CHARLOTTE, N.C., May 16, 2011 /PRNewswire/ --
- High-speed Internet subscribers increased over 13,600, or 4.8% year-over-year, with over 56% of the increase coming during the first quarter
- Voice access line loss continued to improve to 9.6% annually from 10.3% reported in the prior quarter
- Net Income, including Cancellation of Debt Income of $1,351.1 million, increased to $562.5 million versus a Net Loss of $86.3 million a year earlier
- Revenue was flat sequentially from fourth quarter 2010, after adjusting for one-time items
FairPoint Communications, Inc. (Nasdaq: FRP) (FairPoint or the Company), a leading provider of communications services, today announced its financial results for the first quarter ended March 31, 2011. As previously announced, the Company will host a conference call and simultaneous webcast to discuss its results at 2:00 p.m. (EDT) on Tuesday, May 17, 2011.
"We are encouraged by the operational improvements taking hold," said Paul H. Sunu, CEO of FairPoint. "We believe the recently announced fiber-to-the-tower project, along with the increase in high-speed Internet subscribers and the reduction in the rate of voice access line loss are all leading indicators of expected future revenue growth. As we've said before, this is a transition year for FairPoint and we're excited about the organic revenue growth opportunities in our markets."
High-speed Internet penetration increased to 27% of voice access lines at March 31, 2011, which represents the highest level since FairPoint acquired the northern New England assets on March 31, 2008. The addition of over 7,700 high-speed Internet subscribers was also the largest quarterly increase since FairPoint took over the northern New England properties. Company-wide, year-over-year voice access line loss slowed for the fourth consecutive quarter to 9.6%. In addition, continued service quality improvements led to a decline in penalties of $5.1 million versus a year earlier.
FairPoint ended the quarter with revenue of $254.8 million and Consolidated EBITDAR(1) of $49.1 million. Included in the first quarter Consolidated EBITDAR was the impact of a $13.5 million expense related to the annual vacation award for northern New England employees. This annual vacation expense is recorded by the Company in the first quarter of each year. Adjusting for this item, Consolidated EBITDAR would have been approximately $62.6 million in the first quarter of 2011.
Operating and Regulatory Highlights
Operating metrics continue to improve. For example, sustained improvements in retail service quality indicators such as faster call center answer times and shorter installation and repair intervals resulted in lower retail penalties of $0.4 million in the quarter versus $4.3 million a year earlier, an improvement of $3.9 million. In addition, continued improvements in wholesale service quality metrics resulted in lower wholesale penalties of $1.4 million in the quarter versus $2.6 million a year earlier, an improvement of $1.2 million.
High-speed Internet subscribers increased 4.8% year-over-year, compared to a 0.4% increase in the fourth quarter of 2010 and a 5.5% decline in the first quarter of 2010. The rate of voice access line loss slowed to 9.6% annually versus 10.3% in the fourth quarter of 2010 and 12.4% a year earlier.
FairPoint continued its northern New England broadband expansion efforts by announcing it has brought high-speed Internet access to hundreds more communities and neighborhoods in Maine, New Hampshire and Vermont. As of March 31, 2011, FairPoint offers broadband service to more than 83% of customers in Maine, more than 85% of customers in New Hampshire and more than 80% of customers in Vermont. The Company is on track to meet its 2011 regulatory broadband commitments.
On April 14, 2011 the Company announced an initial network build which will bring fiber to more than half of the approximately 1,600 wireless communications towers it serves in its northern New England service footprint. With this strategic investment, FairPoint will further enhance its next-generation IP/MPLS network, branded as VantagePoint(sm), and will be uniquely positioned to capture the growth in mobile data usage by providing Ethernet backhaul to wireless carriers.
Financial Highlights
First Quarter 2011 as compared to First Quarter 2010
Revenue was $254.8 million in the first quarter of 2011 as compared to $270.8 million a year earlier. The $16.0 million decrease was primarily the result of the 9.6% decline in voice access lines year-over-year, which led to decreases in voice services and access revenue. Partially offsetting the decline was the improvement in service quality penalties discussed above and a 5.3% increase in data and Internet services revenue.
