8-K

UNITED STATES

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) August 6, 2012

FairPoint Communications, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-32408	13-3725229
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
521 East Morehead Street, Suite 500, 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.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01 Regulation FD Disclosure

FairPoint Communications, Inc. (the “Company”) plans to conduct a series of investor presentations and meetings at which the Company will use the presentation included as Exhibit 99.1 to this Current Report on Form 8-K (the “Investor Presentation”).

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
99.1	Investor Presentation

The information contained herein and in Exhibit 99.1 hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of such section. The information contained herein and in Exhibit 99.1 hereto shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

2

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/ Ajay Sabherwal
	Name:	Ajay Sabherwal
	Title:	Executive Vice President and Chief Financial Officer

Date: August 6, 2012

EX-99.1

August 2012

Investor Presentation

Exhibit 99.1

Notices

and

Safe

Harbors

2

Company Overview

•

Incumbent communications provider in ME,

NH and VT (“Northern New England”)

Over 1 million access line equivalent

Significant organic growth opportunity,

especially in business market

Ubiquitous, next-generation network

Over 14,000 route miles of fiber attracts

sustainable, IP/Ethernet based revenues and

lowers network operating cost

85% average broadband availability

•

Serving the communications needs of rural

communities in 15 other states (“Telecom

Group”)

263k access line equivalents

Less competition

Local presence and workforce

90% average broadband availability

49% broadband penetration

•

$1 billion LTM revenue and ~3,400 employees

Service Territory

Telecom Group

Northern New England

Access Line Equivalents

(1)

Switched access lines plus broadband subscribers as of June 30, 2012

(2)

UNE-P and Resale lines.  Excludes UNE-L and Special Access circuits

(3)

Broadband subscribers as a percentage of voice access lines

3

as of June 30, 2012

Northern

New

England

Telecom

Group

Total

Switched access lines:

Residential

490,944

128,296

619,240

Business

258,718

47,964

306,682

Wholesale

2

69,375

NM

69,375

Total switched access lines

819,037

176,260

995,297

Broadband subscribers

234,308

86,504

320,812

Total access line equivalents

1,053,345

262,764

1,316,109

1

3

Path to Increasing Shareholder Value

4

Four Pillar Strategy for

Increasing Free Cash Flow

Improve

Operations

Change

Regulatory

Environment

Transform

and Grow

Revenue

Execute

Human

Resource

Strategy

Established Track Record for Three Pillars

5

Execute HR

Strategy

Improve

Operations

Change

Regulatory

Environment

Transform &

Grow

Revenue

Proven

Complex project

management

Improved service

quality

Maintain service

quality after

reductions in force

Proven

Executing

2012-2013 Focus

Level playing field

Legislation in Maine

and New Hampshire;

Vermont IRP

FCC ICC/USF

reform

IBEW 2011 Force

Adjustment Process

(FAP)

CWA 2012 FAP

executed in 30 days

Enhanced

competencies in Labor

Relations and Learning

& Development

2012: Sales force &

customer segment

alignment

2012: Revenue

transformation

2013+: Revenue

stability and growth

Operational Improvements

FairPoint continues to make significant operational

improvements

•

5.1% YoY broadband growth

•

Slowdown in voice access line loss, especially in

business

Business Voice Line Loss (YoY)

Broadband Subscribers

-8.5%

-8.3%

-7.8%

-6.9%

-6.3%

-5.1%

-4.0%

-3.4%

-10.0%

-9.0%

-8.0%

-7.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

270k

280k

290k

300k

310k

320k

330k

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

(1)

