Exhibit 99.1
[FAIRPOINT COMMUNICATIONS LOGO]
FOR IMMEDIATE RELEASE CONTACT: Timothy W. Henry
Telephone: (704) 344.8150
Email: Thenry@fairpoint.com
FAIRPOINT REPORTS OPERATING RESULTS FOR THE FOURTH
QUARTER AND FISCAL YEAR ENDED DECEMBER 31, 2004
CHARLOTTE, N.C. (March 22, 2005) - FairPoint Communications, Inc. (NYSE:FRP)
("FairPoint") today announced financial results for the fourth quarter and
fiscal year ended December 31, 2004. Highlights include:
o Reporting operating revenues of $63.8 million for the fourth quarter, a
6.8% increase from the same period in 2003, and $252.6 million for the
full year, a 9.2 % increase from the prior year.
o Reporting a consolidated net loss of $10.8 million (including a
non-recurring expense of $6.0 million) and a loss per share of $1.13
for the fourth quarter.
o Reporting a consolidated net loss of $23.7 million (including a
non-recurring expense of $6.0 million) and a loss per share of $2.50
for the full year 2004.
o Generating Adjusted EBITDA (as defined herein) of $35.6 million for the
fourth quarter (excluding a non-recurring expense of $6.0 million), an
8.5% increase compared to the same period in 2003, and $141.2 million
for the full year, a 6.5% increase from the prior year.
"We are pleased with our 2004 financial progress," said Gene Johnson, chief
executive officer and chairman. "Our focus on driving top line revenue growth
and delivering an exceptional experience to our customers resulted in
significant DSL growth in 2004."
"Our full year results demonstrate our ability to execute our business strategy
of increasing top line revenue growth, improving operating efficiencies and
pursuing selective acquisitions which contribute to increasing the company's
free cash flow. This is evidenced by the 8.5% increase in revenues reported for
the full year 2004 and a resulting increase in our Adjusted EBITDA of 6.5%, an
$8.6 million increase over the prior year," said Johnson. "In December 2003, we
acquired Community Service Telephone Company located adjacent to our Maine
exchanges and by year-end 2004 had successfully integrated this company into our
operations."
"We intend to continue executing our business strategy in 2005, emphasizing
further gains in product penetration and striving to improve operational
efficiencies," said Johnson. "We will also continue to seek acquisitions which
are accretive to our shareholders and the free cash flow of the company, such as
the announced acquisition of Berkshire Telephone Corporation, which we expect to
close in the second quarter of 2005."
Results for the fourth quarter ended December 31, 2004
FairPoint reported consolidated revenues from continuing operations for the
three months ended December 31, 2004 of $63.8 million, an increase of 6.8% or
$4.0 million compared to the three months ended December 31, 2003 of $59.8
million. Revenues from our existing operations increased $2.4 million for the
three months ended December 31, 2004 over the same period in 2003, with an
additional $1.6 million contributed by Community Service Telephone Company
("CST", a company acquired by us in December 2003). Growth in local service,
interstate access, data / Internet, and long distance revenues contributed to
the improved top line revenue increase compared to the same period in 2003.
Income from continuing operations was $18.1 million for the three months ended
December 31, 2004 compared to $18.3 million for the three months ended December
31, 2003, a 1.1% decrease. Total operating expenses (including depreciation and
amortization) increased $4.2 million or 10.2% for the three months ended
December 31, 2004 compared to the same period in the prior year. Cash operating
expenses increased by $2.8 million to $32.4 million, a 9.6% increase compared to
the three-month period ended December 31, 2003. This change was primarily
attributable to increases in cost of goods sold related to the growth of our
digital subscriber line ("DSL") and long distance customer base, an increase in
employee compensation costs, and an increase in uncollectible expense due to a
recovery in 2003 of a written-off inter-exchange carrier expense.
FairPoint reported a net loss of $10.8 million or a loss per share of $1.13 for
the three months ended December 31, 2004, compared to a net loss of $3.4 million
for the same period in 2003. Excluding a non-recurring expense of $6.0 million,
the net loss for the quarter was $4.8 million or a loss per share of $0.51.
