UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2021

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to__________

Commission file number: 001-11001

~~$C:\Users\biantorn\Desktop\logo.gif$~~

FRONTIER COMMUNICATIONS ~~CORPORATION~~PARENT, INC.

(Exact name of registrant as specified in its charter)


Delaware		~~06-0619596~~86-2359749
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

401 Merritt 7
Norwalk, Connecticut		06851
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (203) 614-5600

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

~~Common Stock, par value $0.25~~

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

FYBR

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x

Smaller reporting company x 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 ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

The number of shares outstanding of the registrant’s Common Stock as of ~~April 28,~~July 30, 2021 was ~~104,779,000.~~244,401,000.

FRONTIER COMMUNICATIONS ~~CORPORATION~~PARENT, INC. AND SUBSIDIARIES

~~(DEBTOR-IN-POSSESSION)~~

Table of Contents


	Page
Part I. Financial Information (Unaudited)

Item 1. Financial Statements

Consolidated Balance Sheets as of ~~March 31,~~June 30, 2021 (Successor) and December 31, 2020 (Predecessor)	2

Consolidated Statements of Operations for the two months ended June 30, 2021 (Successor), the one month ended April 30, 2021 (Predecessor), and the three months ended ~~March 31, 2021 and~~June 30, 2020 (Predecessor)	3

Consolidated Statements of Operations for the two months ended June 30, 2021 (Successor), the four months ended April 30, 2021 (Predecessor), and the six months ended June 30, 2020 (Predecessor)	4

Consolidated Statements of Comprehensive Income (Loss) for the ~~three~~two months ended ~~March 31,~~June 30, 2021 (Successor), the one and four months ended April 30, 2021 (Predecessor), and the three and six months ended June 30, 2020 (Predecessor)	45

Consolidated Statements of Equity (Deficit) for the ~~three~~two months ended ~~March 31,~~June 30, 2021 (Successor), the four months ended April 30, 2021 (Predecessor), and the six months ended June 30, 2020 (Predecessor)	56

Consolidated Statements of Cash Flows for the ~~three~~two months ended ~~March 31,~~June 30, 2021 (Successor), the four months ended April 30, 2021 (Predecessor), and the six months ended June 30, 2020 (Predecessor)	67

Notes to Consolidated Financial Statements	78

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	51

Item 3. Quantitative and Qualitative Disclosures about Market Risk	7874

Item 4. Controls and Procedures	7975

Part II. Other Information

Item 1. Legal Proceedings	8076

Item 1A. Risk Factors	8076

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	8189

Item 6. Exhibits	8290

Signature	8392

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES

~~(DEBTOR-IN-POSSESSION)~~

CONSOLIDATED BALANCE SHEETS

($ in millions and shares in thousands, except for per-share amounts)

(Unaudited)
March 31, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
2,107
$
1,829
Accounts receivable, less allowances of $148 and $130, respectively
519
553
Contract acquisition costs
93
97
Prepaid expenses
85
90
Income taxes and other current assets
43
85
Total current assets
2,847
2,654
Property, plant and equipment, net
12,987
12,931
Other intangibles, net
598
677
Other assets
528
533
Total assets
$
16,960
$
16,795
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Long-term debt due within one year
$
5,782
$
5,781
Accounts payable
507
540
Advanced billings
210
202
Accrued other taxes
202
204
Accrued interest
96
47
Pension and other postretirement benefits
48
48
Other current liabilities
306
318
Total current liabilities
7,151
7,140
Deferred income taxes
430
343
Pension and other postretirement benefits
2,194
2,195
Other liabilities
445
452
Total liabilities not subject to compromise
10,220
10,130
Liabilities subject to compromise
11,570
11,565
Total liabilities
21,790
21,695
Equity (Deficit):
Common stock, $0.25 par value (175,000 authorized shares,
106,025 issued, and 104,671 and 104,793 outstanding
at March 31, 2021 and December 31, 2020, respectively)
27
27
Additional paid-in capital
4,817
4,817
Accumulated deficit
(8,915)
(8,975)
Accumulated other comprehensive loss, net of tax
(744)
(755)
Treasury common stock
(15)
(14)
Total equity (deficit)
(4,830)
(4,900)
Total liabilities and equity (deficit)
$
16,960
$
16,795


	(Unaudited)
	Successor		Predecessor
	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	993	$	1,829
Accounts receivable, less allowances of $18 and $130, respectively		504		553
Contract acquisition costs		-		97
Prepaid expenses		111		90
Income taxes and other current assets		17		85
Total current assets		1,625		2,654

Property, plant and equipment, net		8,686		12,931
Other intangibles, net		4,389		677
Other assets		402		533
Total assets	$	15,102	$	16,795

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Long-term debt due within one year	$	15	$	5,781
Accounts payable		561		540
Advanced billings		205		202
Accrued other taxes		195		204
Accrued interest		63		47
Pension and other postretirement benefits		48		48
Other current liabilities		304		318
Total current liabilities		1,391		7,140

Deferred income taxes		342		343
Pension and other postretirement benefits		1,684		2,195
Other liabilities		430		452
Long-term debt		7,007		-
Total liabilities not subject to compromise		10,854		10,130
Liabilities subject to compromise		-		11,565
Total liabilities		10,854		21,695
Equity (Deficit):
Successor common stock, $0.01 par value (1,750,000 shares authorized,
244,401 issued and outstanding at June 30, 2021)		2		-
Predecessor common stock, $0.25 par value (175,000 authorized shares,
106,025 issued, and 104,793 outstanding at December 31, 2020)		-		27
Additional paid-in capital		4,106		4,817
Retained earnings (deficit)		99		(8,975)
Accumulated other comprehensive income (loss), net of tax		41		(755)
Treasury common stock		-		(14)
Total equity (deficit)		4,248		(4,900)
Total liabilities and equity (deficit)	$	15,102	$	16,795

The accompanying Notes are an integral part of these unaudited Consolidated Financial Statements.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES

~~(DEBTOR-IN-POSSESSION)~~

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

($ ($ in millions and shares in thousands, except for per-share amounts)

(Unaudited)

For the three months ended
March 31,
2021
2020
Revenue
$
1,676
$
1,933
Operating expenses:
Network access expenses
198
286
Network related expenses
422
444
Selling, general and administrative expenses
408
444
Depreciation and amortization
387
415
Loss on disposal of Northwest Operations
-
24
Restructuring costs and other charges
2
48
Total operating expenses
1,417
1,661
Operating income
259
272
Investment and other income, net
2
5
Pension settlement costs
-
(103)
Reorganization items, net
(25)
-
Interest expense (contractual interest for the
three months ended March 31, 2021
was $338 million)
(89)
(383)
Income (loss) before income taxes
147
(209)
Income tax expense (benefit)
87
(23)
Net income (loss)
60
(186)
Basic and diluted net earnings (loss) per share
attributable to Frontier common shareholders
$
0.57
$
(1.78)
Total weighted average shares outstanding - basic
104,556
104,363
Total weighted average shares outstanding - diluted
104,896
104,363



	Successor		Predecessor

	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
	2021		2021		2020

Revenue	$	1,061	$	555	$	1,801

Operating expenses:
Network access expenses		127		66		255
Network related expenses		269		144		430
Selling, general and administrative expenses		269		129		407
Depreciation and amortization		179		119		397
Loss on disposal of Northwest Operations		-		-		136
Restructuring costs and other charges		11		5		36
Total operating expenses		855		463		1,661

Operating income		206		92		140

Investment and other loss, net		(2)		(1)		(20)
Pension settlement costs		-		-		(56)
Reorganization items, net		-		4,196		(142)
Interest expense (See note 3)		(62)		(29)		(160)

Income (Loss) before income taxes		142		4,258		(238)
Income tax (benefit) expense		43		(223)		(57)

Net income (loss)		99		4,481		(181)

Basic net earnings (loss) per share
attributable to Frontier common shareholders	$	0.41	$	42.81	$	(1.73)

Diluted net earnings (loss) per share
attributable to Frontier common shareholders	$	0.41	$	42.68	$	(1.73)

Total weighted average shares outstanding - basic		244,401		104,662		104,525

Total weighted average shares outstanding - diluted		244,401		105,002		104,525

The accompanying Notes are an integral part of these unaudited Consolidated Financial Statements.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions and shares in thousands, except for per-share amounts)

(Unaudited)


	Successor		Predecessor
	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
	2021		2021		2020

Revenue	$	1,061	$	2,231	$	3,734

Operating expenses:
Network access expenses		127		264		541
Network related expenses		269		566		874
Selling, general and administrative expenses		269		537		851
Depreciation and amortization		179		506		812
Loss on disposal of Northwest Operations		-		-		160
Restructuring costs and other charges		11		7		84
Total operating expenses		855		1,880		3,322

Operating income		206		351		412
		-
Investment and other income (loss), net		(2)		1		(15)
Pension settlement costs		-		-		(159)
Reorganization items, net		-		4,171		(142)
Interest expense (See note 3)		(62)		(118)		(543)
		-
Income (Loss) before income taxes		142		4,405		(447)
Income tax (benefit) expense		43		(136)		(80)
		-
Net income (loss)		99		4,541		(367)

Basic and diluted net earnings (loss) per share
attributable to Frontier common shareholders	$	0.41	$	43.42	$	(3.51)

Basic and diluted net earnings (loss) per share
attributable to Frontier common shareholders	$	0.41	$	43.28	$	(3.51)

Total weighted average shares outstanding - basic		244,401		104,584		104,437

Total weighted average shares outstanding - diluted		244,401		104,924		104,437

The accompanying Notes are an integral part of these unaudited Consolidated Financial Statements.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

~~(DEBTOR-IN-POSSESSION)~~

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

($ ($ in millions)

(Unaudited)

For the three months ended
March 31,
2021
2020
Net income (loss)
$
60
$
(186)
Other comprehensive income, net of tax
11
86
Comprehensive income (loss)
$
71
$
(100)



	Successor		Predecessor

	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
	2021		2021		2020

Net income (loss)	$	99	$	4,481	$	(181)
Other comprehensive income (loss), net of tax		41		348		(423)

Comprehensive income (loss)	$	140	$	4,829	$	(604)

	Successor		Predecessor

	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
	2021		2021		2020

Net income (loss)	$	99	$	4,541	$	(367)
Other comprehensive income (loss), net of tax		41		359		(337)

Comprehensive income (loss)	$	140	$	4,900	$	(704)

The accompanying Notes are an integral part of these unaudited Consolidated Financial Statements.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

~~(DEBTOR-IN-POSSESSION)~~

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

($ ($ in millions and shares in thousands)

(Unaudited)




								Accumulated														Accumulated
				Additional				Other		Treasury			Total					Additional		Retained		Other		Treasury			Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Common Stock			Equity		Common Stock			Paid-In		Earnings		Comprehensive		Common Stock			Equity
	Shares	Amount		Capital		Deficit		Loss		Shares	Amount		(Deficit)		Shares	Amount		Capital		(Deficit)		Income (Loss)		Shares	Amount		(Deficit)
Balance at January 1, 2021	106,025	$	27	$	4,817	$	(8,975)	$	(755)	(1,232)	$	(14)	$	(4,900)	106,025	$	27	$	4,817	$	(8,975)	$	(755)	(1,232)	$	(14)	$	(4,900)
Stock plans	-		-		-		-		-	(122)		(1)		(1)	-		-		-		-		-	(122)		(1)		(1)
Net income	-		-		-		60		-	-		-		60	-		-		-		60		-	-		-		60
Other comprehensive
income, net of tax	-		-		-		-		11	-		-		11	-		-		-		-		11	-		-		11
Balance at March 31, 2021	106,025	$	27	$	4,817	$	(8,915)	$	(744)	(1,354)	$	(15)	$	(4,830)
Balance at
March 31, 2021 (Predecessor)															106,025		27		4,817		(8,915)		(744)	(1,354)		(15)		(4,830)
Stock plans															-		-		1		-		-	-		-		1
Net income															-		-		-		4,481		-	-		-		4,481
Other comprehensive
income, net of tax															-		-		-		-		348	-		-		348
Cancellation of Predecessor equity															(106,025)		(27)		(4,818)		4,434		396	1,354		15		-
Issuance of Successor common stock															244,401		2		4,106		-		-	-		-		4,108
Balance at
April 30, 2021 (Predecessor)															244,401	$	2	$	4,106	$	-	$	-	-	$	-	$	4,108


Balance at
April 30, 2021 (Successor)															244,401	$	2	$	4,106	$	-	$	-	-	$	-	$	4,108
Stock plans															-		-		-		-		-	-		-		-
Net income															-		-		-		99		-	-		-		99
Other comprehensive
loss, net of tax															-		-		-		-		41	-		-		41
Balance at
June 30, 2021 (Successor)															244,401	$	2	$	4,106	$	99	$	41	-	$	-	$	4,248



															For the six months ended June 30, 2020
								Accumulated														Accumulated
				Additional				Other		Treasury								Additional				Other		Treasury
	Common Stock			Paid-In		Accumulated		Comprehensive		Common Stock			Total		Common Stock			Paid-In		Accumulated		Comprehensive		Common Stock			Total
	Shares	Amount		Capital		Deficit		Loss		Shares	Amount		Equity		Shares	Amount		Capital		Deficit		Loss		Shares	Amount		Equity
Balance at January 1, 2020	106,025	$	27	$	4,815	$	(8,573)	$	(650)	(894)	$	(13)	$	(4,394)	106,025	$	27	$	4,815	$	(8,573)	$	(650)	(894)	$	(13)	$	(4,394)
Stock plans	-		-		1		-		-	(143)		-		1	-		-		1		-		-	(143)		-		1
Net loss	-		-		-		(186)		-	-		-		(186)	-		-		-		(186)		-	-		-		(186)
Other comprehensive
income, net of tax	-		-		-		-		86	-		-		86	-		-		-		-		86	-		-		86
Balance at March 31, 2020	106,025	$	27	$	4,816	$	(8,759)	$	(564)	(1,037)	$	(13)	$	(4,493)	106,025		27		4,816		(8,759)		(564)	(1,037)		(13)		(4,493)
Stock plans															-		-		-		-		-	(77)		-		-
Net loss															-		-		-		(181)		-	-		-		(181)
Other comprehensive
income, net of tax															-		-		-		-		(423)	-		-		(423)

Balance at June 30, 2020															106,025	$	27	$	4,816	$	(8,940)	$	(987)	(1,114)	$	(13)	$	(5,097)

The accompanying Notes are an integral part of these unaudited Consolidated Financial Statements.
‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES

~~(DEBTOR-IN-POSSESSION)~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020~~

($ in millions)

~~(Unaudited)~~

For the three months ended March 31,
2021
2020
Cash flows provided from (used by) operating activities:
Net income (loss)
$
60
$
(186)
Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities:
Depreciation and amortization
387
415
Pension settlement costs
-
103
Stock-based compensation
(1)
1
Amortization of deferred financing costs
-
8
Other adjustments
1
1
Deferred income taxes
84
(30)
Loss on disposal of Northwest Operations
-
24
Change in accounts receivable
34
29
Change in accounts payable and other liabilities
48
110
Change in prepaid expenses, income taxes and other assets
52
2
Net cash provided from operating activities
665
477
Cash flows provided from (used by) investing activities:
Capital expenditures
(384)
(286)
Proceeds on sale of assets
2
2
Other
2
2
Net cash used by investing activities
(380)
(282)
Cash flows used by financing activities:
Long-term debt principal payments
-
(5)
Finance lease obligation payments
(5)
(8)
Other
(2)
-
Net cash used by financing activities
(7)
(13)
Increase in cash, cash equivalents, and restricted cash
278
182
Cash, cash equivalents, and restricted cash at January 1,
1,887
809
Cash, cash equivalents, and restricted cash at March 31,
$
2,165
$
991
Supplemental cash flow information:
Cash paid during the period for:
Interest
$
40
$
163
Income tax payments, net
$
-
$
1
Reorganization items, net
$
56
$
-



	Successor		Predecessor

	For the		For the		For the
	two months		four months		six months
	ended June 30,		ended April 30,		ended June 30,
	2021		2021		2020

Cash flows provided from (used by) operating activities:
Net income (loss)	$	99	$	4,541	$	(367)
Adjustments to reconcile net income (loss) to net cash
provided from (used by) operating activities:
Depreciation and amortization		179		506		812
Pension settlement costs		-		-		159
Stock-based compensation expense		-		(1)		2
Amortization of deferred financing costs		-		-		11
Non-cash reorganization items, net		-		(5,467)		85
Other adjustments		(5)		1		2
Deferred income taxes		37		(148)		(92)
Loss on disposal of Northwest Operations		-		-		160
Change in accounts receivable		12		36		23
Change in accounts payable and other liabilities		51		(168)		278
Change in prepaid expenses, income taxes and other assets		7		46		(123)
Net cash provided from (used by) operating activities		380		(654)		950

Cash flows provided from (used by) investing activities:
Capital expenditures		(269)		(500)		(511)
Proceeds from sale of Northwest Operations		-		-		1,131
Proceeds on sale of assets		-		9		5
Other		-		1		3
Net cash provided from (used by) investing activities		(269)		(490)		628

Cash flows provided from (used by) financing activities:
Long-term debt principal payments		(4)		(1)		(5)
Proceeds from long-term debt borrowings		-		225		-
Financing costs paid		-		(4)		(19)
Finance lease obligation payments		(4)		(7)		(13)
Other		1		(16)		-
Net cash provided from (used by) financing activities		(7)		197		(37)

Increase (Decrease) in cash, cash equivalents, and restricted cash		104		(947)		1,541
Cash, cash equivalents, and restricted cash
at the beginning of the period		940		1,887		809
Cash, cash equivalents, and restricted cash at the end of the period	$	1,044	$	940	$	2,350

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	84	$	84	$	427
Income tax payments, net	$	24	$	9	$	1
Reorganization items, net	$	-	$	1,397	$	34

				OK		OK

The accompanying Notes are an integral part of these unaudited Consolidated Financial Statements.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

(1) Summary of Significant Accounting Policies:

a) Basis of Presentation and Use of Estimates:

Frontier Communications ~~Corporation~~Parent, Inc. and its subsidiaries are referred to as “we,” “us,” “our,” “Frontier,” or the “Company” in this report. Our interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020. All significant intercompany balances and transactions have been eliminated in consolidation. These interim unaudited consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary, in the opinion of Frontier’s management, to present fairly the results for the interim periods shown. Revenues, net income (loss) and cash flows for any interim periods are not necessarily indicative of results that may be expected for the full year.

We operate in 1 reportable segment. Frontier provides both regulated and unregulated voice, data and video services to consumer, business, and wholesale customers and is typically the incumbent voice services provider in its service areas.

For our interim financial statements as of and for the period ended ~~March 31,~~June 30, 2021, we evaluated subsequent events and transactions for potential recognition or disclosure through the date that we filed this Form 10-Q with the Securities and Exchange Commission (SEC).

The preparation of our interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the financial statements, (ii) the disclosure of contingent assets and liabilities, and (iii) the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. Estimates and judgments are used when accounting for the application of fresh start accounting, allowance for ~~doubtful accounts,~~credit losses, asset impairments, indefinite-lived intangibles, depreciation and amortization, income taxes, and pension and other postretirement benefits, among others.

We operate in 1 reportable segment. Frontier provides both regulated and unregulated voice, data and video services to consumer, commercial and wholesale customers and is typically the incumbent voice services provider in its service areas. For information about our use of estimates as a result of fresh start accounting, See Note 4.

Chapter 11 ~~Cases -~~ Bankruptcy Emergence

On April 14, 2020 (the ~~Petition Date)~~“Petition Date”), Frontier Communications Corporation, ~~(as it may be reorganized pursuant to the Plan, Reorganized Frontier)~~a Delaware corporation (“Old Frontier”), and its subsidiaries (collectively with Old Frontier, the ~~Company Parties or the Debtors and, as they may be reorganized pursuant to the Plan (as defined herein)~~“Debtors”), ~~the Reorganized Company Parties or the Reorganized Debtors)~~ commenced cases under chapter 11 (the ~~Chapter~~“Chapter 11 ~~Cases)~~Cases”) of title 11 of the United States Code (the ~~Bankruptcy Code)~~“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of New York (the ~~Bankruptcy Court)~~“Bankruptcy Court”). On August 21, 2020, the Company Parties filed the Fifth Amended Joint Plan of Reorganization of Frontier Communications Corporation and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the Plan) with the Bankruptcy Court. On August 27, 2020, the Bankruptcy Court ~~entered the Order Confirming~~confirmed the Fifth Amended Joint Plan of Reorganization of Frontier Communications Corporation and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the ~~Confirmation Order)~~“Plan” or the “Plan of Reorganization”), which ~~approved~~was filed with the Bankruptcy Court on August 21, 2020, and ~~confirmed the Plan. The effective date of the Plan will occur after all conditions precedent to the Plan have been satisfied (the Effective Date), which is expected to occur~~ on April 30, 2021 ~~at which time we expect~~(the “Effective Date”), the Debtors satisfied the conditions precedent to ~~emerge~~consummation of the Plan as set forth in the Plan, and the Debtors emerged from the Chapter 11 ~~Cases.~~Cases without any need for further action or order of the Bankruptcy Court. See Note 3 for ~~more information.~~additional information related to our emergence from Chapter 11 Cases.

b) ~~Going Concern~~:Fresh Start Accounting

Upon emergence from bankruptcy, we adopted fresh start accounting in accordance with ~~The Company previously disclosed, based~~Accounting Standards Codification (ASC) Topic 852 – Reorganizations (ASC 852) and became a new entity for financial reporting purposes. As a result, the consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on ~~its~~or before that date as indicated by the “black line” division in the financial ~~condition~~statements and ~~its projected operating~~footnote tables, which emphasizes the lack of comparability between amounts presented. References to “Successor” relate to our financial position and results of operations after the ~~defaults under its debt agreements, and the risks and uncertainties surrounding its Chapter 11 proceedings (see Note 3), that there was substantial doubt as~~Effective Date. References to “Predecessor” refer to the ~~Company’s ability to continue as a going concern as of the issuance of the Company’s 2020 Annual Report on Form 10-K.~~financial position and results

PART I. FINANCIAL INFORMATION (Continued)

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(DEBTOR-IN-POSSESSION)

(Unaudited)

~~Based~~of operations of Old Frontier and its subsidiaries on or before the ~~current status~~Effective Date. See Note 4 for additional information related to Fresh Start Accounting.

During the Predecessor period, ASC 852 was applied in preparing the consolidated financial statements. ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, ~~including~~to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. ASC 852 requires certain additional reporting for financial statements prepared between the bankruptcy filing date and the date of emergence from bankruptcy, including: (i) Reclassification of pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the ~~necessary regulatory approvals have been received,~~liabilities are fully secured, to a separate line item on the consolidated balance sheet called, "Liabilities subject to compromise"; and (ii) Segregation of “Reorganization items, net” as a separate line on the consolidated statements of comprehensive loss, included within income from continuing operations.

Upon application of fresh start accounting, we allocated the reorganization value to our individual assets and liabilities (except for deferred income taxes) based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. The amount of deferred taxes was determined in accordance with ASC Topic 740, Income Taxes. The Effective Date fair values of our assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets, see Note 4.

b)Changes in Accounting Policies:

The accounting policy differences between Predecessor and Successor include:

Universal Service Fund and other Surcharges - Frontier collects various taxes, Universal Service Fund (USF) surcharges (primarily federal USF), and certain other taxes, from its customers and subsequently remits them to governmental authorities. The Predecessor recorded USF and other taxes on a gross basis on the consolidated statement of operations, included within “Revenue” and “Network access expense”. After emergence, the Successor records these USF and other taxes on a net basis.

Provision for Bad Debt – The Predecessor reported the provision for bad debt as a reduction of revenue. After emergence, the Successor reports bad debt expense as an operating expense included in “Selling, general, and administrative expenses”.

Contract Acquisition Costs - During the Predecessor period, certain commissions to obtain new customers were deferred and amortized over four years, which represented the estimated customer contract period. As a result of fresh start accounting, that assumption was reevaluated and the period of benefit for our retail customers was determined to be less than one year. As such, these costs are now expensed as incurred.

Actuarial Losses on Defined Benefit Plans - Historically, actuarial gains (losses) were recognized as they occurred and included in “Accumulated other comprehensive income (loss)”, and were subject to amortization over the estimated average remaining service period of participants. As part of fresh start accounting, Frontier has made an accounting policy election to recognize these gains and losses immediately in the period they occur as Investment and other income (loss) on the consolidated statement of operations.

Government grants revenue - Certain governmental grants that were historically presented on a net basis as part of capital expenditures, are now presented on a gross basis and included in ”Revenue” on the consolidated statement of operations.

PART I. FINANCIAL INFORMATION (Continued)

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Administrative Expenses – Historically, the Predecessor capitalized certain administrative expenses, that following emergence, are expensed during the period incurred and included in “Selling, general, and administrative expense” on the consolidated statement of operations.

c) Going Concern:

In accordance with the requirements of Accounting Standards Update (“ASU”) 2014-15, “Presentation of Financial Statements Going Concern (ASU 2014-15)”, and ASC 205, “Presentation of Financial Statements”, the Company ~~is emerging from~~has the ~~Chapter 11 Cases on~~ responsibility to evaluate at each reporting period, including interim periods, whether conditions and/or events raise substantial doubt about ~~April 30, 2021 and, in so doing, eliminating approximately $11 billion in debt through the restructuring process, improving~~its ability to meet its future financial obligations. In its evaluation for this report, management considered the Company’s ~~capital structure~~current financial condition and ~~stabilizing its~~ liquidity ~~position. As such, as~~sources, including current funds available, forecasted future cash flows and the Company’s conditional and unconditional obligations due within one year following the date of ~~the filing~~issuance of this Quarterly Report on Form ~~10-Q,~~10-Q.

During the ~~substantial doubt as to~~pendency of the ~~Company’s~~Chapter 11 Cases, the Predecessor’s ability to continue as a going concern was contingent upon a variety of factors, including the Bankruptcy Court’s approval of the Plan and the Predecessor’s ability to successfully implement the Plan. As a result of the effectiveness of the Plan, the Company believes it has ~~been alleviated by~~ the ~~emergence~~ability to meet its obligations for at least one year from the ~~Chapter 11 Cases. See Note 3 for more information.~~date of issuance of this Form 10-Q. Accordingly, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course business.

Our consolidated interim unaudited financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our then-outstanding obligations under the Company’s amended and restated credit agreement, dated as of February 27, 2017 (as amended, the JPM Credit Agreement), the Company’s 8.000% first lien secured notes due April 1, 2027 (the Original First Lien Notes), the Company’s 8.500% second lien secured notes due April 1, 2026 (the Original Second Lien Notes), our unsecured notes and debentures and the secured and unsecured debentures of our subsidiaries. As of March 31, 2021, amounts that were outstanding under the JPM Credit Agreement, our Original First Lien Notes, and our Original Second Lien Notes have been repaid in full. We have reclassified our unsecured notes and debentures and the secured and unsecured debentures of our subsidiaries to “Long term debt due within one year” or “Liabilities Subject to Compromise”, based on the event of default or reinstatement provisions of each security in the Restructuring Support Agreement (as defined herein), on our consolidated balance sheet as of March 31, 2021. For additional discussion related to our debt obligations, and details of our refinancing of our secured debt, refer to Note 10.

c)d) Impact of COVID-19:

On March 11, 2020, the World Health Organization declared the ~~highly contagious and lethal~~ corona virus outbreak a global pandemic (COVID-19) and recommended containment and other mitigation measures worldwide to lessen the transmission of COVID-19.

In an effort to reduce the economic impacts of COVID-19, the United States federal government has responded with multiple stimulus bills. Given the evolving nature of the pandemic and the response of multiple levels of government as well as the uncertainty of funding available for services provided, the full impact of the pandemic and response(s) to it on the Company are unknown at this time.

In addition, some of the states we operate in ~~(including California and New York)~~ have issued executive orders as a result of COVID-19 that further impact our ~~business, including prohibiting the disconnection of services for customers for the length of the state of emergency.~~business. State and federal governments may continue to ask companies to aid in pandemic response. While certain customers have taken advantage of our COVID-19 related relief programs, as of ~~March 31,~~June 30, 2021, very few had past due balances beyond the point of normal disconnection.

Frontier’s response to COVID-19 has included ~~several~~comprehensive operational safety precautions ~~such as continuing~~for our employees and customers. To date, we have not experienced significant disruptions in our workforce due to ~~require personal protective equipment on any employees entering a customer location. The percentage of Frontier’s employees who have reported testing positive for~~ COVID-19 ~~is small and continues to track below the percentage of reported cases both nationally and in those states in which Frontier has a significant number of employees. Through March 31,~~related absences or legislative or regulatory changes. In addition, through June 30, 2021, we had not experienced any ~~significant~~material disruptions in our supply chain; however, some of our business partners, particularly those vendors operating outside of the United States, have been more greatly impacted which has affected our service levels and distribution of work.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

As the COVID-19 pandemic continues, certain states are currently considering legislation or other regulations to adopt additional protections for workers impacted by COVID-19. To date, we have not experienced significant disruptions in our workforce due to COVID-19 related absences or legislative or regulatory changes.

While overall the operational and financial impacts to Frontier of the COVID-19 pandemic ~~for the three months ended March 31,~~as of June 30, 2021 were not significant, we continue to closely monitor the evolution of the pandemic, including new COVID-19 variants, as well as the ongoing impact to our employees, our customers, our business and our results of operations. WeThough we have experienced a slowdown in service activations, this negative impact is offset by lower churn within our consumer and ~~Small~~small and ~~Medium Business~~medium business customers. We also continue to closely track our customers’ payment activity as well as external factors, including the expiration of federal wage subsidies for individuals and small businesses which could materially impact payment trends. With more people working from home, we have experienced higher demands on our network and higher sales activity for our ~~residential~~consumer broadband service offering. This sustained increase in network demand could lead to reduced network availability and potential outages, which may impair our ability to meet customer service level commitments, lead to higher costs, higher customer churn and potential increased

PART I. FINANCIAL INFORMATION (Continued)

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(Unaudited)

regulatory actions. These potential changes, among others, could have a material financial impact to Frontier.

d) ~~Debtor-in-Possession:~~

~~In general, as debtors-in-possession under~~ We recommend that you review “Item 1A. Risk Factors” in this Form 10-Q for a further discussion on COVID-19 and the ~~Bankruptcy Code, we are authorized to continue to operate as an ongoing business but may not engage in transactions outside~~risks the ordinary course of business without the prior approval of the Bankruptcy Court. Pursuant to certain motions and applications intended to limit the disruption of the bankruptcy proceedings on our operations (the First Day Motions) and other motions filed with the Bankruptcy Court, the Bankruptcy Court has authorized us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to obtain DIP financing, pay employee wages and benefits, settle certain ~~de minimis~~ ~~disputes and pay vendors and suppliers in the ordinary course for all goods and services.~~Company currently faces.

e) Revenue Recognition:

Revenue for data & Internet services, voice services, video services and switched and non-switched access services is recognized as the service is provided.services are provided to customers. Services that are billed in advance include monthly recurring network access services (including data services), special access services, and monthly recurring voice, video, and related charges. Revenue is recognized by measuring progress toward the complete satisfaction of the Company’s performance obligations. The unearned portion of these fees is initially deferred as a component of “Advanced billings” on our consolidated balance sheet and recognized as revenue over the period that the services are provided. Services that are billed in arrears include non-recurring network access services (including data services), switched access services, and non-recurring voice and video services. The earned but unbilled portion of these fees is recognized as revenue in our consolidated statements of operations and accrued in “Accounts receivable” on our consolidated balance sheet in the period that services are provided. Excise taxes are recognized as a liability when billed.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

Satisfaction of Performance Obligations

Frontier satisfies its obligations to customers by transferring goods and services in exchange for consideration received from the customer. The timing of Frontier’s satisfaction of the performance obligation ~~often differs~~may differ from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liability. Frontier recognizes a contract asset or liability when the Company transfers goods or services to a customer and bills an amount which differs from the revenue allocated to the related performance obligations.payment.

Bundled Service and Allocation of Discounts

When customers purchase more than one service, ~~the~~ revenue ~~allocable to~~for each ~~service~~ is determined by allocating the total transaction price based upon the relative stand-alone selling price of each ~~service received.~~service. We frequently offer service discounts as an incentive to ~~customers. Service discounts~~customers, which reduce the total transaction ~~price allocated to the performance obligations that are satisfied over the term of the customer contract. We may also offer~~price. Any incentives which are considered cash equivalents (e.g. ~~Visa~~ gift cards) that are granted will similarly result in a reduction of the total transaction ~~price as well as lower revenue over~~price. Cash equivalent incentives are accounted for on a portfolio basis and are recognized in the ~~term of the contract. A contract asset is often created during the beginning of the contract term when the term of the incentive is shorter than the contract term. These contract assets~~month they are ~~realized over the term of the contract as our performance obligations are satisfied and customer consideration is received.~~awarded to customers.

Customer Incentives

In the process of acquiring and/or retaining customers, we may issue a variety of ~~other~~ incentives aside from service discounts or cash equivalent incentives. Those incentives that have stand-alone value (e.g. gift cards not considered cash equivalents or free goods/services) are considered a separate performance ~~obligation. As a result, while~~obligations. While these incentives are free to the customer, a portion of the consideration received from the customer ~~over the contract term~~ is ascribed to them based upon their relative stand-alone selling price. These types of incentives are accounted for on a portfolio basis with both revenue and expense recognized in the month they are awarded to the customer. The earned revenue associated with these incentives is reflected in “Other” revenue ~~and~~while the associated costs are reflected in “Network access expenses”, for these incentives are recognized when they are delivered to the customer and the performance obligation is satisfied. Similar to discounts, these types of incentives generally result in the creation of a contract asset during the beginning of the contract term which is recorded in Other current assets and Other assets on our consolidated balance sheet..

Upfront Fees

All non-refundable upfront fees ~~provide~~assessed to our customers provide them with a material right to ~~renew, and~~renew; therefore, they are deferred by creating a contract liability and amortized into ~~revenue~~“Other revenue” over the ~~expected period for which related services are provided. With upfront fees assessed at the beginning of~~average customer life using a contract, a contract liability is often created, which is reduced over the term of the contract as the performance obligations are satisfied. The contract liabilities are recorded in Other current liabilities and Other liabilities on our consolidated balance sheet.portfolio approach.

~~Contributions in Aid of Construction (CIAC)~~Customer Acquisition Costs

~~It is customary for us~~Sales commission expenses are recognized as incurred. According to ~~charge customers for certain construction activities. These activities are requested by the customer and construction charges are assessed at the beginning of a contract. When charges are incurred,~~ASC 606, incremental costs in obtaining a contract ~~liability~~with a customer are deferred and recorded as a contract asset if the period of benefit is ~~often created, which is reduced over~~expected to be greater than one year. For our retail customers, this period of benefit has been determined to be less than one year. As such, the ~~term of~~Company applies the ~~contract~~practical expedient that allows such costs to be expensed as ~~performance obligations are satisfied. The contract liabilities are recorded in Other current liabilities and Other liabilities on our consolidated balance sheet.~~incurred.

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(Unaudited)

~~Contract Acquisition Costs~~

Certain costs to acquire customers are deferred and amortized over the expected customer life (average of 4.0 years). For Frontier, this includes certain commissions paid to acquire new customers. Commissions attributable to new customer contracts are deferred and amortized into expense. Unamortized deferred commissions are recorded in Contract acquisition costs and Other assets on our consolidated balance sheet.

Taxes, Surcharges and Subsidies

Frontier collects various taxes, from its customers and remits the funds to governmental authorities. Substantially all of these taxes are recorded through the consolidated balance sheet and presented on a net basis in our consolidated statements of operations. We also collect Universal Service Fund (USF) surcharges ~~from customers~~ (primarily federal USF), ~~which~~and certain other surcharges, from its customers and subsequently remits these taxes to governmental authorities. USF and other surcharges amounted to ~~$55~~$21 million and ~~$49~~$83 million for the one and four months ended April 30, 2021, and $50 million and $107 million for the three and six months ended March 31, 2021 and 2020, respectively, and video franchise fees, which amounted to $6 million and $9 million for the three months ended March 31, 2021 and 2020, respectively, that we have recorded on a gross basis in our consolidated statements of operations and included within “Revenue” and “Network related expenses”.June 30, 2020.

In June 2015, Frontier accepted the FCC offer of support to price cap carriers under the Connect America Fund (CAF) Phase II program, which is intended to provide long-term support for broadband in high cost unserved or underserved areas. We ~~are recognizing~~recognize FCC’s CAF Phase II subsidies into revenue on a straight-line basis over the ~~seven year~~seven-year funding term.

f)Cash Equivalents:

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash of $50 million and $58 million is included in “Other assets” on our consolidated balance sheet as of ~~both March 31,~~June 30, 2021 and December 31, 2020. ~~These amounts represent Letters of Credit Obligations and a utility adequate assurance account that is required under bankruptcy rules.~~

g)Definite and Indefinite Lived Intangible Assets:

Intangible assets ~~arising from business combinations, such as customer lists, tradenames, and royalty agreements,~~ are initially recorded at estimated fair value. Frontier ~~amortizes~~historically amortized its acquired customer lists and certain other finite-lived intangible assets over their estimated useful lives on ~~the~~an accelerated ~~method of sum of the years digits~~basis. Upon emergence from bankruptcy, customer relationship intangibles were established for business and ~~its royalty agreement~~wholesale customers. These intangibles are amortized on a straight-line basis over ~~its estimated~~their assigned useful life of between 11 and 16 years. Additionally, trademark and tradename assets established upon emergence are amortized on ~~the~~a straight-line ~~method.~~basis over 5 years. We review such intangible assets ~~at least annually as of December 31~~^st to assess whether any potential impairment exists and whether factors exist that would necessitate a change in useful life and a different amortization period.

h)Lease Accounting:

We determine if an arrangement contains a lease at inception. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating and Finance lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating and finance lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms used in accounting for leases may reflect options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term. ROU assets for operating leases are recorded to “Other Assets”, and the related liabilities recorded to “Other current liabilities”, and “Other liabilities” on our consolidated balance sheets. Assets subject to finance leases are included in “Property, Plant & Equipment”, with corresponding liabilities recorded to “Other current liabilities”, and “Other liabilities” on our consolidated balance sheets. Upon emergence from bankruptcy, lease asset and liability balances were adjusted to fair value.

(2) Recent Accounting Literature:

Recently Adopted Accounting Pronouncements

Financial Instrument Credit Losses

In June 2016, The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, “Financial Instruments – Credit Losses” (CECL or ASU 2016-13). This standard, along with its amendments, update the current financial statement impairment model requiring entities to use a

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FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
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(Unaudited)

~~Equipment”, with corresponding liabilities recorded to “Other current liabilities”, and “Other liabilities” on our consolidated balance sheets.~~

~~(2)~~ ~~Recent Accounting Literature~~:

~~Recent Accounting Pronouncements Not Yet Adopted~~

~~Financial Instrument Credit Losses~~

In June 2016, The FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. This standard, along with its amendments, update the current financial statement impairment model requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. For the Company, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. Upon emergence from the Chapter 11 Cases, effective as of April 30, 2021, Frontier ~~is currently evaluating~~adopted the standard as part of its fresh start accounting policy changes. The adoption of CECL did not result in a material impact to our financial position or results of ~~adopting this standard on our consolidated financial statements.~~operations.

Recent Accounting Pronouncements Not Yet Adopted

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting". This standard provides optional expedients, and allows for certain exceptions to existing GAAP, for contract modifications triggered by the expected market transition of certain benchmark interest rates to alternative reference rates. The standard applies to contracts and other arrangements that reference the London Interbank Offering Rate (LIBOR) or any other rates ending after December 31, 2022. Frontier is evaluating the impact of the adoption of this standard, including optional expedients, on our consolidated financial statements.

(3) ~~Liquidity and Financial Condition:~~Emergence from the Chapter 11 Cases:

~~Restructuring Support Agreement~~

On April 14, 2020, the ~~Company Parties~~ ~~entered into~~ ~~a Restructuring Support Agreement (the Restructuring Support Agreement) with certain of its noteholders (the Consenting Noteholders), pursuant to which~~ ~~the Consenting Noteholders agreed, subject to certain terms and conditions, to support~~ ~~a financial restructuring (the Restructuring)~~ ~~of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties, pursuant to the~~ ~~Plan~~ ~~to be filed in~~ ~~the Chapter 11 Cases~~.

~~In accordance with the Restructuring Support Agreement, the Consenting Noteholders agreed, among other things, to:~~

~~(i) support the transactions (the Restructuring Transactions) described in, within the timeframes outlined in, and in accordance with the Restructuring Support Agreement;~~

~~(ii) not take any action, directly or indirectly, that is reasonably likely to interfere with acceptance, implementation, or consummation of the Restructuring Transactions;~~

~~(iii) vote each of its Senior Notes Claims (as defined in the Restructuring Support Agreement) to accept the Plan; and~~

(iv) not transfer Senior Notes Claims held by each Consenting Noteholders except with respect to limited and customary exceptions, including requiring any transferee to either already be bound or become bound by the terms of the Restructuring Support Agreement.

~~In accordance with the Restructuring Support Agreement, the Company Parties agreed, among other things, to:~~

~~(i) support and take all steps reasonably necessary and desirable to consummate the Restructuring Transactions in accordance with the Restructuring Support Agreement;~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

(ii) support and take all steps reasonably necessary and desirable to obtain entry of (a) the final orders of the Bankruptcy Court authorizing the relevant Company Parties’ entry into the documents governing a senior secured superpriority DIP financing facility, (b) the order of the Bankruptcy Court approving the disclosure statement related to the Plan pursuant to section 1125 of the Bankruptcy Code and (c) the Bankruptcy Court’s order confirming the Plan;

~~(iii) use commercially reasonable efforts to obtain any and all required governmental, regulatory, and/or third-party approvals for the Restructuring Transactions;~~

(iv) act in good faith and use commercially reasonable efforts to execute and deliver certain required documents and agreements to effectuate and consummate the Restructuring Transactions as contemplated by the Restructuring Support Agreement;

(v) operate their businesses in the ordinary course of business in a manner consistent with the Restructuring Support Agreement and past practice and use commercially reasonable efforts to preserve their businesses; and

~~(vi) not, directly or indirectly, object to, delay, impede, or take any other action to interfere with acceptance, implementation, or consummation of the Restructuring Transactions.~~

The Restructuring Support Agreement may be terminated upon the occurrence of certain events, including the failure to meet specified milestones related to consummation of the Plan. In addition, the Restructuring Support Agreement shall automatically terminate on the Effective Date of the Plan once all conditions precedent to the Plan have been satisfied.

~~Chapter 11 Cases~~

~~As an initial step towards implementation of the Plan, on the Petition Date, the Company Parties filed~~Debtors commenced the Chapter 11 Cases in the Bankruptcy Court. Each Company Party continues to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Chapter 11 Cases ~~are being~~were jointly administered under the caption In re Frontier Communications Corporation., et al., Case No. 20-22476 (RDD).

In general, as debtors-in-possession under the Bankruptcy Code, we are authorized to continue to operate as an ongoing business, however, we may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. To that end, on the Petition Date, the Company Parties filed the First Day Motions, which were approved after a final hearing held on May 22, 2020. Pursuant to the First Day Motions, the Bankruptcy Court authorized us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders: continue to operate our cash management system and honor certain prepetition obligations related thereto; maintain existing business forms; continue to perform intercompany transactions; obtain super priority administrative expense status for post-petition intercompany balances; pay certain prepetition claims of critical vendors, lien claimants and section 503(b)(9) of the Bankruptcy Code claimants in the ordinary course of business on a post-petition basis; pay prepetition employee wages, salaries, other compensation and reimbursable employee expenses and continue employee benefits programs; pay obligations under prepetition insurance policies, continue to pay certain brokerage fees; renew, supplement, modify or purchase insurance coverage; maintain our surety bond program; pay certain prepetition taxes and fees; honor certain prepetition obligations to customers and continue certain customer programs in the ordinary course of business; and pay or honor prepetition claims of content providers.

