Month: January 2021

VBA Announces New President

first_imgPeter Crosby, chairman of the Vermont Bankers Association announced that Christopher D’Elia has been appointed to the position of president of the VBA. D’Elia replaces Timothy Hayward who left the VBA after 18 years of service to become Chief of Staff for Governor Jim Douglas.D’elia most recently served as commissioner of the Vermont Department of Economic Development. During his two year tenure as commissioner, he was responsible for overseeing the economic development efforts for the state of Vermont, facilitating a partnership of public and private organizations associated with economic development as well as acting as a liason between the business community and the Dean administration. Prior to his commissioner’s post, D’Elia was executive directorof the Vermont Economic Progress Council, of Workforce Education and Training at Vermont Technical College, and executive director of the Lamoille Economic Development Corporation.last_img read more

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Legislature, business scuffle over Yankee, health, housing

first_imgLegislature, business scuffle over Yankee, health, housingby Art EdelsteinA variety of issues emerged from the 2008 legislative session of particular interest to Vermont’s business community. The cost of workers’ compensation, energy and the decommissioning of Vermont Yankee, health care, the declining quality of roads and bridges and the cross border passport issue are among several that came up in discussion with members of the Legislature and business leaders.Legislators must also pass some parts of the governor’s $214 million economic stymulus plan, which he announced April 19, 2008. (see www.vermontbiz.com for complete details of the plan)Workers’ compensation and its high cost in Vermont was an issue raised by Steve Adams, R-Hartland, the House minority leader. As of this writing Senate bill S345 has the best chance of passing both houses. Adams said the bill aims to reduce cost of workers’ compensation by addressing fraud, deductible policies, and calculation of the weekly wage. The bill House Republicans introduced, H831, said Adams, “won’t go anywhere.”According to Adams, S345 “won’t really reduce rates.” He said Vermont has the highest workers’ compensation rates in the nation, which “stymies economic development.” H831, he said, “would in fact lower rates but that bill won’t be taken up.”The Vermont Chamber of Commerce in its legislative update report, said it wants “greater cost savings from benefit realignment, which includes setting the minimum compensation rate at 15 percent of the average weekly wage (currently at 50 percent) and setting the maximum weekly compensation rate at 100 percent of the average weekly wage (currently at 150 percent); and offsetting wage replacement benefits for injured workmen who are not permanently disabled once they become eligible for certain governmental benefits.”Adams is not sure S345 will pass. According to him, “the bill doesn’t help but it doesn’t hurt.”Another issue of concern to House Republicans and the Vermont State Chamber of Commerce is the cost involved in the eventual decommissioning of the Vermont Yankee nuclear power plant in Vernon.”I’m hearing a lot about S373 and the decommissioning fund,” said Adams. Entergy, the company that owns the plant, he explained, wants to spin off some of its other nuclear facilities, ones that are currently stand alones, into a new company called Newco (ultimately, the name would change to something less generic).Adams said this plan is “about economies of scale, they save money and rate payers would save money through economy of scale.” The thrust of S373, according to him, is that the Legislature would let Entergy “spin off plants into Newco.”Tony Klein, D-East Montpelier/Middlesex, serves on the House Natural Resources and Energy Committee and has a very different view of the bill and this issue. He said Vermont Yankee had already submitted an application for relicensing on March 2. According to him, the fund set aside for decommissioning the plant needs to be assured to reach the estimated $700 million decommissioning cost.While the fund is currently at $440 million, Klein said, those who want more control over the funding of decommissioning do not think the current fund, and the money it earns, will be enough to meet expected expenses should the plant be relicensed for 20 more years beyond the current date of 2012 to the year 2032.Klein said that those who oppose the decommissioning bill “assume that decommissioning in 2032 will cost the same as in 2012.” He believes the cost will be much higher and the state has to assure that Entergy will be able to cover the costs, not Vermont ratepayers.Adams said the decommissioning fund is not a fund Vermont ratepayers should contribute to.”It’s a fund by federal law administered by the Nuclear Regulatory Commission. It’s managed by Mellon Bank.”According to Adams, if the bill passes requiring Entergy to assure there will be enough money in the fund, “then Entergy will pass on to local rate payers the cost of raising the additional money for the decommissioning fund.”In Adams’ view, “If Vermont Yankee shuts downs in 2012 and there is the five-year cool down time, there will be enough money in the fund.” He did not address the 2032 date.Adams said there is a greater issue with S373.”It does something not done before, it has the Legislature interfere