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, 2022

¨ 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

FRONTIER COMMUNICATIONS PARENT, INC.

(Exact name of registrant as specified in its charter)


Delaware		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(b) of the Act:

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 x Accelerated filer ¨ Non-accelerated filer ¨

Smaller reporting company ¨ 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 ~~May 2,~~August 1, 2022 was ~~244,963,000.~~244,985,000.

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

Table of Contents


	Page
Part I. Financial Information (Unaudited)

Item 1. Financial Statements

Consolidated Balance Sheets as of ~~March 31,~~June 30, 2022, ~~(Successor),~~ and December 31, 2021 ~~(Predecessor)~~	2

Consolidated Statements of Income for the ~~three~~three months ended ~~March 31,~~June 30, 2022 (Successor), the one month ended April 30, 2021 (Predecessor),and the ~~three~~two months ended ~~March 31,~~June 30, 2021 ~~(Predecessor)~~(Successor)	3

Consolidated Statements of Income for the six months ended June 30, 2022 (Successor), the four months ended April 30, 2021 (Predecessor), and the two months ended June 30, 2021 (Successor)	4

Consolidated Statements of Comprehensive Income for the three months ended ~~March 31, 2022 (Successor), and the three months ended March 31, 2021 (Predecessor)~~	4

~~Consolidated Statements of Equity for the three months ended March 31,~~June 30, 2022 (Successor), the ~~three~~one month ended April 30, 2021 (Predecessor), and the two months ended ~~March 31,~~June 30, 2021 (Successor); and for the six months ended June 30, 2022 (Successor), the four months ended April 30, 2021 (Predecessor), and the two months ended June 30, 2021 (Successor)	5

Consolidated Statements of Equity (Deficit) for the six months ended June 30, 2022 (Successor); and for the two months ended June 30, 2021 (Successor), and the four months ended April 30, 2021 (Predecessor)	6

Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March 31,~~June 30, 2022 (Successor), the ~~three~~four months ended ~~March 31,~~April 30, 2021 (Predecessor), and the two months ended June 30, 2021 (Successor)	67

Notes to Consolidated Financial Statements	78

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3640

Item 3. Quantitative and Qualitative Disclosures about Market Risk	5260

Item 4. Controls and Procedures	5361

Part II. Other Information

Item 1. Legal Proceedings	5462

Item 1A. Risk Factors	5462

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5462

Item 6. Exhibits	5564

Signature	5665

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

(Unaudited)
March 31, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
1,300
$
2,127
Short-term investments
900
-
Accounts receivable, less allowances of $65 and $57, respectively
397
458
Prepaid expenses
60
73
Income taxes and other current assets
31
30
Total current assets
2,688
2,688
Property, plant and equipment, net
9,575
9,199
Other intangibles, net
4,147
4,227
Other assets
345
367
Total assets
$
16,755
$
16,481
LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year
$
15
$
15
Accounts payable
694
535
Advanced billings
202
197
Accrued other taxes
178
183
Accrued interest
153
76
Pension and other postretirement benefits
46
46
Other current liabilities
425
399
Total current liabilities
1,713
1,451
Deferred income taxes
412
387
Pension and other postretirement benefits
1,580
1,672
Other liabilities
415
403
Long-term debt
7,957
7,968
Total liabilities
12,077
11,881
Equity:
Common stock, $0.01 par value (1,750,000 authorized shares, 244,476 and
244,416 shares issued and outstanding at March 31, 2022 and
December 31, 2021, respectively)
2
2
Additional paid-in capital
4,139
4,124
Retained earnings
479
414
Accumulated other comprehensive income, net of tax
58
60
Total equity
4,678
4,600
Total liabilities and equity
$
16,755
$
16,481


	(Unaudited)
	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	678	$	2,127
Short-term investments		2,300		-
Accounts receivable, less allowances of $45 and $57, respectively		420		458
Prepaid expenses		79		73
Income taxes and other current assets		25		30
Total current assets		3,502		2,688

Property, plant and equipment, net		10,108		9,199
Other intangibles, net		4,067		4,227
Other assets		358		367
Total assets	$	18,035	$	16,481

LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year	$	15	$	15
Accounts payable		818		535
Advanced billings		199		197
Accrued other taxes		174		183
Accrued interest		120		76
Pension and other postretirement benefits		46		46
Other current liabilities		407		399
Total current liabilities		1,779		1,451

Deferred income taxes		481		387
Pension and other postretirement benefits		1,427		1,672
Other liabilities		422		403
Long-term debt		9,130		7,968
Total liabilities		13,239		11,881

Equity:
Common stock, $0.01 par value (1,750,000 authorized shares, 244,969
and 244,416 shares issued and outstanding at June 30, 2022 and
December 31, 2021, respectively)		2		2
Additional paid-in capital		4,152		4,124
Retained earnings		580		414
Accumulated other comprehensive income, net of tax		62		60
Total equity		4,796		4,600
Total liabilities and equity	$	18,035	$	16,481

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 INCOME

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

(Unaudited)

Successor
Predecessor
For the three months
For the three months
ended March 31,
ended March 31,
2022
2021
Revenue
$
1,447
$
1,676
Operating expenses:
Cost of service
553
620
Selling, general and administrative expenses
435
408
Depreciation and amortization
284
387
Restructuring costs and other charges
54
2
Total operating expenses
1,326
1,417
Operating income
121
259
Investment and other income, net
77
2
Reorganization items, net
-
(25)
Interest expense (See Note 8)
(103)
(89)
Income before income taxes
95
147
Income tax expense
30
87
Net income
$
65
$
60
Basic net earnings per share
attributable to Frontier common shareholders
$
0.27
$
0.57
Diluted net earnings per share
attributable to Frontier common shareholders
$
0.26
$
0.57
Total weighted average shares outstanding - basic
244,433
104,556
Total weighted average shares outstanding - diluted
245,251
104,896


	Successor		Successor		Predecessor
	For the three months		For the two months		For the one month
	ended June 30,		ended June 30,		ended April 30,
	2022		2021		2021

Revenue	$	1,459	$	1,061	$	555

Operating expenses:
Cost of service		546		396		210
Selling, general, and administrative expenses		427		269		129
Depreciation and amortization		290		179		119
Restructuring costs and other charges		30		11		5
Total operating expenses		1,293		855		463


Operating income		166		206		92

Investment and other income (loss), net		122		(2)		(1)
Reorganization items, net		-		-		4,196
Interest expense (See Note 8)		(118)		(62)		(29)

Income before income taxes		170		142		4,258
Income tax expense (benefit)		69		43		(223)

Net income	$	101	$	99	$	4,481

Basic net earnings per share
attributable to Frontier common shareholders	$	0.41	$	0.41	$	42.81

Diluted net earnings per share
attributable to Frontier common shareholders	$	0.41	$	0.41	$	42.68

Total weighted average shares outstanding - basic		244,723		244,401		104,662

Total weighted average shares outstanding - diluted		244,723		244,401		105,002

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 INCOME

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

(Unaudited)


	Successor		Successor		Predecessor
	For the six months		For the two months		For the four months
	ended June 30,		ended June 30,		ended April 30,
	2022		2021		2021

Revenue	$	2,906	$	1,061	$	2,231

Operating expenses:
Cost of service		1,099		396		830
Selling, general, and administrative expenses		862		269		537
Depreciation and amortization		574		179		506
Restructuring costs and other charges		84		11		7
Total operating expenses		2,619		855		1,880


Operating income		287		206		351

Investment and other income (loss), net		199		(2)		1
Reorganization items, net		-		-		4,171
Interest expense (See Note 8)		(221)		(62)		(118)

Income before income taxes		265		142		4,405
Income tax expense (benefit)		99		43		(136)

Net income	$	166	$	99	$	4,541

Basic net earnings per share
attributable to Frontier common shareholders	$	0.68	$	0.41	$	43.42

Diluted net earnings per share
attributable to Frontier common shareholders	$	0.68	$	0.41	$	43.28

Total weighted average shares outstanding - basic		244,592		244,401		104,584

Total weighted average shares outstanding - diluted		244,831		244,401		104,924

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

($ in millions)

(Unaudited)

Successor
Predecessor
For the three months
For the three months
ended March 31,
ended March 31,
2022
2021
Net income
$
65
$
60
Other comprehensive income (loss), net of tax
(2)
11
Comprehensive income
$
63
$
71


	Successor		Successor		Predecessor
	For the three months		For the two months		For the one month
	ended June 30,		ended June 30,		ended April 30,
	2022		2021		2021

Net income	$	101	$	99	$	4,481
Other comprehensive income, net of tax		4		41		348

Comprehensive income	$	105	$	140	$	4,829


	Successor		Successor		Predecessor
	For the six months		For the two months		For the four months
	ended June 30,		ended June 30,		ended April 30,
	2022		2021		2021

Net income	$	166	$	99	$	4,541
Other comprehensive income, net of tax		2		41		359

Comprehensive income	$	168	$	140	$	4,900

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

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONFRONTIER COMMUNICATIONSS PARENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

($ in millions and shares in thousands)

(Unaudited)



	For the three months ended March 31, 2022 (Successor)											For the six months ended June 30, 2022 (Successor)
								Accumulated											Accumulated
				Additional				Other							Additional				Other
	Common Stock			Paid-In		Retained		Comprehensive		Total		Common Stock			Paid-In		Retained		Comprehensive		Total
	Shares	Amount		Capital		Earnings		Income		Equity		Shares	Amount		Capital		Earnings		Income		Equity
Balance at January 1, 2022	244,416	$	2	$	4,124	$	414	$	60	$	4,600	244,416	$	2	$	4,124	$	414	$	60	$	4,600
Stock plans	60		-		15		-		-		15	60		-		15		-		-		15
Net income	-		-		-		65		-		65	-		-		-		65		-		65
Other comprehensive
income (loss), net of tax	-		-		-		-		(2)		(2)
loss, net of tax												-		-		-		-		(2)		(2)
Balance at March 31, 2022	244,476	$	2	$	4,139	$	479	$	58	$	4,678	244,476	$	2	$	4,139	$	479	$	58	$	4,678
Stock plans												493		-		13		-		-		13
Net income												-		-		-		101		-		101
Other comprehensive
income, net of tax												-		-		-		-		4		4
Balance at June 30, 2022												244,969	$	2	$	4,152	$	580	$	62	$	4,796


	For the three months ended March 31, 2021 (Predecessor)														For the six months ended June 30, 2021
								Accumulated														Accumulated
				Additional				Other		Treasury			Total					Additional				Other		Treasury			Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Common Stock			Equity		Common Stock			Paid-In		Accumulated		Comprehensive		Common Stock			Equity
	Shares	Amount		Capital		Deficit		Income (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
income, net of tax															-		-		-		-		41	-		-		41
Balance at June 30, 2021 ‎(Successor)															244,401	$	2	$	4,106	$	99	$	41	-	$	-	$	4,248

