2014

FairPoint Communications Reports 2012 Second Quarter Results -- Unlevered Free Cash Flow[1] of $38.1 million in the quarter and $67.2 million year-to-date

-- Cash balance grew to $43.8 million at June 30, 2012 from $35.8 million at March 31, 2012

-- Consolidated EBITDAR[2] of $70.2 million in the quarter

-- Net loss narrows to $37.1 million in the quarter

-- Landmark deregulation in New Hampshire, joining Maine and Vermont

CHARLOTTE, N.C., Aug. 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 June 30, 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 Friday, August 3, 2012.

"We're pleased to report a very strong quarter," said Paul H. Sunu, CEO of FairPoint.  "We continue to make great strides on our 'four pillar' strategy to improve operations, level the regulatory playing field, transform our revenue composition and align our human resources.  Our operational and regulatory achievements pave the way for our revenue strategy."

Revenue Highlights

FairPoint continues to see positive momentum in its growth-oriented business and broadband products.  Data and Internet services revenue grew 8.4% sequentially and new products, such as FairPoint's Ethernet service offerings, continued to attract new customers.  Growth in business and broadband products is a key element of FairPoint's strategy to transform its revenue composition and offset continued erosion in the Company's residential voice base.  Ethernet services contributed approximately $10.2 million of revenue in the second quarter of 2012 as compared to $9.0 million in the first quarter of 2012 and $2.6 million in the second 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.

FairPoint continues to see 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 in the quarter.  The rate of loss in business voice access lines, which stood at 3.4% for the twelve months ended June 30, 2012, is less than half the 6.9% loss FairPoint experienced for the twelve months ended June 30, 2011.  Business voice access lines declined only 0.8% sequentially versus March 31, 2012.

Regulatory Highlights

"We were thrilled with the legislation passed in New Hampshire in the quarter, which provides for the substantial deregulation of retail products and services in the state," said Sunu.  "When combined with the retail legislation passed in Maine and the new Incentive Regulation Plan in Vermont, FairPoint can now compete on a more level playing field in all three northern New England states as we expand our sales efforts and transform our revenue composition," Sunu said.

On June 11, 2012, Governor Lynch of New Hampshire signed into law historic legislation that substantially deregulates FairPoint's retail operations in the state.  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 and retail service quality penalties have been eliminated entirely in New Hampshire—reducing FairPoint's exposure to such penalties by $12.5 million per year and further de-risking the business.

Operating and Human Resource Highlights

Broadband subscribers grew 5.1% year-over-year and 0.7% sequentially.  FairPoint has added more than 15,000 broadband subscribers in the last twelve months, as penetration reached 32.2% of voice access lines at June 30, 2012.

Voice access line loss slowed for the ninth consecutive quarter, reaching 7.8% year-over-year and 1.8% sequentially.

As of June 30, 2012, FairPoint had approximately 3,410 employees, a decrease of 3.7% and 15.4% from Dec. 31, 2011 and Dec. 31, 2010, respectively.

Financial Highlights

Second Quarter 2012 as compared to First Quarter 2012

Revenue was $243.5 million in the second quarter of 2012 as compared to $248.5 million in the first quarter of 2012.  The change was due primarily to a loss of voice access lines in the quarter and the impact of service quality penalty reversals which had a $1.2 million beneficial impact in the first quarter of 2012.  Access revenue was down slightly, as growth in special access largely offset continued declines in switched access.  Other revenue declined versus the first quarter of 2012 due primarily to a decline in late payment fees.  Increases in broadband subscribers and Ethernet product revenues led to a $2.8 million increase in data and Internet services revenue.

Operating expenses, excluding depreciation, amortization and reorganization, were $190.7 million in the second quarter of 2012 as compared to $210.9 million in the first quarter of 2012.  The Company recorded its annual vacation expense accrual of $13.8 million in the first quarter of 2012, 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 $6.4 million sequentially due primarily to decreases in employee expenses, contracted services and cost of goods sold.

Consolidated EBITDAR was $70.2 million in the second quarter of 2012 as compared to $55.3 million in the first quarter of 2012.  Adjusting for the impact of the annual vacation expense, Consolidated EBITDAR was up slightly versus the first quarter of 2012, as operating expense reductions offset declines in revenue.

Net loss was $37.1 million in the second quarter of 2012 as compared to a net loss of $46.7 million in the first quarter of 2012.  Adjusting for the impact of the annual vacation accrual, net loss was flat versus the first quarter of 2012.

