-
Continued positive broadband momentum with 17,100 net broadband
additions
-
Maintained an attractive and sustainable dividend payout ratio of 54%
-
Annualized Connecticut cost synergies at $230 million
-
Smooth leadership transition completed with Dan McCarthy becoming
President and Chief Executive Officer and Maggie Wilderotter the
Executive Chairman as of April 3, 2015
-
Integration activities and regulatory approval for acquisition of
Verizon CA, FL and TX assets underway
-
2015 guidance for free cash flow, capital expenditures and cash taxes
reaffirmed
STAMFORD, Conn.--(BUSINESS WIRE)--
Frontier Communications Corporation (NASDAQ:FTR) today reported first
quarter 2015 revenue of $1,371 million, operating income of $163 million
and net loss of $51 million, or $0.05 per share. Excluding acquisition
related interest expense of $58 million, acquisition and integration
costs of $57 million and severance costs of $1 million (combined impact
of $72 million, or $0.07 per share after tax), non-GAAP adjusted net
income was $21 million, or $0.02 per share, for the first quarter of
2015, as determined by the Company in the attached Schedule B.
“I am very pleased to report that we continued our track record of
consistent, strong broadband growth for the quarter,” said Dan McCarthy,
Frontier’s President and Chief Executive Officer. “We also completed our
Connecticut integration in the first quarter, with annualized cost
synergies now at $230 million. Our integration, conversion and
regulatory approval planning have commenced for the Verizon properties
and we still expect to close the transaction in the first half of 2016.
Throughout this year our priorities are improved customer retention,
broadband market share growth in the residential and commercial base,
and improved commercial sales results in all segments. I remain excited
about Frontier’s prospects, including the pending acquisition and the
growth potential in our current markets.”
Revenue for the first quarter of 2015 was $1,371 million compared
to $1,330 million in the fourth quarter of 2014 and $1,154 million in
the first quarter of 2014. Revenue for the first quarter of 2015
increased sequentially by $41 million, or 3%, from the fourth quarter of
2014 and by $217 million, or 19%, from the first quarter of 2014. The
increase in revenue during the first quarter of 2015 is primarily a
result of the incremental contribution of the Connecticut operations
acquired on October 24, 2014 (the Connecticut Acquisition).
Customer revenue for the first quarter of 2015 of $1,233 million
increased 3% sequentially compared to $1,202 million in the fourth
quarter of 2014, primarily due to the additional revenue of $47 million
from the Connecticut Acquisition and the increase in data services
revenue. This was partially offset by lower voice services revenue and
lower non-switched access revenue from the expected decline in wireless
backhaul in the Frontier legacy operations. Total residential revenue
was $617 million for the first quarter of 2015, compared to $601 million
in the fourth quarter of 2014, a 3% sequential increase. Total business
revenue was $616 million for the first quarter of 2015, compared to
$601 million in the fourth quarter of 2014, a 3% sequential increase.
At March 31, 2015, the Company had 3,199,100 residential
customers. The first quarter of 2015 resulted in a net loss of 0.4%
of our residential customers, compared to a net loss of 0.3% of our
customers in the first quarter of 2014. The average monthly residential
revenue per customer was $64.13 in the first quarter of 2015, an
increase of $5.06 compared to $59.07 in the first quarter of 2014.
At March 31, 2015, the Company had 301,100 business customers.
The first quarter of 2015 resulted in a net loss of 1.2% of our business
customers, compared to a net loss of 1.6% of our customers in the first
quarter of 2014. During the first quarter of 2015, the average monthly
business revenue per customer was $678.15, or 4% higher than the first
quarter of 2014.
At March 31, 2015, the Company had 2,386,700 broadband customers.
The Company has added 17,100 net broadband customers during the first
quarter of 2015.
At March 31, 2015, the Company had 577,700 video customers. The
first quarter of 2015 resulted in a net loss of 7,700 video customers,
including 3,500 satellite video customers.
Total Operating Expenses includes operating expenses of the
Connecticut Operations for the full period in the first quarter of 2015,
and only for the period from October 25, 2014 through December 31, 2014
for the fourth quarter of 2014. Total operating expenses for the
Connecticut Operations were $249 million for the first quarter of 2015
and $178 million for the fourth quarter of 2014.
Network access expenses for the first quarter of 2015 were $155
million, compared to $144 million in the fourth quarter of 2014 and $107
million in the first quarter of 2014.
Network related expenses for the first quarter of 2015 were $325
million, compared to $320 million in the fourth quarter of 2014 and $263
million in the first quarter of 2014.
