FairPoint Communications Reports 2012 Fourth Quarter And Full Year Results

  FairPoint Communications Reports 2012 Fourth Quarter And Full Year Results

-- Unlevered Free Cash Flow(1), before storm impact, of $16 million for the
quarter and $112 million for the full year

-- Adjusted EBITDA(1), before storm impact, of $66 million for the quarter and
$278 million for the full year

-- Full year capital expenditures of $145 million as compared to $176 million
in 2011

-- Net loss of $32 million for the quarter and $153 million for the full year

-- Refinancing complete with maturities extended by more than 3 years and
lower total debt service

-- Management provides financial guidance for 2013

PR Newswire

CHARLOTTE, N.C., March 6, 2013

CHARLOTTE, N.C., March 6, 2013 /PRNewswire/ -- FairPoint Communications, Inc.
(NasdaqCM: FRP) ("FairPoint" or the "Company"), a leading communications
provider, today announced its financial results for the fourth quarter and
full year ended Dec. 31, 2012. As previously announced, the Company will host
a conference call and simultaneous webcast to discuss its results at 8:30 a.m.
(ET) on Thursday, March 7, 2013.

"We're pleased with our 2012 performance," said Paul H. Sunu, Chief Executive
Officer of FairPoint. "Successful execution on our 'four pillar' strategy
allowed us to generate free cash flow in 2012 and begin the transformation of
our revenue composition for growth. In 2013, we expect to flatten our top line
trend and, by year-end, start to grow revenue on a sequential quarterly
basis."

Operating Highlights

FairPoint continues to see positive momentum in its growth-oriented business
and broadband products. Data and Internet services revenue in the fourth
quarter grew 13.1% versus a year ago and products like FairPoint's Ethernet
service offerings attracted new customers. Growth in business and broadband
products is a key component of FairPoint's strategy to transform its revenue
composition and offset continued erosion in the Company's legacy access
products like residential voice.

Ethernet services contributed approximately $12 million of revenue in the
fourth quarter of 2012 as compared to $7 million in the fourth 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.

Broadband subscribers grew 3.9% year-over-year and 1.2% sequentially—an
acceleration versus the third quarter of 2012. FairPoint added more than
12,000 broadband subscribers in 2012, as penetration reached 34.3% of voice
access lines at year end.

Voice access lines declined 7.8% in 2012 as compared to 8.4% in 2011. The
improvement was driven largely by a slowdown in the rate of loss in business
voice access lines, which declined 3.7% in 2012 as compared to 5.1% in 2011.

As of Dec. 31, 2012, FairPoint had approximately 3,369 employees, a decrease
of 4.9% and 16.4% from Dec. 31, 2011 and Dec. 31, 2010, respectively.
Headcount declined by 29 in the fourth quarter of 2012.

Financial Highlights

Fourth Quarter 2012 as compared to Third Quarter 2012

Revenue was $240 million in the fourth quarter of 2012 as compared to $242
million in the third quarter of 2012. The change was due in part to a loss of
voice access lines in the quarter, which led to a decrease in voice services
revenue. In addition, management estimates that Superstorm Sandy, which
caused service interruption during the fourth quarter, resulted in an increase
in wholesale service quality penalties of nearly $1 million.

Operating expenses, excluding depreciation, amortization and reorganization,
were $195 million in the fourth quarter of 2012 as compared to $186 million in
the third quarter of 2012. The increase was primarily the result of higher
bad debt expense, the impact of Superstorm Sandy and higher employee benefits
expense. Bad debt expense increased approximately $3 million sequentially,
being low in the third quarter. Management estimates that costs associated
with Superstorm Sandy were approximately $2 million in the fourth quarter.
Employee benefits expense increased $3 million sequentially due primarily to
higher claims.

Adjusted EBITDA, before storm impact, was $66 million in the fourth quarter of
2012 as compared to $74 million in the third quarter of 2012. The sequential
decline was primarily the result of the changes in voice services revenue, bad
debt expense and employee benefits expense described above.