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

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNFRONTIER COMMUNICATIONSICATIONS PARENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
2022
2021
Cash flows provided from (used by) operating activities:
Net Income
$
65
$
60
Adjustments to reconcile net income to net cash provided
‎from (used by) operating activities:
Depreciation and amortization
284
387
Stock-based compensation expense
15
(1)
Lease Impairment
44
-
Other adjustments
(7)
1
Deferred income taxes
25
84
Change in accounts receivable
61
34
Change in accounts payable and other liabilities
26
48
Change in prepaid expenses, income taxes, and other assets
15
52
Net cash provided from operating activities
528
665
Cash flows provided from (used by) investing activities:
Capital expenditures
(447)
(384)
Proceeds on sale of assets
-
2
Purchase of short-term investments
(900)
-
Other
2
2
Net cash used by investing activities
(1,345)
(380)
Cash flows used by financing activities:
Long-term debt principal payments
(3)
-
Finance lease obligation payments
(5)
(5)
Other
(4)
(2)
Net cash used by financing activities
(12)
(7)
Increase (Decrease) in cash, cash equivalents, and restricted cash
(829)
278
Cash, cash equivalents, and restricted cash at January 1,
2,178
1,887
Cash, cash equivalents, and restricted cash at March 31,
$
1,349
$
2,165
Supplemental cash flow information:
Cash paid during the period for:
Interest
$
36
$
40
Income tax payments, net
$
2
$
-
Reorganization items, net
$
-
$
56


	Successor		Successor		Predecessor
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
	2022		2021		2021

Cash flows provided from (used by) operating activities:
Net Income	$	166	$	99	$	4,541
Adjustments to reconcile net income to net cash provided ‎ from (used by) operating activities:
Depreciation and amortization		574		179		506
Stock-based compensation expense		35		-		(1)
Non-cash reorganization items, net		-		-		(5,467)
Lease Impairment		44		-		-
Bad debt expense		14		6		-
Other adjustments		(13)		(5)		1
Deferred income taxes		93		37		(148)
Change in accounts receivable		24		6		36
Change in pension and other post retirement liabilities		(242)		12		(12)
Change in accounts payable and other liabilities		77		39		(156)
Change in prepaid expenses, income taxes, and ‎ other assets		(15)		7		46
Net cash provided from (used by) operating activities		757		380		(654)

Cash flows provided from (used by) investing activities:
Capital expenditures		(1,088)		(269)		(500)
Proceeds on sale of assets		1		-		9
Purchase of short-term investments		(2,600)		-		-
Sale of short-term investments		300		-		-
Other		2		-		1
Net cash used by investing activities		(3,385)		(269)		(490)

Cash flows provided from (used by) financing activities:
Long-term debt principal payments		(7)		(4)		(1)
Proceeds from long-term debt borrowings		1,200		-		225
Financing costs paid		(17)		-		(4)
Finance lease obligation payments		(10)		(4)		(7)
Taxes paid on behalf of employees for shares withheld		(7)		-		-
Other		(1)		1		(16)
Net cash provided from (used by) financing activities		1,158		(7)		197

Increase (decrease) in cash, cash equivalents, and ‎ restricted cash		(1,470)		104		(947)
Cash, cash equivalents, and restricted cash at January 1,		2,178		940		1,887
Cash, cash equivalents, and restricted cash at June 30,	$	708	$	1,044	$	940

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	198	$	84	$	84
Income tax payments, net	$	9	$	24	$	9
Reorganization items, net	$	-	$	-	$	1,397

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

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(1) Summary of Significant ~~Accounting~~Accounting Policies:

a) Basis of Presentation and Use of Estimates:

Frontier Communications 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, 2021. 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.

In 2021, we recategorized our previous operating expenses categories (“Network access expenses” and “Network related expense”) into one expense line: “Cost of service”. All historical periods presented have been updated to conform to the new categorization. In addition, certain reclassifications of prior period balances have been made to conform to the current period presentation. For our interim financial statements as of and for the period ended ~~March 31,~~June 30, 2022, 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 credit losses, asset impairments, indefinite-lived intangibles, depreciation and amortization, income taxes, and pension and other postretirement benefits, among others.

Chapter 11 Bankruptcy Emergence

OnAs described in Note 3 Emergence from the Chapter 11 Cases, and Note 4 Fresh Start Accounting, to our consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2021, on April 30, 2021, (the “Effective Date”), the Company emerged from bankruptcy. Accordingly, the consolidated financial information has been prepared in conformity with Accounting Standards Codification Subtopic 852-10 (ASC 852), Reorganizations, for the Successor as a new entity with assets, liabilities, and a capital structure having carrying amounts not comparable with prior periods.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Reorganization items incurred in the first ~~quarter~~four months of 2021 as a result of the Chapter 11 Cases included ~~$25~~a gain on settlement of liabilities subject to compromise of $5,274 million, fresh start valuation adjustment charges of $1,038 million, debtor-in-possession financing costs of $15 million and $50 million in professional fees and other bankruptcy related costs presented separately in the accompanying consolidated statements of income.

The Company incurred significant costs associated with the reorganization, primarily legal and professional fees. Subsequent to ~~the Petition Date,~~April 14, 2020 (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~~“Reorganization items, ~~net~~net” on our consolidated statement of income. For the periods prior to the Petition date and following the Effective Date, these costs have been included in ~~Restructuring~~“Restructuring costs and other ~~charges~~charges” on our consolidated statement of income. Refer to Note 9.

Fresh Start Accounting

Upon emergence from bankruptcy, we adopted fresh start accounting in accordance with 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 or before that date as indicated by the “black line” division in the financial statements and 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 Effective Date. References to “Predecessor” refer to the financial position and results of operations of ~~Old~~ Frontier Communications Corporation and its subsidiaries on or before the Effective ~~Date.~~Date (“Old Frontier”).

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, 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 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.

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)~~(“USF”) surcharges ~~(primarily~~(“primarily federal ~~USF)~~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 income, included within “Revenue” and “Cost of service 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”.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

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~~“Investment and other income (loss)” on the consolidated statement of income.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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 income.

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 income.

c)~~Impact of COVID-19:~~

While overall the operational and financial impacts to Frontier of the COVID-19 pandemic as of March 31, 2022 have not been 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 suppliers and our results of operations.

In an effort to reduce the economic impacts of COVID-19, the United States federal government has responded with multiple stimulus bills. In addition, some of the states we operate in have issued executive orders as a result of COVID-19 that further impact our business. State and federal governments and health authorities may continue to recommend or mandate measures that could impact our operations. We continue to closely track our customers’ payment activity as well as external factors which could materially impact payment trends.

Frontier’s response to COVID-19 has included comprehensive operational safety precautions for our employees and customers. To date, we have not experienced significant disruptions in our workforce due to COVID-19 related absences or legislative or regulatory changes.

Through March 31, 2022, we have not experienced any material disruptions in our supply chain. However, the challenges and continuing uncertainty of the COVID-19 pandemic could result in further impacts to our business and operations, such as disruptions in our supply chain, inflation in pricing for key materials or labor, or other adverse changes. Some of our business partners have been impacted by COVID-related workforce absences and other disruptions which have affected our service levels and distribution of work. In particular, network electronics that require microchip processors have experienced supply chain constraints due to the global microchip shortage.

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.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

d) Revenue Recognition:

Revenue for data & Internet services, voice services, video services, and switched and non-switched access services is recognized as 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 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 income 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.

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 may differ from the timing of the customer’s payment.

Bundled Service and Allocation of Discounts

When customers purchase more than one service, revenue for each is determined by allocating the total transaction price based upon the relative stand-alone selling price of each service. We frequently offer service discounts as an incentive to customers, which reduce the total transaction price. Any incentives which are considered cash equivalents (e.g. gift cards) that are granted will similarly result in a reduction of the total transaction price. Cash equivalent incentives are accounted for on a portfolio basis and are recognized in the month they are awarded to customers.

Customer Incentives

In the process of acquiring and/or retaining customers, we may issue a variety of 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 separate performance obligations. While these incentives are free to the customer, a portion of the consideration received from the customer 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 while the associated costs are reflected in “Cost of services”.

Upfront Fees

All non-refundable upfront fees assessed to our customers provide them with a material right to renew; therefore, they are deferred by creating a contract liability and amortized into “Data and Internet service” for fees charged to our wholesale customers and “Other revenue” for fees charged to all other customers, using a portfolio approach over the average customer ~~life using a portfolio approach.~~life.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Customer Acquisition Costs

Sales commission expenses are recognized as incurred. According to ASC 606, incremental costs in obtaining a contract with a customer are deferred and recorded as a contract asset if the period of benefit is 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 Company applies the practical expedient that allows such costs to be expensed as incurred.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Taxes, Surcharges and Subsidies

Frontier collects various taxes, Universal Service Fund (“USF”) surcharges (primarily federal USF), and certain other surcharges, from its customers and subsequently remits these taxes to governmental authorities. During the predecessor period, USF and other surcharges amounted to ~~$55~~$83 million for the ~~three~~four months ended ~~March 31,~~April 30, 2021.

In June 2015, Frontier accepted the FCC offer of support to price cap carriers under the Connect America Fund (“CAF”) Phase II program, which was intended to provide long-term support for broadband build commitments in high cost unserved or underserved areas. We recognized FCC’s CAF Phase II subsidies into revenue on a straight-line basis over the seven-year funding term which ended on December 31, 2021. We have accrued an amount for any potential shortfall in the household build commitment 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.

e)In May 2022, Frontier accepted the FCC offer under the Rural Digital Opportunity Fund (“RDOF”) Phase I program, which provides funding over a ten-year period to support the construction of broadband networks in rural communities across the country. Frontier accepted $37 million in annual support through 2032 in return for the Company’s commitment to make broadband available to households within the RDOF eligible areas. We will recognize the FCC’s RDOF Phase I subsidies into revenue on a straight-line basis over the ten-year funding term which will end March 31, 2032. The Company is required to complete the RDOF deployment by December 31, 2028. Thereafter, the FCC will review carriers’ RDOF program completion data, and if the FCC determines that the Company did not satisfy applicable FCC RDOF requirements, Frontier could be required to return a portion of the funds previously received and may be subject to certain other requirements and obligations. We will accrue an amount for any potential shortfall in the household build commitment that we deem to be probable and reasonably estimated.

d)Cash Equivalents:

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash of $17 million is included in “Other current assets” as of ~~both March 31, 2022 and~~ December 31, 2021, and ~~$32~~$30 million and $34 million are included in “Other assets” on our consolidated balance sheet as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

f)e) Short-Term Investments:

Given the long-term nature of our fiber build, we have invested cash into short-term investments to improve interest income while preserving funding flexibility. We have classified these short-term deposits and other investments that have original maturities of greater than three months but less than one year as short-term investments.

As of ~~March 31,~~June 30, 2022, short-term investments of ~~$900~~$2,300 million are comprised of term deposits earning interest in excess of traditional bank deposit rates, maturing between ~~June 16,~~July 15, 2022, and ~~August~~November 15, 2022, and placed with banks with A-1/P-1 or equivalent credit quality. These short-term investments are in scope of ASC 320, Investments - Debt Securities. The short-term ~~investments~~investments’ original maturity is greater than 90 days but less than one year, and they are classified as held to maturity, recorded as current assets, and are accounted for at amortized cost.

g)11

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

f)Definite and Indefinite Lived Intangible Assets:

Intangible assets are initially recorded at estimated fair value. Old Frontier historically amortized its acquired customer lists and certain other finite-lived intangible assets over their estimated useful lives on an accelerated basis. Upon emergence from bankruptcy, customer relationship intangibles were established for business and wholesale customers. These intangibles are amortized on a straight-line basis over their assigned useful ~~life~~lives of between 11 and 16 years. Additionally, trademark and tradename assets established upon emergence are amortized on a straight-line basis over 5 years. We review such intangible assets annually, or more often if indicators of impairment arise, to determine whether there is evidence that ~~indicate~~indicates an impairment condition may exist that would necessitate a change in useful life and a different amortization period.

h)g)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

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

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.~~

We assess potential impairments to our leases annually, or ~~more often~~as indicators exist, if indicators of impairment arise to determine whether there is evidence that indicate an impairment condition may exist. ~~During~~We continue to review our real estate portfolio and, during the first quarter of 2022, ~~we made the decision~~determined to either ~~not retain~~terminate or market for sublease certain facilities leases, which triggered an impairment of $44 million for our finance and operating lease assets recorded as restructuring charges and other costs. See Note 9 for further details.

