Frontier Communications Reports 2017 First Quarter Results
- Adjusted EBITDA1 of $923 million and quarterly Net Loss of $75 million
- Third sequential quarter of improved FiOS® gross adds in CTF markets
- Resolution of non-paying CTF accounts completed, in line with previous disclosures
- Achieved target of $1.25 billion in total annualized synergies by end of Q1 2017, and remain on track
to deliver an additional $350 million by end of Q2 2018
- Board revises capital allocation strategy, including reducing the quarterly dividend to $0.04 per
share and accelerating the pace of debt and leverage reduction
Frontier Communications Corporation (NASDAQ:FTR) today reported its first quarter 2017 results, and announced that the Board of
Directors has revised the Company’s capital allocation strategy, which includes a reduction in the quarterly dividend to $0.04 per
share, to enhance financial flexibility and achieve a targeted leverage ratio2 of 3.5x by year-end 2021, down from the
current ratio of 4.39x.
Dan McCarthy, President and CEO, stated, “During the quarter, we continued to realize our targeted efficiencies and synergies,
and I am also pleased to have achieved our third consecutive quarter of improved FiOS gross additions in the California, Texas and
Florida (CTF) markets. We are executing on a number of initiatives with the goal of enhancing customer experience, reducing churn,
stabilizing revenues and generating cash flow.
“Our Board regularly reviews the Company’s long-term capital allocation strategy, and it has determined to reduce the dividend
at this time to provide additional financial flexibility, while still returning a meaningful cash dividend to shareholders. As we
continue to execute on our strategy to deliver on the full potential of our strong assets and generate additional cash flow, we
will optimize our capital allocation to ensure we strike a balance between investing in the business, paying down debt and
returning capital to shareholders,” said McCarthy.
Business Highlights
- Frontier achieved a third consecutive quarter of growth in broadband gross additions in its CTF
markets, which was driven by the first full quarter of robust marketing
- Overall, consumer churn was elevated during the quarter, and to address this Frontier is investing in
a number of initiatives that will improve customer care, retention and acquisition, including:
- Implementation of Pega® platform underway that will integrate back-office systems to
allow Frontier to transform customer experience management, marketing and cost-to-serve
- Launched e-commerce platform in April to create additional sales channel, improve customer
experience and reduce call center volume
- Expanding network capacity to relieve network congestion
- Increased CAF II households by over 27,000, plus another 82,000 households in adjacent areas
- Completed redeployment of commercial salesforce to align with network and market opportunity
Synergy Realization
Frontier achieved its previously announced target of annualized cost synergies of $1.25 billion as of the end of the first
quarter and remains on track to achieve an incremental $350 million in annual savings by mid-year 2018.
Capital Allocation
The Board has reduced the quarterly common stock dividend from $0.105 to $0.04 per share, beginning with the dividend payable on
June 30, 2017 to shareholders of record on June 15, 2017. This change allows for reallocation of approximately $300 million
annually, increasing to approximately $400 million annually in the second half of 2018 following the conversion of the mandatory
convertible Series A Preferred Stock to common stock. Frontier plans to use these proceeds primarily to repay debt, with the goal
of lowering the leverage ratio from 4.39x to 4.0x by the end of 2019, and 3.5x by the end of 2021.
Frontier also announced its intention to issue secured debt in the second quarter of 2017, subject to market conditions, and to
use the proceeds to address maturities and reduce interest expense.
Financial Highlights for the First Quarter 2017
- Revenue of $2,356 million
- Operating income of $271 million; operating margin of 11.5%
- Net loss of $75 million; net loss attributable to common shares of $129 million, or ($0.11) per
share
- Adjusted EBITDA3 of $923 million; Adjusted EBITDA margin4 of 39.2%
- Net cash provided from operating activities of $300 million
- Adjusted free cash flow5 of $175 million
Revenues
|
|
|
For the quarter ended
|
|
|
March 31, 2017
|
|
|
|
December 31, 2016
|
|
|
Consolidated
|
|
CTF
|
|
Frontier
|
|
|
|
Consolidated
|
|
CTF
|
|
Frontier
|
($ in millions)
|
|
Amount
|
|
Operations
|
|
Legacy
|
|
|
|
Amount
|
|
Operations
|
|
Legacy
|
Total revenue
|
|
$2,356
|
|
$1,087
|
|
$1,269
|
|
|
|
$2,409
|
|
$1,128
|
|
$1,281
|
|
Revenues for the first quarter were $2,356 million, compared to $2,409 million in the fourth quarter of 2016. Approximately $11
million of the sequential decline in revenue was a result of the previously disclosed cleanups of CTF accounts that were determined
to be non-paying following an intensified effort to address overdue accounts. The cleanup associated with those overdue accounts
has now been completed. As previously disclosed, first-quarter revenue and customer trends in Legacy operations reflect a one-time
impact from the automation of processes to address non-paying customers, which accelerated deactivations. This process is now
complete, and we estimate the impact resulted in a one-time reduction in customers of 18,000 which impacted Legacy revenues by $5
million.
