Frontier Delivers Record Operational Results as it Becomes a Fiber-First Company

Company Release - 02/23/2022

Reports Fourth-Quarter and Full-Year 2021 Financial Results

NORWALK, Conn.--(BUSINESS WIRE)-- Frontier Communications Parent, Inc. (NASDAQ: FYBR) (“Frontier” or the “Company”) reported fourth-quarter and full-year 2021 results today, delivering record operational results as it becomes a fiber-first company.

“2021 was a year of remarkable transformation reflected in our strong fourth-quarter and full-year results”, said Nick Jeffery, President and Chief Executive Officer of Frontier. “The team rallied around our purpose of Building Gigabit America™ in March and spent the next nine months breaking our own records for building and selling fiber. As we added new fiber customers, we also made service improvements that earned us a positive fiber Net Promoter Score for the first time in the company’s history. In the fourth quarter, we gained momentum and hit an inflection point, reaching positive total broadband net adds for the first time in more than five years.

“The future is fiber, and we are well on our way to becoming a fiber-first company. Yesterday, we became the only major broadband provider to launch 2 Gig fiber service network-wide, extending our leadership position as customers demand faster speeds.”

Full-year 2021 Highlights:

  • Built fiber to approximately 638,000 locations, bringing total fiber passings to 4.0 million by the end of the 2021
  • Added a record 99,000 fiber broadband customer net additions, 75% of which came in the second half of the year, resulting in fiber broadband customer growth of 7.4% from 2020
  • Revenue of $6.41 billion, net income of $4.96 billion, and Adjusted EBITDA of $2.48 billion
  • Capital expenditures of $1.70 billion, including $0.46 billion of non-subsidy-related build capital expenditures
  • Began executing on plans to reach at least 10 million locations with fiber by 2025
  • Recruited a new board of directors and management team with deep experience in telecom and turnarounds

Fourth-quarter 2021 Highlights:

  • Built fiber to a record 192,000 locations
  • Added a record 45,000 fiber broadband customer net additions, reaching an inflection point in positive total broadband customer net additions for the first time in more than five years
  • Revenue of $1.54 billion, net income of $189 million, and Adjusted EBITDA of $585 million
  • Capital expenditures of $559 million, including $161 million of non-subsidy-related build capital expenditures
  • Delivered record-low churn across both fiber and copper broadband customers
  • Achieved positive fiber Net Promoter Scores for the first time in company history
  • Raised $1 billion of debt to fund fiber build plans

Fourth-quarter 2021 Consolidated Financial Results1

Frontier reported consolidated revenue for the fourth quarter ended December 31, 2021 of $1.54 billion, a 6.3% decline from consolidated revenue reported in the fourth quarter of 2020, as growth in consumer fiber broadband was offset by declines in video, voice, wholesale, and other. Other revenue was particularly impacted by the sale of our CPE business in the fourth quarter, which resulted in lower revenue but had minimal impact on EBITDA.

Fourth quarter 2021 operating income was $272 million and net income was $189 million.

Adjusted EBITDA was $585 million and Adjusted EBITDA margin was 37.9%, compared to Adjusted EBITDA of $676 million and Adjusted EBITDA Margin of 41.0% in the fourth quarter of 2020.2 The year-over-year decline in Adjusted EBITDA and Adjusted EBITDA Margin was driven by revenue declines, partially offset by lower video content expense, lower cost of service from lower call and repair volumes, and cost savings initiatives.

Capital expenditures were $559 million, an increase from $356 million in the fourth quarter of 2020, as fiber expansion initiatives accelerated.

Fourth-quarter 2021 Consumer Results

  • Consumer revenue of $782 million, a decline of 5.9% from the fourth quarter of 2020, as strong growth in fiber broadband was offset by declines in legacy video, voice, and other
  • Consumer fiber revenue of $405 million, a decline of 1.6% from the fourth quarter of 2020 as growth in consumer broadband revenue was offset by declines in voice, video, and other
  • Consumer fiber broadband revenue of $245 million, an increase of 10.9% over the fourth quarter of 2020, driven by strong growth in fiber broadband customers and average revenue per customer (ARPU)
  • Consumer fiber broadband customer net additions of 44,000, the 10th consecutive quarter of positive consumer fiber net additions and an almost five-fold increase from 9,000 net additions in the fourth quarter of 2020, resulting in fiber broadband customer growth of 7.9% from the fourth quarter of 2020
  • Consumer fiber broadband customer churn of 1.32%, an improvement from 1.56% in the fourth quarter of 2020
  • Consumer fiber broadband ARPU of $62.21, an increase of 4.2% over the fourth quarter of 2020, as customers continue to upgrade to faster speeds