Operating expenses, excluding depreciation, amortization and reorganization, were $216.6 million in the first quarter of 2011 as compared to $231.1 million a year earlier. The favorable variance of $14.5 million, or 6.3%, was primarily the result of reductions in contracted services, data and voice transport and bad debt expense.
Consolidated EBITDAR was $49.1 million in the first quarter of 2011 as compared to $60.8 million a year earlier. First quarter 2010 Consolidated EBITDAR was favorably impacted by the add-back of $10.4 million related to the net effect of a financial restatement. Excluding the benefit from this financial restatement add-back, Consolidated EBITDAR for the first quarter of 2010 would have been $50.4 million. The $1.3 million decrease year-over-year is primarily explained by the decrease in revenue mostly offset by operating expense reductions as discussed above.
Net income was $562.5 million in the first quarter of 2011 as compared to a net loss of $86.3 million a year earlier, First quarter 2011 net income benefited from a one-time pre-tax gain of $911.3 million related to the reorganization, which included $1,351.1 million of Cancellation of Debt Income.
Capital expenditures were $53.7 million in the first quarter of 2011 as compared to $40.4 million a year earlier. Major capital initiatives in 2011 include the continued expansion of the VantagePoint(sm) network, the fiber-to-the-tower build, regulatory broadband commitments in northern New England, information technology improvements and enhancements, success-based capital projects for targeted revenue opportunities and network and facilities maintenance.
First Quarter 2011 as compared to Fourth Quarter 2010
Revenue was $254.8 million in the first quarter of 2011 as compared to $268.0 million in the fourth quarter of 2010. Revenue was essentially flat quarter-over-quarter after adjusting fourth quarter 2010 revenue for the one-time benefit of a $12.7 million service quality penalty reversal.
Operating expenses, excluding depreciation, amortization and reorganization, increased $5.0 million to $216.6 million as compared to $211.6 million in the fourth quarter of 2010. As previously reported, the majority of the Company's employees are entitled to their annual vacation allowance on January 1st of each year. Accordingly, the Company recognized $13.5 million of vacation expense on January 1, 2011, which will be amortized over the balance of the year as vacation is used. In addition, fourth quarter 2010 operating expenses included certain one-time non-cash charges related to project abandonment, inventory obsolescence and other non-recurring items which totaled approximately $14.8 million. Adjusting for these items, first quarter 2011 expenses would have been $203.1 million compared to $196.8 million for the fourth quarter of 2010. The increase of $6.3 million was primarily driven by a $12.5 million change in bad debt expense, which was partially offset by expense reductions in other areas such as contracted services. First quarter 2011 bad debt expense was approximately 2.2% of revenue, while in the fourth quarter of 2010 the Company benefited from a reduction in the bad debt allowance as a result of improved collections activity.
Consolidated EBITDAR declined $34.9 million to $49.1 million as compared to $84.0 million in the fourth quarter of 2010. The first quarter of 2011 was unfavorably impacted by the $13.5 million annual vacation expense. In addition, the fourth quarter of 2010 was favorably impacted by the one-time revenue benefit of the $12.7 million service quality penalty reversal. Adjusting for these items, Consolidated EBITDAR would have been approximately $62.6 million in the first quarter of 2011 compared to $71.3 million in the fourth quarter of 2010. The $8.7 million unfavorable variance quarter-over-quarter is primarily the result of the $12.5 million change in bad debt expense discussed above, partially offset by operating expense reductions in other areas such as contracted services.
Capital expenditures were $53.7 million in the first quarter of 2011 as compared to $40.9 million in the fourth quarter of 2010.
2011 Guidance
While the Company is encouraged by the fact that revenue in the first quarter of 2011 was essentially flat versus the fourth quarter of 2010 on an adjusted basis, the full year 2011 revenue guidance of $1,060 to $1,090 million is unlikely to be achieved. The Company does not intend to provide new revenue guidance. However, the Company continues to believe that it can achieve the low end of its Consolidated EBITDAR guidance of $260 to $280 million through cost reduction initiatives, many of which are already underway, and revenue growth.
Fresh Start Accounting
On January 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 January 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 January 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 2011 results at 2:00 p.m. (EDT) on Tuesday, May 17, 2011.