Customers
|
|
|
As of and for the quarter ended |
|
|
March 31, 2017 |
|
December 31, 2016 |
Residential customers (in thousands): |
|
|
|
|
Customers |
|
4,736 |
|
4,891 |
Average monthly residential revenue per customer |
|
$80.62 |
|
$80.33 |
Customer monthly churn |
|
2.37% |
|
2.08% |
|
|
|
|
|
Business customers (in thousands) |
|
484 |
|
502 |
|
|
|
|
|
Broadband subscribers (in thousands) |
|
4,164 |
|
4,271 |
Video (excl. DISH) subscribers (in thousands) |
|
1,065 |
|
1,145 |
|
Residential customer churn was 2.37% for the first quarter (1.95% for Frontier legacy and 3.01% for CTF operations). The overall
increase in residential ARPC is a result of improved collections in our CTF Operations, partially offset by continuing shifts in
subscriber mix.
Operating Expenses
Frontier’s total operating expenses in the first quarter of 2017 were $2,085 million, a 3.2% decrease from $2,154 million in the
fourth quarter of 2016. Frontier reduced adjusted operating expenses6 in the first quarter by $10 million, to $1,433
million from the fourth quarter of 2016. Integration expenses for the first quarter were $2 million, down from $49 million in the
fourth quarter of 2016.
Cash Flow
Net cash provided from operating activities was $300 million for the first quarter of 2017. Adjusted free cash flow7
was $175 million for the first quarter. Frontier’s dividend payout ratio8 was 71% in the first quarter, up from 39% in
the fourth quarter of 2016.
Guidance
For the full year 2017, Frontier reiterated its guidance of:
- Adjusted free cash flow - $800 million to $1.0 billion
- Capital expenditures - $1.0 billion to $1.25 billion
- Integration - operating expense less than $50 million; capital expenditures less than $50
million
- Cash taxes - $0 to $50 million
Non-GAAP Measures
Frontier uses certain non-GAAP financial measures in evaluating its performance, including EBITDA, EBITDA margin, adjusted
EBITDA, adjusted EBITDA margin, free cash flow, adjusted free cash flow, adjusted operating expenses, adjusted net income, leverage
ratio, and dividend payout 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. We believe that the
presentation of these non-GAAP financial measures provides useful information to investors regarding our 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 our 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), investment and other income, interest expense and
depreciation and amortization. EBITDA margin is calculated by dividing EBITDA by total revenues.
Adjusted EBITDA is defined as EBITDA, as described above, adjusted to exclude acquisition and integration costs, non-cash
pension/OPEB costs (including pension settlement costs), and restructuring costs and other charges. Adjusted EBITDA margin is
calculated by dividing adjusted EBITDA by total revenues.
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. We believe that these non-GAAP measures provide useful information for
investors in evaluating our 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, 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 acquisition and integration costs, pension settlement costs, restructuring costs and other
charges, certain income tax items and the income tax effect of these items. Adjustments have also been made to exclude the
financing costs and related income tax effects associated with the Verizon Acquisition, including interest expense and preferred
dividends prior to our ownership of the CTF Operations. Adjusting for these items allows investors to better understand and analyze
our financial performance over the periods presented.
Free Cash Flow, as used by management in the operation of its business, is defined as net cash provided from operating
activities less capital expenditures for business operations and preferred dividends. In determining free cash flow, further
adjustments are made to add back acquisition and integration costs, and interest expense on commitment fees, which provides a
better comparison of our core operations from period to period. Changes in working capital accounts are excluded from this
calculation due to seasonality and specific timing of cash receipts and disbursements between various reporting periods.
Adjusted Free Cash Flow is defined as free cash flow, as described above and adding back interest expense on incremental debt
and dividends paid, prior to our ownership of the CTF Operations, on debt incurred and on preferred stock issued to finance the
Verizon Acquisition.
Management uses Free Cash Flow and Adjusted Free Cash Flow to assist it in comparing performance and liquidity from period to
period and to obtain a more comprehensive view of our core operations and ability to generate cash flow. We believe that these
non-GAAP measures are useful to investors in evaluating cash available to service debt and pay dividends. In addition, we believe
that Adjusted Free Cash Flow provides a useful comparison from period to period because it excludes the impact of financing raised
in connection with the Verizon Acquisition during periods prior to our ownership of the CTF Operations. These non-GAAP financial
measures have certain shortcomings; they do not represent the residual cash flow available for discretionary expenditures, since
items such as debt repayments, changes in working capital and common stock dividends are not deducted in determining such measures.
Management compensates for these shortcomings by utilizing these non-GAAP financial measures in conjunction with the comparable
GAAP financial measures.
Leverage Ratio is the measure of leverage specified in Frontier’s credit facilities: “as of the last day of any fiscal quarter,
the ratio of (a) Total Indebtedness as of such day to (b) Consolidated EBITDA for the four consecutive fiscal quarters ending on
such day.” The definitions of Total Indebtedness (and Consolidated EBITDA are as set forth in the First Amended and Restated Credit
Agreement, dated as of February 27, 2017, among Frontier Communications Corporation, JPMorgan Chase, N.A., as Administrative Agent,
and the other lenders party thereto, filed as Exhibit 10 to Frontier’s Form 8-K, filed with the SEC on February 28, 2017.