Results for the fiscal year ended December 31, 2004
FairPoint reported full year consolidated revenues from continuing operations of
$252.6 million, an increase of 9.2% or $21.2 million over 2003 revenues of
$231.4 million. Revenues from our existing operations increased $13.0 million
compared to 2003, with an additional $8.2 million contributed by the CST
acquisition. Revenue growth was reported in each revenue category with exception
of intrastate revenues, which declined by $1.6 million. The reduction in
intrastate revenue primarily occurred at our Maine businesses due to state
regulatory changes that shifted revenue from intrastate access to local service
revenues.
Income from continuing operations was $73.6 million for the twelve-month period
ended December 31, 2004, an increase of 2.1% compared to $72.1 million in 2003.
Total operating expenses (including depreciation and amortization) increased
12.4% in 2004 compared to the prior year. Cash operating expenses increased by
15.8% or $17.6 million to $128.8 million. The CST acquisition represented $4.1
million of the increase in cash operating expenses while the remainder was
attributed to existing operations. The increase in cash operating expense for
existing operations was attributable to increases in cost of goods sold and
operational expenses related to our expanded DSL and long distance customer
base, wage and benefit increases,
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billing costs related to the conversion of our billing systems to a single
platform and higher advertising and promotional expenses related to our DSL and
long distance marketing initiatives.
FairPoint reported a net loss for the twelve-month period ending December 31,
2004 of $23.7 million (including a one-time expense of $6.0 million) or a loss
per share of $2.50, compared to a net loss of $4.3 million for the same period
in 2003. Excluding a non-recurring expense of $6.0 million, net loss for the
twelve-month period was $17.7 million or a loss per share of $1.87. During the
fourth quarter of 2004, we recorded a one-time expense of $6.0 million
associated with our abandoned offering of Income Deposit Securities. The 2004
increase in net loss was attributable to an increase in interest expense related
to the issuance of the 11 7/8% Senior Notes in March 2003. Also contributing to
the year-over-year difference was the fact that in 2003, we also reported income
from discontinued operations and disposal of assets of discontinued operations
of $9.9 million.
Fourth quarter and fiscal year ended December 31, 2004 operational highlights
Total access line equivalents were 271,150 as of December 31, 2004, representing
an increase of 2.6% from 264,308 as of December 31, 2003. Voice access lines
decreased by 2.9% for the twelve month period to 239,274 compared to 246,371 as
of December 31, 2003. At year end 2004, DSL customers totaled 31,876,
representing an increase of 77.7% from the prior year.
In the fourth quarter, voice access lines decreased by 2,997, compared to 1,828
in the third quarter of 2004. Correspondingly, DSL subscriber growth in the
fourth quarter of 2004 was 1,456 compared to 2,069 in the third quarter 2004. In
the fourth quarter the company controlled DSL growth striving for greater
profitability and reduced churn contrasted against an aggressive sales promotion
/ customer penetration strategy pursued earlier in the year. At year end 2004,
DSL penetration was 13.3% of voice access lines compared to 7.3% penetration at
year end 2003. Our total broadband penetration utilizing DSL, cable and wireless
technologies was 14.0% of voice access lines, compared to 7.6% for the prior
year.
During the second half of 2004, we began to aggressively sell a voice bundled
offering consisting of local voice, long distance and enhanced calling services.
This effort has contributed to an increase in long distance penetration. At
year-end 2004, interstate long distance penetration was 38.4% of voice access
lines compared to 31.4% at year-end 2003, an 18.9% year-over-year increase.
Capital expenditures in the fourth quarter were $12.1 million and for 2004 were
$36.5 million. This annual number includes non-recurring capital expenditures of
approximately $4.4 million relating to the conversion of our billing systems
into an integrated billing platform and approximately $9.0 relating to the final
stages of our DSL initiative.
Recent Developments
On February 8, 2005, FairPoint completed an initial public offering ("the IPO")
of 25,000,000 shares of its common stock at a price to the public of $18.50 per
share. In connection with the IPO, we obtained a new senior secured credit
facility consisting of a $100 million revolving
Page 3 of 3
facility and a $588.5 million B-Term loan facility of which $22.5 million is a
delayed term loan commitment that may be used to redeem any of FairPoint's 12
1/2% senior subordinated notes due 2010, which were not tendered in the tender
offer for such notes. These notes are callable beginning on May 1, 2005.