Net loss decreased sequentially to $32 million in the fourth quarter of 2012
as compared to a net loss of $37 million in the third quarter of 2012. The
improvement was due primarily to a higher income tax benefit in the fourth
quarter.

Capital expenditures were $49 million in the fourth quarter of 2012 as
compared to $38 million in the third quarter of 2012. FairPoint continued to
expand its broadband footprint in New Hampshire during the fourth quarter in
accordance with a regulatory commitment to reach 95% of its customers in the
state by Dec. 31, 2013. As of Dec. 31, 2012, the Company estimates its
broadband coverage in New Hampshire was approximately 94%.

FairPoint's cash position was $23 million as of Dec. 31, 2012, as compared to
$22 million as of Sept. 30, 2012 and $17 million as of Dec. 31, 2011. The
Company reported $957 million of debt outstanding under the former credit
facility at year end, after further voluntary prepayments made during the
fourth quarter. On Jan. 31, 2013, FairPoint closed the sale of its Idaho
operations for $30 million in gross proceeds and used $8 million to repay debt
under the former credit facility. On February 14, 2013, FairPoint refinanced
its former credit facility with $300 million aggregate principal amount of
8.75% senior secured notes due 2019 and a new credit facility comprised of a
$640 million term loan and $75 million revolving credit facility. In
addition, the Company used cash on hand to pay the remaining principal,
accrued interest, fees, expenses and other costs related to the refinancing.
The Company's $75 million revolving credit facility is undrawn, with $63
million available for additional borrowing after applying $12 million for
outstanding letters of credit.

Fourth Quarter 2012 as compared to Fourth Quarter 2011

Revenue was $240 million in the fourth quarter of 2012 as compared to $254
million a year earlier. The change was due primarily to a decline in voice
services revenue and access revenue. The loss of voice access lines versus a
year ago led to a decrease in voice services revenue, while a decline in
switched access minutes of use led to lower switched access revenue. In
addition, special access revenue declined as customers migrated from legacy
access products such as DS1, DS3, frame relay and private line to wholesale
Ethernet-based products, which tend to have lower average revenue per unit.
Service quality penalties, which normally reduce revenue, were $2 million in
the fourth quarter of 2012 as compared to a revenue benefit of $3 million a
year earlier when the Company reversed certain previously accrued penalties
following the favorable outcome of various regulatory proceedings. Data and
Internet services revenue grew as broadband subscribers and retail Ethernet
product revenues increased year-over-year.

Operating expenses, excluding depreciation, amortization and reorganization,
were $195 million in the fourth quarter of 2012 as compared to $204 million a
year earlier. The decrease was primarily the result of decreases in
contracted services and costs of goods sold.

Adjusted EBITDA, before storm impact, was $66 million in the fourth quarter of
2012 as compared to $70 million a year earlier when the Company recognized a
$2 million benefit from the reversal of certain bankruptcy claims. FairPoint
implemented a number of cost reduction initiatives during 2012 which largely
offset the $14 million decline in revenue year-over-year.

Capital expenditures were $49 million in the fourth quarter of 2012 as
compared to $35 million a year earlier. The Company continued to expand its
broadband footprint in New Hampshire as discussed above.

Net loss was $32 million in the fourth quarter of 2012 as compared to a net
loss of $84 million in the fourth quarter of 2011, when FairPoint recognized a
book income tax charge to true-up its deferred tax liability.

2013 Guidance

The Company expects to generate $100 to 110 million of Unlevered Free Cash
Flow in 2013. Unlevered Free Cash Flow refers to Adjusted EBITDA minus
capital expenditures, cash pension contributions and cash payments for other
post-employment benefits ("OPEB"). In addition, for fiscal 2013, Adjusted
EBITDA is expected to be $255 to 265 million, capital expenditures are
expected to be approximately $135 million and aggregate cash pension
contributions and cash OPEB payments are expected to be approximately $20
million.

The financial guidance provided above is after the impact of the sale of
FairPoint's Idaho operations, which closed on Jan. 31, 2013. On an annual
basis, the properties contributed approximately $8 million in revenue and
approximately $5 million in Adjusted EBITDA, with capital expenditures of
approximately $1 million. Neither the gain on the sale nor the cash proceeds
received will be counted towards Unlevered Free Cash Flow or Adjusted EBITDA
in 2013.

