-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GC7dWUtLs85l/SLmYB7ZtmOjU4DuVUuFiw0MKa1nwlzlN5uU/tTvNHUS+/TPYWE2 kjm/T3FR6F10JOw/LGDIsA== 0000912057-01-513749.txt : 20010509 0000912057-01-513749.hdr.sgml : 20010509 ACCESSION NUMBER: 0000912057-01-513749 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010507 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAIRPOINT COMMUNICATIONS INC CENTRAL INDEX KEY: 0001062613 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 133725229 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-56365 FILM NUMBER: 1625739 BUSINESS ADDRESS: STREET 1: 521 EAST MOREHEAD ST STREET 2: STE 250 CITY: CHARLOTTE STATE: NC ZIP: 28202 BUSINESS PHONE: 7043448150 FORMER COMPANY: FORMER CONFORMED NAME: MJD COMMUNICATIONS INC DATE OF NAME CHANGE: 19980527 8-K 1 a2048450z8-k.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): MAY 7, 2001 ------------- FAIRPOINT COMMUNICATIONS, INC. ------------------------------ (Exact Name of Registrant as specified in its charter) DELAWARE 333-56365 13-3725229 --------------------- ------------------ -------------------- (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 521 EAST MOREHEAD STREET, SUITE 250, CHARLOTTE, NORTH CAROLINA 28202 -------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (704) 344-8150 --------------- N/A -------------------------------------------------------------------- (Former name or former address, if changed since last report): Item 5. Other Events On May 7, 2001, FairPoint Communications, Inc. (the "Company") issued a press release (the "Press Release") announcing first quarter results for the quarterly period ended March 31, 2001. The Press Release is hereby incorporated by reference herein and is attached hereto as Exhibit 99.1. Item 7. Exhibits 99.1 Press Release, dated May 7, 2001. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FAIRPOINT COMMUNICATIONS, INC. By: /s/ Walter E. Leach, Jr. --------------------------------- Name: Walter E. Leach, Jr. Title: Senior Vice President and Chief Financial Officer Date: May 8, 2001 EX-99.1 2 a2048450zex-99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE CONTACT: Timothy W. Henry Phone: (704) 344-8150 E-mail: Thenry@fairpoint.com FAIRPOINT COMMUNICATIONS, INC. ANNOUNCES FIRST QUARTER RESULTS o CONSOLIDATED REVENUES UP 68.4% COMPARED WITH FIRST QUARTER 2000 o CONSOLIDATED EBITDA LOSS OF $12.3 MILLION, AFTER RECORDING A RESTRUCTURE CHARGE OF APPROXIMATELY $33.6 MILLION DUE TO THE CONSOLIDATION OF OPERATIONS AT THE COMPANY'S COMPETITIVE COMMUNICATIONS SUBSIDIARY o TRADITIONAL TELEPHONE COMPANY REVENUES UP 5.4% COMPARED TO FIRST QUARTER 2000 o TRADITIONAL TELEPHONE COMPANY EBITDA OF $32.0 MILLION, A 53.5% INCREASE COMPARED TO FIRST QUARTER 2000 CHARLOTTE, N.C. (May 7, 2001) - FairPoint Communications, Inc. ("FairPoint" or the "Company") today reported operational results for its first quarter ended March 31, 2001. FairPoint reported significant year over year growth in revenues driven by access line growth due to traditional telephone company acquisitions during 2000 and from a substantial increase in customers at its competitive communications subsidiary, FairPoint Communications Solutions Corp. ("Solutions"). The Company reported consolidated revenues for the first quarter ended March 31, 2001, of $75.8 million, a 68.4 percent increase compared with consolidated revenues of $45.0 million for the same period in 2000. Revenue growth was due to the revenues contributed by the traditional telephone companies acquired in 2000, the solid year over year growth of the traditional telephone companies owned and operated for the same period and the rapid customer growth at Solutions during the last 12 months. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) was a negative $12.3 million for 2001, compared to a positive EBITDA of $10.5 million for the same period in 2000. The decrease in EBITDA was attributed to operating losses at Solutions including a restructure charge of approximately $33.6 million associated with Solutions' consolidation announced on January 5th, 2001. The traditional telephone companies reported first quarter revenues of $55.0 million, an increase of $18.9 million or 52.5 percent compared to the same period in 2000. Revenues contributed by the companies acquired in 2000 were approximately $16.5 million. The traditional telephone companies reported first quarter EBITDA of $32.0 million, an increase of $11.2 million or 53.5 percent versus $20.8 million for the same period in 2000. For the traditional telephone companies owned for the same period, EBITDA increased 4.1 percent to $21.7 million, and the companies acquired in 2000 contributed EBITDA of $10.3 million. Solutions reported first quarter revenues of $20.9 million, an increase of $11.9 million or 132 percent. Solutions recorded a first quarter EBITDA loss of approximately $44.3 million, which included a restructure charge of approximately $33.6 million. Excluding the restructure charge, Solutions' EBITDA loss in the first quarter was approximately a negative $10.7 million compared to a negative $17.3 million EBITDA loss for the fourth quarter ended December 31, 2000, excluding a restructure charge of approximately $16.5 million for Solutions' consolidation activities in December. The Company reported a first quarter net loss after taxes of $59 million. The net loss was attributed to the net loss after taxes incurred at Solutions of approximately $32 million and higher interest expenses of the Company related to debt incurred in connection with the acquisitions of traditional telephone companies in 2000. In 2000, the Company acquired four traditional telephone companies