with a public docket item the Public Service Board is currently working on.””That alone,” warns Adams, “ought to cause us to stop working on this bill. This isn’t the Legislature’s area to work on.””The business community is very suspicious of the regulatory process here if the Legislature is going to interfere in the process,” said Adams. “When is a deal a deal? they are asking.”Duane Marsh at the Vermont Chamber of Commerce said his group’s position on energy and Yankee is that “all energy alternatives need to be part of future energy mix, including nuclear.””We want to see that it doesn’t become so difficult for Yankee’s renewal that they do not continue toward renewing their license in 2012.”The actions by the Legislature, in his view, will “make it difficult to comply and give the sense to Yankee that it is so difficult to stay here and that they decide not to.”In another issue of concern to the business community, Adams said, was the cross border passport issue which deals with the federal government’s Western Hemisphere Travel Initiative. That legislation requires passports for all those crossing the US Canada/Mexico border. Business, he said, supports the creation of the enhanced drivers license rather than requiring everyone to have a passport. S358 addresses the issue, one he sees as a tourism initiative.”Vermont businesses,” he noted, “rely on tourism.”The bill passed the Senate and as of this writing was in the House Transportation Committee. The bill creates the enhanced drivers license.The issue of the declining quality of the state’s bridges and roads came up in discussions with Adams, Klein and Marsh.While the Douglas Administration has decided to put $3 million into Operation Smooth Ride, to fix potholes this year, there is a legislative push for the state to sell bonds to raise money for a more significant effort to improve the transportation infrastructure.Adams said the state had “done the best we can with the funds we have.”He attributes part of the problem to previous administrations, including the administration of Howard Dean.”It’s coming home to roost,” claims Adams, of the borrowing from the Transportation Fund in previous years.Adams said he favors bonding, which Douglas generally opposes.”We can’t afford to do what we have to do, it will cost a couple million to keep up.”He justified his position saying, “It will cost us less to pay for the bond today than to just purchase materials outright in the future. I’ve said interest rates will never be lower, we have a AAA bond rating.”Bonding beyond the $50 million accepted by Douglas, “will not happen this year,” said Adams.Klein said the Legislature “didn’t take from the Transportation Fund for unrelated activities.”According to him, the Douglas Administration’s transportation budget “had a deficit to begin with. They were making up the deficit by cutting across the Transportation Agency budget.”He sees Operation Smooth Road as a reaction to all the media interest in potholes. He called this program “operation road aspirin.”The House passed a requirement for looking into bonding which the governor doesn’t like, said Klein. According to him, “This governor is going to hold fast to not increasing taxes and he is betting the infrastructure while he is in power, but we all know the infrastructure will fall apart sometime.”Marsh said there has been too much diversion of funds from the transportation trust fund over the years. He said the figure was “close to $500 million in the past 20 years.”His answer to the problem was “to find ways to look at current spending levels to see what can be done from current levels to overcome the situation created.”The Chamber opposed a gas tax increase in the previous session.”Our policy is to stop diversions, and see what we can do,” said Marsh. “We want to look carefully at bonding, an alternative that needs to be considered.”Health care is an important issue for business this legislative session.Andrea Cohen, the Public Policy Coordinator with Vermont Businesses for Social Responsibility, said her organization wants the Legislature to begin exploring public financing for health care as “a more equitable system than we currently have.”VBSR members gripe about “the great expense members incur to insure families.”According to Cohen, under Catamount Health, competitors who don’t provide insurance pay $1 a day per worker to that program. As a result some VBSR employers spend $8,000 to $110,000 a year to insure workers and they do not see a level playing field “when our businesses spend so much money and the cost increases by 10 percent a year.”According to Cohen, “we have an equity issue, our employers pay so much and others pay $1 a day.”She gave the example of a construction company paying for health care at bidding time is unable to compete with a company paying $1 a day under Catamount Health rules.She sees premiums increasing yearly, while “the quality of insurance and benefits they can provide is decreasing and includes higher deductibles. We have a system relying on employer-sponsored insurance and it is crumbling,” notes Cohen.VBSR “wants to separate insurance from employment. We want to decouple health care. We have goals like public financing to pay for this.”The Vermont Chamber of Commerce supported a no vote on H887, which, according to Marsh, would shift more cost onto private sector premiums, while enhancing the access and thus cost of Catamount Health. He said “the bill does contain some good