Dividend Payout Ratio is calculated by dividing the dividends paid on common stock (as adjusted) by adjusted free cash flow.
Dividends paid on common stock has been adjusted to exclude dividends paid on common stock issued in June 2015, from the date of
issuance until April 1, 2016, when the proceeds of the issuance were used in the Verizon Acquisition that generated adjusted free
cash flow from that date. Management uses the dividend payout ratio as a metric to indicate how much money Frontier is returning to
our shareholders. We have made adjustments to exclude the impact of financing raised in connection with the Verizon Acquisition
during periods prior to our ownership of the CTF Operations, which we believe provides a useful comparison from period to
period.
Adjusted Operating Expenses is defined as operating expenses adjusted to exclude depreciation and amortization, acquisition and
integration costs, pension settlement costs, restructuring costs and other charges, and non-cash pension/OPEB costs. Investors have
indicated that this non-GAAP measure is useful in evaluating Frontier’s performance.
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
We 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, Frontier furnished today, on a Current Report on Form 8-K, additional materials regarding first quarter 2017
results. The conference call will be webcast and may be accessed in the Webcasts & Presentations section of Frontier's Investor Relations website at www.frontier.com/ir.
A telephonic replay of the conference call will be available from 8:00 P.M. Eastern Time on May 2, 2017,
through 8:00 P.M. Eastern Time on May 7, 2017 at 888-203-1112 for callers dialing from
the U.S. or Canada, and at 719-457-0820 for those dialing from outside the U.S. or Canada. Use the
passcode 6536396 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) is a leader in providing communications services to urban, suburban, and rural
communities in 29 states. Frontier offers a variety of services to residential customers over its fiber-optic and copper networks,
including video, high-speed internet, advanced voice, and Frontier Secure® digital protection solutions. Frontier
Business Edge™ offers communications solutions to small, medium, and enterprise businesses. More information about Frontier is
available at www.frontier.com.
Forward-Looking Statements
This earnings release 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: competition from cable, wireless and
wireline carriers, satellite, 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; our ability to implement successfully our organizational structure
changes; risks related to the operation of properties acquired from Verizon, including our ability to retain or obtain customers in
those markets, our ability to realize anticipated cost savings, and our ability to meet commitments made in connection with the
acquisition; 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; our ability to attract/retain key talent; 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 and preferred 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 2017 and beyond; adverse
changes in the credit markets; adverse changes in the ratings given to our debt securities by nationally accredited ratings
organizations; the availability and cost of financing in the credit markets; covenants in our indentures and credit agreements that
may limit our operational and financial flexibility; 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 risks and other factors contained in our
filings with the U.S. Securities and Exchange Commission, including our reports on Forms 10-K and 10-Q. Any of the foregoing
events, or other events, could cause our results to vary from management’s forward-looking statements included in this earnings
release. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our
forward-looking statements. We have no obligation to update or revise these forward-looking statements and do not undertake to do
so.
Frontier Communications Corporation |
Consolidated Financial Data |
|
|
|
For the quarter ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
($ in millions and shares in thousands, except per share
amounts) |
|
2017 |
|
2016 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