~~Plan and Disclosure Statement~~

On May 15, 2020, the ~~Company Parties~~Debtors filed a proposed Joint Plan of Reorganization and related Disclosure Statement, ~~(the Plan),~~ each of which were amended on June 26, 2020, June 29, 2020 and June 30, 2020. On May 15, 2020, the Debtors also filed a proposed order approving the Disclosure Statement and various plan solicitation materials, including the solicitation and voting procedures, which ~~was~~were revised on June 29, 2020

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~(including~~ (including modifications to some of the exhibits). On June 30, 2020, the Bankruptcy Court entered the modified order approving the adequacy of the Disclosure Statement and the solicitation and notice procedures and the forms of voting ballots and notices in connection therewith. The order established June 29, 2020 as the voting record date, July 2, 2020 as the solicitation launch date and July 31, 2020 as the voting deadline.

On August 21, 2020, the ~~Company Parties~~Debtors filed the Plan with the Bankruptcy Court. On August 27, 2020, the Bankruptcy Court entered the ~~Confirmation~~ Order~~, which approved and confirmed the Plan. The Effective Date of~~ Confirming the Plan ~~will occur once all conditions precedent to the Plan have been satisfied.~~ ~~As previously announced, as of April 15, 2021, the Company had received PUC approvals or favorable determinations from all required states.~~(the “Confirmation Order”).

~~The~~On the Effective Date, the Debtors satisfied all conditions precedent required for consummation of the Plan as ~~approved~~set forth in the Plan, the Plan became effective in accordance with its terms and ~~confirmed by~~the Debtors emerged from the Chapter 11 Cases without any need for further action or order of the Bankruptcy ~~Court provides for:~~Court.



On the ~~applicable (x) Debtors, with~~Effective Date, pursuant to the ~~consent~~terms of the ~~Consenting Noteholders then holding greater than 50.1%~~Plan, all of the ~~aggregate outstanding principal amount~~obligations under Old Frontier’s unsecured senior note indentures were cancelled, and in connection with emergence, Frontier issued 244,401,000 shares of common stock that were transferred to holders of the allowed senior notes claims ~~that are held~~(as defined by ~~all Consenting Noteholders subject to~~the Plan) and the Restructuring Support Agreement as of such date (the Required Consenting Noteholders), or (y) Reorganized Debtors taking any action as may be necessary or advisable to effectuate the restructuring transactions described in the Plan and Restructuring Transactions Memorandum (as defined in the Plan), including;was automatically terminated.

~~the execution, delivery, and filing of any organizational and governance documents for the Reorganized Company Parties;~~13

o~~any and all actions necessary or appropriate to effectuate the Secured Creditor Settlement (as defined below); and~~

othe execution, delivery, and filing of all agreements, indentures, notes, filings, documents, and instruments delivered or entered into in connection with one or more DIP financing facilities, which shall be used to repay certain of the Company Parties’ prepetition secured indebtedness and shall convert into an exit facility on the Effective Date (a DIP-to-Exit Facility), and a DIP revolving financing facility, which shall, subject to certain conditions, convert into an exit revolving facility (a DIP-to-Exit Revolving Facility and, together with a DIP-to-Exit Facility, DIP Facilities);

the final satisfaction, compromise, settlement, release, and discharge of claims arising under, derived from, secured by, based on, or related to any DIP-to-Exit Facility documents or DIP-to-Exit Revolving Facility documents, on the Effective Date in exchange for payment in full in cash or, at the Company Parties’ election, and solely to the extent permitted under DIP-to-Exit Facility documents or DIP-to-Exit Revolving Facility documents, as applicable, or as otherwise agreed, such holder’s pro rata share of the applicable exit facilities;



on the Effective Date, issuance of takeback debt by one or more of the Reorganized Company Parties (the Takeback Debt), in a principal amount of $750 million, which shall include the following terms which may be modified subject to requisite consent under the Plan):

oan interest rate that is either (a) no more than 2.50% higher than the interest rate of the next most junior secured debt facility to be entered into on the Effective Date if the Takeback Debt is secured on a third lien basis or (b) no more than 3.50% higher than the interest rate of the most junior secured debt facility to be entered into on the Effective Date if the Takeback Debt is unsecured;

oPART I. FINANCIAL INFORMATION (Continued)

a maturity of no less than one year outside of the longest-dated debt facility to be entered into by the Reorganized Company Parties on the Effective Date, provided that in no event shall the maturity of the Takeback Debt be longer than eight years from the Effective Date;FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

to the extent the Original Second Lien Notes claims are reinstated under the Plan, the Takeback Debt will be third lien debt, provided that to the extent the Original Second Lien Notes claims are paid in full in cash during the pendency

Reorganization items incurred as a result of the Chapter 11 Cases ~~or under~~presented separately in the accompanying consolidated statements of operations were as follows:



	Predecessor

	For the one month		For the three months
	ended April 30,		ended June 30,
($ in millions)	2021		2020

Gain on settlement of liabilities subject to compromise	$	5,274	$	-
Fresh start valuation adjustments		(1,038)		-
Write-off of debt issuance costs and
original issue net discount on debt subject to compromise		-		(85)
Debtor-in-possession financing costs		(15)		(19)
Professional fees and other bankruptcy related costs		(25)		(38)
Reorganization items, net	$	4,196	$	(142)



	Predecessor

	For the four months		For the six months
	ended April 30,		ended June 30,
($ in millions)	2021		2020

Gain on settlement of liabilities subject to compromise	$	5,274	$	-
Fresh start valuation adjustments		(1,038)		-
Write-off of debt issuance costs and
original issue net discount on debt subject to compromise		-		(85)
Debtor-in-possession financing costs		(15)		(19)
Professional fees and other bankruptcy related costs		(50)		(38)
Reorganization items, net	$	4,171	$	(142)

The Company has incurred significant costs associated with the reorganization, primarily legal and professional fees. Subsequent to the Petition Date, these costs were expensed as incurred and significantly affected our consolidated results of operations. From the Petition Date to the Effective date, these costs were included in Reorganization items, net on our consolidated statement of operations. For the periods prior to the Petition date and following the Effective Date, these costs were included in Restructuring costs and other charges on our consolidated statement of operations. Refer to Note 12.

(4) Fresh Start Accounting:

In connection with our emergence from bankruptcy and in accordance with ASC Topic 852, we qualified for and adopted fresh start accounting on the Effective Date. We were required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor received less than 50% of the voting shares of the Successor, and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan was less than the ~~Company Parties~~post-petition liabilities and allowed claims.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

The adoption of fresh start accounting resulted in a new reporting entity for financial reporting purposes with no beginning retained earnings or deficit. The cancellation of all outstanding shares of Old Frontier common stock on the ~~Required Consenting Noteholders will agree on whether~~Effective Date and issuance of new shares of common stock of the ~~Takeback Debt will be secured or unsecured, within three business days~~Successor caused a related change of control of the Company Parties’ delivery to the Consenting Noteholders of a term sheet for the financing to repay the Original Second Lien Notes in full in cash that contains terms and conditions reasonably acceptable to the Company Parties and the Required Consenting Noteholders;under ASC 852.

Upon the ~~Takeback Debt amount is subject~~application of fresh start accounting, Frontier allocated the reorganization value to ~~downward adjustment by the Consenting Noteholders holding at least sixty-six~~its individual assets based on their estimated fair values. Each asset and ~~two-thirds percent~~liability existing as of the ~~aggregate outstanding principal amount of senior notes that are held by all Consenting Noteholders;~~Effective Date, other than deferred taxes, have been stated at the fair value, and determined at appropriate risk-adjusted interest rates. Deferred taxes were determined in conformity with applicable accounting standards.

~~all other terms~~Reorganization value represents the fair value of the Successor’s assets before considering liabilities. Our reorganization value is derived from an estimate of enterprise value. Enterprise value represents the estimated fair value of an entity’s long-term debt and shareholders’ equity. In support of the Plan, the enterprise value of the Successor was estimated to be approximately $12.5 billion. The valuation analysis was prepared using financial information and financial projections and applying standard valuation techniques, including without limitation, covenants and governance, shall be reasonably acceptable to the Company Parties and the Required Consenting Noteholders; provided that such terms shall not be more restrictive than those in the indenture for the Original Second Lien Notes.a risked net asset value analysis.

The Effective Date estimated fair values of certain of the Company's assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, ~~among other things and subject~~the Company’s consolidated financial statements after April 30, 2021 are not comparable to the ~~terms~~Company’s consolidated financial statements as of ~~the Secured Creditor Settlement, contemplates the following treatment of claims against and interests in the Company Parties:~~or prior to that date.

Reorganization Value

atAs set forth in the ~~option~~Plan of Reorganization, the enterprise value of the ~~applicable Reorganized~~Successor Company ~~Party, holders of secured claims against a~~was estimated to be between $10.5 billion and $12.5 billion. Based on the estimates and assumptions discussed below, the Company ~~Party that, absent its secured status, would~~estimated the enterprise value to be entitled to priority in right of payment under section 507(a)(8) of the Bankruptcy Code (determined irrespective of time limitations) (the Secured Tax Claims) shall receive (i) payment in full in cash or (ii) payment in cash made in equal semi-annual cash payments commencing$12.5 billion as of the Effective ~~Date or as soon as reasonably practicable thereafter~~Date. The Company based their enterprise value on projections which included higher capital expenditures to enhance the network and ~~continuing for five years,~~would result in ~~an aggregate amount equal to such claim, together with~~higher revenue and Earnings before taxes, interest, ~~at the applicable non-default contract rate under non-bankruptcy law;~~depreciation, and amortization (“EBTIDA”).



atManagement, with the ~~option~~assistance of its valuation advisors, estimated the enterprise value (“EV”) of the ~~applicable~~Successor Company, ~~Party, holders of claims entitled to priority in right of payment under section 507(a) of~~which was approved by the Bankruptcy ~~Code other than Administrative Claims or Priority Tax Claims (each as defined~~Court, using various valuation methodologies, including a Discounted Cash Flow analysis (DCF), the Guideline Public Company Method (GPCM), and the Guideline Transaction Method (GTM). Under the DCF analysis, the enterprise value was estimated by discounting the projections’ unlevered free cash flow by the Weighted Average Cost of Capital (WACC), the Company’s estimated rate of return. A terminal value was estimated by applying a Gordon Growth Model to the normalized level of cash flows in the ~~Plan) shall receive payment in full in~~terminal period. The Gordon Growth Model was based on the WACC and the perpetual growth rate, and the terminal value was added back to the discounted cash ~~or such other treatment rendering such claims unimpaired;~~flows.



~~claims arising under, derived from,~~Under the GPCM, the Company’s enterprise value was estimated by performing an analysis of publicly traded companies that operate in a similar industry. A range of Enterprise Value / EBITDA (EV/EBITDA) multiples were selected based on ~~or related~~the financial and operating attributes of Frontier relative to the comparable publicly traded companies. The selected range of multiples were applied to the Company’s ~~$850 million secured revolving credit facility maturing on February 27, 2024 (the Revolver) shall be repaid on or before~~forecasted EBITDA to estimate the ~~Effective Date, including payment of interest payments calculated at the non-default contract rate through the earlier~~enterprise value of the ~~Effective Date or repayment~~Company.

The GTM approach is similar to the GPCM, in that it relies on EV/EBITDA multiples but rather than of publicly traded companies, the multiples are based on precedent transactions. A range of multiples was derived by analyzing the operating and financial attributes of the ~~Revolver in full in cash (which shall include accrued but unpaid postpetition interest);~~acquired companies and the implied EV/EBITDA multiples. This range of multiples were then applied to the forecasted EBITDA of the Company to arrive an enterprise value.

claims arising under, derived from, based on, or related to the JPM Credit Agreement shall be repaid on or before the Effective Date or reinstated on the Effective Date solely in the event that financing to repay such claims cannot be obtained, including payment of interest payments calculated at the non-default contract rate through the earlier of the Effective Date or repayment of Frontier’s $1,740 million senior secured Term Loan B facility (the Term Loan B) maturing on June 15, 2024 in full in cash (which shall include accrued but unpaid postpetition interest);

claims arising under, derived from, based on, or related to the Original First Lien Notes, issued pursuant to the indenture, dated as of March 15, 2019, by and among the Company, as issuer, the subsidiary guarantors party thereto, JPMorgan Chase Bank, N.A. (JPM), as collateral agent, and Wilmington Trust, National Association, as successor trustee, shall be repaid on or before the Effective Date or reinstated on the Effective Date, including payment of interest payments calculated at the non-default contract rate through the earlier of the Effective Date or repayment of the Original First Lien Notes in full in cash (which shall provide for the payment of accrued but unpaid postpetition interest);

claims arising under, derived from, based on, or related to the Original Second Lien Notes, issued pursuant to that certain indenture, dated as of March 19, 2018, by and among the Company, as issuer, the

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~subsidiary guarantors party thereto, and Wilmington Savings Fund Society FSB,~~The following table reconciles the enterprise value to the estimated fair value of the Successor common stock as ~~successor trustee and successor collateral agent (the Original Second Lien Notes Trustee), shall be repaid on or before~~of the Effective ~~Date or reinstated on~~Date:



($ in millions and shares in thousands, except per share data)

Enterprise value	$	12,500
Plus: Cash and cash equivalents and restricted cash		940
Less: Fair value of debt and other liabilities		(7,267)
Less: Pension and other postretirement benefits		(1,774)
Less: Deferred tax liability		(291)
Fair value of Successor stockholders’ equity	$	4,108
Shares issued upon emergence		244,401
Per share value	$	17

The reconciliation of the ~~Effective Date, including payment of interest payments calculated at the non-default contract rate~~Company’s enterprise value to reorganization value as ~~required through the earlier~~ of the Effective Date ~~or repayment of the Original Second Lien Notes in full in cash (which shall provide for the payment of accrued but unpaid postpetition interest);~~

claims arising under, derived from, based on or related to (a) the 8.500% secured notes due November 15, 2031, issued by Frontier Southwest Incorporated pursuant to the Restated Indenture, dated June 1, 1940, by and among Frontier Southwest Incorporated,is as issuer, and BOKF, NA, as successor trustee, and (b) Rural Utilities Service loan contracts due January 3, 2028 (collectively, the Subsidiary Secured Notes) shall be reinstated on the Effective Date, with holders of such claims receiving ordinary course cash interest payments at the applicable non-default contract rate through the Effective Date;

claims arising under, derived from, based on or related to the 6.750% unsecured notes due May 15, 2027 issued by Frontier California Inc., the 6.860% unsecured notes due February 1, 2028 issued by Frontier Florida LLC, the 6.730% unsecured notes due February 15, 2028 issued by Frontier North Inc., the 8.400% unsecured notes due October 15, 2029 issued by Frontier West Virginia Inc. and the applicable indentures, debentures and purchase agreements associated therewith shall be reinstated on the Effective Date, with holders of such claims receiving ordinary course cash interest payments at the applicable non-default contract rate through the Effective Date;

holders of claims arising under, derived from, based on, or related to the unsecured notes issued by the Company shall receive their (i) pro rata share of and interest in the Incremental Senior Notes Payment Amount (as defined in the Plan) and (ii) pro rata share of and interest in (after first reducing, for distribution purposes only, the amount of each such holder’s senior notes claim on a dollar-for-dollar basis by the amount of Incremental Senior Notes Payments, and solely to the extent actually paid): (a) 100% of the Reorganized Company’s new common stock, subject to dilution by the Reorganized Company’s management incentive plan; (b) the Takeback Debt, if any; and (c) the Surplus Cash (as defined in the Plan), if any;

to the extent not already satisfied during the Chapter 11 Cases, holders of certain other claims that are not secured shall receive: (i) payment in full in cash; (ii) reinstatement; or (iii) such other treatment rendering such claims unimpaired, in each case as reasonably acceptable to the Company Parties and the Required Consenting Noteholders;

holders of secured claims (other than claims arising under, derived from, based on or related to the Revolver, the Term Loan B, the Original First Lien Notes, the Original Second Lien Notes, the Subsidiary Secured Notes, the Secured Tax Claims or DIP Facilities) shall receive, at the option of the applicable Company Party: (i) payment in full in cash, (ii) reinstatement; (iii) delivery of the collateral securing such claim; or (iv) such other treatment rendering such claim unimpaired;

~~claims subject to subordination under section 510(b) of the Bankruptcy Code shall be cancelled, released, discharged, and extinguished;~~

~~all intercompany claims and intercompany interests shall be either (a) reinstated or (b) cancelled on the Effective Date; and~~

~~all equity securities in the Company shall be cancelled, released and extinguished on the Effective Date.~~follows:

~~For more information on the repayment of the Revolver, the Original First Lien Notes, the Original Second Lien Notes and the Term Loan B, see Note 10.~~



($ in millions)

Enterprise value	$	12,500
Plus: Cash and cash equivalents and restricted cash		940
Plus: Current liabilities (excluding debt, finance leases, and non-operating liabilities)		1,179
Plus: Long term liabilities (excluding debt, finance leases, deferred tax liability)		307
Reorganization value	$	14,926

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~Secured Creditor Settlement~~

The ~~Plan will effectuate~~adjustments set forth in the ~~settlement, release, compromise, discharge, and other resolution of all outstanding claims, interests, and causes of action, including~~following unaudited Consolidated Balance Sheet reflect the ~~Objection~~consummation of the ~~Ad Hoc First Lien Committee to~~transactions contemplated by the ~~Debtors’ Third Amended Joint~~ Plan ~~of Reorganization Pursuant to Chapter 11~~(reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the ~~Bankruptcy Code [Docket No. 857],~~adoption of fresh start accounting (reflected in the Objection of the Original Second Lien Notes Trustee to the Debtors’ Third Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 858], and the Second Lien Committee’s Joinder to the Original Second Lien Notes Trustee’s Objection [Docket No. 860], as between the Company Parties, the ad hoc committee of certain unaffiliated holders of Term Loan B claims and Original First Lien Notes claims (the First Lien Committee) represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP and PJT Partners LP, the Original Second Lien Notes Trustee, and the ad hoc committee of certain unaffiliated holders of Original Second Lien Notes claims represented by Quinn Emanuel Urquhart & Sullivan, LLP (the Second Lien Committee) (such settlement, the Secured Creditor Settlement)column “Fresh Start Adjustments”). ~~The Secured Creditor Settlement includes, among other terms and subject to certain conditions, the following key terms:~~

~~holders~~The following table reflects the preliminary reorganization and application of Term Loan B claims, Original First Lien Notes claims, and Original Second Lien Notes claims, and the First Lien Committee and Second Lien Committee, shall be deemed to have consented to reinstatement and shall not allege, and shall be deemed to have waived and foregone any objections to, any defaults arising from the transactions set forth in the Plan;

holders of Term Loan B claims, Original First Lien Notes claims, and Original Second Lien Notes claims, and the First Lien Committee and Second Lien Committee shall be deemed to have consented to and shall not impede or otherwise delay the Debtors’ pursuit of certain debtor in possession/exit financing facilities;

holders of Term Loan B claims, Original First Lien Notes claims, and Original Second Lien Notes claims, and the First Lien Committee and Second Lien Committee, shall waive and forgo any and all “make-whole” claims and claims to default interest under the JPM Credit Agreement, the Original First Lien Notes indenture, and/or the Original Second Lien Notes indenture, as applicable;

holders of Revolver claims, Term Loan B claims, Original First Lien Notes claims (including the First Lien Committee), the applicable agents, and the Original First Lien Notes trustee shall be deemed to have waived any enforcement of any turnover or payment over rights under the Junior Lien Intercreditor and Subordination Agreement, datedASC 852 on our consolidated balance sheet as of ~~March 19, 2018, against the Debtors, Second Lien Notes Trustee, or holders of Original Second Lien Notes claims with respect to certain obligations and amounts;~~

the Company Parties shall make a $48 million payment to holders of Term Loan B claims, a $9 million payment for the benefit of holders of Original First Lien Notes claims, and, in the event that the Effective Date occurs on or after March 31, 2021, an incremental payment of $8 million to holders of Term Loan B claims, subject to the provisions and conditions of the Plan with respect to such payments;

the Company Parties or the Reorganized Company Parties, as applicable, shall pay in full in cash all reasonable First Lien Committee fees and Second Lien Committee fees that are due and owing under the applicable engagement letters; and

all adequate protection currently in effect shall remain in effect until entry of a final adequate protection order and, upon the Company Parties’ entry into any DIP Facilities, the Bankruptcy Court shall enter a final adequate protection order granting, among other things, adequate protection to secured creditors in the form of (i) liens and claims on all collateral securing any future DIP Facilities, and (ii) cash payments in the amount of accrued interest.April 30, 2021:



	(Unaudited)								(Unaudited)
($ in millions)	Predecessor		Reorganization			Fresh Start			Successor
	April 30, 2021		Adjustments			Adjustments			April 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	2,059	$	(1,169)	(1)	$	-		$	890
Accounts receivable, net		516		-			-			516
Contract acquisition costs		91		-			(91)	(8)		-
Prepaid expenses		92		-			-			92
Income taxes and other current assets		45		-			(3)	(8)		42
Total current assets		2,803		(1,169)			(94)			1,540

Property, plant and equipment, net		13,020		-			(4,473)	(9)		8,547
Other intangibles, net		578		-			3,863	(10)		4,441
Other assets		526		(8)	(1)		(120)	(8)(11)		398
Total assets	$	16,927	$	(1,177)		$	(824)		$	14,926

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Long-term debt due within one year	$	5,782	$	(5,767)	(3)	$	-		$	15
Accounts payable		518		(6)	(2)		-			512
Advanced billings		208		-			-			208
Accrued other taxes		185		-			-			185
Accrued interest		81		(1)	(2)		-			80
Pension and other postretirement benefits		48		-			-			48
Other current liabilities		309		53	(2)		(36)	(11)		326
Total current liabilities		7,131		(5,721)			(36)			1,374

Deferred income taxes		389		70	(14)		(168)	(14)		291
Pension and other postretirement benefits		2,163		-			(437)	(13)		1,726
Other liabilities		440		-			(28)	(11)		412
Long-term debt		-		6,738	(3)		277	(12)		7,015
Total liabilities not subject to compromise		10,123		1,087			(392)			10,818
Liabilities subject to compromise		11,570		(11,570)	(7)		-			-
Total liabilities		21,693		(10,483)			(392)			10,818

Equity (Deficit):
Shareholders' equity of Frontier:
Successor common stock		-		2	(5)		-			2
Predecessor common stock		27		(27)	(4)		-			-
Successor additional paid-in capital		-		4,106	(5)		-			4,106
Predecessor additional paid-in capital		4,818		(4,818)	(4)		-			-
Retained earnings (deficit)		(8,855)		10,028	(6)		(1,173)	(15)		-
Accumulated other comprehensive income (loss), net of tax		(741)		-			741	(16)		-
Treasury common stock		(15)		15	(4)		-			-
Total equity (deficit)		(4,766)		9,306			(432)			4,108
Total liabilities and equity (deficit)	$	16,927	$	(1,177)		$	(824)		$	14,926

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
(Unaudited)

~~DIP Financing~~

As previously disclosed, prior to the commencement of the Chapter 11 Cases, the Company and certain of its domestic subsidiaries entered into that certain Commitment Letter, dated April 14, 2020 (as amended by that certain Letter Agreement, dated April 28, 2020, by that certain Letter Agreement, dated May 12, 2020, by that certain Letter Agreement, dated June 10, 2020, by that certain Letter Agreement, dated June 29, 2020 and as further amended, modified or supplemented from time to time, the Original Commitment Letter) with Goldman Sachs Bank USA (GS Bank), Deutsche Bank AG New York Branch (DBNY), Deutsche Bank Securities Inc. (DBSI and, collectively with DBNY, DB), Barclays Bank PLC (Barclays), Morgan Stanley Senior Funding, Inc. (MSSF), Credit Suisse AG, Cayman Islands Branch (CS) and Credit Suisse Loan Funding LLC (CSLF and, together with CS and their respective affiliates, Credit Suisse, and together with GS Bank, DB, Barclays and MSSF, the Original Commitment Parties), pursuant to which, and subject to the satisfaction of certain customary conditions, including the approval of the Bankruptcy Court, GS Bank, DBNY, Barclays, MSSF and CS committed to provide a portion of the senior secured superpriority revolving credit facility in an aggregate principal amount of $460 million, which, upon satisfaction of certain conditions, including the effectiveness of the Plan, would convert into a longer term revolving exit facility. The Original Commitment Letter lapsed in accordance with its terms.

The Company and certain of its domestic subsidiaries entered into a Commitment Letter, dated August 13, 2020, with the Original Commitment Parties, which was amended and restated by that certain Amended and Restated Commitment Letter, dated August 28, 2020, with the Original Commitment Parties and JPM (collectively, the New Commitment Parties), pursuant to which, and subject to the satisfaction of certain customary conditions, including the approval of the Bankruptcy Court, GS Bank, JPM, DBNY, MSSF and CS committed to provide a portion of the $625 million debtor-in-possession (DIP) revolving facility (the DIP Revolving Facility), which, upon satisfaction of certain conditions, including the effectiveness of the Plan, would convert into a revolving exit facility maturing four years from the emergence date.

The Company and certain of its domestic subsidiaries also entered into that certain Engagement Letter, dated August 14, 2020, with GS Bank, which was amended and restated by that certain Amended and Restated Engagement Letter, dated August 28, 2020 with the New Commitment Parties, in connection with the DIP term loan facility, which, upon satisfaction of certain conditions, including the effectiveness of the Plan, would convert into a term loan exit facility.

On August 28, 2020, the Company Parties filed a motion (the DIP Financing Motion) with the Bankruptcy Court to approve (i) the indentures, credit, guarantee and security documents governing the obligations under senior secured superpriority first lien and/or second lien notes to be issued by the Company or an affiliate thereof, (ii) a DIP revolving facility and the exit revolving facility (the Exit Revolving Facility) it would convert into upon satisfaction of certain conditions, including the effectiveness of the Plan, (iii) a DIP term loan facility and the exit term loan facility it would convert into upon satisfaction of certain conditions, including the effectiveness of the Plan (the Exit Term Loan Facility) and, (iv) if applicable, the reinstated Term Loan B (collectively, the DIP Financing). On September 17, 2020, the Bankruptcy Court entered the final order approving the DIP Financing Motion.

In connection with the DIP Financing, on October 8, 2020, the Company issued $1,150 million aggregate principal amount of 5.875% First Lien Secured Notes due October 15, 2027 (the First Lien Notes due October 2027), and entered into a $625 million DIP Revolving Facility and a $500 million DIP term loan facility (the Initial DIP Term Loan Facility). The Company used the proceeds from the offering of the New First Lien Notes due October 2027, together with the proceeds of the Initial DIP Term Loan Facility and cash on hand, to (i) repay in full our prepetition of $1,650 million aggregate principal amount of the Original First Lien Notes and (ii) pay related interest, fees and expenses.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

Also in connection with the DIP Financing, on November 25, 2020, the Company issued $1,550 million aggregate principal amount of 5.000% First Lien Secured Notes due May 1, 2028 (the First Lien Notes due May 2028 and, together with the First Lien Notes due October 2027, the New First Lien Notes) and $1,000 million aggregate principal amount of 6.750% Second Lien Secured Notes due May 1, 2029 (the New Second Lien Notes), and borrowed an incremental $750 million under the DIP term loan facility (the Incremental DIP Term Loan Facility and, together with the Initial DIP Term Loan Facility, the DIP Term Loan Facility). The Company used the proceeds from these issuances and the incremental term loan borrowing, together with cash on hand to (i) repay all outstanding borrowings under our prepetition Term Loan B, (ii) repay in full the $1,600 million aggregate principal amount of our prepetition 8.500% Second Lien Secured Notes due April 1, 2026 (the Original Second Lien Notes), and (iii) pay related interest, fees and expenses incurred in connection therewith.

~~For more information about the DIP Financing and subsequent events related thereto, refer to Note 10 and Note 19.~~

~~Regulatory Approvals~~

As set forth in the Plan and the Disclosure Statement, in order to implement the restructuring contemplated by the Plan, the Company Parties must satisfy several conditions after confirmation of the Plan but prior to emergence from Chapter 11. Among other things, the Company Parties must obtain requisite regulatory approvals, including FCC and required PUC approvals in certain states. The Company is also the subject of ongoing investigations and reviews, which may lead to the imposition of financial sanctions and/or operational restrictions.

As previously announced, as of April 15, 2021, the Company had received PUC approvals or favorable determinations from all required states. In connection with the approvals, the FCC and certain state PUCs imposed conditions on the approval of the Restructuring Transactions, including commitments to make significant capital and operational expenditures, deploy broadband facilities and improve services.

~~Executory Contracts~~

Subject to certain exceptions, under the Bankruptcy Code, the Company Parties may assume, amend, or reject certain executory contracts and unexpired leases with respect to their operations with the approval of the Bankruptcy Court. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Company Parties from performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Generally, the assumption of an executory contract or unexpired lease requires the Company Parties to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with the Company Parties in this document, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease of the Company Parties, is qualified by any overriding rejection rights the Company has under the Bankruptcy Code.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

(Unaudited)

Reorganization ~~Items and Liabilities Subject to Compromise~~Adjustments

Effective on April 14, 2020, we began to apply the provisions of ASC 852, Reorganizations (ASC 852), which is applicable to companies under bankruptcy protection, and requires amendments to the presentation of certain financial statement line items. ASC 852 requires that the financial statements for periods including and after the filing of the Chapter 11 Cases distinguish transactions and events that are directly associatedIn accordance with the ~~Restructuring from~~Plan of Reorganization, the ongoing operations of the business. Expenses (including professional fees), realized gains and losses, and provisions for losses that can be directly associated with the Restructuring must be reported separately as reorganization items, net in the consolidated statements of operations beginning April 14, 2020, the date of filing of the Chapter 11 Cases. Liabilities that may be affected by the Plan must be reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts as a result of the Plan or negotiations with creditors. The amounts currently classified as liabilities subject to compromise may be subject to futurefollowing adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determinations of secured status of certain claims, the values of any collateral securing such claims, or other events. Any resulting changes in classification will be reflected in subsequent financial statements. If there is uncertainty about whether a secured claim is undersecured, or will be impaired under the Plan, the entire amount of the claim is included with prepetition claims in Liabilities subject to compromise.were made:

~~As a result~~(1) Reflects net cash payments as of the ~~filing~~Effective Date from implementation of the Chapter 11 Cases on April 14, 2020, the classification of pre-petition indebtedness is generally subject to compromise pursuant to the Plan. Generally, actions to enforce or otherwise effect payment of pre-bankruptcy filing liabilities are stayed. Although payment of pre-petition claims generally is not permitted, the Bankruptcy Court granted the Company Parties authority to pay certain pre-petition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of the Company Parties’ businesses and assets. Among other things, the Bankruptcy Court authorized the Company Parties’ to pay certain pre-petition claims relating to employee wages and benefits, taxes and critical vendors. The Company Parties are paying and intend to pay undisputed post-petition liabilities in the ordinary course of business. In addition, the Company Parties may reject certain pre-petition executory contracts and unexpired leases with respect to their operations with the approval of the Bankruptcy Court. Any damages resulting from the rejection of executory contracts and unexpired leases are treatedPlan as ~~general unsecured claims.~~follows:

The accompanying unaudited condensed consolidated balance sheet as of March 31, 2021 includes amounts classified as Liabilities subject to compromise, which represent liabilities the Company anticipates will be allowed as claims in the Chapter 11 Cases. These amounts represent the Company's current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases and may differ from actual future settlement amounts paid. Differences between liabilities estimated and claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~Liabilities subject to compromise consisted of the following:~~



($ in millions)		~~March 31, 2021~~

~~Accounts payable~~Sources:
Net proceeds from Incremental Exit Term Loan Facility	$	65220
~~Other current liabilities~~Release of restricted cash from other assets to cash		598
~~Accounts payable, and other current liabilities~~Total sources		~~124~~228

~~Debt subject to compromise~~		~~10,949~~
~~Accrued interest on debt subject to compromise~~		~~497~~
~~Long-term debt and accrued interest~~		~~11,446~~
Uses:
~~Liabilities subject~~Payments of Excess to ~~compromise~~Unsecured senior notes holders		(1,313)
Payments of pre-petition accounts payable and contract cure payments		(62)
Payments of professional fees and other bankruptcy related costs		(22)
Total uses		(1,397)
Net uses of cash	$	~~11,570~~ (1,169)

~~Determination~~

(2) Reflects the reinstatement of accounts payable and accrued expenses upon emergence, as well as payments made on the value at which liabilities will ultimately be settled cannot be made until the Plan becomes effective and the Company emerges from bankruptcy. The Company will continue to evaluate and adjust the amount and classification of its pre-petition liabilities. Such adjustments may be material. Any additional liabilities that are subject to compromise will be recognized accordingly, and the aggregate amount of Liabilities subject to compromise may change.Effective Date.

~~As set forth in~~(3) Reflects the ~~Plan, “Excess Cash” is~~conversion of our DIP-to-Exit term loan facility, DIP-to-Exit First Lien Notes, and DIP-to-Exit Second Lien Notes. Also represent the ~~amount of estimated unrestricted balance sheet cash in excess of $150 million at the Effective Date, and includes net after-tax cash proceeds from the sale~~reclassification of the ~~Northwest Operations (which amount~~debt from current liabilities during bankruptcy to ~~$1,129 million). As disclosed in~~non-current liabilities based on the ~~Debtors’ Plan Supplement, filed on March 1, 2021, the Debtors currently estimate $1,313 million of Excess Cash to be available as~~maturity of the ~~Effective Date. As set forth in~~debt recorded by the Plan, on the Effective Date, each of the Debtors’ senior noteholders shall receive, among other things, its Pro Rata share of and interest in the Debtors’ “Surplus Cash.” Under the Plan, the “Incremental Senior Notes Payments” will be made from Excess Cash, prior to the determination of, and distribution of, Surplus Cash.Company.

~~Reorganization items incurred as a result~~(4) Reflects the cancellation of Predecessor common stock, additional paid in capital and treasury stock.

(5) Reflects the ~~Chapter 11 Cases presented separately~~issuance of Successor common stock and additional paid in capital to the ~~accompanying consolidated statements~~unsecured senior note holders.

(6) Reflects the cumulative impact of ~~operations were as follows:~~reorganization adjustments.


			~~For the three months ended~~
($ in millions)

Gain on settlement of Liabilities Subject to Compromise	$	5,274
Cancellation of Predecessor equity		4,754

Net impact on accumulated deficit	$	10,028

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(7) As part of the Plan of Reorganization, the Bankruptcy Court approved the settlement of claims reported within Liabilities subject to compromise in the Company’s Consolidated balance sheet at their respective allowed claim amounts.

The table below indicates the disposition of Liabilities subject to compromise:



	($ in millions)
~~March 31, 2021~~
	Liabilities subject to compromise pre-emergence	$	11,570

	Reinstated on the Effective Date:
	~~Professional fees and other bankruptcy related costs~~Accounts payable			$	25 (66)
	~~Reorganization items, net~~Other current liabilities			$(59)
25	Less: total liabilities reinstated		(125)

	Amounts settled per the Plan of Reorganization
	Issuance of take back debt		(750)
	Payment for settlement of unsecured senior noteholders		(1,313)
	Equity issued at emergence to unsecured senior noteholders		(4,108)
	Total amounts settled		(6,171)

	Gain on settlement of Liabilities Subject to Compromise	$	5,274

~~The Company has incurred significant costs associated~~Fresh Start Adjustments

In accordance with the ~~reorganization, primarily legal~~application of Fresh Start accounting, the following adjustments were made:

(8)Reflects unamortized deferred commissions paid to acquire new customers that are eliminated upon emergence as this is not a probable future benefit for the Successor. Costs to obtain customers have been reflected as part of intangible assets. Adjustment also reflects the elimination of certain contract assets and ~~professional fees. Subsequent~~contract liabilities.

(9)Property Plant & Equipment – Reflects the decrease in net book value of property and equipment to the ~~Petition Date, these costs were expensed~~estimated fair value as ~~incurred~~of the Effective Date.

Personal property valued consisted of outside and ~~significantly affected~~inside plant network equipment, computers and software, vehicles, office furniture, fixtures and equipment, computers and software, and construction-in-progress. The fair value of our ~~consolidated results~~personal property was estimated using the cost approach, while the income approach was considered to assess economic sufficiency to support asset values. As a part of ~~operations.~~the valuation process, the third-party advisors’ diligence procedures included using internal data to identify and value assets.

Real property valued consisted of land, buildings, and leasehold improvements. The fair value was estimated using the cost approach and sales comparison (market) approach, with consideration of economic sufficiency to support certain asset values.

2119

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~Emergence~~The following table summarizes the components of property and ~~Fresh Start Accounting~~equipment, net as of April 30, 2021, and the fair value as of the Effective Date:


	Predecessor		Fair Value			Successor
($ in millions)	Historical Value		Adjustment			Fair Value

Land	$	209	$	40	$	249
Buildings and leasehold improvements		2,134		(958)		1,176
General support		1,635		(1,462)		173
Central office/electronic circuit equipment		8,333		(7,364)		969
Poles		1,359		(843)		516
Cable, fiber and wire		11,824		(8,755)		3,069
Conduit		1,611		(282)		1,329
Construction work in progress		1,048		18		1,066
Property, plant and equipment	$	28,153	$	(19,606)	$	8,547
Less: Accumulated depreciation		(15,133)		15,133		-
Property, plant and equipment, net	$	13,020	$	(4,473)	$	8,547

(10)Reflects the fair value adjustment to recognize trademark, trade name and customer relationship.

For purposes of estimating the fair values of customer relationships, the Company utilized an Income Approach, specifically, the Multi-Period Excess Earnings method, or MPEEM. The MPEEM estimates fair value based on the present value of the incremental after-tax cash flows attributable only to the subject intangible assets after deducting contributory asset charges. The cash flows attributable to the customer relationships were adjusted for contributory asset charges related to the working capital, fixed assets, trade name/trademarks and assembled workforce. The discount rate utilized to present-value the after-tax cash flows was based on the overall weighted cost of capital of the Company as well as the asset specific risks of the intangible assets.

For purposes of estimating the fair value of trademarks and tradenames, an Income approach was used, specifically, the Relief from Royalty Method. The estimated royalty rates were historical third-party transactions regarding the licensing of similar type of assets as well as a review of historical assumptions used in prior transactions. The selected royalty rates were applied to the revenue generated by the trademarks and tradenames to determine the amount of royalty payments saved as a result of owning these assets. The forecasted cash flows were based on the Company’s projected revenues and the resulting royalty savings were discounted using a rate based on the overall weighted cost of capital of the Company as well as the asset specific risks of the intangible assets.

(11)Reflects the fair value adjustment to the right of use assets and lease liabilities. Upon application of fresh start accounting, the Company revalued its right-of-use assets and lease liabilities using the incremental borrowing rate applicable to the Company after emergence from bankruptcy ~~we expect~~and commensurate with its new capital structure. In addition, the Company decreased the right-of-use assets to ~~adopt fresh start accounting in accordance with ASC 852, Reorganizations. Under fresh start accounting rules, upon~~recognize $4 million related to the ~~Effective Date of~~unfavorable lease contracts.

(12)Reflects the ~~Plan (each as defined herein), our assets and liabilities would be adjusted to~~ fair value ~~and our accumulated deficit would be restated~~adjustment to ~~zero, which we expect will result in material adjustments to the recorded value~~adjust Long-term debt as of ~~certain of our assets and liabilities. As a result, we may incur higher depreciation and amortization expense following~~ the Effective Date. ~~In addition, we may adopt accounting policy changes~~This adjustment is to state the Company's debt at estimated fair values.

(13)Reflects a remeasurement of pension and Other Postretirement Benefits related accounts as part of fresh start accounting and such policies could result in material changes to our financial reporting and results. The actual impact of the application of fresh start accounting and any such accounting policy changes will be determined by management upon and following the Effective Date. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, we expect that our financial condition and results of operations following the emergence from Chapter 11 will not be comparable to the financial condition and results of operations reflected in our historical financial statements.considerations at emergence.

~~(4)~~

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(14)Reflects the impact of fresh start adjustments on deferred taxes. Frontier purchased the assets, including the stock of subsidiaries, of Frontier Communications Corporation (“Predecessor’s Parent”) at the time of emergence. The Predecessor’s Parent’s federal and state net operating loss carryforwards are expected to have been utilized as a result of the taxable gain realized upon emergence. To the extent not utilized to offset taxable gain, such net operating loss carryforwards are expected to be reduced in accordance with Section 108 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). As part of the taxable purchase, elections were made under Code section 338(h)(10) to step up the value of assets in certain subsidiaries to fair market value. All other subsidiaries carried over their deferred taxes. The adjustments reflect a $1.5 billion reduction in deferred tax assets for federal and state net operating loss carryforwards, a reduction in valuation allowance and a reduction in deferred tax liabilities.

(15)Reflects the cumulative impact of the fresh start adjustments as discussed above and the elimination of Predecessor accumulated earnings.

(16)Reflects the derecognition of accumulated other comprehensive loss.

(5) Revenue Recognition:

We categorize our products, services and other revenues into the following categories:

Data and Internet services include broadband services for ~~residential~~consumer and business customers. We provide data transmission services to high volume business customers and other carriers with dedicated high capacity circuits (“nonswitched access”) including services to wireless providers (wireless backhaul);

Voice services include traditional local and long-distance wireline services, Voice over Internet Protocol (VoIP) services, as well as a number of unified messaging services offered to our ~~residential~~consumer and business customers. Voice services also include the long-distance voice origination and termination services that we provide to our business customers and other carriers;

Video services include revenues generated from services provided directly to consumer customers as linear terrestrial television services, and through Dish^® satellite TV service;

Other customer revenue includes switched access revenue, sales of customer premise equipment to our business customers, rents collected for collocation services, and revenue from other services and fees. Switched access revenue includes revenues derived from allowing other carriers to use our network to originate and/or terminate their local and long-distance voice traffic (switched access). These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies; and

Subsidy and other regulatory revenue includes revenues generated from cost subsidies from state and federal authorities, including the Connect America Fund Phase II.

2221

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

The following tables provide a summary of revenues, by category. Prior year revenues in the following tables include revenues for the Northwest Operations for the three and six months ended ~~March 31,~~June 30, 2020 (prior to its disposal):



	Successor		Predecessor

	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Data and Internet services	$	556	$	283	$	874
Voice services		283		160		523
Video services		105		54		200
Other		62		30		108
Revenue from contracts with customers ⁽¹⁾		1,006		527		1,705
Subsidy and other revenue ⁽²⁾		55		28		96
Total revenue	$	1,061	$	555	$	1,801

	Successor		Predecessor

	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Consumer ⁽³⁾	$	543	$	283	$	904
Business and wholesale ⁽³⁾		463		244		801
Revenue from contracts with customers ⁽¹⁾		1,006		527		1,705
Subsidy and other revenue ⁽²⁾		55		28		96
Total revenue	$	1,061	$	555	$	1,801

	Successor		Predecessor

	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Data and Internet services	$	556	$	1,125	$	1,806
Voice services		283		647		1,095
Video services		105		223		422
Other		62		125		225
Revenue from contracts with customers ⁽¹⁾		1,006		2,120		3,548
Subsidy and other revenue ⁽²⁾		55		111		186
Total revenue	$	1,061	$	2,231	$	3,734

For the three months ended March 31,
($ in millions)
2021
2020
Data and Internet services
$
842
$
932
Voice services
487
572
Video services
169
222
Other
95
117
Revenue from contracts with customers ⁽¹⁾
1,593
1,843
Subsidy and other revenue
83
90
Total revenue
$
1,676
$
1,933
For the three months ended March 31,
($ in millions)
2021
2020
Consumer
$
844
$
971
Commercial
749
872
Revenue from contracts with customers ⁽¹⁾
1,593
1,843
Subsidy and other revenue
83
90
Total revenue
$
1,676
$
1,933

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

	Successor		Predecessor

	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Consumer ⁽³⁾	$	543	$	1,133	$	1,881
Business and wholesale ⁽³⁾		463		987		1,667
Revenue from contracts with customers ⁽¹⁾		1,006		2,120		3,548
Subsidy and other revenue ⁽²⁾		55		111		186
Total revenue	$	1,061	$	2,231	$	3,734

⁽¹⁾~~Includes approximately $16~~Lease revenue included in Revenue from contracts with customers was $11 million for the two months ended June 30, 2021, $5 million and $26 million for the one and four months ended April 30, 2021, respectively, and $17 million ~~of lease revenue~~and $34 million for the three and six months ended ~~March 31, 2021 and~~June 30, 2020, respectively.

⁽²⁾Includes $10 million in transition services revenue in connection with the divestiture of the Northwest Operations for the three and six months ended June 30, 2020.

⁽³⁾Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

The following is a summary of the changes in the contract assets and contract liabilities:



	Contract Assets				Contract Liabilities
($ in millions)	Current		Noncurrent		Current		Noncurrent

Balance at December 31, 2020 (Predecessor)	$	6	$	9	$	58	$	20
Revenue recognized included
in opening contract balance		(4)		-		(23)		(3)
Cash received, excluding amounts
recognized as revenue		-		-		22		2
Credits granted, excluding amounts
recognized as revenue		-		-		-		-
Reclassified between current
and concurrent		-		-		-		-
Balance at April 30, 2021 (Predecessor)	$	2	$	9	$	57	$	19
Fresh start accounting adjustments		(2)		(9)		(42)		(18)
Balance at April 30, 2021 (Predecessor)	$	-	$	-	$	15	$	1


Balance at April 30, 2021 (Successor)	$	-	$	-	$	15	$	1
Revenue recognized included
in opening contract balance		-		-		(4)		(1)
Cash received, excluding amounts
recognized as revenue		-		-		8		4
Credits granted, excluding amounts
recognized as revenue		-		-		-		-
Reclassified between current
and concurrent		-		-		(1)		1
Balance at June 30, 2021 (Successor)	$	-	$	-	$	18	$	5

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

	Contract Assets				Contract Liabilities
($ in millions)	Current		Noncurrent		Current		Noncurrent

Balance at December 31, 2019 (Predecessor)	$	37	$	8	$	41	$	21
Revenue recognized included
in opening contract balance		(18)		-		(33)		(7)
Cash received, excluding amounts
recognized as revenue		-		-		42		7
Credits granted, excluding amounts
recognized as revenue		1		-		-		-
Reclassified between current
and concurrent		-		-		1		(1)
Balance at June 30, 2020 (Predecessor)	$	20	$	8	$	51	$	20

The unsatisfied obligations for retail customers consist of amounts in advance billings, which are expected to be earned within by the following ismonthly billing cycle. Unsatisfied obligations for wholesale customers are based on a ~~summary~~point-in-time calculation and determined by the number of circuits provided and the ~~changes in the contract assets and contract liabilities:~~

Contract Assets
Contract Liabilities
($ in millions)
Current
Noncurrent
Current
Noncurrent
Balance at December 31, 2020
$
6
$
9
$
58
$
20
Revenue recognized included
in opening contract balance
(4)
-
(17)
(2)
Cash received, excluding amounts
recognized as revenue
-
-
17
1
Balance at March 31, 2021
$
2
$
9
$
58
$
19
Contract Assets
Contract Liabilities
($ in millions)
Current
Noncurrent
Current
Noncurrent
Balance at December 31, 2019
$
37
$
8
$
41
$
21
Revenue recognized included
in opening contract balance
(9)
-
(21)
(4)
Cash received, excluding amounts
recognized as revenue
-
-
25
5
Credits granted, excluding amounts
recognized as revenue
1
-
-
-
Reclassified between current
and noncurrent
-
-
1
(1)
Balance at March 31, 2020
$
29
$
8
$
46
$
21

~~Short-term contract assets, Long-term contract assets, Short-term contract liabilities, and Long-term contract liabilities~~contractual price. These wholesale customer obligations change from period to period based on new circuits added as well as circuits that are ~~included in other current assets, other assets, other current liabilities, and other liabilities, respectively, on our consolidated balance sheets.~~terminated.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period:

($ in millions)
Revenue from contracts with customers
2021 (remaining nine months)
$
1,091
2022
712
2023
316
2024
110
2025
62
Thereafter
128
Total
$
2,419


	Successor
($ in millions)	Revenue from contracts with customers
2021 (remaining six months)	$	546
2022		474
2023		291
2024		130
2025		77
Thereafter		126
Total	$	1,644

(6) Accounts Receivable:

The components of accounts receivable, net are as follows:



	Successor		Predecessor

($ in millions)	June 30, 2021		December 31, 2020

Retail and wholesale	$	447	$	608
Other		75		75
Less: Allowance for credit losses		(18)		(130)
Accounts receivable, net	$	504	$	553

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

(

As of April 30, 2021, the fair value of our net accounts receivable balances approximated their carrying values; therefore, no fair value adjustment for fresh start accounting was required. In estimating the fair values of receivables from certain of our wholesale customers, we evaluated ongoing billing disputes and the current status of settlement discussions. The final settlements with these customers may differ significantly from our estimates. See Note 5) ~~Accounts Receivable~~: for additional detail.

~~The components of accounts receivable, net are as follows~~:

($ in millions)
March 31, 2021
December 31, 2020

Retail and wholesale
$
592
$
608
Other
75
75
Less: Allowance for doubtful accounts
(148)
(130)
Accounts receivable, net
$
519
$
553

We maintain an allowance for ~~doubtful accounts~~credit losses based on the estimated ability to collect accounts receivable. The allowance for ~~doubtful accounts~~credit losses is increased by recording an expense for the provision for bad debts for retail customers, ~~by recording bad debt expense~~ and ~~for wholesale customers~~ through decreases to revenue at the time of ~~billing.~~billing for wholesale customers. The allowance is decreased when customer accounts are written off, or when customers are given credits.

The ~~ending balances~~provision for bad debts was $4 million and $14 million for the one and four months ended April 30, 2021, respectively, and $10 million and $24 million for the three and six months ended June 30, 2020, respectively.

In accordance with ASC 326, Frontier performs its calculation to estimate expected credit losses, utilizing rates that are consistent with the Company’s write offs (net of recoveries) because such events affect the entity’s loss given default experience.

Activity in the allowance ~~account~~for credit losses for the two months ended June 30, 2021 was as of March 31, 2021 and December 31, 2020 were elevated as a result of ongoing billing disputes with some of our wholesale customers. As of March 31, 2021, our accounts receivable balance included $128 million of disputed amounts that are expected to be settled in the short term. We have established $96 million in reserves related to these balances as well as other amounts that were previously paid, which reflects the current expected outcome from settlement negotiations.

~~Bad debt expense (credits), which is recorded as a reduction to revenue, is as follows~~:follows:

For the three months ended March 31,
($ in millions)
2021
2020
Bad debt expense
$
10
$
14



	Successor

($ in millions)

Balance at April 30, 2021	$	-
Provision for bad debt		(6)
Amounts charged to switched and
nonswitched revenue		(12)
Balance at June 30, 2021	$	(18)

~~(6)~~

(7) Property, Plant and Equipment:

Property, plant and equipment, net is as follows:

($ in millions)
March 31, 2021
December 31, 2020

Property, plant and equipment
$
28,040
$
27,695
Less: Accumulated depreciation
(15,053)
(14,764)
Property, plant and equipment, net
$
12,987
$
12,931


	Successor		Predecessor
($ in millions)	June 30, 2021		December 31, 2020

Property, plant and equipment	$	8,813	$	27,695
Less: Accumulated depreciation		(127)		(14,764)
Property, plant and equipment, net	$	8,686	$	12,931

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

As of April 30, 2021, as a result of fresh start accounting, we have adjusted our property, plant, and equipment balance to fair value. See Note 4 for additional information.

Depreciation expense is principally based on the composite group method. Depreciation expense was as follows:

For the three months ended March 31,
($ in millions)
2021
2020
Depreciation expense
$
308
$
316



	Successor		Predecessor

	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Depreciation expense	$	127	$	99	$	314

	Successor		Predecessor

	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Depreciation expense	$	127	$	407	$	630

We revised the estimated remaining useful lives for certain plant assets as of October 1, 2020, as a result of an annual independent study of the estimated remaining useful lives of our plant assets, with an insignificant impact to depreciation expense.

~~(7)~~(8) Other Intangibles:

The components of other intangibles ~~are~~ as of December 31, 2020 was follows:

March 31, 2021
December 31, 2020
Gross Carrying
Accumulated
Net Carrying
Gross Carrying
Accumulated
Net Carrying
($ in millions)
Amount
Amortization
Amount
Amount
Amortization
Amount

Other Intangibles:
Customer base
$
4,332
$
(3,856)
$
476
$
4,332
$
(3,781)
$
551
Trade name
122
-
122
122
-
122
Royalty agreement
72
(72)
-
72
(68)
4
Total other intangibles
$
4,526
$
(3,928)
$
598
$
4,526
$
(3,849)
$
677


	Predecessor
	December 31, 2020
	Gross Carrying		Accumulated		Net Carrying
($ in millions)	Amount		Amortization		Amount

Other Intangibles:
Customer base	$	4,332	$	(3,781)	$	551
Trade name		122		-		122
Royalty agreement		72		(68)		4
Total other intangibles	$	4,526	$	(3,849)	$	677

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

As a result of fresh start accounting, on the Effective Date, intangible assets and related accumulated amortization of the Predecessor were eliminated. Successor intangible assets were recorded at fair value as of the Effective Date. See Note 4. The balances of these assets as of June 30, 2021 are as follows:



	Successor
	June 30, 2021
	Gross Carrying		Accumulated		Net Carrying
($ in millions)	Amount		Amortization		Amount

Other Intangibles:
Customer Relationships - Business	$	800	$	(11)	$	789
Customer Relationships - Wholesale		3,491		(37)		3,454
Trademarks & Tradenames		150		(4)		146
Total other intangibles	$	4,441	$	(52)	$	4,389

Amortization expense was as follows:

For the three months ended
March 31,
($ in millions)
2021
2020
Amortization expense
$
79
$
99



	Successor		Predecessor

	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Amortization expense	$	52	$	20	$	83


	Successor		Predecessor

	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Amortization expense	$	52	$	99	$	182

~~Amortization~~For the Predecessor, amortization expense was primarily ~~represents the amortization of~~for our customer base acquired as a result of our acquisitions in 2010, 2014, and 2016 with each based on a useful life of 8 to 12 years and amortized on an accelerated method. Our ~~Trade~~trade name iswas an indefinite-lived intangible asset that iswas not subject to amortization.

Following our emergence from bankruptcy, we amortize

26 our intangible assets on a straight line basis, over the assigned useful lives of 16 years for our wholesale customer relationships, 11 years for our business customer relationships, and 5 years for our trademarks and tradenames.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~(8)~~(9) Divestiture of Northwest Operations:

On May 1, 2020, Old Frontier completed the sale of its Northwest Operations pursuant to the terms and conditions of the Purchase Agreement, dated as of May 28, 2019, for gross proceeds of $1,352 million, subject to certain closing adjustments. Net of funding certain pension and other retiree medical liabilities, funding of indebtedness, funding certain escrows and other closing adjustments, we received $1,131 million in proceeds.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

A portion of the proceeds from the sale ~~are~~were held in escrow as recourse for indemnity claims that may arise under the purchase agreement for a period of one year after the sale completion date. AsDuring the first and second quarter of ~~March 31,~~2021, all proceeds previously held in escrow related to indemnification liabilities, employee liabilities, and adjustments to working capital were received by the Company and as of June 30, 2021, there ~~were $27 million of~~are no remaining proceeds held in escrow accounts included in Other current assets. The amounts in escrow will be reviewed and unclaimed amounts released after one year from the completion of the sale. Proceeds previously held in escrow related to employee liabilities of $25 million and adjustments to working capital of $5 million were received by the Company in the first quarter of 2021.

In connection with the sale, Frontier entered into an agreement to perform certain transition services for the purchaser. The first six months of these services were generally being provided at no additional cost to the purchaser as a condition of the transaction. The fair value of these transition services was estimated to be $30 million and were recorded as a deferred liability (recorded within the Advanced Billing financial statement caption in the balance sheet) in connection with the transaction, which amount was amortized to other revenue as the related services were delivered. Effective October 31, 2020, the purchaser terminated all future services that Frontier would have provided and received compensation under this agreement. In connection with the termination, Frontier agreed to provide limited training and subject matter support services for a fee primarily during the fourth quarter of 2020.

The Northwest Operations were included in Frontier’s continuing operations and ~~classified~~designated as assets held for sale and liabilities related to assets held for ~~sale~~sale. Effective with the designation as held-for-sale on ~~our consolidated balance sheets through the completion~~May 28, 2019, we discontinued recording depreciation on Property, Plant and Equipment and finite-lived intangible assets of this business as required by GAAP. Upon closing of the transaction on May 1, ~~2020.~~ ~~As a result of the closing of the transaction,~~2020, we derecognized net assets of $1,132 million, including property, plant, and equipment of $1,084 million, goodwill of $658 million, a $603 million valuation allowance on our assets held for sale, and $150 million of defined benefit pension and other postretirement benefit plan obligations, net of transferred pension plan assets.

This transaction did not represent a strategic shift for Frontier; therefore, it did not meet the criteria to be classified as a discontinued operation. Effective with the designation as held-for-sale on May 28, 2019, we discontinued recording depreciation on Property, Plant and Equipment and finite-lived intangible assets of this business as required by GAAP.

During the three and six months ended ~~March 31,~~June 30, 2020, Frontier recorded a loss on disposal of ~~$24~~$136 million and $160 million, associated with the sale of the Northwest Operations.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~(9)~~(10) Fair Value of Financial Instruments:

The following table summarizes the carrying amounts and estimated fair values for long-term debt at ~~March 31,~~June 30, 2021 and December 31, 2020. For the other financial instruments including cash, accounts receivable, restricted cash, accounts payable and other current liabilities, the carrying amounts approximate fair value due to the relatively short maturities of those instruments.

The fair value of our long-term debt ~~(including $10,949 million of debt classified in Liabilities subject to compromise at March 31, 2021)~~ is estimated based upon quoted market prices at the reporting date for those financial instruments.

March 31, 2021
December 31, 2020
($ in millions)
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Total debt
$
16,769
$
13,354
$
16,769
$
11,635

(

~~(10)~~ ~~Long-Term Debt~~:

~~The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of~~In applying fresh start accounting, our then-outstanding obligations under the JPM Credit Agreement, the Original First Lien Notes, the Original Second Lien Notes, our unsecured notes and debentures and the secured and unsecured debentures of our subsidiaries. As such we have reclassified certain subsidiary unsecured and certain secured debt obligations ~~to Long term debt due within one year and certain parent unsecured debt obligations to Liabilities subject to compromise~~were recognized at fair value on our consolidated balance sheet as of March 31, 2021. While this reclassification includes all of our debt, the Restructuring Support Agreement contemplates agreed-upon terms for a pre-arranged financial restructuring Plan that leaves unimpaired all holders of secured debt and subsidiary debt. Among other things, the Restructuring Support Agreement provides that holders of our secured debt will be entitled to receive cash interest payments and to have the principal amount of their indebtedness repaid or reinstated upon emergence and that holders of secured and unsecured debt of our subsidiaries will be entitled to receive cash interest payments and to have the principal amount of their indebtedness reinstated upon emergence.April 30, 2021, as described further in Note 4.

Pursuant to Section 362 of the Bankruptcy Code, the filing of the Chapter 11 Cases automatically stayed most actions against or on behalf of the Company Parties, including actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Company Parties’ property.



	Successor				Predecessor
	June 30, 2021				December 31, 2020

($ in millions)		Carrying Amount		Fair Value		Carrying Amount		Fair Value

Total debt	$	7,022	$	7,105	$	16,769	$	11,635

~~For information related to the court approved and confirmed plan of reorganization, the Chapter 11 Cases, the Plan and the DIP Financing, refer to Note 3.~~(

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

(11) Long-Term Debt:

Chapter 11 Restructuring

The ~~activity in our long-term~~filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all then-outstanding obligations under Old Frontier’s debt ~~is summarized~~agreements and notes as follows:



For the three months ended
‎March 31, 2021

Principal
Interest Rate at
January 1,
Payments
New
March 31,
March 31,
($ in millions)
2021
and Retirements
Borrowings
2021
2021*





Secured debt issued by Frontier
$
4,964
$
-
$
-
$
4,964
5.75%
Unsecured debt issued by Frontier
10,949
-
-
10,949
9.19%
Secured debt issued by subsidiaries
106
-
-
106
8.37%
Unsecured debt issued by subsidiaries
750
-
-
750
6.90%
Debt prior to reclassification to
liabilities subject to compromise
$
16,769
$
-
$
-
$
16,769
8.07%






Less: Debt Issuance Costs
-

-
Less: Debt Discount
(39)
(38)
Debt, less unamortized debt
issuance costs and discounts
16,730
16,731
Less: Current Portion
(5,781)

(5,782)
Less: Debt subject to compromise
(10,949)
(10,949)
Total Long-term debt
$
-

$
-

the amended and restated credit agreement, dated as of February 27, 2017 (as amended, the JPM Credit Agreement),

* Interest rate includes amortizationthe 8.000% first lien secured notes due April 1, 2027 (the Original First Lien Notes),

the 8.500% second lien secured notes due April 1, 2026 (the Original Second Lien Notes),

the unsecured notes and debentures and the secured and unsecured debentures of ~~debt issuance costs and debt discounts. The interest rates at March 31, 2021 represent a weighted average of multiple issuances.~~the Company’s subsidiaries.

As of the Effective Date, amounts that were outstanding under the JPM Credit Agreement, the Original First Lien Notes, and the Original Second Lien Notes have been repaid in full.

On the Effective Date, pursuant to the terms of the Plan, all of the obligations under Old Frontier’s unsecured senior note indentures were cancelled, and in connection with emergence, Frontier issued 244,401,000 shares of common stock that were transferred to holders of the allowed senior notes claims (as defined under the Plan).

Interest expense for the one and four months ended April 30, 2021 recorded on our Predecessor statements of operations was lower than contractual interest of $112 million and $450 million, respectively, because we ceased accruing interest on the Petition Date in accordance with the terms of the Plan and ASC Topic 852.

Interest expense for the three and six months ended June 30, 2020 recorded on our Predecessor statements of operations was lower than contractual interest of $372 million and $744 million, respectively, because we ceased accruing interest on the Petition Date in accordance with the terms of the Plan and ASC Topic 852.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~Additional information regarding~~The activity in our ~~secured and unsecured~~ long-term debt ~~as of March 31, 2021 and December 31, 2020~~ is summarized as follows:

March 31, 2021
December 31, 2020
Principal
Interest
Principal
Interest
($ in millions)
Outstanding
Rate
Outstanding
Rate
Secured debt issued by Frontier
DIP-to-Exit term loan due 10/8/2027
$
1,250
5.750% (Variable)
$
1,250
5.750% (Variable)
DIP-to-Exit First lien notes due 10/15/2027
1,150
5.875%
1,150
5.875%
DIP-to-Exit First lien notes due 5/1/2028
1,550
5.000%
1,550
5.000%
DIP-to-Exit Second lien notes due 5/1/2029
1,000
6.750%
1,000
6.750%
IDRB due 5/1/2030
14
6.200%
14
6.200%
Secured debt issued by Frontier
4,964
4,964
Unsecured debt issued by Frontier
Senior notes due 4/15/2020
172
8.500%
172
8.500%
Senior notes due 9/15/2020
55
8.875%
55
8.875%
Senior notes due 7/1/2021
89
9.250%
89
9.250%
Senior notes due 9/15/2021
220
6.250%
220
6.250%
Senior notes due 4/15/2022
500
8.750%
500
8.750%
Senior notes due 9/15/2022
2,188
10.500%
2,188
10.500%
Senior notes due 1/15/2023
850
7.125%
850
7.125%
Senior notes due 4/15/2024
750
7.625%
750
7.625%
Senior notes due 1/15/2025
775
6.875%
775
6.875%
Senior notes due 9/15/2025
3,600
11.000%
3,600
11.000%
Debentures due 11/1/2025
138
7.000%
138
7.000%
Debentures due 8/15/2026
2
6.800%
2
6.800%
Senior notes due 1/15/2027
346
7.875%
346
7.875%
Senior notes due 8/15/2031
945
9.000%
945
9.000%
Debentures due 10/1/2034
1
7.680%
1
7.680%
Debentures due 7/1/2035
125
7.450%
125
7.450%
Debentures due 10/1/2046
193
7.050%
193
7.050%
Unsecured debt issued by Frontier
10,949
10,949
Secured debt issued by subsidiaries
Debentures due 11/15/2031
100
8.500%
100
8.500%
RUS loan contracts due 1/3/2028
6
6.154%
6
6.154%
Secured debt issued by subsidiaries
106
106
Unsecured debt issued by subsidiaries
Debentures due 5/15/2027
200
6.750%
200
6.750%
Debentures due 2/1/2028
300
6.860%
300
6.860%
Debentures due 2/15/2028
200
6.730%
200
6.730%
Debentures due 10/15/2029
50
8.400%
50
8.400%
Unsecured debt issued by subsidiaries
750
750
Debt prior to reclassification to
liabilities subject to compromise
16,769
8.188% ⁽¹⁾
16,769
8.188% ⁽¹⁾
Less: debt subject to compromise
(10,949)
(10,949)
Total debt
$
5,820
5.944% ⁽¹⁾
$
5,820
5.944% ⁽¹⁾


($ in millions)
Principal debt outstanding, December 31, 2020 (Predecessor)	$	16,769
Issuance of incremental term loan		225
Issuance of Takeback Notes		750
Conversion of Unsecured Senior Notes		(10,949)
Repayment of long term subsidiary debt at maturity		(1)
Principal debt outstanding, April 30, 2021 (Predecessor)		6,794
Less: Unamortized debt issuance costs		(2)
Less: Unamortized premium (discount)		(39)
Less: Long-term debt due within one year		(15)
Carrying amount of debt, April 30, 2021 (Predecessor)		6,738
Fresh start accounting fair value adjustment		277	⁽¹⁾
Long-term debt, April 30, 2021 (Predecessor)	$	7,015


Principal debt outstanding, April 30, 2021 (Successor)	$	6,794
Repayment of long term debt at maturity		(4)
Principal debt outstanding, June 30, 2021 (Successor)		6,790	⁽²⁾
Less: Unamortized fair value adjustment		232
Less: Long-term debt due within one year		(15)
Long-term debt, June 30, 2021 (Successor)	$	7,007

⁽¹⁾Upon emergence, Frontier adjusted the carrying value of our debt to fair value, in accordance with ASC 852. The adjustment consisted of the elimination of the existing unamortized debt issuance costs and unamortized discounts and recording a balance of $236 million as a fair value adjustment.The fair value accounting adjustment is being amortized into interest expense using the effective interest method. This amortization resulted in $4 million for the two months ended June 30, 2021.

⁽²⁾Weighted average interest rate as of June 30, 2021 was 5.657%. Interest rate ~~represents~~includes amortization of debt issuance costs and debt discounts. The interest rate at June 30, 2020 represent a weighted average of ~~the stated interest rates of~~ multiple ~~issuances~~.issuances.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~DIP Financing~~Additional information regarding our secured and unsecured long-term debt as of June 30, 2021 and December 31, 2020 is as follows:


	Successor			Predecessor
	June 30, 2021			December 31, 2020

	Principal		Interest	Principal		Interest
($ in millions)	Outstanding		Rate	Outstanding		Rate

Secured debt issued by Frontier
Term loan due 10/8/2027	$	1,471	4.500% (Variable)	$	1,250	5.750% (Variable)
First lien notes due 10/15/2027		1,150	5.875%		1,150	5.875%
First lien notes due 5/1/2028		1,550	5.000%		1,550	5.000%
Second lien notes due 5/1/2029		1,000	6.750%		1,000	6.750%
Takeback notes due 11/1/2029		750	5.875%		-
IDRB due 5/1/2030		14	6.200%		14	6.200%
Secured debt issued by Frontier		5,935			4,964

Unsecured debt issued by Frontier
Senior notes due 4/15/2020		-			172	8.500%
Senior notes due 9/15/2020		-			55	8.875%
Senior notes due 7/1/2021		-			89	9.250%
Senior notes due 9/15/2021		-			220	6.250%
Senior notes due 4/15/2022		-			500	8.750%
Senior notes due 9/15/2022		-			2,188	10.500%
Senior notes due 1/15/2023		-			850	7.125%
Senior notes due 4/15/2024		-			750	7.625%
Senior notes due 1/15/2025		-			775	6.875%
Senior notes due 9/15/2025		-			3,600	11.000%
Debentures due 11/1/2025		-			138	7.000%
Debentures due 8/15/2026		-			2	6.800%
Senior notes due 1/15/2027		-			346	7.875%
Senior notes due 8/15/2031		-			945	9.000%
Debentures due 10/1/2034		-			1	7.680%
Debentures due 7/1/2035		-			125	7.450%
Debentures due 10/1/2046		-			193	7.050%
Unsecured debt issued by Frontier		-			10,949

Secured debt issued by subsidiaries
Debentures due 11/15/2031		100	8.500%		100	8.500%
RUS loan contracts due 1/3/2028		5	6.154%		6	6.154%
Secured debt issued by subsidiaries		105			106

Unsecured debt issued by subsidiaries
Debentures due 5/15/2027		200	6.750%		200	6.750%
Debentures due 2/1/2028		300	6.860%		300	6.860%
Debentures due 2/15/2028		200	6.730%		200	6.730%
Debentures due 10/15/2029		50	8.400%		50	8.400%
Unsecured debt issued by subsidiaries		750			750

Debt prior to reclassification to
liabilities subject to compromise		6,790	5.657% ⁽¹⁾		16,769	8.188% ⁽¹⁾
Less: debt subject to compromise		-			(10,949)
Unamortized fair value adjustment		232			-
Carrying amount of Total debt	$	7,022		$	5,820

⁽¹⁾ Interest rate represents a weighted average of the stated interest rates of multiple issuances.

On August 28, 2020, the Company Parties filed the DIP Financing Motion with the Bankruptcy Court to approve the DIP Financing. On September 17, 2020, the Bankruptcy Court entered the final order approving the DIP Financing Motion.
‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Credit Facilities and Term Loans

Credit Agreements

As previously disclosed, on October 8, 2020, Old Frontier entered into that certain Credit Agreement with JPMorgan Chase Bank, N.A. (“JPM”), as administrative agent and collateral agent, and each lender from time to time party thereto (the “DIP to Exit Term Credit Agreement”), which provided for a senior secured superpriority DIP ~~Revolving~~term loan facility in the aggregate principal amount of $500 million (the “Initial DIP Term Loan Facility”). On November 25, 2020, Old Frontier entered into an incremental amendment to the DIP to Exit Term Credit Agreement (the “Incremental DIP Term Loan Amendment”), which provided for an additional senior secured superpriority DIP term loan facility in the aggregate principal amount of $750 million (the “Incremental DIP Term Loan Facility” and, together with the Initial DIP Term Loan Facility, the “DIP Term Loan Facility”), and on April 14, 2021, Old Frontier entered into a Refinancing and Incremental Facility Amendment No. 2 (the “Refinancing and Incremental Amendment”), providing for (i) an amendment to the DIP to Exit Term Credit Agreement, pursuant to which the DIP Term Loan Facility was repriced from an interest rate margin of 4.75% for LIBOR loans or 3.75% for alternate base rate loans, with a 1.00% LIBOR floor, to an interest rate margin of 3.75% for LIBOR loans or 2.75% for alternate base rate loans, with a 0.75% LIBOR floor, effective on April 14, 2021 and (ii) an amendment to the Amended and Restated Credit Agreement (as defined below) providing for the New Incremental Commitment (as defined below).

On October 8, 2020, Old Frontier also entered into the ~~DIP~~debtor-in-possession revolving facility (the “DIP Revolving ~~Facility,~~Facility”), pursuant to the ~~senior secured superpriority debtor-in-possession credit agreement,~~Senior Secured Superpriority Debtor-In-Possession Credit Agreement, dated as of October 8, 2020, by and among Old Frontier, as the borrower GSand a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, Goldman Sachs Bank USA, as administrative agent, ~~and~~JPM, as collateral agent and each lender and issuing bank from time to time party ~~thereto.~~thereto (the “DIP to Exit Revolving Credit Agreement”).

Pursuant to the Refinancing and Incremental Amendment, JPM agreed to provide, subject to certain conditions, including emergence from the Chapter 11 Cases, an incremental exit term loan facility in an aggregate principal amount of $225 million (the “New Incremental Commitment”). As previously disclosed, Old Frontier and certain of its subsidiaries had previously entered into a commitment letter with certain existing noteholders and/or their affiliates (the “Original Commitment Parties”) pursuant to which, and subject to the satisfaction of certain conditions, including the Debtors’ emergence from the Chapter 11 Cases, the Original Commitment Parties agreed to provide an incremental term loan facility in an aggregate principal amount of $225 million (the “Original Incremental Commitment”). The ~~DIP Revolving Facility~~New Incremental Commitment has ~~a maturity~~been used in place of the ~~earlier~~Original Incremental Commitment, which was terminated on April 14, 2021.

In connection with the emergence from the Chapter 11 Cases, on the Effective Date, Frontier Communications Holdings, LLC, a Delaware limited liability company and indirect subsidiary of ~~(x)~~ the ~~date~~Company (the “Borrower” or the “New Frontier Issuer”, as the case may be) entered into that ~~is twelve months after~~certain Amended and Restated Credit Agreement with JPM, as administrative agent and collateral agent, Goldman Sachs Bank USA, as revolver agent, and each lender from time to time party thereto (the “Amended and Restated Credit Agreement”) to amend and restate the ~~closing date of~~DIP to Exit Term Credit Agreement to, among other things, incorporate the DIP Revolving Facility ~~and (y)~~from the ~~date~~DIP to Exit Revolving Credit Agreement, which incorporation resulted in the termination of the ~~substantial consummation of the Plan; provided that~~DIP to Exit Revolving Credit Agreement. Pursuant to the ~~extent such substantial consummation has not occurred on or prior~~Amended and Restated Credit Agreement, the DIP Term Loan Facility was converted into an exit term loan facility in an aggregate principal amount of $1,475 million after giving effect to the ~~date referred to~~New Incremental Commitment (the “Term Loan Facility”) and the DIP Revolving Facility converted into an exit revolving facility in the ~~foregoing clause (x), primarily because any condition precedent set forth therein with respect~~aggregate principal amount of $625 million (the “Revolving Facility”) and became subject to the procurement of regulatory approvals has not been satisfied (and other than any other conditions that by their nature can only be satisfied on the consummation date), the maturity date shall be extended by an additional six months.Amended and Restated Credit Agreement.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Term Loan Facility

The Term Loan Facility’s maturity date is October 8, 2027. At ~~our~~the Borrower’s election, the determination of interest rates for the ~~DIP Revolving~~Term Loan Facility is based on margins over the alternate base rate or over LIBOR. The interest rate margin with respect to any LIBOR loan under the Term Loan Facility is ~~3.250% (or 2.250%~~3.75% for LIBOR loans or 2.75% with respect to any alternate base rate ~~loans).~~loan, with a 0.75% LIBOR floor.

Subject to ~~customary~~certain exceptions and thresholds, the security package under the ~~DIP Revolving~~Term Loan Facility includes pledges of the equity interests in certain of our subsidiaries, which as of the issue date is limited to certain specified pledged entities and substantially all personal property of Frontier Video Services Inc., a Delaware corporation ~~(Frontier Video), and, solely prior to the conversion date, substantially all of the unencumbered assets and properties (the DIP Collateral) of~~ (“Frontier ~~and Frontier Communications of Iowa, LLC, an Iowa limited liability company (Frontier Iowa)~~Video”), ~~which such security interest in the DIP Collateral was granted solely pursuant to the DIP financing order issued by the Bankruptcy Court,~~ which same assets also secure the ~~New~~ First Lien ~~Notes.~~Notes (as defined below). The ~~DIP Revolving~~Term Loan Facility is guaranteed by the same subsidiaries that guarantee the ~~New~~ First Lien Notes.After giving effect to $90 million of letters of credit formerly outstanding under the Revolver that were rolled into, replaced or otherwise accommodated for under the DIP Revolving Facility, the Company has $535 million of available borrowing capacity under the DIP Revolving Facility.

The ~~DIP Revolving~~Term Loan Facility includes ~~usual and~~ customary negative covenants for loan agreements of this type, including covenants limiting ~~Frontier~~the Borrower and its restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material payment subordinated indebtedness, in each case subject to customary exceptions for loan agreements of this type.

The ~~DIP Revolving~~Term Loan Facility also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA, upon the conversion date, unstayed judgments in favor of a third-party involving an aggregate liability in excess of a certain threshold, change of control, upon the conversion date, specified governmental actions having a material adverse effect or condemnation or damage to a material portion of the collateral.

Revolving Facility

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~Upon the conversion date, subject to certain conditions, the DIP Revolving Facility shall convert into the Exit Revolving Facility with an aggregate principal amount of~~The $625 ~~million. The Exit~~million Revolving Facility will be available on a revolving basis ~~during~~until April 30, 2025.

At the ~~period commencing on~~Borrower’s election, the ~~conversion date and ending on the date that is 4 years after the conversion date. The~~ determination of interest rates for the ~~Exit~~ Revolving Facility is based on margins over the alternate base rate or over ~~LIBOR, at our election.~~LIBOR. The interest rate margin with respect to any LIBOR loan under the Exit Revolving Facility is ~~3.500% (or 2.500% for alternate base rate loans).~~

~~DIP Term Loan Facility~~

On October 8, 2020, Frontier entered into a $500 million DIP Term Loan Facility, pursuant to the credit agreement, dated as of October 8, 2020 (the DIP to Exit Term Credit Agreement), by and among Frontier, as the borrower, JPM, as administrative agent and collateral agent and each lender from time to time party thereto. On November 25, 2020, Frontier entered into an incremental facility amendment No. 1 to the DIP to Exit Term Credit Agreement, which provides for an additional senior secured superpriority DIP term loan facility in the aggregate principal amount of $750 million (the Incremental DIP Term Loan Facility and, together with the Initial DIP Term Loan Facility, the DIP Term Loan Facility). On April 14, 2021, the Company entered into a Refinancing and Incremental Facility Amendment No. 2 (the “Refinancing and Incremental Amendment”). Pursuant to the Refinancing and Incremental Amendment, JPM agreed to provide, subject to certain conditions, including emergence from the Chapter 11 Cases, an incremental exit term loan facility in an aggregate principal amount of $225 million (the “New Incremental Commitment” and the loans borrowed thereunder, the “New Incremental Term Loans”). See Note 19.

The DIP Term Loan Facility has a maturity of the earlier of (x) the date that is twelve months after the closing date of the DIP Term Loan Facility and (y) the date of the substantial consummation of the Plan; provided that to the extent such substantial consummation has not occurred on3.50% or ~~prior to the date referred to in the foregoing clause (x), primarily because any condition precedent set forth therein~~2.50% with respect to ~~the procurement of regulatory approvals has not been satisfied (and other than~~ any other conditions that by their nature can only be satisfied on the consummation date), the maturity date shall be extended by an additional six months; provided that if the conversion date has occurred, the maturity date shall be the seventh anniversary of the closing date.

At our election, the determination of interest rates for the DIP Term Loan Facility are based on margins over the alternate base rate or over LIBOR. Pursuant to the Refinancing and Incremental Amendment, the interest rate with respect to any LIBOR loan is 3.75% or 2.75% for alternate base rate loans, with a ~~0.75%~~0% LIBOR floor. ~~See Note 19.~~

Subject to ~~certain~~customary exceptions and thresholds, the security package under the ~~DIP Term Loan~~Revolving Facility includes pledges of the equity interests in certain of our subsidiaries, which as of the issue date is limited to certain specified pledged entities and substantially all personal property of Frontier Video, and substantially all of the unencumbered assets and properties of Frontier and Frontier Iowa, which such security interest in the unencumbered assets and properties was granted solely pursuant to the DIP financing order issued by the Bankruptcy Court, which same assets also secure the ~~New~~ First Lien Notes. The ~~DIP Term Loan~~Revolving Facility is guaranteed by the same subsidiaries that guarantee the ~~New~~ First Lien Notes. ~~Upon~~After giving effect to $90 million of letters of credit previously outstanding, the ~~conversion date,~~Borrower has $535 million of available borrowing capacity under the ~~security package will no longer include the DIP Collateral.~~Revolving Facility.

The ~~DIP Term Loan~~Revolving Facility includes ~~usual and~~ customary negative covenants for ~~DIP to exit~~ loan agreements of this type, including covenants limiting ~~Frontier~~the Borrower and its restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material payment subordinated indebtedness, in each case subject to customary exceptions for ~~exit~~ loan agreements of this type.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

The ~~DIP Term Loan~~Revolving Facility also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA, ~~upon the conversion date, unstayed judgments in favor of a third party involving an aggregate liability in excess of a certain threshold,~~ change of control ~~upon the conversion date, specified governmental actions having a material adverse effect or condemnation~~ or damage to a material portion of the collateral.

Upon the conversion date, subject to certain conditions, the DIP Term Loan Facility shall convert into the Exit Term Loan Facility with an aggregate principal amount of $1,250 million. On April 14, 2021, the Company entered into a Refinancing and Incremental Facility Amendment No. 2 (the “Refinancing and Incremental Amendment”), providing for an incremental exit term loan facility in an aggregate principal amount of $225 million. Refer to Note 19 for more details related to this amendment.33

~~First Lien~~

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Secured Notes ~~due October 2027~~and Takeback Notes

Takeback Notes

On ~~October 8, 2020,~~April 30, 2021, the New Frontier Issuer issued ~~$1,150~~$750 million aggregate principal amount of 5.875% Second Lien Secured Notes (the “Takeback Notes”) pursuant to an indenture, dated as of April 30, 2021 (the “Takeback Notes Indenture”), by and among the ~~First Lien~~New Frontier Issuer, the guarantors party thereto, the grantor party thereto and Wilmington Trust, National Association, a national banking association, as trustee (in such capacity, the “Trustee”) and as collateral agent (in such capacity, the “Collateral Agent”). At Old Frontier’s direction, the Takeback Notes ~~due October 2027.~~were issued to holders of claims arising under, derived from, based on, or related to the unsecured notes issued by Old Frontier in partial satisfaction of such claims. The Takeback Notes are secured by a second-priority lien, subject to permitted liens, by all the assets that secure the New Frontier Issuer’s obligations under the Term Loan Facility, the Revolving Facility and the Notes (as defined below). The Takeback Notes bear interest at a rate of 5.875% per annum and will mature on November 1, 2029. Interest on the ~~First Lien~~Takeback Notes ~~due October 2027 is~~will be payable to holders of record semi-annually in arrears on ~~April 15~~May 1 and ~~October 15~~November 1 of each year, commencing ~~April 15,~~November 1, 2021.

The ~~notes were issued pursuant to an indenture, dated as of October 8, 2020 (the 2027 First Lien Indenture), by and among~~New Frontier the guarantors party thereto, the grantor party thereto, JPMorgan Chase Bank N.A., as collateral agent and Wilmington Trust, National Association, as trustee, and were issued in a private offering exempt from the registration requirements of the Securities Act, to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act, at a purchase price equal to 100% of the principal amount thereof.

Prior to the conversion date, the First Lien Notes due October 2027 are secured on a super-priority basis and pari passu with the DIP Revolving Facility and the DIP Term Loan Facility, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under ~~the DIP Revolving Facility and the DIP Term Loan Facility,~~ on a super-priority basis and pari passu with the DIP Revolving Facility and the DIP Term Loan Facility. From the conversion date, the First Lien Notes due October 2027 are secured on a first-priority basis and pari passu with its senior secured credit facilities, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under its senior secured credit facilities on a first-priority basis and pari passu with its senior secured credit facilities.

~~Frontier~~Issuer may redeem the ~~First Lien~~Takeback Notes ~~due October 2027~~ at any time, in whole or in part, prior to their maturity. ~~If the notes are~~The redemption price for Takeback Notes redeemed before ~~October 15, 2023 the redemption price~~November 1, 2024 will be equal to 100% of the aggregate principal amount ~~thereof,~~of such series being redeemed, together with any accrued and unpaid interest, if any, to, but not including, the redemption date, plus athe applicable make-whole premium. ~~If the notes are~~The redemption price for Takeback Notes redeemed on or after ~~October 15, 2023 the redemption price~~November 1, 2024 will be equal to the ~~amounts~~redemption prices set forth in the ~~2027 First Lien~~Takeback Notes Indenture, together with any accrued and unpaid interest to the redemption date. ~~In addition, at~~At any time before ~~October 15, 2023,~~April 1, 2024, the New Frontier Issuer may redeem up to 40% of the ~~First Lien~~Takeback Notes ~~due October 2027~~ using the proceeds of certain equity offerings at a redemption price equal to 105.875% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemption date.

In the event of a change of control triggering event, each holder of ~~First Lien~~Takeback Notes ~~due October 2027~~ will have the right to require the New Frontier Issuer to purchase ~~the notes~~for cash such holder’s Takeback Notes at a purchase price equal to 101% of the principal amount of the ~~First Lien~~applicable series of Takeback Notes, ~~due October 2027,~~ plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The Takeback Notes Indenture contains customary negative covenants, subject to a number of important exceptions and qualifications, including, without limitation, covenants related to incurring additional debt and issuing preferred stock; incurring or creating liens; redeeming and/or prepaying certain debt; paying dividends on stock or repurchasing stock; making certain investments; engaging in specified sales of assets; entering into transactions with affiliates; and engaging in consolidation, mergers and acquisitions. Certain of these covenants will be suspended during such time, if any, that the Takeback Notes have investment grade ratings by at least two of Moody’s, S&P or Fitch. The Takeback Notes Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Takeback Notes to become or to be declared due and payable.

First and Second Lien Notes

In connection with the DIP financing, (a) on October 8, 2020, Old Frontier issued $1,150 million aggregate principal amount of 5.875% First Lien Secured Notes due October 15, 2027 (the “First Lien Notes due October 2027”) and (b) on November 25, 2020, Old Frontier issued (i) $1,550 million aggregate principal amount of 5.000% First Lien Secured Notes due May 1, 2028 (the “First Lien Notes due May 2028” and, together with the First Lien Notes due October 2027, the “First Lien Notes”) and (ii) $1,000 million aggregate principal amount of 6.750% Second Lien Secured Notes due May 1, 2029 (the “Second Lien Notes” and, together with the First Lien Notes, the “Notes”).

3334

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

The First Lien Notes due October 2027 were issued pursuant to an indenture, dated as of October 8, 2020 (the “2027 First Lien Indenture”), by and among Old Frontier, the guarantors party thereto, the grantor party thereto, JPMorgan Chase Bank N.A., as collateral agent, and Wilmington Trust, National Association, as trustee. The First Lien Notes due May 2028 were issued pursuant to an indenture, dated as of November 25, 2020 (the “2028 First Lien Indenture”), by and among Old Frontier, the guarantors party thereto, the grantor party thereto, JPMorgan Chase Bank N.A., as collateral agent and Wilmington Trust, National Association, as trustee. The Second Lien Notes were issued pursuant to an indenture, dated as of November 25, 2020 (the “Second Lien Indenture” and, together with the 2027 First Lien Indenture ~~contains~~and the 2028 First Lien Indenture, the “Indentures” and each an “Indenture”), by and among Old Frontier, the guarantors party thereto, the grantor party thereto and Wilmington Trust, National Association, as trustee and as collateral agent.