Participants should call (800) 706-7741 (US/Canada) or (617) 614-3471 (international) at 1:50 p.m. (EDT) and enter the passcode 31415391 when prompted. The title of the call is the Q1 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 61310099 when prompted. The recording will be available from Tuesday, May 17, 2011, at 5:00 p.m. (EDT) through Tuesday, May 31, 2011, at 11:59 p.m. (EDT).
A live broadcast of the earnings conference call will be available via the Internet at www.fairpoint.com/investors. An online replay will be available shortly thereafter.
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
FairPoint Communications, Inc. (Nasdaq: FRP) (www.FairPoint.com) is a leading communications provider of high-speed Internet access, local and long-distance phone, television and other broadband services to customers in communities across 18 states. Through its fast, reliable data network, FairPoint delivers data and voice networking communications solutions to residential, business and wholesale customers. VantagePoint(sm), FairPoint's resilient IP-based network in northern New England, provides business customers a fast, flexible, affordable Ethernet connection. VantagePoint(sm) supports applications like video conferencing and e-learning. Additional information about FairPoint products and services is available at www.FairPoint.com.
Cautionary Note Regarding Forward-looking Statements
Some statements herein are known as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements about the 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 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 new 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 | ||||||||||
March 31, 2011 and December 31, 2010 | ||||||||||
(in thousands, except share data) | ||||||||||
Successor Company | Predecessor Company | |||||||||
March 31, | December 31, | |||||||||
2011 | 2010 | |||||||||
Assets | (unaudited) | |||||||||
Current assets: | ||||||||||
Cash | $ | 15,416 | $ | 105,497 | ||||||
Restricted cash | 60,542 | 2,420 | ||||||||
Accounts receivable, net | 113,322 | 125,170 | ||||||||
Materials and supplies | 1,024 | 22,193 | ||||||||
Prepaid expenses | 17,231 | 18,841 | ||||||||
Other current assets | 1,223 | 6,092 | ||||||||
Deferred income tax, net | 33,972 | 31,400 | ||||||||
Total current assets | 242,730 | 311,613 | ||||||||
Property, plant and equipment, net | 1,792,944 | 1,859,700 | ||||||||
Goodwill | 255,967 | 595,120 | ||||||||
Intangibles assets, net | 155,091 | 189,247 | ||||||||
Prepaid pension asset | 3,620 | 2,960 | ||||||||
Debt issue costs, net | 2,256 | 119 | ||||||||
Restricted cash | 1,619 | 1,678 | ||||||||
Other assets | 9,342 | 13,357 | ||||||||
Total assets | $ | 2,463,569 | $ | 2,973,794 | ||||||
Liabilities and Stockholders' Equity (Deficit) | ||||||||||
Liabilities not subject to compromise: | ||||||||||
Current portion of long-term debt | $ | 2,500 | $ | - | ||||||
Current portion of capital lease obligations | 1,235 | 1,321 | ||||||||
Accounts payable | 70,028 | 66,557 | ||||||||
Claims payable and estimated claims accrual | 67,807 | - | ||||||||
Accrued interest payable | 181 | 3 | ||||||||
Other accrued liabilities | 63,394 | 63,279 | ||||||||
Total current liabilities | 205,145 | 131,160 | ||||||||
Capital lease obligations | 3,617 | 3,943 | ||||||||
Accrued pension obligation | 87,465 | 92,246 | ||||||||
Employee benefit obligations | 337,997 | 344,463 | ||||||||
Deferred income taxes | 334,700 | 67,381 | ||||||||
Unamortized investment tax credits | - | 4,310 | ||||||||
Other long-term liabilities | 22,295 | 12,398 | ||||||||
