenue.
Operating expenses, excluding depreciation, amortization and reorganization, were$210.9 millionin the first quarter of 2012 as compared to$203.7 millionin the fourth quarter of 2011. OnJan. 1, 2012, the Company recorded its annual vacation expense accrual of$13.8 million, which will be amortized over the balance of the year as vacation is used. Adjusting for the impact of the annual vacation accrual, operating expenses declined$6.6 millionsequentially. Decreases in bad debt, contracted services and employee expenses were partially offset by an increase in pension and other post-employment ("OPEB") expense. The reduction in bad debt expense during the first quarter of 2012 was primarily the result of settlements with wholesale carriers and a significant improvement in accounts receivable aging.
Consolidated EBITDAR was$55.3 millionin the first quarter of 2012 as compared to$70.0 millionin the fourth quarter of 2011. Adjusting for the impact of the annual vacation expense, Consolidated EBITDAR was flat versus the fourth quarter of 2011. Operating expense reductions more than offset the impact of the revenue decline and the cash pension contribution of$5.7 millionmade during the first quarter. The Company did not make a cash pension contribution in the fourth quarter of 2011.
Net loss was$46.7 millionin the first quarter of 2012 as compared to a net loss of$84.0 millionin the fourth quarter of 2011. Income taxes were a benefit of$24.3 millionin the first quarter of 2012, while they were an expense of$27.5 millionin the fourth quarter of 2011. FairPoint recognized a number of annual adjustments to its income tax account, which led to income tax expense in the fourth quarter of 2011.
Capital expenditures were$26.3 millionin the first quarter of 2012 as compared to$35.1 millionin the fourth quarter of 2011. While FairPoint will continue to be diligent in its approach to capital spending, the Company expects capital expenditures will increase for the remainder of 2012 as the northern New England build season begins and the Company expands its broadband footprint inNew Hampshirein accordance with a regulatory commitment to reach 95% of its customers in the state byMarch 31, 2013. In addition, certain success-based projects that were originally scheduled to begin in the first quarter of 2012 are now expected to start later in the year.
FairPoint's cash position was$35.8 millionas ofMarch 31, 2012, as compared to$17.4 millionas ofDec. 31, 2011. Cash of$35.8 millionwas after an interest payment of approximately$17.0 million, principal repayment of$2.5 millionand cash pension contributions of$5.7 million. The Company's$75 millionrevolving credit facility is undrawn, with$62.6 millionavailable for additional borrowing after applying$12.4 millionfor outstanding letters of credit.
First Quarter 2012 as compared to First Quarter 2011
Revenue was$248.5 millionin the first quarter of 2012 as compared to$254.8 milliona year earlier. The unfavorable variance of$6.3 millionwas primarily the result of an 8.1% decline in voice access lines, partially offset by a decline in service quality penalties and growth in data and Internet services and other revenues.
Operating expenses, excluding depreciation, amortization and reorganization, were$210.9 millionin the first quarter of 2012 as compared to$216.6 milliona year earlier. Both quarters include the impact of the Company's annual vacation expense accrual. Decreases in bad debt, employee and other expenses were partially offset by an increase in pension and OPEB expense. The reduction in bad debt expense is discussed above.
Consolidated EBITDAR was$55.3 millionin the first quarter of 2012 as compared to$49.1 milliona year earlier. Operating expense reductions more than offset the impact of the revenue decline and a cash pension contribution of$5.7 millionmade during the first quarter of 2012. FairPoint did not make a cash pension contribution in the first quarter of 2011.
Capital expenditures were$26.3 millionin the first quarter of 2012 as compared to$53.7 milliona year earlier, when the Company was aggressively building fiber to towers and completing its regulatory commitment for broadband expansion in Vermont. As discussed above, FairPoint expects capital expenditures will increase for the remainder of 2012.
Net loss was$46.7 millionin the first quarter of 2012 as compared to net income of$562.5 millionin the first quarter of 2011 when the Company recorded cancellation of debt income associated with its emergence from bankruptcy.
2012 Guidance
The Company plans to make cash contributions to its pension plan on a quarterly basis in 2012 and expects to contribute approximately$19.8 millionfor the full year, including the$5.7 millioncontribution made in the first quarter. As the Company stated in its previous earnings release, FairPoint expects to generate Unlevered Free Cash Flow (after cash pension contributions) of$90 million to $100 millionin 2012 through a continued focus on improving Consolidated EBITDAR margins and disciplined capital spending. FairPoint expects to pay approximately$68 millionin interest and$10 millionin loan amortization in 2012.