Selling, general and administrative expenses (SG&A expenses) for
the first quarter of 2015 were $330 million, compared to $300 million in
the fourth quarter of 2014 and $266 million in the first quarter of 2014.
Depreciation and amortization for the first quarter of 2015 was
$341 million, compared to $323 million in the fourth quarter of 2014 and
$281 million in the first quarter of 2014. Depreciation and amortization
for our Frontier legacy operations decreased $18 million compared to the
first quarter of 2014, primarily due to the expected lower amortization
related to the customer base acquired in our 2010 Acquisition.
Acquisition and integration costs for the first quarter of 2015
were $57 million ($0.04 per share after tax) compared to $70 million
($0.04 per share after tax) in the fourth quarter of 2014 and $11
million ($0.01 per share after tax) in the first quarter of 2014.
Acquisition and integration costs for the first quarter of 2015 include
$21 million related to the Connecticut Acquisition and $36 million
related to the Verizon Transaction.
Operating income for the first quarter of 2015 was $163 million
and operating income margin was 11.9% compared to operating income of
$173 million and operating income margin of 13.0% in the fourth quarter
of 2014 and operating income of $226 million and operating income margin
of 19.6% in the first quarter of 2014.
Interest expense for the first quarter of 2015 was $245 million
compared to $188 million in the fourth quarter of 2014 and $171 million
in the first quarter of 2014. Interest expense increased by $74 million
compared to the first quarter of 2014, primarily due to the commitment
fees related to the Verizon Transaction bridge loan facilities and the
interest expense on the debt issued in September 2014 and October 2014
to finance the Connecticut Acquisition.
Income tax expense (benefit) for the first quarter of 2015 was a
tax benefit of $30 million compared to a tax benefit of $16 million in
the fourth quarter of 2014 and a tax expense of $17 million in the first
quarter of 2014. Income tax expense decreased by $47 million in the
first quarter of 2015 compared to the first quarter of 2014, principally
due to lower pretax income in 2015. The Company had an effective tax
rate for the first quarter of 2015 and 2014 of 37.1% and 30.4%,
respectively. The first quarter of 2014 included certain tax items
arising from changes in state tax laws with an impact of $3 million in
reduced income tax expense.
Net income (loss) was a net loss of $51 million, or $0.05 per
share, in the first quarter of 2015, compared to net income of $14
million, or $0.01 per share, in the fourth quarter of 2014 and net
income of $39 million, or $0.04 per share, in the first quarter of 2014.
The first quarter of 2015 includes acquisition related interest expense
of $58 million, acquisition and integration costs of $57 million, and
severance costs of $1 million (combined impact of $72 million, or $0.07
per share after tax). Excluding the impact of the aforementioned items,
non-GAAP adjusted net income for the first quarter of 2015 was $21
million, or $0.02 per share, as compared to $36 million, or $0.04 per
share, in the fourth quarter of 2014 and $48 million, or $0.05 per
share, in the first quarter of 2014.
Capital expenditures for Frontier business operations were $170
million for the first quarter of 2015 as compared to $135 million for
the first quarter of 2014. The Company also incurred $10 million in
capital expenditures during the first quarter of 2015 related to
integration activities in connection with the Connecticut Acquisition.
The Company used $9 million of the previously received Connect America
Fund funding in the first quarter of 2015 as compared to $6 million in
the first quarter of 2014.
Operating cash flow was $504 million for the first quarter of
2015 resulting in an operating cash flow margin of 36.7%. Operating cash
flow, as adjusted and determined by the Company in the attached Schedule
A, was $564 million, or 41.1%, after excluding $57 million of
acquisition and integration costs, $2 million of non-cash pension and
other postretirement benefit costs and $1 million of severance costs.
Free cash flow, as determined by the Company in the attached
Schedule A,was $197 million for the first quarter of 2015. The
Company’s dividend represents a 54% payout of free cash flow for the
first quarter of 2015.
Working Capital
At March 31, 2015, the Company had a working capital deficit of $32
million, which reflects the classification of certain debt maturing
during the remainder of 2015 of $169 million as a current liability.
Pension Contributions
Cash contributions to the pension plan were $17 million for the first
quarter of 2015. As previously announced, we anticipate making
contributions to our pension plan of approximately $100 million in 2015.
2015 Guidance Remains Unchanged
For the full year of 2015, the Company’s expectation for free cash
flow is $785 million to $825 million and for capital expenditures
for Frontier business operations is $650 million to $700 million. The
Company expects that absent any further legislative changes in 2015, our
2015 cash taxes will be $175 million to $200 million.
Non-GAAP Measures
The Company uses certain non-GAAP financial measures in evaluating its
performance. These include non-GAAP adjusted net income, free cash flow,
operating cash flow and adjusted operating cash flow. A reconciliation
of the differences between non-GAAP adjusted net income, free cash flow,
operating cash flow and adjusted operating cash flow and the most
comparable financial measures calculated and presented in accordance
with GAAP is included in the tables that follow. The non-GAAP financial
measures are by definition not measures of financial performance under
GAAP, and are not alternatives to operating income or net income (loss)
as reflected in the statement of operations or to cash flow as reflected
in the statement of cash flows, and are not necessarily indicative of
cash available to fund all cash flow needs. The non-GAAP financial
measures used by the Company may not be comparable to similarly titled
measures of other companies.
The Company believes that the presentation of these non-GAAP financial
measures provides useful information to investors regarding the
Company’s financial condition and results of operations because these
measures, when used in conjunction with related GAAP financial measures,
(i) together provide a more comprehensive view of the Company’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)
presents measurements that investors and rating agencies have indicated
to management are useful to them in assessing the Company and its
results of operations. In addition, the Company believes that non-GAAP
adjusted net income, free cash flow, operating cash flow and adjusted
operating cash flow, as the Company defines them, can assist in
comparing performance from period to period, without taking into account
factors affecting operating income or net income (loss) as reflected in
the statement of operations, or cash flow as reflected in the statement
of cash flows, including changes in working capital and the timing of
purchases and payments. The Company has shown adjustments to its
financial presentations to exclude certain tax items, acquisition and
integration costs, acquisition related interest expense, severance
costs, non-cash pension and other postretirement benefit costs and gain
on sale of assets, as disclosed in the attached Schedules A and B,
because investors have indicated to management that such adjustments are
useful to them in assessing the Company and its results of operations.
Management uses these non-GAAP financial measures to (i) assist in
analyzing the Company’s underlying financial performance from period to
period, (ii) evaluate the financial performance of its business units,
(iii) analyze and evaluate strategic and operational decisions, (iv)
establish criteria for compensation decisions, and (v) assist management
in understanding the Company’s ability to generate cash flow and, as a
result, to plan for future capital and operational decisions. Management
uses these non-GAAP financial measures in conjunction with related GAAP
financial measures.
These non-GAAP financial measures have certain shortcomings. In
particular, free cash flow does not represent the residual cash flow
available for discretionary expenditures, since items such as debt
repayments and dividends are not deducted in determining such measure.
Operating cash flow has similar shortcomings as interest, income taxes,
capital expenditures, debt repayments and dividends are not deducted in
determining this measure. Management compensates for the shortcomings of
these measures by utilizing them in conjunction with their comparable
GAAP financial measures. The information in this press release should be
read in conjunction with the financial statements and footnotes
contained in our documents filed with the U.S. Securities and Exchange
Commission.
Conference Call and Webcast
The Company will host a conference call today at 4:30 P.M. Eastern time.
In connection with the conference call and as a convenience to
investors, the Company furnished today on a Current Report on Form 8-K
certain materials regarding first quarter 2015 results. The conference
call will be webcast and may be accessed at:
http://investor.frontier.com/events.cfm
A telephonic replay of the conference call will be available beginning
at 7:30 P.M. Eastern time, Tuesday, May 5, 2015 through Sunday, May 10,
2015 at 7:30 P.M. Eastern time via dial-in at 888-203-1112 for U.S. and
Canadian callers or, outside the United States and Canada, at
719-457-0820. Use the passcode 1178089 to access the replay. A webcast
replay of the call will be available at www.frontier.com/ir.
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers broadband,
voice, satellite video, wireless Internet data access, data security
solutions, bundled offerings and specialized bundles for residential
customers, small businesses and home offices, and advanced
communications for medium and large businesses in 28 states. Frontier’s
approximately 17,800 employees are based entirely in the United States.
More information is available at www.frontier.com
and www.frontier.com/ir.
Forward-Looking Statements
This document contains "forward-looking statements," related to future,
not past, events. Forward-looking statements address our expected future
business and financial performance and financial condition, and contain
words such as "expect," "anticipate," "intend," "plan," "believe,"
"seek," "see," "will," "would," or "target." Forward-looking statements
by their nature address matters that are, to different degrees,
uncertain. For us, particular uncertainties that could cause our actual
results to be materially different than those expressed in our
forward-looking statements include: risks related to the pending
acquisition of properties from Verizon, including our ability to
complete the acquisition of such operations, our ability to successfully
integrate operations, our ability to realize anticipated cost savings,
sufficiency of the assets to be acquired from Verizon, our ability to
migrate Verizon’s operations from Verizon owned and operated systems and
processes to our owned and operated systems and processes successfully,
failure to enter into or obtain, or delays in entering into or
obtaining, certain agreements and consents necessary to operate the
acquired business as planned, failure to obtain, delays in obtaining or
adverse conditions contained in any required regulatory approvals for
the acquisition, and increased expenses incurred due to activities
related to the transaction; the ability of the banks that have provided
the bridge financing commitments to meet their obligations thereunder in
the event the Company is required to draw on the bridge financing; our
ability to raise, on terms reasonable and acceptable to us, all or a
portion of the financing to replace the current bridge financing
commitments with debt and equity financing to complete the Verizon
Transaction prior to the closing of such transaction, which, if the
Verizon Transaction is ultimately not consummated or is delayed, could
require us to pay significant interest expense, dividends and other
costs in connection with the financing without achieving the expected
benefits of the Verizon Transaction; risks related to the
recently-concluded Connecticut Acquisition, including our ability to
fully realize anticipated synergies; our ability to meet our debt and
debt service obligations; competition from cable, wireless and other
wireline carriers 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; reductions in revenue from our voice customers that we cannot
offset with increases in revenue from broadband and video subscribers
and sales of other products and services; our ability to maintain
relationships with customers, employees or suppliers; the impact of
regulation and regulatory, investigative and legal proceedings and legal
compliance risks; continued reductions in switched access revenues as a
result of regulation, competition or technology substitutions; the
effects of changes in the availability of federal and state universal
service funding or other subsidies to us and our competitors; our
ability to effectively manage service quality in our territories and
meet mandated service quality metrics; our ability to successfully
introduce new product offerings; the effects of changes in accounting
policies or practices, including potential future impairment charges
with respect to our intangible assets; our ability to effectively manage
our operations, operating expenses, capital expenditures, debt service
requirements and cash paid for income taxes and liquidity, which may
affect payment of dividends on our common shares; the effects of changes
in both general and local economic conditions on the markets that we
serve; the effects of increased medical expenses and pension and
postemployment expenses; the effects of changes in income tax rates, tax
laws, regulations or rulings, or federal or state tax assessments; our
ability to successfully renegotiate union contracts; changes in pension
plan assumptions, interest rates, regulatory rules and/or the value of
our pension plan assets, which could require us to make increased
contributions to the pension plan in 2015 and beyond; adverse changes in
the credit markets or in the ratings given to our debt securities by
nationally accredited ratings organizations, which could limit or
restrict the ability, or increase the cost, of financing to us; the
effects of state regulatory cash management practices that could limit
our ability to transfer cash among our subsidiaries or dividend funds up
to the parent company; the effects of severe weather events or other
natural or man-made disasters, which may increase our operating expenses
or adversely impact customer revenue; the impact of potential
information technology or data security breaches or other disruptions;
and the other factors that are described in our filings with the U.S.
Securities and Exchange Commission, including our reports on Forms 10-K
and 10-Q. These risks and uncertainties may cause our actual future
results to be materially different than those expressed in our
forward-looking statements. We do not undertake to update or revise
these forward-looking statements.
TABLES TO FOLLOW
|
|
Frontier Communications Corporation Consolidated Financial Data |
|
|
| | |
| | |
| | |
| | |
For the quarter ended
|
| ($ in millions and shares in thousands, except per share
amounts) | | | March 31,
| | December 31,
| | March 31,
|
| | |
2015
|
| |
2014 ((6
|
))
| |
2014
|
|
| | | | | | | | | |
|
| Statement of Operations Data | | | | | | | | | | |
|
Revenue
| | |
$
|
1,371
|
| |
$
|
1,330
|
| |
$
|
1,154
|
|
| | | | | | | | | |
|
|
Operating expenses:
| | | | | | | | | | |
|
Network access expenses
| | | |
155
| | | |
144
| | | |
107
| |
|
Network related expenses (1) | | | |
325
| | | |
320
| | | |
263
| |
|
Selling, general and administrative expenses (1) | | | |
330
| | | |
300
| | | |
266
| |
|
Depreciation and amortization
| | | |
341
| | | |
323
| | | |
281
| |
|
Acquisition and integration costs (2) | | |
|
57
|
| |
|
70
|
| |
|
11
|
|
|
Total operating expenses
| | |
|
1,208
|
| |
|
1,157
|
| |
|
928
|
|
| | | | | | | | | |
|
|
Operating income
| | | |
163
| | | |
173
| | | |
226
| |
| | | | | | | | | |
|
|
Investment and other income, net
| | | |
1
| | | |
13
| | | |
1
| |
|
Interest expense
| | |
|
245
|
| |
|
188
|
| |
|
171
|
|
| | | | | | | | | |
|
|
Income (loss) before income taxes
| | | |
(81
|
)
| | |
(2
|
)
| | |
56
| |
|
Income tax expense (benefit)
| | |
|
(30
|
)
| |
|
(16
|
)
| |
|
17
|
|
| | | | | | | | | |
|
| Net income (loss) (2) | | |
$
|
(51
|
)
| |
$
|
14
|
| |
$
|
39
|
|
| | | | | | | | | |
|
|
Weighted average shares outstanding
| | | |
994,716
| | | |
994,541
| | | |
994,026
| |
| | | | | | | | | |
|
| Basic net income (loss) per common share (3) | | |
$
|
(0.05
|
)
| |
$
|
0.01
|
| |
$
|
0.04
|
|
| | | | | | | | | |
|
| Non-GAAP adjusted net income per common share (3)(4) | | |
$
|
0.02
|
| |
$
|
0.04
|
| |
$
|
0.05
|
|
| | | | | | | | | |
|
| Other Financial Data | | | | | | | | | | |
|
Capital expenditures - Business operations
| | |
$
|
170
| | |
$
|
159
| | |
$
|
135
| |
|
Capital expenditures - Integration activities
| | | |
10
| | | |
33
| | | |
10
| |
|
Operating cash flow, as adjusted (4) | | | |
564
| | | |
569
| | | |
521
| |
|
Free cash flow (4) | | | |
197
| | | |
193
| | | |
235
| |
|
Dividends paid
| | | |
105
| | | |
100
| | | |
100
| |
|
Dividend payout ratio (5) | | | |
54
|
%
| | |
52
|
%
| | |
43
|
%
|
| | | | | | | | | | | | |
|
(1) Includes severance costs of $1 million for the quarter ended March
31, 2015.
(2) Reflects acquisition and integration costs of $57 million ($35
million or $0.04 per share after tax), $70 million ($44 million or $0.04
per share after tax), and $11 million ($7 million or $0.01 per share
after tax) for the quarters ended March 31, 2015, December 31, 2014 and
March 31, 2014, respectively.
(3) Calculation based on weighted average shares outstanding.
(4) Reconciliations to the most comparable GAAP measures are presented
in Schedules A and B at the end of these tables.
(5) Represents dividends paid divided by free cash flow, as determined
in Schedule A.
(6) Includes the results of the Connecticut Operations for the period of
October 25, 2014 through December 31, 2014.
|
|
Frontier Communications Corporation Consolidated Financial Data |
|
|
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
For the quarter ended
|
| | | March 31, 2015 | | December 31, 2014 | | | |
| ($ in millions) | | | | | Connecticut | |
Frontier
| | | | Connecticut | |
Frontier
| | March 31,
|
| | |
Consolidated
| |
Operations
| |
Legacy
| |
Consolidated
| |
Operations
| |
Legacy
| |
2014
|
| | | | | | | | | | | | | | | | | | | | | |
|
| Selected Statement of Operations Data | | | | | | | | | | | | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | | | | | | | | | | | |
|
Voice services
| | |
$
|
525
| |
$
|
93
| |
$
|
432
| |
$
|
525
| |
$
|
74
| |
$
|
451
| |
$
|
482
|
|
Data and internet services
| | | |
575
| | |
107
| | |
468
| | |
555
| | |
88
| | |
467
| | |
461
|
|
Other
| | |
|
133
| |
|
54
| |
|
79
| |
|
122
| |
|
45
| |
|
77
| |
|
78
|
|
Customer revenue
| | | |
1,233
| | |
254
| | |
979
| | |
1,202
| | |
207
| | |
995
| | |
1,021
|
|
Switched access and subsidy
| | |
|
138
| |
|
10
| |
|
128
| |
|
128
| |
|
9
| |
|
119
| |
|
133
|
|
Total revenue
| | |
$
|
1,371
| |
$
|
264
| |
$
|
1,107
| |
$
|
1,330
| |
$
|
216
| |
$
|
1,114
| |
$
|
1,154
|
| | | | | | | | | | | | | | | | | | | | | |
|
| Other Financial and Operating Data | | | | | | | | | | | | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | | | | | | | | | | | |
|
Residential
| | |
$
|
617
| |
$
|
138
| |
$
|
479
| |
$
|
601
| |
$
|
116
| |
$
|
485
| |
$
|
496
|
|
Business
| | |
|
616
| |
|
116
| |
|
500
| |
|
601
| |
|
91
| |
|
510
| |
|
525
|
|
Customer revenue
| | | |
1,233
| | |
254
| | |
979
| | |
1,202
| | |
207
| | |
995
| | |
1,021
|
|
Switched access and subsidy
| | |
|
138
| |
|
10
| |
|
128
| |
|
128
| |
|
9
| |
|
119
| |
|
133
|
|
Total revenue
| | |
$
|
1,371
| |
$
|
264
| |
$
|
1,107
| |
$
|
1,330
| |
$
|
216
| |
$
|
1,114
| |
$
|
1,154
|
| | | | | | | | | | | | | | | | | | | | | |
|
|
|
Frontier Communications Corporation Consolidated Financial and Operating Data |
|
|
|
| | |
| | |
| | |
| |
For the quarter ended
|
| | March 31,
| | December 31,
| | March 31,
|
| |
2015
|
| |
2014
|
| |
2014
|
|
| | | | | | | | |
|
| Customers (in thousands) (1) | | |
3,500
| | | |
3,516
| | | |
3,060
| |
| Residential customer metrics: | | | | | | | | | |
|
Customers (in thousands) (1) | | |
3,199
| | | |
3,211
| | | |
2,794
| |
|
Average monthly residential revenue per customer
| |
$
|
64.13
| | |
$
|
65.67
| | |
$
|
59.07
| |
|
Customer monthly churn
| | |
1.78
|
%
| | |
1.62
|
%
| | |
1.63
|
%
|
| | | | | | | | |
|
| Business customer metrics: | | | | | | | | | |
|
Customers (in thousands) (1) | | |
301
| | | |
305
| | | |
266
| |
|
Average monthly business revenue per customer
| |
$
|
678.15
| | |
$
|
688.31
| | |
$
|
651.53
| |
| | | | | | | | |
|
| Employees | | |
17,815
| | | |
17,354
| | | |
13,676
| |
| Broadband subscribers (in thousands) (2) | | |
2,387
| | | |
2,370
| | | |
1,904
| |
| Video subscribers (in thousands) (2) | | |
578
| | | |
585
| | | |
390
| |
| Switched access minutes of use (in millions) | | |
3,948
| | | |
3,853
| | | |
3,943
| |
| | | | | | | | | | | |
|
(1) Reflects 474,400 residential customers, 48,800 business customers
and 523,200 total customers attributable to the Connecticut Acquisition
as of October 24, 2014.
(2) Reflects 394,300 broadband subscribers and 195,200 video subscribers
attributable to the Connecticut Acquisition as of October 24, 2014.
|
|
| | |
| | |
Frontier Communications Corporation Condensed Consolidated Balance Sheet Data |
| | | | | | |
|
| ($ in millions) | | | | | | | |
| | | March 31, 2015 | | December 31, 2014 |
| ASSETS | | | | | | | |
|
Current assets:
| | | | | | | |
|
Cash and cash equivalents
| | |
$
|
509
| |
$
|
682
|
|
Accounts receivable, net
| | | |
526
| | |
614
|
|
Other current assets
| | |
|
373
| |
|
190
|
|
Total current assets
| | | |
1,408
| | |
1,486
|
| | | | | | |
|
|
Property, plant and equipment, net
| | | |
8,478
| | |
8,566
|
|
Other assets - principally goodwill
| | |
|
8,835
| |
|
8,922
|
|
Total assets
| | |
$
|
18,721
| |
$
|
18,974
|
| | | | | | |
|
| LIABILITIES AND EQUITY | | | | | | | |
|
Current liabilities:
| | | | | | | |
|
Long-term debt due within one year
| | |
$
|
193
| |
$
|
298
|
|
Accounts payable and other current liabilities
| | |
|
1,247
| |
|
1,214
|
|
Total current liabilities
| | | |
1,440
| | |
1,512
|
| | | | | | |
|
|
Deferred income taxes and other liabilities
| | | |
4,310
| | |
4,318
|
|
Long-term debt
| | | |
9,464
| | |
9,486
|
|
Equity
| | |
|
3,507
| |
|
3,658
|
|
Total liabilities and equity
| | |
$
|
18,721
| |
$
|
18,974
|
| | | | | | |
|
|
|
Frontier Communications Corporation Consolidated Cash Flow Data |
|
|
| | |
| | |
| ($ in millions) | | |
For the quarter ended March 31,
|
| | |
2015
|
| |
2014
|
|
| | | | | | |
|
| Cash flows provided by (used in) operating activities: | | | | | | | |
|
Net income (loss)
| | |
$
|
(51
|
)
| |
$
|
39
| |
|
Adjustments to reconcile net income (loss) to net cash provided by
| | | | | | | |
|
operating activities:
| | | | | | | |
|
Depreciation and amortization
| | | |
341
| | | |
281
| |
|
Pension/OPEB costs
| | | |
2
| | | |
3
| |
|
Stock based compensation expense
| | | |
7
| | | |
6
| |
|
Other non-cash adjustments
| | | |
50
| | | |
10
| |
|
Deferred income taxes
| | | |
(33
|
)
| | |
(22
|
)
|
|
Change in accounts receivable
| | | |
87
| | | |
16
| |
|
Change in accounts payable and other liabilities
| | | |
(138
|
)
| | |
(71
|
)
|
|
Change in other current assets
| | |
|
(16
|
)
| |
|
51
|
|
| Net cash provided by operating activities | | | |
249
| | | |
313
| |
| | | | | | |
|
| Cash flows provided from (used by) investing activities: | | | | | | | |
|
Capital expenditures - Business operations
| | | |
(170
|
)
| | |
(135
|
)
|
|
Capital expenditures - Integration activities
| | | |
(10
|
)
| | |
(10
|
)
|
|
Network expansion funded by Connect America Fund | | | |
(9
|
)
| | |
(6
|
)
|
|
Grant funds received for network expansion from Connect America Fund | | | |
-
| | | |
4
| |
|
Other
| | |
|
-
|
| |
|
13
|
|
| Net cash used by investing activities | | | |
(189
|
)
| | |
(134
|
)
|
| | | | | | |
|
| Cash flows provided from (used by) financing activities: | | | | | | | |
|
Long-term debt borrowings
| | | |
3
| | | |
11
| |
|
Long-term debt payments
| | | |
(129
|
)
| | |
(14
|
)
|
|
Dividends paid
| | | |
(105
|
)
| | |
(100
|
)
|
|
Other
| | |
|
(2
|
)
| |
|
(2
|
)
|
| Net cash used by financing activities | | | |
(233
|
)
| | |
(105
|
)
|
| | | | | | |
|
|
(Decrease)/Increase in cash and cash equivalents
| | | |
(173
|
)
| | |
74
| |
|
Cash and cash equivalents at January 1,
| | |
|
682
|
| |
|
880
|
|
| | | | | | |
|
| Cash and cash equivalents at March 31, | | |
$
|
509
|
| |
$
|
954
|
|
| | | | | | |
|
| Supplemental cash flow information: | | | | | | | |
| Cash paid (received) during the period for: | | | | | | | |
|
Interest
| | |
$
|
189
| | |
$
|
146
| |
|
Income taxes (refunds), net
| | |
$
|
17
| | |
$
|
(5
|
)
|
| | | | | | | | |
|
|
|
| | |
| | |
| | |
| | | | | | | | | | Schedule A |
Frontier Communications Corporation Reconciliation of Non-GAAP Financial Measures |
| | | | | | | | | |
|
| | |
For the quarter ended
|
| ($ in millions) | | | March 31,
| | December 31,
| | March 31,
|
| | |
2015
|
| |
2014
|
| |
2014
|
|
| | | | | | | | | |
|
| Operating Income to Adjusted Operating Cash Flow | | | | | | | | | | |
| to Free Cash Flow | | | | | | | | | | |
| | | | | | | | | |
|
| Revenue | | | $ | 1,371 | | | $ | 1,330 | | | $ | 1,154 | |
|
Less: Total operating expenses
| | |
|
1,208
|
| |
|
1,157
|
| |
|
928
|
|
| Operating income | | | | 163 | | | | 173 | | | | 226 | |
| | | | | | | | | |
|
|
Depreciation and amortization
| | |
|
341
|
| |
|
323
|
| |
|
281
|
|
| Operating cash flow | | | |
504
| | | |
496
| | | |
507
| |
| | | | | | | | | |
|
| Add back: | | | | | | | | | | |
|
Acquisition and integration costs
| | | |
57
| | | |
70
| | | |
11
| |
|
Pension/OPEB costs (1) | | | |
2
| | | |
3
| | | |
3
| |
|
Severance costs
| | |
|
1