Long-term debt, net of current portion | 997,500 | - | ||||||||
Total long-term liabilities | 1,783,574 | 524,741 | ||||||||
Total liabilities not subject to compromise | 1,988,719 | 655,901 | ||||||||
Liabilities subject to compromise | - | 2,905,311 | ||||||||
Total liabilities | 1,988,719 | 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, issued and outstanding 26,197,432 shares at March 31, 2011 | 262 | - | ||||||||
Additional paid-in capital, Successor Company | 499,011 | - | ||||||||
Warrants, Successor Company | - | - | ||||||||
Retained deficit | (24,423) | (1,101,294) | ||||||||
Accumulated other comprehensive loss | - | (212,804) | ||||||||
Total stockholders' equity (deficit) | 474,850 | (587,418) | ||||||||
Total liabilities and stockholders' equity (deficit) | $ | 2,463,569 | $ | 2,973,794 | ||||||
See accompanying notes to condensed consolidated financial statements (unaudited) in FairPoint's Quarterly Report on Form 10-Q for the three months ended March 31, 2011 as filed with the SEC on May 16, 2011. | ||||||||||
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES | |||||||||||
Condensed Consolidated Statements of Operations | |||||||||||
Sixty-Six Days ended March 31, 2011, Twenty-Four Days ended January 24, 2011 | |||||||||||
and Three Months ended March 31, 2010 | |||||||||||
(Unaudited) | |||||||||||
(in thousands, except per share data) | |||||||||||
Successor Company | Predecessor Company | ||||||||||
Sixty-Six | Twenty-Four | Three Months | |||||||||
Days Ended | Days Ended | Ended | |||||||||
March 31, 2011 | January 24, 2011 | March 31, 2010 | |||||||||
(Restated) | |||||||||||
Revenues | $ | 188,402 | $ | 66,378 | $ | 270,801 | |||||
Operating expenses: | |||||||||||
Cost of services and sales, excluding depreciation | |||||||||||
and amortization | 87,173 | 38,766 | 137,469 | ||||||||
Selling, general and administrative expense, excluding | |||||||||||
depreciation and amortization | 63,482 | 27,161 | 93,584 | ||||||||
Depreciation and amortization | 62,779 | 21,515 | 71,382 | ||||||||
Reorganization related expense | 2,736 | - | - | ||||||||
Total operating expenses | 216,170 | 87,442 | 302,435 | ||||||||
Loss from operations | (27,768) | (21,064) | (31,634) | ||||||||
Other income (expense): | |||||||||||
Interest expense | (12,491) | (9,321) | (34,630) | ||||||||
Other | 481 | (132) | 26 | ||||||||
Total other expense | (12,010) | (9,453) | (34,604) | ||||||||
Loss before reorganization items and income taxes | (39,778) | (30,517) | (66,238) | ||||||||
Reorganization items | - | 897,313 | (16,591) | ||||||||
(Loss) income before income taxes | (39,778) | 866,796 | (82,829) | ||||||||
Income tax benefit (expense) | 15,355 | (279,889) | (3,501) | ||||||||
Net (loss) income | $ | (24,423) | $ | 586,907 | $ | (86,330) | |||||
Weighted average shares outstanding: | |||||||||||
Basic | 25,633 | 89,424 | 89,424 | ||||||||
Diluted | 25,633 | 89,695 | 89,424 | ||||||||
(Loss) earnings per share: | |||||||||||
Basic | $ | (0.95) | $ | 6.56 | $ | (0.97) | |||||
Diluted | $ | (0.95) | $ | 6.54 | $ | (0.97) | |||||
See accompanying notes to condensed consolidated financial statements (unaudited) in FairPoint's Quarterly Report on Form 10-Q for the three months ended March 31, 2011 as filed with the SEC on May 16, 2011. | |||||||||||
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||||
Sixty-Six Days ended March 31, 2011, Twenty-Four Days ended January 24, 2011 and | |||||||||||||
Three months ended March 31, 2010 | |||||||||||||
(Unaudited) | |||||||||||||
(in thousands) | |||||||||||||