(2) Recent Accounting Literature:

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.

Government Assistance

In November 2021, the FASB issued ASU 2021-10, which requires business entities to disclose information about certain government assistance they receive. Such disclosure requirements include the nature of the transactions and the related accounting policy used, the line items on the balance sheet and income statement that are affected and the amounts applicable to each financial statement line item and significant

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

terms and conditions of the transactions. ASU 2021-10 will be effective for annual periods beginning after December 15, 2021 (year ending December 31, 2022 for the Company). Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2021-10 will have on its disclosures.

(3) Revenue Recognition:

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

Data and Internet services include broadband services for 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 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;

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Video services include revenues generated from services provided directly to consumer customers as linear terrestrial television services, through DISH® satellite TV service, and through partnerships with over-the-top (OTT) video providers. Video services also includes pay per view revenues, video on demand, equipment rentals, and video advertising. The Company has made the strategic decision to limit sales of new traditional TV services, focusing on our broadband products and OTT video options;

Other customer revenue includes switched access revenue, rents collected for colocation 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. 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~~include revenues generated from cost subsidies from state and federal authorities, including ~~the Connect America Fund Phase II.~~CAF II and RDOF.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

The following tables provide a summary of revenues, by category:

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
($ in millions)
2022
2021 ⁽²⁾
Data and Internet services
$
836
$
842
Voice services
386
487
Video services
137
169
Other
83
95
Revenue from contracts with customers ⁽¹⁾
1,442
1,593
Subsidy and other revenue ⁽³⁾
5
83
Total revenue
$
1,447
$
1,676
Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
($ in millions)
2022
2021 ⁽²⁾
Consumer
$
776
$
850
Commercial
666
743
Revenue from contracts with customers ⁽¹⁾
1,442
1,593
Subsidy and other revenue ⁽³⁾
5
83
Total revenue
$
1,447
$
1,676


	Successor		Successor		Predecessor
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,
($ in millions)	2022		2021		2021

Data and Internet services	$	847	$	556	$	283
Voice services		381		283		160
Video services		134		105		54
Other		80		62		30
Revenue from contracts with customers ⁽¹⁾		1,442		1,006		527
Subsidy and other revenue ⁽²⁾		17		55		28
Total revenue	$	1,459	$	1,061	$	555

	Successor		Successor		Predecessor
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,
($ in millions)	2022		2021		2021

Consumer	$	791	$	543	$	283
Business and wholesale		651		463		244
Revenue from contracts with customers ⁽¹⁾		1,442		1,006		527
Subsidy and other revenue ⁽²⁾		17		55		28
Total revenue	$	1,459	$	1,061	$	555

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)


	Successor		Successor		Predecessor
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
($ in millions)	2022		2021		2021

Data and Internet services	$	1,683	$	556	$	1,125
Voice services		767		283		647
Video services		271		105		223
Other		163		62		125
Revenue from contracts with customers ⁽¹⁾		2,884		1,006		2,120
Subsidy and other revenue ⁽²⁾		22		55		111
Total revenue	$	2,906	$	1,061	$	2,231

	Successor		Successor		Predecessor
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
($ in millions)	2022		2021		2021

Consumer	$	1,567	$	543	$	1,133
Business and wholesale		1,317		463		987
Revenue from contracts with customers ⁽¹⁾		2,884		1,006		2,120
Subsidy and other revenue ⁽²⁾		22		55		111
Total revenue	$	2,906	$	1,061	$	2,231

⁽¹⁾Lease revenue included in ~~Revenue~~“Revenue from contracts with ~~customers~~customers” was $16 million and $32 million for ~~both~~ the three and six months ended ~~March 31,~~June 30, 2022, respectively, $11 million for the two months ended June 30, 2021, and $5 million and $26 million for the one and four months ended April 30, 2021, respectively.

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

⁽³⁾Subsidy and other revenue for the three and six months ended ~~March 31,~~June 30, 2022, does not include revenue from CAF II as the program ended in 2021.

We began to receive funding for RDOF in the second quarter of 2022.

‎

1315

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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, 2021 (Successor)
$
-
$
-
$
27
$
11
Revenue recognized included
in opening contract balance
-
-
(9)
(3)
Credits granted, excluding amounts
recognized as revenue
-
-
9
5
Balance at March 31, 2022 (Successor)
$
-
$
-
$
27
$
13
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)
-
(17)
(2)
Cash received, excluding amounts
recognized as revenue
-
-
17
1
Balance at March 31, 2021 (Predecessor)
$
2
$
9
$
58
$
19


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

Balance at December 31, 2021 (Successor)	$	-	$	-	$	27	$	11
Revenue recognized included
in opening contract balance		-		-		(20)		(5)
Credits granted, excluding amounts
recognized as revenue		-		-		18		11
Reclassified between current
and noncurrent		-		-		2		(2)
Balance at June 30, 2022 (Successor)	$	-	$	-	$	27	$	15


	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
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
Reclassified between current
and noncurrent		-		-		(1)		1
Balance at June 30, 2021 (Successor)	$	-	$	-	$	18	$	5

The unsatisfied obligations for retail customers consist of amounts in advance billings, which are expected to be earned within the following monthly billing cycle. Unsatisfied obligations for wholesale customers are based on a point-in-time calculation and determined by the number of circuits provided and the contractual price. These wholesale customer obligations change from period to period based on new circuits added as well as circuits that are 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
2022 (remaining nine months)
$
601
2023
379
2024
221
2025
98
2026
55
Thereafter
84
Total
$
1,438

‎

1416

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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


($ in millions)	Revenue from contracts with customers
2022 (remaining six months)	$	461
2023		407
2024		270
2025		135
2026		83
Thereafter		91
Total	$	1,447

(4) Accounts Receivable:

The components of accounts receivable, net are as follows:

($ in millions)
March 31, 2022
December 31, 2021
Retail and wholesale
$
409
$
441
Other
53
74
Less: Allowance for doubtful accounts
(65)
(57)
Accounts receivable, net
$
397
$
458



($ in millions)	June 30, 2022		December 31, 2021
Retail and wholesale	$	406	$	441
Other		59		74
Less: Allowance for doubtful accounts		(45)		(57)
Accounts receivable, net	$	420	$	458

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

The provision for bad debts was ~~$7 million and $10~~$14 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022, $6 million for the two months ended June 30, 2021, and $4 million and $14 million for the one and four months ended April 30, 2021, 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 for credit losses for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was as follows:


($ in millions)
Balance at December 31, 2021	$	57
Provision for bad debt		714
Amounts charged to revenue		1117
Write offs charged against the allowance		~~(9)~~
~~Other~~		~~(1)~~(43)
Balance at ~~March 31,~~June 30, 2022	$	6545

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(5) Property, Plant and Equipment:

Property, plant and equipment, net is as follows:



($ in millions)	June 30, 2022		December 31, 2021
Property, plant and equipment	$	11,024	$	9,707
Less: Accumulated depreciation		(916)		(508)
Property, plant and equipment, net	$	10,108	$	9,199

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


	Successor		Successor		Predecessor
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,
($ in millions)	2022		2021		2021

Depreciation expense	$	211	$	127	$	99

	Successor		Successor		Predecessor
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
($ in millions)	2022		2021		2021

Depreciation expense	$	414	$	127	$	407

As a result of applying fresh start accounting on the Effective Date, Frontier’s fixed assets were reduced from $13.0 billion to $8.5 billion. For the six months ended June 30, 2022, the decrease in depreciation expense was principally a result of the reduced asset base following this fresh start fair value adjustment. In July 2022, we sold a property that was subject to leaseback, generating approximately $70 million in proceeds.

During the six months ended June 30, 2022, our capital expenditures were $1,088 million. In addition, we had $250 million of capital expenditures that were received but not paid as of June 30, 2022.

(6) Other Intangibles:

The components of other intangibles as of June 30, 2022 and December 31, 2021 was follows:



	June 30, 2022						December 31, 2021
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
($ in millions)	Amount		Amortization		Amount		Amount		Amortization		Amount

Intangibles:
Customer Relationships - Business	$	800	$	(85)	$	715	$	800	$	(48)	$	752
Customer Relationships - Wholesale		3,491		(254)		3,237		3,491		(146)		3,345
Trademarks & Tradenames		150		(35)		115		150		(20)		130
Total other intangibles	$	4,441	$	(374)	$	4,067	$	4,441	$	(214)	$	4,227

1518

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

~~(5)~~ ~~Property, Plant and Equipment~~:

~~Property, plant and equipment, net is as follows~~:

($ in millions)
March 31, 2022
December 31, 2021
Property, plant and equipment
$
10,282
$
9,707
Less: Accumulated depreciation
(707)
(508)
Property, plant and equipment, net
$
9,575
$
9,199

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

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
($ in millions)
2022
2021
Depreciation expense
$
204
$
308

As a result of applying fresh start accounting on the Effective Date, Frontier’s fixed assets were reduced from $13.0 billion to $8.5 billion. For the three months ended March 31, 2022, the decrease in depreciation expense was principally a result of the reduced asset base following this fresh start fair value adjustment.

~~(6)~~ ~~Other Intangibles~~:

~~The components of other intangibles as of March 31, 2022 was follows~~:

March 31, 2022
December 31, 2021
Gross Carrying
Accumulated
Net Carrying
Gross Carrying
Accumulated
Net Carrying
($ in millions)
Amount
Amortization
Amount
Amount
Amortization
Amount

Intangibles:
Customer Relationships - Business
$
800
$
(67)
$
733
$
800
$
(48)
$
752
Customer Relationships - Wholesale
3,491
(200)
3,291
3,491
(146)
3,345
Trademarks & Tradenames
150
(27)
123
150
(20)
130
Total other intangibles
$
4,441
$
(294)
$
4,147
$
4,441
$
(214)
$
4,227

Amortization expense was as follows:

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
($ in millions)
2022
2021
Amortization expense
$
80
$
79


	Successor		Successor		Predecessor
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,
($ in millions)	2022		2021		2021

Amortization expense	$	79	$	52	$	20


	Successor		Successor		Predecessor
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
($ in millions)	2022		2021		2021

Amortization expense	$	160	$	52	$	99

Following our emergence from bankruptcy, we amortize 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 PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

For the Predecessor, amortization expense was primarily 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 name was an indefinite-lived intangible asset that was not subject to amortization.

(7) Fair Value of Financial Instruments:

The following table summarizes the carrying amounts and estimated fair values for total long-term debt at ~~March 31,~~June 30, 2022 and December 31, 2021. For the other financial instruments including cash, short-term investments, 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 total long-term debt is estimated based upon quoted market prices at the reporting date for those financial instruments.