These indentures contain customary negative covenants, subject to a number of important exceptions and qualifications, including, without limitation, covenants related to incurring additional debt and issuing preferred stock; incurring or creating liens; redeeming and/or prepaying certain debt; paying dividends on our stock or repurchasing stock; making certain investments; engaging in specified sales of assets; entering into transactions with affiliates; and engaging in consolidation, mergers and acquisitions. Certain of these covenants will be suspended during such time, if any, that the First Lien Notes due October 2027 have investment grade ratings by at least two of Moody’s, S&P or Fitch. The 2027 First Lien Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the First Lien Notes due October 2027 to become or to be declared due and payable.

~~First Lien Notes due May 2028~~

On ~~November 25, 2020,~~the Effective Date, in accordance with the Indentures and the Plan, the New Frontier ~~issued $1,550 million aggregate principal amount~~Issuer entered into supplemental indentures (the “Supplemental Indentures”), in each case with Wilmington Trust, National Association, as trustee, and assumed the obligations under each series of the ~~First Lien~~ Notes ~~due~~ ~~May 2028, which bear interest at a rate~~and each of ~~5.000% per annum. Interest is payable to holders of record semi-annually in arrears on May 1 and November 1 of each year, commencing May 1, 2021.~~the Indentures.

The First Lien Notes ~~due~~ ~~May 2028~~ were issued pursuant to an indenture, dated as of November 25, 2020 (the 2028 First Lien Indenture), by and among Frontier, the guarantors party thereto, the grantor party thereto, JPMorgan Chase Bank N.A., as collateral agent and Wilmington Trust, National Association, as trustee, and were issued in a private offering exempt from the registration requirements of the Securities Act, to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act, at a purchase price equal to 100% of the principal amount thereof.

~~Prior to the conversion date, the First Lien Notes due~~ ~~May 2028~~ are secured on a super-priority basis and pari passu with the DIP Revolving Facility and the DIP Term Loan Facility, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under the DIP Revolving Facility and the DIP Term Loan Facility, on a super-priority basis and pari passu with the DIP Revolving Facility and the DIP Term Loan Facility. From the conversion date, the First Lien Notes due May 2028 are secured on a first-priority basis and pari passu with its senior secured credit facilities, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under its senior secured credit facilities on a first-priority basis and pari passu with its senior secured credit facilities.

Frontier may redeem the First Lien Notes due May 2028 at any time, in whole or in part, prior to their maturity. If redeemed before May 1, 2024 the redemption price will be equal to 100% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemption date, plus a make-whole premium. If the notes are redeemed on or after May 1, 2024, the redemption price will be equal to the amounts set forth in the 2028 First Lien Indenture, together with any accrued and unpaid interest to the redemption date. In addition, at any time before May 1, 2024, Frontier may redeem up to 40% of the First Lien Notes due ~~May 2028~~ using the proceeds of certain equity offerings at a redemption price equal to 105.000% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemption date.

~~In the event of a change of control triggering event, each holder of the First Lien Notes due~~ ~~May 2028~~ ~~will have the right to require Frontier to purchase the notes at a purchase price equal to 101% of the principal amount of the First Lien Notes due~~ ~~May 2028, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

The 2028 First Lien Indenture contains customary negative covenants, subject to a number of important exceptions and qualifications, including, without limitation, covenants related to incurring additional debt and issuing preferred stock; incurring or creating liens; redeeming and/or prepaying certain debt; paying dividends on our stock or repurchasing stock; making certain investments; engaging in specified sales of assets; entering into transactions with affiliates; and engaging in consolidation, mergers and acquisitions. Certain of these covenants will be suspended during such time, if any, that the First Lien Notes due May 2028 have investment grade ratings by at least two of Moody’s, S&P or Fitch. The 2028 First Lien Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the First Lien Notes due May 2028 to become or to be declared due and payable.

~~New Second Lien Notes~~

On November 25, 2020, Frontier issued $1,000 million aggregate principal amount of the New Second Lien Notes, which mature on May 1, 2029 and bear interest at a rate of 6.750% per annum. Interest is payable to holders of record semi-annually in arrears on May 1 and November 1 of each year, commencing May 1, 2021.

The New Second Lien Notes were issued pursuant to an indenture, dated as of November 25, 2020 (the New Second Lien Indenture, and together with the 2027 First Lien Indenture and the 2028 First Lien Indenture, the Secured Note Indentures), by and among Frontier, the guarantors party thereto, the grantor party thereto, Wilmington Trust, National Association, as trustee and collateral agent, and were issued in a private offering exempt from the registration requirements of the Securities Act, to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act, at a purchase price equal to 100% of the principal amount thereof.

~~Prior to the conversion date, the New~~ Second Lien Notes are ~~superpriority obligations~~ secured ~~by a~~ second-priority ~~lien~~basis junior to the ~~DIP Revolving Facility, the DIP Term Loan Facility, the First Lien Notes due~~ ~~October 2027~~senior secured credit facilities and the First Lien Notes, ~~due~~ ~~May 2028, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under~~ ~~the DIP Revolving Facility, the DIP Term Loan Facility,~~ ~~on a super-priority basis and pari passu with the DIP Revolving Facility and the DIP Term Loan Facility, the First Lien Notes due~~ ~~October 2027~~ ~~and the First Lien Notes due~~ ~~May 2028. From the conversion date, the New Second Lien Notes are secured on a second-priority basis junior to the DIP Revolving Facility, the First Lien Notes due~~ ~~October 2027~~ ~~and the First Lien Notes due~~ ~~May 2028~~, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under its senior secured credit facilities and ~~existing first lien notes~~First Lien Notes on a second-priority basis junior to its secured credit facilities and ~~existing first lien notes.~~First Lien Notes.

Frontier may redeem the New Second Lien Notes at any time, in whole or in part, prior to their maturity. If redeemed before May 1, 2024, the redemption price will be equal to 100% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemption date, plus a make-whole premium. If redeemed on or after May 1, 2024, the redemption price will be equal to the amounts set forth in the New Second Lien Indenture, together with any accrued and unpaid interest to the redemption date. In addition, at any time before November 1, 2023, Frontier may redeem up to 40% of the New Second Lien Notes using the proceeds of certain equity offerings at a redemption price equal to 106.750% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemption date.

(12) Restructuring Costs and Other Charges:

Restructuring and other charges consists of severance and employee costs related to workforce reductions. It also includes professional fees related to our Chapter 11 Cases that were incurred after the ~~event~~emergence date as well as professional fees related to our restructuring and transformation that were incurred prior to the Petition Date.

During the four months ended April 30, 2021, we incurred $7 million of ~~a change~~severance and employee costs resulting from workforce reductions. During the two months ended June 30, 2021, we incurred $11 million in expenses consisting of ~~control triggering event, each holder~~$2 million of severance and employee costs resulting from workforce reductions and $9 million of professional fees related to our balance sheet restructuring.

During the ~~New Second Lien Notes will have~~six-month period ended June 30, 2020, we incurred $84 million in restructuring expenses consisting of $8 million directly associated with transformation initiatives, $4 million of severance and employee costs resulting from workforce reductions, and $72 million of consulting and advisory costs related to our balance sheet restructuring activities through the right to require Frontier to purchase the notes at a purchase price equal to 101% of the principal amount of the New Second Lien Notes, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.Petition Date.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

The New Second Lien Indenture contains customary negative covenants, subject to a number of important exceptions and qualifications, including, without limitation, covenants related to incurring additional debt and issuing preferred stock; incurring or creating liens; redeeming and/or prepaying certain debt; paying dividends on our stock or repurchasing stock; making certain investments; engaging in specified sales of assets; entering into transactions with affiliates; and engaging in consolidation, mergers and acquisitions. Certain of these covenants will be suspended during such time, if any, that the New Second Lien Notes have investment grade ratings by at least two of Moody’s, S&P or Fitch. The New Second Lien Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the New Second Lien Notes to become or to be declared due and payable.

~~Existing Debt Issuances and Reductions~~

~~Repaid Original First Lien Notes~~

On March 15, 2019, Frontier completed a private offering of $1,650 million aggregate principal amount of the Original First Lien Notes, which had a maturity date of April 1, 2027, and accrued interest at a rate of 8.000% per annum. ~~The Original First Lien Notes were repaid in full on October 8, 2020 with proceeds from the offering of the New First Lien Notes and the DIP Term Loan Facility and cash on hand.~~

Frontier used the proceeds from the offering of the Original First Lien Notes, together with cash on hand, to (i) repay in full the outstanding borrowings under the senior secured Term Loan A facility under the JPM Credit Agreement, which otherwise would have matured in March 2021, (ii) repay in full the outstanding borrowings under the 2016 CoBank Credit Agreement, which otherwise would have matured in October 2021, and (iii) pay related interest, fees and expenses.

~~Repaid Original Second Lien Notes~~

On March 19, 2018, Frontier completed a private offering of $1,600 million aggregate principal amount of the Original Second Lien Notes, which had a maturity date of April 1, 2026, and accrued interest at a rate of 8.500% per annum. As noted above, these notes were repaid in full using the proceeds from the November 25, 2020 debt refinancing.

~~Repaid JP Morgan Credit Facilities~~

Frontier had an amended and restated credit agreement with JPM, as administrative agent, and the lenders party thereto, which provided for a $1,625 million senior secured Term Loan A facility (the Term Loan A), a $1,740 million Term Loan B, and the Revolver. As noted above all outstanding amounts remaining drawn under the Revolver and Term Loan B were fully repaid using cash on hand and the proceeds from the November 25, 2020 debt refinancing, and all outstanding amounts remaining drawn under Term Loan A were fully repaid using the proceeds from the offering of the Original First Lien Notes.

On July 3, 2018, the Company entered into Increase Joinder No. 2 to the JPM Credit Agreement, pursuant to which the Company borrowed an incremental $240 million under the Term Loan B. The Company used the incremental borrowings to repay in full the 2014 CoBank Credit Agreement (as defined below), repay a portion of the 2016 CoBank Credit Agreement (as defined below) and pay certain fees and expenses related to this incremental borrowing.

~~Repaid CoBank Credit Facilities~~

Frontier had a $315 million senior term loan facility drawn in October 2016 (the 2016 CoBank Credit Agreement) with CoBank, ACB, as administrative agent, lead arranger and a lender, and the other lenders which was repaid in full on March 15, 2019. Frontier had a separate $350 million senior term loan facility drawn in 2014 (the 2014 CoBank Credit Agreement) with CoBank which was repaid in full on July 3, 2018.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~(11)~~ ~~Restructuring Costs and Other Charges:~~

~~As of March 31, 2021, restructuring related liabilities of $3 million pertaining to employee separation charges are included in “Other current liabilities” in our consolidated balance sheet.~~

~~During the three-month period ended March 31, 2021, we incurred $2 million in expenses consisting of severance and employee costs resulting from workforce reductions.~~

During the three-month period ended March 31, 2020, we incurred $48 million in expenses consisting of $8 million directly associated with transformation initiatives, $2 million of severance and employee costs resulting from workforce reductions, and $38 million of consulting and advisory costs related to our balance sheet restructuring activities through the Petition Date.

~~Effective with the Petition date, these other charges consisting of consulting and advisory costs incurred are recorded in Reorganization items, net in the consolidated statement of operations.~~

The following is a summary of the changes in the liabilities established for restructuring and other related programs:



($ in millions)

Balance at January 1, 2021	(Predecessor)	$	2
Severance expense			27
Cash payments during the period			~~(1)~~(2)
Balance at ~~March 31,~~April 30, 2021	(Predecessor)	$	37


Balance at April 30, 2021 (Successor)	$	7
Severance expense		2
Other costs		9
Cash payments during the period		(7)
Balance at June 30, 2021 (Successor)	$	11

(10)

~~(12)~~(13) Investment and Other Income:

The following is a summary of the components of Investment and Other Income:

For the three months ended
March 31,
($ in millions)
2021
2020
Interest and dividend income
$
-
$
2
Pension and OPEB benefit
1
1
All other, net
1
2
Total investment and other income, net
$
2
$
5



	Successor		Predecessor

	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Interest and dividend income	$	-	$	-	$	2
Pension and OPEB benefit (costs)		(4)		1		(20)
All other, net		2		(2)		(2)
Total investment and other loss, net	$	(2)	$	(1)	$	(20)

	Successor		Predecessor

	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Interest and dividend income	$	-	$	-	$	4
Pension and OPEB benefit (costs)		(4)		2		(19)
All other, net		2		(1)		-
Total investment and other loss, net	$	(2)	$	1	$	(15)

Pension and OPEB credit (cost) consists of interest costs, expected return on plan assets, amortization of prior service costs (credit) and amortization of unrecognized (gain) loss.

‎

3736

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~(13)~~(14) Income Taxes:

The following is a reconciliation of the provision for income taxes computed at the federal statutory rate to income taxes computed at the effective rate:

For the three months ended
March 31,
2021
2020
Consolidated tax provision at federal statutory rate
21.0
%
21.0
%
State income tax provisions, net of federal income
tax expense (benefit)
8.7
(1.2)
Changes in certain deferred tax balances
60.9
0.6
Interest expense deduction
(36.7)
-
Restructuring cost
5.1
(3.4)
Loss on disposal of Northwest Operations
-
(2.4)
Tax reserve adjustment
-
(2.5)
Shared-based payments
-
(0.7)
Federal research and development tax credit
-
0.6
All other, net
0.2
(0.9)
Effective tax rate
59.2
%
11.1
%



	Successor		Predecessor

	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Consolidated tax provision at federal statutory rate	21.0	%	21.0	%	21.0	%
State income tax provisions, net of federal income
tax expense (benefit)	3.7		0.5		5.4
Changes in certain deferred tax balances	-		-		(3.9)
Interest expense deduction	-		-		10.4
Restructuring cost	-		0.3		(5.0)
Loss on disposal of Northwest Operations	-		-		(8.0)
Tax reserve adjustment	0.6		-		(0.7)
Fresh start and reorganization adjustments	-		(24.9)		-
Shared-based payments	-		-		(0.3)
Federal research and development tax credit	(1.3)		-		(0.5)
All other, net	6.1		-		(0.5)
Effective tax rate	30.1	%	(3.1)	%	17.9	%

Under ASC 740 – 270, income tax expense for ~~interim periods~~the four months ended April 30, 2021, is based on the actual year to date effective tax rate for the first four months of the year inclusive of the impact of the fresh start and reorganization adjustments. Income tax expense for the two months ended June 30, 2021 is based on an annual effective tax rate for the ~~full year~~successor period with the exclusion of the discrete items. However, in a period when the Company is expecting marginal ordinary income (or loss) and relatively significant permanent differences, the actual effective tax rate for the year-to-date period may be used as an exception. The actual year-to date effective tax rate method was used by the Company in the first quarter of 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. As part of the CARES Act, employers were allowed to defer payment of the employer’s share of the Social Security tax that they otherwise were responsible for paying on wages. The deferral applied to affected taxes that were normally required to be paid from March 27, 2020, through December 31, 2020. These deferred taxes must be paid in equal amounts in 2021 and 2022. As of ~~March 31,~~June 30, 2021, Frontier has deferred the payments of approximately $60 million in such taxes.

As of ~~March 31,~~June 30, 2021, and December 31, 2020, amounts pertaining to expected income tax refunds of $13 million are included in “Income taxes and other current assets” inon the consolidated balance sheets, respectively.

Frontier considered positive and negative evidence in regard to evaluating certain deferred tax assets during the ~~first~~second quarter of 2021, including the development of recent years of pre-tax book losses. On the basis of this evaluation, a valuation allowance of ~~$138~~$108 million ($~~125~~85 million net of federal benefit) has been recorded ~~for the three months ended March 31, 2021, related to these deferred tax assets and reflected in “Changes in certain deferred tax balances.”~~as of April 30, 2021.

As described more fully in Note 1 and Note 3, the Company ~~expects to emerge~~emerged from bankruptcy on April 30, 2021, ~~at which time it will consummate~~and consummated a taxable disposition of substantially all of the assets and/or subsidiary stock of the Company and ~~utilize~~utilized substantially all of the Company’s ~~NOLs.~~

Net Operating Losses (“NOLs”).

3837

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~(14)~~(15) Net Earnings (Loss) Per Share:

The reconciliation of the net earnings (loss) per share calculation is as follows:

For the three months ended
March 31,
($ in millions and shares in thousands, except per share amounts)
2021
2020
Net income (loss) used for basic and diluted earnings (loss)
per share:
Total basic net income (loss)
attributable to Frontier common shareholders
$
60
$
(186)
Effect of loss related to dilutive stock units
-
-
Total diluted net income (loss)
attributable to Frontier common shareholders
$
60
$
(186)
Basic earnings (loss) per share:
Total weighted average shares and unvested restricted stock
awards outstanding - basic
104,786
105,060
Less: Weighted average unvested restricted stock awards
(230)
(697)
Total weighted average shares outstanding - basic
104,556
104,363
Basic net earnings (loss) per share
attributable to Frontier common shareholders
$
0.57
$
(1.78)
Diluted earnings (loss) per share:
Total weighted average shares outstanding - basic
104,556
104,363
Effect of dilutive stock units
340
-
Total weighted average shares outstanding - diluted
104,896
104,363
Diluted net earnings (loss) per share
attributable to Frontier common shareholders
$
0.57
$
(1.78)


	Successor		Predecessor

	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Net income (loss) used for basic and diluted earnings (loss)
per share:
Total basic net income (loss)
attributable to Frontier common shareholders	$	99	$	4,481	$	(181)
Effect of loss related to dilutive stock units		-		-		-
Total diluted net income (loss)
attributable to Frontier common shareholders	$	99	$	4,481	$	(181)

Basic earnings (loss) per share:
Total weighted average shares and unvested restricted stock
awards outstanding - basic		244,401		104,816		104,988
Less: Weighted average unvested restricted stock awards		-		(154)		(463)
Total weighted average shares outstanding - basic		244,401		104,662		104,525

Basic net earnings (loss) per share
attributable to Frontier common shareholders	$	0.41	$	42.81	$	(1.73)

Diluted earnings (loss) per share:
Total weighted average shares outstanding - basic		244,401		104,662		104,525
Effect of dilutive stock units		-		340		-
Total weighted average shares outstanding - diluted		244,401		105,002		104,525

Diluted net earnings (loss) per share
attributable to Frontier common shareholders	$	0.41	$	42.68	$	(1.73)

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

	Successor		Predecessor

	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Net income (loss) used for basic and diluted earnings (loss)
per share:
Total basic net income (loss)
attributable to Frontier common shareholders	$	99	$	4,541	$	(367)
Effect of loss related to dilutive stock units		-		-		-
Total diluted net income (loss)
attributable to Frontier common shareholders	$	99	$	4,541	$	(367)

Basic earnings (loss) per share:
Total weighted average shares and unvested restricted stock
awards outstanding - basic		244,401		104,799		105,029
Less: Weighted average unvested restricted stock awards		-		(215)		(592)
Total weighted average shares outstanding - basic		244,401		104,584		104,437

Basic net earnings (loss) per share
attributable to Frontier common shareholders	$	0.41	$	43.42	$	(3.51)

Diluted earnings (loss) per share:
Total weighted average shares outstanding - basic		244,401		104,584		104,437
Effect of dilutive shares		-		340		-
Total weighted average shares outstanding - diluted		244,401		104,924		104,437

Diluted net earnings (loss) per share
attributable to Frontier common shareholders	$	0.41	$	43.28	$	(3.51)

For the two months ended June 30, 2021, there were 0 outstanding stock options or units that would have a dilutive effect on earnings per share.

In calculating diluted net loss per common share for the three and six months ended ~~March 31,~~June 30, 2020, the effect of all common stock equivalents was excluded from the computation as the effect would have been antidilutive.

Stock Options

For the ~~three~~one month and four months ended ~~March 31,~~April 30, 2021 ~~there were 0 outstanding stock options. As of March 31,~~and the two months ended June 30, 2020, previously granted options to purchase ~~1,344~~1,334 shares issuable under Old Frontier employee compensation plans were ~~excluded from~~not included in the ~~computation of~~ diluted earnings (loss) per share (EPS) ~~for those periods~~calculation because ~~the exercise prices were greater than the average market price of our common stock and, therefore, the effect~~their inclusion would ~~be antidilutive. These options expired on July 6, 2020.~~have an antidilutive effect.

Stock Units

~~At each~~As of ~~March 31,~~June 30, 2021, ~~and March 31,~~there were 0 stock units outstanding. As of June 30, 2020, ~~we had~~there were 339,544 stock units issued under ~~the Non-Employee Directors’ Deferred Fee Equity Plan (Deferred Fee Plan), the Non-Employee Directors’ Equity Incentive Plan (Directors’ Equity Plan), the 2013 Equity Incentive Plan~~Old Frontier director and ~~the 2017 Equity Incentive Plan. These securities have~~employee compensation plans that were 0t ~~been~~ included in the diluted EPS calculation for the ~~three~~six months ended ~~March 31,~~June 30, 2020 because their inclusion would have an antidilutive effect.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~(15)~~(16) Stock Plans:

~~At March 31, 2021, we have 4~~Upon emergence, all outstanding stock-based compensation plans ~~under which grants~~of Old Frontier were ~~made~~terminated and, ~~awards remained outstanding. No further awards may be granted under three~~in accordance with the Plan, the form of the ~~plans: the 2013 Equity~~Frontier Communications Parent, Inc. 2021 Management Incentive Plan (the ~~2013 EIP),~~“Incentive Plan”) was approved and adopted by the ~~Deferred Fee~~Board. The Incentive Plan permits stock-based awards to be made to employees, directors, or consultants of the Company or its affiliates, as determined by the Compensation and ~~the Directors’ Equity Plan.~~Human Capital Committee. At ~~March 31,~~June 30, 2021, there were 15,600,000 shares of Common Stock reserved for issuance pursuant to the Incentive Plan and 0 grants or awards had been made. In July 2021, the Company awarded an aggregate of approximately ~~5,667,000 shares authorized for grant and approximately 3,754,000 shares available for grant~~5,340,000 unvested restricted stock units (which includes the “target” number of restricted stock units subject to performance conditions granted to certain officers), under the ~~2017 Equity~~ Incentive Plan ~~(the 2017 EIP, together with~~to certain employees, directors and officers of the ~~2013 EIP,~~Company, subject to satisfaction of the ~~EIPs).~~applicable vesting conditions.

Restricted Stock

The following summary presents information regarding unvested restricted stock with regard to restricted stock granted under the 2017 EIP:

Weighted
Average
Number of
Grant Date
Aggregate
Shares
Fair Value
Fair Value
(in thousands)
(per share)
(in millions)
Balance at January 1, 2021
304
$
6.78
$
-
Restricted stock granted
-
$
-
$
-
Restricted stock vested
(41)
$
8.23
$
-
Restricted stock forfeited
(109)
$
8.23
Balance at March 31, 2021
154
$
5.38
$
-



		Weighted
		Average
	Number of	Grant Date		Aggregate
	Shares	Fair Value		Fair Value
	(in thousands)	(per share)		(in millions)
Balance at January 1, 2021 (Predecessor)	304	$	6.78	$	-
Restricted stock granted	-	$	-	$	-
Restricted stock vested	(41)	$	8.23	$	-
Restricted stock forfeited	(109)	$	8.23	$	-
Balance at April 30, 2021 (Predecessor)	154	$	5.38	$	-
Cancellation of restricted stock	(154)	$	-	$	-
Balance at April 30, 2021 (Predecessor)	-	$	-	$	-


Balance at June 30, 2021 (Successor)	-

For purposes of determining compensation expense, the fair value of each restricted stock grant is estimated based on the closing price of a share of our common stock on the date of the grant. Total remaining unrecognized compensation cost associated with unvested restricted stock awards that is deferred at ~~March 31,~~June 30, 2021 was less than $1 ~~million, and the weighted average vesting period over which this cost is expected to be recognized is less than 1 year.~~

40million.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~(16)~~(17) Comprehensive Income (Loss):

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting equity (deficit) and pension/postretirement benefit (OPEB) liabilities that, under GAAP, are excluded from net loss.

In May of 2021, Frontier amended the medical coverage for certain postretirement benefit plans, which resulted in a remeasurement of its other postretirement benefit obligation and a prior service credit of $55 million, which is deferred in “Accumulated comprehensive income” on our consolidated balance sheet for the two months ended June 30, 2021. Refer to Note 18 for further details.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

The components of accumulated other comprehensive income (loss), net of tax, and changes are as follows:

Pension
OPEB
($ in millions)
Costs
Costs
Total
Balance at January 1, 2021 ⁽¹⁾
$
(699)
$
(56)
$
(755)
Other comprehensive income (loss)
before reclassifications
-
-
-
Amounts reclassified from accumulated other
comprehensive loss to net income
14
(3)
11
Net current-period other comprehensive
income (loss)
14
(3)
11
Balance at March 31, 2021 ⁽¹⁾
$
(685)
$
(59)
$
(744)

Pension
OPEB
($ in millions)
Costs
Costs
Total
Balance at January 1, 2020 ⁽¹⁾
$
(684)
$
34
$
(650)
Other comprehensive income (loss)
before reclassifications
1
-
1
Amounts reclassified from accumulated other
comprehensive loss to net loss
90
(5)
85
Net current-period other comprehensive
income (loss)
91
(5)
86
Balance at March 31, 2020 ⁽¹⁾
$
(593)
$
29
$
(564)



	Pension		OPEB
($ in millions)	Costs		Costs		Total

Balance at January 1, 2021 (Predecessor) ⁽¹⁾	$	(699)	$	(56)	$	(755)
Other comprehensive income (loss)
before reclassifications		270		74		344
Amounts reclassified from accumulated other
comprehensive loss to net loss		19		(4)		15
Net current-period other comprehensive
income (loss)		289		70		359
Cancellation of Predecessor equity		410		(14)		396

Balance at April 30, 2021 (Predecessor) ⁽¹⁾	$	-	$	-	$	-


Balance at April 30, 2021 (Successor) ⁽¹⁾	$	-	$	-	$	-
Other comprehensive income (loss)
before reclassifications		-		42		42
Amounts reclassified from accumulated other
comprehensive loss to net loss		-		(1)		(1)
Net current-period other comprehensive
income (loss)		-		41		41
Balance at June 30, 2021 (Successor) ⁽¹⁾	$	-	$	41	$	41


	Pension		OPEB
($ in millions)	Costs		Costs		Total

Balance at January 1, 2020 (Predecessor) ⁽¹⁾	$	(684)	$	34	$	(650)
Other comprehensive income (loss)
before reclassifications		(525)		(15)		(540)
Amounts reclassified from accumulated other
comprehensive loss to net loss		208		(5)		203
Net current-period other comprehensive
income (loss)		(317)		(20)		(337)
Balance at June 30, 2020 (Predecessor) ⁽¹⁾	$	(1,001)	$	14	$	(987)

⁽¹⁾Pension and OPEB amounts are net of tax of $234 million and $204 million as of January 1, 2021 and 2020, respectively and ~~$230~~$14 million and ~~$176~~$280 million as of ~~March 31,~~June 30, 2021 and 2020, respectively.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

The significant items reclassified from ~~each component~~components of accumulated other comprehensive loss are as follows:

Amount Reclassified from
Accumulated Other
Comprehensive Loss ⁽¹⁾
($ in millions)
Affected Line Item in
For the three months ended
the Statement Where
Details about Accumulated Other
March 31,
Net Income (Loss)
Comprehensive Loss Components
2021
2020
is Presented
Amortization of Pension Cost Items ⁽²⁾
Actuarial gains (losses)
$
(18)
$
(17)
Pension settlement costs
-
(103)
(18)
(120)
Income (Loss) before income taxes
Tax impact
4
30
Income tax benefit
$
(14)
$
(90)
Net income (loss)
Amortization of OPEB Cost Items ⁽²⁾
Prior-service costs
$
7
$
8
Actuarial gains (losses)
(3)
(2)
4
6
Income (Loss) before income taxes
Tax impact
(1)
(1)
Income tax benefit
$
3
$
5
Net income (loss)



	Amount Reclassified from
	Accumulated Other
	Comprehensive Loss ⁽¹⁾
	Successor		Predecessor

	For the two months		For the one month		For the three months		Affected Line Item in the
	ended June 30,		ended April 30,		ended June 30,		Statement Where Net
($ in millions)	2021		2021		2020		Income (Loss) is presented

Amortization of Pension
Cost Items:
Actuarial gains (losses)	$	-	$	(6)	$	(30)
One-time loss on disposal		-		-		(61)
Pension settlement costs		-		-		(56)
		-		(6)		(147)	Income (Loss) before income taxes
Tax impact		-		1		29	Income tax benefit
	$	-	$	(5)	$	(118)	Net income (loss)

Amortization of OPEB
Cost Items:
Prior-service costs	$	1	$	3	$	8
Actuarial gains (losses)		-		(2)		(1)
One-time loss on disposal		-		-		(7)
		1		1		-	Income (Loss) before income taxes
Tax impact		-		-		-	Income tax benefit
	$	1	$	1	$	-	Net income (loss)


	Amount Reclassified from
	Accumulated Other
	Comprehensive Loss ⁽¹⁾
	Successor		Predecessor

	For the two months		For the four months		For the six months		Affected Line Item in the
	ended June 30,		ended April 30,		ended June 30,		Statement Where Net
($ in millions)	2021		2021		2020		Income (Loss) is presented

Amortization of Pension
Cost Items
Actuarial gains (losses)	$	-	$	(24)	$	(47)
One-time loss on disposal		-		-		(61)
Pension settlement costs		-		-		(159)
		-		(24)		(267)	Income (Loss) before income taxes
Tax impact		-		5		59	Income tax benefit
	$	-	$	(19)	$	(208)	Net income (loss)

Amortization of OPEB
Cost Items
Prior-service costs	$	1	$	10	$	16
Actuarial gains (losses)		-		(5)		(3)
One-time loss on disposal		-		-		(7)
		1		5		6	Income (Loss) before income taxes
Tax impact		-		(1)		(1)	Income tax benefit
	$	1	$	4	$	5	Net income (loss)

⁽¹⁾ ~~Amounts in parentheses indicate losses.~~

⁽²⁾ These accumulated other comprehensive loss components are included in the computation of net periodic pension and OPEB costs (see Note 1718 - Retirement Plans for additional details).

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~(17)~~

(18) Retirement Plans:

Frontier recognizes actuarial gains (losses) for our pension and postretirement plans in the period they occur. The components of net periodic benefit cost other than the service cost component for our plans as well as any actuarial gains or losses are included in “Investment and other income (loss)” on the consolidated statement of operations.

The following tables provide the components of total pension ~~and postretirement~~ benefit cost:

Pension Benefits
For the three months ended
March 31,
($ in millions)
2021
2020
Components of total pension benefit cost
Service cost
$
24
$
25
Interest cost on projected benefit obligation
23
30
Expected return on plan assets
(45)
(50)
Amortization of unrecognized loss
18
17
Net periodic pension benefit cost
20
22
Pension settlement costs
-
103
Total pension benefit cost
$
20
$
125
Postretirement Benefits
For the three months ended
March 31,
($ in millions)
2021
2020
Components of net periodic postretirement benefit cost
Service cost
$
5
$
5
Interest cost on projected benefit obligation
7
8
Amortization of prior service cost (credit)
(7)
(8)
Amortization of unrecognized (gain) loss
3
2
Net periodic postretirement benefit cost
$
8
$
7



	Successor		Predecessor
	Pension		Pension
	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Components of total pension benefit cost
Service cost	$	13	$	8	$	24
Interest cost on projected benefit obligation		18		8		28
Expected return on plan assets		(31)		(16)		(39)
Amortization of unrecognized loss		-		6		30
Net periodic pension benefit cost		-		6		43
Pension settlement costs		-		-		56
Gain on disposal, net		-		-		(50)
Total pension benefit cost	$	-	$	6	$	49


	Successor		Predecessor
	Pension		Pension
	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Components of total pension benefit cost
Service cost	$	13	$	32	$	49
Interest cost on projected benefit obligation		18		31		58
Expected return on plan assets		(31)		(61)		(89)
Amortization of unrecognized loss		-		24		47
Net periodic pension benefit cost		-		26		65
Pension settlement costs		-		-		159
Gain on disposal, net		-		-		(50)
Total pension benefit cost	$	-	$	26	$	174

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

The components of net periodic benefit cost other than the service cost component are included in “Investment and other income” inon the consolidated statement of operations.

As part of fresh start accounting, Frontier revalued its net pension obligation as of April 30, 2021. In revaluating the pension benefit obligation, the assumed discount rate was 3.10% and the assumed rate of return on Plan assets was 7.5%. The discount rate increased compared to the 2.60% used in the December 31, 2020 valuation. This change as well as other changes in assumptions lead to a pension obligation decrease of $328 million.

The value of our pension plan assets ~~decreased $23~~increased $79 million from $2,507 million at December 31, 2020 to ~~$2,484~~$2,586 million at ~~March 31,~~April 30, 2021. This ~~decrease~~increase primarily resulted from contributions of $32 million and investment returns of $78 million, partially offset by benefit payments to participants of ~~$19~~$25 million and plan expenses of $5$6 million.

The value of our pension plan assets increased $61 million from $2,586 million at April 30, 2021 to $2,647 million at June 30, 2021. This increase primarily resulted from investment returns of $76 million, partially offset by ~~investment returns~~benefit payments to participants of $1$13 million and plan expenses of $2 million.

The pension plan contains provisions that provide certain employees with the option of receiving a lump sum payment upon retirement. Frontier’s accounting policy is to record these payments as a settlement only if, in the aggregate, they exceed the sum of the annual service and interest costs for the Pension Plan’s net periodic pension benefit cost. During the ~~three~~six months ended ~~March 31,~~June 30, 2020, lump sum pension settlement payments to terminated or retired individuals amounted to ~~$310~~$464 million, which exceeded the settlement threshold of $211 million, and as a result, Frontier recognized non-cash settlement charges totaling ~~$103~~$159 million during the ~~three~~six months ended ~~March 31,~~June 30, 2020. The non-cash charge accelerated the recognition of a portion of the previously unrecognized actuarial losses in the Pension Plan. These non-cash charges increased our recorded net loss and accumulated deficit, with a corresponding offset to accumulated other comprehensive loss in stockholders’ equity.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~During the first three months of 2021 and 2020, we capitalized $6 million and $7~~ ~~million, respectively, of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities.~~

~~Prior to the CARES Act, required~~Required pension plan contributions for fiscal year 2020 were approximately $180 ~~million.~~million prior to the CARES Act that was passed in March 2020. The CARES Act ~~(passed in March 2020)~~ allowed employers to postpone ~~making~~ pension contributions due in 2020 until January 4, 2021. As a result, Frontier ~~decided~~elected to defer all of its remaining 2020 fiscal year required contributions ~~(approximately $147~~of approximately $127 million including additional ~~interest).~~

On December 31, 2020, a $27 million contribution was made for the 2019 plan year. The remaining required 2020 plan year contributions were further delayed past the January 4, 2021 deadline (approximately $120 million including additional interest to January 4, 2021). As Frontier has applied for a waiver of delayed contributions per minimum funding standard regulations under Section 412(c) of the Internal Revenue Code and Section 302(c) of the Employee Retirement Income Security Act of 1974. This waiver would delay payments of the 2020 plan year by spreading the 2020 plan year contributions, determined as of January 1, 2020, over the five subsequent plan years.interest.

In March 2021, Congress passed the American Rescue Plan Act, or ARPA, which includes pension funding relief for plan sponsors. ARPA provides for 1) a shortfall amortization period change from 7 to 15 years with a fresh start for the existing shortfall, with an option to commence in this in the 2019 plan year and 2) interest rate stabilization, with an option to commence in this in the 2020 plan year.

~~Assuming the pension waiver described above is finalized and incorporating~~Incorporating the ARPA pension relief provisions, our pension plan contributions in the fiscal year 2021 are estimated to be $95 million. ~~There were 0 contributions~~Frontier made contribution payments of $32 million during the ~~first three~~four months ended April 30, 2021.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

The following tables provide the components of total postretirement benefit cost:



	Successor		Predecessor
	Postretirement		Postretirement
	For the two months		For the one month		For the three months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Components of net periodic postretirement benefit cost
Service cost	$	3	$	2	$	5
Interest cost on projected benefit obligation		5		2		8
Amortization of prior service cost (credit)		(1)		(3)		(8)
Amortization of unrecognized (gain) loss		13		2		1
Net periodic postretirement benefit cost		20		3		6
One-time gain on sale		-		-		(24)
Net periodic postretirement benefit cost	$	20	$	3	$	(18)

	Successor		Predecessor
	Postretirement		Postretirement
	For the two months		For the four months		For the six months
	ended June 30,		ended April 30,		ended June 30,
($ in millions)	2021		2021		2020

Components of net periodic postretirement benefit cost
Service cost	$	3	$	7	$	10
Interest cost on projected benefit obligation		5		9		16
Amortization of prior service cost (credit)		(1)		(10)		(16)
Amortization of unrecognized (gain) loss		13		5		3
Net periodic postretirement benefit cost		20		11		13
One-time gain on sale		-		-		(24)
Net periodic postretirement benefit cost	$	20	$	11	$	(11)

As part of fresh start accounting, the Company remeasured its other postretirement benefit obligation as of April 30, 2021. The assumed discount rate for this remeasurement increased from 2.60% to 3.30%, resulting in a reduction of our postretirement benefit obligation of approximately $101 million. As such, the postretirement benefit obligation was reduced from $1,042 million as of December 31, 2020, to $941 million as of April 30, 2021.

In May of 2021, Frontier amended the medical coverage for certain postretirement benefit plans, which resulted in a remeasurement of its other postretirement benefit obligation and a prior service credit of $55 million, which is deferred in Accumulated comprehensive income for the two months ended June 30, 2021.

The remeasurement resulted in a decrease to the discount rate used to calculate the benefit obligation from 3.30% to 3.20%, resulting in a remeasurement loss of approximately $14 million. As a result of fresh start accounting, Frontier updated its policy to recognize actuarial gains and losses in the period in which they occur. As such, this loss on remeasurement was recorded in Investment and other income, net on our consolidated statement of operations for the two months ended June 30, 2021.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

During the one month and four months of ~~2021.~~April 30, 2021, we capitalized $1 million and $7 million, respectively, of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities. During the two months ended June 30, 2021, we capitalized $4 million of pension and OPEB expense. During the three and six months ended June 30, 2020, we capitalized $7 million and $13 million, respectively, of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities.

~~(18)~~(19) Commitments and Contingencies:

Although from time to time we make short-term purchasing commitments to vendors with respect to capital expenditures, we generally do not enter into firm, written contracts for such activities.

Frontier accepted the FCC’s CAF Phase II offer in 25 states, which provides $313 million in annual support through 2020 (since extended to 2021) in return for the Company’s commitment to make broadband available to households within ~~Frontier’s footprint.~~the CAF II eligible areas. The CAF II program ends, and the Company must complete the CAF II deployment by December 31, 2021.

On January 30, 2020, the FCC adopted an order establishing the Rural Digital Opportunity Fund (RDOF) program. The FCC held the RDOF Phase I auction from October 29, 2020 through November 25, 2020 and announced the results on December 7, 2020. Frontier was awarded approximately $371 million over ten years to build gigabit capable broadband over a fiber-to-the-premises network to approximately 127,000 locations ~~across~~in 8 states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia). Frontier submitted its Long Form application to the FCC on January 29, 2021 and, assuming the long-form application is granted by the FCC, anticipates that it will begin receiving funding on January 1, 2022, in which case, Frontier will be required to complete the buildout to these locations by December 31, 2027, with interim target milestones over this period. Beginning in 2022, Frontier will be required to issue letters of credit to the FCC as a condition for amounts awarded. After the FCC updates its maps with more granular broadband availability information, the FCC plans to hold a second auction (RDOF Phase II) for any remaining locations with the remaining funding, up to approximately $11.2 billion.~~Beginning in 2022, Frontier will be required to issue letters of credit to the FCC as a condition for amounts awarded.~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

On April 30, 2018, an amended consolidated class action complaint was filed in the United States District Court for the District of Connecticut on behalf of certain purported stockholders against Frontier, certain of its current and former directors and officers and the underwriters of certain Frontier securities offerings. The complaint was brought on behalf of all persons who (1) acquired Frontier common stock between February 6, 2015 and February 28, 2018, inclusive, and/or (2) acquired Frontier common stock or Mandatory Convertible Preferred Stock either in or traceable to Frontier’s offerings of common and preferred stock conducted on or about June 2, 2015 and June 8, 2015. The complaint asserted, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the ~~Exchange Act)~~“Exchange Act”), and Rule 10b-5 thereunder, Section 20(a) of the Exchange Act and Sections 11 and 12 of the Securities Act of 1933, as amended (the ~~Securities Act)~~“Securities Act”), in connection with certain disclosures relating to the CTF Acquisition. The complaint sought, among other things, damages and equitable and injunctive relief. On March 8, 2019, the District Court granted in its entirety Frontier’s motion to dismiss the complaint. The District Court dismissed with prejudice a number of claims and with respect to certain other claims that were not dismissed with prejudice, Plaintiffs were permitted to seek the court’s permission to refile. On May 10, 2019, Plaintiffs filed a motion for leave to amend along with a proposed amended complaint that is narrower in scope than the dismissed complaint. On March 24, 2020, the court denied plaintiffs’ motion for leave to amend, finding that they had not pled a viable claim. Plaintiffs appealed and the case ~~was stayed by~~is pending with the Second Circuit Court of Appeals. Following Frontier’s emergence from bankruptcy, the Second Circuit set a briefing schedule completed in July 2021, with oral argument likely in the fall of 2021. We continue to dispute the allegations and intend to vigorously defend against such claims. In addition, shareholders have filed derivative complaints on behalf of the Company in Connecticut, California, and Delaware courts. The derivative complaints are based, generally, on the same

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

facts asserted in the consolidated class action complaint and allege against current and former officers and directors of the Company (i) breach of fiduciary duty claims for disseminating false and misleading information to shareholders, failure to manage internal controls, and failure to oversee and manage the company; (ii) unjust enrichment and waste of corporate assets claims; and (iii) violations of Section 14(a) of the Exchange Act for the false and misleading statements. We also dispute the allegations in the derivative complaints described above and intend to vigorously defend against such claims. Given that all of these matters are in the initial stages of litigation, we are unable to estimate a reasonably possible range of loss, if any, that may result.

In addition, we are party to various legal proceedings (including individual actions, class and putative class actions, and governmental investigations) arising in the normal course of our business covering a wide range of matters and types of claims including, but not limited to, general contract disputes, billing disputes, rights of access, taxes and surcharges, consumer protection, advertising, sales and the provision of services, intellectual property, including, trademark, copyright, and patent infringement, employment, regulatory, tort, claims of competitors and disputes with other carriers. Litigation is subject to uncertainty and the outcome of individual matters is not predictable. However, we believe that the ultimate resolution of all such matters, after considering insurance coverage or other indemnities to which we are entitled, will not have a material adverse effect on our financial position, results of operations, or cash flows.

In October 2013, the California Attorney General’s Office notified certain Verizon companies, including one of the subsidiaries that we acquired in the CTF Acquisition, of potential violations of California state hazardous waste statutes primarily arising from the disposal of electronic components, batteries and aerosol cans at certain California facilities. We are cooperating with this investigation. We have accrued an amount for potential penalties that we deem to be probable and reasonably estimated, and we do not expect that any potential penalties, if ultimately incurred, will be material in comparison to the established accrual.