provisions, but amendments to eliminate the problems failed on the House floor.”The Chamber doesn’t like new mandates placed on insurance policies. An example is post-divorce coverage where a divorced person has the right to stay on their ex spouse’s policy with any extra cost paid by two parties. “It still makes a business a partner in a divorce settlement,” argues Marsh.The provision for coverage for adult children up to age 23 is unacceptable to the Chamber. Marsh said the cost to private insurance payers would be $16 million to $32 million a year because these health insurance costs are being born by businesses that pay a portion of the policy. The current coverage provisions end at age 19.Marsh said upping the coverage age “sends a wrong message to a child not attending college who should be seeking employment. If coverage is not available they are eligible for Catamount Health, a subsidized policy. By staying on a family policy the Catamount product isn’t available to them.”The Chamber wants to see elimination of the 75 percent rule where currently an insurance carrier doesn’t have to sell to a business unless 75 percent of employees sign up.Marsh said the new Catamount provisions would eliminate that completely, which will lead to “adverse selection. Which means business can have multiple carriers within their company.” The Chamber is concerned about the ramifications to insurance rates.”You have to balance good risk with bad risk,” said Marsh.The Chamber wants to study what a single-payer system would look like and how it would be funded. It also wants to study what the system would look like if it were government intervention free.”We want a cost comparison, structural comparison and we want the information to go forward.”We think Catamount Health should work and be sustainable before we expand it,” said Dawn Francis at the Greater Burlington Industrial Corp. “We oppose the cost implications of the bill as currently drafted.”Klein was blunt in discussing the current legislative initiatives on health care.”Nobody likes what we have now for health care in terms of cost and coverage,” he admitted. “Most reasonable people would agree we can’t get universal coverage in one step. Anything that we can do to move forward on an incremental basis is better than nothing I believe. I think that is what the Legislature has attempted to do this session. The Legislature wanted to go further but there is no money.”There is considerable discussion about H863 “AN ACT RELATING TO CREATION AND PRESERVATION OF AFFORDABLE HOUSING AND SMART GROWTH DEVELOPMENT.”The governor advanced an alternative, The Vermont Neighborhoods Bill. Marsh said the problem with the bill passed by the House “is it doesn’t allow for construction of needed homes to increase supply and reduce overall costs.”He said under this legislation “500 homes would be produced and the need is in the 12,000 home range, we need to balance demand and supply and control costs.”The Chamber said the Legislature “wants to contain housing to contiguous areas. We think there are areas of development that can be made without impacting the character of Vermont. We want to make it easier for more homes to be built.””What I heard on the floor of the house from developers,” said Klein, is “less regulation means more housing. That is a discussion most Vermonters don’t approve of anymore. We are well beyond that.”He said the Vermont Neighborhoods Bill, was a gut of Act 250. “What it did,” he explained, “was it took language from other programs tightly designed around their location. The program the administration offered was to let them build what they want where they want with no guaranteed of any affordability.””We are following H863 housing bill very closely,” said Francis with GBIC. Her group opposes the bill in its current form. “It offers very little gain for a lot of pain. We’re concerned the bill is too restrictive for the amount of land area that could be considered for regulatory relief and fee reduction. We would like to see more land area included for consideration of permit relief. It could be for commercial as well.”The current bill, said Francis, won’t result in any significant expansion of workforce housing. “This bill doesn’t have any money. It does have some tax credits for VFHA. There are no incentives for municipalities or the for-profit community to build.”Sam Matthews at Central Vermont Economic Development Corp has concerns with the bill. She is concerned the bill “doesn’t encourage new housing starts outside of state designated growth centers, meaning rural areas, which leaves the rural municipalities out of the equation.”Art Edelstein is a freelance writer from East Calais.last_img read more

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Auditor Salmon says schools can save more on supplies

