Fourth Quarter Debt Offering and Repurchases
On October 1, 2012, the Company completed a registered debt offering of $250 million aggregate principal amount of 7.125% senior unsecured notes due 2023, issued at a price of 104.250% of their principal amount, equating to an effective yield of 6.551%. The notes are an additional issuance to the $600 million aggregate principal amount of 7.125% senior notes due 2023 issued by the Company on August 15, 2012. The Company will use the net proceeds from the sale of the notes to repurchase or retire its existing indebtedness or for general corporate purposes.
On October 1, 2012, the Company accepted for purchase $75.7 million and $59.3 million aggregate principal amount of its 7.875% Senior Notes due 2015 (the April 2015 Notes) and its 8.250% Senior Notes due 2017 (the 2017 Notes), respectively, in open market repurchases for total consideration of $154.7 million. The repurchases resulted in a loss on the early extinguishment of debt of approximately $19.3 million ($0.01 per share after tax) to be recognized in the fourth quarter of 2012. As of October 31, 2012, approximately $374.8 million aggregate principal amount of the April 2015 Notes and $1,040.7 million aggregate principal amount of the 2017 Notes remained outstanding.
GuidanceFor the full year of 2012, the Company’s expectations for capital expenditures and free cash flow, excluding integration costs and integration capital expenditures, are within a range of $750 million to $775 million and $900 million to $1 billion, respectively. We expect that in 2012 our cash taxes will be approximately $15 million. We expect to incur operating expenses and capital expenditures for integration activities of approximately $80 million and $50 million, respectively, in 2012. We made total net contributions to our pension plan for 2012 of $28.5 million, including $18.2 million in the third quarter of 2012 and $10.3 million in October 2012. These contributions reflect the positive impact of funding rate changes contained in the Highway Investment Act of 2012. There are no further contributions to be made in 2012. For the full year of 2013, the Company’s expectations for capital expenditures are within a range of $625 million to $675 million. We expect that in 2013, absent any legislative changes in 2012 or 2013, our cash taxes will be in the range of $125 million to $150 million. Non-GAAP Measures The Company uses certain non-GAAP financial measures in evaluating its performance. These include non-GAAP adjusted net income attributable to common shareholders of Frontier, free cash flow and operating cash flow. A reconciliation of the differences between non-GAAP adjusted net income attributable to common shareholders of Frontier, free cash flow and operating cash flow and the most comparable financial measures calculated and presented in accordance with GAAP is included in the tables that follow. The non-GAAP financial measures are by definition not measures of financial performance under GAAP and are not alternatives to operating income or net income attributable to common shareholders of Frontier as reflected in the statement of operations or to cash flow as reflected in the statement of cash flows and are not necessarily indicative of cash available to fund all cash flow needs. The non-GAAP financial measures used by the Company may not be comparable to similarly titled measures of other companies.
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