Annual Report

The information in this press release should be read in conjunction with the
financial statements and footnotes contained in the Company's annual report on
Form 10-K for the fiscal year ended Dec. 31, 2012, which will be filed with
the SEC no later than March 18, 2013. The Company's results for the quarter
and fiscal year ended Dec. 31, 2012, are subject to the completion of such
annual report.

Fresh Start Accounting

On Jan. 24, 2011, the Company emerged from Chapter 11 bankruptcy protection
and its Plan of Reorganization became effective. In accordance with 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 are not 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 fourth quarter 2012 results at 8:30 a.m.
(ET) on Thursday, March 7, 2013.

Participants should call (866) 272-9941 (US/Canada) or (617) 213-8895
(international) at 8:20 a.m. (ET) and enter the passcode 53958194 when
prompted. The title of the call is the Q4 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 13187041 when prompted. The
recording will be available from Thursday, March 7, 2013, at 10:30 a.m. (ET)
through Thursday, March 14, 2013, at 11:59 p.m. (ET).

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 Adjusted EBITDA and Unlevered Free Cash Flow, and adjustments
to GAAP and non-GAAP measures to exclude the effect of special items.
Management believes that Adjusted EBITDA provides a useful measure of
operational and financial performance and removes variability related to
pension contributions and payments for other post-employment benefits and that
Unlevered Free Cash Flow may be useful to investors in assessing the Company's
ability to generate cash and meet its debt service requirements. The
maintenance covenants contained in the Company's new credit facility are based
on Consolidated EBITDA, which is consistent with the pro forma calculation of
Adjusted EBITDA included in the attachment to this press release. In
addition, management believes that the adjustments to GAAP and non-GAAP
measures to exclude the effect of special items may be useful to investors in
understanding period-to-period operating performance and in identifying
historical and prospective trends.

However, the non-GAAP financial measures, as used herein, are not necessarily
comparable to similarly titled measures of other companies. Furthermore,
Adjusted EBITDA and Unlevered Free Cash Flow have limitations as analytical
tools and should not be considered in isolation from, or as an alternative to,
net income or loss, operating income, cash flow or other combined income or
cash flow data prepared in accordance with GAAP. Because of these limitations,
Adjusted EBITDA, Unlevered Free Cash Flow and related ratios should not be
considered as measures of discretionary cash available to invest in business
growth or reduce indebtedness. The Company compensates for these limitations
by relying primarily on its GAAP results and using Adjusted EBITDA and
Unlevered Free Cash Flow only supplementally. A reconciliation of Adjusted
EBITDA and Unlevered Free Cash Flow to net loss or income is contained in the
attachments to this press release.

About FairPoint Communications, Inc.

FairPoint Communications, Inc. (NasdaqCM: FRP) is a leading communications
provider of broadband Internet access, local and long-distance phone,
television and other high-capacity data services to customers in communities
across 17 states. Through its fast, reliable fiber network, FairPoint delivers
high-quality data and voice networking communications solutions to
residential, business and wholesale customers. FairPoint delivers
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 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 and Adjusted EBITDA are non-GAAP financial
measures. Additional information regarding the calculation of Unlevered Free
Cash Flow and Adjusted EBITDA and a reconciliation to net income or loss are
contained in the attachment to this press release.

FAIRPOINT COMMUNICATIONS, INC.