Successor Company | Predecessor Company | ||||||||||||
Sixty-Six | Twenty-Four | Three | |||||||||||
Days Ended | Days Ended | Months Ended | |||||||||||
March 31, 2011 | January 24, 2011 | March 31, 2010 | |||||||||||
(Restated) | |||||||||||||
Cash flows from operating activities: | |||||||||||||
Net (loss) income | $ | (24,423) | $ | 586,907 | $ | (86,330) | |||||||
Adjustments to reconcile net income to net cash provided by | |||||||||||||
operating activities: | |||||||||||||
Deferred income taxes | (11,996) | 276,204 | 3,207 | ||||||||||
Provision for uncollectible revenue | 2,068 | 3,454 | 8,133 | ||||||||||
Depreciation and amortization | 62,779 | 21,515 | 71,382 | ||||||||||
Post-retirement accruals | 5,103 | 2,654 | 8,058 | ||||||||||
Pension accruals | 1,948 | 986 | 2,182 | ||||||||||
Other non cash items | (48) | 130 | 458 | ||||||||||
Changes in assets and liabilities arising from operations: | |||||||||||||
Accounts receivable | 13,918 | (7,752) | 12,812 | ||||||||||
Prepaid and other assets | 379 | (3,423) | (8,517) | ||||||||||
Accounts payable and accrued liabilities | 1,236 | 30,258 | 33,583 | ||||||||||
Accrued interest payable | 180 | 9,017 | 33,810 | ||||||||||
Other assets and liabilities, net | (1,141) | 177 | (5,901) | ||||||||||
Reorganization adjustments: | |||||||||||||
Non-cash reorganization costs (income) | (709) | (917,358) | 977 | ||||||||||
Claims payable and estimated claims accrual | (26,485) | (1,096) | - | ||||||||||
Restricted cash - cash claims reserve | 23,888 | (82,764) | - | ||||||||||
Total adjustments | 71,120 | (667,998) | 160,184 | ||||||||||
Net cash provided by (used in) operating activities | 46,697 | (81,091) | 73,854 | ||||||||||
Cash flows from investing activities: | |||||||||||||
Net capital additions | (41,248) | (12,477) | (40,407) | ||||||||||
Distributions from investments | 3 | - | 8 | ||||||||||
Net cash used in investing activities | (41,245) | (12,477) | (40,399) | ||||||||||
Cash flows from financing activities: | |||||||||||||
Loan origination costs | (866) | (1,500) | (1,100) | ||||||||||
Proceeds from issuance of long-term debt | - | - | 5,513 | ||||||||||
Restricted cash | 779 | 34 | (722) | ||||||||||
Repayment of capital lease obligations | (211) | (201) | (521) | ||||||||||
Net cash (used in) provided by financing activities | (298) | (1,667) | 3,170 | ||||||||||
Net change | 5,154 | (95,235) | 36,625 | ||||||||||
Cash, beginning of period | 10,262 | 105,497 | 109,355 | ||||||||||
Cash, end of period | $ | 15,416 | $ | 10,262 | $ | 145,980 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||||
Capital additions included in accounts payable, claims | |||||||||||||
payable, estimated claims accrual or liabilities subject | |||||||||||||
subject to compromise at period-end | 2,418 | 1,818 | 32,687 | ||||||||||
Reorganization costs paid | 8,064 | 11,110 | 14,381 | ||||||||||
See accompanying notes to condensed consolidated financial statements (unaudited) in FairPoint's Quarterly Report on Form 10-Q for the three months ended March 31, 2011 as filed with the SEC on May 16, 2011. | |||||||||||||
FAIRPOINT COMMUNICATIONS, INC. | |||||||||
Supplemental Financial Information | |||||||||
(Unaudited) | |||||||||
($ in thousands, except units) | |||||||||
Quarter ended | |||||||||
1Q11 | 4Q10 | 3Q10 | 2Q10 | 1Q10 | |||||
Summary Income Statement: | |||||||||
Revenue: | |||||||||
Voice services | $ 124,225 | $ 136,664 | $ 125,598 | $ 134,943 | $ 134,418 | ||||
Access | 91,358 | 92,128 | 95,923 | 96,182 | 96,856 | ||||
Data and Internet services | 28,495 | 27,504 | 26,691 | 28,961 | 27,067 | ||||