Fourth-quarter 2021 Business and Wholesale Results

  • Business and wholesale revenue of $677 million, a decline of 6.0% from the fourth 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 revenue of $270 million, a decline of 1.1% from the fourth quarter of 2020
  • Business fiber broadband customer churn of 1.23%, an improvement from 1.43% in the fourth quarter of 2020
  • Business fiber broadband ARPU of $106.87, an increase of 5.2% from the fourth quarter of 2020

Capital Structure

In the fourth quarter of 2021, Frontier successfully raised $1.0 billion of 6.000% second lien secured debt. As of the end of 2021, Frontier had total liquidity of approximately $2.6 billion, including a cash balance of approximately $2.1 billion and $0.5 billion of available borrowing capacity on its revolving credit facility. Frontier’s net leverage ratio for the four quarters ended December 31, 2021, was approximately 2.4x.3 Frontier has no long-term debt maturities prior to 2027.

2022 Outlook

Frontier’s guidance for the full year 2022 is:

  • Adjusted EBITDA of $2.00 - $2.15 billion
  • Fiber build to at least 1 million new locations
  • Cash capital expenditures of $2.40 - $2.50 billion
  • Cash taxes of approximately $20 million
  • Cash interest payments of approximately $430 million
  • Cash Pension and OPEB expense of approximately $75 million (net of capitalization)
  • Cash pension and OPEB contributions, including a catch-up from contribution waivers during bankruptcy, of approximately $135 million (net of capitalization)

Conference Call Information

As previously announced, Frontier will host a conference call with the financial community to discuss fourth-quarter and full-year 2021 results today, February 23, 2022, beginning at 8:30 a.m. Eastern Time.

The conference call webcast and presentation materials are accessible through Frontier’s Investor Relations website and will remain archived at this location.

About Frontier Communications

Frontier is a leading communications provider offering gigabit speeds to empower and connect millions of consumers and businesses across 25 states. It is building critical digital infrastructure across the country with its fiber-optic network and cloud-based solutions, enabling connections today and future proofing for tomorrow. Rallied around a single purpose, Building Gigabit America™, the Company is focused on supporting a digital society, closing the digital divide, and working toward a more sustainable environment. Frontier is preparing today for a better tomorrow. Visit 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 net 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, 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 implementation of strategic initiatives, and 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; our ability to successfully implement strategic initiatives, including our fiber buildout and other initiatives to enhance revenue and realize productivity and service improvements; our ability to secure necessary construction resources, materials and permits for our fiber buildout initiative in a timely and cost effective manner; potential disruptions in our supply chain and the effects of inflation resulting from the COVID-19 pandemic, the global microchip shortage, or otherwise, which could adversely impact our business and hinder our fiber expansion plans; 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 OTT 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; 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 comply with the applicable CAF II and RDOF requirements 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, working remotely and recent applicable federal, state, and local mandates, and prohibitions, 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; 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 the 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 year-over-year comparisons 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 information, available at www.frontier.com/ir, for information setting forth 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

 

For the

 

 

 

For the

 

 

three months ended

 

three months ended

 

 

 

 

three months ended

 

 

December 31,

 

September 30,

 

 

 

December 31,

 

 

2021

 

2021

 

 

 

2020

 

 

(Successor)

 

(Successor)

 

 

 

(Predecessor)

($ in millions and shares in thousands,

 

 

 

 

 

 

 

 

 

 

 

except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,543

 

$

1,576

 

 

 

$

1,695

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of service

 

 

546

 

 

590

 

 

 

 

629

Selling, general and administrative expenses

 

 

441

 

 

421

 

 

 

 

393

Depreciation and amortization

 

 

282

 

 

273

 

 

 

 

394

Loss on disposal of Northwest Operations

 

 

-

 

 

-

 

 

 

 

2

Restructuring costs and other charges

 

 

2

 

 

8

 

 

 

 

-

Total operating expenses

 

 

1,271

 

 

1,292

 

 

 

 

1,418

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

272

 

 

284

 

 

 

 

277

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income (loss), net

 

 

34

 

 

(37)

 

 

 

 

(14)

Loss on early extinguishment of debt

 

 

-

 

 

-

 

 

 

 

(72)

Reorganization items, net

 

 

-

 

 

-

 

 

 

 

(136)

Interest expense

 

 

(105)

 

 

(90)

 

 

 

 

(98)

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

201

 

 

157

 

 

 

 

(43)

Income tax expense

 

 

12

 

 

31

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

189

 

$

126

 

 

 

$

(50)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

244,308

 

 

244,403

 

 

 

 

104,489

Weighted average shares outstanding - diluted

 

 

244,840

 

 

245,667

 

 

 

 

104,489

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net earnings

 

 

 

 

 

 

 

 

 

 

 

per common share

 

$

0.77

 

$

0.52

 

 

 

$

(0.48)