	March 31, 2022				December 31, 2021				June 30, 2022				December 31, 2021

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

Total debt	$	7,774	$	7,543	$	7,777	$	7,996	$	8,970	$	7,995	$	7,777	$	7,996

(

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(8) Long-Term Debt:

Chapter 11 Restructuring

The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all then-outstanding obligations under Old Frontier’s debt agreements and notes as follows:

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

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 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 were 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 ~~three~~one and four months ended ~~March 31,~~April 30, 2021 recorded on our Predecessor statements of income was lower than contractual interest of ~~$338~~$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.

‎

1720

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

The activity in our long-term debt is summarized as follows:

For the three months ended
‎March 31, 2022

Principal
January 1,
Payments
New
March 31,
($ in millions)
2022
and Retirements
Borrowings
2022





Secured debt issued by Frontier
$
6,927
$
(3)
$
-
$
6,924
Secured debt issued by subsidiaries
100
-
-
100
Unsecured debt issued by subsidiaries
750
-
-
750
Principal outstanding
$
7,777
$
(3)
$
-
$
7,774






Less: Debt Issuance Costs
(13)

(13)
Less: Current Portion
(15)

(15)
Plus: Unamortized fair value adjustments ⁽¹⁾
219
211
Total Long-term debt
$
7,968

$
7,957



			For the six months ended ‎June 30, 2022
			Principal
	January 1,		Payments		New		June 30,
($ in millions)	2022		and Retirements		Borrowings		2022

Secured debt issued by Frontier	$	6,927	$	(7)	$	1,200	$	8,120
Secured debt issued by subsidiaries		100		-		-		100
Unsecured debt issued by subsidiaries		750		-		-		750
Principal outstanding	$	7,777	$	(7)	$	1,200	$	8,970

Less: Debt Issuance Costs		(13)						(30)
Less: Current Portion		(15)						(15)
Plus: Unamortized fair value adjustments ⁽¹⁾		219						205
Total Long-term debt	$	7,968					$	9,130

⁽¹⁾Upon emergence, we adjusted the carrying value of our debt to fair value. 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.

‎

1821

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Additional information regarding our secured and unsecured total long-term debt as of ~~March 31,~~June 30, 2022 and December 31, 2021 is as follows:

March 31, 2022
December 31, 2021
Principal
Interest
Principal
Interest
($ in millions)
Outstanding
Rate
Outstanding
Rate
Secured debt issued by Frontier
Term loan due 10/8/2027
$
1,460
4.500% (Variable)
$
1,464
4.500% (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 11/1/2029
750
5.875%
750
5.875%
Second lien notes due 5/1/2029
1,000
6.750%
1,000
6.750%
Second lien notes due 1/15/2030
1,000
6.000%
1,000
6.000%
IDRB due 5/1/2030
14
6.200%
13
6.200%
Secured debt issued by Frontier
6,924
6,927
Secured debt issued by subsidiaries
Debentures due 11/15/2031
100
8.500%
100
8.500%
Secured debt issued by subsidiaries
100
100
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
Principal outstanding
$
7,774
5.704% ⁽¹⁾
$
7,777
5.702% ⁽¹⁾


	June 30, 2022			December 31, 2021
	Principal		Interest	Principal		Interest
($ in millions)	Outstanding		Rate	Outstanding		Rate

Secured debt issued by Frontier
Term loan due 10/8/2027	$	1,457	4.813% (Variable)	$	1,464	4.500% (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%
First lien notes due 5/12/2030		1,200	8.750%		-	n/a
Second lien notes due 11/1/2029		750	5.875%		750	5.875%
Second lien notes due 5/1/2029		1,000	6.750%		1,000	6.750%
Second lien notes due 1/15/2030		1,000	6.000%		1,000	6.000%
IDRB due 5/1/2030		13	6.200%		13	6.200%
Secured debt issued by Frontier		8,120			6,927

Secured debt issued by subsidiaries
Debentures due 11/15/2031		100	8.500%		100	8.500%
Secured debt issued by subsidiaries		100			100

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

Principal outstanding	$	8,970	6.163% ⁽¹⁾	$	7,777	5.702% ⁽¹⁾

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

Credit Facilities and Term Loans

~~Credit Agreements~~

~~In connection with emergence from the Chapter 11 Cases, on the Effective Date, Frontier Communications Holdings, LLC, a Delaware limited liability company~~Summaries of our various credit and indirect subsidiary of the Company (the “Borrower” or the “New Frontier Issuer”, as the case may be) entered into that 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 Old Frontier’s DIP to Exit Term Credit Agreement to, among other things, incorporate the DIP Revolving Facility from the DIP to Exit Revolving Credit Agreement, which incorporation resulted in the termination of the DIP to Exit Revolving Credit Agreement. Pursuant to the Amended and Restated Credit Agreement, the DIP Term Loan Facility was converted into an exit term loan facility in an aggregate principal amount of $1,468 million after giving effect to the New Incremental Commitment (the “Term Loan Facility”)debt agreements, including our credit agreements and the ~~DIP Revolving Facility converted into~~indentures for our senior secured first lien notes and senior secured second lien notes, are contained in our Annual Report on Form 10-K. The summaries below and in our Form 10-K do not purport to be complete and are qualified in their entirety by reference to each agreement filed as an ~~exit revolving facility in the aggregate principal amount of $625 million (the “Revolving Facility”) and became subject~~Exhibit to ~~the Amended and Restated Credit Agreement. For further details regarding Old Frontier’s DIP financing arrangements, see the Company’s~~our Annual Report on Form 10-K.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

~~Term Loan~~Revolving Facility

On May 12, 2022, Frontier entered into an amendment (“Amendment No. 2”) to its Revolving Facility. The ~~Term Loan Facility’s maturity date is October 8, 2027. At~~Amendment, among other things, increased the ~~Borrower’s election,~~Revolving Facility by an additional $275 million, to a total of $900 million in aggregate principal amount of revolving credit commitments, and provided that the ~~determination of~~Revolving Facility be amended to reflect Secured Overnight Financing Rate “SOFR” based interest rates for the 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 3.75% for LIBOR loans or 2.75% with respect to any alternate base rate loan, with(including a ~~0.75% LIBOR floor.~~

Subject to certain exceptions and thresholds, the security package under the 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”), which same assets also secure the First Lien Notes (as defined below)customary spread adjustment). ~~The Term Loan Facility is guaranteed by the same subsidiaries that guarantee the First Lien Notes.~~

The Term Loan 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 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~~$900 million Revolving Facility will be available on a revolving basis until April 30, 2025.

At Frontier’s election, the determination of interest rates for the Revolving Facility is based on margins over the alternate base rate or over ~~LIBOR.~~SOFR. The interest rate margin with respect to any ~~LIBOR~~SOFR loan under the Exit Revolving Facility is 3.50% or 2.50% with respect to any alternate base rate loans, with a 0% ~~LIBOR~~SOFR 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 $133 million of letters of credit previously outstanding, the Borrower has $492 million of available borrowing capacity under the 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.

2022

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

~~On October 13, 2021, the Issuer entered into an amendment (the “Amendment”)~~First Lien Notes. After giving effect to ~~its senior secured~~$133 million of letters of credit facility. The Amendment, among other things, modifies the financial covenant from a maximum first lien leverage ratio covenant of 2.75:1.00 to a maximum first lien leverage ratio covenant of 3.00:1.00.

~~Senior Secured Notes~~

~~Second Lien Notes due 2030~~

On October 13, 2021, New Frontier Issuer issued $1.0 billion aggregate principal amount of 6.000% Second Lien Secured Notes due 2030 (the “Second Lien Notes due 2030”) in an offering pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended. The Company intends to use the net proceeds of this offering to fund capital investments and operating costs arising from the Company’s fiber build and expansion of its fiber customer base, and for general corporate purposes.

~~The Second Lien Notes due 2030 were issued pursuant to an indenture, dated~~outstanding as of ~~October 13, 2021 (the “Second Lien 2030 Indenture”), by and among~~June 30, 2022, the ~~Issuer, the guarantors party thereto, the grantor party thereto and Wilmington Trust, National Association, as trustee and as collateral agent.~~

~~Second Lien Notes due May 2029~~

~~In connection with the DIP financing, on November 25, 2020, Old Frontier issued $1.0 billion aggregate principal amount~~Borrower has $767 million of ~~6.750% Second Lien Secured Notes due May 1, 2029 (the “Second Lien Notes due May 2029”).~~

The Second Lien Notes due May 2029 were issued pursuant to an indenture, dated as of November 25, 2020 (the “Second Lien May 2029 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.

On the Effective Date, in accordance with the Second Lien May 2029 Indenture and the Plan, New Frontier Issuer entered into a supplemental indenture with Wilmington Trust, National Association, as trustee, and assumed the obligationsavailable borrowing capacity under the ~~Second Lien Notes due May 2029 and the Second Lien May 2029 Indenture.~~

~~Second Lien Notes due November 2029 or “Takeback Notes”~~

~~On April 30, 2021, New Frontier Issuer issued $750 million aggregate principal amount of 5.875% Second Lien Secured Notes due~~ ~~November 2029~~ (the “Second Lien Notes due November 2029” or the “Takeback Notes”) pursuant to an indenture, dated as of April 30, 2021 (the “Takeback Notes Indenture”), by and among New Frontier Issuer, the guarantors party thereto, the grantor party thereto and Wilmington Trust, National Association, as trustee and as collateral agent. At Old Frontier’s direction, the Takeback Notes 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 Second Lien Notes due 2030, the Second Lien Notes due May 2029 and the Takeback Notes are collectively referred to as the Second Lien Notes. The Second Lien 2030 Indenture, the Second Lien May 2029 Indenture and the Takeback Notes Indenture are collectively referred to as the Second Lien Notes Indentures. The Second Lien Notes and the First Lien Notes (as defined below) are referred to herein collectively as the “Notes”.

The Second Lien Notes are secured by a second-priority lien, subject to permitted liens, by all the assets that secure New Frontier Issuer’s obligations under the Term Loan Facility, the Revolving Facility and the First Lien Notes (as defined below).

The Second Lien Notes Indentures contain customary negative covenants, subject to a number of important exceptions and qualifications, including, without limitation, covenants related to incurring additional debt and

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

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 Second Lien Notes have investment grade ratings by at least two of Moody’s, S&P or Fitch. The Second Lien Notes Indentures 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 Second Lien Notes to become or to be declared due and payable.

~~First 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 2027”) and (b) on November 25, 2020, Old Frontier issued $1,550 million aggregate principal amount of 5.000% First Lien Secured Notes due May 1, 2028 (the “First Lien Notes due 2028” and, together with the First Lien Notes due 2027, the “First Lien Notes”).

The First Lien Notes due 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 2028 were issued pursuant to an indenture, dated as of November 25, 2020 (the “2028 First Lien Indenture” and, together with the 2027 First Lien Indenture, the “First Lien Indentures”), 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.

On the Effective Date, in accordance with the Indentures and the Plan, New Frontier Issuer entered into supplemental indentures to the First Lien Indentures with Wilmington Trust, National Association, as trustee, and assumed the obligations under each series of the First Lien Notes and each of the First Lien Indentures.

~~The 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 exceptions, by all the assets that secure Frontier’s obligations under the Term Loan Facility and the Revolving Facility.

