Frontier Communications Delivers Record New Fiber Locations and Fiber Broadband Customer Growth

Company Release - 11/03/2021

Reports Third-Quarter 2021 Financial Results

  • Built fiber to a record 185,000 locations in the third quarter, bringing total fiber passings to 3.8 million by the end of the third quarter
  • Added a record 29,000 new fiber broadband customers during the quarter
  • Delivered third-quarter revenue of $1.58 billion, net income of $126 million, and Adjusted EBITDA of $587 million
  • Raised $1 billion of debt in October, contributing to liquidity of approximately $2.7 billion
  • Continued to enhance leadership team with Melissa Pint, Chief Digital Information Officer, and Charlon McIntosh, Chief Customer Operations Officer

NORWALK, Conn.--(BUSINESS WIRE)-- Frontier Communications Parent, Inc. (NASDAQ: FYBR) (“Frontier” or the “Company”) reported third quarter 2021 results today, delivering record new fiber locations and fiber broadband customer growth.

“We gained strong momentum in the quarter and delivered record results on two of the most important drivers of our transformation – building and selling fiber. The team’s diligent operational execution and relentless focus on improving the customer experience are beginning to show in our results,” said Nick Jeffery, President and Chief Executive Officer of Frontier. “We continued to attract world-class talent to our organization, and the new billion-dollar debt raise in October will help us continue to accelerate our fiber build. It’s still early days, but I’m encouraged by the numbers and the progress we’re making in our plans to Build Gigabit America.”

Consolidated Financial Results1

Frontier reported consolidated revenue for the third quarter ended September 30, 2021 of $1.58 billion, a 6.1% decline from consolidated revenue reported in the third quarter of 2020, as growth in consumer fiber broadband was more than offset by declines in video, voice, and wholesale services. Consumer fiber broadband revenue increased 14.6% over the third quarter of 2020 to $243 million in the third quarter, driven by strong growth in fiber broadband customers and average revenue per customer (ARPU). Consumer fiber broadband net adds were approximately 29,000 in the third quarter, the ninth consecutive quarter of positive consumer fiber net adds, resulting in fiber broadband customer growth of 5.1%.

Third quarter 2021 operating income was $284 million and net income was $126 million.

Adjusted EBITDA was $587 million and Adjusted EBITDA margin was 37.2%, compared to Adjusted EBITDA of $670 million and Adjusted EBITDA margin of 39.9% in the third quarter of 2020.2 The year-over-year decline in Adjusted EBITDA and Adjusted EBITDA margin was driven by revenue declines, partially offset by cost savings initiatives, including the emphasis on reducing video content costs.

Capital expenditures were $377 million in the quarter, an increase from $314 million in the third quarter of 2020, as fiber expansion initiatives accelerated.

Consumer Results

  • Consumer revenue was $800 million, a 4.2% decline from the third quarter of 2020, as strong fiber broadband revenue growth was offset by legacy video and voice declines
  • Consumer fiber revenue was $409 million, a 0.7% increase over the third quarter of 2020 as strong consumer broadband revenue growth offset declines in voice, video, and wholesale
  • Consumer fiber broadband revenue was $243 million, a 14.6% increase over the third quarter of 2020
  • Consumer fiber customer net adds were 29,000, an increase of over 6,000, or 5.1%, from the third quarter of 2020
  • Consumer fiber broadband customer churn was 1.56%, a decline from 1.80% in the third quarter of 2020
  • Consumer fiber broadband ARPU was $63.35, a 10.0% increase over the third quarter of 2020, as customers continue to upgrade to faster speeds

Business and Wholesale Results

  • Business and wholesale revenue was $693 million, a 6.5% decline from the third quarter of 2020, primarily due to proactive strategic repositioning with key business partners to reset pricing in exchange for higher win shares in the future and higher overall expected cash flow stability.
  • Business and wholesale fiber broadband revenue was $275 million, a 1.4% decline from the third quarter of 2020.
  • Business fiber broadband customer churn was 1.26%, a decline from 1.62% in the third quarter of 2020.
  • Business fiber broadband ARPU was $104.76, a 3.9% increase over the third quarter of 2020.

Capital Structure

Frontier successfully raised $1.0 billion of 6.000% second lien secured debt on October 13, 2021. Including the $1.0 billion debt raise, Frontier currently has total liquidity of approximately $2.7 billion, including a cash balance of approximately $2.2 billion and $535 million of available capacity in its revolving credit facility. Frontier’s net leverage ratio for the four quarters ended September 30, 2021 was approximately 2.2x.3 Frontier has no long-term debt maturities prior to 2027.

2021 Outlook

Frontier today reaffirmed its operational and financial guidance expectations for 2021.

Frontier’s guidance for the full year 2021 is:

  • Adjusted EBITDA of $2.40 - $2.50 billion
  • Cash capital expenditures of approximately $1.8 billion
  • Fiber build to at least 600,000 new locations in 2021
  • Cash taxes of approximately $50 million
  • Cash interest payments of approximately $365 million
  • Cash pension and OPEB of approximately $70 million (net of capitalization)

Conference Call Information

Frontier Communications will host a conference call with the financial community to discuss third quarter 2021 results today, November 3, 2021, at 8:30 a.m. Eastern Time (ET).

The conference call webcast and presentation materials will be accessible through Frontier’s Investor Relations website at https://investor.frontier.com and will remain archived at this location.

About Frontier Communications

Frontier Communications offers a variety of services to residential and business customers over its fiber-optic and copper networks in 25 states, including high-speed Internet, advanced voice, video, and Frontier Secure® digital protection solutions. Frontier Business offers communications solutions to small, medium, and enterprise businesses. More information about Frontier is available at www.frontier.com.