Refers to Northern New England only

6

–

7.8% YoY total voice line loss

–

3.4% YoY business voice line loss

–

0.8% business voice line loss in 2Q12

•

Fiber-to-the-Tower initiative

–

800+ towers served with fiber

–

Opportunities for further expansion

–

26% YoY reduction in repair calls and

–

30% YoY reduction in repeat trouble calls

–

24% QoQ improvement in broadband

installation intervals

–

8% QoQ improvement in Ethernet

trouble reports

•

Meaningful

improvement

in

service

quality

¹

¹

installation intervals

Regulatory Progress

•

Regulators and legislators in Maine, New Hampshire and Vermont have responded to

FairPoint’s message of the need for a level playing field

•

Improvement in service quality and recognition of need for strong communications

infrastructure provider promotes the concept of a level playing field

•

Benefits include:

–

Increased competitiveness with unregulated providers

–

Fewer

service

quality

metrics

and

lowered

caps

in

retail

service

quality

penalties

–

Reduction in regulatory administrative burden

7

•Regulatory reform

required to fulfill

mission

•26% of Business

Market

Level Playing

Field

Sustainable

Growing Revenue

•Business

•Broadband

•Ethernet/Transport

Strong

Communications

Infrastructure

•Strong provider of last

resort

•Extension of

broadband to unserved

and underserved

regions

Revenue Transformation

Total

Revenue

Growth

Products

Residential

Voice

8

FairPoint plans to change the composition of its

revenue base in order to stabilize and then

grow our top line

Low market share, especially in business

market, creates opportunity for organic growth

in northern New England

Next-generation network on 14k fiber route

miles in northern New England provides

platform for growth

•

Legacy products in decline

•

Growth-oriented products

–

Residential voice

–

Revenue churn arising from:

–

copper to fiber

–

TDM to IP

–

Broadband (business and residential)

–

SMB products and services

–

Ethernet services

–

Other high-capacity/transport and management

services

Revenue Transformation

Human Resource Strategy

FairPoint must align its human resource assets

with the changing telecom landscape

•

15% workforce reduction since 2Q11

•

3,410 employees as of June 30, 2012

•

Increased labor relations competencies with

telecommunications focus

•

Pension & OPEB liabilities arise from

northern New England union contracts

•

New law lowers 2013 required pension

contribution

Pension & OPEB Sensitivity

(1)

Based upon liability at December 31, 2011

(2)

Please see FairPoint’s disclosure regarding the Moving Ahead for

Progress

in

the

21

which

was

furnished

with

the

SEC

on Form 8-K on July 19, 2012

Pension & OPEB GAAP Liability

($ in millions)

Pension

OPEB

Impact on liability given 1%

change in the discount rate

assumption

19%

23%

Impact on liability given 1%

increase in healthcare cost trend

assumption

N/A

$134.1

Impact on liability given 1%

decrease in healthcare cost trend

assumption

N/A

($101.1)

9

2

1

st

–

Lump sum pension distributions of $49 million

–

1,226 management

–

2,184 union (1,911 covered by CBAs with CWA

and IBEW in NNE, which expire Aug. 2014)

–

GAAP figures represent status quo into perpetuity

and reflect continuation of past practices

–

Pension and OPEB are highly sensitive to the

discount rate assumption (i.e. interest rates)

–

OPEB liability is highly sensitive to the medical

cost trend assumption

–

FairPoint’s 2012 contribution would have been  

$8-10M lower, pro forma for the new law

Century Act,

($ in millions)

2010

2011

2Q12

Pension

Plan assets

$176.5

$160.3

$152.8

Projected benefit obligation

$265.8

$318.3

$308.9

Key assumptions:

Discount rate

5.56%

4.63%

4.61%

OPEB

Plan assets

Projected benefit obligation

$0.2

$344.9

$1.0

$533.2

$1.0

$556.6

Key assumptions:

Discount rate

5.65%

4.66%

4.66%

Healthcare cost trend (<65 years)

7.70%

8.40%

8.40%

Healthcare cost trend (>65 years)

8.20%

8.40%

8.40%

10

Tactical Outlook 

2012

2013

2014

2015

Productivity gains

through process and

systems

enhancement

Regulatory

progress:

FCC, ME, VT & NH

Training and labor

relations

Transform revenue

Stabilize and grow

revenue

Productivity gains

through process and

systems

enhancement

Contingency

planning

Regulatory

FCC reform

Negotiation of labor

agreements

Stabilize operations

during negotiation

Regulatory

FCC reform

Grow revenue

Grow revenue

Productivity gains

through process

and systems

enhancement

Refinance

credit agreement

As of June 30, 2012:

•

Liquidity of $107 million

–

$44 million unrestricted cash

–

$63 million of revolver availability, after

$12 million letters of credit

•

Leverage of 3.95x vs. 4.75x covenant

•

Interest coverage of 3.77x vs. 3.25x covenant

•

Covenant limiting capital expenditures to:

Capital Structure

Capital Structure Summary

(1)

Excludes letters of credit of $12 million and capital lease obligations of $3 million

(2)

Undrawn as of June 30, 2012, except for outstanding letters of credit of $12 million, which reduces revolver availability

(3)

Includes management restricted stock and common stock held in reserve for certain pre-petition claims

as of June 30, 2012

(in millions)

Cash and cash equivalents (unrestricted)

$44

Gross debt

$995

Revolver

$75

Amortization schedule:

2011

$0

2012

$10

2013

$10

2014

$25

2015

$38

January 24, 2016

$918

L+450, with LIBOR floor of 200

No dividends if leverage > 2.0x

Interest coverage and leverage covenants

Common stock outstanding

26.2

Warrants

(7 yr, $48.81 strike)

3.6

¹

²

³

11

2012:  $190 million + $20 million carryover

2013:  $170 million

2014:  $150 million

2015:  $150 million

12

2012 Guidance:

•

Unlevered

Free

Cash

Flow

of

$90

to

$100

million

(after

pension

&

OPEB)

•

Continued focus on improving EBITDAR

•

Disciplined capital spending

•

Interest of approximately $68 million

•

Debt amortization of $10 million

Financial Results and Guidance

Financial Highlights

($ in millions)

3Q11

4Q11

1Q12

2Q12

LTM

Revenue

$257.9

$254.2

$248.5

$243.5

$1,004.0

Consolidated EBITDAR

60.5

70.0

55.3

70.2

256.0

Capital expenditures

35.2

35.1

26.3

32.1

128.6

Unlevered Free Cash Flow

2

$25.3

$34.9

$29.1

$38.1

$127.3

Cash on hand

$9.9

$17.4

$35.8

$43.8

$43.8

1

(1)

As defined in FairPoint’s credit facility.  Consolidated EBITDAR is a non-GAAP financial measure.  For a reconciliation of Net Income (Loss) to Consolidated

EBITDAR, see our second

quarter

2012

earnings

release

furnished

August

2,

2012

on

Form

8-K

(2)

Unlevered Free Cash Flow means Consolidated EBITDAR minus capital expenditures.  Unlevered Free Cash Flow is a non-GAAP financial measure.

For

a

reconciliation

of

Net

Income

(Loss)

to

Unlevered

Free

Cash

Flow,

see

our

second

quarter

2012

earnings

release

furnished

August

2,

2012

on

Form

8-K

13

Summary

13

•

Operational improvements create foundation for transformation

–

–

–

•

Regulators and legislators are supportive of FairPoint’s need for a level playing field

–

–

•

Transforming revenue by adding sustainable, growth-oriented revenues on our

next-generation network in northern New England

–

–

–

•

Focus on increasing free cash flow to enhance shareholder value

–

–

–

–

–

–

–

–

Productivity enhancements and 15% workforce reduction

Focusing on productivity gains arising from process and systems enhancements

Deregulation in Maine and New Hampshire

Incentive Regulation Plan in Vermont

3 contiguous states with network ubiquity

14,000 fiber route miles

26% business market share

Broadband, FTTT and service quality improvements