8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):   May 6, 2020

Frontier Communications Corporation

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

001-11001	06-0619596
(Commission File Number)	(IRS Employer Identification No.)
401 Merritt 7, Norwalk, Connecticut	06851
(Address of principal executive offices)	(Zip Code)

(203) 614-5600

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange
Common Stock, $0.25 par value (1)	FTR	None
Preferred Stock Purchase Rights	N/A	None

(1) On April 29, 2020, the NASDAQ Stock Market filed a Form 25 with the Securities and Exchange Commission to delist the common stock, par value $0.25 per share, of Frontier Communications Corporation (the “common stock”) from the NASDAQ Global Select Market. The delisting will be effective 10 days after the Form 25 was filed. The deregistration of the common stock under Section 12(b) of the Securities Exchange Act of 1934 will be effective 90 days, or such shorter period as the Securities and Exchange Commission may determine, after filing of the Form 25. Following deregistration of the common stock under Section 12(b) of the Securities Exchange Act of 1934, the common stock shall remain registered under Section 12(g) of the Securities Exchange Act of 1934. Trading of Frontier’s common stock now occurs on the OTC Pink market under the symbol “FTRCQ.”

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On May 6, 2020, Frontier Communications Corporation (“Frontier”) filed its Form 10-Q for the quarter ended March 31, 2020.  Furnished and incorporated by reference herein as Exhibit 99.1 is supplemental information regarding Frontier’s financial results. This information is also available on Frontier’s Investor Relations website at www.frontier.com/ir.

The information provided pursuant to this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any of Frontier’s other filings under the Securities Act of 1933 or the Exchange Act.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description
99.1	First Quarter 2020 Supplemental Financial Information

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		FRONTIER COMMUNICATIONS CORPORATION
Date: May 6, 2020	By:	/s/ Mark D. Nielsen
		Mark D. Nielsen
		Executive Vice President, Chief Legal Officer and Chief Transaction Officer

EX-99.1

Exhibit 99.1

Frontier Communications Corporation (Frontier) filed its Form 10-Q for the quarter ended March 31, 2020 with the U.S. Securities and Exchange Commission ("SEC") on May 6, 2020.  The schedules contained in this Exhibit 99.1 include supplemental information regarding Frontier’s financial results.

Non-GAAP Financial Measures

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

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

EBITDA is defined as net income (loss) less income tax expense (benefit), interest expense, investment and other income (loss), pension settlement costs, gains/losses on extinguishment of debt, 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 expense, goodwill impairment charges, 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, goodwill impairment charges, 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. 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 expense, and certain other non-recurring items.  Investors have indicated that this non-GAAP measure is useful in evaluating Frontier’s performance.

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 SEC.

 

Frontier Communications Corporation

Unaudited Consolidated Financial Data

	For the quarter ended
($ in millions and shares in thousands, except per share amounts)	March 31, 2020			December 31, 2019			March 31, 2019
Statement of Operations Data
Revenue	$	1,933		$	1,942		$	2,101
Operating expenses:
Network access expenses		286			284			338
Network related expenses		444			445			456
Selling, general and administrative expenses		444			458			456
Depreciation and amortization		415			420			484
Loss on disposal of Northwest Operations		24			32			-
Restructuring costs and other charges		48			82			28
Total operating expenses		1,661			1,721			1,762
Operating income		272			221			339
Investment and other income (loss), net		5			(9	)		(9	)
Pension settlement costs		103			57			-
Loss on early extinguishment of debt		-			-			(20	)
Interest expense		383			391			379
Loss before income taxes		(209	)		(236	)		(69	)
Income tax expense (benefit)		(23	)		(74	)		18
Net loss		(186	)		(162	)		(87	)
Weighted average shares outstanding - basic and diluted		104,363			104,165			103,885
Basic and diluted net loss per common share	$	(1.78	)	$	(1.55	)	$	(0.84	)
Other Financial Data:
Capital expenditures	$	286		$	328		$	305