We accrue an expense for pending litigation when we determine that an unfavorable outcome is probable, and the amount of the loss can be reasonably estimated. Legal defense costs are expensed as incurred. None of our existing accruals for pending matters, after considering insurance coverage, is material. We monitor our pending litigation for the purpose of adjusting our accruals and revising our disclosures accordingly, when required. Litigation is, however, subject to uncertainty, and the outcome of any particular matter is not predictable. We will vigorously defend our interests in pending litigation, and as of this date, we believe that

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

the ultimate resolution of all such matters, after considering insurance coverage or other indemnities to which we are entitled, will not have a material adverse effect on our consolidated financial position, results of operations, or our cash flows.

As part of the sale of the Northwest Operations, Frontier ~~indemnified~~has agreed to indemnify the purchaser for certain customary post-closing matters, including, among other things, breaches of certain covenants, agreements and warranties included in the purchase agreement. While Frontier intends to comply with its obligations under the purchase agreement, we could be obligated to make payments pursuant to these provisions in the future. ~~The amounts in escrow will be reviewed and unclaimed amounts released after one year from the completion of the sale.~~ ~~See Note 8 for additional details on the divestiture of our Northwest Operations.~~

We conduct certain of our operations in leased premises and also lease certain equipment and other assets pursuant to operating leases. The lease arrangements have terms ranging from 1 to 99 years and several contain rent escalation clauses providing for increases in monthly rent at specific intervals. When rent escalation clauses exist, we record annual rental expense based on the total expected rent payments on a straight-line basis over the lease term. Certain leases also have renewal options. Renewal options that are reasonably assured are included in determining the lease term.

We are party to contracts with several unrelated long-distance carriers. The contracts provide fees based on traffic they carry for us subject to minimum monthly fees.

‎

~~Effect of Automatic Stay~~

Subject to certain exceptions under the Bankruptcy Code, the filing of the Company Parties’ Chapter 11 Cases automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of the Company Parties or their property to recover on, collect or secure a claim arising prior to the Petition Date or to exercise control over property of the Company Parties’ bankruptcy estates, unless and until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim. Notwithstanding the general application of the automatic stay described above, governmental authorities may determine to continue actions brought under their police and regulatory powers.

~~(19)~~ ~~Subsequent Events~~:

~~Refinancing and Incremental Amendment~~

On April 14, 2021, the Company entered into a Refinancing and Incremental Facility Amendment No. 2 (the “Refinancing and Incremental Amendment”), providing for an amendment to the DIP to Exit Term Credit Agreement, pursuant to which the DIP Term Loan Facility (and the exit term loan facility into which it will convert upon the Company Parties’ emergence from the Chapter 11 Cases) was repriced, effective on April 14, 2021. The determination of interest rates is based on margins over the alternate base rate or over LIBOR, at the Company's election. Prior to the Refinancing and Incremental Amendment, the interest rate margin was 4.75% for LIBOR loans or 3.75% for alternate base rate loans, with a 1.00% LIBOR floor. Pursuant to the Refinancing and Incremental Amendment, the interest rate margin is 3.75% for LIBOR loans or 2.75% for alternate base rate loans, with a 0.75% LIBOR floor.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

affiliates (the Original Commitment Parties) pursuant to which, and subject to the satisfaction of certain conditions, including the Company Parties’ emergence from the Chapter 11 Cases, the Original Commitment Parties agreed to provide the Company with an incremental term loan facility in an aggregate principal amount of $225 million (the Original Incremental Commitment). The New Incremental Commitment will be used in place of the Original Incremental Commitment, which was terminated on April 14, 2021. The New Incremental Term Loans are expected to be fungible with, and on the same terms as, the Company’s existing term loans under the DIP to Exit Credit Agreement and have the same CUSIP numbers and other identifiers. Refer to Note 10, for details related to the DIP Term Loan Facility. At emergence our Exit term loan facility will have an aggregate principal amount of $1,475 million consisting of our converted DIP Term Loan Facility and the New Incremental Term Loan.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

Forward-Looking Statements

~~Forward-Looking Statements~~

This Quarterly Report on Form 10-Q contains "forward-looking statements" related to future events. Forward-looking statements address our ~~expected~~expectations or beliefs concerning future ~~business~~events, including, without limitation, our future operating and financial performance, our ability to comply with the covenants in the agreements governing our indebtedness and ~~financial condition,~~other matters. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance and contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “may,” “will,” “would,” or “target.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. ~~Uncertainties that~~We do not intend, nor do we undertake any duty, to update any forward-looking statements.

A wide range of factors could ~~cause our actual results to be~~ materially ~~different than those expressed in our forward-looking statements include,~~affect future developments and performance, including but ~~are~~ not limited to:

our significant indebtedness, our ability to ~~continue as a going concern;~~

~~our ability to successfully consummate a financial restructuring of our existing~~incur substantially more debt existing equity interests, and certain other obligations (the Restructuring), and emerge from cases commenced under chapter 11 (the Chapter 11 Cases) of the United States Bankruptcy Code, including by satisfying the conditions in the ~~Plan~~future, and ~~the conditions and milestones~~covenants in the ~~restructuring support agreement;~~

agreements governing our ~~ability to improve~~current indebtedness that may reduce our ~~liquidity~~operating and ~~long-term capital structure and to address our debt service obligations through the Restructuring and the potential adverse effects of the Chapter 11 Cases on our liquidity and results of operations;~~

~~our ability to maintain relationships with suppliers, customers, employees and other third parties as a result of the Restructuring and the Chapter 11 Cases;~~

~~the effects of the Restructuring and the Chapter 11 Cases on the Company and the interests of various constituents;~~

risks and uncertainties associated with the Restructuring, including our ability to satisfy the conditions precedent for effectiveness of and successfully consummate the Restructuring in accordance with the Plan under the Chapter 11 Cases;

~~our ability to comply with the restrictions imposed by covenants in our debtor-in-possession financing and expected to be imposed by our exit financing;~~

~~the length of time that we will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the Chapter 11 Cases;~~

~~risks associated with third party motions in the Chapter 11 Cases, which may interfere with the Company’s ability to consummate the Restructuring;~~

~~increased administrative and legal costs related to the Chapter 11 process;~~

~~declines in revenue from our voice services, switched and nonswitched access and video and data services that we cannot stabilize or offset with increases in revenue from other products and services;~~financial flexibility;

our ability to successfully implement strategic initiatives, including ~~opportunities~~our fiber buildout and other initiatives to enhance revenue and realize productivity improvements;

~~our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirement and cash paid for income taxes and liquidity;~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

competition from cable, wireless and wireline carriers, satellite, fiber “overbuilders” and over the top companies, and the risk that we will not respond on a timely or profitable basis;

our ability to successfully adjust to changes in the communications industry, including the effects of technological changes and competition on our capital expenditures, products and service offerings;

risks related to disruption in our networks, infrastructure and information technology that result in customer loss and/or incurrence of additional expenses;

the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions;

our ability to retain or attract new customers and to maintain relationships with customers, ~~employees~~including wholesale customers;

our reliance on a limited number of key supplies and vendors;

declines in revenue from our voice services, switched and nonswitched access and video and data services that we cannot stabilize or ~~suppliers;~~offset with increases in revenue from other products and services;

our ability to secure, continue to use or renew intellectual property and other licenses used in our business;

~~changes to our board of directors and management team upon emergence from bankruptcy or in anticipation of emergence, and~~ our ability to hire or retain key personnel;

our ability to dispose of certain assets or asset groups or to make acquisition of certain assets on terms that are attractive to us, or at all;

the effects of changes in the availability of federal and state universal service funding or other subsidies to us and our competitors and our ability to obtain future ~~subsidies, including participation in the proposed RDOF program;~~subsidies;

our ability to meet our CAF II and RDOF obligations and the risk of penalties or obligations to return certain CAF II and RDOF funds;

~~our RDOF application approval by the FCC and our ability to meet the applicable RDOF obligations and the risk of penalties or requirements to return certain RDOF funds;~~



~~our ability to comply with the obligations agreed to by the Company or imposed on the Company by regulatory authorities related to the approval to emerge from Chapter 11;~~

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

our ability to defend against litigation and potentially unfavorable results from current pending and future litigation;

our ability to comply with applicable federal and state consumer protection requirements;

~~the effects of state regulatory requirements that could limit our ability to transfer cash among our subsidiaries or dividend funds up to the parent company;~~

the effects of governmental legislation and regulation on our business, including costs, disruptions, possible limitations on operating flexibility and changes to the competitive landscape resulting from such legislation or regulation;

the impact of regulatory, investigative and legal proceedings and legal compliance risks;

~~government infrastructure projects (such as highway construction) that impact our capital expenditures;~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~continued reductions in switched access revenues as a result of regulation, competition or technology substitutions;~~

our ability to effectively manage service quality in the states in which we operate and meet mandated service quality metrics;

the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments, including the risk that such changes may benefit our competitors more than us, as well as potential future decreases in the value of our deferred tax assets;

the effects of changes in accounting policies or ~~practices, including potential future impairment charges with respect~~practices;

our ability to ~~our intangible assets;~~successfully renegotiate union contracts;

the effects of increased medical expenses and pension and postemployment expenses;

~~our ability to successfully renegotiate union contracts;~~

changes in pension plan assumptions, interest rates, discount rates, regulatory rules and/or the value of our pension plan ~~assets, which could require us to make increased contributions to~~ assets;

the ~~pension plan in 2020~~likelihood that our historical financial information may no longer be indicative of our future performance; and ~~beyond;~~our implementation of fresh start accounting;

adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally, including but not limited to, changes resulting from epidemics, pandemics and outbreaks of contagious diseases, including the COVID-19 pandemic, or other adverse public health developments;

potential adverse impacts of the COVID-19 pandemic on our business and operations, including potential disruptions to the work of our employees arising from health and safety measures such as social distancing and working remotely, our ability to effectively manage increased demand on our network, our ability to maintain relationships with our current or prospective customers and vendors as well as their abilities to perform under current or proposed arrangements with us, and stress on our supply chain; ~~and~~

risks associated with our emergence from the Chapter 11 Cases, including, but not limited to: the continuing effects of the Chapter 11 Cases on us and our relationships with our suppliers, customers, service providers or employees and changes in the composition of our board of directors and senior management;

volatility in the trading price ~~and volatility~~ of our common stock, ~~risks related to the delisting of our common stock from the Nasdaq Global Select Market and the cancellation of the Company’s common stock as contemplated by the Plan.~~which has a limited trading history;

~~Any~~substantial market overhang from the common stock issued in the Reorganization;

certain provisions of Delaware law and our certificate of incorporation that may prevent efforts by our stockholders to change the ~~foregoing events,~~direction or management of our company;

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

certain other ~~events, could cause~~factors set forth in our ~~results to vary from management’s~~other filings with the SEC.

This list of factors that may affect future performance and the accuracy of forward-looking statements ~~included in this report.~~is illustrative and is not intended to be exhaustive. You should consider these important factors, as well as the risks ~~contained~~described in ~~our most recent~~this report on Form ~~10-K~~10-Q and other filings with the SEC, in evaluating any statement in this report or otherwise made by us or on our behalf. ~~We have no obligation~~Please refer to ~~update or revise these forward-looking statements and do not undertake to do so.~~the Risk Factors included in Item 1A. of this report on Form 10-Q.

Investors should also be aware that while we do, at various times, communicate with securities analysts, it is against our policy to disclose to them selectively any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by an analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Overview~~Description of our Business

Frontier Communications ~~Corporation (Frontier~~Parent, Inc. (“Frontier” or the ~~Company,~~“Company”) offers a variety of broadband and ~~as it may be reorganized pursuant to the Plan, Reorganized Frontier) is a provider of~~ communications services over our fiber-optic and copper networks in the United States, with approximately ~~3.6~~3.5 million customers, ~~3.1~~2.8 million broadband ~~subscribers~~customers and ~~16,200~~approximately 16,000 employees, operating in 25 states as of ~~March 31,~~June 30, 2021. We offer a broad portfolio of communications services for consumer and ~~commercial~~business and wholesale customers. These services which include data and ~~internet~~Internet services, video services, voice services, access services, and advanced hardware and network solutions, are offered on either a standalone basis or in a bundled package, depending on each customer’s needs.

~~Q1 2021 Results~~Emergence from Bankruptcy

During the first quarter of 2021, Frontier reported operating income of $259 million and net income of $60 million. This compares to operating income of $272 million and a net loss of $186 million reported in the first quarter of 2020. We have continued to experience net losses in customers, which have contributed to lower revenues and lower profitability. Our results in the first quarter of 2021 reflect $25 million of reorganization charges. Contractual interest attributable to our unsecured noteholders of $252 million was not recorded, as we do not expect those amounts to be paid. Our results for the first quarter of 2020 included a pension settlement costs of $103 million, $48 million of restructuring costs, and loss on disposal of $24 million.

~~The company anticipates emerging from Chapter 11 on April 30, 2021 and eliminating approximately~~ ~~$11 billion~~ ~~in debt through the restructuring process. With an improved~~ ~~capital structure and stable liquidity position, the Company has been able to demonstrate that it will be able~~ ~~continue as a going concern upon emergence. See Note 3 for more information.~~

~~Recent Developments~~

~~Balance Sheet Restructuring~~

On April 14, 2020, Frontier Communications Corporation (“Old Frontier”) and its subsidiaries (collectively, the ~~Company Parties~~“Company Parties” or the ~~Debtors~~“Debtors” and, as ~~they may be~~ reorganized pursuant to the Plan, the ~~Reorganized~~“Reorganized Company ~~Parties~~Parties” or the ~~Reorganized Debtors)~~“Reorganized Debtors”) entered into a Restructuring Support Agreement (the ~~Restructuring~~“Restructuring Support ~~Agreement)~~Agreement”) with certain of its noteholders (the ~~Consenting Noteholders)~~“Consenting Noteholders”) to facilitate the financial restructuring (the ~~Restructuring)~~“Restructuring”) of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties. In connection therewith, on ~~April 14, 2020 (the~~the Petition ~~Date),~~Date, the Company Parties commenced ~~cases under chapter 11 (the~~the Chapter 11 ~~Cases) of title 11 of the United States Code (the~~Cases in Bankruptcy ~~Code) in the U.S. Bankruptcy Court for the Southern District of New York (the Bankruptcy Court).~~Court.

On May 15, 2020, the Company Parties filed a proposed Joint Plan of Reorganization and related Disclosure Statement, each of which were amended on June 26, 2020, June 29, 2020 and June 30, 2020. On May 15, 2020, the Debtors also filed a proposed order approving the Disclosure Statement and various plan solicitation materials, including the solicitation and voting procedures, which was revised on June 29, 2020 (including modifications to some of the exhibits). On June 30, 2020, the Bankruptcy Court entered the modified order approving the adequacy of the Disclosure Statement and the solicitation and notice procedures and the forms of voting ballots and notices in connection therewith. ~~The order established June 29, 2020 as the voting record date, July 2, 2020 as the solicitation launch date and July 31, 2020 as the voting deadline.~~ On August 21, 2020, the Company Parties filed the ~~Fifth Amended Joint~~ Plan ~~of Reorganization of Frontier Communications Corporation and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code~~ ~~(the Plan)~~ with the Bankruptcy Court.

On August 27, 2020, the Bankruptcy Court entered the Confirmation Order, which approved and confirmed the Plan.

On the Effective Date, the remaining conditions precedent to the effectiveness of the Plan were satisfied. In connection with the satisfaction of the conditions to effectiveness as set forth in the Confirmation Order and in the Plan, Old Frontier completed a series of transactions pursuant to which it transferred all of its assets in a taxable sale to an indirectly wholly owned subsidiary of Frontier, prior to winding down its business. In addition, the Company entered into a series of transactions (the “Reorganization”) through which Frontier’s debt was reduced by approximately $11 billion. The Reorganization involved, among others (i) the restructuring of Frontier’s indebtedness by (A) converting its DIP to Exit Term Credit Agreement into an Amended and Restated Credit Agreement, incorporating an exit term loan facility in an aggregate principal amount of $1,475 million after giving effect to the New Incremental Commitment (the “Exit Term Loan Facility”) and an exit revolving facility in the aggregate principal amount of $625 million (the “Exit Revolving Facility”), (B) issuing $750 million aggregate principle amount of 5.875% Second Lien Secured Notes (the “Takeback Notes”) to holders of claims related to Old Frontier’s unsecured notes, in partial satisfaction thereof; (C) assuming the obligations under the DIP-to-Exit Notes; (D) the cancellation of certain pre-petition obligations, and (E) issuing 244,401,000 shares of common stock that were transferred to holders of claims related to Old Frontier’s unsecured notes, in partial satisfaction thereof.

All of the existing equity of Old Frontier was canceled on the Effective Date pursuant to the Plan of Reorganization.

Beginning on the Effective Date, we applied fresh start accounting in accordance with ASC 852, Reorganizations, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

Reorganization, the consolidated financial statements after May 1, 2021 are not comparable with the consolidated financial statements on or prior to that date. Significant impacts to our results due to accounting policy changes have been discussed further in the related narrative discussions that follow. Additionally, Refer to Note 4, "Fresh Start Accounting," to our Consolidated Financial Statements for further details.

~~On August 27, 2020, the Bankruptcy Court entered the~~

~~Order Confirming the Fifth Amended Joint Plan of Reorganization ofFrontier Communications Corporation and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code~~ ~~(the Confirmation Order), which approved and confirmed the Plan. The effective date of the Plan will occur once all conditions precedent to the Plan have been satisfied (the Effective Date).~~Executive Summary

Upon emergence from ~~the Chapter 11 Cases, execution~~bankruptcy and consummation of ~~the~~ Plan, ~~will accomplish three strategic goals:~~

~~Enable Frontier to become a stronger partner for customers to keep them connected to what matters most.~~

~~Provide~~Frontier’s debt was reduced by approximately $11 billion, providing significant financial flexibility to accelerate transformation, invest in infrastructure, and drive operational efficiencies.

~~Significantly improve Frontier’s capital structure and reduce outstanding debt by approximately $11 billion through the restructuring process.~~

During the Chapter 11 Cases, Frontier is allowed to reorganize its finances while the business operations continue. The Company Parties continue to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. For further developments on this topic, see “(b) Liquidity and Capital Resources—Chapter 11 Cases and Other Related Matters.”Fiber Investment Focus

~~Upon emergence~~We are pursuing plans to extend our fiber network to meet the increased demand for data from ~~bankruptcy,~~both our consumer and business customers. We are prioritizing these build outs to target projects which we estimate will provide the highest investment returns. Over time, we expect our business mix will shift significantly, with a larger percentage of revenue coming from fiber as we implement our expansion plan. At June 30, 2021, our network passed approximately 15 million locations. We increased our 2021 fiber build target and now expect to ~~adopt fresh start accounting~~pass approximately 600,000 new locations this year, resulting in ~~accordance with ASC 852, Reorganizations. Under fresh start accounting rules, upon~~approximately 4 million fiber locations passed by the ~~Effective Date~~end of the Plan (each as defined herein), our assets and liabilities would be adjusted to fair value and our accumulated deficit would be restated to zero, which we expect will result in material adjustments to the recorded value of certain of our assets and liabilities. As a result, we may incur higher depreciation and amortization expense following the Effective Date.2021. In addition, we may adopt accounting policy changes as part of fresh start accounting and such policies could result in material changes to our financial reporting and results. The actual impact of the application of fresh start accounting and any such accounting policy changes will be determined by management upon and following the Effective Date. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, we expect that our financial condition and results of operations following the emergence from Chapter 11 will not be comparable to the financial condition and results of operations reflected in our historical financial statements.

~~April 2021~~ ~~Refinancing and Incremental Term Loan~~

~~On April 14, 2021, the Company entered into a Refinancing and Incremental Facility Amendment No. 2 (the Refinancing and Incremental Amendment), providing~~are targeting an additional 6 million locations for an amendment to the DIP to Exit Term Credit Agreement, pursuant to which the DIP Term Loan Facility (and the exit term loan facility into which it will convert upon the Company Parties’ emergence from the Chapter 11 Cases) was repriced. Pursuant to the Refinancing and Incremental Amendment, JPM also agreed to provide, subject to certain conditions, including emergence from the Chapter 11 Cases, an incremental exit term loan facility in an aggregate principal amount of $225 million (the New Incremental Commitment and the loans borrowed thereunder, the New Incremental Term Loans). Refer to Note 19 for additional information related to the Refinancing and Incremental Facility Amendment.fiber expansion through 2025.

Presentation of Results of Operations

The sections below include tables that present customer counts, average monthly consumer revenue per customer (ARPC) and consumer customer churn. We define churn as the number of consumer customer deactivations during the month divided by the number of consumer customers at the beginning of the month and utilize the average of each monthly churn in the period.

Management believes that consumer customer counts and average monthly revenue per customer are important factors in evaluating our consumer customer trends. Among the key services we provide to consumer customers are voice service, data service and video service. We continue to explore the potential to provide additional services to our customer base, with the objective of meeting our customers’ communications needs.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

The following section should be read in conjunction with the unaudited interim consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2020.

The following charts present key customer metrics, disaggregation of revenue, and the results of operations of the consolidated company including the Northwest Operations (Northwest Ops) through the date of sale. The results of operations for the Northwest Operations are shown separate from the total for our operations located in the remaining 25 states (Remaining Properties).

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Results of Operations

Unless otherwise indicated, the discussion of the customer metrics and components of operating income for the table that follows relates only to the Non-GAAP combined financial results for the three and six months ended June 30, 2021 as compared to the financial results excluding the impact of the Northwest operations for the three and six months ended June 30, 2020.

Customer counts, ARPC, and Consumer Customer Churn



	As of or for the three months ended June 30,
(Customer, Subscriber, and Employee Metrics in thousands)	2021⁽²⁾		2020 ⁽³⁾		% Change

Customers ⁽⁴⁾
Consumer		3,196		3,342	(4)	%
Business ⁽¹⁾		313		344	(9)	%
Total		3,509		3,686	(5)	%

Consumer Customer Metrics ⁽⁴⁾
Net customer additions (losses)		(38)		(32)	19	%
ARPC	$	85.65	$	87.22	(2)	%
Customer Churn		1.54%		1.63%	(6)	%

Broadband Customer Metrics ^{(1) (4)}
Fiber Broadband
Consumer customers		1,263		1,223	3	%
Business customers		95		93	2	%
Consumer net customer additions		12		7	71	%
Consumer customer churn		1.53%		1.52%	1	%
Consumer customer ARPU	$	63.10	$	56.92	11	%
Copper Broadband
Consumer customers		1,297		1,401	(7)	%
Business customers		143		164	(13)	%
Consumer net customer additions		(30)		(18)	67	%
Consumer customer churn		1.67%		2.03%	(18)	%
Consumer customer ARPU	$	44.80	$	41.93	7	%

Other Metrics
Employees		16,005		16,420	(3)	%

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~(a)Results of Operations~~

Unless otherwise indicated, the discussion of the customer metrics and components of operating income for that follows relates only to the Remaining Properties for the three months ended March 31, 2021 and 2020.

~~Customer counts, ARPC, and Consumer Customer Churn~~

As of or for the three months ended
March 31, 2021
March 31, 2020
%
Consolidated
Consolidated
Northwest
Remaining
Remaining
Frontier
Frontier
Ops
Properties
Properties
Customers (in thousands)
3,553
4,063
N/A
N/A
N/A
Consumer customer metrics
Customers (in thousands)
3,234
3,703
330
3,373
-4%
Net customer additions (losses)
(30)
(44)
(5)
(39)
-23%
Average monthly consumer
   revenue per customer
$              86.60
$          86.93
$        77.22
$        87.88
-1%
Customer monthly churn
1.45%
1.81%
1.52%
1.84%
-21%
Commercial customer metrics
Customers (in thousands)
319
360
N/A
N/A
N/A
Broadband subscriber metrics
Broadband subscribers (in thousands)
3,052
3,480
297
3,183
-4%
Net subscriber additions (losses)
(17)
(33)
(5)
(28)
-39%
Video (excl. DISH) subscriber metrics
Video subscribers (in thousands)
453
621
27
594
-24%
Net subscriber additions (losses)
(32)
(39)
(2)
(37)
-14%
DISH subscriber metrics
DISH subscribers (in thousands)
129
165
16
149
-13%
Net subscriber additions (losses)
(5)
(8)
(1)
(7)
-29%
Employees
16,201
17,437
950
16,487
-2%

		For the six months ended June 30,
	(Customer, Subscriber, and Employee Metrics in thousands)	2021⁽²⁾		2020 ⁽³⁾		% Change

	Consumer Customer Metrics ⁽⁴⁾
	Net customer additions (losses)		(68)		(71)	(4)	%
	ARPC	$	86.34	$	87.87	(2)	%
	Customer Churn		1.49%		1.74%	(14)	%

	Broadband Customer Metrics ^{(1) (4)}
	Fiber Broadband
	Consumer net customer additions		25		17	47	%
	Consumer customer churn		1.47%		1.73%	(15)	%
	Consumer customer ARPU	$	61.88	$	56.89	9	%
	Copper Broadband
	Consumer net customer additions		(52)		(41)	27	%
	Consumer customer churn		1.65%		2.20%	(25)	%
	Consumer customer ARPU	$	43.98	$	41.55	6	%


⁽¹⁾	Amounts presented exclude related metrics for our wholesale customers
⁽²⁾	Amounts represent activity related to both the Predecessor and Successor company on a combined basis.
⁽³⁾	Amounts have been adjusted to exclude the impact of our Northwest Operations.
⁽⁴⁾	Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

Consumer Customers

For the three and six months ended ~~March 31,~~June 30, 2021, Frontier lost ~~30,000,~~38,000, or 1%, and 68,000, or 2%, of our consumer customers compared to ~~39,000,~~32,000, or 1%, and 71,000 or 2%, for the three and six months ended ~~March 31,~~June 30, 2020. This includes net losses of our consumer broadband ~~subscribers~~customers of approximately ~~11,000,~~18,000, or ~~less than~~ 1%~~. This loss was~~ and 27,000, or 1% during those same periods. Customer losses were driven by ~~a reduction~~reductions in our copper broadband customers, ~~of 22,000, or a 2% decrease,~~ offset by net additions of fiber broadband ~~customers of 11,000, or a 1% increase.~~ customers.

Additionally, we lost 7% and 3%13% of our consumer video customers and 3% and 6% of our consumer voice customers ~~respectively,~~ during the 3three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively. These trends are indicative of the shift in the Company’s strategy to focus primarily on increasing our fiber footprint and away from the acquisition of high cost video customers and packaging voice and video services with our broadband offerings. As of ~~March 31,~~June 30, 2021, ~~the continued trend of decreased bundling of our services resulted in 48%~~46% of our consumer broadband customers also subscribed to at least one other service offering, a decrease from ~~both 54%~~53% as of ~~March 31,~~June 30, 2020 and 50% as of December 31, 2020.

Our average monthly consumer customer churn was ~~1.45%~~1.54% and 1.49% for the three and six months ended ~~March 31,~~June 30, 2021 compared to ~~1.84%~~1.63% and 1.74% for three and six months ended ~~March 31,~~June 30, 2020. The ~~reduction~~reductions in customer churn ~~was~~were primarily driven by internal initiatives to increase customer retention and also reflect the impact of COVID-19. The average monthly consumer revenue per customer (consumer ARPC) decreased ~~by $1.28~~$1.57 or 1%2% to ~~$86.60 during~~$85.65 and decreased $1.53 or 2% to $86.34 for the three and six months ended ~~March 31,~~June 30, 2021 compared to the prior year ~~period. The overall decrease~~period, respectively. Fresh start accounting resulted in a $19 million reduction in consumer customer revenue for both the three and six months ended June 30, 2021, which resulted in a lower ARPC. After adjusting for the fresh start impact of approximately $1.89 and $0.94 for the three and six month periods, respectively, consumer ARPC isincreased by $0.32 and decreased by $0.59, respectively. The increase for the three months ended June 30, 2021 was due to increased fiber and data equipment revenues and the decrease for the six months ended June 30, 2021 was primarily a result of decreased linear video services along with decreased consumer voice services, slightly offset by increased fiber data and data equipment revenues.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~video services along with decreased~~

Consumer Fiber Broadband

For the three and six months ended June 30, 2021, Frontier added 12,000, or 1%, and 25,000, or 2%, of consumer ~~voice services, slightly offset by increased~~ fiber ~~data~~broadband customers compared to 7,000, or 1%, and ~~data equipment revenues.~~17,000 or 1%, for the three and six months ended June 30, 2020. These increases are a result of the company’s investment strategy focused on building out and improving its fiber network.

Consumer Copper Broadband

For the three and six months ended June 30, 2021, Frontier lost 30,000, or 2%, and 52,000, or 4%, of our consumer copper broadband customers compared to 18,000, or 1%, and 41,000 or 3%, for the three and six months ended June 30, 2020. These decreases are a result of customers shifting to our Fiber Broadband products or finding other alternatives.

Financial Results

We reported operating income of $92 million and $206 million for the month ended April 30, 2021 and for the two months ended June 30, 2021. While the basis of accounting for the predecessor and successor are different as a result of applying fresh start accounting, for purposes of discussing our operating performance that follows we have presented combined Non-GAAP operating income for the three months ended June 30, 2021 which will be compared to operating income for the three months ended June 30, 2020 for the Remaining Properties. The more significant impacts of fresh start accounting that affect comparability are included in the variance analysis that follows.

We reported Non-GAAP operating income of $298 million and operating income of $140 million for the three months ended June 30, 2021 and 2020, respectively, an increase of $158 million. The impact of identified fresh start accounting differences resulted in a $15 million reduction to operating income for the second quarter of 2021 as compared to the prior year. The improvement in our operating results was primarily due to a reduction in loss on disposal and decreased video content costs.

For the three months ended March 31,
2021
2020
% Change
Consolidated
Consolidated
Northwest
Remaining
Consolidated
Remaining
Frontier
Frontier
Ops ⁽¹⁾
Properties
Frontier
Properties
Data and Internet services
$
842
$
932
$
77
$
855
-10%
-2%
Voice services
487
572
43
529
-15%
-8%
Video services
169
222
10
212
-24%
-20%
Other
95
117
9
108
-19%
-12%
Revenue from contracts
with customers
1,593
1,843
139
1,704
-14%
-7%
Subsidy and other revenue
83
90
6
84
-8%
-1%
Revenue
1,676
1,933
145
1,788
-13%
-6%
Operating expenses ⁽²⁾:
Network access
expenses
198
286
10
276
-31%
-28%
Network related
expenses
422
444
19
425
-5%
-1%
Selling, general and
administrative
expenses
408
444
19
425
-8%
-4%
Depreciation and
amortization
387
415
-
415
-7%
-7%
Loss on disposal of
Northwest Operations
-
24
-
24
-100%
-100%
Restructuring costs and
other charges
2
48
-
48
-96%
-96%
Total operating expenses
$
1,417
$
1,661
$
48
$
1,613
-15%
-12%
Operating income (loss)
259
272
97
175
-5%
48%
Consumer
844
971
77
894
-13%
-6%
Commercial
749
872
62
810
-14%
-8%
Revenue from contracts
with customers
1,593
1,843
139
1,704
-14%
-7%
Subsidy and other revenue
83
90
6
84
-8%
-1%
Total revenue
$
1,676
$
1,933
$
145
$
1,788
-13%
-6%

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

					Non-GAAP
	Successor		Predecessor		Combined		Predecessor

	For the two		For the one		For the three		For the three months ended June 30, 2020
	months ended		month ended		months ended		Consolidated		Northwest		Remaining
($ in millions)	June 30, 2021		April 30, 2021		June 30, 2021		Frontier		Ops ⁽¹⁾		Properties

Data and Internet services	$	556	$	283	$	839	$	874	$	25	$	849
Voice services		283		160		443		523		14		509
Video services		105		54		159		200		3		197
Other		62		30		92		108		3		105
Revenue from contracts
with customers		1,006		527		1,533		1,705		45		1,660
Subsidy and other revenue		55		28		83		96		2		94
Revenue		1,061		555		1,616		1,801		47		1,754

Operating expenses ⁽²⁾:
Network access
expenses		127		66		193		255		4		251
Network related
expenses		269		144		413		430		7		423
Selling, general and
administrative
expenses		269		129		398		407		7		400
Depreciation and
amortization		179		119		298		397		-		397
Loss on disposal of
Northwest Operations		-		-		-		136		-		136
Restructuring costs and
other charges		11		5		16		36		-		36
Total operating expenses	$	855	$	463	$	1,318	$	1,661	$	18	$	1,643

Operating income (loss)		206		92		298		140		29		111

Consumer ⁽³⁾		543		283		826		904		25		879
Business and wholesale ⁽³⁾		463		244		707		801		20		781
Revenue from contracts
with customers		1,006		527		1,533		1,705		45		1,660
Subsidy and other revenue		55		28		83		96		2		94
Total revenue	$	1,061	$	555	$	1,616	$	1,801	$	47	$	1,754

⁽¹⁾Amounts represent the financial results of the Northwest Operations for the three months ended ~~March 31,~~June 30, 2020.

⁽²⁾Operating expenses for the Northwest Operations do not include allocated expenses which are included in operating expenses for our Remaining Properties.

⁽³⁾

55Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~REVENUE~~

~~Revenue for our consumer and commercial customers was as follows:~~

For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2021
2020
(Decrease)
(Decrease)
Consumer
$
844
$
894
$
(50)
(6)
%
Commercial
749
810
(61)
(8)
%
Revenue from contracts with customers ⁽¹⁾
1,593
1,704
(111)
(7)
%
Subsidy and other revenue
83
84
(1)
(1)
%
Total revenue
$
1,676
$
1,788
$
(112)
(6)
%

⁽¹⁾~~Amounts include approximately $16 million and $17 million of lease revenue for each of the three months ended March 31, 2021 and 2020, respectively.~~

~~We provide service and product options in our consumer and commercial offerings in each of our markets.~~

We generate revenues primarily through either a monthly recurring fee or a fee based on usage, and revenue recognition is not dependent upon significant judgments by management, with the exception of a determination of the provision for uncollectible amounts.

For the three months ended March 31, 2021, decreased consumer revenues were primarily driven by the 4% decline in consumer customers when compared to March 31, 2020, combined with decreased ARPC (as described above) resulting in reduced revenues for consumer voice services, video services, and to a lesser extent, data and internet services.

Decreases in commercial revenues for the three months ended March 31, 2021 were primarily driven by reductions in wholesale revenues of 6%, which comprised approximately 53% of our commercial revenues. The decline in wholesale revenues were primarily a result of rate declines for our network access services as a result of more collaborative approach we are undertaking with our carrier clients, which we expect will lead to more sustainable service revenues. Our small and medium business and larger enterprise (SME) revenues, decreased 9%, for the three months ended March 31, 2021, primarily as a result of a decline in small business customers as compared to March 31, 2020.

Non-GAAP

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

	Successor		Predecessor		Combined		Predecessor

	For the two		For the four		For the six		For the six months ended June 30, 2020
	months ended		months ended		months ended		Consolidated		Northwest		Remaining
($ in millions)	June 30, 2021		April 30, 2021		June 30, 2021		Frontier		Ops ⁽¹⁾		Properties

Data and Internet services	$	556	$	1,125	$	1,681	$	1,806	$	102	$	1,704
Voice services		283		647		930		1,095		57		1,038
Video services		105		223		328		422		13		409
Other		62		125		187		225		12		213
Revenue from contracts
with customers		1,006		2,120		3,126		3,548		184		3,364
Subsidy and other revenue		55		111		166		186		8		178
Revenue		1,061		2,231		3,292		3,734		192		3,542

Operating expenses ⁽²⁾:
Network access
expenses		127		264		391		541		14		527
Network related
expenses		269		566		835		874		26		848
Selling, general and
administrative
expenses		269		537		806		851		26		825
Depreciation and
amortization		179		506		685		812		-		812
Loss on disposal of
Northwest Operations		-		-		-		160		-		160
Restructuring costs and
other charges		11		7		18		84		-		84
Total operating expenses	$	855	$	1,880	$	2,735	$	3,322	$	66	$	3,256

Operating income (loss)		206		351		557		412		126		286

Consumer ⁽³⁾		543		1,133		1,676		1,881		102		1,779
Business and wholesale ⁽³⁾		463		987		1,450		1,667		82		1,585
Revenue from contracts
with customers		1,006		2,120		3,126		3,548		184		3,364
Subsidy and other revenue		55		111		166		186		8		178
Total revenue	$	1,061	$	2,231	$	3,292	$	3,734	$	192	$	3,542

⁽¹⁾Amounts represent the financial results of the Northwest Operations for the six months ended June 30, 2020.

⁽²⁾Operating expenses for the Northwest Operations do not include allocated expenses which are included in operating expenses for our Remaining Properties.

⁽³⁾Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

REVENUE

Revenue for our consumer and business and wholesale customers was as follows:



	Non-GAAP
	Combined		Predecessor

	For the three		For the three
	months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Consumer ⁽²⁾	$	826	$	879	$	(53)	(6)	%
Business and wholesale ⁽²⁾		707		781		(74)	(9)	%
Revenue from contracts with customers ⁽¹⁾		1,533		1,660		(127)	(8)	%
Subsidy and other revenue		83		94		(11)	(12)	%
Total revenue	$	1,616	$	1,754	$	(138)	(8)	%

	Non-GAAP
	Combined		Predecessor

	For the six		For the six
	months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Consumer ⁽²⁾	$	1,676	$	1,779	$	(103)	(6)	%
Business and wholesale ⁽²⁾		1,450		1,585		(135)	(9)	%
Revenue from contracts with customers ⁽¹⁾		3,126		3,364		(238)	(7)	%
Subsidy and other revenue		166		178		(12)	(7)	%
Total revenue	$	3,292	$	3,542	$	(250)	(7)	%

⁽¹⁾Amounts include approximately $21 million and $16 million and $37 million and $32 million of lease revenue for the three and six months ended June 30, 2021 and 2020, respectively.

⁽²⁾Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts

We provide services and products for our consumer and business and wholesale customers in each of our markets. We generate revenues primarily through monthly recurring fees or fees based on usage. Revenue recognition is not dependent upon significant judgments by management, with the exception of a determination of the provision for expected credit losses.

For the three and six months ended June 30, 2021, we experienced 6% declines in our consumer customer revenues, which were driven by a 4% decrease in the number of customers and a 2% decrease in ARPC. The adoption of fresh start accounting policies resulted in a $19 million net reduction to consumer customer revenue for each of the three and six months ended June 30, 2021.

For the three and six months ended June 30, 2021, we experienced a 9% decline in our business and wholesale revenues, respectively. Of these declines, wholesale revenues decreased by 14% and 10%, driven by lower rates for our network access services charged to our wholesale customers for the three and six months ended June 30, 2021, respectively. Our small and medium business and larger enterprise (SME) revenues, decreased 4% and 7%, primarily as a result of a decline in small business customers for the three and six months ended June 30, 2021, respectively. Our adoption of fresh start accounting policies resulted in a $15 million net reduction to business and wholesale customer revenue for each of the three and six months ended June 30, 2021.

Revenue by product and service type was as follows:

For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2021
2020
(Decrease)
(Decrease)
Data and Internet services
$
842
$
855
$
(13)
(2)
%
Voice services
487
529
(42)
(8)
%
Video services
169
212
(43)
(20)
%
Other
95
108
(13)
(12)
%
Revenue from contracts with customers ⁽¹⁾
1,593
1,704
(111)
(7)
%
Subsidy and other revenue
83
84
(1)
(1)
%
Total revenue
$
1,676
$
1,788
$
(112)
(6)
%

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)


	Non-GAAP
	Combined		Predecessor

	For the three		For the three
	months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Data and Internet services	$	839	$	849	$	(10)	(1)	%
Voice services		443		509		(66)	(13)	%
Video services		159		197		(38)	(19)	%
Other		92		105		(13)	(12)	%
Revenue from contracts with customers ⁽¹⁾		1,533		1,660		(127)	(8)	%
Subsidy and other revenue		83		94		(11)	(12)	%
Total revenue	$	1,616	$	1,754	$	(138)	(8)	%

	Non-GAAP
	Combined		Predecessor

	For the six		For the six
	months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Data and Internet services	$	1,681	$	1,704	$	(23)	(1)	%
Voice services		930		1,038		(108)	(10)	%
Video services		328		409		(81)	(20)	%
Other		187		213		(26)	(12)	%
Revenue from contracts with customers ⁽¹⁾		3,126		3,364		(238)	(7)	%
Subsidy and other revenue		166		178		(12)	(7)	%
Total revenue	$	3,292	$	3,542	$	(250)	(7)	%

⁽¹⁾Amounts include approximately $21 million and $16 million, and ~~$17~~$37 million and $32 million of lease revenue for the three and six months ended ~~March 31,~~June 30, 2021 and 2020, respectively.

We categorize our products, services, and other revenues into the following five categories:

Data and Internet Services

Approximately two thirds of our Data and Internet services is comprised of Broadband and data services revenues ~~comprised 63% or $527 million of total Data~~related to our consumer and ~~internet services revenue, while~~SME customers, with the remainder being network access ~~revenues comprised 37% or $315 million.~~revenues. Network access revenues include our data transmission services to high volume ~~commercial~~business and wholesale customers and other ~~carriers~~customers with dedicated high capacity circuits including services to wireless providers (wireless backhaul).

For the three and six months ended ~~March 31,~~June 30, 2021, Data and Internet services revenue decreased ~~by 2%~~$10 million and $23 million. For the three and six months ended June 30, 2021, Data and Internet services revenue declined $2 million as a result of the elimination of the deferred installation fee revenue balance with the implementation of fresh start accounting. Adjusting for this fresh start accounting impact, Data and Internet revenue decreased $8 million and $21 million for the three and six months ended June 30, 2021, respectively. This decrease is primarily due to decreased network access revenues, offset by increased broadband and data services revenue. Network access revenues declined 8%10% and 9%, ~~compared to~~for the ~~same period in 2020. This decrease was due to~~three and six months as result of an ongoing migration of our carrier customers from legacy technology circuits to lower priced ethernet circuits. Broadband and data services revenue ~~(which represents all data and internet service revenue other than our Network access service revenue)~~ increased by 2%5% and 3% for the three and six months ended June 30, 2021 compared to the corresponding period in 2020. ~~The~~This increase was primarily driven by ~~management initiatives to~~ increase ~~our~~fiber broadband ~~customer base.~~revenues.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Voice Services

Voice services include traditional local and long-distance wireline services, data-based Voice over Internet Protocol (VoIP) services, as well as voice messaging services offered to our consumer and ~~commercial~~business and wholesale customers. Voice services also include the long-distance voice origination and termination ~~services that we provide to our commercial customers and other carriers.~~services.

For the three and six months ended ~~March 31,~~June 30, 2021 voice revenue decreased $66 million and $108 million, respectively. As a result of the fresh start accounting policy change to account for USF fees on a net basis instead of on a gross basis in both revenue and expense, voice services revenue was lower by $28 million for the three and six months ended June 30, 2021. Adjusting for this change in accounting policy, voice revenue decreased $38 million and $80 million for the three and six months ended June 30, 2021, respectively. These declines were primarily due to a net ~~loss~~losses in business and consumer customers ~~and a net loss~~ in ~~commercial~~addition to fewer customers ~~combined with a reduction in~~bundling voice services ~~being bundled~~ with ~~broadband services.~~broadband.

Video Services

Video services include revenues generated from services provided directly to consumer customers as linear terrestrial television services, and through Dish satellite TV services.