Diluted net earnings per common share

 

$

0.77

 

$

0.51

 

 

 

$

(0.48)

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

559

 

$

377

 

 

 

$

356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 eight months ended December 31, 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 year ended December 31, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the eight

 

 

 

For the four

 

 

 

 

 

 

 

 

months ended

 

 

 

months ended

 

For the year ended

 

 

December 31,

 

 

 

April 30,

 

December 31,

 

December 31,

($ in millions and shares in thousands,

 

2021

 

 

 

2021

 

2021

 

2020

except per share amounts)

 

(Successor)

 

 

 

(Predecessor)

 

(Non-GAAP

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

Combined)

 

 

 

Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

4,180

 

 

 

$

2,231

 

$

6,411

 

$

7,155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service

 

 

1,532

 

 

 

 

830

 

 

2,362

 

 

2,701

Selling, general and administrative expenses

 

 

1,131

 

 

 

 

537

 

 

1,668

 

 

1,648

Depreciation and amortization

 

 

734

 

 

 

 

506

 

 

1,240

 

 

1,598

Loss on disposal of Northwest Operations

 

 

-

 

 

 

 

-

 

 

-

 

 

162

Restructuring costs and other charges

 

 

21

 

 

 

 

7

 

 

28

 

 

87

Total operating expenses

 

 

3,418

 

 

 

 

1,880

 

 

5,298

 

 

6,196

Operating income

 

 

762

 

 

 

 

351

 

 

1,113

 

 

959

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment and other income (loss), net

 

 

(5)

 

 

 

 

1

 

 

(4)

 

 

(43)

Pension settlement costs

 

 

-

 

 

 

 

-

 

 

-

 

 

(159)

Loss on early extinguishment of debt

 

 

-

 

 

 

 

-

 

 

-

 

 

(72)

Reorganization items, net

 

 

-

 

 

 

 

4,171

 

 

4,171

 

 

(409)

Interest expense

 

 

(257)

 

 

 

 

(118)

 

 

(375)

 

 

(762)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

500

 

 

 

 

4,405

 

 

4,905

 

 

(486)

Income tax expense (benefit)

 

 

86

 

 

 

 

(136)

 

 

(50)

 

 

(84)

Net income (loss)

 

$

414

 

 

 

$

4,541

 

$

4,955

 

$

(402)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

244,405

 

 

 

 

104,584

 

 

NM

 

 

104,467

Weighted average shares outstanding - diluted

 

 

245,885

 

 

 

 

104,924

 

 

NM

 

 

104,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net earnings (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

per common share

 

$

1.69

 

 

 

$

43.42

 

 

NM

 

$

(3.85)

Diluted net earnings (loss) per common share

 

$

1.68

 

 

 

$

43.28

 

 

NM

 

$

(3.85)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

1,205

 

 

 

$

500

 

$

1,705

 

$

1,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 eight months ended December 31, 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 year ended December 31, 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 three

 

 

 

 

 

months ended

 

 

 

months ended

 

 

 

 

 

December 31,

 

 

 

September 30,

 

 

 

December 31,

 

 

 

($ in millions)

 

2021

 

 

 

2021

 

 

 

2020

 

 

 

 

 

(Successor)

 

 

 

(Successor)

 

 

 

(Predecessor)

 

 

 

Selected Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

 

$

834

 

 

 

$

834

 

 

 

$

834

 

 

 

Voice services

 

 

397

 

 

 

 

411

 

 

 

 

490

 

 

 

Video services

 

 

143

 

 

 

 

149

 

 

 

 

181

 

 

 

Other

 

 

85

 

 

 

 

99

 

 

 

 

101

 

 

 

Revenue from contracts with customers

 

 

1,459

 

 

 

 

1,493

 

 

 

 

1,606

 

 

 

Subsidy and other revenue

 

 

84

 

 

 

 

83

 

 

 

 

89

 

 

 

Total revenue

 

$

1,543

 

 

 

$

1,576

 

 

 

$

1,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer (1)

 

$

782

 

 

 

$

800

 

 

 

$

863

 

 

 

Business and Wholesale (1)

 

 

677

 

 

 

 

693

 

 

 

 

743

 

 

 

Revenue from contracts with customers

 

$

1,459

 

 

 

$

1,493

 

 

 

$

1,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiber

 

$

675

 

 

 

$

684

 

 

 

$

689

 

 

 

Copper

 

 

784

 

 

 

 

809

 

 

 

 

867

 

 

 

Other

 

 

-

 

 

 

 

-

 

 

 

 

50

 

 

 

Revenue from contracts with customers

 

$

1,459

 

 

 

$

1,493

 

 

 

$

1,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the eight

 

 

 

For the four

 

 

 

 

 

 

 

 

 

 

months ended

 