Frontier Communications Corporation

Unaudited Consolidated Financial Data

	For the quarter ended
($ in millions)	March 31, 2020		December 31, 2019		March 31, 2019
Selected Statement of Operations Data
Revenue:
Data and Internet services	$	932	$	898	$	967
Voice services		572		600		650
Video services		222		233		268
Other		117		120		124
Customer revenue		1,843		1,851		2,009
Subsidy revenue		90		91		92
Total revenue	$	1,933	$	1,942	$	2,101
Other Financial Data
Revenue:
Consumer	$	971	$	1,002	$	1,077
Commercial		872		849		932
Customer revenue		1,843		1,851		2,009
Subsidy revenue		90		91		92
Total revenue	$	1,933	$	1,942	$	2,101

Frontier Communications Corporation

Consolidated Financial and Operating Data

	For the quarter ended
	March 31, 2020			December 31, 2019			March 31, 2019
Customers (in thousands)		4,063			4,118			4,395
Consumer customer metrics
Customers (in thousands)		3,703			3,747			3,995
Net customer additions (losses)		(44	)		(65	)		(65	)
Average monthly consumer revenue per customer	$	86.93		$	88.40		$	89.14
Customer monthly churn		1.81	%		1.93	%		1.99	%
Commercial customer metrics
Customers (in thousands)		360			371			400
Broadband subscriber metrics (in thousands)
Broadband subscribers		3,480			3,513			3,697
Net subscriber additions (losses)		(33	)		(42	)		(38	)
Video (excl. DISH) subscriber metrics (in thousands)
Video subscribers		621			660			784
Net subscriber additions (losses)		(39	)		(38	)		(54	)
Video - DISH subscriber metrics (in thousands)
DISH subscribers		165			173			198
Net subscriber additions (losses)		(8	)		(8	)		(7	)
Employees		17,437			18,317			20,439

Frontier Communications Corporation

Condensed Consolidated Balance Sheet Data

($ in millions)	(unaudited) March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	941		$	760
Accounts receivable, net		596			629
Assets held for sale		1,406			1,401
Other current assets		259			247
Total current assets		3,202			3,037
Property, plant and equipment, net		12,890			12,963
Other assets		1,396			1,488
Total assets	$	17,488		$	17,488
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Long-term debt due within one year	$	17,306		$	994
Liabilities held for sale		115			123
Accounts payable and other current liabilities		1,808			1,687
Total current liabilities		19,229			2,804
Deferred income taxes and other liabilities		2,752			2,770
Long-term debt		-			16,308
Equity (deficit)		(4,493	)		(4,394	)
Total liabilities and equity (deficit)	$	17,488		$	17,488

Frontier Communications Corporation

Unaudited Consolidated Cash Flow Data

	For the three months ended
($ in millions)	March 31, 2020			March 31, 2019
Cash flows provided from (used by) operating activities:
Net loss	$	(186	)	$	(87	)
Adjustments to reconcile net loss to net cash provided from (used by) operating activities:
Depreciation and amortization		415			484
(Gain) Loss on extinguishment of debt		-			20
Pension settlement costs		103			-
Stock-based compensation expense		1			3
Amortization of deferred financing costs		8			9
Other adjustments		1			-
Deferred income taxes		(30	)		16
Loss on disposal of Northwest Operations		24			-
Change in accounts receivable		29			7
Change in accounts payable and other liabilities		110			(157	)
Change in prepaid expenses, income taxes, and other assets		2			(13	)
Net cash provided from operating activities		477			282
Cash flows provided from (used by) investing activities:
Capital expenditures		(286	)		(305	)
Proceeds on sale of assets		2			74
Other		2			-
Net cash used by investing activities		(282	)		(231	)
Cash flows provided from (used by) financing activities:
Long-term debt payments		(5	)		(1,995	)
Proceeds from long-term debt borrowings		-			1,650
Proceeds from revolving debt		-			375
Repayment of revolving debt		-			(275	)
Financing costs paid		-			(30	)
Finance lease obligation payments		(8	)		(8	)
Other		-			(3	)
Net cash used by financing activities		(13	)		(286	)
Increase (Decrease) in cash, cash equivalents, and restricted cash		182			(235	)
Cash, cash equivalents, and restricted cash at January 1,		809			404
Cash, cash equivalents, and restricted cash at March 31,	$	991		$	169
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	163		$	525
Income tax payments, net	$	1		$	-