Non-GAAP Financial Measures

Frontier uses certain non-GAAP financial measures in evaluating its performance, including EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, operating free cash flow, adjusted operating expenses, and leverage ratio, each of which is described below. Management uses these non-GAAP financial measures internally to (i) assist in analyzing Frontier's underlying financial performance from period to period, (ii) analyze and evaluate strategic and operational decisions, (iii) establish criteria for compensation decisions, and (iv) assist in the understanding of Frontier's ability to generate cash flow and, as a result, to plan for future capital and operational decisions. Management believes that the presentation of these non-GAAP financial measures provides useful information to investors regarding Frontier’s financial condition and results of operations because these measures, when used in conjunction with related GAAP financial measures (i) provide a more comprehensive view of Frontier’s core operations and ability to generate cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation, and planning decisions and (iii) present measurements that investors and rating agencies have indicated to management are useful to them in assessing Frontier and its results of operations.

A reconciliation of these measures to the most comparable financial measures calculated and presented in accordance with GAAP is included in the accompanying tables. These non-GAAP financial measures are not measures of financial performance or liquidity under GAAP, nor are they alternatives to GAAP measures and they may not be comparable to similarly titled measures of other companies.

EBITDA is defined as net income (loss) less income tax expense (benefit), interest expense, investment and other income (loss), pension settlement costs, gains/losses on extinguishment of debt, reorganization items, and depreciation and amortization. EBITDA margin is calculated by dividing EBITDA by total revenue.

Adjusted EBITDA is defined as EBITDA, as described above, adjusted to exclude, certain pension/OPEB expenses, restructuring costs and other charges, stock-based compensation, and certain other non-recurring items. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

Management uses EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin to assist it in comparing performance from period to period and as measures of operational performance. Management believes that these non-GAAP measures provide useful information for investors in evaluating Frontier’s operational performance from period to period because they exclude depreciation and amortization expenses related to investments made in prior periods and are determined without regard to capital structure or investment activities. By excluding capital expenditures, debt repayments and dividends, among other factors, these non-GAAP financial measures have certain shortcomings. Management compensates for these shortcomings by utilizing these non-GAAP financial measures in conjunction with the comparable GAAP financial measures.

Adjusted net income (loss) attributable to Frontier common shareholders is defined as net income (loss) attributable to Frontier common shareholders and excludes restructuring costs and other charges, pension settlement costs, reorganization items, certain income tax items and the income tax effect of these items, and certain other non-recurring items. Adjusting for these items allows investors to better understand and analyze Frontier’s financial performance over the periods presented.

Management defines operating free cash flow, a non-GAAP measure, as net cash provided from operating activities less capital expenditures. Management uses operating free cash flow to assist it in comparing liquidity from period to period and to obtain a more comprehensive view of Frontier’s core operations and ability to generate cash flow. Management believes that this non-GAAP measure is useful to investors in evaluating cash available to service debt and pay dividends. This non-GAAP financial measure has certain shortcomings; it does not represent the residual cash flow available for discretionary expenditures, as items such as debt repayments and preferred stock dividends are not deducted in determining such measure. Management compensates for these shortcomings by utilizing this non-GAAP financial measure in conjunction with the comparable GAAP financial measure.

Adjusted operating expenses is defined as operating expenses adjusted to exclude depreciation and amortization, restructuring and other charges, goodwill impairment charges, certain pension/OPEB expenses, stock-based compensation, and certain other non-recurring items. Investors have indicated that this non-GAAP measure is useful in evaluating Frontier’s performance.

Net leverage ratio is calculated as net debt (total debt less cash and cash equivalents) divided by Adjusted EBITDA for the most recent four quarters. Investors have indicated that this non-GAAP measure is useful in evaluating Frontier’s debt levels.

The information in this press release should be read in conjunction with the financial statements and footnotes contained in Frontier’s documents filed with the U.S. Securities and Exchange Commission.

Forward-Looking Statements

This release contains "forward-looking statements" related to future events. Forward-looking statements address our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, our ability to comply with the covenants in the agreements governing our indebtedness and other matters. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance and contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “may,” “will,” “would,” or “target.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. A wide range of factors could materially affect future developments and performance, including but not limited to: our significant indebtedness, our ability to incur substantially more debt in the future, and covenants in the agreements governing our current indebtedness that may reduce our operating and financial flexibility; declines in Adjusted EBITDA relative to historical levels that we are unable to offset through potential EBTIDA enhancements; our ability to successfully implement strategic initiatives, including our fiber buildout and other initiatives to enhance revenue and realize productivity improvements; our ability to secure necessary construction resources, materials and permits for our fiber buildout initiative; our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirement and cash paid for income taxes and liquidity; competition from cable, wireless and wireline carriers, satellite, fiber “overbuilders” and over the top companies, and the risk that we will not respond on a timely or profitable basis; our ability to successfully adjust to changes in the communications industry, including the effects of technological changes and competition on our capital expenditures, products and service offerings; risks related to disruption in our networks, infrastructure and information technology that result in customer loss and/or incurrence of additional expenses; the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions; our ability to retain or attract new customers and to maintain relationships with customers, including wholesale customers; our reliance on a limited number of key supplies and vendors; declines in revenue from our voice services, switched and nonswitched access and video and data services that we cannot stabilize or offset with increases in revenue from other products and services; our ability to secure, continue to use or renew intellectual property and other licenses used in our business; our ability to hire or retain key personnel; our ability to dispose of certain assets or asset groups or to make acquisition of certain assets on terms that are attractive to us, or at all; the effects of changes in the availability of federal and state universal service funding or other subsidies to us and our competitors and our ability to obtain future subsidies, including participation in the proposed RDOF program; our ability to meet our CAF II and RDOF obligations and the risk of penalties or obligations to return certain CAF II and RDOF funds; our ability to defend against litigation and potentially unfavorable results from current pending and future litigation; our ability to comply with applicable federal and state consumer protection requirements; the effects of governmental legislation and regulation on our business, including costs, disruptions, possible limitations on operating flexibility and changes to the competitive landscape resulting from such legislation or regulation; the impact of regulatory, investigative and legal proceedings and legal compliance risks; our ability to effectively manage service quality in the states in which we operate and meet mandated service quality metrics; the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments; the effects of changes in accounting policies or practices; our ability to successfully renegotiate union contracts; the effects of increased medical expenses and pension and postemployment expenses; changes in pension plan assumptions, interest rates, discount rates, regulatory rules and/or the value of our pension plan assets; the likelihood that our historical financial information may no longer be indicative of our future performance and our implementation of fresh start accounting; the impact of adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally, including, but not limited to, disruption in our supply chain, inflation in pricing for key materials or labor, or other adverse changes resulting from epidemics, pandemics and outbreaks of contagious diseases, including the COVID-19 pandemic, natural disasters, economic or political instability or other adverse public health developments; potential adverse impacts of the COVID-19 pandemic on our business and operations, including potential disruptions to the work of our employees arising from health and safety measures such as social distancing and working remotely and recent federal vaccine mandates, our ability to effectively manage increased demand on our network, our ability to maintain relationships with our current or prospective customers and vendors as well as their abilities to perform under current or proposed arrangements with us, including impacts of potential stress on our supply chain; risks associated with our emergence from the Chapter 11 Cases, including, but not limited to, the continuing effects of the Chapter 11 Cases on us and our relationships with our suppliers, customers, service providers or employees and changes in the composition of our board of directors and senior management; volatility in the trading price of our common stock, which has a limited trading history; substantial market overhang from the common stock issued in the Chapter 11 reorganization; certain provisions of Delaware law and our certificate of incorporation that may prevent efforts by our stockholders to change the direction or management of our Company; and certain other factors set forth in our other filings with the SEC. This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive. You should consider these important factors, as well as the risks and other factors contained in Frontier’s filings with the U.S. Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q. These risks and uncertainties may cause actual future results to be materially different than those expressed in such forward-looking statements. We do not intend, nor do we undertake any duty, to update any forward-looking statements.

 


1 Prior year comparisons are adjusted for Disposal of Northwest Operations. See Schedule C and Schedule E for a reconciliation of reported results to the results adjusted for the Disposal of Northwest Operations. Upon emergence from bankruptcy, Frontier adopted fresh start accounting in accordance with ASC 852. As a result, Frontier’s consolidated financial statements after April 30, 2021 are not comparable to prior periods.- All figures and growth rates in this release have been normalized to reflect the impact of fresh start accounting. See Frontier’s Form 8-K filed with the SEC on July 30, 2021, for further details on the impact of fresh start accounting. See Frontier’s supplemental trending schedules, available at www.frontier.com/ir, for information regarding adjustments to revenue, expense and certain non-GAAP measures reflecting the impact of fresh start accounting for periods presented.

2 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures of performance, See “Non-GAAP Measures” for a description of these measures and its calculation. See Schedule A for a reconciliation of Adjusted EBITDA to net income/(loss).

3 Net leverage ratio is a non-GAAP measure. See “Non-GAAP Measures” and the condensed consolidated balance sheet data contained herein for a description and calculation of net leverage ratio.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Consolidated Financial Data

Reconciliation of Non-GAAP financial results for Combined Frontier

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: The following results are reported separately for the three months ended September 30, 2021 (our Successor period). While the basis of accounting for the Predecessor and Successor are different as a result of the application of fresh start accounting, we have calculated combined Non-GAAP results for the three months ended September 30, 2021.

 

 

 

For the

 

For the

 

 

 

For the

For the

 

 

 

three months ended

 

two months ended

 

 

 

one month ended

 

three months ended

 

 

 

September 30,

 

June 30,

 

 

 

April 30,

 

June 30,

 

September 30,

 

 

 

2021

 

2021

 

 

 

2021

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

(Non-GAAP

 

 

 

($ in millions and shares in thousands,

 

(Successor)

 

(Successor)

 

 

 

(Predecessor)

Combined)

(Predecessor)

 

except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,576

 

$

1,061

 

 

 

$

555

 

$

1,616

 

$

1,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network access expenses

 

 

177

 

 

127

 

 

 

 

66

 

 

193

 

 

226

 

Network related expenses

 

 

413

 

 

269

 

 

 

 

144

 

 

413

 

 

431

 

Selling, general and administrative expenses

 

 

421

 

 

269

 

 

 

 

129

 

 

398

 

 

404

 

Depreciation and amortization

 

 

273

 

 

179

 

 

 

 

119

 

 

298

 

 

392

 

Restructuring costs and other charges

 

 

8

 

 

11

 

 

 

 

5

 

 

16

 

 

3

 

Total operating expenses

 

 

1,292

 

 

855

 

 

 

 

463

 

 

1,318

 

 

1,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

284

 

 

206

 

 

 

 

92

 

 

298

 

 

270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other loss, net

 

 

(37)

 

 

(2)

 

 

 

 

(1)

 

 

(3)

 

 

(14)

 

Reorganization items, net

 

 

-

 

 

-

 

 

 

 

4,196

 

 

4,196

 

 

(131)

 

Interest expense

 

 

(90)

 

 

(62)

 

 

 

 

(29)

 

 

(91)

 

 

(121)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

157

 

 

142

 

 

 

 

4,258

 

 

4,400

 

 

4

 

Income tax expense (benefit)

 

 

31

 

 

43

 

 

 

 

(223)

 

 

(180)

 

 

(11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

126

 

$

99

 

 

 

$

4,481

 

$

4,580

 

$

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

244,403

 

 

244,401

 

 

 

 

104,662

 

 

NM

 

 

104,526

 

Weighted average shares outstanding - diluted

 

 

245,667

 

 

244,401

 

 

 

 

105,002

 

 

NM

 

 

104,866

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

per common share

 

$

0.52

 

$

0.41

 

 

 

$

42.81

 

 

NM

 

$

0.14

 

Diluted net earnings per common share

 

$

0.51

 

$

0.41

 

 

 

$

42.68

 

 

NM

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

377

 

$

269

 

 

 

$

116

 

$

385

 

$

314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM - Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Consolidated Financial Data

Reconciliation of Non-GAAP financial results for Combined Frontier

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: The following results are reported separately for the four months ended April 30, 2021 (our Predecessor period prior to emergence) and for the five months ended September 30, 2021 (our Successor period). While the basis of accounting for the Predecessor and Successor are different as a result of the application of fresh start accounting, we have calculated combined Non-GAAP results for the nine months ended September 30, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the five months ended

 

 

 

For the four months ended

 

For the nine months ended

 

 

 

September 30,

 

 

 

April 30,

 

September 30,

 

September 30,

 

 

 

2021

 

 

 

2021

 

2021

 

2020

 

($ in millions and shares in thousands,

 

(Successor)

 

 

 

(Predecessor)

 

(Non-GAAP

 

(Predecessor)

 

except per share amounts)

 

 

 

 

 

 

 

 

 

Combined)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

2,637

 

 

 

$

2,231

 

$

4,868

 

$

5,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network access expenses

 

 

304

 

 

 

 

264

 

 

568

 

 

767

 

Network related expenses

 

 

682

 

 

 

 

566

 

 

1,248

 

 

1,305

 

Selling, general and administrative expenses

 

 

690

 

 

 

 

537

 

 

1,227

 

 

1,255

 

Depreciation and amortization

 

 

452

 

 

 

 

506

 

 

958

 

 

1,204

 

Loss on disposal of Northwest Operations

 

 

-

 

 

 

 

-

 

 

-

 

 

160

 

Restructuring costs and other charges

 

 

19

 

 

 

 

7

 

 

26

 

 

87

 

Total operating expenses

 

 

2,147

 

 

 

 

1,880

 

 

4,027

 

 

4,778

 

Operating income

 

 

490

 

 

 

 

351

 

 

841

 

 

682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income (loss), net

 

 

(39)

 

 

 

 

1

 

 

(38)

 

 

(29)

 

Pension settlement costs

 

 

-

 

 

 

 

-

 

 

-

 

 

(159)

 

Reorganization items, net

 

 

-

 

 

 

 

4,171

 

 

4,171

 

 

(273)

 

Interest expense

 

 

(152)

 

 

 

 

(118)

 

 

(270)

 

 

(664)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

299

 

 

 

 

4,405

 

 

4,704

 

 

(443)

 

Income tax expense (benefit)

 

 

74

 

 

 

 

(136)

 

 

(62)

 

 

(91)

 

Net income (loss)

 

 

225

 

 

 

 

4,541

 

 

4,766

 

 

(352)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

244,402

 

 

 

 

104,584

 

 

NM

 

 

104,460

 

Weighted average shares outstanding - diluted

 

 

245,600

 

 

 

 

104,924

 

 

NM

 

 

104,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net earnings (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

per common share

 

$

0.92

 

 

 

$

43.42

 

 

NM

 

$

(3.37)

 

Diluted net earnings (loss) per common share

 

$

0.92

 

 

 

$

43.28

 

 

NM

 

$

(3.37)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

646

 

 

 

$

500

 

$

1,146

 

$

825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM - Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Financial Data for Non-GAAP Combined Frontier and for Remaining Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: The following results are reported separately for the four months ended April 30, 2021 (our Predecessor period prior to emergence) and for the five months ended September 30, 2021 (our Successor period). While the basis of accounting for the Predecessor and Successor are different as a result of the application of fresh start accounting, we have calculated combined Non-GAAP results for the three and nine months ended September 30, 2021. Additionally, the following financial information presents disaggregation of revenue for the operations located in the remaining 25 states (“Remaining Properties”) after excluding the Northwest Operations (“Northwest Ops”) through the date of sale from the Consolidated Company's results. See Schedule C for a reconciliation to the Total Company Results.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three

 

 

 

For the two

 

 

 

For the one

 

For the three

 

For the three

 

 

 

months ended

 

 

 

months ended

 

 

 

month ended

 

month ended

 

month ended

 

 

 

September 30,

 

 

 

June 30,

 

 

 

April 30,

 

June 30,

 

September 30,

 

 

 

2021

 

 

 

2021

 

 

 

2021

 

2021

 

2020

 

($ in millions)

 

(Successor)

 

 

 

(Successor)

 

 

 

(Predecessor)

 

(Non-GAAP

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

 

$

834

 

 

 

$

556

 

 

 

$

283

 

$

839

 

$

838

 

Voice services

 

 

411

 

 

 

 

283

 

 

 

 

160

 

 

443

 

 

500

 

Video services

 

 

149

 

 

 

 

105

 

 

 

 

54

 

 

159

 

 

186

 

Other

 

 

99

 

 

 

 

62

 

 

 

 

30

 

 

92

 

 

103

 

Revenue from contracts with customers

 

 

1,493

 

 

 

 

1,006

 

 

 

 

527

 

 

1,533

 

 

1,627

 

Subsidy and other revenue

 

 

83

 

 

 

 

55

 

 

 

 

28

 

 

83

 

 

99

 

Total revenue

 

$

1,576

 

 

 

$

1,061

 

 

 

$

555

 

$

1,616

 

$

1,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer (1)

 

$

800

 

 

 

$

543

 

 

 

$

283

 

$

826

 

$

865

 

Business and Wholesale (1)

 

 

693

 

 

 

 

463

 

 

 

 

244

 

 

707

 

 

762

 

Revenue from contracts with customers

 

 

1,493

 

 

 

 

1,006

 

 

 

 

527

 

 

1,533

 

 

1,627

 

Subsidy and other revenue

 

 

83

 

 

 

 

55

 

 

 

 

28

 

 

83

 

 

99

 

Total revenue

 

$

1,576

 

 

 

$

1,061

 

 

 

$

555

 

$

1,616

 

$

1,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the five

 

 

 

For the four

 

 

 

 

 

 

 

 

 

 

months ended

 

 

 

months ended

 

 

 

For the nine months ended

 

 

 

 

 

 

September 30,

 

 

 

April 30,

 

 

 

September 30,

 

September 30,

 

 

 

 

 

2021

 

 

 

2021

 

 

 

2021

 

2020

 

 

 

 

($ in millions)

 

(Successor)

 

 

 

(Predecessor)

 

 

 

(Non-GAAP

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

 

$

1,390

 

 

 

$

1,125

 

 

 

$

2,515

 

$

2,542

 

 

 

 

Voice services

 

 

694

 

 

 

 

647

 

 

 

 

1,341

 

 

1,538

 

 

 

 

Video services

 

 

254

 

 

 

 

223

 

 

 

 

477

 

 

595

 

 

 

 

Other

 

 

161

 

 

 

 

125

 

 

 

 

286

 

 

316

 

 

 

 

Revenue from contracts with customers

 

 

2,499

 

 

 

 

2,120

 

 

 

 

4,619

 

 

4,991

 

 

 

 

Subsidy and other revenue

 

 

138

 

 

 

 

111

 

 

 

 

249

 

 

277

 

 

 

 

Total revenue

 

$

2,637

 

 

 

$

2,231

 

 

 

$

4,868

 

$

5,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer (1)

 

$

1,343

 

 

 

$

1,133

 

 

 

$

2,476

 

$

2,644

 

 

 

 

Business and Wholesale (1)

 

 

1,156

 

 

 

 

987

 

 

 

 

2,143

 

 

2,347

 

 

 

 

Revenue from contracts with customers

 

 

2,499

 

 

 

 

2,120

 

 

 

 

4,619

 

 

4,991

 

 

 

 

Subsidy and other revenue

 

 

138

 

 

 

 

111

 

 

 

 

249

 

 

277

 

 

 

 

Total revenue

 

$

2,637

 

 

 

$

2,231

 

 

 

$

4,868

 

$

5,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

 

Unaudited Operating Data for Remaining Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: The following table presents operating metrics for the operations located in the remaining 25 states (“Remaining Properties”) after excluding the Northwest Operations (“Northwest Ops”) through the date of sale from the Consolidated Company's results. See Schedule D for a reconciliation to the Total Company Results.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

For the nine months ended

 

 

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

 

Customers (in thousands)

 

3,173

 

3,196

 

3,306

 

3,173

 

3,306

 

 

Net customer additions (losses)

 

(23)

 

(38)

 

(36)

 

(92)

 

(107)

 

 

Average monthly consumer

 

 

 

 

 

 

 

 

 

 

 

 

revenue per customer

 

$ 83.77

 

$ 85.65

 

$ 86.75

 

$ 85.49

 

$ 87.50

 

 

Customer monthly churn

 

1.64%

 

1.54%

 

1.81%

 

1.54%

 

1.76%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband customer metrics (1) (2)

 

 

 

 

 

 

 

 

 

 

 

 

Broadband customers (in thousands)

 

2,789

 

2,798

 

2,861

 

2,789

 

2,861

 

 

Net customer additions (losses)

 

(9)

 

(22)

 

(20)

 

(44)

 

(58)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees

 

15,803

 

16,005

 

16,302

 

15,803

 

16,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

(2) Excludes wholesale customers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Condensed Consolidated Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

Successor

 

 

 

Predecessor

($ in millions)

 

September 30, 2021

 

 

 

December 31, 2020

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,211

 

 

 

$

1,829

Accounts receivable, net

 

 

452

 

 

 

 

553

Other current assets

 

 

124

 

 

 

 

272

Total current assets

 

 

1,787

 

 

 

 

2,654

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

8,918

 

 

 

 

12,931

Other assets

 

 

4,683

 

 

 

 

1,210

Total assets

 

$

15,388

 

 

 

$

16,795

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Long-term debt due within one year

 

$

15

 

 

 

$

5,781

Accounts payable and other current liabilities

 

 

1,465

 

 

 

 

1,359

Total current liabilities

 

 

1,480

 

 

 

 

7,140

 

 

 

 

 

 

 

 

 

Deferred income taxes and other liabilities

 

 

2,527

 

 

 

 

2,990

Liabilities subject to compromise

 

 

-

 

 

 

 

11,565

Long-term debt

 

 

6,996

 

 

 

 

-

Equity (deficit)

 

 

4,385

 

 

 

 

(4,900)

Total liabilities and equity (deficit)

 

$

15,388

 

 

 

$

16,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

 

 

 

 

September 30, 2021

 

 

 

 

 

Leverage Ratio

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

Long-term debt due within one year

 

$

15

 

 

 

 

 

Long-term debt

 

 

6,996

 

 

 

 

 

Total debt

 

$

7,011

 

 

 

 

 

Less: Cash and cash equivalents

 

 

(1,211)

 

 

 

 

 

Net debt

 

$

5,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Adjusted EBITDA - last 4 quarters

 

$

2,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Leverage Ratio

 

 

2.2x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Financial Data for Non-GAAP Combined Frontier

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

For the three months ended

 

 

September 30, 2021

 

 

 

September 30, 2020

($ in millions)

 

(Successor)

 

 

 

(Predecessor)

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

126

 

 

 

$

15

Adjustments to reconcile net loss to net cash provided from

 

 

 

 

 

 

 

 

(used by) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

273

 

 

 

 

392

Pension settlement costs

 

 

-

 

 

 

 

318

Stock-based compensation

 

 

8

 

 

 

 

1

Amortization of deferred financing costs

 

 

-

 

 

 

 

2

Other adjustments

 

 

(6)

 

 

 

 

1

Deferred income taxes

 

 

31

 

 

 

 

(8)

Loss on disposal of Northwest Operations

 

 

-

 

 

 

 

1

Change in accounts receivable

 

 

53

 

 

 

 

40

Change in accounts payable and other liabilities

 

 

98

 

 

 

 

(264)

Change in prepaid expenses, income taxes, and other assets

 

 

20

 

 

 

 

44

Net cash provided from operating activities

 

 

603

 

 

 

 

542

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(377)

 

 

 

 

(314)

Proceeds on sale of assets

 

 

-

 

 

 

 

2

Other

 

 

1

 

 

 

 

(1)

Net cash used by investing activities

 

 

(376)

 

 

 

 

(313)

 

 

 

 

 

 

 

 

 

Cash flows used by financing activities:

 

 

 

 

 

 

 

 

Long-term debt payments

 

 

(4)

 

 

 

 

-

Repayment of revolving debt

 

 

-

 

 

 

 

(749)

Financing costs paid

 

 

-

 

 

 

 

(5)

Finance lease obligation payments

 

 

(5)

 

 

 

 

-

Other

 

 

(1)

 

 

 

 

-

Net cash used by financing activities

 

 

(10)

 

 

 

 

(754)

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

217

 

 

 

 

(525)

Cash, cash equivalents, and restricted cash at the beginning of the period

 

 

1,044

 

 

 

 

2,350

 

 

 

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash at the end of the period

 

$

1,261

 

 

 

$

1,825

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

37

 

 

 

$

1

Income tax payments, net

 

$

3

 

 

 

$

-

Reorganization items, net

 

$

-

 

 

 

$

34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Financial Data for Non-GAAP Combined Frontier

 

 

 

Note: The following results are reported separately for the four months ended April 30, 2021 (our Predecessor period prior to emergence) and for the five months ended September 30, 2021 (our Successor period). While the basis of accounting for the Predecessor and Successor are different as a result of the application of fresh start accounting, we have calculated combined Non-GAAP results for the nine months ended September 30, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the five months ended

 

 

 

For the four months ended

 

For the nine months ended

 

 

September 30, 2021

 

 

 

April 30, 2021

 

September 30, 2021

 

September 30, 2020

($ in millions)

 

(Successor)

 

 

 

(Predecessor)

 

(Non-GAAP Combined)

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

225

 

 

 

$

4,541

 

$

4,766

 

$

(352)

Adjustments to reconcile net loss to net cash provided from

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(used by) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

452

 

 

 

 

506

 

 

958

 

 

1,204

Pension settlement costs

 

 

-

 

 

 

 

-

 

 

-

 

 

159

Stock-based compensation

 

 

8

 

 

 

 

(1)

 

 

7

 

 

3

Amortization of deferred financing costs

 

 

-

 

 

 

 

-

 

 

-

 

 

13

Non-cash reorganization items, net

 

 

-

 

 

 

 

(5,467)

 

 

(5,467)

 

 

85

Other adjustments

 

 

(11)

 

 

 

 

1

 

 

(10)

 

 

3

Deferred income taxes

 

 

68

 

 

 

 

(148)

 

 

(80)

 

 

(100)

Loss on disposal of Northwest Operations

 

 

-

 

 

 

 

-

 

 

-

 

 

160

Change in accounts receivable

 

 

65

 

 

 

 

36

 

 

101

 

 

63

Change in accounts payable and other liabilities

 

 

149

 

 

 

 

(168)

 

 

(19)

 

 

334

Change in prepaid expenses, income taxes, and other assets

 

 

27

 

 

 

 

46

 

 

73

 

 

(80)

Net cash provided from (used by) operating activities

 

 

983

 

 

 

 

(654)

 

 

329

 

 

1,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(646)

 

 

 

 

(500)

 

 

(1,146)

 

 

(825)

Proceeds from sale of Northwest Operations

 

 

-

 

 

 

 

-

 

 

-

 

 

1,131

Proceeds on sale of assets

 

 

-

 

 

 

 

9

 

 

9

 

 

7

Other

 

 

1

 

 

 

 

1

 

 

2

 

 

2

Net cash provided from (used by) investing activities

 

 

(645)

 

 

 

 

(490)

 

 

(1,135)

 

 

315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows used by financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt payments

 

 

(8)

 

 

 

 

(1)

 

 

(9)

 

 

(5)

Proceeds from long-term debt borrowings

 

 

-

 

 

 

 

225

 

 

225

 

 

-

Repayment of revolving debt

 

 

-

 

 

 

 

-

 

 

-

 

 

(749)

Financing costs paid

 

 

-

 

 

 

 

(4)

 

 

(4)

 

 

(19)

Finance lease obligation payments

 

 

(9)

 

 

 

 

(7)

 

 

(16)

 

 

(18)

Other

 

 

-

 

 

 

 

(16)

 

 

(16)

 

 

-

Net cash provided from (used by) financing activities

 

 

(17)

 

 

 

 

197

 

 

180

 

 

(791)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

321

 

 

 

 

(947)

 

 

(626)

 

 

1,016

Cash, cash equivalents, and restricted cash at the beginning of the period

 

 

940

 

 

 

 

1,887

 

 

1,887

 

 

809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash at the end of the period

 

$

1,261

 

 

 

$

940

 

$

1,261

 

$

1,825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

121

 

 

 

$

84

 

$

205

 

$

548

Income tax payments, net

 

$

27

 

 

 

$

9

 

$

36

 

$

6

Reorganization items, net

 

$

-

 

 

 

$

1,397

 

$

1,397

 

$

134

 

 

 

(0)

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE A

Frontier Communications Parent, Inc.