 

 

months ended

 

 

 

For the year ended

 

 

December 31,

 

 

 

April 30,

 

 

 

December 31,

 

December 31,

 

 

2021

 

 

 

2021

 

 

 

2021

 

2020

($ in millions)

 

(Successor)

 

 

 

(Predecessor)

 

 

 

(Non-GAAP

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

Combined)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Statement of Operations Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

 

$

2,224

 

 

 

$

1,125

 

 

 

$

3,349

 

$

3,376

Voice services

 

 

1,091

 

 

 

 

647

 

 

 

 

1,738

 

 

2,028

Video services

 

 

397

 

 

 

 

223

 

 

 

 

620

 

 

776

Other

 

 

246

 

 

 

 

125

 

 

 

 

371

 

 

417

Revenue from contracts with customers

 

 

3,958

 

 

 

 

2,120

 

 

 

 

6,078

 

 

6,597

Subsidy and other revenue

 

 

222

 

 

 

 

111

 

 

 

 

333

 

 

366

Total revenue

 

$

4,180

 

 

 

$

2,231

 

 

 

$

6,411

 

$

6,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer (1)

 

$

2,125

 

 

 

$

1,133

 

 

 

$

3,258

 

$

3,507

Business and Wholesale (1)

 

 

1,833

 

 

 

 

987

 

 

 

 

2,820

 

 

3,090

Revenue from contracts with customers

 

$

3,958

 

 

 

$

2,120

 

 

 

$

6,078

 

$

6,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiber

 

$

1,814

 

 

 

$

903

 

 

 

$

2,717

 

$

2,812

Copper

 

 

2,144

 

 

 

 

1,140

 

 

 

 

3,284

 

 

3,603

Other

 

 

-

 

 

 

 

77

 

 

 

 

77

 

 

182

Revenue from contracts with customers

 

$

3,958

 

 

 

$

2,120

 

 

 

$

6,078

 

$

6,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Due to changes in accounting policy 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 year ended

 

 

December 31, 2021

 

September 30, 2021

 

December 31, 2020

 

December 31, 2021

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

Consumer customer metrics (1)

 

 

 

 

 

 

 

 

 

 

Customers (in thousands)

 

 

3,165

 

 

3,173

 

 

3,264

 

 

3,165

 

 

3,264

Net customer additions (losses)

 

 

(8)

 

 

(23)

 

 

(42)

 

 

(99)

 

 

(148)

Average monthly consumer

 

 

 

 

 

 

 

 

 

 

revenue per customer

 

$

82.29

 

$

83.77

 

$

87.57

 

$

84.70

 

$

87.52

Customer monthly churn

 

 

1.45%

 

 

1.64%

 

 

1.67%

 

 

1.52%

 

 

1.74%

 

 

 

 

 

 

 

 

 

 

 

Broadband customer metrics (1) (2)

 

 

 

 

 

 

 

 

 

 

Broadband customers (in thousands)

 

 

2,799

 

 

2,789

 

 

2,834

 

 

2,799

 

 

2,834

Net customer additions (losses)

 

 

10

 

 

(9)

 

 

(27)

 

 

(34)

 

 

(85)

 

 

 

 

 

 

 

 

 

 

 

Employees

 

 

15,640

 

 

15,803

 

 

16,200

 

 

15,640

 

 

16,200

 

 

 

 

 

 

 

 

 

 

 

(1) Due to changes in accounting policy 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

 

 

Predecessor

($ in millions)

 

December 31, 2021

 

 

 

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,127

 

 

 

 

$

1,829

Accounts receivable, net

 

 

458

 

 

 

 

 

553

Other current assets

 

 

103

 

 

 

 

 

272

Total current assets

 

 

2,688

 

 

 

 

 

2,654

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

9,199

 

 

 

 

 

12,931

Other assets

 

 

4,594

 

 

 

 

 

1,210

Total assets

 

$

16,481

 

 

 

 

$

16,795

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Long-term debt due within one year

 

$

15

 

 

 

 

$

5,781

Accounts payable and other current liabilities

 

 

1,436

 

 

 

 

 

1,359

Total current liabilities

 

 

1,451

 

 

 

 

 

7,140

 

 

 

 

 

 

 

 

 

 

Deferred income taxes and other liabilities

 

 

2,462

 

 

 

 

 

2,990

Liabilities subject to compromise

 

 

-

 

 

 

 

 

11,565

Long-term debt

 

 

7,968

 

 

 

 

 

-

Equity (deficit)

 

 

4,600

 

 

 

 

 

(4,900)

Total liabilities and equity (deficit)

 

$

16,481

 

 

 

 

$

16,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

Leverage Ratio

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

Long-term debt due within one year

 

$

15

 

 

 

 

 

 

Long-term debt

 