For the three and six months ended ~~March 31,~~June 30, 2021 video service revenue decreased $38 million and $81 million, respectively. As a result of the fresh start accounting policy change to account for certain surcharges and taxes on a net basis instead of on a gross basis in both revenue and expense, video services revenue was lower by $5 million for the three and six months ended June 30, 2021. Adjusting for this change in accounting policy, video services revenue decreased $33 million and $76 million for the three and six months ended June 30, 2021, respectively. These declines were primarily driven by a ~~24% net loss in~~ linear video ~~customers, when compared to the prior year period,~~customer losses, partially offset by price increases.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

Other

Other customer revenue includes switched access revenue and sales of Customer Premise Equipment (CPE) to our business customers and directory services. Switched access revenue includes revenue derived from allowing other carriers to use our network to originate and/or terminate their local and long-distance voice ~~traffic (switched access).~~traffic. These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies.

~~The decrease in~~For the three and six months ended June 30, 2021, other customer revenue decreased $13 million and $26 million, respectively. As a result of the fresh start accounting policy changes to classify the provision for bad debt as an expense instead of as a reduction to revenue, other customer revenue is $7 million higher for the three and six months ended ~~March 31,~~June 30, 2021. For the three and six months ended June 30, 2021, ~~was~~other customer revenue declined $6 million as a result of the elimination of the deferred installation fee revenue balance with the implementation of fresh start accounting. Excluding these impacts of fresh start accounting, other customer revenue decreased $14 million and $27 million for the three and six months ended June 30, 2021, respectively. These decreases were primarily driven by ~~a reduction~~reductions in late payment fees, early termination fees and reconnect ~~fees in 2021 as compared to the prior year period.~~fees.

Subsidy and other revenue

Subsidy and other revenue ~~was relatively flat as compared~~decreased $11 million and $12 million for the three and six months ended June 30, 2021, primarily due to $10 million of transition service revenue in 2020 related to the ~~first~~disposal of our Northwest Operations that was discontinued in the fourth quarter of ~~2021.~~2020.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

OPERATING EXPENSES

NETWORK ACCESS EXPENSES

For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2021
2020
(Decrease)
(Decrease)
Network access expenses
$
198
$
276
$
(78)
(28)
%

Non-GAAP

Combined

Predecessor

For the three

months ended

$ Increase

% Increase

($ in millions)

June 30, 2021

June 30, 2020

(Decrease)

Network access expenses

193

251

(58)

(23)

Non-GAAP

Combined

Predecessor

For the six

months ended

$ Increase

% Increase

($ in millions)

June 30, 2021

June 30, 2020

(Decrease)

Network access expenses

391

527

(136)

(26)

Network access expenses include access charges and other third-party costs directly attributable to connecting customer locations to our network, video content costs and certain promotional costs. Such access charges and other third-party costs exclude network related expenses, depreciation and amortization, and employee related expenses.

For the three and six months ended ~~March 31,~~June 30, 2021, network access expense decreased $58 million and $136 million, respectively. As result of the ~~decrease~~fresh start accounting policy change to account for USF fees on a net basis instead of on a gross basis in both revenue and expense, network access expense was $35 million lower for the three and six months ended June 30, 2021. Adjusting for this change in accounting policy, network access expense decreased $23 million and $101 million for the three and six months ended June 30, 2021, respectively. These decreases are driven by lower video content costs as a result of ~~a decline~~declines in video customers, ~~and~~ non-renewal of certain content agreements ~~as well as~~and decreased CPE costs.

NETWORK RELATED EXPENSES

For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2021
2020
(Decrease)
(Decrease)
Network related expenses
$
422
$
425
$
(3)
(1)
%

Non-GAAP

Combined

Predecessor

For the three

months ended

$ Increase

% Increase

($ in millions)

June 30, 2021

June 30, 2020

(Decrease)

Network related expenses

413

423

(10)

(2)

Non-GAAP

Combined

Predecessor

For the six

months ended

$ Increase

% Increase

($ in millions)

June 30, 2021

June 30, 2020

(Decrease)

Network related expenses

835

848

(13)

(2)

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Network related expenses include expenses associated with the delivery of services to customers and the operation and maintenance of our network, such as facility rent, utilities, maintenance and other costs, as well as salaries, wages and related benefits associated with personnel who are responsible for the delivery of services, and the operation and maintenance of our network. For the three and six months ended ~~March 31,~~June 30, 2021, Network related expenses were relatively flat.

58SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

Non-GAAP

Combined

Predecessor

For the three

months ended

$ Increase

% Increase

($ in millions)

June 30, 2021

June 30, 2020

(Decrease)

Selling, general and

administrative expenses

398

400

(2)

(1)

Non-GAAP

Combined

Predecessor

For the six

months ended

$ Increase

% Increase

($ in millions)

June 30, 2021

June 30, 2020

(Decrease)

Selling, general and

administrative expenses

806

825

(19)

(2)

~~SELLING, GENERAL AND ADMINISTRATIVE EXPENSES~~

For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2021
2020
(Decrease)
(Decrease)
Selling, general and
administrative expenses
$
408
$
425
$
(17)
(4)
%

Selling, general and administrative expenses (SG&A expenses) include the salaries, wages and related benefits and the related costs of corporate and sales personnel, travel, insurance, non-network related rent, advertising, and other administrative expenses.

For the three and six months ended ~~March 31,~~June 30, 2021, ~~the decrease in~~ SG&A expenses ~~was~~decreased $2 million and $19 million, respectively. As a result of the fresh start accounting policy change to classify the provision for bad debt as an expense instead of as a reduction to revenue, SG&A expenses were $7 million higher for the three and six months ended June 30, 2021. Additionally, we have expensed $10 million of certain administrative items that were previously capitalized by the predecessor. Adjusting for these fresh start accounting changes, SG&A expenses decreased $19 million and $36 million for the three and six months ended June 30, 2021, respectively. These decreases were driven by reduced property taxes and ~~a decrease in certain executive benefits.~~lower headcount, partially offset by higher professional services and recruiting fees.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Pension and OPEB costs

Frontier allocates certain pension/OPEB expense to network related expenses and SG&A expenses. Total consolidated pension and OPEB service costs for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 were as follows:

For the three months ended March 31,
($ in millions)
2021
2020
Total pension/OPEB
service costs
$
29
$
30
Less: costs capitalized into
capital expenditures
(6)
(7)
Net pension/OPEB costs
$
23
$
23



	Non-GAAP
	Combined		Predecessor

	For the three		For the three
	months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Pension/OPEB Service Costs	$	26	$	29	$	(3)	(10)	%
Less: costs capitalized into
capital expenditures		(5)		(6)		1	(17)	%

Net pension/OPEB costs	$	21	$	23	$	(2)	(9)	%

	Non-GAAP
	Combined		Predecessor

	For the six		For the three
	months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Pension/OPEB Service Costs	$	55	$	59	$	(4)	(7)	%
Less: costs capitalized into
capital expenditures		(11)		(13)		2	(15)	%

Net pension/OPEB costs	$	44	$	46	$	(2)	(4)	%

DEPRECIATION AND AMORTIZATION EXPENSE

For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2021
2020
(Decrease)
(Decrease)
Depreciation expense
$
308
$
316
$
(8)
(3)
%
Amortization expense
79
99
(20)
(20)
%
Depreciation and
Amortization expense
$
387
$
415
$
(28)
(7)
%

~~The decrease in depreciation expense for the three months ended March 31, 2021 was primarily driven by lower asset bases, refer to Note 6.~~

The decrease in amortization expense for the three months ended March 31, 2021 was primarily driven by the accelerated method of amortization related to customer bases acquired in 2010, 2014, and 2016.

~~LOSS ON DISPOSAL OF NORTHWEST OPERATIONS~~

During the three months ended March 31, 2020, Frontier recorded a loss on disposal of $24 million associated with the sale of the Northwest Operations. There was no additional loss on disposal recorded during the first quarter of 2021.


	Non-GAAP
	Combined		Predecessor

	For the three		For the three
	months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Depreciation expense	$	226	$	314	$	(88)	(28)	%
Amortization expense		72		83		(11)	(13)	%
Depreciation and
Amortization expense	$	298	$	397	$	(99)	(25)	%

5963

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

	Non-GAAP
	Combined		Predecessor

	For the six		For the six
	months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Depreciation expense	$	534	$	630	$	(96)	(15)	%
Amortization expense		151		182		(31)	(17)	%
Depreciation and
Amortization expense	$	685	$	812	$	(127)	(16)	%

The decrease in depreciation expense for the three and months ended June 30, 2021 was primarily driven by lower asset bases as result of the valuation of our fixed assets determined in fresh start accounting, refer to Note 4.

The decrease in amortization expense for the three and six months ended June 30, 2021 was due to the Predecessor’s accelerated method of amortization related to our acquired customer bases, slightly offset by higher valuation of our intangible assets for the Successor determined in fresh start accounting.

LOSS ON DISPOSAL OF NORTHWEST OPERATIONS

During the three and six months ended June 30, 2020, Frontier recorded a loss on disposal of $136 million and $160 million associated with the sale of the Northwest Operations.

RESTRUCTURING COSTS AND OTHER CHARGES

For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2021
2020
(Decrease)
(Decrease)
Restructuring costs and
other charges
$
2
$
48
$
(46)
(96)
%

Non-GAAP

Combined

Predecessor

For the three

months ended

$ Increase

% Increase

($ in millions)

June 30, 2021

June 30, 2020

(Decrease)

Restructuring costs and

other charges

(20)

(56)

Non-GAAP

Combined

Predecessor

For the six

months ended

$ Increase

% Increase

($ in millions)

June 30, 2021

June 30, 2020

(Decrease)

Restructuring costs and

other charges

(66)

(79)

Restructuring costs and other charges consist of ~~expenses~~consulting and advisory fees related to ~~changes in~~our balance sheet restructuring prior to filing our Chapter 11 Cases and subsequent to the ~~composition of our business, including~~Emergence Date, workforce reductions, transformation initiatives, other restructuring ~~expenses, and corresponding changes to retirement plans resulting from a voluntary severance program.~~expenses.

~~During the~~For three months ended ~~March 31,~~June 30, 2021, ~~we incurred $2~~Restructuring costs and other charges were comprised of $9 million ~~in expenses consisting~~of consulting and advisory costs related to our balance sheet restructuring activities and $7 million of severance and employee costs resulting from workforce reductions.

For the three months ended March 31, 2020, the $48 million of restructuring costs and other charges were comprised of $8 million in costs related to transformation initiatives, $2 million in severance expense, and $38 million in consulting and advisory costs related to our balance sheet restructuring activities, respectively.

Following the filing of the Chapter 11 Cases, Frontier recorded all consulting and advisory costs related to our balance sheet restructuring activities outside of operating income in “Reorganization Items, net”.

~~OTHER NON-OPERATING INCOME AND EXPENSE~~

For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2021
2020
(Decrease)
(Decrease)
Investment and other income, net
$
2
$
5
$
(3)
(60)
%
Pension settlement costs
$
-
$
(103)
$
103
(100)
%
Reorganization items, net
$
(25)
$
-
$
(25)
100
%
Interest expense
$
(89)
$
(383)
$
294
(77)
%
Income tax expense (benefit)
$
87
$
(23)
$
110
NM
NM - Not meaningful

6064

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

For the six months ended June 30, 2021, Restructuring costs and other charges were comprised of $9 million in severance and employee costs resulting from workforce reductions, and, respectively.

For the three months ended June 30, 2020, Restructuring costs and other charges were comprised of $34 million in consulting and advisory costs related to our balance sheet restructuring activities, and $2 million in severance expense.

For the six months ended June 30, 2020, Restructuring costs and other charges were comprised of $72 million in consulting and advisory costs related to our balance sheet restructuring activities, $8 million in costs related to transformation initiatives, and $4 million in severance expense.

Following the filing of the Chapter 11 Cases and prior to emergence, Frontier recorded all consulting and advisory costs related to our balance sheet restructuring in “Reorganization Items, net”.

OTHER NON-OPERATING INCOME AND EXPENSE

The following table represents our Non-GAAP combined financial results for the three and six months ended June 30, 2021 as compared to the financial results of our consolidated operations (including the Northwest Operations) for the three and six months ended June 30, 2020.


					Non-GAAP
	Successor		Predecessor		Combined		Predecessor

	For the two		For the one		For the three		For the three
	months ended		month ended		months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		April 30, 2021		June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Investment and other loss, net	$	(2)	$	(1)	$	(3)	$	(20)	$	17	(85)	%
Pension settlement	$	-	$	-	$	-	$	(56)	$	56	(100)	%
Reorganization items, net	$	-	$	4,196	$	4,196	$	(142)	$	4,338	NM
Interest expense	$	(62)	$	(29)	$	(91)	$	(160)	$	69	(43)	%
Income tax benefit (expense)	$	43	$	(223)	$	(180)	$	(57)	$	(123)	NM
Net income (loss)	$	99	$	4,481	$	4,580	$	(181)	$	4,761	NM

NM - Not meaningful


					Non-GAAP
	Successor		Predecessor		Combined		Predecessor

	For the two		For the four		For the six		For the six
	months ended		months ended		months ended		months ended		$ Increase		% Increase
($ in millions)	June 30, 2021		April 30, 2021		June 30, 2021		June 30, 2020		(Decrease)		(Decrease)

Investment and other loss, net	$	(2)	$	1	$	(1)	$	(15)	$	14	(93)	%
Pension settlement	$	-	$	-	$	-	$	(159)	$	159	(100)	%
Reorganization items, net	$	-	$	4,171	$	4,171	$	(142)	$	4,313	NM
Interest expense	$	(62)	$	(118)	$	(180)	$	(543)	$	363	(67)	%
Income tax benefit (expense)	$	43	$	(136)	$	(93)	$	(80)	$	(13)	NM
Net income (loss)	$	99	$	4,541	$	4,640	$	(367)	$	5,007	NM

NM - Not meaningful

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Investment and other income (loss), net

The significant decrease in our Investment and other ~~income,~~loss, net for the three and six months ended ~~March 31,~~June 30, 2021 ~~and 2020 included $1 million of~~was the result a lower net non-operating pension and OPEB ~~income.~~expense as compared to the prior year. This decrease was driven by reduced pension expense as a result of the elimination of actuarial losses that were amortized from Accumulated other comprehensive income (loss) prior to emergence, offset by increased OPEB expense including a remeasurement charge of $14 million recognized in May 2021.

Pension settlement

During the ~~three~~six months ended ~~March 31,~~June 30, 2020, lump sum pension settlement payments to terminated or retired individuals amounted to ~~$310~~$464 million, which exceeded the settlement threshold of $211 million, and as a result, Frontier recognized non-cash settlement charges totaling ~~$103~~$56 million and $159 million for the three and six months ended ~~March 31, 2020.~~June 30, 2020, respectively.

Reorganization items, net

The Company has incurred ~~and will continue to incur significant~~ costs associated with the reorganization, primarily the write-off of certain debt issuance costs and net discounts, financing costs, and legal and professional ~~fees. Subsequent~~fees and fresh start accounting adjustments. These include expenses incurred subsequent to the Petition ~~Date, these costs are being expensed as incurred and are expected to significantly affect our consolidated results of operations.~~Date. During the three and six months ended ~~March 31,~~June 30, 2021, Frontier recognized $4,196 million and $4,171 million, respectively, in reorganization items associated with the restructuring of our balance sheet primarily due to the $11 billion gain associated with the cancellation of debt, offset by other adjustments related to emergence and fresh start accounting.

During the three and six months ended June 30, 2020, Frontier incurred ~~$25~~$142 million in reorganization costs associated with the restructuring of our balance sheet.

Interest expense

For the three and six months ended ~~March 31,~~June 30, 2021 interest expense decreased ~~$294~~$69 million ~~or 77%,~~and $363 million, respectively, as compared to the same ~~period~~periods in 2020. ~~Beginning on the Petition Date, we ceased recording~~The decline in interest expense ~~for~~was primarily driven by reduced interest rates resulting from the refinancing of our secure debt, the unrecorded interest related to our unsecured ~~debt.~~notes prior to emergence from bankruptcy, and the overall reduction in our principal debt balance. The ~~contractual~~weighted average interest ~~is $252 million higher than what we have recorded for our debt obligations for the three months ended March 31, 2021.~~rate as of June 30, 2021 and 2020 was 5.657% and 8.464%, respectively.

Income tax ~~benefit~~expense (benefit)

~~For three~~During the four months ended ~~March 31,~~April 30, 2021, ~~Frontier~~the Predecessor recorded an income tax benefit of $136 million on pre-tax income of $4,405 million. The driver for the benefit was the tax effect of fresh start accounting adjustments. During the two months ended June 30, 2021, the successor recorded income tax expense of ~~$87~~$43 million on pre-tax income of ~~$147~~$142 million. The tax expense was driven primarily by the tax impact of pre-tax income and increases in valuation allowances on federal and state NOL carryovers, partially offset by tax deductible post-petition interest expense. TheOur effective tax rates ~~on our pretax loss~~ for the ~~three~~four months ended ~~March 31,~~April 30, 2021 and the two months ended June 30, 2021 were ~~59.2% compared with 11.1% for the pretax loss for the three months ended March 31, 2020.~~(3.1%) and 30.3%, respectively.

~~Basic and diluted net earnings (loss) attributable to Frontier common shareholders~~

Basic and diluted net earnings attributable to Frontier common shareholders for the first three months of 2021 was $60 million, or earnings of $0.57 per share, as compared to a net loss of $186 million, or a loss of $1.78 per share, in the first three months of 2020. For 2021, our net income was driven by increased profitability resulting from reduced interest expense as compared to prior year.

‎

6166

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

(b) Liquidity and Capital Resources

~~Historically,~~Frontier emerged from the Chapter 11 Cases on the effective date with a new capital structure consisting of significantly lower levels of long-term debt as compared to the Company’s historical debt levels. The reorganization resulted in the elimination of approximately $11 billion of our long-term debt and a corresponding decrease in the capital needed for debt service requirements. Following emergence, we expect that our principal ~~liquidity requirements have been~~uses of cash and capital resources will be to fund the ~~costs~~cost of operations, working capital, and ~~expand our business, pay principal~~capital expenditures and to fund interest ~~obligations~~payments on our significant indebtedness and for capital expenditures to replace, upgrade, expand and improve our networks and infrastructure, and to integrate acquired businesses and to separate assets and systems for sale.long-term debt.

Analysis of Cash Flows

As of ~~March 31,~~June 30, 2021, we had unrestricted cash and cash equivalents aggregating ~~$2,107~~$993 million. For the ~~three~~six months ended ~~March 31,~~June 30, 2021, we used cash flow from operations, cash on hand, and cash from prior year borrowings principally to ~~principally~~ fund ~~all of~~payments related to our emergence from Chapter 11 bankruptcy and our cash investing and financing activities, which were primarily capital expenditures.

As of ~~March 31,~~June 30, 2021, we had a working capital ~~deficit~~surplus of ~~$4,304~~$234 million compared to a $4,486 million deficit at December 31, 2020. The primary driver for the change in the working capital deficit at ~~March 31,~~June 30, 2021 was ~~the acceleration of the maturities~~classification of our long-term debt ~~that resulted from our filing~~as current as a result of the Chapter 11 Cases.


	Non-GAAP
	Combined		Predecessor

	For the six		For the six
	months ended		months ended
($ in millions)	June 30, 2021		June 30, 2020

Cash provided by (used for):
Operating activities	$	(274)	$	950
Investing activities	$	(759)	$	628
Financing activities	$	190	$	(37)

Cash Flows from Operating Activities

~~Cash~~Non-GAAP combined cash flows ~~provided~~used by operating activities increased ~~$188~~$1,224 million to ~~$665~~($274) million for the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to the corresponding period in 2020. The overall ~~increase~~decrease in operating cash flows was primarily the result of ~~increased profitability. Net income increased $246 million compared~~payments of excess cash to ~~the first quarter loss recorded last year, partially offset by an unfavorable changes in working capital accounts.~~unsecured senior noteholders and payments of prepetition accounts payable following our emergence from bankruptcy totaling $1,375 million.

We paid ~~less than $1~~$33 million in net cash taxes during the ~~three~~six months ended ~~March 31,~~June 30, 2021 and $1 million in net cash taxes during the ~~three~~six months ended ~~March 31,~~June 30, 2020.

Cash Flows from Investing Activities

~~Cash~~Non-GAAP combined cash flows used in investing activities were $759 million for the six months ended June 30, 2021, compared to cash flows provided by investing activities ~~increased $98~~of $628 million ~~to $380 million~~ for ~~the three months ended March 31, 2021 as compared to~~ the corresponding period in 2020. ~~The primary driver of this increase was increased capital expenditures.~~

Capital Expenditures

For the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020, our Non-GAAP combined capital expenditures were ~~$384~~$769 million and ~~$286~~$511 million, respectively. Capital expenditures related to CAF Phase II are included in our reported amounts for capital expenditures. The driver for the increase in capital expenditure was increased spending for fiber upgrades

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

our existing copper network, a trend that we expect to continue as we execute our strategy of investing in our fiber network.

In 2020, we received $1,131 million in proceeds from the sale of our Northwest Operations.

Cash Flows from Financing Activities

Cash flows ~~used~~provided by financing activities ~~decreased $6~~increased $227 million to $7$190 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to 2020. The ~~primary driver~~increase is primarily the result of ~~this decreased principal payments of long-term debt.~~receiving $225 million in proceeds from the exit term loan facility in 2021.

62Capital Resources

The Restructuring resulted in a new capital structure with significantly lower levels of long-term debt. Upon emergence, our consolidated long-term debt decreased from approximately $16,769 million to $6,738 million. In the six months ended June 30, 2021, we paid $168 million of cash interest.

In connection with the Restructuring, we paid $1,313 million to Old Frontier’s unsecured senior note holders, $62 million related to prepetition accounts payable and contract cure payments and $22 million for professional fees and other bankruptcy related costs.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~Capital Resources~~

~~Historically, a substantial portion~~We expect that our primary anticipated uses of ~~our~~ liquidity ~~needs arise from debt service on our outstanding indebtedness and from funding~~will be to fund the costs of operations, working capital and capital ~~expenditures.~~expenditures and to fund interest payments on our long-term debt. Our primary sources of ~~cash~~liquidity are cash flows from operations, cash on hand and ~~proceeds from debt borrowings, including issuances of long-term debt and~~borrowing capacity under our $625 million ~~undrawn borrowing capacity under the DIP~~Exit Revolving Facility (as reduced by $90 million of Letters of Credit.)

We have assessed our current and expected funding requirements and our current and expected sources of liquidity, and have determined, based on our forecasted financial results and financial condition as of ~~March 31,~~June 30, 2021, that our operating cash flows and existing cash balances, will be adequate to finance our working capital requirements, fund capital expenditures, make required debt interest and principal payments, ~~due under the Plan,~~ pay taxes and make other ~~payments due under the Plan.~~payments. A number of factors, including but not limited to, losses of customers, pricing pressure from increased competition, lower subsidy and switched access revenues, and the impact of economic conditions may negatively affect our cash generated from operations.

~~Refer~~Credit Facilities

On the Effective Date, the DIP Term Loan Facility was converted into an exit term loan facility in an aggregate principal amount of $1,475 million after giving effect to “—~~Chapter 11 Cases and Other Related Matters” for more information on~~ the ~~terms of the Restructuring Support Agreement, the Chapter 11 Cases~~New Incremental Commitment (the “Exit Term Loan Facility”) and the ~~effects~~DIP Revolving Facility converted into an exit revolving facility in the aggregate principal amount of ~~both on our liquidity.~~$625 million (the “Revolving Facility”) and became subject to the Amended and Restated Credit Agreement.

Term Loan ~~Revolving Credit Facilities, and Secured Notes~~

~~DIP Revolving~~ Facility

On October 8, 2020, Frontier entered into the DIP Revolving Facility, pursuant to the senior secured superpriority debtor-in-possession credit agreement, dated as of October 8, 2020, by and among Frontier, as the borrower and a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, Goldman Sachs Bank USA, as administrative agent, ~~JPMorgan Chase Bank, N.A. (JPM), as collateral agent, and each lender and issuing bank from time to time party thereto.~~

The DIP Revolving Facility has a maturity of the earlier of (x) the date that is twelve months after the closing date of the DIP Revolving Facility and (y) the date of the substantial consummation of the Plan; provided that to the extent such substantial consummation has not occurred on or prior to the date referred to in the foregoing clause (x), primarily because any condition precedent set forth therein with respect to the procurement of regulatory approvals has not been satisfied (and other than any other conditions that by their nature can only be satisfied on the consummation date), theTerm Loan Facility’s maturity date ~~shall be extended by an additional six months.~~

is October 8, 2027. At ~~our~~the Borrower’s election, the determination of interest rates for the ~~DIP Revolving~~Term Loan Facility is based on margins over the alternate base rate or over LIBOR. The interest rate margin with respect to any LIBOR loan ~~is 3.250% (or 2.250% for alternate base rate loans).~~

~~Subject to customary exceptions and thresholds, the security package~~ under the DIP Revolving Facility includes pledges of the equity interests in certain of our subsidiaries, which as of the issue date is limited to certain specified pledged entities, substantially all of the unencumbered assets and properties (the DIP Collateral) of Frontier and Frontier Communications of Iowa, LLC, an Iowa limited liability company (Frontier Iowa), which such security interest in the DIP Collateral was granted solely pursuant to the DIP financing order issued by the Bankruptcy Court, which same assets also secure the New First Lien Notes. The DIP RevolvingTerm Loan Facility is guaranteed by the same subsidiaries that guarantee the New First Lien Notes. After giving effect to $90 million of letters of credit formerly outstanding under the Revolver that were rolled into, replaced3.75% for LIBOR loans or ~~otherwise accommodated for under the DIP Revolving Facility, the Company has $535 million of available borrowing capacity under the DIP Revolving Facility.~~

Upon the conversion date, subject to certain conditions, the DIP Revolving Facility shall convert into the Exit Revolving Facility with an aggregate principal amount of $625 million. The Exit Revolving Facility will be available on a revolving basis during the period commencing on the conversion date and ending on the date that is 4 years after the conversion date. The determination of interest rates for the Exit Revolving Facility is based on margins over

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~the alternate base rate or over LIBOR, at our election. The interest rate~~2.75% with respect to any ~~LIBOR loan is 3.500% (or 2.500% for~~ alternate base rate ~~loans).~~

~~DIP Term Loan Facility~~

On October 8, 2020, Frontier entered into a credit agreement with JPM, as administrative agent and collateral agent and each lender from time to time party thereto (the DIP to Exit Term Credit Agreement). which provides for the $500 million Initial DIP Term Loan Facility. On November 25, 2020, Frontier entered into an incremental amendment to the DIP to Exit Term Credit Agreement, which provides for an additional senior secured superpriority DIP term loan, ~~facility in the aggregate principal amount of $750 million (the Incremental DIP Term Loan Facility and, together with the Initial DIP Term Loan Facility, the DIP Term Loan Facility).~~

The DIP Term Loan Facility has a maturity of the earlier of (x) the date that is twelve months after the closing date of the DIP Term Loan Facility and (y) the date of the substantial consummation of the Plan; provided that to the extent such substantial consummation has not occurred on or prior to the date referred to in the foregoing clause (x), primarily because any condition precedent set forth therein with respect to the procurement of regulatory approvals has not been satisfied (and other than any other conditions that by their nature can only be satisfied on the consummation date), the maturity date shall be extended by an additional six months; provided that the conversion date has occurred, the maturity date shall be the seventh anniversary of the closing date.

At our election, the determination of interest rates for the DIP Term Loan Facility are based on margins over the alternate base rate or over LIBOR. Pursuant to the Refinancing and Incremental Amendment (as defined herein), the interest rate with respect to any LIBOR loan is 3.75% or 2.75% for alternate base rate loans, with a 0.75% LIBOR floor.

Subject to certain exceptions and thresholds, the security package under the ~~DIP~~ Term Loan Facility includes pledges of the equity interests in certain of our subsidiaries, which as of the issue date is limited to certain specified pledged entities and substantially all personal property of Frontier Video and substantially all of the unencumbered assets and properties of Frontier and Frontier Iowa, which such security interest in the unencumbered assets and properties was granted solely pursuant to the DIP financing order issued by the Bankruptcy Court, which same assets also secure the New First Lien Notes. The DIP Term Loan Facility is guaranteed by the same subsidiaries that guarantee the New First Lien Notes. Upon the conversion date, the security package will no longer include the DIP Collateral.

Upon the conversion date, subject to certain conditions, the DIP Term Loan Facility shall convert into the Exit Term Loan Facility with an aggregate principal amount of $1,250 million. Pursuant to the Refinancing and Incremental Amendment, JPM also agreed to provide, subject to certain conditions, including emergence from the Chapter 11 Cases, an incremental $225 million exit term loan facility. For information on the Refinancing and Incremental Amendment to the DIP to Exit Term Credit Agreement, see “Subsequent Events Related to the Chapter 11 Cases.”

~~Terminated JP Morgan Credit Facilities~~

~~Frontier had~~Services Inc., a prepetition term loan facility and revolving credit facility with JPM, as administrative agent, and the lenders party thereto. As noted above, as of December 31, 2020 all outstanding amounts drawn under these facilities have been paid in full and the agreements have been terminated.

~~Terminated CoBank Credit Facilities~~

Delaware corporation (“Frontier had two separate prepetition term loan facilities with CoBank, ACB, as administrative agent, lead arranger and a lender, and the other lenders. All outstanding amounts drawn under these agreements have been paid in full and the agreements were terminated on or before March 15, 2019.

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~Letters of Credit~~Video”), which same assets also secure the First Lien Notes (as defined below). The Term Loan Facility

~~Frontier has a Continuing Agreement for Standby Letters of Credit with Deutsche Bank AG New York Branch (the LC Agreement). Frontier also has capacity to issue letters of credit under~~ is guaranteed by the ~~DIP Revolving Credit Facility up to~~same subsidiaries that guarantee the full facility amount. As of March 31, 2021, $49 million and $90 million of undrawn Standby Letters of Credit had been issued under the LC Agreement and DIP Revolving Credit Facility, respectively. Letters of credit under the LC Agreement are fully cash collateralized.First Lien Notes.

~~Covenants related to DIP Financing~~

The ~~DIP Revolving Facility and DIP~~ Term Loan Facility ~~each include usual and~~includes customary negative covenants for ~~DIP credit and DIP to exit~~ loan agreements of this type, including covenants limiting ~~Frontier~~the Borrower and its restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material payment subordinated indebtedness, in each case subject to customary exceptions for ~~credit and~~ exit loan agreements of this type.

The ~~DIP~~ Term Loan Facility also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA, upon the conversion date, unstayed judgments in favor of a third-party involving an aggregate liability in excess of a certain threshold, change of control, upon the conversion date, specified governmental actions having a material adverse effect or condemnation or damage to a material portion of the collateral.

Revolving Facility

The $625 million Revolving Facility will be available on a revolving basis until April 30, 2025. At the Borrower’s election, the determination of interest rates for the Revolving Facility is based on margins over the alternate base rate or over LIBOR. The interest rate margin with respect to any LIBOR loan under the Revolving Facility is 3.50% or 2.50% with respect to any alternate base rate loans, with a 0% LIBOR floor.

Subject to customary exceptions and thresholds, the security package under the Revolving Facility includes pledges of the equity interests in certain of our subsidiaries, which as of the issue date is limited to certain specified pledged entities and substantially all personal property of Frontier Video, which same assets also secure the First Lien Notes. The Revolving Facility is guaranteed by the same subsidiaries that guarantee the First Lien Notes. After giving effect to $90 million of letters of credit previously outstanding, the Borrower has $535 million of available borrowing capacity under the Exit Revolving Facility.

The Revolving Facility includes customary negative covenants for loan agreements of this type, including covenants limiting the Borrower and its restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material payment subordinated indebtedness, in each case subject to customary exceptions for loan agreements of this type.

The Revolving Facility also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA, change of control or damage to a material portion of the collateral.

The DIP Term Loan Facility includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA, upon the conversion date, unstayed judgments in favor of a third party involving an aggregate liability in excess of a certain threshold, change of control, upon the conversion date, specified governmental actions having a material adverse effect or condemnation or damage to a material portion of the collateral.

~~First Lien~~Takeback Notes ~~due October 2027~~

On ~~October 8, 2020, Frontier~~April 30, 2021, we issued ~~$1,150~~$750 million aggregate principal amount of ~~First~~5.875% Second Lien Secured Notes ~~due October 2027, which mature~~(the “Takeback Notes”) pursuant to an indenture, dated as of April 30, 2021 (the “Takeback Notes Indenture”), by and among the Company, the guarantors party thereto, the grantor party thereto and Wilmington Trust, National Association, a national banking association, as trustee (in such capacity, the “Trustee”) and as collateral agent (in such capacity, the “Collateral Agent”). At Old Frontier’s direction, the Takeback Notes were issued to holders of claims arising under, derived from, based on, ~~October 15, 2027,~~or related to the unsecured notes issued by Old Frontier in partial satisfaction of such claims. The Takeback Notes are secured by a second-priority lien, subject to permitted liens, by all the assets that secure our obligations under the Term Loan Facility, the Revolving Facility and the Notes (as defined below). The Takeback Notes bear interest at a rate of 5.875% per ~~annum. Interest~~annum and will mature on ~~the First Lien Notes due October 2027 is payable to holders of record semi-annually in arrears on April 15 and October 15 of each year, commencing April 15, 2021.~~

The notes were issued pursuant to an indenture, dated as of October 8, 2020 (the 2027 First Lien Indenture), by and among Frontier, the guarantors party thereto, the grantor party thereto, JPM, as collateral agent, and Wilmington Trust, National Association, as trustee, and were issued in a private offering exempt from the registration requirements of the Securities Act, to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act, at a purchase price equal to 100% of the principal amount thereof.

Prior to the conversion date, the First Lien Notes due October 2027 are secured on a super-priority basis and pari passu with the DIP Revolving Facility and the DIP Term Loan Facility, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under the DIP Revolving Facility and the DIP Term Loan Facility, on a super-priority basis and pari passu with the DIP Revolving Facility and the DIP Term Loan Facility. From the conversion date, the First Lien Notes due October 2027 are secured on a first-priority basis and pari passu with its senior secured credit facilities, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under its senior secured credit facilities and First Lien Notes due May 2028 on a first-priority basis and pari passu with its senior secured credit facilities and First Lien Notes due May 2028.

Frontier may redeem the First Lien Notes due October 2027 at any time, in whole or in part, prior to their maturity. If the notes are redeemed before October 15, 2023 the redemption price will be equal to 100% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemptionNovember 1,

6569

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

2029. Interest on the Takeback Notes will be payable to holders of record semi-annually in arrears on May 1 and November 1 of each year, commencing November 1, 2021.

We may redeem the Takeback Notes at any time, in whole or in part, prior to their maturity. The redemption price for Takeback Notes redeemed before November 1, 2024 will be equal to 100% of the aggregate principal amount of such notes being redeemed, together with any accrued and unpaid interest, if any, to, but not including, the redemption date, plus athe applicable make-whole premium. ~~If the notes are~~The redemption price for Takeback Notes redeemed on or after ~~October 15, 2023 the redemption price~~November 1, 2024 will be equal to the ~~amounts~~redemption prices set forth in the ~~2027 First Lien~~Takeback Notes Indenture, together with any accrued and unpaid interest to the redemption date.

~~In addition, at~~ At any time before ~~October 15, 2023, Frontier~~April 1, 2024, we may redeem up to 40% of the ~~First Lien~~Takeback Notes ~~due October 2027~~ using the proceeds of certain equity offerings at a redemption price equal to 105.875% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemption date.

In the event of a change of control triggering event, each holder of ~~the First Lien~~Takeback Notes ~~due October 2027~~ will have the right to require ~~Frontier~~the Company to purchase ~~the notes~~for cash such holder’s Takeback Notes at a purchase price equal to 101% of the principal amount of the ~~First Lien Notes due October 2027, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.~~

~~First Lien Notes due May 2028~~

On November 25, 2020, Frontier issued $1,550 million aggregate principal amount of the First Lien Notes due May 2028, which mature on May 1, 2028, and bear interest at a rate of 5.000% per annum. Interest is payable to holders of record semi-annually in arrears on May 1 and November 1 of each year, commencing May 1, 2021.

The First Lien Notes due May 2028 were issued pursuant to an indenture, dated as of November 25, 2020 (the 2028 First Lien Indenture), by and among Frontier, the guarantors party thereto, the grantor party thereto, JPM, as collateral agent, and Wilmington Trust, National Association, as trustee, and were issued in a private offering exempt from the registration requirements of the Securities Act, to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act, at a purchase price equal to 100% of the principal amount thereof.

Prior to the conversion date, the First Lien Notes due May 2028 are secured on a super-priority basis and pari passu with the DIP Revolving Facility and DIP Term Loan Facility, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under the DIP Revolving Facility and the DIP Term Loan Facility, on a super-priority basis and pari passu with the DIP Revolving Facility and DIP Term Loan Facility. From the conversion date, the First Lien Notes due May 2028 are secured on a first-priority basis and pari passu with its senior secured credit facilities, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under its senior secured credit facilities and First Lien Notes due October 2027 on a first-priority basis and pari passu with its senior secured credit facilities and First Lien Notes due October 2027.

In addition, at any time before May 1, 2024, Frontier may redeem up to 40% of the First Lien Notes due May 2028 using the proceeds of certain equity offerings at a redemption price equal to 105.000% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemption date.

In the event of a change of control triggering event, each holder of the First Lien Notes due May 2028 will have the right to require Frontier to purchase the notes at a purchase price equal to 101% of the principal amount of the First Lien Notes due May 2028, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~New Second Lien Notes~~

On November 25, 2020, Frontier issued $1,000 million aggregate principal amount of the New Second Lien Notes, which mature on May 1, 2029, and bear interest at a rate of 6.750% per annum. Interest is payable to holders of record semi-annually in arrears on May 1 and November 1 of each year, commencing May 1, 2021.

The New Second Lien Notes were issued pursuant to an indenture, dated as of November 25, 2020 (the New Second Lien Indenture, and together with the 2027 First Lien Indenture and the 2028 First Lien Indenture, the Secured Note Indentures), by and among Frontier, the guarantors party thereto, the grantor party thereto, and Wilmington Trust, National Association, as trustee and collateral agent, and were issued in a private offering exempt from the registration requirements of the Securities Act, to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act, at a purchase price equal to 100% of the principal amount thereof.

Prior to the conversion date, the New Second Lien Notes are superpriority obligations secured on a second-priority lien junior to the DIP Revolving Facility, the DIP Term Loan Facility, the First Lien Notes due October 2027 and the First Lien Notes due May 2028, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under the DIP Revolving Facility, the DIP Term Loan Facility, on a super-priority basis and pari passu with the DIP Revolving Facility and the DIP Term Loan Facility, the First Lien Notes due October 2027 and the First Lien Notes due May 2028. From the conversion date, the New Second Lien Notes are secured on a second-priority basis junior to the DIP Revolving Facility, the DIP Term Loan Facility, the First Lien Notes due October 2027 and the First Lien Notes due May 2028, subject to permitted liens and certain exceptions, by all the assets that secure Frontier’s obligations under its senior secured credit facilities and existing first lien notes on a second-priority basis junior to its senior secured credit facilities and New First Lien Notes.

In addition, at any time before November 1, 2023, Frontier may redeem up to 40% of the New Second Lien Notes using the proceeds of certain equity offerings at a redemption price equal to 106.750% of the aggregate principal amount thereof, together with any accrued and unpaid interest, if any, to, but not including, the redemption date.

In the event of a change of control triggering event, each holder of the New Second Lien Notes will have the right to require Frontier to purchase the notes at a purchase price equal to 101% of the principal amount of the New Second LienTakeback Notes, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

~~Covenants related to our Secured~~The Takeback Notes

~~Each of the Secured Note Indentures contain~~ Indenture contains customary negative covenants, subject to a number of important exceptions and qualifications, including, without limitation, covenants related to incurring additional debt and issuing preferred stock; incurring or creating liens; redeeming and/or prepaying certain debt; paying dividends on stock or repurchasing stock; making certain investments; engaging in specified sales of assets; entering into transactions with affiliates; and engaging in consolidation, mergers and acquisitions. Certain of these covenants will be suspended during such time, if any, that the ~~Secured~~Takeback Notes ~~as applicable,~~ have investment grade ratings by at least two of Moody’s, S&P or Fitch. The ~~Secured Note Indentures~~Takeback Notes Indenture also ~~provide~~provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the ~~applicable series of Secured~~Takeback Notes to become or to be declared due and payable.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~Covenants related to other debt~~

~~The indentures governing our unsecured notes~~First and other subsidiary indebtedness limit our ability to create liens on our assets securing indebtedness and our subsidiaries’ assets or merge or consolidate with other companies, our subsidiaries’ ability to borrow funds and to engage in change of control transactions, subject to important exceptions and qualifications.

On April 14, 2020, the Company Parties filed the Chapter 11 Cases. The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our debt covenants other than those now governing our DIP Revolving Facility, DIP Term Loan Facility, and Secured Note Indentures.

~~Shareholder Rights Plan~~

On July 1, 2019, the Board of Directors of Frontier Communications adopted a shareholder’s right plan (Rights Agreement) designed to protect the availability of the net operating loss carryforwards under the Internal Revenue Code (Code). The Rights Agreement was intended to reduce the likelihood of an ownership change under Section 382 of the Code by deterring any person or group of affiliated or associated persons from acquiring beneficial ownership of 4.9% or more of the outstanding common shares. The Rights Agreement will terminate upon emergence.

~~Chapter 11 Cases and Other Related Matters~~

~~Restructuring Support Agreement~~

~~On April 14, 2020, the Company Parties entered into the Restructuring Support Agreement with the Consenting Noteholders, pursuant to which~~ the Consenting Noteholders agreed, subject to certain terms and conditions, to support the Restructuring of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties, pursuant to the Plan to be filed in the Chapter 11 Cases.

Second Lien Notes

In ~~accordance~~connection with the ~~Restructuring Support Agreement, the Consenting Noteholders agreed, among other things, to:~~

~~(i)support the transactions~~DIP financing, (a) on October 8, 2020, Old Frontier issued $1,150 million aggregate principal amount of 5.875% First Lien Secured Notes due October 15, 2027 (the ~~Restructuring Transactions) described in, within the timeframes outlined in,~~“First Lien Notes due October 2027”) and ~~in accordance~~(b) on November 25, 2020, Old Frontier issued (i) $1,550 million aggregate principal amount of 5.000% First Lien Secured Notes due May 1, 2028 (the “First Lien Notes due May 2028” and, together with the ~~Restructuring Support Agreement;~~

First Lien Notes due October 2027, the “First Lien Notes”) and (ii)~~not take any action, directly or indirectly, that is reasonably likely to interfere with acceptance, implementation, or consummation~~ $1,000 million aggregate principal amount of ~~the Restructuring Transactions;~~

~~(iii)vote each of its Senior~~6.750% Second Lien Secured Notes ~~Claims (as defined in the Restructuring Support Agreement) to accept the Plan;~~due May 1, 2029 (the “Second Lien Notes” and,

~~(iv)~~not transfer Senior Notes Claims held by each Consenting Noteholders except with respect to limited and customary exceptions, including requiring any transferee to either already be bound or become bound by the terms of the Restructuring Support Agreement.

~~In accordance~~ together with the ~~Restructuring Support Agreement,~~First Lien Notes, the ~~Company Parties agreed, among other things, to:~~

~~(i)support and take all steps reasonably necessary and desirable to consummate the Restructuring Transactions in accordance with the Restructuring Support Agreement;~~

~~(ii)~~support and take all steps reasonably necessary and desirable to obtain entry of (a) the final orders of the Bankruptcy Court authorizing the relevant Company Parties’ entry into the documents governing a senior secured superpriority DIP financing facility, (b) the order of the Bankruptcy Court approving the disclosure statement related to the Plan pursuant to section 1125 of the Bankruptcy Code and (c) the Bankruptcy Court’s order confirming the Plan;

~~(iii)use commercially reasonable efforts to obtain any and all required governmental, regulatory, and/or third-party approvals for the Restructuring Transactions;~~

~~(iv)~~act in good faith and use commercially reasonable efforts to execute and deliver certain required documents and agreements to effectuate and consummate the Restructuring Transactions as contemplated by the Restructuring Support Agreement;

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~(v)~~operate their businesses in the ordinary course of business in a manner consistent with the Restructuring Support Agreement and past practice and use commercially reasonable efforts to preserve their businesses; and

~~(vi)not, directly or indirectly, object to, delay, impede, or take any other action to interfere with acceptance, implementation, or consummation of the Restructuring Transactions.~~“Notes”).

The ~~Restructuring Support Agreement may be terminated upon~~First Lien Notes due October 2027 were issued pursuant to an indenture, dated as of October 8, 2020 (the “2027 First Lien Indenture”), by and among Old Frontier, the ~~occurrence~~guarantors party thereto, the grantor party thereto, JPMorgan Chase Bank N.A., as collateral agent, and Wilmington Trust, National Association, as trustee. The First Lien Notes due May 2028 were issued pursuant to an indenture, dated as of ~~certain events, including~~November 25, 2020 (the “2028 First Lien Indenture”), by and among Old Frontier, the ~~failure~~guarantors party thereto, the grantor party thereto, JPMorgan Chase Bank N.A., as collateral agent and Wilmington Trust, National Association, a national banking association, as trustee. The Second Lien Notes were issued pursuant to ~~meet specified milestones related to consummation~~an indenture, dated as of November 25, 2020 (the “Second Lien Indenture” and, together with the ~~Plan. In addition,~~2027 First Lien Indenture and the ~~Restructuring Support Agreement shall automatically terminate on~~2028 First Lien Indenture, the ~~Effective Date of~~“Indentures” and each an “Indenture”), by and among Old Frontier, the ~~Plan once all conditions precedent to~~guarantors party thereto, the ~~Plan have been satisfied.~~grantor party thereto and Wilmington Trust, National Association, as trustee and as collateral agent.

~~Chapter 11 Cases~~

As an initial step towards implementation of the Plan, on the Petition Date, the Company Parties filed the Chapter 11 Cases in the Bankruptcy Court. Each Company Party continues to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Chapter 11 Cases are being jointly administered under the caption ~~In re Frontier Communications Corporation., et al., Case No. 20-22476 (RDD).~~

In general, as debtors-in-possession under the Bankruptcy Code, we are authorized to continue to operate as an ongoing business, however, we may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. To that end, on the Petition Date, the Company Parties filed the First Day Motions, which were approved after a final hearing held on May 22, 2020. Pursuant to the First Day Motions, the Bankruptcy Court authorized us to conduct our business activities in the ordinary course, including, among other things andThese indentures contain customary negative covenants, subject to ~~the terms~~a number of important exceptions and conditions of such orders: continue to operate our cash management system and honor certain prepetition obligations related thereto; maintain existing business forms; continue to perform intercompany transactions; obtain super priority administrative expense status to post-petition intercompany balances; pay certain prepetition claims of critical vendors, lien claimants and section 503(b)(9) of the Bankruptcy Code claimants in the ordinary course of business on a post-petition basis; pay prepetition employee wages, salaries, other compensation and reimbursable employee expenses and continue employee benefits programs; pay obligations under prepetition insurance policies, continue to pay certain brokerage fees; renew, supplement, modify or purchase insurance coverage; maintain our surety bond program; pay certain prepetition taxes and fees; honor certain prepetition obligations to customers and continue certain customer programs in the ordinary course of business; and pay or honor prepetition claims of content providers.

~~Plan and Disclosure Statement~~

On May 15, 2020, the Company Parties filed a proposed Joint Plan of Reorganization and related Disclosure Statement, each of which were amended on June 26, 2020, June 29, 2020, June 30, 2020, August 17, 2020 and August 21, 2020. On May 15, 2020, the Debtors also filed a proposed order approving the Disclosure Statement and various plan solicitation materials, including the solicitation and voting procedures, which was revised on June 29, 2020 (including modifications to some of the exhibits). On June 30, 2020, the Bankruptcy Court entered the modified order approving the adequacy of the Disclosure Statement and the solicitation and notice procedures and the forms of voting ballots and notices in connection therewith. The order established June 29, 2020 as the voting record date, July 2, 2020 as the solicitation launch date and July 31, 2020 as the voting deadline.

On August 21, 2020, the Company Parties filed the Plan with the Bankruptcy Court. On August 27, 2020, the Bankruptcy Court entered the Confirmation Order, which approved and confirmed the Plan. The Effective Date of the Plan will occur once all conditions precedent to the Plan have been satisfied. As previously announced, as of April 15, 2021, the Company had received PUC approvals or favorable determinations from all required states.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

~~The Plan as approved and confirmed by the Bankruptcy Court provides for:~~

·the applicable (x) Debtors, with the consent of the Consenting Noteholders then holding greater than 50.1% of the aggregate outstanding principal amount of senior notes claims that are held by all Consenting Noteholders subject to the Restructuring Support Agreement as of such date (the Required Consenting Noteholders), or (y) Reorganized Debtors taking any action as may be necessary or advisable to effectuate the restructuring transactions described in the Plan and Restructuring Transactions Memorandum (as defined in the Plan), including;

·~~the execution, delivery, and filing of any organizational and governance documents for the Reorganized Company Parties;~~

·~~any and all actions necessary or appropriate to effectuate the Secured Creditor Settlement (as defined below); and~~

·the execution, delivery, and filing of all agreements, indentures, notes, filings, documents, and instruments delivered or entered into in connection with one or more DIP financing facilities, which shall be used to repay certain of the Company Parties’ prepetition secured indebtedness and shall convert into an exit facility on the Effective Date (a DIP-to-Exit Facility), and a DIP revolving financing facility, which shall, subject to certain conditions, convert into an exit revolving facility (a DIP-to-Exit Revolving Facility and, together with a DIP-to-Exit Facility, DIP Facilities);

·the final satisfaction, compromise, settlement, release, and discharge of claims arising under, derived from, secured by, based on, or related to any DIP-to-Exit Facility documents or DIP-to-Exit Revolving Facility documents, on the Effective Date in exchange for payment in full in cash or, at the Company Parties’ election, and solely to the extent permitted under DIP-to-Exit Facility documents or DIP-to-Exit Revolving Facility documents, as applicable, or as otherwis~~e agreed, such holder’s pro rata share of the applicable exit facilities;~~

·on the Effective Date, issuance of takeback debt by one or more of the Reorganized Company Parties (the Takeback Debt), in a principal amount of $750 million, which shall include the following terms (which may be modified subject to requisite consent under the Plan):

·an interest rate that is either (a) no more than 2.50% higher than the interest rate of the next most junior secured debt facility to be entered into on the Effective Date if the Takeback Debt is secured on a third lien basis or (b) no more than 3.50% higher than the interest rate of the most junior secured debt facility to be entered into on the Effective Date if the Takeback Debt is unsecured;

·a maturity of no less than one year outside of the longest-dated debt facility to be entered into by the Reorganized Company Parties on the Effective Date, provided that in no event shall the maturity of the Takeback Debt be longer than eight years from the Effective Date;

·to the extent the Original Second Lien Notes claims are reinstated under the Plan, the Takeback Debt will be third lien debt, provided that to the extent the Original Second Lien Notes claims are paid in full in cash during the pendency of the Chapter 11 Cases or under the Plan, the Company Parties and the Required Consenting Noteholders will agree on whether the Takeback Debt will be secured or unsecured, within three business days of the Company Parties’ delivery to the Consenting Noteholders of a term sheet for the financing to repay the Original Second Lien Notes in full in cash that contains terms and conditions reasonably acceptable to the Company Parties and the Required Consenting Noteholders;

·the Takeback Debt amount is subject to downward adjustment by the Consenting Noteholders holding at least sixty-six and two-thirds percent of the aggregate outstanding principal amount of senior notes that are held by all Consenting Noteholders; and

·~~all other terms~~qualifications, including, without limitation, covenants related to incurring additional debt and ~~governance, shall be reasonably acceptable to the Company Parties~~issuing preferred stock; incurring or creating liens; redeeming and/or prepaying certain debt; paying dividends on our stock or repurchasing stock; making certain investments; engaging in specified sales of assets; entering into transactions with affiliates; and ~~the Required Consenting Noteholders; provided that such terms shall not be more restrictive than those~~engaging in ~~the indenture for the Original Second Lien Notes.~~consolidation, mergers and acquisitions.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~The Plan, among other things and subject to the terms of the Secured Creditor Settlement, contemplates the following treatment of claims against and interests in the Company Parties:~~

·at the option of the applicable Reorganized Company Party, holders of secured claims against a Company Party that, absent its secured status, would be entitled to priority in right of payment under section 507(a)(8) of the Bankruptcy Code (determined irrespective of time limitations) (the Secured Tax Claims) shall receive (i) payment in full in cash or (ii) payment in cash made in equal semi-annual cash payments commencing as ofOn the Effective Date, ~~or as soon as reasonably practicable thereafter~~in accordance with the Indentures and ~~continuing for five years,~~the Plan, the New Frontier Issuer entered into supplemental indentures (the “Supplemental Indentures”), in ~~an aggregate amount equal to such claim, together~~each case with ~~interest at the applicable non-default contract rate under non-bankruptcy law;~~

·at the option of the applicable Company Party, holders of claims entitled to priority in right of payment under section 507(a) of the Bankruptcy Code other than Administrative Claims or Priority Tax Claims (each as defined in the Plan) shall receive payment in full in cash or such other treatment rendering such claims unimpaired;

·claims arising under, derived from, based on, or related to the Company’s $850 million Revolver shall be repaid on or before the Effective Date, including payment of interest payments calculated at the non-default contract rate through the earlier of the Effective Date or repayment of the Revolver in full in cash (which shall include accrued but unpaid postpetition interest);

·claims arising under, derived from, based on, or related to the JPM Credit Agreement shall be repaid on or before the Effective Date or reinstated on the Effective Date solely in the event that financing to repay such claims cannot be obtained, including payment of interest payments calculated at the non-default contract rate through the earlier of the Effective Date or repayment of Frontier’s $1,740 million Term Loan B maturing on June 15, 2024 in full in cash (which shall include accrued but unpaid postpetition interest);

·claims arising under, derived from, based on, or related to the Original First Lien Notes, issued pursuant to the indenture, dated as of March 15, 2019, by and among the Company, as issuer, the subsidiary guarantors party thereto, JPM, as collateral agent, and Wilmington Trust, National Association, as ~~successor~~ trustee, ~~shall be repaid on or before~~and assumed the ~~Effective Date or reinstated on the Effective Date, including payment of interest payments calculated at the non-default contract rate through the earlier~~obligations under each series of the ~~Effective Date or repayment~~Notes and each of the ~~Original First Lien Notes in full in cash (which shall provide for the payment of accrued but unpaid postpetition interest);~~

·claims arising under, derived from, based on, or related to the Original Second Lien Notes, issued pursuant to that certain indenture, dated as of March 19, 2018, by and among the Company, as issuer, the subsidiary guarantors party thereto, and Wilmington Savings Fund Society FSB, as successor trustee and successor collateral agent (the Original Second Lien Notes Trustee) shall be repaid on or before the Effective Date or reinstated on the Effective Date, including payment of interest payments calculated at the non-default contract rate as required through the earlier of the Effective Date or repayment of the Original Second Lien Notes in full in cash (which shall provide for the payment of accrued but unpaid postpetition interest);

·claims arising under, derived from, based on or related to (a) the 8.500% secured notes due November 15, 2031, issued by Frontier Southwest Incorporated pursuant to the Restated Indenture, dated June 1, 1940, by and among Frontier Southwest Incorporated, as issuer, and BOKF, NA, as successor trustee, and (b) Rural Utilities Service loan contracts due January 3, 2028 (collectively, the Subsidiary Secured Notes) shall be reinstated on the Effective Date, with holders of such claims receiving ordinary course cash interest payments at the applicable non-default contract rate through the Effective Date;

·claims arising under, derived from, based on or related to the 6.750% unsecured notes due May 15, 2027 issued by Frontier California Inc., the 6.860% unsecured notes due February 1, 2028 issued by Frontier Florida LLC, the 6.730% unsecured notes due February 15, 2028 issued by Frontier North Inc., the 8.400% unsecured notes due October 15, 2029 issued by Frontier West Virginia Inc. and the applicable indentures, debentures and purchase agreements associated therewith shall be reinstated on the Effective Date, with holders of such claims receiving ordinary course cash interest payments at the applicable non-default contract rate through the Effective Date;

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

·holders of claims arising under, derived from, based on, or related to the unsecured notes issued by the Company shall receive their (i) pro rata share of and interest in the Incremental Senior Notes Payment Amount (as defined in the Plan) and (ii) pro rata share of and interest in (after first reducing, for distribution purposes only, the amount of each such holder’s senior notes claim on a dollar-for-dollar basis by the amount of Incremental Senior Notes Payments, and solely to the extent actually paid): (a) 100% of the Reorganized Company’s new common stock, subject to dilution by the Reorganized Company’s management incentive plan; (b) the Takeback Debt, if any; and (c) the Surplus Cash (as defined in the Plan), if any;

·to the extent not already satisfied during the Chapter 11 Cases, holders of certain other claims that are not secured shall receive: (i) payment in full in cash; (ii) reinstatement; or (iii) such other treatment rendering such claims unimpaired, in each case as reasonably acceptable to the Company Parties and the Required Consenting Noteholders;

·holders of secured claims (other than claims arising under, derived from, based on or related to the Revolver, the Term Loan B, the Original First Lien Notes, the Original Second Lien Notes, the Subsidiary Secured Notes, the Secured Tax Claims or DIP Facilities) shall receive, at the option of the applicable Company~~Party: (i) payment in full in cash, (ii) reinstatement; (iii) delivery of the collateral securing such claim; or (iv) such other treatment rendering such claim unimpaired;~~

·~~claims subject to subordination under section 510(b) of the Bankruptcy Code shall be cancelled, released, discharged, and extinguished;~~

·~~all intercompany claims and intercompany interests shall be either (a) reinstated or (b) cancelled on the Effective Date; and~~

·~~all equity securities in the Company shall be cancelled, released and extinguished on the Effective Date.~~

~~For more information on the repayment of the Revolver, the Original First Lien Notes, the Original Second Lien Notes and Term Loan B, see~~ ~~—Term Loan and Revolving Credit Facilities and New Secured Notes~~.

~~Secured Creditor Settlement~~

~~The Plan will effectuate the settlement, release, compromise, discharge, and other resolution of all outstanding claims, interests, and causes of action, including the~~ ~~Objection of the Ad Hoc First Lien Committee to the Debtors’ Third Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code~~ ~~[Docket No. 857], the~~ ~~Objection of the Original Second Lien Notes Trustee to the Debtors’ Third Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code~~ ~~[Docket No. 858], and the Second Lien Committee’s~~ ~~Joinder to the Original Second Lien Notes Trustee’s Objection~~ [Docket No. 860], as between the Company Parties, the ad hoc committee of certain unaffiliated holders of Term Loan B claims and Original First Lien Notes claims (the First Lien Committee) represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP and PJT Partners LP, the Original Second Lien Notes Trustee, and the ad hoc committee of certain unaffiliated holders of Original Second Lien Notes claims represented by Quinn Emanuel Urquhart & Sullivan, LLP (the Second Lien Committee) (such settlement, the Secured Creditor Settlement). The Secured Creditor Settlement includes, among other terms and subject to certain conditions, the following key terms:

·holders of Term Loan B claims, Original First Lien Notes claims, and Original Second Lien Notes claims, and the First Lien Committee and Second Lien Committee, shall be deemed to have consented to reinstatement and shall not allege, and shall be deemed to have waived and foregone any objections to, any defaults arising from the transactions set forth in the Plan;

·holders of Term Loan B claims, Original First Lien Notes claims, and Original Second Lien Notes claims, and the First Lien Committee and Second Lien Committee shall be deemed to have consented to and shall not impede or otherwise delay the Debtors’ pursuit of certain debtor in possession/exit financing facilities;

·holders of Term Loan B claims, Original First Lien Notes claims, and Original Second Lien Notes claims, and the First Lien Committee and Second Lien Committee, shall waive and forgo any and all “make-whole” claims and claims to default interest under the JPM Credit Agreement, the Original First Lien Notes indenture, and/or the Original Second Lien Notes indenture, as applicable;

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

·holders of Revolver claims, Term Loan B claims, Original First Lien Notes claims (including the First Lien Committee), the applicable agents, and the Original First Lien Notes trustee shall be deemed to have waived any enforcement of any turnover or payment over rights under the Junior Lien Intercreditor and Subordination Agreement, dated as of March 19, 2018, against the Debtors, Original Second Lien Notes Trustee, or holders of Original Second Lien Notes claims with respect to certain obligations and amounts;

·the Company Parties shall make a $48 million payment to holders of Term Loan B claims, a $9 million payment for the benefit of holders of Original First Lien Notes claims, and, in the event that the Effective Date occurs on or after March 31, 2021, an incremental payment of $8 million to holders of Term Loan B claims, subject to the provisions and conditions of the Plan with respect to such payments;

·the Company Parties or the Reorganized Company Parties, as applicable, shall pay in full in cash all reasonable First Lien Committee fees and Second Lien Committee fees that are due and owing under the applicable engagement letters; and

·all adequate protection currently in effect shall remain in effect until entry of a final adequate protection order and, upon the Company Parties’ entry into any DIP Facilities, the Bankruptcy Court shall enter a final adequate protection order granting, among other things, adequate protection to secured creditors in the form of (i) liens and claims on all collateral securing any future DIP Facilities, and (ii) cash payments in the amount of accrued interest.

~~DIP Financing~~

The ~~Company~~First Lien Notes are secured on a first-priority basis and pari passu with its senior secured credit facilities, subject to permitted liens and certain ofexceptions, by all the assets that secure Frontier’s obligations under its domestic subsidiaries entered into a Commitment Letter, dated August 13, 2020, with the Original Commitment Parties, which was amended and restated by that certain Amended and Restated Commitment Letter, dated August 28, 2020, with the Original Commitment Parties and JPM (collectively, the New Commitment Parties), pursuant to which, and subject to the satisfaction of certain customary conditions, including the approval of the Bankruptcy Court, GS Bank, JPM, DBNY, MSSF and CS committed to provide a portion of the $625 million DIP Revolving Facility, which, upon satisfaction of certain conditions, including the effectiveness of the Plan, would convert into a longer term revolving exit facility.

On August 14, 2020, the Company and certain of its subsidiaries entered into an engagement letter, which was amended and restated on August 28, 2020 by that certain Amended and Restated Engagement Letter by and among the Company and certain of its subsidiaries and Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, DBSI, Barclays Capital Inc., Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC, in connection with a proposed issuance, offering and sale senior secured ~~superpriority first lien and/or second lien notes to be issued by the Company or an affiliate thereof.~~credit facilities on a first-priority basis and pari passu with its senior secured credit facilities.

The ~~Company~~Second Lien Notes are secured second-priority basis junior to the senior secured credit facilities and the First Lien Notes, subject to permitted liens and certain ofexceptions, by all the assets that secure Frontier’s obligations under its ~~domestic subsidiaries also entered into that certain Engagement Letter, dated August 14, 2020, with GS Bank, which was amended~~senior secured credit facilities and ~~restated by that certain Amended~~First Lien Notes on a second-priority basis junior to its secured credit facilities and ~~Restated Engagement~~

73First Lien Notes.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

Letter, dated August 28, 2020 with the New Commitment Parties, in connection with the DIP term loan facility, which, upon satisfaction of certain conditions, including the effectiveness of the Plan, would convert into a term loan exit facility.

Net Operating Losses

In connection with the DIP Financing, on October 8, 2020, the Company issued $1,150 million aggregate principal amount of the First Lien Notes due October 2027, and entered into the $625 million DIP Revolving Facility and the $500 million Initial DIP Term Loan Facility. The Company used the proceeds from the offering of the First Lien Notes due October 2027, together with the proceeds of the Initial DIP Term Loan Facility and cash on hand, to (i) repay in full our prepetition $1,650 million aggregate principal amount of the Original First Lien Notes and (ii) pay related interest, fees and expenses.

Also, in connection with the DIP Financing, on November 25, 2020, the Company issued $1,550 million aggregate principal amount of the First Lien Notes due May 2028 and $1,000 million aggregate principal amount of the New Second Lien Notes, and borrowed an incremental $750 million under the DIP Term Loan Facility. The Company used the proceeds from these issuances and the incremental term loan borrowing, together with cash on hand to (i) repay all outstanding borrowings under our Term Loan B, (ii) repay in full the $1,600 million aggregate principal amount of the Original Second Lien Notes, and (iii) pay related interest, fees and expenses incurred in connection therewith.

~~For information about events related to the DIP Financing, refer to “—Capital Resources”~~.

~~Regulatory Approvals~~

~~Effects of the Restructuring and the Chapter 11 Cases on Our Liquidity~~

The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our the-outstanding obligations under the documents governing the JPM Credit Facilities, the Original First Lien Notes, the Original Second Lien Notes, our then-outstanding unsecured notes and debentures and the secured and unsecured debentures of our subsidiaries. However, pursuant to the Bankruptcy Code and as described in “Part II. Other Information—Item 1. Legal Proceedings”, the filing of the Bankruptcy Petitions automatically stayed most actions against the Company Parties, including most actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Company Parties’ property. Accordingly, although the filing of the Bankruptcy Petitions triggered events of default under our existing debt obligations, creditors are stayed from taking action as a result of these defaults. Additionally, under Section 502(b)(2) of the Bankruptcy Code, and subject to the terms of the DIP financing order providing for adequate protection payments to certain of our prepetition lenders, we are no longer required to pay interest on our indentures and credit facilities accruing on or after the Petition Date.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

Additionally, in connection with the Chapter 11 Cases, we have incurred, and expect to continue to incur, significant professional fees and other costs in connection with the Chapter 11 Cases. There can be no assurance that our current liquidity is sufficient to allow us to satisfy our obligations related to the Chapter 11 Cases or to pursue confirmation of the Plan.

As set forth in the Plan, “Excess Cash” is the amount of estimated unrestricted balance sheet cash in excess of $150 million at the Effective Date, and includes net after-tax cash proceeds from the sale of the Northwest Operations (which amount to $1,129 million). As disclosed in the Debtors’ Plan Supplement, filed on March 1, 2021, the Debtors currently estimate $1,313 million of Excess Cash to be available as of the Effective Date. As set forth in the Plan, on the Effective Date, each of the Debtors’ senior noteholders shall receive, among other things, its Pro Rata share of and interest in the Debtors’ “Surplus Cash.” Under the Plan, the “Incremental Senior Notes Payments” will be made from Excess Cash, prior to the determination of, and distribution of, Surplus Cash.

Subsequent Events Related to the Chapter 11 Cases

~~Refinancing and Incremental Amendment~~

On April 14, 2021, the Company entered into a Refinancing and Incremental Facility Amendment No. 2 (the Refinancing and Incremental Amendment), providing for an amendment to the DIP to Exit Term Credit Agreement, pursuant to which the DIP Term Loan Facility (and the exit term loan facility into which it will convert upon the Company Parties’ emergence from the Chapter 11 Cases) was repriced, effective on April 14, 2021. At the Company’s election, the determination of interest rates is based on margins over the alternate base rate or over LIBOR. Prior to the Refinancing and Incremental Amendment, the interest rate with respect to any LIBOR loan was 4.75% or 3.75% for alternate base rate loans, with a 1.00% LIBOR floor. Pursuant to the Refinancing and Incremental Amendment, the interest rate with respect to any LIBOR loan is 3.75% or 2.75% for alternate base rate loans, with a 0.75% LIBOR floor.

Pursuant to the Refinancing and Incremental Amendment, JPM also agreed to provide, subject to certain conditions, including emergence from the Chapter 11 Cases, an incremental exit term loan facility in an aggregate principal amount of $225 million (the New Incremental Commitment and the loans borrowed thereunder, the New Incremental Term Loans). As previously disclosed, the Company and certain of its subsidiaries had previously entered into a commitment letter with certain existing noteholders and/or their affiliates (the Original Commitment Parties) pursuant to which, and subject to the satisfaction of certain conditions, including the Company Parties’ emergence from the Chapter 11 Cases, the Original Commitment Parties agreed to provide the Company with an incremental term loan facility in an aggregate principal amount of $225 million (the Original Incremental Commitment). The New Incremental Commitment will be used in place of the Original Incremental Commitment, which was terminated on April 14, 2021. The New Incremental Term Loans are expected to be fungible with, and on the same terms as, the Company’s existing term loans under the DIP to Exit Credit Agreement and have the same CUSIP numbers and other identifiers.

~~Other Information Related to the Restructuring~~

~~Consistent with the company’s expected~~ emergence from bankruptcy, ~~on April 30, 2021,~~ the Company ~~will consummate~~consummated a taxable disposition of substantially all of the assets and/or subsidiary stock of the ~~Company and utilize substantially all~~Company. Certain of the ~~Company’s NOLs.~~

~~See Note 3~~NOLs were utilized in offsetting gains from the disposition, certain of the ~~Notes~~NOLS were extinguished as part of attribute reduction and certain subsidiary NOLS were carried over. Under Section 338(h)(10) of the Code, Predecessor and Successor made elections to ~~Consolidated Financial Statements for more information~~step-up tax basis of certain subsidiary assets. Such Section 338(h)(10) elections will generate depreciation and amortization expense going forward, which may result in net operating losses on ~~the Restructuring. See Note 10 for further detail of our debt obligations as of and for the year ended December 31, 2020.~~a go forward basis. Such net operating losses would be carried forward indefinitely but would be subject to an 80% limitation on U.S. taxable income.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~(Unaudited)~~

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial statements.

Contractual Obligations

Other than as disclosed elsewhere in this report with respect to the filing of the Chapter 11 Cases, ~~and~~ the acceleration of substantially all of our debt, ~~as a result,~~and the application of fresh start accounting, there have been no material changes outside the ordinary course of business to the information provided with respect to our contractual obligations, including indebtedness and purchase and lease obligations, as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~.2020.

Future Commitments

In April 2015, the FCC released its right of first refusal offer of support to price cap carriers under the CAF Phase II program, which is intended to provide long-term support for broadband in high cost unserved or underserved areas. Frontier accepted the FCC’s CAF Phase II offer in 25 states, which provides $313 million in annual support through 2021, to make available 10 Mbps downstream/1 Mbps upstream broadband service to households across some of the 25 states where we operate.

To the extent we do not enable the required number of households with 10 Mbps downstream/1 Mbps upstream broadband service by the end of the CAF Phase II term or we are unable to satisfy other FCC CAF Phase II requirements, Frontier would be required to return a portion of the funds previously ~~received.~~received and may be subject to certain other requirements and obligations.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Critical Accounting Policies and Estimates

The preparation of our financial statements requires management to make estimates and assumptions. There are inherent uncertainties with respect to such estimates and assumptions; accordingly, it is possible that actual results could differ from those estimates and changes to estimates could occur in the near term.

These critical accounting estimates have been reviewed with the Audit Committee of our Board of Directors.

~~There~~Except for the application of fresh start accounting, there have been no material changes to our critical accounting policies and estimates from the information provided in Item 7. “Management Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2020.

See Note 1, 2, and 3 of the notes to the financial statements for updated accounting policies related to the application of fresh start accounting.

Recent Accounting Pronouncements

See Note 2 of the Notes to Consolidated Financial Statements included in Part I of this report for additional information related to recent accounting literature.

‎

7672

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

Regulatory Developments

In 2015, Frontier accepted the FCC’s CAF Phase II offer in 29 states, which provides $332 million in annual support and in return the Company is committed to make broadband available to approximately 774,000 locations within its footprint. This amount included approximately 41,000 locations and $19 million in annual support related to the four states of the Northwest Operations, which were disposed on May 1, 2020. The CAF Phase II program is intended to provide long-term support for carriers for establishing and providing broadband service with at least 10 Mbps downstream/1 Mbps upstream speeds in high-cost unserved or underserved areas. The CAF II funding runs through and the Company must complete the CAF II deployment by December 31, 2021.

On January 30, 2020, the FCC adopted an order establishing the Rural Digital Opportunity Fund (RDOF), a competitive reverse auction to provide support to serve high cost areas. The FCC held the RDOF Phase I auction from October 29, 2020 through November 25, 2020, and announced the results on December 7, 2020. Frontier was awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations ~~across~~in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia). Frontier submitted its Long Form application to the FCC on January 29, 2021 and, assuming the long-form application is granted by the FCC, anticipates that it will begin receiving funding on January 1, 2022, in which case, Frontier will be required to complete the buildout to the RDOF locations by December 31, 2027, with interim target milestones over this period.

After the FCC completes its current requirement to update its broadband maps with more granular broadband availability information, the FCC plans to hold a second auction for any remaining locations with the remaining funding, expected to be up to approximately $11.2 billion.

Privacy-related legislation has been considered in a number of states. Legislative and regulatory action could result in increased costs of compliance, claims against broadband ~~internet~~Internet access service providers and others, and increased uncertainty in the value and availability of data. On June 28, 2018, the state of California enacted comprehensive privacy legislation that, effective as of January 1, 2020, gives California consumers the right to know what personal information is being collected about them, and whether and to whom it is sold or disclosed, and to access and request deletion of this information. Subject to certain exceptions, it also gives consumers the right to opt-out of the sale of personal information. The law applies the same rules to all companies that collect consumer information. It is unclear the degree to which federal legislative or regulatory action may impact privacy issues.

On October 1, 2019, the D.C. Circuit Court largely upheld the FCC decision in its 2018 Restoring Internet Freedom Order to reclassify broadband as an “information service.” However, the Court invalidated the FCC’s preemption of a state’s ability to pass their own network neutrality rules, and California’s network neutrality provisions have gone into effect. It is unclear whether pending or future appeals or regulatory challenges will have any impact on federal or state net neutrality provisions.

On March 13, 2020, in response to the COVID-19 pandemic, over 550 providers of critical communications services, including Frontier, took the FCC’s Keep Americans Connected pledge pursuant to which providers agreed (i) not to terminate service to any ~~residential~~consumer or small business customers because of their inability to pay their bills due to the disruptions caused by the coronavirus pandemic; (ii) to waive any late fees that any ~~residential~~consumer or small business customers incur because of their economic circumstances related to the coronavirus pandemic; and (iii) to open its Wi-Fi hotspots to any American who needs them. The Keep Americans Connected Pledge expired on June 30, 2020; however, state and federal governments continue to ask companies to aid in pandemic response. ~~A number~~Some of the states we operate in have issued executive orders prohibiting the disconnection of services for customers for the length of the state of emergency and/or otherwise restrict the assessment of late fees during the pandemic. While certain customers have taken advantage of COVID-19 related relief programs, as of ~~March 31,~~June 30, 2021, very few had past due balances beyond the point of normal disconnection. Given the unprecedented and evolving nature of the pandemic and the evolving response of multiple levels of government, the impact of potential changes on the Company are not fully known at this time.

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

~~Company are not fully known at this time.~~

The Federal government has undertaken a number of measures to address the ongoing impacts of the COVID-19 pandemic and to facilitate enhanced access to high speed broadband. As part of the Consolidated Appropriations Act of 2021 passed in December 2020, Congress provided $3.2 billion in funding to help support access to broadband services. In furtherance of this objective, the Federal Communications Commission created the Emergency Broadband Benefit to provide an up to $50 (up to $75 on tribal lands) monthly benefit for qualifying low-income consumers to purchase broadband. Frontier is currently ~~evaluating its participation~~participating in the program. In March 2021, Congress also passed the American Rescue Plan Act (“ARPA”) of 2021 which created a new $10 billion Coronavirus Capital Projects Fund that will be available to the states for critical capital projects, including broadband infrastructure products, that directly enable work, education, and health monitoring. The ARPA also dedicated $350 billion to State and Local Coronavirus Fiscal Recovery Funds, which give states and localities the discretion to target a portion of the funding to broadband infrastructure, among many other permissible expenditure categories. Additionally, the President has proposed, and Congress continues to consider, $100 billion in additional funding for broadband infrastructure and adoption programs. Frontier cannot say at this time ifwhether the federal government, states, and localities will use these funds in ways that may benefit Frontier or create additional competition in any of our markets. The ~~American Rescue Plan Act of 2021~~ARPA also included $7.2 billion in funding for schools and libraries (the Emergency Connectivity Fund) that will provide support for connectivity that enables remote learning. The FCC ~~currently~~ has ~~an open proceeding to establish~~established rules prioritizing funding for ~~this program.~~on-campus services and devices, and Frontier does not know the impact this program may have, if any, at this point in time.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk in the normal course of our business operations due to ongoing investing and funding activities, including those associated with our pension plan assets. Market risk refers to the potential change in fair value of a financial instrument as a result of fluctuations in interest rates and equity prices. We do not hold or issue derivative instruments, derivative commodity instruments or other financial instruments for trading purposes. As a result, we do not undertake any specific actions to cover our exposure to market risks, and we are not party to any market risk management agreements other than in the normal course of business. Our primary market risk exposures from interest rate risk and equity price risk are as follows:

Interest Rate Exposure

Our exposure to market risk for changes in interest rates relates primarily to the interest-bearing portion of our pension investment portfolio and the related actuarial liability for pension obligations, as well as our floating rate indebtedness. As of ~~March 31,~~June 30, 2021, ~~93%~~78% of our total debt had fixed interest rates. We had no interest rate swap agreements in effect at ~~March 31,~~June 30, 2021. We believe that our currently outstanding obligation exposure to interest rate changes is minimal.

Our discount rate assumption for our pension benefit obligation is determined at least annually, or whenever required, with assistance from our actuaries based on the pattern of expected future benefit payments and the prevailing rates available on long-term, high quality corporate bonds with durations approximate to that of our benefit obligation. As of ~~March 31,~~June 30, 2021, our discount rate utilized in calculating our benefit plan obligation was ~~2.60%~~3.10%.

Our objectives in managing our interest rate risk are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, 7%22% of our outstanding borrowings at ~~March 31,~~June 30, 2021 have floating interest rates. The annual impact of 100 basis points change in the LIBOR would result in approximately ~~$13~~$15 million of additional interest expense, provided that the LIBOR rate exceeds the LIBOR floor. An adverse change in interest rates would increase the amount that we pay on our variable rate obligations and could result in fluctuations in the fair value of our fixed rate obligations. Based upon our overall interest rate exposure, a near-term change in interest rates would not materially affect our consolidated financial position, results of operations or cash flows.

At March 31, 2021, the fair value of our debt was estimated to be approximately $13.4 billion, based on quoted market prices, our overall weighted average borrowing rate was 8.066% and our overall weighted average maturity

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)

(Unaudited)

At June 30, 2021, the fair value of our debt was estimated to be approximately $7,105 million, based on quoted market prices, our overall weighted average borrowing rate was 5.657% and our overall weighted average maturity was approximately ~~six~~eight years. As of ~~March 31,~~June 30, 2021, prior to the filing of the Chapter 11 Cases, there had been no significant change in the weighted average maturity applicable to our obligations since December 31, 2020. ~~However, the filing of the Chapter 11 Cases has accelerated the maturity of substantially all of our debt obligations.~~ Refer to Note 10 for discussion of the impact of the Chapter 11 Cases on our debt obligations.

Equity Price Exposure

Our exposure to market risks for changes in equity security prices as of ~~March 31,~~June 30, 2021 is primarily limited to our pension plan assets. We have no other security investments of any significant amount.

~~Our Pension Plan~~The value of our pension plan assets ~~decreased~~increased $79 million from $2,507 million at December 31, 2020 to ~~$2,484~~$2,586 million at ~~March 31, 2021, a decrease~~April 30, 2021. This increase primarily resulted from contributions of ~~$23 million, or 1%. This decrease was primarily a result of benefit payments of $19~~$32 million and ~~Plan expenses~~investment returns of $5$78 million, partially offset by benefit payments to participants of $25 million and plan expenses of $6 million.

The value of our pension plan assets increased $61 million from $2,586 million at April 30, 2021 to $2,647 million at June 30, 2021. This increase primarily resulted from investment returns of $1$76 million, partially offset by benefit payments to participants of $13 million and plan expenses of $2 million.

Item 4. Controls and Procedures

(a)Evaluation of disclosure controls and procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, regarding the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon this evaluation, our principal executive officer and principal financial officer concluded, as of the end of the period covered by this report, ~~March 31,~~June 30, 2021, that our disclosure controls and procedures were effective in recording, processing, summarizing and reporting on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in an evaluation thereof that occurred during the first ~~fiscal quarter~~six months of 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On April 30, 2018, an amended consolidated class action complaint was filed in the United States District Court for the District of Connecticut on behalf of certain purported stockholders against Frontier, certain of its current and former directors and officers and the underwriters of certain Frontier securities offerings. The complaint was brought on behalf of all persons who (1) acquired Frontier common stock between February 6, 2015 and February 28, 2018, inclusive, and/or (2) acquired Frontier common stock or Mandatory Convertible Preferred Stock either in or traceable to Frontier’s offerings of common and preferred stock conducted on or about June 2, 2015 and June 8, 2015. The complaint asserted, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Rule 10b-5 thereunder, Section 20(a) of the Exchange Act and Sections 11 and 12 of the Securities Act of 1933, as amended (the Securities Act), in connection with certain disclosures relating to the CTF Acquisition. The complaint sought, among other things, damages and equitable and injunctive relief. On March 8, 2019, the District Court granted in its entirety Frontier’s motion to dismiss the complaint. The District Court dismissed with prejudice a number of claims and with respect to certain other claims that were not dismissed with prejudice, Plaintiffs were permitted to seek the court’s permission to refile. On May 10, 2019, Plaintiffs filed a motion for leave to amend along with a proposed amended complaint that is narrower in scope than the dismissed complaint. On March 24, 2020, the court denied plaintiffs’ motion for leave to amend, finding that they had not pled a viable claim. Plaintiffs appealed and the case ~~was stayed by~~is pending with the Second Circuit Court of Appeals. Following Frontier’s emergence from bankruptcy, the Second Circuit set a briefing schedule completed in July 2021, with oral argument likely in the fall of 2021. We continue to dispute the allegations and intend to vigorously defend against such claims. In addition, shareholders have filed derivative complaints on behalf of the Company in Connecticut, California, and Delaware courts. The derivative complaints are based, generally, on the same facts asserted in the consolidated class action complaint and allege against current and former officers and directors of the Company (i) breach of fiduciary duty claims for disseminating false and misleading information to shareholders, failure to manage internal controls, and failure to oversee and manage the company; (ii) unjust enrichment and waste of corporate assets claims; and (iii) violations of Section 14(a) of the Exchange Act for the false and misleading statements. We also dispute the allegations in the derivative complaints described above and intend to vigorously defend against such claims. Given that all of these matters are in the initial stages of litigation, we are unable to estimate a reasonably possible range of loss, if any, that may result.

In addition, we are party to various other legal proceedings (including individual, class and putative class actions as well as federal and state governmental investigations) arising in the normal course of our business covering a wide range of matters and types of claims including, but not limited to, general contracts, billing disputes, rights of access, taxes and surcharges, consumer protection, trademark, copyright and patent infringement, employment, regulatory, tort, claims of competitors and disputes with other carriers. Such matters are subject to uncertainty and the outcome of individual matters is not predictable. However, we believe that the ultimate resolution of these matters, after considering insurance coverage or other indemnities to which we are entitled, will not have a material adverse effect on our financial position, results of operations, or cash flows.

~~Most of our pending legal proceedings have been stayed as a result of filing the Chapter 11 Cases on April 14, 2020 and the effect of the automatic stay.~~

Item 1A. Risk Factors

~~There have been no material changes to~~The following risk factors update and replace the ~~Risk Factors described~~risk factors disclosed under the caption “Risk Factors”, in Part 1,I, Item 1A ~~“Risk Factors” in~~of our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, 2020. In particular, you should carefully consider the risk factors described below and the risks and uncertainties related to “Forward-Looking Statements,” any of which could materially adversely affect our business, operating results, financial condition and the actual outcome of matters as to which forward-looking statements are made in this annual report. The risks and uncertainties described below are not the only ones facing Frontier. Additional risks and uncertainties that are not presently known to us or that we currently deem immaterial or that are not specific to us, such as general economic conditions, may also adversely affect our business and operations.

PART II. OTHER INFORMATION

Risks Related to Our Indebtedness

We have a significant amount of indebtedness and we may still be able to incur substantially more debt in the future. Such debt and debt service obligations may adversely affect us.

As of June 30, 2021, we have indebtedness of approximately $7 billion of which approximately $6 billion is secured. We may also be able to incur substantial additional indebtedness in the future. Although the terms of the agreements currently governing our existing indebtedness restrict our and our restricted subsidiaries’ ability to incur additional indebtedness and liens, such restrictions are subject to several exceptions and qualifications, and the indebtedness and/or liens incurred in compliance with such restrictions may be substantial. Also, these restrictions do not prevent us or our restricted subsidiaries from incurring obligations that do not constitute indebtedness. In addition, to the extent other new debt is added to our and our subsidiaries’ current debt levels, the substantial leverage risks described below would increase.

The potential significant negative consequences on our financial condition and results of operations that could result from our substantial debt include:

·limitations on our ability to obtain additional debt or equity financing on favorable terms or at all;

·instances in which we are unable to comply with the covenants contained in our indentures and credit agreement or to generate cash sufficient to make required debt payments, which circumstances have the potential of accelerating the maturity of some or all of our outstanding indebtedness;

·the allocation of a substantial portion of our cash flow from operations to service our debt, thus reducing the amount of our cash flows available for other purposes, including capital expenditures that would otherwise improve our competitive position, results of operations or stock price;

·requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations;

·compromising our flexibility to plan for, or react to, competitive challenges in our business and the telecommunications industry;

·increasing our vulnerability to general adverse economic and industry conditions, including increases in interest rates, particularly given our indebtedness that bears interest at variable rates, as well as to catastrophic events; and

·the possibility of our being put at a competitive disadvantage with competitors who, relative to their size, do not have as much debt as we do, and competitors who may be in a more favorable position to access additional capital resources.

In addition, our First Lien Notes, Second Lien Notes and Takeback Notes, as well as our subsidiary indebtedness are rated below “investment grade” by independent rating agencies. This has resulted in higher borrowing costs for us. These rating agencies may lower our debt ratings further, if in the rating agencies’ judgment such an action is appropriate. A further lowering of a rating would likely increase our future borrowing costs and reduce our access to capital. Our negotiations with vendors, customers and business partners can be negatively impacted if they deem us a credit risk as a result of our credit rating.

The agreements governing our current indebtedness contain various covenants that impose restrictions on us and certain of our subsidiaries that may reduce our operating and financial flexibility and we may not be able to satisfy our obligations under these or other, future debt arrangements.

We face significant operational and industry challenges. Pressures on our business are resulting in a continued deterioration in revenue and liquidity and there is a lower outlook for our industry as a whole. While we have undertaken initiatives to strengthen our business, we have experienced significant challenges in achieving improvements in revenue and customer trends.

‎

PART II. OTHER INFORMATION

The agreements governing our existing indebtedness contain covenants that, among other things, limit our ability and the ability of certain of our subsidiaries to:

·incur additional debt and issue preferred stock;

·incur or create liens;

·redeem and/or prepay certain debt;

·pay dividends on our stock or repurchase stock;

·make certain investments;

·engage in specified sales of assets;

·enter into transactions with affiliates; and

·engage in consolidation, mergers and acquisitions.