The First Lien 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 have investment grade ratings by at least two of Moody’s, S&P or Fitch. The First Lien Notes Indentures 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 to become or to be declared due and payable.

(9) 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 emergence date as well as professional fees related to our restructuring and transformation that were incurred prior to the Petition Date.

During the ~~three~~six month period ended ~~March 31,~~June 30, 2022, we incurred ~~$54~~$84 million in restructuring charges and other costs consisting of $44 million of lease impairment costs from the strategic exit of certain facilities, $6$32 million of severance and employee costs resulting from workforce reductions, and $4$8 million of costs related to other restructuring activities.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Of the $32 million in severance and employee costs, approximately $26 million related to the second quarter of 2022, as a result of larger workforce reductions.

As part of the Company's cost reduction strategy, certain real estate leases will not be retained, or will be marketed for sublease. The Company evaluated the related right-of-use assets and other lease related assets for impairment under ASC 360. In connection with this analysis, the Company reassessed its leased real estate asset groups and estimated the fair value of the office space to be subleased under current market conditions. Where the carrying values of individual asset groups exceeded their fair values, an impairment charge was recognized for the difference.

During the ~~three-month period~~four months ended ~~March 31,~~April 30, 2021, we incurred $6$7 million ~~in expenses consisting~~ of severance and employee costs resulting from workforce reductions. During the two months ended June 30, 2021, we incurred $11 million in expenses consisting of $2 million of severance and employee costs resulting from workforce reductions and $9 million of professional fees related to our balance sheet restructuring.

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



($ in millions)

Balance at January 1, 2022	$	7
Severance expense		632
Other costs		48
Cash payments during the period		~~(9)~~(28)
Balance at ~~March 31,~~June 30, 2022	$	819

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(10) Investment and Other Income:

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

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
($ in millions)
2022
2021
Interest and dividend income
$
2
$
-
Pension benefit
25
4
OPEB costs
(3)
(3)
OPEB remeasurement
54
-
All other, net
(1)
1
Total investment and other income, net
$
77
$
2


	Successor		Successor		Predecessor
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,
($ in millions)	2022		2021		2021

Interest and dividend income	$	6	$	-	$	-
Pension benefit		25		13		2
OPEB costs		(5)		(17)		(1)
OPEB remeasurement gain		96		-		-
All other, net		-		2		(2)
Total investment and other income (loss), net	$	122	$	(2)	$	(1)


	Successor		Successor		Predecessor
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
($ in millions)	2022		2021		2021

Interest and dividend income	$	8	$	-	$	-
Pension benefit		50		13		6
OPEB costs		(8)		(17)		(4)
OPEB remeasurement gain		150		-		-
All other, net		(1)		2		(1)
Total investment and other income (loss), net	$	199	$	(2)	$	1

In the first ~~quarter~~half of 2022, Frontier amended the medical coverage for certain postretirement benefit plans, primarily due to discount rate changes, which resulted in ~~a $54 million~~ remeasurement ~~gain.~~gains of $150 million. Refer to Note 15 for further details.

Pension and OPEB benefit (costs) ~~consists~~consist of interest income (loss), expected return on plan assets, amortization of prior service costs (credit) and recognition of actuarial gain (loss).

‎

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(11) Stock Plans:

Upon emergence, all outstanding stock-based compensation plans of Old Frontier were terminated and, in accordance with the Plan, the form of Frontier Communications Parent, Inc. 2021 Management Incentive Plan (the “2021 Incentive Plan”) was approved and adopted by the 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 Human Capital Committee of the Board. Under the 2021 Incentive Plan, 15,600,000 shares of common stock have been reserved for issuance. As of ~~March 31,~~June 30, 2022, unvested awards relating to approximately ~~2,500,000~~2,327,000 shares were outstanding under the ~~Emergence~~long-term equityaward program or “Emergence LTI ~~Program.~~Program”.

Restricted Stock

The following summary presents information regarding unvested restricted stock under the 2021 Incentive Plan:

2021 Incentive Plan
Weighted
Average
Number of
Grant Date
Aggregate
Shares
Fair Value
Fair Value
(in thousands)
(per share)
(in millions)
Balance at January 1, 2022
2,483
$
28.67
$
72
Restricted stock granted
760
$
26.04
$
21
Restricted stock vested
(86)
$
25.73
$
(2)
Restricted stock forfeited
(50)
$
26.04

Balance at March 31, 2022
3,107
$
25.85
$
86


2021 Incentive Plan
		Weighted
		Average
	Number of	Grant Date		Aggregate
	Shares	Fair Value		Fair Value
	(in thousands)	(per share)		(in millions)
Balance at January 1, 2022	2,483	$	28.67	$	72
Restricted stock granted	941	$	25.87	$	25
Restricted stock vested	(817)	$	25.69	$	(22)
Restricted stock forfeited	(92)	$	25.91
Balance at June 30, 2022	2,515	$	25.84	$	67

For purposes of determining compensation expense, the fair value of each restricted stock grant is estimated based on the closing price of our common stock on the date of grant. The non-vested restricted stock units granted in 2021 generally vest, and are expensed, on a ratable basis over three years from the grant date of the award. Total remaining unrecognized compensation cost associated with unvested restricted stock awards that is deferred at ~~March 31,~~June 30, 2022 was ~~$68~~$62 million and the weighted average vesting period over which this cost is expected to be recognized is approximately 2 years.

None of the restricted stock awards may be sold, assigned, pledged, or otherwise transferred, voluntarily or involuntarily, by the employees until the restrictions lapse, subject to limited exceptions. The restrictions are time-based. Compensation expense, including compensation related to non-employee directors, recognized in “Selling, general and administrative expenses”, of $9$19 million for the ~~three~~six month-period ended ~~March 31,~~June 30, 2022, has been recorded in connection with restricted stock.

Performance Stock Units

Under the 2021 Incentive Plan, a target number of performance units are awarded to each participant with respect to the three-year ~~Measurement Period.~~performance period (a “Measurement Period”). The performance metrics under the 2021 and 2022 PSU grants consist of targets for (1) Adjusted Fiber EBITDA, (2) Fiber Locations Constructed and (3) Expansion Fiber Penetration. In addition, there is an overall relative total shareholder return (“TSR”) modifier, which is based on Frontier’s total return to stockholders over the Measurement Period relative to the S&P 400 Mid Cap Index. Each performance metric is weighted 33.3%, and targets for each metric are set for each of the three years during the Measurement Period. Achievement of the metrics will be measured separately, and the number of awards earned will be determined based on actual performance relative to the targets of each performance metric, plus the effect of the TSR modifier. Achievement is measured on a cumulative basis for each performance metric individually at the end of the three-year Measurement Period. The payout of the 2021 PSUs can range from 0% to a maximum award payout of 300% of the target units. The payout of the 2022 PSUs ~~can range from 0% to a maximum award payout of 200% of the target units. PSUs awards, to the extent earned, will be paid out in the~~

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

can range from 0% to a maximum award payout of 200% of the target units. PSUs awards, to the extent earned, will be paid out in the form of common stock shortly following the end of the Measurement Period.

The number of shares of common stock or units earned at the end of the Measurement Period may be more or less than the number of target performance shares or units granted as a result of performance. An executive must maintain a satisfactory performance rating during the Measurement Period and must be employed by Frontier upon determination in order for the award to vest. The Compensation and Human Capital Committee will determine the number of shares earned for the Measurement Period in the first quarter of the year following the end of the Measurement Period.

Under ASC 718, Stock Based Compensation Expense, we establish a grant date and determine the fair value once the targets are finalized. All targets for the 2021 awards have been set and the fair value of the grants will be amortized over the vesting period. For the 2022 PSU awards, the targets related to two of the three performance metrics have not been established. As a result, as of ~~March 31,~~June 30, 2022, we have recognized associated expense with respect to 1/3 of the aggregate outstanding 2022 PSU awards.

The following summary presents information regarding performance shares as of ~~March 31,~~June 30, 2022 and changes during the ~~three~~six months then ended with regard to performance shares awarded under the 2021 Incentive Plan:

2021 Incentive Plan
Weighted
Average
Number of
Grant Date
Aggregate
Shares
Fair Value
Fair Value
(in thousands)
(per share)
(in millions)
Balance at January 1, 2022
3,144
$
25.62
$
92
Target performance shares awarded, net
240
$
25.97
$
7
Target performance shares earned
-
$
-
$
-
Target performance shares forfeited
(9)
$
25.61
Balance at March 31, 2022
3,375
$
25.64
$
93


2021 Incentive Plan
			Weighted
			Average
	Number of		Grant Date	Aggregate
	Shares		Fair Value	Fair Value
	(in thousands)		(per share)	(in millions)
Balance at January 1, 2022	3,144	$	25.62	$	92
Target performance shares awarded, net	257	$	25.85	$	7
Target performance shares earned	-	$	-	$	-
Target performance shares forfeited	(9)	$	25.61
Balance at June 30, 2022	3,392	$	25.64	$	90

For purposes of determining compensation expense, the fair value of each performance share grant is estimated based on the closing price of a share of our common stock on the date of the grant, adjusted to reflect the fair value of the relative TSR modifier. For the ~~three~~six months ended ~~March 31,~~June 30, 2022, we recognized net compensation expense, reflected in “Selling, general and administrative expenses,” of $6$16 million related PSU awards.

‎

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(12) 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:

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
2022
2021
Consolidated tax provision at federal statutory rate
21.0
%
21.0
%
State income tax provisions, net of federal income
tax expense
6.7
8.7
Changes in certain deferred tax balances
-
60.9
Interest expense deduction
-
(36.7)
Restructuring cost
-
5.1
Tax reserve adjustment
0.5
-
Tax Credit
(1.1)
-
Sec.162(m) - nondeductible Executive Compensation
4.5
-
All other, net
-
0.2
Effective tax rate
31.6
%
59.2
%


	Successor				Successor		Predecessor
	For the three months ended June 30,		For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
	2022		2022		2021		2021

Consolidated tax provision at federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
State income tax expense, net of federal
income tax benefit	15.0		12.0		3.7		0.5
Changes in certain deferred tax balances	1.7		1.1		-		-
Restructuring cost	-		-		-		0.3
Tax reserve adjustment	0.3		0.4		0.6		-
Fresh start and reorganization adjustments	-		-		-		(24.9)
Tax Credit	(0.6)		(0.8)		(1.3)		-
Sec.162(m) - nondeductible Executive Compensation	2.4		3.2		-		-
All other, net	0.8		0.5		6.1		-
Effective tax rate	40.6	%	37.4	%	30.1	%	(3.1)	%

Frontier considered positive and negative evidence in regard to evaluating certain state deferred tax assets during the ~~first~~second quarter of 2022, including the development of recent years of pre-tax book losses. On the basis of this evaluation, a valuation allowance of ~~$134~~$41 million ($~~106~~32 million net of federal benefit) was recorded as of ~~March 31,~~June 30, 2022.

The effective rate for the three and six months ended June 30, 2022, increased as a result of increases to the state rate due to valuation allowances in certain states, arising from non-deductible interest expense primarily related to our $1.2 billion first lien note issuance.

AsThe effective rate changes between the three and six months ended June 30, 2022, as compared to 2021 are primarily due to, as described more fully in Note 1, the Company ~~emerged~~emergence from bankruptcy on April 30, 2021, and ~~consummated~~consummation of a taxable disposition of substantially all of the assets and/or subsidiary stock of the Company and utilized substantially all of the Company’s Net Operating Losses (“NOLs”).