 

7,968

 

 

 

 

 

 

Total debt

 

$

7,983

 

 

 

 

 

 

Less: Cash and cash equivalents

 

 

(2,127)

 

 

 

 

 

 

Net debt

 

$

5,856

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Adjusted EBITDA - last 4 quarters

 

$

2,475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Leverage Ratio

 

 

2.4x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Consolidated Cash Flow Data

 

 

 

 

 

For the three

 

 

 

 

For the three

 

 

months ended

 

 

 

 

months ended

 

 

December 31, 2021

 

 

 

 

December 31, 2020

($ in millions)

 

(Successor)

 

 

 

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

189

 

 

 

 

$

(50)

Adjustments to reconcile net loss to net cash provided from

 

 

 

 

 

 

 

 

 

(used by) operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

282

 

 

 

 

 

394

Loss on extinguishment of debt

 

 

-

 

 

 

 

 

72

Stock-based compensation

 

 

10

 

 

 

 

 

-

Amortization of deferred financing costs

 

 

-

 

 

 

 

 

2

Non-cash reorganization items, net

 

 

-

 

 

 

 

 

8

Other adjustments

 

 

(7)

 

 

 

 

 

3

Deferred income taxes

 

 

13

 

 

 

 

 

9

Loss on disposal of Northwest Operations

 

 

-

 

 

 

 

 

2

Change in accounts receivable

 

 

(6)

 

 

 

 

 

10

Change in accounts payable and other liabilities

 

 

(34)

 

 

 

 

 

8

Change in prepaid expenses, income taxes, and other assets

 

 

21

 

 

 

 

 

39

Net cash provided from operating activities

 

 

468

 

 

 

 

 

497

 

 

 

 

 

 

 

 

 

 

Cash flows used by investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(559)

 

 

 

 

 

(356)

Proceeds on sale of assets

 

 

7

 

 

 

 

 

20

Other

 

 

4

 

 

 

 

 

2

Net cash used by investing activities

 

 

(548)

 

 

 

 

 

(334)

 

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) financing activities:

 

 

 

 

 

 

 

 

 

Long-term debt payments

 

 

(9)

 

 

 

 

 

(4,943)

Proceeds from long-term debt borrowings

 

 

1,000

 

 

 

 

 

4,950

Financing costs paid

 

 

(13)

 

 

 

 

 

(102)

Finance lease obligation payments

 

 

(4)

 

 

 

 

 

(5)

Other

 

 

23

 

 

 

 

 

(1)

Net cash provided from (used by) financing activities

 

 

997

 

 

 

 

 

(101)

 

 

 

 

 

 

 

 

 

 

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

 

 

917

 

 

 

 

 

62

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

 

 

1,261

 

 

 

 

 

1,825

 

 

 

 

 

 

 

 

 

 

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

 

$

2,178

 

 

 

 

$

1,887

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

Interest

 

$

160

 

 

 

 

$

64

Income tax payments, net

 

$

1

 

 

 

 

$

2

Reorganization items, net

 

$

-

 

 

 

 

$

136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 eight 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 year ended December 31, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the eight

 

 

 

For the four

 

 

 

 

 

 

 

 

months ended

 

 

 

months ended

 

For the year ended

 

 

December 31, 2021

 

 

 

April 30, 2021

 

December 31, 2021

 

December 31, 2020

($ in millions)

 

(Successor)

 

 

 

(Predecessor)

 

(Non-GAAP Combined)

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

414

 

 

 

$

4,541

 

$

4,955

 

$

(402)

Adjustments to reconcile net loss to net cash provided from

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(used by) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

734

 

 

 

 

506

 

 

1,240

 

 

1,598

Loss on extinguishment of debt

 

 

-

 

 

 

 

-

 

 

-

 

 

72

Pension settlement costs

 

 

-

 

 

 

 

-

 

 

-

 

 

159

Stock-based compensation

 

 

18

 

 

 

 

(1)

 

 

17

 

 

3

Amortization of deferred financing costs

 

 

-

 

 

 

 

-

 

 

-

 

 

15

Non-cash reorganization items, net

 

 

-

 

 

 

 

(5,467)

 

 

(5,467)

 

 

93

Other adjustments

 

 

(18)

 

 

 

 

1

 

 

(17)

 

 

6

Deferred income taxes

 

 

81

 

 

 

 

(148)

 

 

(67)

 

 

(91)

Loss on disposal of Northwest Operations

 

 

-

 

 

 

 

-

 

 

-

 

 

162

Change in accounts receivable

 

 

59

 

 

 

 

36

 

 

95

 

 

73

Change in accounts payable and other liabilities

 

 

115

 

 

 

 

(168)

 

 

(53)

 

 

342

Change in prepaid expenses, income taxes, and other assets

 

 

48

 

 

 

 

46

 

 

94

 

 

(41)

Net cash provided from (used by) operating activities

 

 

1,451

 

 

 

 

(654)

 

 

797

 

 

1,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows used by investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(1,205)

 

 

 

 

(500)

 

 

(1,705)

 

 

(1,181)

Proceeds from sale of Northwest Operations

 

 

-

 

 

 

 

-

 

 

-

 

 

1,131

Proceeds on sale of assets

 

 

7

 

 

 

 

9

 

 

16

 

 

27

Other

 

 

5

 

 

 

 

1

 

 

6

 

 

4

Net cash used by investing activities

 

 

(1,193)

 

 

 

 

(490)

 

 

(1,683)

 

 

(19)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt payments

 

 

(17)

 

 

 

 

(1)

 

 

(18)

 

 

(4,948)

Proceeds from long-term debt borrowings

 

 

1,000

 

 

 

 

225

 

 

1,225

 

 

4,950

Repayment of revolving debt

 

 

-

 

 

 

 

-

 

 

-

 

 

(749)

Financing costs paid

 

 

(13)

 

 

 

 

(4)

 

 

(17)

 

 

(121)

Finance lease obligation payments

 

 

(13)

 

 

 

 

(7)

 

 

(20)

 

 

(23)

Other

 

 

23

 

 

 

 

(16)

 

 

7

 

 

(2)

Net cash provided from (used by) financing activities

 

 

980

 

 

 

 

197

 

 

1,177

 

 

(893)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

1,238

 

 

 

 

(947)

 

 

291

 

 

1,077

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

 

 

940

 

 

 

 

1,887

 

 

1,887

 

 

810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

2,178

 

 

 

$

940

 

$

2,178

 

$

1,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

281

 

 

 

$

84

 

$

365

 

$

612

Income tax payments, net

 

$

28

 

 

 

$

9

 

$

37

 

$

8

Reorganization items, net

 

$

-

 

 

 

$

1,397

 

$

1,397

 

$

270

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 three months ended September 30 and December 31, 2021 (our Successor period) and the three months ended December 31, 2020 (our Predecessor period prior to emergence). 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 year ended December 31, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the year ended

 

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

($ in millions)

 

 

2021

 

2021

 

2020

 

2021

 

2020

 

 

 

(Successor)

 

(Successor)

 

(Predecessor)

 

(Non-GAAP

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

Combined)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

$

189

 

$

126

 

$

(50)

 

$

4,955

 

$

(528)

Add back (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

 

12

 

 

31

 

 

7

 

 

(50)

 

 

(84)

Interest expense

 

 

 

105

 

 

90

 

 

98

 

 

375

 

 

762

Investment and other income (loss), net

 

 

 

(34)

 

 

37

 

 

14

 

 

4

 

 

43

Pension settlement costs

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

159

Loss on early extinguishment of debt

 

 

 

-

 

 

-

 

 

72

 

 

-

 

 

72

Reorganization items, net

 

 

 

-

 

 

-

 

 

136

 

 

(4,171)

 

 

409

Operating income

 

 

 

272

 

 

284

 

 

277

 

 

1,113

 

 

833

Depreciation and amortization

 

 

 

282

 

 

273

 

 

394

 

 

1,240

 

 

1,598

EBITDA

 

 

$

554

 

$

557

 

$

671

 

$

2,353

 

$

2,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension/OPEB expense

 

 

$

19

 

$

18

 

$

20

 

$

81

 

$

90

Restructuring costs and other charges

 

 

 

2

 

 

8

 

 

-

 

 

28

 

 

87

Stock-based compensation

 

 

 

10

 

 

8

 

 

-

 

 

17

 

 

3

Storm-related insurance proceeds

 

 

 

-

 

 

(4)

 

 

-

 

 

(4)

 

 

(1)

Loss on disposal of Northwest Operations

 

 

 

-

 

 

-

 

 

2

 

 

-

 

 

162

Adjusted EBITDA

 

 

$

585

 

$

587

 

$

693

 

$

2,475

 

$

2,772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

 

 

35.9%

 

 

35.3%

 

 

39.6%

 

 

36.7%

 

 

34.9%

Adjusted EBITDA margin

 

 

 

37.9%

 

 

37.2%

 

 

40.9%

 

 

38.6%

 

 

39.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Predecessor period prior to emergence and for the 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 year ended December 31, 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 year ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

 

2021

 

2021

 

2020

 

2021

 

2020

 

 

(Successor)

 

(Successor)

 

(Predecessor)

 

(Non-GAAP

 

(Predecessor)

($ in millions)

 

 

 

 

 

 

 

 

 

 

Combined)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

1,271

 

$

1,292

 

$

1,418

 

$

5,298

 

