- 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
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) 614-5044Vice President, Investor
Relationsluke.szymczak@FTR.comorMEDIA:Brigid
Smith,(203) 614-5042AVP, Corporate
Communicationsbrigid.smith@FTR.com
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