‎

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(13) Net Earnings Per Share:

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

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
($ in millions and shares in thousands, except per share amounts)
2022
2021
Net income used for basic and diluted earnings
per share:
Total basic net income
attributable to Frontier common shareholders
$
65
$
60
Effect of loss related to dilutive stock units
-
-
Total diluted net income
attributable to Frontier common shareholders
$
65
$
60
Basic earnings per share:
Total weighted average shares and unvested restricted stock
awards outstanding - basic
244,433
104,786
Less: Weighted average unvested restricted stock awards
-
(230)
Total weighted average shares outstanding - basic
244,433
104,556
Basic net earnings per share
attributable to Frontier common shareholders
$
0.27
$
0.57
Diluted earnings per share:
Total weighted average shares outstanding - basic
244,433
104,556
Effect of dilutive stock units
-
340
Effect of dilutive restricted stock awards
818
-
Total weighted average shares outstanding - diluted
245,251
104,896
Diluted net earnings per share
attributable to Frontier common shareholders
$
0.26
$
0.57


	Successor		Successor		Predecessor
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,
($ in millions and shares in thousands, except per share amounts)	2022		2021		2021
Net income used for basic and diluted earnings
per share:
Total basic net income
attributable to Frontier common shareholders	$	101	$	99	$	4,481
Effect of loss related to dilutive stock units		-		-		-
Total diluted net income
attributable to Frontier common shareholders	$	101	$	99	$	4,481

Basic earnings per share:
Total weighted average shares and unvested restricted stock
awards outstanding - basic		244,723		244,401		104,816
Less: Weighted average unvested restricted stock awards		-		-		(154)
Total weighted average shares outstanding - basic		244,723		244,401		104,662

Basic net earnings per share
attributable to Frontier common shareholders	$	0.41	$	0.41	$	42.81

Diluted earnings per share:
Total weighted average shares outstanding - basic		244,723		244,401		104,662
Effect of dilutive stock units		-		-		340
Effect of dilutive restricted stock awards		-		-		-
Total weighted average shares outstanding - diluted		244,723		244,401		105,002

Diluted net earnings per share
attributable to Frontier common shareholders	$	0.41	$	0.41	$	42.68

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)


	Successor		Successor		Predecessor
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
($ in millions and shares in thousands, except per share amounts)	2022		2021		2021
Net income used for basic and diluted earnings
per share:
Total basic net income
attributable to Frontier common shareholders	$	166	$	99	$	4,541
Effect of loss related to dilutive stock units		-		-		-
Total diluted net income
attributable to Frontier common shareholders	$	166	$	99	$	4,541

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

Basic net earnings per share
attributable to Frontier common shareholders	$	0.68	$	0.41	$	43.42

Diluted earnings per share:
Total weighted average shares outstanding - basic		244,592		244,401		104,584
Effect of dilutive stock units		-		-		340
Effect of dilutive restricted stock awards		239		-		-
Total weighted average shares outstanding - diluted		244,831		244,401		104,924

Diluted net earnings per share
attributable to Frontier common shareholders	$	0.68	$	0.41	$	43.28

In calculating diluted net income per common share for the ~~three~~six months ended ~~March 31,~~June 30, 2022, the effect of all performance stock units is excluded from the computation as their respective performance metrics have not been satisfied as of ~~March 31,~~June 30, 2022.

Stock Units

At ~~March 31,~~June 30, 2021, the dilutive common stock equivalents consisted of 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 and the 2017 Equity Incentive Plan.

‎

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(14) 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.

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


	Pension		OPEB				Pension		OPEB
($ in millions)	Costs		Costs		Total		Costs		Costs		Total
Balance at January 1, 2022 (Successor) ⁽¹⁾	$	-	$	60	$	60	$	-	$	60	$	60
Other comprehensive income (loss)
Other comprehensive income
before reclassifications		-		1		1		-		6		6
Amounts reclassified from accumulated other
comprehensive loss to net loss		-		(3)		(3)
comprehensive income to net income								-		(4)		(4)
Net current-period other comprehensive
income (loss)		-		(2)		(2)
Balance at March 31, 2022 (Successor) ⁽¹⁾	$	-	$	58	$	58
income								-		2		2
Balance at June 30, 2022 (Successor) ⁽¹⁾							$	-	$	62	$	62


	Pension		OPEB				Pension		OPEB
($ in millions)	Costs		Costs		Total		Costs		Costs		Total
Balance at January 1, 2021 (Predecessor) ⁽¹⁾	$	(699)	$	(56)	$	(755)	$	(699)	$	(56)	$	(755)
Other comprehensive income (loss)
Other comprehensive income
before reclassifications		-		-		-		270		74		344
Amounts reclassified from accumulated other
comprehensive loss to net income		14		(3)		11		19		(4)		15
Net current-period other comprehensive
income (loss)		14		(3)		11
Balance at March 31, 2021 (Predecessor) ⁽¹⁾	$	(685)	$	(59)	$	(744)
income								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
before reclassifications								-		42		42
Amounts reclassified from accumulated other
comprehensive income to net income								-		(1)		(1)
Net current-period other comprehensive
income								-		41		41
Balance at June 30, 2021 (Successor) ⁽¹⁾							$	-	$	41	$	41

⁽¹⁾ Pension and OPEB amounts are net of tax of $15 million and $234 million as of January 1, 2022 and 2021, respectively and ~~$15~~$17 million and ~~$230~~$14 million as of ~~March 31,~~June 30, 2022 and 2021, respectively.

‎

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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


	Successor		Predecessor			Successor		Successor		Predecessor
	Amount Reclassified from					Amount Reclassified from
	Accumulated Other					Accumulated Other
	Comprehensive Loss ⁽¹⁾					Comprehensive Loss ⁽¹⁾
($ in millions)					Affected Line Item in							Affected Line Item in
	For the three months ended		For the three months ended		the Statement Where	For the three months		For the two months		For the one month		the Statement Where
Details about Accumulated Other	March 31,		March 31,		Net Income (Loss)	ended June 30,		ended June 30,		ended April 30,		Net Income (Loss)
Comprehensive Loss Components	2022		2021		is Presented	2022		2021		2021		is Presented
Amortization of Pension Cost Items
Actuarial gains (losses)	$	-	$	(18)
Actuarial losses						$	-	$	-	$	(6)
One-time loss on disposal		-		-			-		-		-
		-		(18)	Income (Loss) before income taxes		-		-		(6)	Income (Loss) before income taxes
Tax impact		-		4	Income tax benefit		-		-		1	Income tax benefit
	$	-	$	(14)	Net income (loss)	$	-	$	-	$	(5)	Net income (loss)

Amortization of OPEB Cost Items
Prior-service costs	$	3	$	7		$	3	$	1	$	3
Actuarial gains (losses)		-		(3)
Actuarial losses							-		-		(2)
		3		4	Income (Loss) before income taxes		3		1		1	Income (Loss) before income taxes
Tax impact		-		(1)	Income tax benefit		(1)		-		-	Income tax benefit
	$	3	$	3	Net income (loss)	$	2	$	1	$	1	Net income (loss)


	Successor		Successor		Predecessor
	Amount Reclassified from
	Accumulated Other
	Comprehensive Loss ⁽¹⁾
($ in millions)							Affected Line Item in
	For the six months		For the two months		For the four months		the Statement Where
Details about Accumulated Other	ended June 30,		ended June 30,		ended April 30,		Net Income (Loss)
Comprehensive Loss Components	2022		2021		2021		is Presented
Amortization of Pension Cost Items
Actuarial losses	$	-	$	-	$	(24)
One-time loss on disposal		-		-		-
		-		-		(24)	Income (Loss) before income taxes
Tax impact		-		-		5	Income tax benefit
	$	-	$	-	$	(19)	Net income (loss)

Amortization of OPEB Cost Items
Prior-service costs	$	6	$	1	$	10
Actuarial losses		-		-		(5)
		6		1		5	Income (Loss) before income taxes
Tax impact		(2)		-		(1)	Income tax benefit
	$	4	$	1	$	4	Net income (loss)

⁽¹⁾ These accumulated other comprehensive loss components are included in the computation of net periodic pension and OPEB costs (See Note 15 - Retirement Plans for additional details).

‎

2931

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(15) 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 income.

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


	Successor		Predecessor		Successor		Successor		Predecessor
	Pension Benefits				Pension Benefits
	For the three months ended March 31,		For the three months ended March 31,		For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,
($ in millions)	2022		2021		2022		2021		2021

Components of total pension benefit cost
Service cost	$	21	$	24	$	20	$	13	$	8
Interest cost on projected benefit obligation		24		23		25		18		8
Expected return on plan assets		(49)		(45)		(50)		(31)		(16)
Amortization of unrecognized loss		-		18		-		-		6
Total pension benefit cost	$	(4)	$	20
Total pension (benefit) cost					$	(5)	$	-	$	6


	Successor		Predecessor		Successor		Successor		Predecessor
	Postretirement Benefits				Pension Benefits
	For the three months ended March 31,		For the three months ended March 31,		For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
($ in millions)	2022		2021		2022		2021		2021

Components of net periodic postretirement benefit cost
Components of total pension benefit cost
Service cost	$	4	$	5	$	41	$	13	$	32
Interest cost on projected benefit obligation		6		7		49		18		31
Amortization of prior service cost (credit)		(3)		(7)
Expected return on plan assets						(99)		(31)		(61)
Amortization of unrecognized loss		-		3		-		-		24
Net periodic postretirement benefit cost	$	7	$	8
Total pension (benefit) cost					$	(9)	$	-	$	26

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

The value of our pension plan assets decreased ~~$184~~$545 million from $2,655 million at December 31, 2021 to ~~$2,471~~$2,110 million at ~~March 31,~~June 30, 2022. This decrease primarily resulted from changes in the market value of investments of ~~$183~~$506 million including plan expenses, and benefit payments to participants of ~~$33~~$113 million, partially offset by contributions of ~~$32~~$74 million.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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


	Successor		Successor		Predecessor
	Postretirement
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,
($ in millions)	2022		2021		2021

Components of net periodic postretirement benefit cost
Service cost	$	3	$	3	$	2
Interest cost on projected benefit obligation		8		5		2
Amortization of prior service (benefit)		(3)		(1)		(3)
Remeasurement (gain) loss		(96)		13		-
Amortization of unrecognized loss		-		-		2
Net periodic postretirement (benefit) cost	$	(88)	$	20	$	3


	Successor		Successor		Predecessor
	Postretirement
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,
($ in millions)	2022		2021		2021

Components of net periodic postretirement benefit cost
Service cost	$	7	$	3	$	7
Interest cost on projected benefit obligation		14		5		9
Amortization of prior service (benefit)		(6)		(1)		(10)
Remeasurement (gain) loss		(150)		13		-
Amortization of unrecognized loss		-		-		5
Net periodic postretirement (benefit) cost	$	(135)	$	20	$	11

In the first ~~quarter~~half of 2022, Frontier amended the medical coverage for certain postretirement benefit plans, which necessitated a remeasurement of its other postretirement benefit (OPEB) obligations. This remeasurement resulted in the recognition of a net actuarial gain of ~~$54~~$150 million, which was driven primarily from a higher assumed discount rate relative to December 31, 2021. Upon emergence from bankruptcy, Frontier revised its accounting policy to recognize actuarial gains and losses in the period in which they occur. As such, this gain was recorded in ~~investment~~“Investment and other income, ~~net~~net” on our consolidated statements of income.

During the six months ended June 30, 2022, we capitalized $11 million 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 one month and four months of 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.

3033

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

During both the three months ended March 31, 2022 and 2021, we capitalized $6 million of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities.

(16) 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. In connection with the accelerated fiber build, we have prioritized diversifying our vendor base and finalizing agreements with vendors for relevant labor and materials. Some of these agreements will have initial two-year terms with an option to extend for two years through 2025.

Frontier accepted the FCC’s CAF Phase II offer in 25 states, which provided $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.

The deployment deadline was December 31, 2021, and final review and audit of households is not complete. To the extent it is determined we did not enable the required number of households with 10 Mbps downstream/1 Mbps upstream broadband service or we were unable to satisfy other FCC CAF Phase II requirements, Frontier will be required to return a portion of the funds previously received and may be subject to certain other requirements and obligations. We have accrued an amount for any potential shortfall in the household build commitment 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.

On January 30, 2020, the FCC adopted an order establishing ~~the Rural Digital Opportunity Fund (RDOF) program.~~ RDOF, a competitive reverse auction to provide support to serve high cost areas. The FCC ~~held~~announced the results of its 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~~gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in 8 states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia). ~~Frontier submitted its~~The FCC approved Frontier’s Long Form application ~~to the FCC on January 29, 2021~~in March 2022 and ~~on March 10, 2022 received preliminary authorization of its RDOF award.~~ Frontier ~~anticipates final authorization in the 2nd quarter and that it will begin~~began receiving funding in the ~~first half~~second quarter of 2022. Frontier will be required to complete the buildout to these locations ~~within six years after funding starts,~~by December 31, 2028, with interim target milestones over this period. On March 15, 2022, Frontier issued letters of credit to the RDOF program as a condition for the annual award amounts. 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.

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 and in connection with certain disclosures relating to the CTF transaction. 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. On March 8, 2019, the District Court granted in its entirety Frontier’s motion to dismiss the complaint and on March 24, 2020, the court denied plaintiffs’ motion for leave to amend. Plaintiffs appealed and prior to oral argument, the parties reached an agreement in principle to resolve the matter. The settlement, which has ~~preliminary~~obtained final court approval, will be covered by insurance and will have no material financial impact on the Company.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

misrepresenting in its advertisements the Internet speeds it was capable of delivering to DSL customers. On October 4, 2021, the court granted in part and denied in part Frontier’s motion dismiss by dismissing the non-California state claims, but permitting the FTC’s and California’s claims to proceed in the litigation. Frontier ~~has~~expressly denies any wrongdoing but, in the interest of resolving the matter, entered into a settlement with the FTC and California, which ~~would require~~required Frontier to make a financial payment of approximately $9 million in costs and civil penalties, along with certain modifications to its DSL advertising and other practices. ~~The settlement must be approved by the court.~~ An accrual ~~has been~~was established as of March 31, 2022 for the financial impact of this settlement, which is not material to these

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

financial statements. The settlement was approved by the court and the financial payment was made in the second quarter of 2022.

On July 27, 2022, the Connecticut Public Utility Regulatory Authority (“PURA”) issued a Notice of Violation and Assessment of Civil Penalty Order to Cease and Desist (“NOV”) related to the underground excavation and placement of fiber facilities by Frontier and its contractors in Connecticut. The NOV alleges that Frontier and its contractors failed to comply with certain state excavation regulations which created public safety and compliance issues. The NOV prescribes a $5 million fine, which the Company will challenge in a contested proceeding. The NOV also orders Frontier to discontinue certain underground fiber deployment work until the Company submits a compliance plan to ensure compliance with the applicable regulations. Frontier is complying with the NOV and will seek relief from the underground fiber deployment restrictions. On August 1, 2022, the PURA responded to a Frontier motion, clarifying the restrictions and allowing certain underground construction activity to continue. While the Company does not believe that this matter will have a material impact on its fiber build or financial position, results of operations or cash flows, a prolonged ban on underground installations in Connecticut could adversely impact the Company’s ability to meet its build targets in a timely manner.

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 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.

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.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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.

‎

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FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" related to future events. Forward-looking statements address our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, our ability to comply with the covenants in the agreements governing our indebtedness and 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. We do not intend, nor do we undertake any duty, to update any forward-looking statements.

A wide range of factors could materially affect future developments and performance, including but not limited to:

our significant indebtedness, our ability to incur substantially more debt in the future, and covenants in the agreements governing our current indebtedness that may reduce our operating and financial flexibility;

declines in Adjusted EBITDA relative to historical levels that we are unable to offset;

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

our ability to secure necessary construction resources, materials and permits for our fiber buildout initiative in a timely and cost-effective manner;

potential disruptions in our supply chain and the effects of inflation resulting from the COVID-19 pandemic, the global microchip shortage, or otherwise, which could adversely impact our business and hinder our fiber expansion plans;

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

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, 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 offset with increases in revenue from other products and services;

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FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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

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;

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 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 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;

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;

our ability to successfully renegotiate union contracts;

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

changes in pension plan assumptions, interest rates, discount rates, regulatory rules and/or the value of our pension plan assets;

the likelihood that our historical financial information may no longer be indicative of our future performance;

the impact of adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally, including but not limited to, disruption in our supply chain, inflation in pricing for key materials or labor, or other adverse changes resulting from epidemics, pandemics and outbreaks of contagious diseases, including the COVID-19 pandemic, natural disasters, economic or political instability 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, working remotely and recent applicable federal, state and local mandates and prohibitions, our ability to

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FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

effectively manage increased demand on our network, our ability to maintain relationships with our current or prospective customers and vendors and the ability of our vendors to perform under current or proposed arrangements with us;

potential adverse impacts of climate change and increasingly stringent environmental laws, rules and regulations, and customer expectations;

market overhang from the substantial common stock ~~issued in the Reorganization;~~holdings by our former creditors;

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

certain other factors set forth in our other filings with the SEC.

Any of the foregoing events, or other events, could cause our results to vary from management’s forward-looking statements included in this report. You should consider these important factors, as well as the risks contained in our most recent Form 10-K 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 to update or revise these forward-looking statements and do not undertake to do so.

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.

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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

Frontier Communications Parent, Inc. is a provider of communications services in the United States, with approximately 2.8 million broadband customers and ~~15,400~~15,074 employees, operating in 25 states as of ~~March 31,~~June 30, 2022. We offer a broad portfolio of communications services for consumer and business customers. These services include data and Internet services, video services, voice services, access services, and advanced hardware and network solutions.

Business Overview

Frontier’s purpose is to Build Gigabit America^TM by expanding and transforming our fiber network in order to meet the rapidly increasing demand for data from both our consumer and business customers. We believe that a fiber network has competitive advantages to be able to meet this growing demand, including faster download speeds, faster upload speeds, and lower latency levels than alternative broadband services.

In August 2021, we announced our plan to accelerate our fiber build to reach 10 million total fiber passings by December 31, 2025. We are prioritizing our fiber build activities to locations which we believe 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.

Our strategy focuses on four levers of value creation: fiber deployment, fiber broadband penetration, improving the customer experience, and operational efficiency. We accomplished the following objectives in the ~~first~~second quarter of 2022:

We built fiber to approximately ~~211,000~~281,000 locations, resulting in approximately ~~4.2~~4.4 million total locations passed with fiber as of ~~March 31,~~June 30, 2022.

We accelerated our fiber build and announced that we expect to exceed our 2022 build target of 1 million locations by an additional 100,000 to 200,000 locations. Our ~~build~~ plan remains on track, within our established cost parameters, and we have solidified our fiber build supply chain with multi-year agreements with key labor and equipment partners.

We ~~had a record quarter of approximately~~added 54,000 fiber broadband customer net ~~additions.~~additions, resulting in fiber broadband customer growth of 13.4% versus the second quarter of 2021.

oIn our Base Fiber Network of 3.2 million locations, we achieved broadband penetration of 43%, an increase of 140bps from the second quarter of 2021 and approaching our terminal penetration target of 45%.

oFiber locations constructed in 2020 reached broadband penetration of 22% and 44% after 12 and 24 months, respectively.

oFiber locations constructed in 2021 reached penetration of 17% after 12 months.

Fiber broadband customer net additions continued to outpace copper broadband customer net losses, resulting in ~~a record quarter of approximately 20,000~~8,000 total broadband customer net additions.

We ~~concluded our extensive, data-driven evaluation of our brand, and unveiled our reinvented brand on April 25.~~achieved sequential growth in consumer revenue for the first time in more than three years, led by strong fiber broadband growth.

We realized ~~approximately $139~~$201 million of gross annualized cost savings as of June 30, 2022 and remain on track to exceed our goal of ~~approximately~~ $250 million of gross annual cost savings by 2023.

We successfully completed an offering of $1.2 billion first lien notes, further strengthening our balance sheet and securing funding for our fiber build through mid-2024.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

During the first half of 2022, markets remained volatile and the economic outlook remains uncertain. We continue to closely monitor market factors including potential disruptions in our supply chain, tightening labor markets, actual or perceived inflation, the cost of borrowing, and evolution of the ongoing COVID-19 pandemic. We continuously evaluate the impact these and other factors may have on our business, including demand for our products and services, our ability to execute on our strategic priorities and our financial condition and results of operations. Through June 30, 2022 the overall operational and financial impacts to our business have not been significant.

Financial Overview

We reported operating income of ~~$121~~$166 million and ~~$259~~Non-GAAP operating income of $298 million for the three months ended ~~March 31,~~June 30, 2022 and 2021, respectively, a decrease of ~~$138~~$132 million. After adjusting for the impact of fresh start accounting, our Non-GAAP operating income would have decreased by ~~$123~~$127 million, as compared to the prior year period.

We reported operating income of $287 million and Non-GAAP operating income of $557 million for the six months ended June 30, 2022 and 2021, respectively, a decrease of $270 million. After adjusting for the impact of fresh start accounting, our Non-GAAP operating income would have decreased by $250 million, as compared to the prior year period.

Our operating results decreased primarily due to decreases in subsidy and other revenue, and lease impairment charges, partially offset by a reduction in depreciation and amortization expense as a result of the lower asset bases established upon our implementation of fresh start accounting and lower video content costs as compared to the corresponding period in 2021.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Presentation of Results of Operations

The sections below include tables that present customer counts, average monthly consumer revenue per customer ~~(ARPC)~~(“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.

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, 2021. The following charts present key customer metrics, disaggregation of revenue, and the results of operations of the consolidated company.

(a)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 financial results for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the financial results for the three and six months ended ~~March 31,~~June 30, 2021.