first_imgVermont State Auditor, Tom Salmon, is attempting to find more ways for Vermont schools to save money on  supplies.  In a report released on April 20, Salmon said that schools are missing an opportunity to take advantage of the State s competitive bidding, estimating that they spend at least $60 million a year on supplies such as paper and computers.  The state has an extensive centralized contracting system covering 400 commodities, but Salmon noted that only 21 percent of the school supervisory unions surveyed were checking state contracts.   The State s Department of Buildings & General Services (BGS) has developed an extensive centralized contracting system with competitively bid contracts covering 400 commodities in 45 categories, Salmon noted, but we are not adequately deploying this system to help schools stretch their dollars and save money. He said that schools likely spend at least $60 million a year on standard supplies such as paper, janitorial and office supplies, computers and other educational staples. If we could save just 3 percent on that amount, it would mean nearly $2 million a year in avoided costs for the educational system, he said.Salmon said his study also showed that at times a local school district can beat the state price on an item by purchasing from a local vendor. School business managers take pride in finding low prices, and by paying attention to the local vendors seasonal promotions, close-outs and other offerings, they can beat the state price, he noted.For example, schools can often beat the State s price on copy paper, Salmon said, because the State is mandated by law to procure copy paper that is recycled and processed 100 percent chlorine free. The State is typically about 25 percent higher on paper costs, he noted.The auditor s limited review found that one supervisory union in the Southern part of the state paid less than the State contract price on 7 of 9 comparable items, not including copy paper. The school union saved between 3 and 48 percent on the 7 items. Another school union in central Vermont paid more than the State contract price on 5 of 7 items, not including copy paper, paying between 10 and 22 percent more on the 5 items.The report noted that legislation passed in 1987 required BGS and the Dept. of Education to develop and promote a program of centralized purchasing of equipment and supplies for public schools in Vermont, by which purchases may be combined in order to obtain volume purchasing discounts and other purchasing benefits.Salmon said the current system doesn t fully address the legislation s requirement for a centralized system for school purchasing, but is a good starting point for more cooperation. The State s system currently doesn t allow us to know which schools are using the system and how much they might be saving, Salmon noted. But it s clear that we have opportunities for improvement and more savings. We have recommended that Education and BGS get together and appoint an action committee to explore ways to increase cost-effective savings in the purchasing area. There s a lot more we could do, in my opinion, Salmon said.The purchasing report is available at www.auditor.vermont.gov(link is external). Click on Audits & Reports and then Reports to access the review on school purchasing. Source: Vermont Auditorlast_img read more

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FairPoint releases Q3 financial report

first_img‘ 213,483202,784216,582211,598218,177 Prepaid and other assets Net income (loss)$(330,961) Predecessor Company (4)  High-speed data subscribers include DSL, fiber-to-the-premise, cable modem and fixed wireless broadband. Loss before reorganization items and income taxes (73,414) 34 (21,064) 9,017 (Unaudited) Two Hundred Forty- 105,497 3Q11 Reported2Q11 Reported1Q11 Reported4Q10 Reported3Q10 Restated 725,786 (4,457) Other $              60,453$              70,499$              49,085$              83,987$              59,203 $              35,170$              52,121$              53,725$              40,868$              53,705 Claims payable and estimated claims accrual (35,358) Twenty-Four $           (279,441)$             (27,097)$            562,484$             (74,987)$             (66,084) (17,147) Prepaid expenses Ended 24,746 (1)  Following FairPoint’s emergence from Chapter 11 on January 24, 2011, all reorganization items are reported in total operating expenses.   ‘ (5,290) Net cash used in investing activities 21,515 Post-retirement accruals 215,218 Total liabilities not subject to compromise Accounts payable and the Nine Months ended September 30, 2010 Two Hundred Forty- 13,049 -1.1%-1.1%-1.2%-2.1%-2.2% (12,477) ‘ December 31, 130,933 Additional paid-in capital, Successor Company payable and estimated claims accrual or liabilities subject 120,149 2,960 Total switched access lines (1,608) Repayment of capital lease obligations 17,821 (322,061) 80,796 Net income (loss) Restricted cash Successor ‘ $2,973,794 Successor Company January 24, 2011 ‘ $‘ Total operating expenses 27,161 Business access lines Other accrued liabilities September 30, 2011 1,709 Claims payable and estimated claims accrual 89,424 Total assets$2,068,771 Accrued interest payable 3,561,212 268 Provision for uncollectible revenue 360,779 (Restated) Total current liabilities Net income (loss) 131,160 311,613 257,912262,636254,780267,992260,630 3,943 Access (3)  Wholesale access lines include Resale and UNE-P, but exclude UNE-L and special access circuits.   Long-term debt, net of current portion (46,634) 389,445 Capital additions included in accounts payable, claims (195,098) 894 Other non-cash items, net (2b) (3,423) 458,471 1,818 Other long-term liabilities Interest expense Predecessor Company 1,075,392 290,058 Other assets 3 4883503493772,207 Capital lease obligations Basic$(10.89)$(0.74) (322,061) 655,901 Reorganization costs paid 2,338 636 ‘ ‘ 262,019 344,463 Assets 33,972 $           (279,441)$             (27,097)$            562,484$             (74,987)$             (66,084) Interest expense 1,898,365 125,170 Restricted cash – cash claims reserve Predecessor Company 262,019 Liabilities not subject to compromise: Deferred income tax, net Consolidated Communications,FairPoint Communications, Inc. (NasdaqCM: FRP) (FairPoint or the Company), a leading provider of communications services, November 2 announced its financial results for the third quarter endedSept. 