Statement of Operations Data |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
2,356 |
|
|
$ |
2,409 |
|
|
$ |
1,355 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Network access expenses |
|
|
411 |
|
|
|
417 |
|
|
|
160 |
|
Network related expenses |
|
|
494 |
|
|
|
488 |
|
|
|
326 |
|
Selling, general and administrative expenses |
|
|
544 |
|
|
|
558 |
|
|
|
357 |
|
Depreciation and amortization |
|
|
579 |
|
|
|
562 |
|
|
|
316 |
|
Acquisition and integration costs |
|
|
2 |
|
|
|
49 |
|
|
|
138 |
|
Pension settlement costs |
|
|
43 |
|
|
|
- |
|
|
|
- |
|
Restructuring costs and other charges |
|
|
12 |
|
|
|
80 |
|
|
|
- |
|
Total operating expenses |
|
|
2,085 |
|
|
|
2,154 |
|
|
|
1,297 |
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
271 |
|
|
|
255 |
|
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
Investment and other income, net |
|
|
3 |
|
|
|
13 |
|
|
|
11 |
|
Interest expense |
|
|
388 |
|
|
|
386 |
|
|
|
373 |
|
Loss before income taxes |
|
|
(114 |
) |
|
|
(118 |
) |
|
|
(304 |
) |
Income tax benefit |
|
|
(39 |
) |
|
|
(38 |
) |
|
|
(118 |
) |
Net loss |
|
|
(75 |
) |
|
|
(80 |
) |
|
|
(186 |
) |
Less: Dividends on preferred stock |
|
|
54 |
|
|
|
53 |
|
|
|
54 |
|
Net loss attributable to Frontier common shareholders
|
|
$ |
(129 |
) |
|
$ |
(133 |
) |
|
$ |
(240 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic and diluted |
|
|
1,163,739 |
|
|
|
1,164,085 |
|
|
|
1,164,041 |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share |
|
$ |
(0.11 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Data: |
|
|
|
|
|
|
|
|
|
Capital expenditures - Business operations |
|
$ |
315 |
|
|
$ |
299 |
|
|
$ |
207 |
|
Capital expenditures - Integration activities |
|
|
1 |
|
|
|
43 |
|
|
|
52 |
|
Dividends paid - Common Stock |
|
|
124 |
|
|
|
123 |
|
|
|
123 |
|
Dividends paid - Preferred Stock |
|
|
54 |
|
|
|
53 |
|
|
|
54 |
|
|
Frontier Communications Corporation |
Consolidated Financial Data |
|
|
|
For the quarter ended |
|
|
March 31, 2017 |
|
December 31, 2016 |
|
|
Consolidated |
|
CTF |
|
Frontier |
|
Consolidated |
|
CTF |
|
Frontier |
|
March 31, |
($ in millions)
|
|
Amount |
|
Operations |
|
Legacy |
|
Amount |
|
Operations |
|
Legacy |
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Statement of Operations Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data and internet services |
|
$ |
993
|
|
|
$ |
422
|
|
|
$ |
571
|
|
|
$ |
1,013
|
|
|
$ |
439 |
|
|
$ |
574
|
|
|
$ |
587
|
|
Voice services |
|
|
751 |
|
|
|
327 |
|
|
|
424 |
|
|
|
774 |
|
|
|
339 |
|
|
|
435 |
|
|
|
467 |
|
Video services |
|
|
347 |
|
|
|
281 |
|
|
|
66 |
|
|
|
365 |
|
|
|
300 |
|
|
|
65 |
|
|
|
67 |
|
Other |
|
|
68 |
|
|
|
5 |
|
|
|
63 |
|
|
|
58 |
|
|
|
(2 |
) |
|
|
60 |
|
|
|
68 |
|
Customer revenue |
|
|
2,159 |
|
|
|
1,035 |
|
|
|
1,124 |
|
|
|
2,210 |
|
|
|
1,076 |
|
|
|
1,134 |
|
|
|
1,189 |
|
Switched access and subsidy |
|
|
197 |
|
|
|
52 |
|
|
|
145 |
|
|
|
199 |
|
|
|
52 |
|
|
|
147 |
|
|
|
166 |
|
Total revenue |
|
$ |
2,356 |
|
|
$ |
1,087 |
|
|
$ |
1,269 |
|
|
$ |
2,409 |
|
|
$ |
1,128 |
|
|
$ |
1,281 |
|
|
$ |
1,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
$ |
1,164 |
|
|
$ |
614 |
|
|
$ |
550 |
|
|
$ |
1,196 |
|
|
$ |
637 |
|
|
$ |
559 |
|
|
$ |
583 |
|
Business |
|
|
995 |
|
|
|
421 |
|
|
|
574 |
|
|
|
1,014 |
|
|
|
439 |
|
|
|
575 |
|
|
|
606 |
|
Customer revenue |
|
|
2,159 |
|
|
|
1,035 |
|
|
|
1,124 |
|
|
|
2,210 |
|
|
|
1,076 |
|
|
|
1,134 |
|
|
|
1,189 |
|
Switched access and subsidy |
|
|
197 |
|
|
|
52 |
|
|
|
145 |
|
|
|
199 |
|
|
|
52 |
|
|
|
147 |
|
|
|
166 |
|
Total revenue |
|
$ |
2,356 |
|
|
$ |
1,087 |
|
|
$ |
1,269 |
|
|
$ |
2,409 |
|
|
$ |
1,128 |
|
|
$ |
1,281 |
|
|
$ |
1,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network access expenses |
|
$ |
411 |
|
|
$ |
261 |
|
|
$ |
150 |
|
|
$ |
417 |
|
|
$ |
268 |
|
|
$ |
149 |
|
|
$ |
160 |
|
Network related expenses |
|
|
494 |
|
|
|
197 |
|
|
|
297 |
|
|
|
488 |
|
|
|
199 |
|
|
|
289 |
|
|
|
326 |
|
Selling, general and administrative expenses
|
|
|
544 |
|
|
|
226 |
|
|
|
318 |
|
|
|
558 |
|
|
|
246 |
|
|
|
312 |
|
|
|
357 |
|
Acquisition and integration costs |
|
|
2 |
|
|
|
- |
|
|
|
2 |
|
|
|
49 |
|
|
|
- |
|
|
|
49 |
|
|
|
138 |
|
Pension settlement costs |
|
|
43 |
|
|
|
22 |
|
|
|
21 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Restructuring costs and other charges |
|
|
12 |
|
|
|
1 |
|
|
|
11 |
|
|
|
80 |
|
|
|
26 |
|
|
|
54 |
|
|
|
- |
|
Cost and expenses (exclusive of depreciation and amortization)
|
|
|
1,506 |
|
|
|
707 |
|
|
|
799 |
|
|
|
1,592 |
|
|
|
739 |
|
|
|
853 |
|
|
|
981 |
|
Depreciation and amortization |
|
|
579 |
|
|
|
280 |
|
|
|
299 |
|
|
|
562 |
|
|
|
261 |
|
|
|
301 |
|
|
|
316 |
|
Total Operating Expenses |
|
$ |
2,085 |
|
|
$ |
987 |
|
|
$ |
1,098 |
|
|
$ |
2,154 |
|
|
$ |
1,000 |
|
|
$ |
1,154 |
|
|
$ |
1,297 |
|
|
Frontier Communications Corporation |
Consolidated Financial and Operating Data |
|
|
|
As of and for the quarter ended |
|
|
March 31, 2017 |
|
|
December 31, 2016 |
|
|
March 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Customers (in thousands) |
|
|
5,220 |
|
(1)
|
|
|
5,393 |
|
(1)
|
|
|
3,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential customer metrics |
|
|
|
|
|
|
|
|
|
|
|
Customers (in thousands) |
|
|
4,736 |
|
(1)
|
|
|
4,891 |
|
(1)
|
|
|
3,088 |
|
Net customer additions/(losses) |
|
|
(155 |
) |
|
|
|
(144 |
) |
|
|
|
(36 |
) |
Average monthly residential revenue per customer
|
|
$ |
80.62 |
|
|
|
$ |
80.33 |
|
|
|
$ |
62.64 |
|
Customer monthly churn |
|
|
2.37 |
% |
|
|
|
2.08 |
% |
|
|
|
1.83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Business customer metrics |
|
|
|
|
|
|
|
|
|
|
|
Customers (in thousands) |
|
|
484 |
|
(1)
|
|
|
502 |
|
(1)
|
|
|
284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband subscriber metrics (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Broadband subscribers |
|
|
4,164 |
|
(2)
|
|
|
4,271 |
|
(2)
|
|
|
2,487 |
|
Net subscriber additions/(losses) |
|
|
(107 |
) |
|
|
|
(91 |
) |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (excl. DISH) subscriber metrics (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Video subscribers |
|
|
1,065 |
|
(2)
|
|
|
1,145 |
|
(2)
|
|
|
238 |
|
Net subscriber additions/(losses) |
|
|
(80 |
) |
|
|
|
(77 |
) |
|
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Video - DISH subscriber metrics (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
DISH subscribers |
|
|
266 |
|
(2)
|
|
|
274 |
|
(2)
|
|
|
305 |
|
Net subscriber additions/(losses) |
|
|
(8 |
) |
|
|
|
(7 |
) |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Employees |
|
|
26,878 |
|
|
|
|
28,332 |
|
|
|
|
20,416 |
|
Switched Access Minutes of Use (in thousands) |
|
|
4,828 |
|
|
|
|
5,034 |
|
|
|
|
3,540 |
|
(1) |
|
2,283,000 residential customers, 250,000 business customers and 2,533,000 total
customers were acquired at the time of the April 2016 CTF Acquisition. |
(2) |
|
2,052,000 broadband subscribers and 1,165,000 video subscribers were acquired at the
time of the April 2016 CTF Acquisition. |
|
Frontier Communications Corporation |
Condensed Consolidated Balance Sheet Data |
|
($ in millions)
|
|
March 31, 2017 |
|
December 31, 2016 |
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
341
|
|
|
$ |
522
|
|
Accounts receivable, net |
|
|
836 |
|
|
|
938 |
|
Other current assets |
|
|
207 |
|
|
|
196 |
|
Total current assets |
|
|
1,384 |
|
|
|
1,656 |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
14,616 |
|
|
|
14,902 |
|
Other assets - principally goodwill |
|
|
12,449 |
|
|
|
12,455 |
|
Total assets |
|
$ |
28,449 |
|
|
$ |
29,013 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Long-term debt due within one year |
|
$ |
363 |
|
|
$ |
363 |
|
Accounts payable and other current liabilities |
|
|
1,717 |
|
|
|
2,081 |
|
Total current liabilities |
|
|
2,080 |
|
|
|
2,444 |
|
|
|
|
|
|
|
|
Deferred income taxes and other liabilities |
|
|
4,517 |
|
|
|
4,490 |
|
Long-term debt |
|
|
17,526 |
|
|
|
17,560 |
|
Equity |
|
|
4,326 |
|
|
|
4,519 |
|
Total liabilities and equity |
|
$ |
28,449 |
|
|
$ |
29,013 |
|
|
Frontier Communications Corporation |
Consolidated Cash Flow Data |
|
|
|
For the quarter ended March 31, |
($ in millions)
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
Cash flows provided from (used by) operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(75 |
) |
|
$ |
(186 |
) |
Adjustments to reconcile net loss to net cash provided from (used by) operating activities:
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
579 |
|
|
|
316 |
|
Pension settlement costs |
|
|
43 |
|
|
|
- |
|
Pension/OPEB costs |
|
|
16 |
|
|
|
16 |
|
Stock based compensation expense |
|
|
3 |
|
|
|
8 |
|
Amortization of deferred financing costs |
|
|
9 |
|
|
|
21 |
|
Deferred income taxes |
|
|
(41 |
) |
|
|
(119 |
) |
Change in accounts receivable |
|
|
105 |
|
|
|
26 |
|
Change in accounts payable and other liabilities |
|
|
(328 |
) |
|
|
(134 |
) |
Change in other current assets |
|
|
(11 |
) |
|
|
- |
|
Net cash provided from (used by) operating activities |
|
|
300 |
|
|
|
(52 |
) |
|
|
|
|
|
|
|
Cash flows provided from (used by) investing activities: |
|
|
|
|
|
|
Capital expenditures - Business operations |
|
|
(315 |
) |
|
|
(207 |
) |
Capital expenditures - Integration activities |
|
|
(1 |
) |
|
|
(52 |
) |
Proceeds on sale of assets |
|
|
70 |
|
|
|
- |
|
Other |
|
|
3 |
|
|
|
- |
|
Net cash used by investing activities |
|
|
(243 |
) |
|
|
(259 |
) |
|
|
|
|
|
|
|
Cash flows provided from (used by) financing activities: |
|
|
|
|
|
|
Long-term debt payments |
|
|
(38 |
) |
|
|
(24 |
) |
Financing costs paid |
|
|
(6 |
) |
|
|
(6 |
) |
Dividends paid on common stock |
|
|
(124 |
) |
|
|
(123 |
) |
Dividends paid on preferred stock |
|
|
(54 |
) |
|
|
(54 |
) |
Capital lease obligation payments |
|
|
(10 |
) |
|
|
- |
|
Taxes paid on behalf of employees for shares withheld |
|
|
(5 |
) |
|
|
(10 |
) |
Other |
|
|
(1 |
) |
|
|
- |
|
Net cash used by financing activities |
|
|
(238 |
) |
|
|
(217 |
) |
|
|
|
|
|
|
|
Decrease in cash, cash equivalents, and restricted cash |
|
|
(181 |
) |
|
|
(528 |
) |
Cash, cash equivalents, and restricted cash at January 1, |
|
|
522 |
|
|
|
9,380 |
|
|
|
|
|
|
|
|
Cash, cash equivalents, and restricted cash at March 31, |
|
$ |
341 |
|
|
$ |
8,852 |
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
Cash paid (received) during the period for: |
|
|
|
|
|
|
Interest |
|
$ |
577 |
|
|
$ |
524 |
|
Income tax refunds, net |
|
$ |
(3 |
) |
|
$ |
(32 |
) |
|
|
|
SCHEDULE A |
Frontier Communications Corporation |
Reconciliation of Non-GAAP Financial Measures |
|
|
|
For the quarter ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
($ in millions)
|
|
2017 |
|
2016 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(75 |
) |
|
$ |
(80 |
) |
|
$ |
(186 |
) |
Add back (subtract): |
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
(39 |
) |
|
|
(38 |
) |
|
|
(118 |
) |
Interest expense |
|
|
388 |
|
|
|
386 |
|
|
|
373 |
|
Investment and other income, net |
|
|
(3 |
) |
|
|
(13 |
) |
|
|
(11 |
) |
Operating income |
|
|
271 |
|
|
|
255 |
|
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
579 |
|
|
|
562 |
|
|
|
316 |
|
EBITDA |
|
|
850 |
|
|
|
817 |
|
|
|
374 |
|
|
|
|
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
|
Acquisition and integration costs |
|
|
2 |
|
|
|
49 |
|
|
|
138 |
|
Pension/OPEB costs (non-cash) (1) |
|
|
16 |
|
|
|
20 |
|
|
|
16 |
|
Restructuring costs and other charges |
|
|
12 |
|
|
|
80 |
|
|
|
- |
|
Pension settlement costs |
|
|
43 |
|
|
|
- |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
923 |
|
|
$ |
966 |
|
|
$ |
528 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA margin |
|
|
36.1 |
% |
|
|
33.9 |
% |
|
|
27.6 |
% |
Adjusted EBITDA margin |
|
|
39.2 |
% |
|
|
40.0 |
% |
|
|
38.9 |
% |
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
|
|
|
|
|
|
|
|
Net cash provided from (used by) operating activities
|
|
$ |
300 |
|
|
$ |
714 |
|
|
$ |
(52 |
) |
Add back (subtract): |
|
|
|
|
|
|
|
|
|
Capital expenditures - Business operations |
|
|
(315 |
) |
|
|
(299 |
) |
|
|
(207 |
) |
Acquisition and integration costs |
|
|
2 |
|
|
|
49 |
|
|
|
138 |
|
Deferred income taxes |
|
|
41 |
|
|
|
43 |
|
|
|
119 |
|
Income tax benefit |
|
|
(39 |
) |
|
|
(38 |
) |
|
|
(118 |
) |
Dividends on preferred stock |
|
|
(54 |
) |
|
|
(53 |
) |
|
|
(54 |
) |
Non-cash (gains)/losses, net(2) |
|
|
(9 |
) |
|
|
(35 |
) |
|
|
(21 |
) |
Changes in current assets and liabilities |
|
|
234 |
|
|
|
(230 |
) |
|
|
108 |
|
Cash refunded for income taxes |
|
|
3 |
|
|
|
85 |
|
|
|
32 |
|
Restructuring costs and other charges |
|
|
12 |
|
|
|
80 |
|
|
|
- |
|
Interest expense - commitment fees(3) |
|
|
- |
|
|
|
- |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
175 |
|
|
$ |
316 |
|
|
$ |
(45 |
) |
Dividends on preferred stock |
|
|
- |
|
|
|
- |
|
|
|
54 |
|
Incremental interest on new debt |
|
|
- |
|
|
|
- |
|
|
|
178 |
|
Adjusted free cash flow |
|
$ |
175 |
|
|
$ |
316 |
|
|
$ |
187 |
|
(1) Reflects pension and other postretirement benefit (OPEB) expense, net
of capitalized amounts, of $25 million, $27 million and $21 million for the quarters ended March 31, 2017, December 31, 2016
and March 31, 2016, respectively, less cash pension contributions and certain OPEB costs/payments of $9 million, $7 million and
$5 million for the quarters ended March 31, 2017, December 31, 2016 and March 31, 2016, respectively. |
(2) Includes amortization of deferred financing costs and other non-cash
adjustments from the consolidated cash flow data. |
(3) Includes interest expense of $10 million for the quarter ended March
31, 2016, related to commitment fees on bridge loan facilities. |
|
|
|
SCHEDULE B
|
Frontier Communications Corporation |
Reconciliation of Non-GAAP Financial Measures |
|
|
|
For the quarter ended |
|
|
March 31, 2017 |
|
December 31, 2016 |
|
March 31, 2016 |
|
|
Net Income
|
|
Basic Earnings
|
|
Net Income
|
|
Basic Earnings
|
|
Net Income
|
|
Basic Earnings
|
($ in millions, except per share amounts)
|
|
(Loss)
|
|
(Loss) Per Share
|
|
(Loss)
|
|
(Loss) Per Share
|
|
(Loss)
|
|
(Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Frontier common shareholders
|
|
$ |
(129 |
) |
|
$ |
(0.11 |
) |
|
$ |
(133 |
) |
|
$ |
(0.12 |
) |
|
$ |
(240 |
) |
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and integration costs |
|
|
2 |
|
|
|
|
|
|
49 |
|
|
|
|
|
|
138 |
|
|
|
|
Acquisition related interest expense (1) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
188 |
|
|
|
|
Restructuring costs and other charges |
|
|
12 |
|
|
|
|
|
|
80 |
|
|
|
|
|
|
- |
|
|
|
|
Pension settlement costs |
|
|
43 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
Certain other tax items (2) |
|
|
1 |
|
|
|
|
|
|
(17 |
) |
|
|
|
|
|
- |
|
|
|
|
Income tax effect on above items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and integration costs |
|
|
(1 |
) |
|
|
|
|
|
(1 |
) |
|
|
|
|
|
(53 |
) |
|
|
|
Acquisition related interest expense |
|
|
- |
|
|
|
|
|
|
7 |
|
|
|
|
|
|
(73 |
) |
|
|
|
Restructuring costs and other charges |
|
|
(4 |
) |
|
|
|
|
|
(28 |
) |
|
|
|
|
|
- |
|
|
|
|
Pension settlement costs |
|
|
(15 |
) |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
38 |
|
|
|
0.03 |
|
|
|
90 |
|
|
|
0.08 |
|
|
|
200 |
|
|
|
0.17 |
|
Dividends on preferred stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
54 |
|
|
|
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) attributable to Frontier common shareholders(3)
|
|
$ |
(91 |
) |
|
$ |
(0.08 |
) |
|
$ |
(43 |
) |
|
$ |
(0.04 |
) |
|
$ |
14 |
|
|
$ |
0.01 |
|
(1) Represents interest expense related to commitment fees on bridge loan
facilities in connection with the CTF Acquisition. Also includes interest expense related to the September 2015 private debt
offering in connection with financing the CTF Acquisition. |
(2) Includes impact arising from federal research and development credits,
the domestic production activities deduction, changes in certain deferred tax balances, state tax law changes, state filing
method change, non-deductible transaction costs, and the net impact of uncertain tax positions. |
(3) Adjusted net income (loss) attributable to Frontier common
shareholders may not sum due to rounding. |
|
|
|
SCHEDULE C
|
Frontier Communications Corporation |
Reconciliation of Non-GAAP Financial Measures |
|
|
|
For the quarter ended |
|
|
March 31, 2017 |
|
|
December 31, 2016 |
|
|
|
|
Consolidated |
|
CTF |
|
Frontier |
|
|
Consolidated |
|
CTF |
|
Frontier |
|
March 31, 2016 |
($ in millions)
|
|
Amount |
|
Operations |
|
Legacy |
|
|
Amount |
|
Operations |
|
Legacy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
$ |
2,085 |
|
|
$ |
987 |
|
|
$ |
1,098 |
|
|
|
$ |
2,154
|
|
|
$ |
1,000
|
|
|
$ |
1,154
|
|
|
$ |
1,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtract: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
579 |
|
|
|
280 |
|
|
|
299 |
|
|
|
|
562 |
|
|
|
261 |
|
|
|
301 |
|
|
|
316 |
|
Acquisition and integration costs
|
|
|
2 |
|
|
|
- |
|
|
|
2 |
|
|
|
|
49 |
|
|
|
- |
|
|
|
49 |
|
|
|
138 |
|
Pension/OPEB costs (non-cash) |
|
|
16 |
|
|
|
3 |
|
|
|
13 |
|
|
|
|
20 |
|
|
|
5 |
|
|
|
15 |
|
|
|
16 |
|
Restructuring costs and other charges |
|
|
12 |
|
|
|
1 |