Unaudited Financial Data for Non-GAAP Combined Frontier and for Remaining Properties

Reconciliation of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: The following results include activity for the four months ended April 30, 2021 (our Predecessor period prior to emergence) and the five months ended September 30, 2021 (our Successor period). While the basis of accounting for the Predecessor and Successor are different as a result of the application of fresh start accounting, we have calculated combined Non-GAAP results for the nine months ended September 30, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the nine months ended

 

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

($ in millions)

 

 

2021

 

2021

 

2020

 

2021

 

2020

 

 

 

(Successor)

 

(Non-GAAP

 

(Predecessor)

 

(Non-GAAP

 

(Predecessor)

 

 

 

 

 

Combined)

 

 

 

Combined)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

$

126

 

$

4,580

 

$

15

 

$

4,766

 

$

(478)

Add back (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

 

31

 

 

(180)

 

 

(11)

 

 

(62)

 

 

(91)

Interest expense

 

 

 

90

 

 

91

 

 

121

 

 

270

 

 

664

Investment and other loss, net

 

 

 

37

 

 

3

 

 

14

 

 

38

 

 

29

Pension settlement costs

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

159

Reorganization items, net

 

 

 

-

 

 

(4,196)

 

 

131

 

 

(4,171)

 

 

273

Operating income

 

 

 

284

 

 

298

 

 

270

 

 

841

 

 

556

Depreciation and amortization

 

 

 

273

 

 

298

 

 

392

 

 

958

 

 

1,204

EBITDA

 

 

$

557

 

$

596

 

$

662

 

$

1,799

 

$

1,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension/OPEB expense

 

 

$

18

 

$

21

 

$

24

 

$

62

 

$

70

Restructuring costs and other charges

 

 

 

8

 

 

16

 

 

3

 

 

26

 

 

87

Stock-based compensation

 

 

 

8

 

 

-

 

 

1

 

 

7

 

 

3

Storm-related insurance proceeds

 

 

 

(4)

 

 

-

 

 

-

 

 

(4)

 

 

(1)

Loss on disposal of Northwest Operations

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

160

Adjusted EBITDA

 

 

$

587

 

$

633

 

$

690

 

$

1,890

 

$

2,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

 

 

35.3%

 

 

36.9%

 

 

38.4%

 

 

37.0%

 

 

33.4%

Adjusted EBITDA margin

 

 

 

37.2%

 

 

39.2%

 

 

40.0%

 

 

38.8%

 

 

39.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE B

Frontier Communications Parent, Inc.

Unaudited Consolidated Financial Data

Reconciliation of Non-GAAP Financial Measures for Remaining Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: The following results include activity for the four months ended April 30, 2021 (our Predecessor period prior to emergence) and for the five months ended September 30, 2021 (our Successor period). While the basis of accounting for the Predecessor and Successor are different as a result of the application of fresh start accounting, we have calculated combined Non-GAAP results for the nine months ended September 30, 2021. The following table presents Non-GAAP measures for the operations located in the remaining 25 states (“Remaining Properties”) after excluding the Northwest Operations (“Northwest Ops”) through the date of sale from the consolidated Company's results. See Schedule F for a reconciliation to the Total Company results.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the nine months ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2021

 

2021

 

2020

 

2021

 

2020

($ in millions)

 

(Successor)

 

(Non-GAAP

 

(Predecessor)

 

(Non-GAAP

 

(Predecessor)

 

 

 

 

 

Combined)

 

 

 

 

Combined)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

1,292

 

$

1,318

 

$

1,456

 

$

4,027

 

$

4,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtract:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

273

 

 

298

 

 

392

 

 

958

 

 

1,204

Loss on disposal of Northwest Operations

 

 

-

 

 

-

 

 

-

 

 

-

 

 

160

Pension/OPEB expense

 

 

18

 

 

21

 

 

24

 

 

62

 

 

70

Restructuring costs and other charges

 

 

8

 

 

16

 

 

3

 

 

26

 

 

87

Stock-based compensation

 

 

8

 

 

-

 

 

1

 

 

7

 

 

3

Storm-related insurance proceeds

 

 

(4)

 

 

-

 

 

-

 

 

(4)

 

 

(1)

Adjusted operating expenses

 

$

989

 

$

983

 

$

1,036

 

$

2,978

 

$

3,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE C

Frontier Communications Parent, Inc.

 

Unaudited Consolidated Financial Data

 

Reconciliation of Non-GAAP Financial Measures for Remaining Properties to Consolidated Frontier

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

 

 

(Successor)

 

(Non-GAAP Combined)

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

 

 

($ in millions)

Frontier

 

Frontier

 

Frontier

 

Ops

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

$

834

 

$

839

 

$

838

 

$

-

 

$

838

 

 

Voice services

 

411

 

 

443

 

 

500

 

 

-

 

 

500

 

 

Video services

 

149

 

 

159

 

 

186

 

 

-

 

 

186

 

 

Other

 

99

 

 

92

 

 

103

 

 

-

 

 

103

 

 

Revenue from contracts with customers

 

1,493

 

 

1,533

 

 

1,627

 

 

-

 

 

1,627

 

 

Subsidy revenue

 

83

 

 

83

 

 

99

 

 

-

 

 

99

 

 

Revenue

 

1,576

 

 

1,616

 

 

1,726

 

 

-

 

 

1,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network access expenses

 

177

 

 

193

 

 

226

 

 

-

 

 

226

 

 

Network related expenses

 

413

 

 

413

 

 

431

 

 

-

 

 

431

 

 

Selling, general and administrative expenses

 

421

 

 

398

 

 

404

 

 

-

 

 

404

 

 

Depreciation and amortization

 

273

 

 

298

 

 

392

 

 

-

 

 

392

 

 

Restructuring costs and other charges

 

8

 

 

16

 

 

3

 

 

-

 

 

3

 

 

Total operating expenses

 

1,292

 

 

1,318

 

 

1,456

 

 

-

 

 

1,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

284

 

 

298

 

 

270

 

 

-

 

 

270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer (3)

$

800

 

$

826

 

$

865

 

$

-

 

$

865

 

 