30, 2011Related QuotesSymbolPriceChangeFRP5.10+0.15{“s” : “frp”,”k” : “a00,a50,b00,b60,c10,g00,h00,l10,p20,t10,v00″,”o” : “”,”j” : “”}As previously announced, the Company will host a conference call and simultaneous webcast to discuss its results at10:00 a.m. (EDT)onThursday, Nov. 3, 2011.”We accomplished great things this quarter,” said Paul H. Sunu, CEO of FairPoint.  “Despite a major storm affecting much of our footprint, we delivered a solid quarter operationally and financially.  High-speed Internet subscriber growth remains strong and we continue to improve the rate of voice access line loss.  I’m impressed with the Company’s resolve and our team’s ability to execute.” 89,695 15,713 January 24, 2011 ‘ Wholesale access lines (3) Predecessor ‘ Other income (expense): (809) —-1,397 Total stockholders’ equity (deficit) 350,684 Condensed Consolidated Balance Sheets Consolidated EBITDAR(1) before pension contribution and storm-related expenses of $70.6 millionHigh-speed Internet subscriber growth accelerates to 8.2% year-over-year, versus a 1.7% loss a year earlierVoice access line loss slows to 8.8% year-over-year, versus 11.0% a year earlierNet loss of $279.4 million driven by non-cash accounting charge of $262.0 millionOperating and Regulatory HighlightsHigh-speed Internet subscriber growth accelerated to 8.2% year-over-year, compared to a 5.4% increase in the second quarter of 2011 and a 1.7% decline in the third quarter of 2010.  FairPoint has added more than 22,000 high-speed Internet subscribers year-to-date, compared to less than 400 for the first nine months of 2010.  High-speed Internet penetration reached 29.6% of voice access lines at Sept. 30, 2011, as the Company surpassed 312,000 high-speed Internet subscribers in service’another all-time high.Voice access line loss slowed for the sixth consecutive quarter, reaching 8.8% year-over-year versus 9.3% in the second quarter of 2011 and 11.0% in the third quarter of 2010.On Sept. 8, 2011, the Company announced it would reduce its work force by approximately 400 employees by year-end.  The initiative is expected to result in operating expense savings of approximately $34 million annually, with the full benefit realized in 2012.  As of Sept. 30, 2011, the Company had approximately 3,700 employees, compared to approximately 4,000 at June 30, 2011, with most of the reduction occurring in late September.  FairPoint incurred $3.3 million in severance and incentive payments in the third quarter.  The Company expects the total severance and incentive payments related to this work force reduction initiative will range from $7 million to $13 million.FairPoint continued its fiber-to-the-tower expansion during the quarter.  As of Sept. 30, 2011, fiber had been placed to more than 700 of the approximately 800 towers that the Company has announced it intends to serve with fiber.Financial HighlightsThird Quarter 2011 as compared to Second Quarter 2011Revenue was $257.9 million in the third quarter of 2011 as compared to $262.6 million in the second quarter of 2011.  The unfavorable variance of $4.7 million was primarily the result of two items.  First, the Company recognized a one-time revenue benefit of $4.0 million in the second quarter related to the reversal of retail and wholesale service quality penalties.  Second, service outages related to Hurricane Irene resulted in approximately $0.8 million of incremental service quality penalties during the third quarter.  Excluding these two items, revenue was essentially flat on a sequential basis as declines in voice services revenue were offset by increases in access revenue, data and Internet services revenue and other revenue.Operating expenses, excluding depreciation, amortization and reorganization, were $213.5 million in the third quarter of 2011 as compared to $202.8 million in the second quarter of 2011.  The unfavorable variance of $10.7 million was primarily the result of three items that impacted the third quarter.  First, non-cash other post-employment benefit (“OPEB”) expense increased by approximately $4.9 million after the Company received its annual actuarial study and booked a true-up to the liability.  Second, FairPoint recognized severance charges of $3.3 million related to the work force reduction initiative.  Both non-cash OPEB and severance expense are add-backs for Consolidated EBITDAR as defined in the Company’s credit facility.  Third, storm-related activities following Hurricane Irene resulted in approximately $3.2 million of increased overtime and contracted services expense.Consolidated EBITDAR was $60.5 million in the third quarter of 2011 as compared to $70.5 million in the second quarter of 2011.  The $10.0 million unfavorable variance was primarily the result of two items.  First, the Company made a $6.8 million cash contribution to its pension plan during the third quarter, of which approximately $6.2 million was related to operating expenses.  Prior to the third quarter, FairPoint had not made a cash contribution to the pension plan.  As a result, Consolidated EBITDAR declined $6.2 million sequentially for this item.  