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 endedMarch 31, 2012, which will be filed with the SEC on or prior toMay 10, 2012. The Company's results for the quarter endedMarch 31, 2012, are subject to the completion of its quarterly report for such period.
Fresh Start Accounting
OnJan. 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 ofJan. 24, 2011, whereby the Company's assets and liabilities were marked to their fair value as of the date of emergence. Accordingly, the Company's consolidated statements of financial position and operations for periods afterJan. 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 first quarter 2012 results at8:30 a.m. (EDT)onThursday, May 3, 2012.
Participants should call (866) 783-2142 (US/Canada) or (857) 350-1601 (international) at8:20 a.m. (EDT)and enter the passcode 68118910 when prompted. The title of the call is the Q1 2012 FairPoint Communications, Inc. Earnings Conference Call.
A telephonic replay will be available for anyone unable to participate in the live call. To access the replay, call (888) 286-8010 (US/Canada) or (617) 801-6888 (international) and enter the passcode 93221305 when prompted. The recording will be available fromThursday, May 3, 2012, at10:30 a.m. (EDT)throughThursday, May 10, 2012, at11:59 p.m. (EDT).
A live broadcast of the earnings conference call will be available online atwww.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, Unlevered Free Cash Flow and adjustments to GAAP and non-GAAP measures to exclude the effect of special items. Management believes that Consolidated EBITDAR and Unlevered Free Cash Flow 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 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, Consolidated EBITDAR 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, Consolidated EBITDAR, 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 Consolidated EBITDAR and Unlevered Free Cash Flow only supplementally. A reconciliation of Consolidated EBITDAR and Unlevered Free Cash Flow to net 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 18 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 VantagePoint(SM) services through its resilient IP-based network in northern New England. This state-of-the-art fiber network provides carrier Ethernet connections to support the surging bandwidth and performance requirements for cloud-based applications like network storage, disaster recovery, distance learning, medical imaging, video conferencing and CAD/CAM along with traditional voice, VoIP, video and Internet access solutions. Additional information about FairPoint products and services is available atwww.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]Unlevered Free Cash Flow means Consolidated EBITDAR minus capital expenditures. Unlevered Free Cash Flow is a non-GAAP financial measure. A reconciliation of Unlevered Free Cash Flow to net income is contained in the attachments to this press release.
[2]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.
Supplemental Financial Information
(Unaudited)
($ in thousands, except per unit)
1Q12
4Q11
3Q11
2Q11
1Q11
Summary Income Statement:
Revenue:
Voice services
$ 118,177
$ 121,616
$ 120,388
$ 127,085
$ 124,225
Access
86,823
90,204
94,646
93,128
91,358
Data and Internet services
29,932
29,382
30,049
29,849
28,495
Other services
13,542
12,960
12,829
12,574
10,702
Total revenue
248,474
254,162
257,912
262,636
254,780
Operating expenses:
Operating expenses, excluding depreciation, amortization and reorganization
210,903
203,717
213,483
202,784
216,582
Depreciation and amortization
93,207
91,951
91,547
90,614
84,294
Reorganization (income) expense (post-emergence) (1)
(1,392)
(1,743)
(3,735)
2,510
2,736
Impairment of intangible assets and goodwill
-
-
262,019
-
-
Total operating expenses
302,718
293,925
563,314
295,908
303,612
Loss from operations
(54,244)
(39,763)
(305,402)
(33,272)
(48,832)
Other income (expense):
Interest expense
(17,028)
(17,173)
(17,147)
(16,996)
(21,812)
Other income (expense), net
302
472
488
350
349
Total other income (expense)
Loss before reorganization items and income taxes
(16,726)
(16,701)
(16,659)
(16,646)
(21,463)
(70,970)
(56,464)
(322,061)
(49,918)
(70,295)
Reorganization items (1)
-
-
-
-
897,313
Income (loss) before income taxes
(70,970)
(56,464)
(322,061)
(49,918)
827,018
Income tax benefit (expense)
24,258
(27,520)
42,620
22,821
(264,534)
Net (loss) income
$ (46,712)
$ (83,984)
$ (279,441)
$ (27,097)
$ 562,484
Consolidated EBITDAR and Unlevered Free Cash Flow Reconciliation:
Net (loss) income
$ (46,712)
$ (83,984)
$ (279,441)
$ (27,097)
$ 562,484
Income tax (benefit) expense
(24,258)
27,520
(42,620)
(22,821)
264,534
Interest expense
17,028
17,173
17,147
16,996
21,812
Depreciation and amortization
93,207
91,951
91,547
90,614
84,294
Non-cash pension and OPEB expense (2a)
12,981
12,984
9,592
10,583
10,686
Other non-cash items, net (2b)
(156)
(53)
260,518
(138)
(912,270)
Restructuring costs (2c)
463
275
844
2,608
17,326
All other allowed adjustments, net (2d)
2,771
4,112
2,866
(246)
219
Consolidated EBITDAR
$ 55,324
$ 69,978
$ 60,453
$ 70,499
$ 49,085
Consolidated EBITDAR margin
22.3%
27.5%
23.4%
26.8%
19.3%
Capital expenditures
$ 26,257
$ 35,110
$ 35,169
$ 52,121
$ 53,725
Unlevered Free Cash Flow
$ 29,067
$ 34,868
$ 25,284
$ 18,378
$ (4,640)
Select Operating and Financial Metrics:
Residential access lines
631,724
645,453
662,562
680,189
695,916
Business access lines
309,078
311,241
314,290
317,584
322,106
Wholesale access lines (3)
72,233
76,065
80,025
82,231
84,667
Total switched access lines
1,013,035
1,032,759
1,056,877
1,080,004
1,102,689
% change y-o-y
-8.1%
-8.4%
-8.8%
-9.3%
-9.6%
% change q-o-q
-1.9%
-2.3%
-2.1%
-2.1%
-2.2%
Broadband subscribers (4)
318,510
314,135
312,475
305,155
297,491
% change y-o-y
7.1%
8.4%
8.2%
5.4%
4.8%
% change q-o-q
1.4%
0.5%
2.4%
2.6%
2.7%
penetration of access lines
31.4%
30.4%
29.6%
28.3%
27.0%
Access line equivalents
1,331,545
1,346,894
1,369,352
1,385,159
1,400,180
% change y-o-y
-4.9%
-5.0%
-5.4%
-6.4%
-6.8%
% change q-o-q
-1.1%
-1.6%
-1.1%
-1.1%
-1.2%
(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 benefit 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, and
d)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) Broadband subscribers include DSL, fiber-to-the-premise, cable modem and fixed wireless broadband.
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2012 and December 31, 2011
(in thousands, except share data)
March 31,
December 31,
2012
2011
Assets
(unaudited)
Current assets:
Cash
$
35,795
$
17,350
Restricted cash
17,902
24,446
Accounts receivable, net
102,150
104,298
Prepaid expenses
15,924
18,346
Other current assets
2,701
3,312
Deferred income tax, net
17,915
17,915
Total current assets
192,387
185,667
Property, plant and equipment, net
1,598,842
1,663,065
Intangible assets, net
125,357
128,145
Debt issue costs, net
1,613
1,779
Restricted cash
651
651
Other assets
10,282
10,338
Total assets
$
1,929,132
$
1,989,645
Liabilities and Stockholders' Deficit
Current portion of long-term debt
$
10,000
$
10,000
Current portion of capital lease obligations
1,238
1,252
Accounts payable
68,260
65,184
Claims payable and estimated claims accrual
10,221
22,839
Accrued interest payable
502
508
Other accrued liabilities
64,076
54,348
Total current liabilities
154,297
154,131
Capital lease obligations
2,379
2,690
Accrued pension obligation
156,714
157,961
Employee benefit obligations
543,886
531,634
Deferred income taxes
221,183
245,369
Other long-term liabilities
12,935
14,003
Long-term debt, net of current portion
987,500
990,000
Total long-term liabilities
1,924,597
1,941,657
Total liabilities
2,078,894
2,095,788
Stockholders' deficit:
Common stock, $0.01 par value, 37,500,000 shares authorized,
26,215,302and 26,197,142 shares issued and outstanding at
March 31, 2012 and December 31, 2011, respectively
262
262
Additional paid-in capital