that served approximately 81,800 access lines on March 31, 2001. The Company operates 28 traditional telephone companies serving approximately 237,700 access lines on March 31, 2001. On May 7, the Company executed a purchase contract to acquire approximately 3,000 access lines located in southwestern Pennsylvania. This acquisition will likely be completed during the third quarter of this year. On March 31, 2001, Solutions served approximately 113,900 access lines, a decrease of 6,700 access lines compared with 120,600 access lines on December 31, 2001. This decline in access lines was planned and was attributed to the scaling back of Solutions' business plan during the fourth quarter of 2000 and first quarter of 2001, as previously announced. Solutions consolidated its operations in two phases in December 2000 and the first quarter of 2001. This consolidation was a proactive response by management to the deterioration in the capital markets and general economy that became evident in the fourth quarter 2000. "During the first quarter ended March 31, 2001, we successfully completed the scaling back and consolidation of our operations," commented CEO Jack Thomas. "We believe we are poised to grow Solutions successfully by concentrating our efforts in our established facilities-based markets that edge-out from our traditional telephone companies." The Company, on March 30, 2001, amended its senior credit facility and subsequently on April 11, 2001 increased a term tranche commitment by $64 million. In addition, the amendment revised the loan amortization of the facility's revolving credit commitments and also revised certain financial covenants. Proceeds were used to pay down the Company's outstanding amounts under the revolving credit facilities and thereby increased the availability under these revolving facilities for general corporate purposes and potential future acquisitions. Solutions, on March 21, 2001, amended its senior secured credit facility. The amendment reduced the facility commitment to $200 million from $250 million and reset certain financial covenants. The amendment reflected the changes in the revised business plan initiated in December 2000 and January 2001. Solutions' business plan continues to be fully funded. On April 1, 2001, the Company named John P. Duda president and chief operating officer of the Company and Peter G. Nixon president of the Company's traditional telephone group or the Telecom Group. Mr. Duda joined the Office of the Chairman reporting to Chairman and CEO Jack Thomas. Mr. Duda formerly served as president and CEO of the Company's Telecom Group. Mr. Nixon formerly served as president of the Telecom Group's Eastern Region. ABOUT FAIRPOINT FairPoint is an integrated communications provider offering voice, Internet, data, Web-enabled and other related communication services to its customers in its traditional telephone companies. It provides similar services to small and medium size businesses in targeted ex-urban markets through execution of a competitive local exchange communications business that utilizes the network and infrastructure of its traditional telephone companies to service these adjacent markets. FairPoint was founded in 1991 to take advantage of the consolidation opportunities in the highly fragmented rural independent telephone industry. Since its first traditional telephone acquisition in 1993, the Company has completed 28 acquisitions and serves customers in 17 states across the United States. In 1998, the Company established its competitive communications subsidiary, Solutions, to pursue new market opportunities created by the deregulation of the local exchange carrier markets. Solutions is pursuing a regional "edge-out" facilities-based strategy entering markets near the Company's traditional telephone companies and competing with the incumbent local exchange carrier. On March 31, 2001, the company served more than 351,000 access lines in 22 states across the United States. FORWARD LOOKING STATEMENTS The statements in this news release that are not historical facts are forward-looking statements that are subject to material risks and uncertainties. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors which are discussed in previous FairPoint Communications, Inc. filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, uncertainties relating to economic conditions, acquisitions and divestitures, growth and expansion risks, the availability of equipment, materials, inventories and programming, product acceptance, and the ability to construct, expand and upgrade its services and facilities. FairPoint does not undertake to update any forward-looking statements in this news release or with respect to matters described herein. PART I. FINANCIAL INFORMATION Item 1. Financial Statements FairPoint Communications, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