Supplemental Financial Information

(Unaudited)

(in thousands, except per unit and percentage data)
                 FY2012        FY2011       4Q12         3Q12         2Q12         1Q12         4Q11
Summary Income
Statement:
Revenue:
Voice services   $ 446,126     $ 483,766    $ 108,487    $ 111,337    $ 111,525    $ 114,777    $ 118,580
Access           336,000       369,336      82,476       82,015       84,686       86,823       90,204
Data and
Internet         142,911       127,323      36,668       36,793       36,118       33,332       32,418
services
Other services   48,612        49,065       12,039       11,907       11,124       13,542       12,960
Total revenue    973,649       1,029,490    239,670      242,052      243,453      248,474      254,162
Operating
expenses:
Operating
expenses,
excluding        782,684       836,566      194,692      186,417      190,672      210,903      203,717
depreciation,
amortization and
reorganization
Depreciation and 376,614       358,406      99,845       89,782       93,780       93,207       91,951
amortization
Reorganization
expense (income) (3,666)       (232)        377          172          (2,823)      (1,392)      (1,743)

(post-emergence)
Impairment of
intangible       —             262,019      —            —            —            —            —
assets and
goodwill
Total operating  1,155,632     1,456,759    294,914      276,371      281,629      302,718      293,925
expenses
Loss from        (181,983)     (427,269)    (55,244)     (34,319)     (38,176)     (54,244)     (39,763)
operations
Other income
(expense):
Interest expense (67,610)      (73,128)     (16,608)     (16,991)     (16,983)     (17,028)     (17,173)
Other income     739           1,659        14           548          (125)        302          472
(expense), net
Total other      (66,871)      (71,469)     (16,594)     (16,443)     (17,108)     (16,726)     (16,701)
expense
Loss before
reorganization   (248,854)     (498,738)    (71,838)     (50,762)     (55,284)     (70,970)     (56,464)
items and income
taxes
Reorganization   —             897,313      —            —            —            —            —
items
(Loss) income
before income    (248,854)     398,575      (71,838)     (50,762)     (55,284)     (70,970)     (56,464)
taxes
Income tax
benefit          95,560        (226,613)    39,658       13,433       18,211       24,258       (27,520)
(expense)
Net (loss)       $ (153,294)   $ 171,962    $ (32,180)   $ (37,329)   $ (37,073)   $ (46,712)   $ (83,984)
income
Reconciliation
of Adjusted
EBITDA (before
storm impact)
and Unlevered
Free Cash Flow
(before storm
impact):
Net (loss)       $ (153,294)   $ 171,962    $ (32,180)   $ (37,329)   $ (37,073)   $ (46,712)   $ (83,984)
income
Income tax
(benefit)        (95,560)      226,613      (39,658)     (13,433)     (18,211)     (24,258)     27,520
expense
Interest expense 67,610        73,128       16,608       16,991       16,983       17,028       17,173
Depreciation and 376,614       358,406      99,845       89,782       93,780       93,207       91,951
amortization
Pension expense  17,809        12,185       4,005        4,166        4,573        5,065        3,313
(1a)
OPEB expense     50,875        39,601       11,899       11,729       13,373       13,874       10,153
(1a)
Severance        6,380         8,006        938          592          1,907        2,943        4,360
Restructuring    1,335         21,053       258          338          276          463          275
costs (1b)
Storm expenses   3,000         4,040        3,000        —            —            —            —
(1c)
Other non-cash   3,518         (651,943)    2,068        1,211        395          (156)        (53)
items, net (1d)
All other
allowed          (675)         (1,055)      (288)        (358)        143          (172)        (248)
adjustments, net
(1e)
Adjusted EBITDA,
before storm     $ 277,612     $ 261,996    $ 66,495     $ 73,689     $ 76,146     $ 61,282     $ 70,460
impact
Adjusted EBITDA  28.5        % 25.4      %  27.7       % 30.4       % 31.3       % 24.7       % 27.7       %
margin
Pension          (17,850)      (6,178)      —            (7,344)      (5,156)      (5,350)      —
contributions
OPEB payments    (3,183)       (1,763)      (1,125)      (656)        (794)        (608)        (482)