503,057
502,034
Retained deficit
(461,657)
(414,945)
Accumulated other comprehensive loss
(191,424)
(193,494)
Total stockholders' deficit
(149,762)
(106,143)
Total liabilities and stockholders' deficit
$
1,929,132
$
1,989,645
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Months ended March 31, 2012, Sixty-Six Days ended March 31, 2011
and Twenty-Four Days ended January 24, 2011
(Unaudited)
(in thousands, except per share data)
Predecessor
Company
Three Months
Sixty-Six
Twenty-Four
Ended
Days Ended
Days Ended
March 31, 2012
March 31, 2011
January 24, 2011
Revenues
$
248,474
$
188,402
$
66,378
Operating expenses:
Cost of services and sales, excluding depreciation
and amortization
121,475
87,173
38,766
Selling, general and administrative expense, excluding
depreciation and amortization
89,428
63,482
27,161
Depreciation and amortization
93,207
62,779
21,515
Reorganization related (income) expense
(1,392)
2,736
â
Total operating expenses
302,718
216,170
87,442
Loss from operations
(54,244)
(27,768)
(21,064)
Other income (expense):
Interest expense
(17,028)
(12,491)
(9,321)
Other
302
481
(132)
Total other expense
(16,726)
(12,010)
(9,453)
Loss before reorganization items and income taxes
(70,970)
(39,778)
(30,517)
Reorganization items
â
â
897,313
(Loss) income before income taxes
(70,970)
(39,778)
866,796
Income tax benefit (expense)
24,258
15,355
(279,889)
Net (loss) income
$
(46,712)
$
(24,423)
$
586,907
Weighted average shares outstanding:
Basic
25,931
25,820
89,424
Diluted
25,931
25,820
89,695
(Loss) earnings per share:
Basic
$
(1.80)
$
(0.95)
$
6.56
Diluted
$
(1.80)
$
(0.95)
$
6.54
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2012, Sixty-Six Days Ended March 31, 2011
and Twenty-Four Days Ended January 24, 2011
(Unaudited)
(in thousands)
Predecessor
Company
Three Months
Sixty-Six
Twenty-Four
Ended
Days Ended
Days Ended
March 31, 2012
March 31, 2011
January 24, 2011
Cash flows from operating activities:
Net (loss) income
$
(46,712)
$
(24,423)
$
586,907
Adjustments to reconcile net (loss) income to net cash provided by
(used in) operating activities:
Deferred income taxes
(24,373)
(11,996)
279,868
Provision for uncollectible revenue
(1,857)
2,068
3,454
Depreciation and amortization
93,207
62,779
21,515
Post-retirement healthcare
13,266
5,103
2,654
Qualified pension
(285)
1,948
986
Other non cash items
64
(48)
97
Changes in assets and liabilities arising from operations:
Accounts receivable
4,060
13,918
(7,752)
Prepaid and other assets
2,982
379
(3,423)
Restricted cash
(6,643)
â
â
Accounts payable and accrued liabilities
7,935
1,236
26,627
Accrued interest payable
(6)
180
9,017
Other assets and liabilities, net
(230)
(1,141)
177
Reorganization adjustments:
Non-cash reorganization income
(1,855)
(709)
(917,358)
Claims payable and estimated claims accrual
(5,550)
(26,485)
(1,096)
Restricted cash - cash claims reserve
13,076
23,888
(82,764)
Total adjustments
93,791
71,120
(667,998)
Net cash provided by (used in) operating activities
47,079
46,697
(81,091)
Cash flows from investing activities:
Net capital additions
(26,257)
(41,248)
(12,477)
Distributions from investments
338
3
â
Net cash used in investing activities
(25,919)
(41,245)
(12,477)
Cash flows from financing activities:
Loan origination costs
â
(866)
(1,500)
Repayments of long-term debt
(2,500)
â
â
Restricted cash
111
779
34
Repayment of capital lease obligations
(326)
(211)
(201)
Net cash used in financing activities
(2,715)
(298)
(1,667)
Net change
18,445
5,154
(95,235)
Cash, beginning of period
17,350
10,262
105,497
Cash, end of period
$
35,795
$
15,416
$
10,262
Supplemental disclosure of cash flow information:
Capital additions included in accounts payable or claims
payable and estimated claims accrual at period-end
$
154
$
2,418
$
1,818
Reorganization costs paid
$
270
$
8,064
$
11,110
Non-cash settlement of claims payable
$
5,268
$
â
$
â
SOURCE FairPoint Communications, Inc.CHARLOTTE, N.C.,May 2, 2012/PRNewswire/