===================================================================================== MARCH 31, DECEMBER 31, 2001 2000 Assets (UNAUDITED) - ------------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) Current assets: Cash and cash equivalents $ 5,612 1,023 Accounts receivable and other 55,075 56,020 - ------------------------------------------------------------------------------------- Total current assets 60,687 57,043 - ------------------------------------------------------------------------------------- Property, plant, and equipment, net 354,651 348,916 - ------------------------------------------------------------------------------------- Other assets: Investments 49,985 50,353 Goodwill, net of accumulated amortization 448,516 451,486 Deferred charges and other assets 31,779 33,625 - ------------------------------------------------------------------------------------- Total other assets 530,280 535,464 - ------------------------------------------------------------------------------------- Total assets $ 945,618 941,423 ===================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) - ------------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 25,590 38,118 Current portion of long-term debt and other long-term liabilities 6,818 6,480 Demand notes payable 484 535 Accrued interest payable 22,407 11,547 Other accrued liabilities 56,834 47,955 - ------------------------------------------------------------------------------------- Total current liabilities 112,133 104,635 - ------------------------------------------------------------------------------------- Long-term liabilities: Long-term debt, net of current portion 813,591 751,630 Deferred credits and other long-term liabilities 15,774 15,754 - ------------------------------------------------------------------------------------- Total long-term liabilities 829,365 767,384 - ------------------------------------------------------------------------------------- Minority interest 16 15 - ------------------------------------------------------------------------------------- Common stock subject to put option 4,136 5,011 - ------------------------------------------------------------------------------------- Stockholders' equity: Common stock 498 498 Additional paid-in capital 224,293 227,245 Unearned compensation (7,864) (9,707) Accumulated other comprehensive income (loss) (3,897) 440 Accumulated deficit (213,062) (154,098) - ------------------------------------------------------------------------------------- Total stockholders' equity (deficit) (32) 64,378 - ------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 945,618 941,423 =====================================================================================
FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, 2001 2000 - -------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) Revenues $ 75,838 45,048 - -------------------------------------------------------------------------------- Operating expenses: Network operating costs 35,194 21,145 Selling, general and administrative 20,856 15,226 Depreciation and amortization 16,199 8,996 Restructure charge 33,607 -- Stock-based compensation (741) 12,323 - -------------------------------------------------------------------------------- Total operating expenses 105,115 57,690 - -------------------------------------------------------------------------------- Loss from operations (29,277) (12,642) - -------------------------------------------------------------------------------- Other income (expense): Net gain on sale of investments -- 206 Interest income 48 730 Dividend income 555 182 Interest expense (30,863) (10,165) Other, net 893 681 - -------------------------------------------------------------------------------- Total other expense (29,367) (8,366) - -------------------------------------------------------------------------------- Loss before income taxes (58,644) (21,008) Income tax benefit (expense) (319) 2,826 Minority interest in income of subsidiaries (1) (1) - -------------------------------------------------------------------------------- Net loss $ (58,964) (18,183) ================================================================================ FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
========================================================================================================= THREE MONTHS ENDED MARCH 31, 2001 2000 - --------------------------------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS) Cash flows from operating activities: Net loss $ (58,964) (18,183) Adjustments to reconcile net loss to net cash provided by operating activities: Amortization of debt issue costs 3,417 649 Depreciation and amortization 16,199 8,996 Deferred tax valuation allowance (18,994) Other non cash items 38,048 11,191 Changes in assets and liabilities arising from operations, net of acquisitions: Accounts receivable 1,151 (2,791) Accounts payable and accrued expenses 430 3,523 Income taxes recoverable 3,005 (438) - ---------------------------------------------------------------------------------------------------- Total adjustments 43,256 21,130 - ---------------------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities (15,708) 2,947 - ---------------------------------------------------------------------------------------------------- Cash flows from investing activities: Net capital additions (36,485) (10,446) Other, net 1,298 (818) - ---------------------------------------------------------------------------------------------------- Net cash used in investing activities (35,187) (11,264) - ---------------------------------------------------------------------------------------------------- Cash flows from financing activities: Loan origination costs (1,963) (3,251) Proceeds from issuance of long-term debt 130,125 5,861 Repayment of long-term debt (67,859) (104,702) Net proceeds from the issuance of common stock -- 159,160 Other, net (4,819) (14) - ---------------------------------------------------------------------------------------------------- Net cash provided by financing activities 55,484 57,054 - ---------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents 4,589 48,737 Cash and cash equivalents, beginning of period 1,023 9,923 - ---------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 5,612 58,660 ====================================================================================================
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