Business and wholesale (3)

 

693

 

 

707

 

 

762

 

 

-

 

 

762

 

 

Revenue from contracts with customers

 

1,493

 

 

1,533

 

 

1,627

 

 

-

 

 

1,627

 

 

Subsidy revenue

 

83

 

 

83

 

 

99

 

 

-

 

 

99

 

 

Total revenue

$

1,576

 

$

1,616

 

$

1,726

 

$

-

 

$

1,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

September 30, 2021

 

September 30, 2020

 

 

 

 

 

 

(Successor)

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

 

 

 

 

 

($ in millions)

Frontier

 

Frontier

 

Ops (1)

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

$

2,515

 

$

2,644

 

$

102

 

$

2,542

 

 

 

 

 

Voice services

 

1,341

 

 

1,595

 

 

57

 

 

1,538

 

 

 

 

 

Video services

 

477

 

 

608

 

 

13

 

 

595

 

 

 

 

 

Other

 

286

 

 

328

 

 

12

 

 

316

 

 

 

 

 

Revenue from contracts with customers

 

4,619

 

 

5,175

 

 

184

 

 

4,991

 

 

 

 

 

Subsidy revenue

 

249

 

 

285

 

 

8

 

 

277

 

 

 

 

 

Revenue

 

4,868

 

 

5,460

 

 

192

 

 

5,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network access expenses

 

568

 

 

767

 

 

14

 

 

753

 

 

 

 

 

Network related expenses

 

1,248

 

 

1,305

 

 

26

 

 

1,279

 

 

 

 

 

Selling, general and administrative expenses

 

1,227

 

 

1,255

 

 

26

 

 

1,229

 

 

 

 

 

Depreciation and amortization

 

958

 

 

1,204

 

 

-

 

 

1,204

 

 

 

 

 

Loss on disposal of Northwest Operations

 

-

 

 

160

 

 

-

 

 

160

 

 

 

 

 

Restructuring costs and other charges

 

26

 

 

87

 

 

-

 

 

87

 

 

 

 

 

Total operating expenses

 

4,027

 

 

4,778

 

 

66

 

 

4,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

841

 

 

682

 

 

126

 

 

556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer (3)

$

2,476

 

$

2,746

 

$

102

 

$

2,644

 

 

 

 

 

Business and wholesale (3)

 

2,143

 

 

2,429

 

 

82

 

 

2,347

 

 

 

 

 

Revenue from contracts with customers

 

4,619

 

 

5,175

 

 

184

 

 

4,991

 

 

 

 

 

Subsidy revenue

 

249

 

 

285

 

 

8

 

 

277

 

 

 

 

 

Total revenue

$

4,868

 

$

5,460

 

$

192

 

$

5,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts represent the financial results of our Northwest Operations for the nine months ended September 30, 2020.

 

(2) Operating expenses for Northwest Ops do not include allocated expenses which are included in operating expenses for our Remaining Properties.

 

(3) Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE D

Frontier Communications Parent, Inc.

Unaudited Operating Data for Remaining Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

 

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

 

 

 

Consolidated

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

 

 

 

 

Frontier

 

Frontier

 

Frontier

 

Ops

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

 

Customers (in thousands)

 

 

3,173

 

3,196

 

3,306

 

-

 

3,306

 

Net customer additions (losses)

 

 

(23)

 

(38)

 

(36)

 

-

 

(36)

 

Average monthly consumer

 

 

 

 

 

 

 

 

 

 

 

 

revenue per customer

 

 

$ 83.77

 

$ 85.65

 

$ 86.75

 

N/A

 

$ 86.75

 

Customer monthly churn

 

 

1.64%

 

1.54%

 

1.81%

 

N/A

 

1.81%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

 

Broadband customers (in thousands)

 

 

2,789

 

2,798

 

2,861

 

N/A

 

2,861

 

Net customer additions (losses)

 

 

(9)

 

(22)

 

(20)

 

N/A

 

(20)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees

 

 

15,803

 

16,005

 

16,302

 

-

 

16,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

September 30, 2021

 

September 30, 2020

 

 

 

 

 

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

 

 

 

 

 

 

Frontier

 

Frontier

 

Ops

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

 

Customers (in thousands)

 

 

3,173

 

3,306

 

-

 

3,306

 

 

 

Net customer additions (losses)

 

 

(92)

 

(442)

 

(335)

 

(107)

 

 

 

Average monthly consumer

 

 

 

 

 

 

 

 

 

 

 

 

revenue per customer

 

 

$ 85.49

 

$ 87.06

 

$ 76.74

 

$ 87.50

 

 

 

Customer monthly churn

 

 

1.54%

 

1.75%

 

1.51%

 

1.76%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

 

Broadband customer (in thousands)

 

 

2,789

 

2,861

 

N/A

 

2,861

 

 

 

Net customer additions (losses)

 

 

(44)

 

(58)

 

N/A

 

(58)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE E

Frontier Communications Parent, Inc.

 

 

 

Unaudited Consolidated Financial Data

 

 

 

Reconciliation of Non-GAAP Financial Measures for Remaining Properties to Consolidated Frontier

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

 

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

 

 

 

 

 

(Successor)

 

(Non-GAAP Combined)

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

 

 

 

 

($ in millions)

 

Frontier

 

Frontier

 

Frontier

 

Ops

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

126

 

 

$

4,580

 

$

15

 

$

-

 

$

15

 

 

 

 

Add back (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

31

 

 

 

(180)

 

 

(11)

 

 

-

 

 

(11)

 

 

 

 

Interest expense

 

 

90

 

 

 

91

 

 

121

 

 

-

 

 

121

 

 

 

 

Investment and other loss, net

 

 

37

 

 

 

3

 

 

14

 

 

-

 

 

14

 

 

 

 

Pension settlement costs

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

Reorganization items, net

 

 

-

 

 

 

(4,196)

 

 

131