Other services | 10,702 | 11,696 | 12,418 | 11,477 | 12,460 | ||||
Total revenue | 254,780 | 267,992 | 260,630 | 271,563 | 270,801 | ||||
Operating expenses: | |||||||||
Operating expenses, excluding depreciation, amortization and reorganization | 216,582 | 211,598 | 218,177 | 230,273 | 231,053 | ||||
Depreciation and amortization | 84,294 | 74,606 | 72,364 | 71,472 | 71,382 | ||||
Reorganization expense (post-emergence) (1) | 2,736 | - | - | - | - | ||||
Total operating expenses | 303,612 | 286,204 | 290,541 | 301,745 | 302,435 | ||||
Loss from operations | (48,832) | (18,212) | (29,911) | (30,182) | (31,634) | ||||
Other income (expense): | |||||||||
Interest expense | (21,812) | (35,187) | (35,358) | (35,721) | (34,630) | ||||
Other income (expense), net | 349 | 377 | 2,207 | 105 | 26 | ||||
Total other income (expense) | (21,463) | (34,810) | (33,151) | (35,616) | (34,604) | ||||
Loss before reorganization items and income taxes | (70,295) | (53,022) | (63,062) | (65,798) | (66,238) | ||||
Reorganization items (1) | 897,313 | (15,552) | (10,352) | 1,375 | (16,591) | ||||
Income (loss) before income taxes | 827,018 | (68,574) | (73,414) | (64,423) | (82,829) | ||||
Income tax benefit (expense) | (264,534) | (6,413) | 7,330 | 10,245 | (3,501) | ||||
Net income (loss) | $ 562,484 | $ (74,987) | $ (66,084) | $ (54,178) | $ (86,330) | ||||
Consolidated EBITDAR Reconciliation: | |||||||||
Net income (loss) | $ 562,484 | $ (74,987) | $ (66,084) | $ (54,178) | $ (86,330) | ||||
Income tax (benefit) expense | 264,534 | 6,413 | (7,330) | (10,245) | 3,501 | ||||
Interest expense | 21,812 | 35,187 | 35,358 | 35,721 | 34,630 | ||||
Depreciation and amortization | 84,294 | 74,606 | 72,364 | 71,472 | 71,382 | ||||
Non-cash pension and OPEB expense (2a) | 10,686 | 10,992 | 12,036 | 9,979 | 10,240 | ||||
Other non-cash items, net (2b) | (912,270) | 16,096 | 1,066 | (8,509) | 1,327 | ||||
Restructuring costs (2c) | 17,326 | 14,948 | 11,395 | 18,788 | 14,739 | ||||
Restatement impact, net (2d) | - | - | 1,397 | 8,307 | 10,436 | ||||
All other allowed adjustments, net (2e) | 219 | 732 | (999) | 959 | 859 | ||||
Consolidated EBITDAR | $ 49,085 | $ 83,987 | $ 59,203 | $ 72,294 | $ 60,784 | ||||
Consolidated EBITDAR margin | 19.3% | 31.3% | 22.7% | 26.6% | 22.4% | ||||
Select Operating and Financial Metrics: | |||||||||
Residential access lines | 695,916 | 712,591 | 734,260 | 758,005 | 776,254 | ||||
Business access lines | 322,106 | 327,812 | 335,334 | 340,988 | 349,179 | ||||
Wholesale access lines (3) | 84,667 | 87,142 | 89,035 | 91,138 | 93,827 | ||||
Total switched access lines | 1,102,689 | 1,127,545 | 1,158,629 | 1,190,131 | 1,219,260 | ||||
% change y-o-y | -9.6% | -10.3% | -11.0% | -11.6% | -12.4% | ||||
% change q-o-q | -2.2% | -2.7% | -2.6% | -2.4% | -3.0% | ||||
High-speed data subscribers (4) | 297,491 | 289,745 | 288,891 | 289,609 | 283,806 | ||||
% change y-o-y | 4.8% | 0.4% | -1.7% | -1.9% | -5.5% | ||||
% change q-o-q | 2.7% | 0.3% | -0.2% | 2.0% | -1.6% | ||||
penetration of access lines | 27.0% | 25.7% | 24.9% | 24.3% | 23.3% | ||||
Access line equivalents | 1,400,180 | 1,417,290 | 1,447,520 | 1,479,740 | 1,503,066 | ||||
% change y-o-y | -6.8% | -8.3% | -9.3% | -9.9% | -11.2% | ||||
% change q-o-q | -1.2% | -2.1% | -2.2% | -1.6% | -2.8% | ||||
Capital expenditures | $ 53,725 | $ 40,868 | $ 53,705 | $ 62,815 | $ 40,407 | ||||
(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 new 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-home, cable modem and fixed wireless broadband. | |||||||||
SOURCE FairPoint Communications, Inc.