FairPoint used the proceeds from the IPO and borrowings under its new credit
facility primarily to refinance its existing credit facility, consummate tender
offers for its outstanding high yield debt, redeem its series A preferred stock,
repay operating subsidiary debt and pay related fees and expenses.
Non-GAAP Measures
FairPoint's EBITDA for the three months and twelve months ended December 31,
2004 was $29.5 million and $130.8, respectively. Our Adjusted EBITDA for the
2004 fourth quarter was $35.6 million, an 8.5% increase from the corresponding
period in the prior year. Adjusted EBITDA for the twelve months ended December
31, 2004 was $141.2 million, representing an increase of 6.5% compared to the
prior year.
EBITDA and Adjusted EBITDA are non-GAAP financial measures. For additional
information regarding EBITDA and Adjusted EBITDA, and a reconciliation of such
measures to the most comparable financial measures calculated in accordance with
GAAP, please review the attachments to this press release.
EBITDA means net income (loss) before income (loss) from discontinued
operations, interest expenses, income taxes, and depreciation and amortization.
FairPoint believes EBITDA is useful to investors because EBITDA is commonly used
in the communications industry to analyze companies on the basis of operating
performance, liquidity and leverage. We believe EBITDA allows a standardized
comparison between companies in the industry, while minimizing the differences
from depreciation policies, financial leverage and tax strategies. We also
believe that EBITDA is useful as a means to evaluate our ability to pay
dividends. While providing useful information, EBITDA should not be considered
in isolation or as a substitute for consolidated statement of operations and
cash flows data prepared in accordance with GAAP.
Certain covenants in our new credit facility contain ratios based on Adjusted
EBITDA and the restricted payment covenant in our new credit facility regulating
the payment of dividends on our common stock is based on Adjusted EBITDA.
Adjusted EBITDA for any period is defined in our new credit facility as (1) the
sum of Consolidated Net Income (which is defined in our new credit facility and
includes distributions from investments), plus the following to the extent
deducted from consolidated net income: provision for taxes, consolidated
interest expense, depreciation, amortization, losses on sales of assets and
other extraordinary losses, and certain other non-cash items, each as defined,
minus (2) gains on sales of assets and other extraordinary gains and all
non-cash items increasing consolidated net income for the period.
The information in this press release should be read in conjunction with the
financial statements and footnotes contained in our documents to be filed with
the Securities and Exchange Commission.
Page 4 of 4
About FairPoint
FairPoint is a leading provider of communications services to rural communities
across the country. Incorporated in 1991, FairPoint's mission is to acquire and
operate telecommunications companies that set the standard of excellence for the
delivery of service to rural communities. Today, FairPoint owns and operates 26
rural local exchange companies (RLECs) located in 17 states. FairPoint serves
customers with approximately 271,150 access line equivalents (voice plus digital
subscriber lines) as of December 31, 2004 and offers an array of services
including local and long distance voice, data, Internet and broadband offerings.
Forward Looking Statement
This press release may contain forward-looking statements that are not based on
historical fact, including without limitation, statements containing the words
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
"indicated" and similar expressions. 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. Such
factors include those risks described in FairPoint Communications, Inc.'s
Registration Statement on Form S-1 on file with the Securities and Exchange
Commission. These factors should be considered carefully and readers are
cautioned not to place undue reliance on such forward-looking statements. All
information is current as of the date this press release is issued, and
FairPoint Communications, Inc. undertakes no duty to update this information.
# # #
Attachments
Page 5 of 5
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, December 31,
2004 2003
------------------ -----------------
(unaudited)
(Dollars in thousands)
Assets
Current assets:
Cash $ 3,595 5,603
Accounts receivable, net 30,203 28,845
Other 6,805 7,545
Assets of discontinued operations 102 105
------------------ -----------------
Total current assets 40,705 42,098
------------------ -----------------
Property, plant, and equipment, net 252,262 266,706
------------------ -----------------
Other assets:
Investments 37,749 41,792
Goodwill 468,508 468,845
Deferred charges and other assets 19,912 23,627
------------------ -----------------
Total other assets 526,169 534,264
------------------ -----------------
Total assets $ 819,136 843,068
================== =================
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 14,184 14,671
Current portion of long-term debt and other
long-term liabilities 624 22,127
Demand notes payable 382 407
Accrued interest payable 16,582 16,739
Other accrued liabilities 15,872 15,154
Liabilities of discontinued operations 2,262 4,461
------------------ -----------------
Total current liabilities 49,906 73,559
------------------ -----------------
Long-term liabilities:
Long-term debt, net of current portion 809,908 803,578
Preferred shares subject to mandatory redemption 116,880 96,699
Liabilities of discontinued operations 1,580 2,571
Deferred credits and other long-term liabilities 12,667 12,463
------------------ -----------------
Total long-term liabilities 941,035 915,311
------------------ -----------------
Commitments and contingencies
Minority interest 11 15
------------------ -----------------
Common stock subject to put options 1,136 2,136
------------------ -----------------
Stockholders' deficit:
Common stock 94 94
Additional paid-in capital 198,519 198,470
Accumulated other comprehensive income -- 1,366
Accumulated deficit (371,565) (347,883)
------------------ -----------------
Total stockholders' deficit (172,952) (147,953)
------------------ -----------------
Total liabilities and stockholders' deficit $ 819,136 843,068
================== =================
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
===========================================================================================================================
Three months ended Twelve months ended
December 31, December 31,
-------------------------- --------------------------
2004 2003 2004 2003
(Dollars in thousands)
- ---------------------------------------------------------------------------------------------------------------------------
Revenues $ 63,807 59,769 252,645 231,432
- ---------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Operating expenses, excluding depreciation
and amortization and stock-based
compensation 32,400 29,564 128,755 111,188
Depreciation and amortization 13,411 11,908 50,287 48,089
Stock-based compensation (84) 15 49 15
- ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 45,727 41,487 179,091 159,292
- ---------------------------------------------------------------------------------------------------------------------------
Income from operations 18,080 18,282 73,554 72,140
- ---------------------------------------------------------------------------------------------------------------------------
Other income (expense):
Net gain (loss) on sale of investments and
other assets and impairment losses (5) 13 (245) 608
Interest and dividend income 1,006 528 2,335 1,792
Interest expense (26,617) (25,585) (104,315) (90,224)
Equity in net earnings of investees 2,970 2,857 10,899 10,092
Realized and unrealized losses on
interest rate swaps -- (177) (112) (1,387)
Other nonoperating, net (5,951) -- (5,951) (1,505)
- ---------------------------------------------------------------------------------------------------------------------------
Total other expense (28,597) (22,364) (97,389) (80,624)
- ---------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations before
income taxes (10,517) (4,082) (23,835) (8,484)
Income tax benefit (expense) (237) 486 (516) 236
Minority interest in income of subsidiaries (1) (1) (2) (2)
- ---------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations (10,755) (3,597) (24,353) (8,250)
- ---------------------------------------------------------------------------------------------------------------------------
Income from Discontinued operations -- -- -- 1,929
Gain from Discontinued operations -- 195 671 7,992
- ---------------------------------------------------------------------------------------------------------------------------
Discontinued operations -- 195 671 9,921
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) (10,755) (3,402) (23,682) 1,671
Redeemable preferred stock dividends
and accretion -- -- -- (8,892)
Gain on repurchase of redeemable
preferred stock -- -- -- 2,905
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) attributed to common
stockholders $ (10,755) (3,402) (23,682) (4,316)
===========================================================================================================================
Weighted average shares outstanding:
Basic 9,468 9,483 9,468 9,483
Diluted 9,468 9,483 9,468 9,483
===========================================================================================================================
Basic and diluted loss from continuing operations per share $ (1.13) (0.38) (2.57) (1.50)
===========================================================================================================================
Basic and diluted earnings from discontinued operations
per share -- 0.02 0.07 1.04
===========================================================================================================================
Basic and diluted earnings (loss) per share (1.13) (0.36) (2.50) (0.46)
===========================================================================================================================