$

6,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtract:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

282

 

 

273

 

 

394

 

 

1,240

 

 

1,598

Loss on disposal of Northwest Operations

 

 

-

 

 

-

 

 

2

 

 

-

 

 

162

Pension/OPEB expense

 

 

19

 

 

18

 

 

20

 

 

81

 

 

90

Restructuring costs and other charges

 

 

2

 

 

8

 

 

-

 

 

28

 

 

87

Stock-based compensation

 

 

10

 

 

8

 

 

-

 

 

17

 

 

3

Storm-related insurance proceeds

 

 

-

 

 

(4)

 

 

-

 

 

(4)

 

 

(1)

Adjusted operating expenses

 

$

958

 

$

989

 

$

1,002

 

$

3,936

 

$

4,191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

December 31, 2021

 

 

September 30, 2021

 

December 31, 2020

 

(Successor)

 

 

(Successor)

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

($ in millions)

Frontier

 

 

Frontier

 

Frontier

 

Ops

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

$

834

 

 

$

834

 

$

834

 

$

-

 

$

834

Voice services

 

397

 

 

 

411

 

 

490

 

 

-

 

 

490

Video services

 

143

 

 

 

149

 

 

181

 

 

-

 

 

181

Other

 

85

 

 

 

99

 

 

101

 

 

-

 

 

101

Revenue from contracts with customers

 

1,459

 

 

 

1,493

 

 

1,606

 

 

-

 

 

1,606

Subsidy revenue

 

84

 

 

 

83

 

 

89

 

 

-

 

 

89

Revenue

 

1,543

 

 

 

1,576

 

 

1,695

 

 

-

 

 

1,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service

 

546

 

 

 

590

 

 

629

 

 

-

 

 

629

Selling, general and administrative expenses

 

441

 

 

 

421

 

 

393

 

 

-

 

 

393

Depreciation and amortization

 

282

 

 

 

273

 

 

394

 

 

-

 

 

394

Loss on disposal of Northwest Operations

 

-

 

 

 

-

 

 

2

 

 

-

 

 

2

Restructuring costs and other charges

 

2

 

 

 

8

 

 

-

 

 

-

 

 

-

Total operating expenses

 

1,271

 

 

 

1,292

 

 

1,418

 

 

-

 

 

1,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

272

 

 

 

284

 

 

277

 

 

-

 

 

277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer (3)

$

782

 

 

$

800

 

$

863

 

$

-

 

$

863

Business and wholesale (3)

 

677

 

 

 

693

 

 

743

 

 

-

 

 

743

Revenue from contracts with customers

 

1,459

 

 

 

1,493

 

 

1,606

 

 

-

 

 

1,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiber

 

675

 

 

 

684

 

 

689

 

 

-

 

 

689

Copper

 

784

 

 

 

809

 

 

867

 

 

-

 

 

867

Other

 

-

 

 

 

-

 

 

50

 

 

-

 

 

50

Revenue from contracts with customers

$

1,459

 

 

$

1,493

 

$

1,606

 

$

-

 

$

1,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended

 

 

 

 

December 31, 2021

 

 

December 31, 2020

 

 

 

 

(Non-GAAP Combined)

 

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Consolidated

 

Northwest

 

Remaining

 

 

 

($ in millions)

Frontier

 

 

Frontier

 

Ops (1)

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

$

3,349

 

 

$

3,478

 

$

102

 

$

3,376

 

 

 

Voice services

 

1,738

 

 

 

2,085

 

 

57

 

 

2,028

 

 

 

Video services

 

620

 

 

 

789

 

 

13

 

 

776

 

 

 

Other

 

371

 

 

 

429

 

 

12

 

 

417

 

 

 

Revenue from contracts with customers

 

6,078

 

 

 

6,781

 

 

184

 

 

6,597

 

 

 

Subsidy revenue

 

333

 

 

 

374

 

 

8

 

 

366

 

 

 

Revenue

 

6,411

 

 

 

7,155

 

 

192

 

 

6,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service

 

2,362

 

 

 

2,701

 

 

40

 

 

2,661

 

 

 

Selling, general and administrative expenses

 

1,668

 

 

 

1,648

 

 

26

 

 

1,622

 

 

 

Depreciation and amortization

 

1,240

 

 

 

1,598

 

 

-

 

 

1,598

 

 

 

Loss on disposal of Northwest Operations

 

-

 

 

 

162

 

 

-

 

 

162

 

 

 

Restructuring costs and other charges

 

28

 

 

 

87

 

 

-

 

 

87

 

 

 

Total operating expenses

 

5,298

 

 

 

6,196

 

 

66

 

 

6,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

1,113

 

 

 

959

 

 

126

 

 

833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer (3)

$

3,258

 

 

$

3,609

 