|
| |
|
-
|
| |
|
-
|
|
| Adjusted operating cash flow | | | | 564 | | | | 569 | | | | 521 | |
| | | | | | | | | |
|
| Add back: | | | | | | | | | | |
|
Interest and dividend income
| | | |
1
| | | |
-
| | | |
1
| |
|
Stock based compensation
| | | |
7
| | | |
5
| | | |
6
| |
| | | | | | | | | |
|
| Subtract: | | | | | | | | | | |
|
Cash paid (refunded) for income taxes
| | | |
17
| | | |
34
| | | |
(5
|
)
|
|
Capital expenditures - Business operations (2) | | | |
170
| | | |
159
| | | |
135
| |
|
Interest expense (3) | | |
|
188
|
| |
|
188
|
| |
|
163
|
|
| Free cash flow | | | $ | 197 |
| | $ | 193 |
| | $ | 235 |
|
| | | | | | | | | |
|
| Operating income margin (Operating income | | | | | | | | | | |
| divided by revenue) | | | | | | | | | | |
|
As Reported
| | | |
11.9
|
%
| | |
13.0
|
%
| | |
19.6
|
%
|
|
As Adjusted (4) | | | |
16.2
|
%
| | |
18.4
|
%
| | |
20.8
|
%
|
| | | | | | | | | |
|
| Operating cash flow margin (Operating cash flow | | | | | | | | | | |
| divided by revenue) | | | | | | | | | | |
|
As Reported
| | | |
36.7
|
%
| | |
37.3
|
%
| | |
44.0
|
%
|
|
As Adjusted
| | | |
41.1
|
%
| | |
42.7
|
%
| | |
45.2
|
%
|
| | | | | | | | | | | | |
|
(1) Reflects pension and other postretirement benefit (OPEB) expense,
net of capitalized amounts, of $19 million, $17 million and $14 million
for the quarters ended March 31, 2015, December 31, 2014 and March 31,
2014, respectively, less cash pension contributions and certain OPEB
costs/payments of $17 million, $14 million and $11 million for the
quarters ended March 31, 2015, December 31, 2014 and March 31, 2014,
respectively.
(2) Excludes capital expenditures for integration activities.
(3) Excludes interest expense of $58 million and $8 million for the
quarters ended March 31, 2015 and 2014, respectively, related to
commitment fees on bridge loan facilities in connection with the pending
Verizon Transaction and the Connecticut Acquisition.
(4) Excludes acquisition and integration costs, pension/OPEB costs and
severance costs.
|
|
| | |
| | |
| | |
| | |
| | |
| | |
| | | | | | | | | | | | | | | | | | | Schedule B |
Frontier Communications Corporation Reconciliation of Non-GAAP Financial Measures |
| | | | | | | | | | | | | | | | | | |
|
| ($ in millions, except per share amounts) | | | | | | | | | | | | | | | | | | | |
| | |
For the quarter ended
|
| | | March 31, 2015 | | December 31, 2014 | | March 31, 2014 |
| Net income (loss) | | |
Net Income (Loss)
| |
Earnings (Loss) Per Share
| |
Net Income
| |
Earnings Per Share
| |
Net Income
| |
Earnings Per Share
|
| | | | | | | | | | | | | | | | | | |
|
|
GAAP, as reported
| | |
$
|
(51
|
)
| |
$
|
(0.05
|
)
| |
$
|
14
| | |
$
|
0.01
| | |
$
|
39
| | |
$
|
0.04
|
|
Gain on sale of assets
| | | |
-
| | | |
-
| | | |
(8
|
)
| | |
-
| | | |
-
| | | |
-
|
|
Acquisition and integration costs
| | | |
35
| | | |
0.04
| | | |
44
| | | |
0.04
| | | |
7
| | | |
0.01
|
|
Severance costs
| | | |
1
| | | |
-
| | | |
-
| | | |
-
| | | |
-
| | | |
-
|
|
Acquisition related interest expense (1) | | | |
36
| | | |
0.04
| | | |
-
| | | |
-
| | | |
5
| | | |
-
|
|
Certain tax items (2) | | |
|
-
|
| |
|
-
|
| |
|
(14
|
)
| |
|
(0.02
|
)
| |
|
(3
|
)
| |
|
-
|
| Non-GAAP, as adjusted (3) | | |
$
|
21
|
| |
$
|
0.02
|
| |
$
|
36
|
| |
$
|
0.04
|
| |
$
|
48
|
| |
$
|
0.05
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
(1)Represents interest expense related to commitment
fees on bridge loan facilities in connection with the pending Verizon
Transaction and the Connecticut Acquisition.
(2)Includes impact arising from state law changes, the
net impact of uncertain tax positions, the domestic production
activities deduction, federal research and development tax credits,
non-deductible transaction costs and changes in certain deferred tax
balances.
(3)Non-GAAP, as adjusted may not sum due to rounding.
INVESTOR:
Luke Szymczak, (203) 614-5044
Vice President,
Investor Relations
luke.szymczak@FTR.com
or
MEDIA:
Brigid
Smith,(203) 614-5042
AVP, Corporate Communications
brigid.smith@FTR.com
Source: Frontier Communications Corporation