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Twelve months ended
December 31,
--------------------------------
2004 2003
--------------- --------------
(Dollars in thousands)
Cash flows from operating activities:
Net income (loss) $ (23,682) 1,671
--------------- --------------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities of continuing operations:
Income from discontinued operations (671) (9,921)
Gain on disposal of discontinued telco operations -- --
Dividends and accretion on shares subject to mandatory redemption 20,181 9,049
Amortization of debt issue costs 4,603 4,171
Depreciation and amortization 50,287 48,089
Gain on early retirement of debt -- (3,465)
Write-off of debt issue costs 5,951 4,968
Minority interest in income of subsidiaries 2 2
Income from equity method investments (10,899) (10,092)
Other non cash items 1,129 (6,499)
Changes in assets and liabilities arising from operations:
Accounts receivable and other current assets (3,157) (4,572)
Accounts payable and accrued expenses 1,868 1,019
Income taxes (138) (149)
Other assets/liabilities 501 (1,437)
--------------- --------------
Total adjustments 69,657 31,163
--------------- --------------
Net cash provided by operating activities of continuing operations 45,975 32,834
--------------- --------------
Cash flows from investing activities of continuing operations:
Acquisitions of telephone properties (225) (33,114)
Net capital additions (35,961) (33,218)
Distributions from investments 15,017 10,775
Net proceeds from sales of investments and other assets 328 2,100
Other, net (145) (553)
--------------- --------------
Net cash used in investing activities of continuing operations (20,986) (54,010)
--------------- --------------
Cash flows from financing activities of continuing operations:
Debt issue and offering costs (7,750) (15,593)
Proceeds from issuance of long-term debt 178,550 317,680
Repayments of long-term debt (193,761) (294,414)
Repurchase of preferred and common stock (1,005) (9,649)
--------------- --------------
Net cash used in financing activities of continuing operations (23,966) (1,976)
--------------- --------------
Net cash contributed from (to) continuing operations to
(from) discontinued operations (3,031) 23,361
--------------- --------------
Net increase in cash (2,008) 209
Cash, beginning of period 5,603 5,394
--------------- --------------
Cash, end of period $ 3,595 5,603
=============== ==============
Supplemental disclosures of noncash financing activities:
Redeemable preferred stock dividends paid in kind $ -- 8,163
=============== ==============
Gain on repurchase of redeemable preferred stock $ -- 2,905
=============== ==============
Accretion of redeemable preferred stock $ -- 729
=============== ==============
Long-term debt issued in connection with Carrier Services'
Tranche B interest payment $ 115 1,548
=============== ==============
FairPoint Communications, Inc.
EBITDA Reconciliation
For the Three and Twelve Months Ended December 31, 2004 and 2003
Three-Months Ended Three-Months Ended
12/31/04 12/31/03
------------------ ------------------
(Dollars in Thousands)
Net cash provided by operating activities of continuing operations $ 13,117 $ 9,176
Adjustments:
Depreciation and amortization (13,411) (11,908)
Impairment of investments (349) -
Other non-cash items (9,427) (1,902)
Changes in assets and liabilities arising from continuing
operations, net of acquisitions (686) 1,037
------------------- ------------------
Income from continuing operations (10,756) (3,597)
Adjustments:
Interest expense 26,617 25,585
Provision for income taxes 237 (486)
Depreciation and amortization 13,411 11,908
------------------- ------------------
EBITDA 29,509 33,410
Adjustments:
Net (gain) loss on sale of investments and other assets (344) (13)
Impairment of investments 349 -
Equity in earnings of investee (2,970) (2,857)
Distributions from investments 3,207 2,125
Realized and unrealized losses on interest rate swaps - 177
Loss on early retirement of debt - -
Non-cash stock based compensation (84) 15
Write-off of costs associated with an abandoned offering - -
of Income Deposit Securities 5,951 -
Deferred patronage dividends (40) (61)
------------------- ------------------
Adjusted Consolidated EBITDA $ 35,578 $ 32,796
=================== ==================
========================================================================================================================
Three-Months Ended Three-Months Ended
12/31/04 12/31/03
------------------ ------------------
(Dollars in Thousands)
Net cash provided by operating activities of continuing operations $ 45,975 $ 32,834
Adjustments:
Depreciation and amortization (50,287) (48,089)
Impairment of investments (349) -
Other non-cash items (20,618) 1,866
Changes in assets and liabilities arising from continuing
operations, net of acquisitions 926 5,139
------------------- ------------------
Income (loss) from continuing operations (24,353) (8,250)
Adjustments:
Interest expense 104,315 90,224
Provision for income taxes 516 (236)
Depreciation and amortization 50,287 48,089
------------------- ------------------
EBITDA 130,765 129,827
Adjustments:
Net (gain) loss on sale of investments and other assets (104) (608)
Impairment of investments 349 -
Equity in earnings of investee (10,899) (10,092)
Distributions from investments 15,017 10,775
Realized and unrealized losses on interest rate swaps 112 1,387
Loss on early retirement of debt - 1,503
Non-cash stock based compensation 49 15
Write-off of costs associated with an abandoned offering
of Income Deposit Securities 5,951 -
Deferred patronage dividends (84) (233)
------------------- ------------------
Adjusted Consolidated EBITDA $ 141,156 $ 132,574
=================== ==================
EBITDA means net income (loss) before income (loss) from discontinued
operations, interest expense, income taxes, and depreciation and amortization.