$

102

 

$

3,507

 

 

 

Business and wholesale (3)

 

2,820

 

 

 

3,172

 

 

82

 

 

3,090

 

 

 

Revenue from contracts with customers

 

6,078

 

 

 

6,781

 

 

184

 

 

6,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiber

 

2,717

 

 

 

2,887

 

 

75

 

 

2,812

 

 

 

Copper

 

3,284

 

 

 

3,707

 

 

104

 

 

3,603

 

 

 

Other

 

77

 

 

 

187

 

 

5

 

 

182

 

 

 

Revenue from contracts with customers

$

6,078

 

 

$

6,781

 

$

184

 

$

6,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts represent the financial results of our Northwest Operations for the year ended December 31, 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 accounting policy 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

 

 

 

December 31, 2021

 

September 30, 2021

 

December 31, 2020

 

 

 

Consolidated

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

 

 

 

Frontier

 

Frontier

 

Frontier

 

Ops

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

Consumer customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

Customers (in thousands)

 

 

 

3,165

 

 

3,173

 

 

3,264

 

 

-

 

 

3,264

Net customer additions (losses)

 

 

 

(8)

 

 

(23)

 

 

(42)

 

 

-

 

 

(42)

Average monthly consumer

 

 

 

 

 

 

 

 

 

 

 

revenue per customer

 

 

$

82.29

 

$

83.77

 

$

87.57

 

 

N/A

 

$

87.57

Customer monthly churn

 

 

 

1.45%

 

 

1.64%

 

 

1.67%

 

 

N/A

 

 

1.67%

 

 

 

 

 

 

 

 

 

 

 

 

Broadband customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

Broadband customers (in thousands)

 

 

 

2,799

 

 

2,789

 

 

N/A

 

 

N/A

 

 

2,834

Net customer additions (losses)

 

 

 

10

 

 

(9)

 

 

N/A

 

 

N/A

 

 

(27)

 

 

 

 

 

 

 

 

 

 

 

 

Employees

 

 

 

15,640

 

 

15,803

 

 

16,200

 

 

-

 

 

16,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended

 

 

 

 

 

December 31, 2021

 

December 31, 2020

 

 

 

 

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

 

 

 

 

 

Frontier

 

Frontier

 

Ops

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

Customers (in thousands)

 

 

 

3,165

 

 

3,264

 

 

-

 

 

3,264

 

 

Net customer additions (losses)

 

 

 

(99)

 

 

(483)

 

 

(335)

 

 

(148)

 

 

Average monthly consumer

 

 

 

 

 

 

 

 

 

 

 

revenue per customer

 

 

$

84.70

 

$

87.19

 

$

76.74

 

$

87.52

 

 

Customer monthly churn

 

 

 

1.52%

 

 

1.73%

 

 

1.51%

 

 

1.74%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband customer metrics (1)

 

 

 

 

 

 

 

 

 

 

 

Broadband customer (in thousands)

 

 

 

2,799

 

 

N/A

 

 

N/A

 

 

2,834

 

 

Net customer additions (losses)

 

 

 

(34)

 

 

N/A

 

 

N/A

 

 

(85)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Due to changes in accounting policy 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

 

 

December 31, 2021

 

September 30, 2021

 

December 31, 2020

 

 

(Successor)

 

(Successor)

 

(Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

Consolidated

 

Consolidated

 

Northwest

 

Remaining

($ in millions)

 

Frontier

 

Frontier

 

Frontier

 

Ops

 

Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

189

 

 

$

126

 

$

(50)

 

$

-

 

$

(50)

Add back (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

12

 

 

 

31

 

 

7

 

 

-

 

 

7

Interest expense

 

 

105

 

 

 

90

 

 

98

 

 

-

 

 

98

Investment and other income (loss), net

 

 

(34)

 

 

 

37

 

 

14

 

 

-

 

 

14

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

72

 

 

-

 

 

72

Reorganization items, net

 

 

-

 

 

 

-

 

 

136

 

 

-

 

 

136

Operating income

 

 

272

 

 

 

284

 

 

277

 

 

-

 

 

277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

282

 

 

 

273

 

 

394

 

 

-

 

 

394

EBITDA

 

 

554

 

 

 

557

 

 

671

 

 

-

 

 

671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension/OPEB expense

 

 

19

 

 

 

18

 

 

20

 

 

-

 

 

20

Restructuring costs and other charges

 

 

2

 

 

 

8

 

 

-

 

 

-

 

 

-

Stock-based compensation expense

 

 

10

 

 

 

8

 

 

-

 

 

-

 

 

-

Storm-related insurance proceeds

 

 

-

 

 

 

(4)

 

 

-

 

 

-

 

 

-

Loss on disposal of Northwest Operations

 

 

-