Capital expenditures were $32.1 million in the second quarter of 2012 as compared to $26.3 million in the first quarter of 2012.  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 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.

FairPoint's cash position grew to $43.8 million as of June 30, 2012, as compared to $35.8 million as of March 31, 2012 and $17.4 million as of Dec. 31, 2011.  Cash grew to $43.8 million in the quarter even after a cash interest payment of approximately $16.5 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.

Second Quarter 2012 as compared to Second Quarter 2011

Revenue was $243.5 million in the second quarter of 2012 as compared to $262.6 million a year earlier.  The change was due primarily to a loss of voice access lines and the impact of service quality penalty reversals which had a $4.0 million beneficial impact in the second quarter of 2011.  Access revenue declined versus a year earlier, which was primarily caused by the decline in voice access lines leading to fewer switched access minutes of use.  Data and Internet services revenue grew as broadband subscribers and Ethernet product revenues increased year-over-year.

Operating expenses, excluding depreciation, amortization and reorganization, were $190.7 million in the second quarter of 2012 as compared to $202.8 million a year earlier.  Decreases in employee expenses, bad debt and other expenses were partially offset by an increase in pension and OPEB expense.

Consolidated EBITDAR was $70.2 million in the second quarter of 2012 as compared to $70.5 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 second quarter of 2012. FairPoint did not make a cash pension contribution in the second quarter of 2011.

Capital expenditures were $32.1 million in the second quarter of 2012 as compared to $52.1 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 $37.1 million in the second quarter of 2012 as compared to net loss of $27.1 million in the second quarter of 2011.

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 $11.5 million contributed in the first and second quarters combined.  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 June 30, 2012, which will be filed with the SEC on or prior to August 9, 2012. The Company's results for the quarter ended June 30, 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 second quarter 2012 results at 8:30 a.m. (EDT) on Friday, August 3, 2012.

Participants should call (866) 578-5747 (US/Canada) or (617) 213-8054 (international) at 8:20 a.m. (EDT) and enter the passcode 88153752 when prompted.   The title of the call is the Q2 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 88754734 when prompted.  The recording will be available from Friday, August 3, 2012, at 10:30 a.m. (EDT) through Friday, August 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.  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 VantagePointSM 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 represent 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)




































2Q12

1Q12

4Q11

3Q11

2Q11













Summary Income Statement:



















Revenue:









Voice services (1)


$        111,525

$        114,777

$        118,580

$        117,583

$        124,676



Access


84,686

86,823

90,204

94,646

93,128



Data and Internet services (1)


36,118

33,332

32,418

32,854

32,258



Other services


11,124

13,542

12,960

12,829

12,574



Total revenue


243,453

248,474

254,162

257,912

262,636



Operating expenses:









Operating expenses, excluding depreciation, amortization and reorganization


190,672

210,903

203,717

213,483

202,784



Depreciation and amortization


93,780

93,207

91,951

91,547

90,614



Reorganization (income) expense (post-emergence)


(2,823)

(1,392)

(1,743)

(3,735)

2,510



Impairment of intangible assets and goodwill


-

-

-

262,019

-



Total operating expenses


281,629

302,718

293,925

563,314

295,908



Loss from operations


(38,176)

(54,244)

(39,763)

(305,402)

(33,272)



Other income (expense):









Interest expense


(16,983)

(17,028)

(17,173)

(17,147)

(16,996)



Other income (expense), net


(125)

302

472

488

350



Total other income (expense)


(17,108)

(16,726)

(16,701)

(16,659)

(16,646)



Loss before reorganization items and income taxes


(55,284)

(70,970)

(56,464)

(322,061)

(49,918)



Income tax benefit (expense)


18,211

24,258

(27,520)

42,620

22,821



Net loss


$         (37,073)

$         (46,712)

$         (83,984)

$       (279,441)

$         (27,097)













Consolidated EBITDAR and Unlevered Free Cash Flow Reconciliation:



















Net loss


$         (37,073)

$         (46,712)

$         (83,984)

$       (279,441)

$         (27,097)



Income tax (benefit) expense


(18,211)

(24,258)

27,520

(42,620)

(22,821)



Interest expense


16,983

17,028

17,173

17,147

16,996



Depreciation and amortization


93,780

93,207

91,951

91,547

90,614



Non-cash pension and OPEB expense (2a)


11,996

12,981

12,984

9,592

10,583



Other non-cash items, net (2b)


395

(156)

(53)

260,518

(138)



Restructuring costs (2c)


