Interest expense for the third quarter of 2012 was $172.2 million as compared to $165.8 million in the third quarter of 2011, a $6.4 million increase, primarily due to higher average debt levels and lower capitalized interest in 2012. In August 2012, the Company completed a registered offering of $600.0 million aggregate principal amount of 7.125% senior unsecured notes due 2023. We received net proceeds of approximately $588.1 million from the offering which we will use to repurchase or retire existing indebtedness or for general corporate purposes.
Income tax expense for the third quarter of 2012 was $35.7 million as compared to a $6.9 million tax benefit in the third quarter of 2011, a $42.6 million increase, principally due to higher pretax income and the reduced impact for the reversal of uncertain tax positions of $6.2 million.
Net income attributable to common shareholders of Frontier was $67.0 million, or $0.07 per share, in the third quarter of 2012, as compared to $20.4 million, or $0.02 per share, in the third quarter of 2011. The third quarter of 2012 includes severance costs of $6.8 million, integration costs of $4.5 million and losses on the early extinguishment of debt of $0.2 million, offset by the reversal of uncertain tax positions of $7.8 million (combined net impact of $0.2 million after tax). Excluding the impact of the aforementioned items, non-GAAP adjusted net income attributable to common shareholders of Frontier for the third quarter of 2012 would be $66.8 million, or $0.07 per share.
Capital expenditures for Frontier business operations were $195.0 million for the third quarter of 2012 and $571.1 million for the first nine months of 2012. Capital expenditures related to integration activities were $10.8 million for the third quarter of 2012 and $38.8 million for the first nine months of 2012.Operating cash flow, as adjusted and defined by the Company in the attached Schedule B, was $581.3 million for the third quarter of 2012 resulting in an operating cash flow margin of 46.4 percent. Operating cash flow, as reported, of $573.6 million for the third quarter of 2012 has been adjusted to exclude $6.8 million of severance costs and $4.5 million of integration costs, partially offset by $3.6 million of non-cash pension and other postretirement benefit costs. Free cash flow, as defined by the Company in the attached Schedule A, was $215.3 million for the third quarter of 2012 and $753.3 million for the first nine months of 2012. The Company’s dividend represents a payout of 40 percent of free cash flow for the first nine months of 2012. Working Capital At September 30, 2012, we had a working capital surplus of $608.2 million, which includes the classification of certain debt maturing in the first quarter of 2013 of $502.7 million as a current liability. We believe our operating cash flows, existing cash balances and existing revolving credit facility will be adequate to meet our working capital and other cash requirements.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV