FairPoint Communications Reports 2012 First Quarter Results -- 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

CHARLOTTE, N.C., May 2, 2012 /PRNewswire/ -- FairPoint Communications, Inc. (NasdaqCM: FRP) ("FairPoint" or the "Company"), a leading communications provider, today announced its financial results for the quarter ended March 31, 2012.  As previously announced, the Company will host a conference call and simultaneous webcast to discuss its results at 8:30 a.m. (EDT) on Thursday, May 3, 2012.

"We're off to a solid start in 2012 and our financial results reflect that," said Paul 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 at March 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 of Maine last month with the substantive deregulation of retail products and services," said Sunu.  "The landmark legislation in Maine came right on the heels of the breakthrough Incentive Regulation Plan in Vermont we 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 in Maine and Vermont will allow us to compete more effectively for business and broadband customers in order to transform our revenue composition for growth," Sunu said.

On April 12, 2012, Governor LePage of Maine signed 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 million per year—down from $12.5 million—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 of Tony Tomae as 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 line—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 ended March 31, 2012, is nearly half the 7.8% loss FairPoint experienced for the twelve months ended March 31, 2011.  Business voice access lines declined only 0.7% sequentially versus Dec. 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 million of revenue in the first quarter of 2012 as compared to $7 million in the fourth quarter of 2011 and $2 million in 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 of March 31, 2012, FairPoint had approximately 3,454 employees, a decrease from 3,541 at Dec. 31, 2011, and 4,032 at Dec. 31, 2010—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 million in the first quarter of 2012 as compared to $254.2 million in 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 million in 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 million increase in data and Internet services revenue.

Operating expenses, excluding depreciation, amortization and reorganization, were $210.9 million in the first quarter of 2012 as compared to $203.7 million in the fourth quarter of 2011.  On Jan. 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 million sequentially.  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 million in the first quarter of 2012 as compared to $70.0 million in 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 million made during the first quarter. The Company did not make a cash pension contribution in the fourth quarter of 2011.

Net loss was $46.7 million in the first quarter of 2012 as compared to a net loss of $84.0 million in the fourth quarter of 2011. Income taxes were a benefit of $24.3 million in the first quarter of 2012, while they were an expense of $27.5 million in 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 million in the first quarter of 2012 as compared to $35.1 million in 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 in New Hampshire in accordance with a regulatory commitment to reach 95% of its customers in the state by March 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 million as of March 31, 2012, as compared to $17.4 million as of Dec. 31, 2011.  Cash of $35.8 million was after an interest payment of approximately $17.0 million, principal repayment of $2.5 million and cash pension contributions of $5.7 million.  The Company's $75 million revolving credit facility is undrawn, with $62.6 million available for additional borrowing after applying $12.4 million for outstanding letters of credit.

First Quarter 2012 as compared to First Quarter 2011

Revenue was $248.5 million in the first quarter of 2012 as compared to $254.8 million a year earlier.  The unfavorable variance of $6.3 million was 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 million in the first quarter of 2012 as compared to $216.6 million a 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 million in the first quarter of 2012 as compared to $49.1 million a year earlier.  Operating expense reductions more than offset the impact of the revenue decline and a cash pension contribution of $5.7 million made 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 million in the first quarter of 2012 as compared to $53.7 million a 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 million in the first quarter of 2012 as compared to net income of $562.5 million in 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 million for the full year, including the $5.7 million contribution 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 million in 2012 through a continued focus on improving Consolidated EBITDAR margins and disciplined capital spending.  FairPoint expects to pay approximately $68 million in interest and $10 million in 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 ended March 31, 2012, which will be filed with the SEC on or prior to May 10, 2012. The Company's results for the quarter ended March 31, 2012, 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 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 first quarter 2012 results at 8:30 a.m. (EDT) on Thursday, May 3, 2012.

Participants should call (866) 783-2142 (US/Canada) or (857) 350-1601 (international) at 8:20 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 from Thursday, May 3, 2012, at 10:30 a.m. (EDT) through Thursday, May 10, 2012, at 11:59 p.m. (EDT).

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, 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 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] 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,








     26,215,302  and 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




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









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)






          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




      Net cash used in investing activities





(25,919)



(41,245)




(12,477)
















Cash flows from financing activities:













    Loan origination costs







(866)




(1,500)

    Repayments of long-term debt





(2,500)






    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


$



$


















SOURCE FairPoint Communications, Inc.



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http://www.fairpoint.com

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