|
|
|
11 |
|
|
|
|
80 |
|
|
|
26 |
|
|
|
54 |
|
|
|
- |
|
Pension settlement costs |
|
|
43 |
|
|
|
22 |
|
|
|
21 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Adjusted operating expenses |
|
$ |
1,433 |
|
|
$ |
681 |
|
|
$ |
752 |
|
|
|
$ |
1,443 |
|
|
$ |
708 |
|
|
$ |
735 |
|
|
$ |
827 |
|
|
|
|
|
For the quarter ended |
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
|
|
|
|
|
|
Dividend Payout Ratio
|
|
2017 |
|
2016 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid on common stock |
|
$ |
124 |
|
|
$ |
123 |
|
|
$ |
123 |
|
|
|
|
|
|
|
|
|
|
Less: Dividends on June 2015 common stock issuance
|
|
|
- |
|
|
|
- |
|
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
124 |
|
|
$ |
123 |
|
|
$ |
105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (see Schedule A) |
|
$ |
175 |
|
|
$ |
316 |
|
|
$ |
(45 |
) |
|
|
|
|
|
|
|
|
|
Dividends on preferred stock |
|
|
- |
|
|
|
- |
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
Incremental interest expense |
|
|
- |
|
|
|
- |
|
|
|
178 |
|
|
|
|
|
|
|
|
|
|
Adjusted free cash flow |
|
$ |
175 |
|
|
$ |
316 |
|
|
$ |
187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend payout ratio |
|
|
71 |
% |
|
|
39 |
% |
|
|
56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the twelve
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage Ratio
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt |
|
$ |
18,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future minimum payments for finance lease obligations |
|
|
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future minimum payments for capital lease obligations |
|
|
124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Indebtedness |
|
|
18,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash in excess of $50 million |
|
|
(291 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
18,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income for the last twelve months |
|
$ |
1,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments(1) |
|
|
3,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage Ratio |
|
|
4.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes depreciation and amortization, pension/OPEB costs (Non-cash),
restructuring costs and other charges, acquisition and integration costs, pension settlement costs and cost synergies. |
|
1 See “Non-GAAP Measures” for a description of this measure and its calculation, and Schedule A for a reconciliation
to net loss.
2 Leverage ratio is a non-GAAP measure contained in a covenant in Frontier’s credit facilities, derived from total
long-term debt and operating income. See “Non-GAAP Measures” for a description of this measure and its calculation, and Schedule C
for a reconciliation to $18,140 million in total long-term debt at March 31, 2017 and $1,101 million in operating income in the
four quarters ended March 31, 2017.
3 See Note 1, above.
4 Adjusted EBITDA margin is a non-GAAP measure of performance, calculated as Adjusted EBITDA, divided by total revenue.
See Schedule A for a reconciliation to net loss.
5 Adjusted free cash flow is a non-GAAP measure of liquidity derived from net cash provided from operating activities.
See “Non-GAAP Measures” for a description of this measure and its calculation, and Schedule A for a reconciliation to net cash
provided from operating activities.
6 Adjusted operating expenses is a non-GAAP measure of performance derived from total operating expenses. See “Non-GAAP
Measures” for a description of this measure and its calculation, and Schedule C for a reconciliation to total operating expenses.
7 See Note 5, above.
8 Dividend payout ratio is a non-GAAP measure of liquidity derived from dividends paid on common stock (as adjusted) and
adjusted free cash flow (see Note 5, above). See “Non-GAAP Measures” for a description of this measure and its calculation, and
Schedule C for a reconciliation to the $124 million of dividends paid on common stock in Q1 2017 and Schedule A for the
$300 million of net cash provided from operating activities in Q1 2017.
Frontier Communications Corporation
INVESTORS:
Luke Szymczak, 203-614-5044
VP, Investor Relations
luke.szymczak@ftr.com
or
MEDIA:
Brigid Smith, 203-614-5042
AVP, Corporate Communications
brigid.smith@ftr.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170502006788/en/