Second, the impact of Hurricane Irene totaled approximately $4.0 million between revenue and operating expenses in the third quarter.Net loss was $279.4 million in the third quarter of 2011 as compared to $27.1 million in the second quarter of 2011.  Net loss increased due to a non-cash goodwill and trade name impairment charge booked in the third quarter of $262.0 million, which was precipitated by the decline of FairPoint’s stock price in recent months.Capital expenditures were $35.2 million in the third quarter of 2011 as compared to $52.1 million in the second quarter of 2011.  FairPoint completed its Vermont broadband buildout during the second quarter of 2011 and has now satisfied its regulatory broadband commitment in the state.  In addition, spending on the Company’s fiber-to-the-tower initiative was lower in the third quarter as compared to the second quarter.FairPoint’s cash position was $9.9 million as of Sept. 30, 2011, versus $13.1 million at June 30, 2011.  The Company has not drawn on its $75 million revolving credit facility and, as of Sept. 30, 2011, it had $62.6 million available for borrowing, net of $12.4 million of outstanding letters of credit.Third Quarter 2011 as compared to Third Quarter 2010Revenue was $257.9 million in the third quarter of 2011 as compared to $260.6 million a year earlier.  The decrease was primarily the result of an 8.8% decline in voice access lines year-over-year, which led to decreases in voice services and access revenue.  Partially offsetting the decline was a $3.4 million reduction in service quality penalties and a 12.6% increase in data and Internet services revenue.Operating expenses, excluding depreciation, amortization and reorganization, were $213.5 million in the third quarter of 2011 as compared to $218.2 million a year earlier.  The favorable variance of $4.7 million would have been greater if not for three items in the third quarter of 2011.  First, non-cash OPEB expense increased versus a year earlier by approximately $3.3 million after the Company received its annual actuarial study and booked a true-up to the liability.  Second, severance charges increased approximately $3.0 million versus a year earlier as a result of the work force reduction initiative.  Both non-cash OPEB and severance expense are add-backs for Consolidated EBITDAR as defined in the Company’s credit facility.  Third, overtime and contracted services expense were higher by approximately $4.0 million due primarily to storm-related activities following Hurricane Irene.  If not for these three items, expenses would have declined by more than $15.0 million versus a year ago.  The primary drivers of the decrease were a reduction in bad debt expense, a reduction in employee costs and other operating expense reductions.Consolidated EBITDAR was $60.5 million in the third quarter of 2011 as compared to $59.2 million a year earlier.  The benefit from operating expense reductions made during the last 12 months was offset primarily by two items in the third quarter of 2011.  First, the Company made a $6.8 million cash contribution to its pension plan during the third quarter, of which approximately $6.2 million was related to operating expenses.  Prior to the third quarter of 2011, FairPoint had not made a cash contribution to the pension plan.  As a result, Consolidated EBITDAR declined $6.2 million for this item.    Second, the impact of Hurricane Irene totaled approximately $4.0 million between revenue and operating expenses.Capital expenditures were $35.2 million in the third quarter of 2011 as compared to $53.7 million a year earlier, when the Company was aggressively expanding its broadband network to meet certain regulatory commitments in Maine, New Hampshire and Vermont by year end 2010.Quarterly ReportThe information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company’s quarterly report for the quarter ended Sept. 30, 2011, which will be filed with the SEC on or prior to Nov. 15, 2011. The Company’s results for the quarter ended Sept. 30, 2011, are subject to the completion of its quarterly report for such period.Fresh Start AccountingOn Jan. 24, 2011, the Company emerged from Chapter 11 bankruptcy protection and its Plan of Reorganization became effective.  For purposes of generally accepted accounting principles, the Company adopted fresh start accounting as of Jan. 24, 2011, whereby the Company’s assets and liabilities were marked to their fair value as of the date of emergence.  Accordingly, the Company’s condensed consolidated statements of financial position and operations for periods after Jan. 24, 2011, will not be comparable in many respects to periods prior to the adoption of fresh start accounting.Conference Call InformationAs previously announced, FairPoint will host a conference call and simultaneous webcast to discuss its third quarter 2011 results at 10:00 a.m. (EDT) on Thursday, Nov. 3, 2011.Participants should call (866) 804-6920 (US/Canada) or (857) 350-1666 (international) at 9:50 a.m. (EDT) and enter the passcode 70534871 when prompted.   The title of the call is the Q3 2011 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 31962362 when prompted.  