SCHEDULE A

Frontier Communications Corporation

Reconciliation of Non-GAAP Financial Measures

	For the quarter ended
($ in millions)	March 31, 2020			December 31, 2019			March 31, 2019
EBITDA
Net loss	$	(186	)	$	(162	)	$	(87	)
Add back (subtract):
Income tax expense (benefit)		(23	)		(74	)		18
Interest expense		383			391			379
Investment and other (income) loss, net		(5	)		9			9
Pension settlement costs		103			57			-
Loss on extinguishment of debt		-			-			20
Operating income		272			221			339
Depreciation and amortization		415			420			484
EBITDA	$	687		$	641		$	823
Add back:
Pension/OPEB expense		23			19			20
Restructuring costs and other charges		48			82			28
Stock-based compensation expense		1			5			3
Storm-related insurance proceeds		-			(5	)		(1	)
Loss on disposal of Northwest Operations		24			32			-
Adjusted EBITDA	$	783		$	774		$	873
EBITDA margin		35.6	%		33.0	%		39.1	%
Adjusted EBITDA margin		40.5	%		39.9	%		41.6	%
Free Cash Flow
Net cash provided from operating activities	$	477		$	405		$	282
Capital expenditures		(286	)		(328	)		(305	)
Operating free cash flow	$	191		$	77		$	(23	)

SCHEDULE B

Frontier Communications Corporation

Reconciliation of Non-GAAP Financial Measures

	For the quarter ended
	March 31, 2020						December 31, 2019						March 31, 2019
($ in millions, except per share amounts)	Net Income (Loss)			Basic Earnings (Loss) Per Share			Net Income (Loss)			Basic Earnings (Loss) Per Share			Net Income (Loss)			Basic Earnings (Loss) Per Share
Net loss attributable to Frontier common shareholders	$	(186	)	$	(1.78	)	$	(162	)	$	(1.55	)	$	(87	)	$	(0.84	)
Restructuring costs and other charges		48						82						28
Pension settlement costs		103						57						-
(Gain) Loss on extinguishment of debt		-						-						20
Loss on disposal of Northwest Operations		24						32						-
Storm-related insurance proceeds		-						(5	)					(1	)
Certain other tax items (1)		13						41						30
Income tax effect on above items:
Restructuring costs and other charges		(10	)					(21	)					(5	)
Pension settlement costs		(25	)					(14	)					-
Loss on extinguishment of debt		-						-						(4	)
Storm-related insurance proceeds		-						1						-
	$	153		$	1.47		$	173		$	1.66		$	68		$	0.65
Adjusted net income (loss) attributable to Frontier common shareholders(2)	$	(33	)	$	(0.32	)	$	11		$	0.11		$	(19	)	$	(0.18	)

(1) Includes impact arising from federal research and development credits, changes in certain deferred tax balances, state tax law changes, state filing method change, and the net impact of uncertain tax positions.

(2) 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
($ in millions)	March 31, 2020		December 31, 2019			March 31, 2019
Adjusted Operating Expenses
Total operating expenses	$	1,661	$	1,721		$	1,762
Subtract:
Depreciation and amortization		415		420			484
Loss on disposal of Northwest Operations		24		32			-
Pension/OPEB expense		23		19			20
Restructuring costs and other charges		48		82			28
Stock-based compensation expense		1		5			3
Storm-related insurance proceeds		-		(5	)		(1	)
Adjusted operating expenses	$	1,150	$	1,168		$	1,228

	As of March 31, 2020
Leverage Ratio
Numerator
Long-term debt	$	-
Long-term debt due within one year		17,306
Cash and cash equivalents		(941	)
	$	16,365
Denominator
Adjusted EBITDA - last 4 quarters	$	3,243
Leverage Ratio		5.05

XML

Document and Entity Information	May 06, 2020
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 06, 2020
Entity Registrant Name	FRONTIER COMMUNICATIONS CORP
Entity Incorporation, State or Country Code	DE
Entity File Number	001-11001
Entity Tax Identification Number	06-0619596
Entity Address, Address Line One	401 MERRITT 7
Entity Address, City or Town	NORWALK
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06851
City Area Code	203
Local Phone Number	614-5600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000020520
Common Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	Common Stock, $0.25 par value (1)
Trading Symbol	FTR
Preferred Stock Purchase Rights [Member]
Entity Listings [Line Items]
Title of 12(b) Security	Preferred Stock Purchase Rights
No Trading Symbol Flag	true