In addition, the exit facilities require us to comply with specified financial ratios, including a maximum first lien coverage ratio. Any future indebtedness may also require us to comply with similar or other covenants.

These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities. Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity for the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. This could have serious consequences to our financial condition and results of operations.

Frontier is primarily a holding company and, as a result, we rely on the receipt of funds from our subsidiaries in order to meet our cash needs and service our indebtedness, including the notes.

Frontier is primarily a holding company and its principal assets consist of the shares of capital stock or other equity instruments of its subsidiaries. As a holding company, we depend on dividends, distributions and other payments from our subsidiaries to fund our obligations. The operating results of our subsidiaries at any given time may not be sufficient to make dividends, distributions or other payments to us in order to allow us to make payments on our indebtedness. In addition, the payment of these dividends, distributions and other payments, as well as other transfers of assets, between our subsidiaries and from our subsidiaries to us may be subject to legal, regulatory or contractual restrictions. Some state regulators have imposed, and others may consider imposing, on regulated companies, that could limit the ability of such regulated companies to transfer cash between subsidiaries or to the parent company. While none of the existing state regulations materially affect our cash management, any changes to the existing regulations or imposition of new regulations or restrictions may materially adversely affect our ability to transfer cash within our consolidated companies.

We expect to make contributions to our pension plan in future years, the amount of which will be impacted by volatility in asset values related to Frontier’s pension plan and/or changes in pension plan assumptions.

We made contributions of $64 million and $166 million to our pension plan in 2020 and 2019, respectively, and we expect to continue to make contributions in future years. Required pension plan contributions for the fiscal year 2020 were approximately $180 million, including interest owed on contribution deferrals. Certain provisions of the CARES Act permit employers to postpone making pension contributions due in 2020 until January 4, 2021 and we postponed the remaining 2020 contributions of approximately $147 million, in the aggregate, as permitted by the CARES Act. We received from the IRS a waiver of the minimum funding standard under Section 412(c) of the Internal Revenue Code, and Section 302(c) of the Employee Retirement Income Security Act of 1974 for the pension plan year beginning January 1, 2020. With this waiver, we will spread the 2020 contribution, determined as of January 1,

PART II. OTHER INFORMATION

2020 (approximately $127 million in total), over the five subsequent plan years, in addition to the minimum contributions owed for those plan years. In addition, in March 2021, Congress passed the American Rescue Plan Act, or ARPA, which includes certain pension funding relief for plan sponsors.

Volatility in our asset values, liability calculations, or returns may impact the costs of maintaining our pension plan and our future funding requirements. The deferrals described above do not reduce our overall contribution obligations. Any future contribution to our pension plan could be material and could have a material adverse effect on our liquidity by reducing cash flows.

Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements.

Pension costs and obligations are determined using actual results as well as actuarial valuations that involve several assumptions. The most critical assumptions are the discount rate, the long-term expected return on assets and mortality tables. Other assumptions include salary increases, lump sum payments, and retirement age. Some of these assumptions, such as the discount rate and return on pension assets, are reflective of economic conditions and largely out of our control. Changes in the pension assumptions could have a material impact on pension costs and obligations, and could in turn have a material adverse effect on our earnings, equity and funding requirements.

Risks Related to our Emergence from Bankruptcy

The ongoing effects of the Chapter 11 Cases, including the risks and uncertainties associated with bankruptcy, may harm our business following emergence.

We have only recently emerged from bankruptcy. Our senior management has been required to spend a significant amount of time and effort attending to the Restructuring instead of focusing exclusively on our business operations. Risks associated with emergence from bankruptcy include our ability to maintain our relationships with our suppliers, service providers, regulators, customers, employees, and other third parties; and our ability to maintain contracts that are critical to our operations.

Our historical financial information may not be indicative of our future financial performance as a result of the implementation of the Plan.

Our capital structure was significantly altered under the Plan. Upon emergence from bankruptcy, we adopted fresh-start accounting in accordance with ASC 852, Reorganizations. Under fresh-start accounting rules that apply to us upon the Effective Date, our assets and liabilities have been adjusted to fair value and our accumulated deficit has been restated to zero. In addition, we have adopted certain accounting policy changes as part of fresh-start accounting and such policies could result in material changes to our financial reporting and results. Accordingly, our financial condition and results of operations following our emergence from Chapter 11 are not comparable to the financial condition and results of operations reflected in our historical consolidated financial statements. As a result, investors should not rely on these results as indicative of our future performance.

There can be no assurance as to the effect that our bankruptcy and emergence from Chapter 11 will have on our relationships with our business partners.

There can be no assurance as to the effect that our bankruptcy and emergence from Chapter 11 will have on our ongoing relationships with our suppliers, customers, service providers or employees. To the extent that any of these events result in the tightening of payment or credit terms, increases in the price of supplied goods, or the loss of one or more major customers, service providers or key employees, it could have a material adverse effect on our business, financial condition, liquidity and results of operations.

PART II. OTHER INFORMATION

Upon emergence from bankruptcy, the composition of our Board of Directors and our management team changed significantly.

The composition of our senior management team has changed significantly during 2021. Nick Jeffery became Chief Executive Officer as of March 4, 2021 and since that time we have hired a new Chief Financial Officer, a new Chief Network Officer, a new head of our Consumer business and a new Chief People Officer, in addition to other key hires. The composition of our management team may continue to change significantly. Qualified individuals are in high demand and we may incur significant costs to attract them. The loss of other key employees or unexpected changes in the composition of our management team could materially and adversely affect our ability to execute our strategy and implement operational initiatives which could have a material and adverse effect on our financial condition, liquidity and results of operations.

In addition, upon emergence from bankruptcy, the composition of our board of directors changed significantly. Our current directors have different backgrounds, experiences and perspectives from those individuals who previously served on our board of directors during bankruptcy and current board of directors may have different views on strategic initiatives and a range of issues that will determine the future of the Company. As a result, the future strategy and plans of the Company may differ materially from those of the past.

Risks Related to Our Business

If our fiber build out or other initiatives to increase our revenues, profitability and cash flows are unsuccessful, our financial position and results of operations will be negatively and adversely impacted.

We must produce adequate revenues and operating cash flows that, when combined with cash on hand and borrowing under our revolving credit facility and other financings, will be sufficient to service our debt, fund our capital expenditures, pay our taxes, and fund our pension and other employee benefit obligations. We continue to experience revenue declines as compared to prior years. We have undertaken, and expect to continue to undertake, programs and initiatives with the objective of improving revenues, profitability, and cash flows by enhancing our operations and customer service and support processes. In particular, under our fiber expansion plan we intend to grow our fiber network and optimize our existing copper network at attractive IRRs in order to increase our revenues and customer trends, and in turn increase our profitability and cash flows. These programs and initiatives require significant resources and may divert attention from ongoing operations and other strategic initiatives. Despite similar efforts in the past, we have historically experienced significant challenges in achieving improvements in revenue and customer trends.

There can be no assurance that our current and future initiatives and programs will be successful, and even if they are successful, the actual returns from these programs and initiatives may be less than anticipated or may take longer to realize than we anticipate. For example, we may not reach our targets to expand our existing fiber network on the timelines we anticipate, or at all. If current and future programs and initiatives are unsuccessful, result in lower returns than we anticipate, or take longer than we anticipate, it could have a material adverse effect on our financial position and our results of operations.

The effects of COVID-19, including its impact on market conditions, may adversely impact our business and hinder our fiber expansion plans.

The outbreak of COVID-19 and the resulting economic downturn adversely affected the financial markets and the economy more generally, which could adversely impact our business. As of June 30, 2020, the markets remain volatile and the economic outlook remains uncertain.

While overall the operational and financial impacts to our business of the COVID-19 pandemic for the six months ended June 30, 2021 were not significant, we continue to closely monitor the evolution of the pandemic, including new COVID-19 variants, as well as the ongoing impact to our employees, our customers, our business and

PART II. OTHER INFORMATION

our results of operations. We have experienced a slowdown in service activations and an increase in deactivations for our SMB customers; to date, these negative impacts have been partially offset by higher consumer activations and lower churn, but there can be no assurance they will continue to be offset. We also continue to closely track our customers’ payment activity as well as external factors, including the expiration of federal wage subsidies for individuals and small businesses which could materially impact payment trends. With more people working from home, we have experienced higher demands on our network and higher sales activity for our consumer broadband service offering. This sustained increase in network demand could lead to reduced network availability and potential outages, which may impair our ability to meet customer service level commitments, lead to higher costs, higher customer churn and potential increased regulatory actions. These potential changes, among others, could have a material financial impact to Frontier.

Our response to COVID-19 has included several operational safety precautions such as limiting our product offerings in certain markets for certain periods and, for some time, not allowing our field service employees to enter a customer’s home. Through June 30, 2021, we had not experienced any significant disruptions in our supply chain; however, some of our business partners, particularly those vendors operating outside of the United States, have been more greatly impacted which has affected our service levels and distribution of work, and resulted in disruptions to our supply chain or other aspects of our business. Any significant shortages or delays in our supply chain relating to our fiber expansion project may adversely impact our ability to reach our fiber expansion targets on budget and on time.

In addition, we may rely on the equity and debt capital markets in order to finance all or a portion of our fiber expansion plan. Adverse capital market conditions related to COVID-19 (or otherwise) could make it more difficult or expensive, or even infeasible, to finance the fiber expansion through the use of one or more capital market financing transactions.

Potential longer-term impacts of COVID-19 on our business include the potential for higher borrowing costs due to the increasing difference in the higher yield of lower-rated debt as compared to the lower yield of higher-rated debt of similar maturity and incremental financing needs. Our analysis of the potential impact of COVID-19 is subject to change. We are unable to predict the timing, duration or intensity of the COVID-19 situation and its effects on the business and general economic conditions in the United States of America. We continue to monitor and assess the impact of the COVID-19 pandemic. Our financial condition, results of operations, liquidity and cash flows could be significantly affected by the outbreak of the COVID-19 pandemic.

The communications industry is very competitive, and some of our competitors have superior resources which may place us at a disadvantage.

We face competition in every aspect of our business. Through mergers and various service expansion strategies, service providers are striving to provide integrated solutions both within and across geographic markets. Our competitors include CLECs, Internet service providers, wireless companies, OTT, VoIP providers, fiber and other “overbuilders” and cable companies, some of which may be subject to less regulation than we are. These entities may provide services competitive with the services that we offer or intend to introduce. For example, our competitors may seek to introduce networks in our markets that are competitive with or superior to our copper-based networks in those markets. Several competitors were successful bidders in the RDOF auction in areas within Frontier’s service footprint and we expect these competitors will deploy expanded services in these areas that will compete with our services. We also believe that wireless, cable and other providers have increased their penetration of various services in our markets. We expect that competition will remain robust. Our revenue and cash flow will be adversely impacted if we cannot reverse our customer losses or continue to provide high-quality services.

Some of our competitors have market presence, engineering, technical, marketing and financial capabilities which are substantially greater than ours. In addition, some of these competitors have less debt and are able to raise capital at a lower cost than we are able to. Consequently, some of these competitors may be able to develop and expand their communications and network infrastructures more quickly, adapt more swiftly to new or emerging technologies and changes in customer requirements, including leading edge technologies such as artificial intelligence, machine learning and various types of data science, as well as take advantage of acquisition and other

PART II. OTHER INFORMATION

opportunities more readily and devote greater resources to the marketing and sale of their products and services than we will be able to. Additionally, the greater brand name recognition of some competitors may require us to price our services at lower levels in order to retain or obtain customers. Finally, the cost advantages and greater financial resources of some of these competitors may give them the ability to reduce their prices for an extended period of time if they so choose. Our business and results of operations may be materially adversely impacted if we are not able to effectively compete.

We cannot predict which of the many possible future technologies, products or services will be important in order to maintain our competitive position or what expenditures will be required to develop and provide these technologies, products or services. Our ability to compete successfully will depend on the effectiveness of capital expenditure investments in our properties, our marketing efforts, our ability to deliver high quality customer service, our ability to anticipate and respond to various competitive factors affecting the industry, including a changing regulatory environment that may affect our business and that of our competitors differently, new services that may be introduced, changes in consumer preferences, or habits, demographic trends, economic conditions and pricing strategies by competitors. Increasing competition may reduce our revenues and increase our marketing and other costs as well as require us to increase our capital expenditures and thereby decrease our cash flows.

We may be unable to meet the technological needs or expectations of our customers and may lose customers as a result.

The communications industry is subject to significant changes in technology and replacing or upgrading our infrastructure to keep pace with such technological changes could result in significant capital expenditures. If we do not replace or upgrade technology and equipment and manage broadband speeds and capacity as necessary, we may be unable to compete effectively because we will not be able to meet the needs or expectations of our customers.

In addition, enhancements to product offerings may influence our customers to consider other service providers, such as cable operators or wireless providers. We may be unable to attract new or retain existing customers from cable companies due to their deployment of enhanced broadband and VoIP technology. In addition, new capacity services for broadband technologies may permit our competitors to offer broadband data services to our customers throughout most or all of our service areas. Any resulting inability to attract new or retain existing customers could adversely impact our business and results of operations in a material manner.

We rely on network and information systems and other technology, and a disruption or failure of such networks, systems or technology as a result of computer viruses, cyber-attacks, misappropriation of data or other malfeasance, as well as outages, accidental releases of information or similar events, may disrupt our business and materially impact our results of operations, financial condition and cash flows.

Our information technology networks and infrastructure may be subject to damage, disruptions or shutdowns due to computer viruses, cyber-attacks or breaches, employee or third-party error or malfeasance, power outages, communication or utility failures, systems failures, natural disasters or other catastrophic events.

Further, our network and information systems are subject to various risks related to third parties and other parties we may not fully control. We use encryption and authentication technology licensed from third parties to provide secure transmission of confidential information, including our business data and customer information. Similarly, we rely on employees in our network operations centers, data centers, call centers and retail stores to follow our procedures when handling sensitive information. While we select our third-party business partners and employees carefully, we do not control their actions, which could expose us to cyber-security risks. In addition, our customers using our network to access the Internet may become victim to malicious and abusive Internet activities, such as unsolicited mass advertising (or spam), peer-to-peer file sharing, distribution of viruses, worms and other destructive or disruptive software; these activities could adversely affect our network, result in excessive call volume at our call centers and damage our or our customers’ equipment and data.

While we maintain security measures, disaster recovery plans and business continuity plans for our business and are continuously working to upgrade our existing technology systems and provide employee training around the

PART II. OTHER INFORMATION

cyber risks we face, these risks are constantly evolving and are challenging to mitigate. Like many companies, we are the subject of increasingly frequent cyber-attacks. Any unauthorized access, computer viruses, accidental or intentional release of confidential information or other disruptions could result in misappropriation of our or our customers’ sensitive information; financial loss; reputational harm; increased costs, such as those relating to remediation or future protection; customer dissatisfaction, which could lead to a decline in customers and revenue; government investigations and legal claims or proceedings, fines and other liabilities. There can be no assurance that the impact of such incidents would not be material to our results of operations, financial condition or cash flows.

Our business is sensitive to continued relationships with our wholesale customers.

We have substantial business relationships with other communications carriers for which we provide service. While we seek to maintain and grow our business with these customers, we face significant competition for this wholesale business. If we fail to maintain our grow this business, our revenues and results of operations could be materially and adversely affected.

A significant portion of our workforce is represented by labor unions.

As of June 30, 2021, approximately 70% of our total employees were represented by unions and were subject to collective bargaining agreements. Of this unionized workforce, approximately 70% are covered by collective agreements that either expire or have been ratified in 2021 and approximately 15% are covered by collective bargaining agreements that expire in 2022. In addition, approximately 15% of the unionized workforce are covered by collective bargaining agreements that are on extensions from the dates on which they originally expired in 2019 or 2020.

We cannot predict the outcome of negotiations of the collective bargaining agreements covering our employees. If we are unable to reach new agreements or renew existing agreements, employees subject to collective bargaining agreements may engage in strikes, work slowdowns or other labor actions, which could materially disrupt our ability to provide services. New labor agreements or the renewal of existing agreements may impose significant new costs on us, which could adversely affect our financial condition and results of operations in the future.

Negotiations with the providers of content for our video systems may not be successful, potentially resulting in our inability to carry certain programming channels on our video systems, which could result in the loss of subscribers. Alternatively, because of the power of some content providers, we may be forced to pay an increasing amount for some content, resulting in higher expenses and lower profitability.

We continue to execute on our video strategy of achieving savings by renegotiating contracts to lower content costs or dropping channels entirely. The content owners of the programming that we carry on our multichannel video systems are the exclusive provider of the channels they offer. If we are unable to reach a mutually-agreed contract with a content owner, including pricing and carriage provisions, our existing agreements to carry this content may not be renewed, resulting in the blackout of these channels. The loss of content could result in our loss of customers who place a high value on the particular content that is lost. In addition, many content providers own multiple channels. As a result, we typically have to negotiate the pricing for multiple channels rather than one and carry and pay for content that customers do not value, in order to have access to other content that customers do value. Some of our competitors havematerially larger scale than we do, and may, as a result, be better positioned than we are in such negotiations. As a result of these factors, the expense of content acquisition may continue to increase, and this could result in higher expenses and lower profitability.

PART II. OTHER INFORMATION

We are subject to a significant amount of litigation, which could require us to pay significant damages or settlements.

We are party to various legal proceedings, including, from time to time, individual actions, class and putative class actions, and governmental investigations, covering a wide range of matters and types of claims including, but not limited to, general contract disputes, billing disputes, rights of access, taxes and surcharges, consumer protection, advertising, sales and the provision of services, trademark and patent infringement, employment, regulatory, tort, claims of competitors and disputes with carriers.

In connection with our emergence from bankruptcy, the Plan provided that holders of general unsecured claims, including, but not limited to, litigation claims against us and/or our subsidiaries, had their claims “ride through” the bankruptcy, meaning there was no bar to or discharge of these claims. In particular, litigation claims against us survived the bankruptcy and those claims may be pursued against us on or after the Effective Date. To the extent such claims could have been asserted prior to bankruptcy or arose during the bankruptcy, such claims can be asserted now that we have emerged from bankruptcy. In addition to potential liability for claims asserted against us, we have ongoing obligations to indemnify our former officers and directors and certain underwriters in connection with litigation as we did before the bankruptcy.

Litigation is subject to uncertainty and the outcome if individual matters is not predictable. We may incur significant expenses in defending these lawsuits. In addition, we may be required to pay significant awards or enter into settlements with governmental or other entities which impose significant financial and business remediation measures.

We rely on a limited number of key suppliers and vendors.

We depend on a number of suppliers and vendors for equipment and services relating to our network infrastructure, including network elements such as digital and internet protocol switching and routing equipment, optical and copper transmission equipment, broadband connectivity equipment, various forms of customer premise equipment, optical fiber, wireless equipment, as well as the software that is used throughout our network to manage traffic, network elements, and other functions critical to our operations. If any of our major suppliers were to experience disruption, supply-chain interruptions, financial difficulties, or other unforeseen problems delivering, maintaining, or servicing these network components on a timely basis, our operations could suffer significantly. For example, the ongoing COVID-19 pandemic may affect the ability of our suppliers and vendors to provide products and services to us and may adversely impact our operations. In addition, due to changes in the communications industry, the suppliers of many of these products and services have been consolidating. In the event it were to become necessary to seek alternative suppliers and vendors, we may be unable to obtain satisfactory replacement supplies, services, or utilities on economically-attractive terms, on a timely basis, or at all, which could increase costs or cause disruptions in our services.

Risks Related to Regulation and Oversight

Changesinfederal or state regulations may reduce the switched access charge and subsidy revenues we receive.

A portion of Frontier’s total revenues ($89 million, or 1% in 2020 and $102 million, or 1%, in 2019) are derived from switched access charges paid by other carriers for services we provide in originating intrastate and interstate long-distance traffic. Frontier expects a portion of our revenues will continue to be derived from switched access charges paid by these carriers for these services. The rates Frontier can charge for switched access are regulated by the FCC and state regulatory agencies.

In 2011, the FCC adopted the 2011 Order regarding Intercarrier Compensation, which is the payment framework that governs how carriers compensate each other for the exchange of voice traffic between carriers. However, the 2011 Order did not resolve all questions on Intercarrier Compensation. In an October 2020 order, the FCC adopted a 2-year transition of 1-800 (toll free) switched access charges to bill and keep beginning July 2021,

PART II. OTHER INFORMATION

thus further reducing this declining revenue stream. The FCC continues to consider the possibility of further reducing access rates in the future. We cannot predict when or how the FCC would implement any changes originating access rates, and future reductions in these revenues may directly affect our profitability and cash flows.

In April 2017, the FCC issued an order that resulted in substantial deregulation in a number of our marketsfor special access services where the market is determined to be competitive and the transport market nationwide. While some aspects of the 2017 Order were appealed by stakeholders the 8^th Circuit issued a decision that upheld the majority of the 2017 Order. The FCC has since reaffirmed the portions of the 2017 Order that were vacated, and no party appealed the FCC’s second decision.

Certain states also have their own open proceedings to address reform to originating intrastate access charges, other intercarrier compensation, and state universal service funds. Although the FCC has pre-empted state jurisdiction on most access charges, many states could consider moving forward with their proceedings. We cannot predict when or how these matters will be decided or the effect on our subsidy or switched access revenues. However, future reductions in our subsidy or switched access revenues may directly affect our profitability and cash flows as those regulatory revenues do not have an equal level of associated variable expenses.

A portion of Frontier’s total revenues ($344 million, or 5%, in 2020 and $365 million, or 4%, in 2019) are derived from federal and state subsidies for rural and high-cost support, that consists primarily of CAF II support, as well as Federal High Cost support and various state subsidies. The FCC’s 2011 Order changed how federal subsidies are calculated and disbursed. These changes transitioned the USF (Universal Service Fund), which supported voice services in high-cost areas, to the CAF (Connect America Fund), which supports broadband deployment in high-cost areas. In June 2015, we accepted the FCC’s offer of support to price cap carriers under the CAF Phase II program in 25 states, which, excluding the support related to the Northwest Operations divested on May 1, 2020, provides $313 million in annual support through 2021 in return for our commitment to make broadband available to households within our footprint.

On January 30, 2020, the FCC adopted an order establishing the RDOF program. The FCC held the RDOF Phase I auction in the third quarter of 2021. Frontier was awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia). Frontier submitted its Long Form application to the FCC on January 29, 2021 and, assuming the long-form application is granted by the FCC, anticipates that it will begin receiving funding on January 1, 2022. The program will not be as favorable to us as the CAF Phase II program, and this program will result in a material reduction in the level of funding that we receive from the FCC under the CAF Phase II program (approximately $332 million in annual support) to approximately $37 million in annual support under RDOF beginning in 2022. Our inability to replace a substantial portion of this reduction, will in turn result in a material reduction in our revenue and operating income, and could have a material adverse effect on our business, financial condition and results of operations.

While we are implementing a number of operational initiatives in order to realize certain cost savings, our ability to achieve such cost savings on a timely basis, or at all, is subject to various risks and assumptions by our management, which may or may not be realized. In addition, our ability to achieve such costs savings is subject to the incurrence of other costs in our operations, which may be material and may offset all or a portion of such cost savings. As a result, we may not be able to realize these anticipated cost savings on a timely basis or at all. Even if we do realize some or all of such cost savings, they may be insufficient to offset any reductions in subsidies or CAF Phase II funding we receive, or our inability to recover USF contributions.

In addition, we are required to contribute to the USF and the FCC allows us to recover these contributions through a USF surcharge on customers’ bills. This surcharge accounted for $193 million of revenue in 2020 and $221 million in 2019. Our inability to recover USF contributions could have a material adverse effect on our business or results of operations.

PART II. OTHER INFORMATION

Future reductions in these subsidies, the inability to replace a substantial portion of our CAF II or RDOF funding, or our inability to recover USF contributions, could have a material adverse effect on our business or results of operations.

Frontier and our industry will likely remain highly regulated, and we could incur substantial compliance costs that could constrain our ability to compete in our target markets.

As an incumbent local exchange carrier, some of the services we offer are subject to significant regulation from federal, state and local authorities. This regulation could impact our ability to change our rates, especially on our basic voice services and our access rates and could impose substantial compliance costs on us. In some jurisdictions, regulation may restrict our ability to expand our service offerings. In addition, changes to the regulations that govern our business may have an adverse effect on our business by reducing the allowable fees that we may charge, imposing additional compliance costs, reducing the amount of subsidies or otherwise changing the nature of our operations and the competition in our industry. At this time, it is unknown how these regulations, regulatory oversight, or changes to these regulations will affect Frontier’s operations or ability to compete in the future.

FCC rulemakings and state regulatory proceedings, including those relating to intercarrier compensation, universal service and broadband services, could have a substantial adverse impact on our operations.

Our Internet access offerings could become subject to additional laws and regulations as they are adopted or applied to the Internet. As the significance of the Internet expands, federal, state and local governments may pass laws and adopt rules and regulations, including those directed at privacy or service rates, or apply existing laws and regulations to the Internet (including Internet access services), and related matters are under consideration in both federal and state legislative and regulatory bodies. Although the FCC has pre-empted state jurisdiction on network neutrality and privacy, many states, including California, have considered or are moving forward with legislation on these or other Internet-related issues. Multiple states have taken executive or legislative action directed at reinstating aspects of the FCC’s 2015 Order. We cannot predict whether the outcome of expected or pending challenges to the FCC’s order or subsequent state actions will prove beneficial or detrimental to our competitive position. It is also unclear the degree to which the outcome of the November 2020 elections may impact federal or state legislative or regulatory action on net neutrality and privacy issues.

We are subject to the oversight of certain federal and state agencies that have in the past, and may in the future, investigate or pursue enforcement actions against us relating to consumer protection matters.

Certain federal and state agencies, including state attorneys general, monitor and exercise oversight related to consumer protection matters, including those affecting the communications industry. Such agencies have in the past, and may in the future, choose to launch an inquiry or investigation of our business practices in response to customer complaints or other publicized customer service issues or disruptions, including regarding the failure to meet technological needs or expectations of our customers. Such inquiries or investigations could result in reputational harm, enforcement actions, litigation, fines, settlements and/or operational and financial conditions being placed on the Company, any of which could materially and adversely affect our business.

We are subject to the oversight of certain federal and state regulatory agencies regarding commitments that were made by or imposed on the Company by the regulatory agencies in association with securing federal and state regulatory approval for the Restructuring.

The Company made a number of affirmative commitments to federal and certain state regulators to secure approval for the Restructuring, including specific investment, broadband service deployment, service quality improvements, reporting, and compliance commitments. Regulators will monitor and may launch compliance inquiries or investigations and if the Company is found to have failed to comply with its obligations it could result in reputational harm, enforcement actions, litigation, penalties, fines, settlements and/or operational and financial conditions being placed on the Company, any of which could materially and adversely affect our business.

PART II. OTHER INFORMATION

Tax legislation may adversely affect our business and financial condition.

Tax laws are dynamic and continually change as new laws are passed and new interpretations of the law are issued or applied. For example, on December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the TCJA. The TCJA makes broad and complex changes to the U.S. tax code and, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest, allows for the expensing of capital expenditures, and imposes limitations on the use of net operating losses arising in taxable years beginning after December 31, 2017. The reduction of the U.S. corporate tax rate results in a decreased valuation of our deferred tax asset and liabilities.

More recently, on March 18, 2020, the Families First Coronavirus Response Act (FFCR Act), and on March 27, 2020, the CARES Act were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017. The Company is continuing to evaluate the impact of this legislation on its consolidated financial position, results of operations, and cash flows. Future regulatory guidance under the FFCR Act and the CARES Act (as well as under the TCJA) may be forthcoming, and such guidance could ultimately increase or lessen their impact on our business and financial condition. It is also highly possible that Congress will enact additional legislation in connection with the COVID-19 pandemic, some of which could have an impact on the Company.

The determination of the benefit from (or provision for) income taxes requires complex estimations and significant judgments concerning the applicable tax laws. If in the future any element of tax legislation changes the related accounting guidance for income tax, it could affect our income tax position and we may need to adjust the benefit from (or provision for) income taxes accordingly.

Risks Related to Our Common Stock

The price of our common stock may be volatile or may decline, which could result in substantial losses for purchasers of our common stock.

Volatility in the market price of our common stock may prevent you from being able to sell your shares at or above the price you paid for them. Many factors, which may be outside our control, may cause the market price of our common stock to fluctuate significantly, including those described elsewhere in the “Risk Factors” section, as well as the following:

variations in our operating and financial performance and prospects from period to period;

our quarterly or annual earnings or those of other companies in our industry compared to market expectations;

future announcements concerning our business or our competitors’ businesses;

the public’s reaction to our press releases, other public announcements and filings with the SEC;

the composition of our public float, including substantial holdings by former creditors that may wish to dispose of our securities;

coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;

market and industry perception of our success, or lack thereof, in pursuing our fiber expansion strategy;

strategic actions by us or our competitors, such as acquisitions or restructurings;

changes in laws or regulations which adversely affect our industry or us;

changes in accounting standards, policies, guidance, interpretations or principles;

changes in senior management or key personnel;

issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock;

adverse resolution of new or pending litigation against us; and

changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.

PART II. OTHER INFORMATION

These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low. As a result, you may suffer a loss on your investment.

If there are substantial sales of shares of our common stock, the price of our common stock could decline.

The market price of the shares of our common stock could decline as a result of the sale of a substantial number of our shares of common stock in the public market, or the perception in the market that our significant stockholders intend to sell a significant number of their shares.

We do not intend to pay dividends on our common stock for the foreseeable future.

We currently have no intention to pay dividends on our common stock at any time in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, certain of our debt instruments contain covenants that restrict the ability of our subsidiaries to pay dividends to us.

Delaware law and certain provisions in our certificate of incorporation may prevent efforts by our stockholders to change the direction or management of our Company.

Our certificate of incorporation and our by-laws contain provisions that may make the acquisition of our Company more difficult without the approval of our Board, including, but not limited to, the following: action by stockholders may only be taken at an annual or special meeting duly called by or at the direction of our board of directors; and advance notice for all stockholder proposals is required.

These and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more difficult for stockholders or potential acquirers to initiate actions that are opposed by our board of directors, including actions to delay or impede a merger, tender offer or proxy contest involving our Company. The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction.

If securities or industry analysts do not publish or cease publishing research or reports, or publish unfavorable research or reports, about us, our business or our industry, or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our industry or our competitors. If we do not maintain adequate research coverage or if any of the analysts who may cover us downgrade our stock, publish inaccurate or unfavorable research about our business or provide relatively more favorable recommendations about our competitors, our stock price could decline. If any analyst who may cover us were to cease coverage of our Company or fail to regularly publish reports about us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

General Risks

The ability to attract and retain key personnel is critical to the success of our business and may be affected by our emergence from bankruptcy.

Our success depends in part upon key personnel. We cannot guarantee that our key personnel will not leave or compete with us. If executives, managers or other key personnel resign, retire or are terminated, or their service is otherwise interrupted, we may not be able to replace them in a timely manner. The loss, incapacity or unavailability for any reason of key members of our management team could have a material impact on our business.
‎

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the quarter ended ~~March 31,~~June 30, 2021.

ISSUER PURCHASES OF EQUITY SECURITIES



~~Period~~	~~Total Number of Shares Purchased~~	~~Average Price Paid per Share~~

~~January 1, 2021 to January 31, 2021~~
~~Employee Transactions~~ ⁽¹⁾	-	$	-

~~February 1, 2021 to February 28, 2021~~
~~Employee Transactions~~ ⁽¹⁾	-	$	-

~~March 1, 2021 to March 31, 2021~~
~~Employee Transactions~~ ⁽¹⁾	-	$	-


~~Totals January 1, 2021 to March 31, 2021~~
~~Employee Transactions~~ ⁽¹⁾	-	$	-

⁽¹⁾Includes restricted shares withheld (under the terms of grants under employee stock compensation plans) to offset minimum tax withholding obligations that occur upon the vesting of restricted shares. Frontier’s stock compensation plans provide that the value of shares withheld shall be the average of the high and low price of our common stock on the date the relevant transaction occurs.

Upon emergence from the Chapter 11 Cases on April 30, 2021, all equity interests in Frontier outstanding prior to the Effective Date ~~will be~~were canceled, released, and extinguished, and we are of no further force or effect and Reorganized Frontier ~~will issue~~issued a total of ~~244,400,000~~244,401,000 shares of common stock to the holders of existing Senior Notes in partial satisfaction of the allowed Senior Notes claims.

The shares of common stock described above are exempt from registration under the Securities Act pursuant to Section 1145 of the Bankruptcy Code (which generally exempts from such registration requirements the issuance of securities under a plan of reorganization).

‎

8189

PART II. OTHER INFORMATION

Item 6. Exhibits


(a)	Exhibits:
	~~31.1~~Exhibit Number	Description
	3.1	Amended and Restated Certificate of Incorporation of Frontier Communications Parent, Inc. (incorporated herein by reference to Exhibit 3.1 of Frontier’s Current Report on Form 8-K filed on April 30, 2021).
	3.2	Amended and Restated Bylaws of Frontier Communications Parent, Inc. (incorporated herein by reference to Exhibit 3.2 of Frontier’s Current Report on Form 8-K filed on April 30, 2021).
	4.1	Indenture, dated as of April 30, 2021, by and among Frontier Communications Holdings, LLC, the guarantors party thereto, the collateral grantor party thereto and Wilmington Trust, National Association, as trustee and collateral agent (incorporated herein by reference to Exhibit 4.1 of Frontier’s Current Report on Form 8-K12G3 filed on April 30, 2021).
	4.2	Form of 5.875% Second Lien Secured Notes due 2029 (included in Exhibit 4.1 hereto).
	4.3	Supplemental Indenture, dated as of April 30, 2021, by and among Frontier Communications Holdings, LLC and Wilmington Trust, National Association, as trustee, with respect to the First Lien Notes due October 2027 (incorporated herein by reference to Exhibit 4.3 of Frontier’s Current Report on Form 8-K12G3 filed on April 30, 2021).
	4.4	Supplemental Indenture, dated as of April 30, 2021, by and among Frontier Communications Holdings, LLC and Wilmington Trust, National Association, as trustee, with respect to the First Lien Notes due May 2028 (incorporated herein by reference to Exhibit 4.4 of Frontier’s Current Report on Form 8-K12G3 filed on April 30, 2021).
	4.5	Supplemental Indenture, dated as of April 30, 2021, by and among Frontier Communications Holdings, LLC and Wilmington Trust, National Association, as trustee, with respect to the Second Lien Notes (incorporated herein by reference to Exhibit 4.5 of Frontier’s Current Report on Form 8-K12G3 filed on April 30, 2021).
	10.1	Amended and Restated Credit Agreement dated as of April 30, 2021, by and among Frontier Communications Holdings, LLC, as borrower, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, Goldman Sachs Bank USA, as revolver agent, and the lenders from time to time party thereto (incorporated herein by reference to Exhibit 10.1 of Frontier’s Current Report on Form 8-K12G3 filed on April 30, 2021).
	10.2	Form of Director Offer Letter (incorporated herein by reference to Exhibit 10.2 of Frontier’s Current Report on Form 8-K12G3 filed on April 30, 2021).

PART II. OTHER INFORMATION

	10.3			Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.3 of Frontier’s Current Report on Form 8-K12G3 filed on April 30, 2021).
	10.4			Form of Frontier Communications Parent, Inc. 2021 Management Incentive Plan (incorporated herein by reference to Exhibit 10.4 of Frontier’s Current Report on Form 8-K12G3 filed on April 30, 2021).
	10.5			Employment Agreement between the Company and Scott C. Beasley, dated as of May 25, 2021 (incorporated herein by reference to Exhibit 10.1 of Frontier’s Current Report on Form 8-K filed on June 2, 2021).
	10.6			Employment Agreement between the Company and Alan Gardner, dated as of May 31, 2021.
	10.7			Employment Agreement between the Company and John Harrobin, dated as of May 8, 2021.
	10.8			Employment Agreement between the Company and Veronica Bloodworth, dated as of March 29, 2021.
	10.9			Transition Agreement between the Company and Sheldon Bruha, dated as of June 10, 2021.
	31.1			Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
	31.2			Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
	32			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101			The following materials from Frontier’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2021, formatted in iXBRL (inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Loss; (iv) the Consolidated Statements of Equity (Deficit); (v) the Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.
	104			Cover Page from Frontier’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2021, formatted in iXBRL and contained in Exhibit 101.

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PART II. OTHER INFORMATION

SIGNATURE

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, thereunto duly authorized.


	FRONTIER COMMUNICATIONS ~~CORPORATION~~PARENT, INC.



	By: /s/ Donald Daniels
	Donald Daniels
	Senior Vice President and Chief Accounting Officer
	(Principal Accounting Officer)

Date: ~~April 30,~~August 5, 2021

8292



	(Unaudited)
	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	2,107	$	1,829
Accounts receivable, less allowances of $148 and $130, respectively		519		553
Contract acquisition costs		93		97
Prepaid expenses		85		90
Income taxes and other current assets		43		85
Total current assets		2,847		2,654

Property, plant and equipment, net		12,987		12,931
Other intangibles, net		598		677
Other assets		528		533
Total assets	$	16,960	$	16,795

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Long-term debt due within one year	$	5,782	$	5,781
Accounts payable		507		540
Advanced billings		210		202
Accrued other taxes		202		204
Accrued interest		96		47
Pension and other postretirement benefits		48		48
Other current liabilities		306		318
Total current liabilities		7,151		7,140

Deferred income taxes		430		343
Pension and other postretirement benefits		2,194		2,195
Other liabilities		445		452
Total liabilities not subject to compromise		10,220		10,130
Liabilities subject to compromise		11,570		11,565
Total liabilities		21,790		21,695
Equity (Deficit):
Common stock, $0.25 par value (175,000 authorized shares,
106,025 issued, and 104,671 and 104,793 outstanding
at March 31, 2021 and December 31, 2020, respectively)		27		27
Additional paid-in capital		4,817		4,817
Accumulated deficit		(8,915)		(8,975)
Accumulated other comprehensive loss, net of tax		(744)		(755)
Treasury common stock		(15)		(14)
Total equity (deficit)		(4,830)		(4,900)
Total liabilities and equity (deficit)	$	16,960	$	16,795



	For the three months ended
	March 31,

	2021		2020

Revenue	$	1,676	$	1,933

Operating expenses:
Network access expenses		198		286
Network related expenses		422		444
Selling, general and administrative expenses		408		444
Depreciation and amortization		387		415
Loss on disposal of Northwest Operations		-		24
Restructuring costs and other charges		2		48
Total operating expenses		1,417		1,661

Operating income		259		272

Investment and other income, net		2		5
Pension settlement costs		-		(103)
Reorganization items, net		(25)		-
Interest expense (contractual interest for the
three months ended March 31, 2021
was $338 million)		(89)		(383)

Income (loss) before income taxes		147		(209)
Income tax expense (benefit)		87		(23)

Net income (loss)		60		(186)

Basic and diluted net earnings (loss) per share
attributable to Frontier common shareholders	$	0.57	$	(1.78)

Total weighted average shares outstanding - basic		104,556		104,363

Total weighted average shares outstanding - diluted		104,896		104,363



	For the three months ended March 31,
	2021		2020

Cash flows provided from (used by) operating activities:
Net income (loss)	$	60	$	(186)
Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities:
Depreciation and amortization		387		415
Pension settlement costs		-		103
Stock-based compensation		(1)		1
Amortization of deferred financing costs		-		8
Other adjustments		1		1
Deferred income taxes		84		(30)
Loss on disposal of Northwest Operations		-		24
Change in accounts receivable		34		29
Change in accounts payable and other liabilities		48		110
Change in prepaid expenses, income taxes and other assets		52		2
Net cash provided from operating activities		665		477

Cash flows provided from (used by) investing activities:
Capital expenditures		(384)		(286)
Proceeds on sale of assets		2		2
Other		2		2
Net cash used by investing activities		(380)		(282)

Cash flows used by financing activities:
Long-term debt principal payments		-		(5)
Finance lease obligation payments		(5)		(8)
Other		(2)		-
Net cash used by financing activities		(7)		(13)

Increase in cash, cash equivalents, and restricted cash		278		182
Cash, cash equivalents, and restricted cash at January 1,		1,887		809
Cash, cash equivalents, and restricted cash at March 31,	$	2,165	$	991

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	40	$	163
Income tax payments, net	$	-	$	1
Reorganization items, net	$	56	$	-



($ in millions)	Revenue from contracts with customers
2021 (remaining nine months)	$	1,091
2022		712
2023		316
2024		110
2025		62
Thereafter		128
Total	$	2,419



			For the three months ended ‎March 31, 2021
			Principal						Interest Rate at
	January 1,		Payments		New		March 31,		March 31,
($ in millions)	2021		and Retirements		Borrowings		2021		2021*

Secured debt issued by Frontier	$	4,964	$	-	$	-	$	4,964	5.75%
Unsecured debt issued by Frontier		10,949		-		-		10,949	9.19%
Secured debt issued by subsidiaries		106		-		-		106	8.37%
Unsecured debt issued by subsidiaries		750		-		-		750	6.90%
Debt prior to reclassification to
liabilities subject to compromise	$	16,769	$	-	$	-	$	16,769	8.07%

Less: Debt Issuance Costs		-						-
Less: Debt Discount		(39)						(38)
Debt, less unamortized debt
issuance costs and discounts		16,730						16,731
Less: Current Portion		(5,781)						(5,782)
Less: Debt subject to compromise		(10,949)						(10,949)
Total Long-term debt	$	-					$	-



	Pension Benefits
	For the three months ended
	March 31,

($ in millions)	2021		2020

Components of total pension benefit cost
Service cost	$	24	$	25
Interest cost on projected benefit obligation		23		30
Expected return on plan assets		(45)		(50)
Amortization of unrecognized loss		18		17
Net periodic pension benefit cost		20		22
Pension settlement costs		-		103
Total pension benefit cost	$	20	$	125



	Postretirement Benefits
	For the three months ended
	March 31,

($ in millions)	2021		2020

Components of net periodic postretirement benefit cost
Service cost	$	5	$	5
Interest cost on projected benefit obligation		7		8
Amortization of prior service cost (credit)		(7)		(8)
Amortization of unrecognized (gain) loss		3		2
Net periodic postretirement benefit cost	$	8	$	7


	As of or for the three months ended
	March 31, 2021	March 31, 2020			%
	Consolidated	Consolidated	Northwest	Remaining	Remaining
	Frontier	Frontier	Ops	Properties	Properties
Customers (in thousands)	3,553	4,063	N/A	N/A	N/A

Consumer customer metrics
Customers (in thousands)	3,234	3,703	330	3,373	-4%
Net customer additions (losses)	(30)	(44)	(5)	(39)	-23%
Average monthly consumer
revenue per customer	$ 86.60	$ 86.93	$ 77.22	$ 87.88	-1%
Customer monthly churn	1.45%	1.81%	1.52%	1.84%	-21%

Commercial customer metrics
Customers (in thousands)	319	360	N/A	N/A	N/A

Broadband subscriber metrics
Broadband subscribers (in thousands)	3,052	3,480	297	3,183	-4%
Net subscriber additions (losses)	(17)	(33)	(5)	(28)	-39%

Video (excl. DISH) subscriber metrics
Video subscribers (in thousands)	453	621	27	594	-24%
Net subscriber additions (losses)	(32)	(39)	(2)	(37)	-14%

DISH subscriber metrics
DISH subscribers (in thousands)	129	165	16	149	-13%
Net subscriber additions (losses)	(5)	(8)	(1)	(7)	-29%

Employees	16,201	17,437	950	16,487	-2%

FRONTIER COMMUNICATIONS CORPORATIONPARENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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Subsequent Events Related to the Chapter 11 Cases

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial statements.

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