Capital          (145,066)     (176,125)    (49,070)     (37,669)     (32,070)     (26,257)     (35,110)
expenditures
Unlevered Free
Cash Flow,       $ 111,513     $ 77,930     $ 16,300     $ 28,020     $ 38,126     $ 29,067     $ 34,868
before storm
impact
Pro Forma
Reconciliation
of Adjusted
EBITDA (new
definition)(2)
and Unlevered
Free Cash Flow:
Adjusted EBITDA,
before storm     $ 277,612     $ 261,996    $ 66,495     $ 73,689     $ 76,146     $ 61,282     $ 70,460
impact
Compensated      329           (462)        (3,925)      (4,490)      (2,864)      11,608       (2,966)
absences (2a)
Adjusted EBITDA
(new             $ 277,941     $ 261,534    $ 62,570     $ 69,199     $ 73,282     $ 72,890     $ 67,494
definition)(2)
Adjusted EBITDA  28.5        % 25.4      %  26.1       % 28.6       % 30.1       % 29.3       % 26.6       %
margin
Pension          (17,850)      (6,178)      —            (7,344)      (5,156)      (5,350)      —
contributions
OPEB payments    (3,183)       (1,763)      (1,125)      (656)        (794)        (608)        (482)
Capital          (145,066)     (176,125)    (49,070)     (37,669)     (32,070)     (26,257)     (35,110)
expenditures
Unlevered Free   $ 111,842     $ 77,468     $ 12,375     $ 23,530     $ 35,262     $ 40,675     $ 31,902
Cash Flow
Select Operating
and Financial
Metrics:
Residential      586,725       645,453      586,725      602,530      619,240      631,724      645,453
access lines
Business access  299,701       311,241      299,701      303,904      306,682      309,078      311,241
lines
Wholesale access 65,641        76,065       65,641       67,886       69,375       72,233       76,065
lines (3)
Total switched   952,067       1,032,759    952,067      974,320      995,297      1,013,035    1,032,759
access lines
% change y-o-y   (7.8)%        (8.4)%       (7.8)%       (7.8)%       (7.8)%       (8.1)%       (8.4)%
% change q-o-q   N/A           N/A          (2.3)%       (2.1)%       (1.8)%       (1.9)%       (2.3)%
Broadband        326,367       314,135      326,367      322,551      320,812      318,510      314,135
subscribers (4)
% change y-o-y   3.9         % 8.4       %  3.9        % 3.2        % 5.1        % 7.1        % 8.4        %
% change q-o-q   N/A           N/A          1.2        % 0.5        % 0.7        % 1.4        % 0.5        %
penetration of   34.3        % 30.4      %  34.3       % 33.1       % 32.2       % 31.4       % 30.4       %
access lines
Access line      1,278,434     1,346,894    1,278,434    1,296,871    1,316,109    1,331,545    1,346,894
equivalents
% change y-o-y   (5.1)%        (5.0)%       (5.1)%       (5.3)%       (5.0)%       (4.9)%       (5.0)%
% change q-o-q   N/A           N/A          (1.4)%       (1.5)%       (1.2)%       (1.1)%       (1.6)%
(1) For purposes of calculating Adjusted EBITDA, the Company adjusts net (loss) income for interest, income
taxes, depreciation and amortization, in addition to:
a) the add-back of aggregate pension and other post-employment benefits (OPEB) expense,
b) the add-back of costs related to the restructuring, including professional fees for advisors and
consultants,
c) the add-back of costs and expenses, including those imposed by regulatory authorities, with respect to
casualty events, acts of God or force majeure to the extent they are not reimbursed from proceeds of
insurance,
d) the add-back of other non-cash items except to the extent they will require a cash payment in a future
period, and
e) the add-back (or subtraction) of other items including non-cash gains/losses, non-operating dividend and
interest income and other extraordinary gains/losses.
(2) On February 14, 2013, the Company refinanced its former credit facility with a new credit agreement.
Going forward, Adjusted EBITDA will be calculated in accordance with the definition of Consolidated EBITDA
in the Company's new credit agreement. Accordingly, the new definition of Adjusted EBITDA will also adjust
for:
a) the add-back (or subtraction) of the adjustment to the compensated absences accrual to eliminate the
impact of changes in the accrual.
(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

Consolidated Balance Sheets

December 31, 2012 and 2011

(in thousands, except share data)