The recording will be available from Thursday, Nov. 3, 2011, at 1:00 p.m. (EDT) through Friday, Nov. 11, 2011, at 11:59 p.m. (EST).A live broadcast of the earnings conference call will be available online at www.fairpoint.com/investors(link is external). An online replay will be available shortly thereafter.Use of Non-GAAP Financial MeasuresThis press release includes certain non-GAAP financial measures, including but not limited to Consolidated EBITDAR and adjustments to GAAP measures to exclude the effect of special items. Management believes that Consolidated EBITDAR may be useful to investors in assessing the Company’s operating performance and its ability to meet its debt service requirements, and the maintenance covenants contained in the Company’s credit facility are based on Consolidated EBITDAR.  In addition, management believes that the adjustments to GAAP measures to exclude the effect of special items may be useful to investors in understanding period-to-period operating performance and in identifying historical and prospective trends. However, the non-GAAP financial measures, as used herein, are not necessarily comparable to similarly titled measures of other companies. Furthermore, Consolidated EBITDAR has limitations as an analytical tool and should not be considered in isolation from, or as an alternative to, net income or loss, operating income, cash flow or other combined income or cash flow data prepared in accordance with GAAP. Because of these limitations, Consolidated EBITDAR and related ratios should not be considered as measures of discretionary cash available to invest in business growth or reduce indebtedness. The Company compensates for these limitations by relying primarily on its GAAP results and using Consolidated EBITDAR only supplementally.  A reconciliation of Consolidated EBITDAR to net income is contained in the attachments to this press release.About FairPoint Communications, Inc.FairPoint Communications, Inc. (NasdaqCM: FRP) (www.FairPoint.com(link is external)) is a leading communications provider of high-speed Internet access, local and long-distance phone, television and other broadband services to customers in communities across 18 states. Through its fast, reliable network, FairPoint delivers affordable 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 network provides Ethernet connections that support applications like video conferencing, e-learning and other broadband based applications. Additional information about FairPoint products and services is available at www.FairPoint.com(link is external).Cautionary Note Regarding Forward-looking StatementsSome 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 represents 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) Consolidated EBITDAR means earnings before interest, taxes, depreciation, amortization and restructuring items as defined in the Company’s credit facility.  Consolidated EBITDAR is a non-GAAP financial measure.  A reconciliation of Consolidated EBITDAR to net income is contained in the attachments to this press release.FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES (305,402)(33,272)(48,832)(18,212)(29,911) FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations 89,424 ‘ $2,973,794 ($ in thousands, except per unit) (9,453) (1,500) Total other income (expense) 2,207 Impairment of intangible assets and goodwill Days Ended 276,204 290,541 ‘ (2)  For purposes of calculating Consolidated EBITDAR, FairPoint’s credit facility allows it to adjust for:   25,654 Nine Months Net capital additions Reorganization items Accounts receivable, net Depreciation and amortization Ended $10,262$99,706 27,524 1,898,365 9,921 September 30, 2010 Current assets: 1,675 Prepaid pension asset $708,950$66,378$802,994 Three Months 2,737 and amortization 262,019—- Supplemental disclosure of cash flow information: Loan origination costs Twenty-Four (3,735) 70,323 4,296 93,334 authorized, issued and outstanding 89,440,334 shares at Cash flows from investing activities: Unamortized investment tax credits Successor % change q-o-q Net cash provided by (used in) operating activities 72,364 244,940 Supplemental Financial Information 183 Reorganization related (income) expense Total revenue 177 1,321 (Restated) (20,219) 260,518(138)(912,270)16,0961,066 Distributions from investments 7,330 262,019 Successor Company common stock, $0.01 par value, 37,500,000 shares 189,247 Total operating expenses (587,418) (220,666) 866,796 Summary Income Statement: (91,727) (305,402) All other allowed adjustments, net (2e) Intangible assets, net (366,442) 130 38,766 Other income (expense): Accounts receivable Current portion of capital lease obligations -5.4%-6.4%-6.8%-8.3%-9.3% Nine Months (45,315) ‘ 42,620 488 Company 80,02582,23184,66787,14289,035 (29,911) ‘ 24 Days ended January 24, 2011 and Three and Nine Months ended September 30, 2010 Total adjustments 27,575 Other services ‘ Reorganization adjustments: Loss before reorganization items and income taxes ‘ 91,54790,61484,29474,60672,364 (411,757) -2.1%-2.1%-2.2%-2.7%-2.6% 2010 18,841 1,250 2,030 ‘ 87,442 ‘ (64,091) 563,314 662,562680,189695,916712,591734,260 56,544 92,246 Three Months Income tax benefit (expense) 1,731,931 (68) ‘ (Loss) income before income taxes 170,406 94,64693,12891,35892,12895,923 (Loss) earnings per share: (156,478) (14,375) FAIRPOINT COMMUNICATIONS, INC. 89,424 (Unaudited) 4,310 (1,667) (9,321)center_img Loss on abandoned projects 1,944 563,314295,908303,612286,204290,541 312,475305,155297,491289,745288,891 89,424 99,412 262       d)  the impact from any restatement of financial statements for the periods ending on or prior to January 24, 2011, and   Other income (expense), net 1,319 September 30, 2011 and December 31, 2010 2,866(246)219732(999) ‘ Property, plant and equipment, net (Unaudited) (in thousands) (9,649) ‘ Total current assets Residential access lines 113,034 Impairment of intangible assets and goodwill Deferred income taxes 1,056,8771,080,0041,102,6891,127,5451,158,629 (128,538) 1,991 (721) Diluted Current portion of long-term debt$7,500 ‘      During Chapter 11, all reorganization items were reported below operating income in Reorganization Items.   (103,371) December 31, 2010 Stockholders’ equity (deficit): (12,477) 25,654 $            120,388$            127,085$            124,225$            136,664$            125,598 Revenues$257,912$260,630 25,512 3,454 118,765 $(12.90)$6.56$(2.31) 524,741 Employee benefit obligations 986 67,381 244,940 13,357 (33,151) (411,757) Access line equivalents 31,152 1,859,700 202,602 245,132 1,511 Cash flows from operating activities: Predecessor Company common stock, $0.01 par value, 200,000,000 shares operating activities: ‘ September 30, 2011 (410) (212,804) -8.8%-9.3%-9.6%-10.3%-11.0% 6,092 904 Operating expenses: 11,110 Total liabilities Operating expenses: Cash, beginning of period 12,82912,57410,70211,69612,418 1,839 31,400 Depreciation and amortization (2,636) (917,358) 2011 Accrued interest payable Cash, end of period$9,852 314,290317,584322,106327,812335,334 (10,352) ‘ 166,434 Debt issue costs, net Nine Days Ended Adjustments to reconcile net income to net cash provided by 1,718,352 8.2%5.4%4.8%0.4%-1.7% Accounts payable and accrued liabilities (25,568) Deferred income taxes 63,279 (1,096) ‘ 21,515 Diluted$(10.89)$(0.74) 992,500 to compromise at period-end $(12.90)$6.54$(2.31) Income tax (benefit) expense (667,998) (132) September 30, 2010       a)  aggregate pension and other post-employment benefits expense (OPEB), net of pension contributions and OPEB cash payments in the period,   (81,091) 144,092 Depreciation and amortization 501,105 September 30, 2011 723 (156,927) 109,355 Non-cash pension and OPEB expense (2a) Changes in assets and liabilities arising from operations: Consolidated EBITDAR Reconciliation: Total other expense Total liabilities and stockholders’ equity (deficit)$2,068,771 25,648 25,648 Successor Company 8442,60817,32614,94811,395 ‘ High-speed data subscribers (4) (1,100) (16,659) (13,350) $105,497 5,513 89,424 (in thousands, except share data) % change y-o-y ‘ (63,062) Reorganization expense (post-emergence) (1) Days Ended Cash flows from financing activities: Net cash (used in) provided by financing activities (18) 249 Days ended September 30, 2011, 24 Days ended January 24, 2011 (7,752)       e)  other items including success bonuses, severance, non-cash gains/losses, non-operating dividend and interest income and other extraordinary gains/losses.   Company Net change 2,905,311 2,777 10,262 % change y-o-y 17,14716,99621,81235,18735,358 183 119 $(330,961)$586,907$(206,592) 14,963 (1,101,294) 449 ‘ 102,535 1,250 14,074 Cost of services and sales, excluding depreciation (unaudited) 897,313 1,737 (279,889) Consolidated EBITDAR margin Other non cash items Three Months ended September 30, 2011, 249 Days ended September 30, 2011, Selling, general and administrative expense, excluding Revenue: Voice services 30,258 Accrued pension obligation Select Operating and Financial Metrics: (Restated) September 30, 2,420 (150) September 30, 2010 12,398 1,678 59,603 Income tax benefit (expense) Condensed Consolidated Statements of Cash Flows Total long-term liabilities Operating expenses, excluding depreciation, amortization and reorganization Data and Internet services 269,912 Ended (30,517) (80,119) Liabilities subject to compromise 127,510 Accumulated other comprehensive loss 2,654 (17,147)(16,996)(21,812)(35,187)(35,358) Nine Days Ended 321,790 September 30, 2011 (16,659)(16,646)(21,463)(34,810)(33,151) 595,120 Materials and supplies Reorganization items (1) –897,313(15,552)(10,352) (884) Basic 11,488 42,62022,821(264,534)(6,413)7,330 23.4%26.8%19.3%31.3%22.7% 66,557 (3,735)2,5102,736– (201) (322,061)(49,918)827,018(68,574)(73,414) Income (loss) before income taxes 3,004 Interest expense 894,721 Goodwill 7,509 91,54790,61484,29474,60672,364 215,218 91,547 Restricted cash Restructuring costs (2c) 22,193 Restatement impact, net (2d) Capital expenditures Consolidated EBITDAR Depreciation and amortization depreciation and amortization Proceeds from issuance of long-term debt Pension accruals Other current assets (322,061)(49,918)(70,295)(53,022)(63,062) Additional paid-in capital, Predecessor Company (105,709) (95,235) Cash$9,852 Retained deficit Impairment of intangible assets and goodwill 27,886 1,369,3521,385,1591,400,1801,417,2901,447,520 % change y-o-y % change q-o-q Company penetration of access lines Loss from operations (127,902) 87,915 Loss from operations Ended 2.4%2.6%2.7%0.3%-0.2% Weighted average shares outstanding: 29.6%28.3%27.0%25.7%24.9% authorized, 26,198,640 shares issued and outstanding at 9,59210,58310,68610,99212,036 (42,620)(22,821)264,5346,413(7,330) 30,04929,84928,49527,50426,691 Restricted cash       b)  other non-cash items except to the extent they will require a cash payment in a future period,   Other assets and liabilities, net (330,961) Non-cash reorganization income $586,907$(206,592) % change q-o-q Net (loss) income$(279,441)$(66,084) (in thousands)       c)  costs related to the restructuring, including professional fees for advisors and consultants,   FAIRPOINT COMMUNICATIONS, INC. AND SUBSIDIARIES 19,282 (82,764) Liabilities and Stockholders’ Equity (Deficit)last_img read more

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