We believe EBITDA is useful to investors because EBITDA is commonly used in the
communications industry to analyze companies on the basis of operating
performance, liquidity and leverage. We believe EBITDA allows a standardized
comparison between companies in the industry, while minimizing the differences
from depreciation policies, financial leverage and tax strategies. We also
believe that EBITDA is useful as a means to evaluate our ability to pay
dividends. While providing useful information , EBITDA should not be considered
in isolation or as a substitute for consolidated statement of operations and
cash flows data prepared in accordance with GAAP.
Certain covenants in our credit facility contain ratios based on Adjusted EBITDA
and the restricted payment covenant in our credit facility regulating the
payment of dividends on our common stock is based on Adjusted EBITDA. Adjusted
EBITDA for any period is defined in our credit facility as (1) the sum of
Consolidated Net Income (which is defined in our credit facility and includes
distributions from investments), plus the following to the extent deducted from
consolidated net income: provision for taxes, consolidated interest expense,
depreciation, amortization, losses on sales of assets and other extraordinary
losses, and certain other non-cash items, each as defined, minus (2) gains on
sales of assets and other extraordinary gains and all non-cash items increasing
consolidated net income for the period.
FairPoint Communications, Inc.
Consolidated and Rural Local Exchange Comparative Financial Information
For the Three and Twelve Months Ended December 31, 2004 and 2003
($ thousands) Three-Months Ended Three-Months Ended
12/31/04 12/31/03
----------------------- ----------------------
Consolidated Results from Continuing Operations:
Revenues $ 63,807 $ 59,769
Operating expenses 45,727 41,487
----------------------- ----------------------
Income from operations 18,080 18,282
Other expense (28,598) (22,364)
----------------------- ----------------------
Income from continuing operations before income taxes (10,518) (4,082)
Income taxes (237) 486
Minority Interest in income of subsidiaries (1) (1)
Income from discontinued operations - 195
----------------------- ----------------------
Net income (loss) $ (10,756) $ (3,402)
======================= ======================
Adjusted Consolidated EBITDA $ 35,578 $ 32,796
Free Cash Flow (1,853) (2,770)
Other information:
-----------------
Gross property, plant and equipment $ 702,995 $ 674,554
Capital expenditures 12,100 13,982
Cash interest expense (adjusted for amortization, swap interest and
accretion on series A preferred stock) 20,221 21,053
Access line equivalents 271,150 264,308
Residential access lines 189,668 196,145
Business access lines 49,606 50,226
DSL lines 31,876 17,937
===================================================================================================================================
($ thousands) Three-Months Ended Three-Months Ended
12/31/04 12/31/03
----------------------- ----------------------
Consolidated Results from Continuing Operations:
Revenues $ 252,645 $ 231,432
Operating expenses 179,091 159,292
----------------------- ----------------------
Income from operations 73,554 72,140
Other expense (97,389) (80,624)
----------------------- ----------------------
Income from continuing operations before income taxes (23,835) (8,484)
Income taxes (516) 236
Minority Interest in income of subsidiaries (2) (2)
Income from discontinued operations 671 9,921
----------------------- ----------------------
Net income (loss) $ (23,682) $ 1,671
======================= ======================
Adjusted Consolidated EBITDA $ 141,156 $ 132,574
Free Cash Flow (2,303) 9,860
Other information:
-----------------
Gross property, plant and equipment $ 702,995 $ 674,554
Capital expenditures 36,492 33,595
Cash interest expense (adjusted for amortization, swap interest and
accretion on series A preferred stock) 80,579 85,137
FairPoint Communications, Inc.
Sequential Financial Information for the Quarters ending December 31, September 30, June 30, and March 31, 2004, December 31, 2003
($ thousands) Three-Months Three-Months Three-Months Three-Months Three-Months
Ended Ended Ended Ended Ended
12/31/04 9/30/04 6/30/04 3/31/04 12/31/03
------------ ----------- ----------- ----------- ----------
Consolidated Results:
Revenues:
Local calling services $ 15,828 $ 15,974 $ 15,767 $ 15,581 $ 14,343
USF - high cost loop support 5,042 5,807 5,850 5,452 4,642
Interstate access revenue 18,236 17,382 17,772 16,907 17,527
Intrastate access revenue 10,509 10,844 10,325 10,711 11,344
Long distance services 4,508 5,009 4,205 4,044 3,767
Data and internet services 5,504 5,064 4,459 4,027 3,847
Other services 4,180 5,357 4,038 4,263 4,299
------------ ----------- ----------- ----------- ----------
Total revenues 63,807 65,437 62,416 60,985 59,769
Operating expenses 45,727 46,405 44,436 42,524 41,487
------------ ----------- ----------- ----------- ----------
Income from operations 18,080 19,032 17,980 18,461 18,282
Other income (expense) (28,598) (23,152) (22,794) (22,845) (22,364)
------------- ------------ ------------ ------------ -----------
Earnings (loss) from continuing
operations before income taxes (10,518) (4,120) (4,814) (4,384) (4,082)
Income taxes (237) (105) 49 (223) 486
Minority interest in income of subsidiaries (1) -- -- (1) (1)
Gain on disposal of assets of discontinued
operations -- -- 671 -- 195
------------- ------------ ------------ ------------ -----------
Net income (loss) $ (10,756) $ (4,225) $ (4,094) $ (4,608) $ (3,402)
============= ============ ============ ============ ===========
Free Cash Flow:
Adjusted Consolidated EBITDA $ 35,578 34,796 35,295 $ 35,487 $ 32,796
Less:
Scheduled principal payments 4,873 5,149 5,326 10,524 1,017
Cash interest expense (adjusted for amortization, swap interest and
dividend and accretion on series A preferred stock) 20,221 19,859 20,045 20,454 21,053
Capital expenditures 12,100 7,767 9,668 6,957 13,982
Income taxes 237 105 (49) 223 (486)
------------ ----------- ----------- ----------- ----------
Consolidated Free Cash Flow $ (1,853) 1,916 305 $ (2,671) $ (2,770)
============= ============ ============ ============ ===========
Three-Months Three-Months
Ended Ended
12/31/04 12/31/03
------------ ----------
Free Cash Flow:
Adjusted Consolidated EBITDA $ 141,156 $ 132,574
Less:
Scheduled principal payments 25,872 4,218
Cash interest expense (adjusted for amortization, swap interest and
the dividend and accretion on the series A preferred stock) 80,579 85,137
Capital expenditures 36,492 33,595
Income taxes 516 (236)
------------- -----------
Consolidated Free Cash Flow $ (2,303) $ 9,860
============= ===========
Other information:
Gross property, plant and equipment $ 702,995 695,537 690,021 $ 680,859 $ 674,554
Capital expenditures 12,100 7,767 9,668 6,957 13,982
Interest expense (adjusted for amortization
and swap interest) 20,221 19,859 20,045 20,454 21,053
Access line equivalents 271,150 272,691 272,450 267,790 264,308
Residential access lines 189,668 192,353 194,269 194,385 196,145
Business access lines 49,606 49,918 49,830 50,097 50,226
DSL lines 31,876 30,420 28,351 23,308 17,937