276

463

275

844

2,608



All other allowed adjustments, net (2d)


2,050

2,771

4,112

2,866

(246)



Consolidated EBITDAR


$        70,196

$        55,324

$        69,978

$        60,453

$        70,499



Consolidated EBITDAR margin


28.8%

22.3%

27.5%

23.4%

26.8%













Capital expenditures


$          32,070

$          26,257

$          35,110

$          35,169

$          52,121













Unlevered Free Cash Flow


$        38,126

$        29,067

$        34,868

$        25,284

$        18,378













Select Operating and Financial Metrics:



















Residential access lines


619,240

631,724

645,453

662,562

680,189



Business access lines


306,682

309,078

311,241

314,290

317,584



Wholesale access lines (3)


69,375

72,233

76,065

80,025

82,231



Total switched access lines


995,297

1,013,035

1,032,759

1,056,877

1,080,004




% change y-o-y


-7.8%

-8.1%

-8.4%

-8.8%

-9.3%




% change q-o-q


-1.8%

-1.9%

-2.3%

-2.1%

-2.1%























Broadband subscribers (4)


320,812

318,510

314,135

312,475

305,155




% change y-o-y


5.1%

7.1%

8.4%

8.2%

5.4%




% change q-o-q


0.7%

1.4%

0.5%

2.4%

2.6%




penetration of access lines


32.2%

31.4%

30.4%

29.6%

28.3%













Access line equivalents


1,316,109

1,331,545

1,346,894

1,369,352

1,385,159




% change y-o-y


-5.0%

-4.9%

-5.0%

-5.4%

-6.4%




% change q-o-q


-1.2%

-1.1%

-1.6%

-1.1%

-1.1%
























(1)

FairPoint reclassified certain revenues from voice services to data and Internet services to more accurately reflect the underlying nature of services provided.

(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, but exclude Ethernet and other high-capacity circuits.











FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets 

June 30, 2012 and December 31, 2011

(in thousands, except share data)





















June 30,



December 31,








2012



2011

Assets


(unaudited)





Current assets:








Cash




$

43,770



$

17,350


Restricted cash


13,889




24,446


Accounts receivable, net


102,654




104,298


Prepaid expenses


19,464




18,346


Other current assets


3,201




3,312


Deferred income tax, net


16,425




17,915

Total current assets


199,403




185,667

Property, plant and equipment (net of $463.2 million and $280.5








million accumulated depreciation, respectively)


1,543,062




1,663,065

Intangible assets (net of $16.0 million and $10.4 million accumulated 








amortization, respectively)


122,568




128,145

Debt issue costs, net


1,446




1,779

Restricted cash


651




651

Other assets



10,309




10,338

Total assets


$

1,877,439



$

1,989,645














Liabilities and Stockholders' Deficit








Current portion of long-term debt

$

10,000



$

10,000


Current portion of capital lease obligations


1,224




1,252


Accounts payable


61,836




65,184


Claims payable and estimated claims accrual


2,753




22,839


Accrued interest payable


502




508


Other accrued liabilities


71,453




54,348



Total current liabilities


147,768




154,131















Capital lease obligations


2,085




2,690


Accrued pension obligation


156,107




157,961


Employee benefit obligations


556,305




531,634


Deferred income taxes


200,796




245,369


Other long-term liabilities


13,784




14,003


Long-term debt, net of current portion


985,000




990,000



Total long-term liabilities


1,914,077




1,941,657














Total liabilities


2,061,845




2,095,788














Commitments and contingencies




















Stockholders' deficit: 








Common stock, $0.01 par value, 37,500,000 shares authorized,









26,232,652  and 26,197,142 shares issued and outstanding at









June 30, 2012 and December 31, 2011, respectively


262




262


Additional paid-in capital


504,217




502,034


Retained deficit


(498,730)




(414,945)


Accumulated other comprehensive loss


(190,155)




(193,494)

Total stockholders' deficit


(184,406)




(106,143)

Total liabilities and stockholders' deficit

$

1,877,439



$

1,989,645















 

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations 

Three Months ended June 30, 2012 and 2011, Six Months ended June 30, 2012,

One Hundred Fifty-Seven Days ended June 30, 2011 and Twenty-Four Days ended January 24, 2011

(Unaudited)

(in thousands, except per share data)




































Predecessor
Company
















One Hundred















Six Months


Fifty-Seven


Twenty-Four









Three Months Ended June 30,



Ended


Days Ended


Days Ended









2012


2011



June 30, 2012


June 30, 2011


January 24, 2011





































Revenues



$

243,453

$

262,636


$

491,927

$

451,038

$

66,378

Operating expenses:













Cost of services and sales, excluding depreciation














and amortization


103,960


114,468



225,435


201,641


38,766


Selling, general and administrative expense, excluding














depreciation and amortization


86,712


88,316



176,140


151,798


27,161


Depreciation and amortization


93,780


90,614



186,987


153,393


21,515


Reorganization related (income) expense


(2,823)


2,510



(4,215)


5,246


Total operating expenses


281,629


295,908



584,347


512,078


87,442

Loss from operations


(38,176)


(33,272)



(92,420)


(61,040)


(21,064)

Other income (expense):













Interest expense


(16,983)


(16,996)



(34,011)


(29,487)


(9,321)


Other





(125)


350



177


831


(132)

Total other expense


(17,108)


(16,646)



(33,834)


(28,656)


(9,453)

Loss before reorganization items and income taxes


(55,284)


(49,918)



(126,254)


(89,696)


(30,517)

Reorganization items







897,313

(Loss) income before income taxes


(55,284)


(49,918)



(126,254)


(89,696)


866,796

Income tax benefit (expense)


18,211


22,821



42,469


38,176


(279,889)

Net (loss) income

$

(37,073)

$

(27,097)


$

(83,785)

$

(51,520)

$

586,907





































Weighted average shares outstanding:













Basic





25,984


25,840



25,958


25,831


89,424


Diluted




25,984


25,840



25,958


25,831


89,695



















(Loss) earnings per share:













Basic




$

(1.43)

$

(1.05)


$

(3.23)

$

(1.99)

$

6.56


Diluted



$

(1.43)

$

(1.05)


$

(3.23)

$

(1.99)

$

6.54



















 

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows 

Six Months Ended June 30, 2012, One Hundred Fifty-Seven Days Ended June 30, 2011

and Twenty-Four Days Ended January 24, 2011

(Unaudited)

(in thousands)





























One Hundred



Predecessor
Company










Six Months



Fifty-Seven



Twenty-Four










Ended



Days Ended



Days Ended










June 30, 2012



June 30, 2011



January 24, 2011

















Cash flows from operating activities:











Net (loss) income


$

(83,785)


$

(51,520)


$

586,907

Adjustments to reconcile net (loss) income to net cash provided by











(used in) operating activities:












Deferred income taxes



(43,315)



(35,213)



279,868



Provision for uncollectible revenue



1,297



10,070



3,454



Depreciation and amortization



186,987



153,393



21,515



Post-retirement healthcare



25,846



12,850



2,654



Qualified pension



(869)



4,779



986



Other non cash items



457



22



97



Changes in assets and liabilities arising from operations:













Accounts receivable



401



(619)



(7,752)




Prepaid and other assets



(1,269)



4,921



(3,423)




Restricted cash



(9,966)








Accounts payable and accrued liabilities



6,389



7,790



26,627




Accrued interest payable



(6)



183



9,017




Other assets and liabilities, net



(440)



(1,457)



177



Reorganization adjustments:













Non-cash reorganization income



(4,954)



(709)



(917,358)




Claims payable and estimated claims accrual



(7,518)



(55,858)



(1,096)




Restricted cash - cash claims reserve



20,041



46,932



(82,764)





Total adjustments



173,081



147,084



(667,998)






Net cash provided by (used in) operating activities



89,296



95,564



(81,091)

Cash flows from investing activities:











Net capital additions



(58,327)



(93,369)



(12,477)


Distributions from investments



572



618





Net cash used in investing activities



(57,755)



(92,751)



(12,477)

Cash flows from financing activities:











Loan origination costs





(884)



(1,500)


Repayments of long-term debt



(5,000)






Restricted cash



483



1,372



34


Proceeds from exercise of stock options



30






Repayment of capital lease obligations



(634)



(505)



(201)



Net cash used in financing activities



(5,121)



(17)



(1,667)



Net change



26,420



2,796



(95,235)

Cash, beginning of period



17,350



10,262



105,497

Cash, end of period


$

43,770


$

13,058


$

10,262











Supplemental disclosure of cash flow information:












Capital additions included in accounts payable or claims













payable and estimated claims accrual at period-end


$


$

3,297


$

1,818



Reorganization costs paid


$

620


$

16,857


$

11,110



Non-cash settlement of claims payable


$

7,668


$


$

















 

 

SOURCE FairPoint Communications, Inc.



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