                                          December31, 2012  December31, 2011
Assets:
Cash                                      $   23,203         $   17,350
Restricted cash                           6,818              24,446
Accounts receivable, net                  86,999             100,324
Prepaid expenses                          20,128             18,346
Other current assets                      4,219              3,312
Deferred income tax, net                  16,376             17,915
Assets held for sale                      12,549             —
Total current assets                      170,292            181,693
Property, plant and equipment, net        1,438,309          1,663,065
Intangible assets, net                    116,992            128,145
Debt issue costs, net                     1,111              1,779
Restricted cash                           651                651
Other assets                              5,006              10,338
Total assets                              $   1,732,361      $   1,985,671
Liabilities and Stockholders' Deficit:
Current portion of long-term debt         $   10,000         $   10,000
Current portion of capital lease          1,220              1,252
obligations
Accounts payable                          57,832             65,184
Claims payable and estimated claims       1,282              22,839
accrual
Accrued interest payable                  176                508
Other accrued liabilities                 72,036             50,374
Liabilities held for sale                 407                —
Total current liabilities                 142,953            150,157
Capital lease obligations                 1,470              2,690
Accrued pension obligation                203,537            157,961
Employee benefit obligations              619,108            531,634
Deferred income taxes                     127,361            245,369
Other long-term liabilities               8,745              14,003
Long-term debt, net of current portion    947,000            990,000
Total long-term liabilities               1,907,221          1,941,657
Total liabilities                         2,050,174          2,091,814
Commitments and contingencies (See Note
19)
Stockholders' deficit:
Common stock, $0.01 par value, 37,500,000
sharesauthorized, 26,288,998 and
26,197,142 shares issued and outstanding  262                262
atDecember 31, 2012 and 2011,
respectively
Additional paid-in capital                506,153            502,034
Retained deficit                          (568,239)          (414,945)
Accumulated other comprehensive loss      (255,989)          (193,494)
Total stockholders' deficit               (317,813)          (106,143)
Total liabilities and stockholders'       $   1,732,361      $   1,985,671
deficit

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Year Ended December 31, 2012, Three Hundred Forty-One Days Ended December 31,
2011,

Twenty-Four Days Ended January 24, 2011 and Year Ended December 31, 2010

(in thousands, except per share data)
                                                     Predecessor Company
                                      Three
                                      Hundred        Twenty-Four

                        Year Ended    Forty-One      Days Ended   Year Ended

                        December 31,  Days Ended     January 24,  December 31,
                        2012                         2011         2010
                                      December 31,
                                      2011
Revenues                $ 973,649     $ 963,112      $  66,378    $ 1,070,986
Operating expenses:
Cost of services and
sales, excluding        440,271       438,619        38,766       525,728
depreciationand
amortization
Selling, general and
administrative expense, 342,413       332,020        27,161       365,373
excludingdepreciation
and amortization
Depreciation and        376,614       336,891        21,515       289,824
amortization
Reorganization related  (3,666)       (232)          —            —
income
Impairment of
intangible assets and   —             262,019        —            —
goodwill
Total operating         1,155,632     1,369,317      87,442       1,180,925
expenses
Loss from operations    (181,983)     (406,205)      (21,064)     (109,939)
Other income (expense):
Interest expense        (67,610)      (63,807)       (9,321)      (140,896)
Other                   739           1,791          (132)        2,715
Total other expense     (66,871)      (62,016)       (9,453)      (138,181)
Loss before
reorganization items    (248,854)     (468,221)      (30,517)     (248,120)
and income taxes
Reorganization items    —             —              897,313      (41,120)
(Loss) income before    (248,854)     (468,221)      866,796      (289,240)
income taxes
Income tax benefit      95,560        53,276         (279,889)    7,661
(expense)
Net (loss) income       $ (153,294)   $ (414,945)    $  586,907   $ (281,579)
Weighted average shares
outstanding:
Basic                   25,987        25,838         89,424       89,424
Diluted                 25,987        25,838         89,695       89,424
(Loss) earnings per
share:
Basic                   $ (5.90)      $ (16.06)      $  6.56      $ (3.15)
Diluted                 (5.90)        (16.06)        6.54         (3.15)

FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Year Ended December 31, 2012, Three Hundred Forty-One Days Ended December 31,
2011,

Twenty-Four Days Ended January 24, 2011 and Year Ended December 31, 2010

(in thousands)
                                                     Predecessor Company
                                     Three Hundred
                                                     Twenty-Four
                    Year Ended       Forty-One                    Year Ended
                                                     Days Ended
                    December 31,     Days Ended                   December 31,
                    2012                             January 24,  2010
                                     December 31,    2011
                                     2011
Cash flows from
operating
activities:
Net (loss) income   $  (153,294)     $  (414,945)    $  586,907   $ (281,579)
Adjustments to
reconcile net
income to net cash
provided by (used
in) operating
activities:
Deferred income     (96,778)         (52,203)        279,868      (7,915)
taxes
Provision for
uncollectible       7,506            18,344          3,454        20,525
revenue
Depreciation and    376,614          336,891         21,515       289,824
amortization
Post-retirement     47,692           35,183          2,654        33,216
healthcare
Qualified pension   (42)             5,021           986          10,017
Loss on abandoned   2,862            —               —            15,132
projects
Impairment of
intangible assets   —                262,019         —            —
and goodwill
Other non-cash      866              (288)           97           4,045
items
Changes in assets
and liabilities
arising from
operations:
Accounts receivable 9,587            7,863           (7,752)      12,706
Prepaid and other   (3,301)          (1,926)         (3,423)      (6,834)
assets
Restricted cash     (6,164)          —               —            —
Accounts payable
and accrued         3,364            (12,303)        26,627       (10,802)
liabilities
Accrued interest    (332)            508             9,017        137,111
payable
Other assets and    (4,198)          67              177          (3,816)
liabilities, net
Reorganization
adjustments:
Non-cash
reorganization      (5,002)          (7,308)         (917,358)    (20,004)
income
Claims payable and
estimated claims    (8,824)          (66,712)        (1,096)      —
accrual
Restricted
cash—Cash Claims    22,219           59,888          (82,764)     —
Reserve
Total adjustments   346,069          585,044         (667,998)    473,205
Net cash provided
by (used in)        192,775          170,099         (81,091)     191,626
operating
activities
Cash flows from
investing
activities:
Net capital         (145,066)        (163,648)       (12,477)     (197,795)
additions
Distributions from  759              798             —            527
investments
Net cash used in
investing           (144,307)        (162,850)       (12,477)     (197,268)
activities
Cash flows from
financing
activities:
Loan origination    —                (884)           (1,500)      (1,475)
costs
Proceeds from
issuance of         —                —               —            5,513
long-term debt
Repayments of       (43,000)         —               —            —
long-term debt
Restricted cash     1,573            1,843           34           (62)
Proceeds from
exercise of stock   64               —               —            —
options
Repayment of
capital lease       (1,252)          (1,120)         (201)        (2,192)
obligations
Net cash (used in)
provided by         (42,615)         (161)           (1,667)      1,784
financing
activities
Net change          5,853            7,088           (95,235)     (3,858)
Cash, beginning of  17,350           10,262          105,497      109,355
period
Cash, end of period $  23,203        $  17,350       $  10,262    $ 105,497
Supplemental
disclosure of cash
flow information:
Interest paid, net
of capitalized      $  66,619        $  62,290       $  —         $ 1,005
interest
Income tax paid,    562              218             —            361
net of refunds
Capital additions
included in
accounts payable,
claims payable and
estimated claims    —                854             1,818        1,961
accrual or
liabilities subject
to compromise at
period-end
Reorganization      1,197            20,069          11,110       41,699
costs paid
Non-cash settlement 7,668            —               —            —
of claims payable



SOURCE FairPoint Communications, Inc.

Website: http://www.fairpoint.com
Contact: Investor Relations Contact: Lee Newitt, +1-704-344-8150,
lnewitt@fairpoint.com; Media Contact: Sabina Haskell, +1-802-658-7351,
shaskell@fairpoint.com
 
Press spacebar to pause and continue. Press esc to stop.