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Customer Trends

As of or for the three months ended March 31,
(Customer, Subscriber, and Employee Metrics in thousands)
2022
2021
% Change
Customers ⁽²⁾
Consumer
3,169
3,234
(2)
%
Consumer Customer Metrics ⁽²⁾
Net customer additions (losses)
4
(30)
(113)
%
ARPC
$
81.67
$
87.16
(6)
%
Customer Churn
1.35%
1.45%
(7)
%
Broadband Customer Metrics ^{(1) (2)}
Fiber Broadband
Consumer customers
1,388
1,251
11
%
Business customers
98
95
3
%
Consumer net customer additions
52
13
300
%
Consumer customer churn
1.19%
1.41%
(16)
%
Consumer customer ARPU
$
62.10
$
60.73
2
%
Copper Broadband
Consumer customers
1,204
1,327
(9)
%
Business customers
129
147
(12)
%
Consumer net customer additions (losses)
(30)
(22)
36
%
Consumer customer churn
1.53%
1.62%
(6)
%
Consumer customer ARPU
$
45.72
$
43.23
6
%
Other Metrics
Employees
15,373
16,201
(5)
%
⁽¹⁾
Amounts presented exclude related metrics for our wholesale customers.
⁽²⁾
Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.


	As of or for the three months ended June 30,
(Customer and Employee Metrics in thousands)	2022		2021		% Change
Customers
Consumer		3,159		3,196	(1)	%

Consumer Customer Metrics
Net customer additions (losses)		(10)		(38)	(74)	%
ARPC	$	83.35	$	85.65	(3)	%
Customer Churn		1.53%		1.54%	(1)	%

Broadband Customer Metrics ⁽¹⁾
Fiber Broadband
Consumer customers		1,438		1,263	14	%
Business customers		102		95	7	%
Consumer net customer additions		50		12	317	%
Consumer customer churn		1.43%		1.53%	(6)	%
Consumer customer ARPU	$	63.35	$	63.10	0	%
Copper Broadband
Consumer customers		1,163		1,297	(10)	%
Business customers		124		143	(13)	%
Consumer net customer additions (losses)		(41)		(30)	37	%
Consumer customer churn		1.73%		1.67%	3	%
Consumer customer ARPU	$	48.47	$	44.80	8	%

Other Metrics
Employees		15,074		16,005	(6)	%

~~Customers~~


		For the six months ended June 30,
	(Customer and Employee Metrics in thousands)	2022		2021		% Change
	Consumer Customer Metrics
	Net customer additions (losses)		(6)		(68)	(91)	%
	ARPC	$	82.51	$	86.34	(4)	%
	Customer Churn		1.44%		1.49%	(3)	%

	Broadband Customer Metrics ⁽¹⁾
	Fiber Broadband
	Consumer net customer additions		102		25	308	%
	Consumer customer churn		1.31%		1.47%	(11)	%
	Consumer customer ARPU	$	62.76	$	61.88	1	%
	Copper Broadband
	Consumer net customer additions		(71)		(52)	37	%
	Consumer customer churn		1.63%		1.65%	(1)	%
	Consumer customer ARPU	$	47.09	$	43.98	7	%

⁽¹⁾	Amounts presented exclude related metrics for our wholesale customers.

~~We experienced a decrease in customers of approximately 2% as of March 31, 2022, as compared to the prior year period.~~

~~The average monthly consumer revenue per customer (“consumer ARPC”) decreased $5.49, or 6%, to $81.67 for the three months ended March 31, 2022, compared to the three months ended March 31, 2021.~~

The decrease for the quarter ended March 31, 2022, was primarily a result of decreased video services along with decreased consumer voice services, slightly offset by increased fiber data as well as price adjustments and promotional roll-offs on our voice, data and video services. This ARPC trend is expected to continue as our customer mix becomes more weighted towards broadband service. We have de-emphasized the sale of low margin video products, which have been a material part of the overall ARPC.
‎

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FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Customers

We experienced a decrease in customers of approximately 1% as of June 30, 2022, as compared to the prior year period.

The average monthly consumer revenue per customer (“consumer ARPC”) decreased $2.30, or 3%, to $83.35 and $3.83, or 4%, to $82.51 for the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, respectively.

The decrease for the quarter ended June 30, 2022, was primarily a result of decreased video services and consumer voice services, slightly offset by increased fiber data as well as price adjustments and promotional roll-offs on our voice, data and video services. The moderate decline in ARPC is expected to continue as our customer mix becomes more weighted towards broadband service. We have de-emphasized the sale of low margin video products, which have been a material part of the overall ARPC. In our expansion markets, we expect 15% and 20% penetration within 12 months and 25% after 24 months.

Fiber Broadband Customers

The Company has initiated an investment strategy focused on expanding and improving its fiber network. In conjunction with this strategy, the Company is also working to improve its product positioning in both existing and new fiber markets.

Although still in the ~~initial~~early stages of this fiber investment strategy, results are ~~promising as the~~promising. The quarter ended ~~March 31,~~June 30, 2022 represents the ~~eleventh~~twelfth consecutive quarter of positive consumer fiber net adds. For the quarter ended ~~March 31,~~June 30, 2022, Frontier added ~~52,000~~50,000 consumer fiber broadband customers compared to ~~13,000~~12,000 for the three months ended ~~March 31,~~June 30, 2021. Customers who migrated from our copper base constituted a minor portion of these consumer fiber broadband customer net additions in the ~~three~~six months ended ~~March 31,~~June 30, 2022.

For the three and six months ended ~~March 31,~~June 30, 2022, Frontier added ~~2,000~~4,000 and 6,000 business fiber broadband customers compared to zero net additions infor both the three and six months ended ~~March 31,~~June 30, 2021.

Our focus on expanding and improving our fiber network is contributing to improved customer retention. Our average monthly consumer fiber broadband churn was ~~1.19%~~1.43% and 1.31% for the three and six months ended ~~March 31,~~June 30, 2022, compared to ~~1.41% in~~1.53% and 1.47% for the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively. The improvements in customer churn were driven partly ~~driven~~ by ~~our~~ increased focus ~~on customer retention~~ at key customer touchpoints such as installation, first bill, and end of promotion ~~periods.~~periods, and partly by improved retention associated with inflation-related pricing actions, which were implemented in first quarter of 2021 and second quarter of 2022.

In addition to our ~~sequential~~ improvement in fiber net adds, we continue to see improvements in the average monthly consumer fiber broadband revenue per customer which increased ~~$1.37, or 2%,~~$0.25 to ~~$62.10~~$63.35 and $0.88 to $62.76 for the three and six months ended ~~March 31,~~June 30, 2022, compared to the three and six months ended ~~March 31,~~June 30, 2021, respectively. These increases are due to price increases and shifting mix towards higher speed tiers, a shift which has accelerated since the launch of our 2 gigabit offering on February 22, 2022.

Copper Broadband Customers

For the three and six months ended ~~March 31,~~June 30, 2022, Frontier lost ~~30,000~~41,000 and 71,000 consumer copper broadband customers compared to a loss of ~~22,000~~30,000 and 52,000 for the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively. Our fiber investment strategy has impacted these results as new fiber markets will not only cease selling the copper broadband product, but we will focus on converting existing copper broadband customers to a fiber product.

For the three and six months ended ~~March 31,~~June 30, 2022, Frontier lost ~~4,000~~5,000 and 9,000 business copper broadband customers compared to a loss of ~~5,000~~4,000 and 9,000 in the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively.

Our average monthly consumer ~~customer~~copper broadband churn was ~~1.53%~~1.73% and 1.63% for the three and six months ended ~~March 31,~~

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

June 30, 2022, compared to ~~1.62%~~1.67% and 1.65% in the three and six months ended ~~March 31,~~June 30, 2021. The reductions in customer churn were primarily driven by customer retention initiatives.

Financial Results


	Successor		Successor		Predecessor		Non-GAAP Combined
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,		For the three months ended June 30,
	2022		2021		2021		2021		% Change
Data and Internet services	$	847	$	556	$	283	$	839	1	%
Voice services		381		283		160		443	(14)	%
Video services		134		105		54		159	(16)	%
Other		80		62		30		92	(13)	%
Revenue from contracts ‎ with customers		1,442		1,006		527		1,533	(6)	%
Subsidy and other revenue		17		55		28		83	(80)	%
Revenue		1,459		1,061		555		1,616	(10)	%

Operating expenses:
Cost of Service		546		396		210		606	(10)	%
Selling, general and administrative expenses		427		269		129		398	7	%
Depreciation and amortization		290		179		119		298	(3)	%
Restructuring costs and other charges		30		11		5		16	88	%
Total operating expenses	$	1,293	$	855	$	463	$	1,318	(2)	%

Operating income		166		206		92		298	(44)	%

Consumer		791		543		283		826	(4)	%
Business and wholesale		651		463		244		707	(8)	%
Revenue from contracts ‎ with customers	$	1,442	$	1,006	$	527	$	1,533	(6)	%

Fiber revenue		685		455		225		680	1	%
Copper revenue		757		551		283		834	(9)	%
Non-network specific revenue		-		-		19		19	(100)	%
Revenue from contracts ‎ with customers	$	1,442	$	1,006	$	527	$	1,533	(6)	%

‎

3944

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

~~Financial Results~~

Successor
Predecessor
For the three months ended March 31,
2022
2021
% Change
Data and Internet services
$
836
$
842
(1)
%
Voice services
386
487
(21)
%
Video services
137
169
(19)
%
Other
83
95
(13)
%
Revenue from contracts with customers
1,442
1,593
(9)
%
Subsidy and other revenue
5
83
(94)
%
Revenue
1,447
1,676
(14)
%
Operating expenses:
Cost of Service
553
620
(11)
%
Selling, general and administrative expenses
435
408
7
%
Depreciation and amortization
284
387
(27)
%
Restructuring costs and other charges
54
2
2,600
%
Total operating expenses
$
1,326
$
1,417
(6)
%
Operating income
121
259
(53)
%
#DIV/0!
Consumer ⁽¹⁾
776
850
(9)
%
Business and wholesale ⁽¹⁾
666
743
(10)
%
Revenue from contracts with customers
$
1,442
$
1,593
(9)
%
Fiber revenue
672
678
(1)
%
Copper revenue
770
857
(10)
%
Non-network specific revenue
-
58
(100)
%
Revenue from contracts with customers
$
1,442
$
1,593
(9)
%


	Successor		Successor		Predecessor		Non-GAAP Combined
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,		For the six months ended June 30,
	2022		2021		2021		2021		% Change
Data and Internet services	$	1,683	$	556	$	1,125	$	1,681	0	%
Voice services		767		283		647		930	(18)	%
Video services		271		105		223		328	(17)	%
Other		163		62		125		187	(13)	%
Revenue from contracts ‎ with customers		2,884		1,006		2,120		3,126	(8)	%
Subsidy and other revenue		22		55		111		166	(87)	%
Revenue		2,906		1,061		2,231		3,292	(12)	%

Operating expenses:
Cost of Service		1,099		396		830		1,226	(10)	%
Selling, general and administrative expenses		862		269		537		806	7	%
Depreciation and amortization		574		179		506		685	(16)	%
Restructuring costs and other charges		84		11		7		18	367	%
Total operating expenses	$	2,619	$	855	$	1,880	$	2,735	(4)	%

Operating income		287		206		351		557	(48)	%

Consumer		1,567		543		1,133		1,676	(7)	%
Business and wholesale		1,317		463		987		1,450	(9)	%
Revenue from contracts ‎ with customers	$	2,884	$	1,006	$	2,120	$	3,126	(8)	%

Fiber revenue		1,357		455		903		1,358	(0)	%
Copper revenue		1,527		551		1,140		1,691	(10)	%
Non-network specific revenue		-		-		77		77	(100)	%
Revenue from contracts ‎ with customers	$	2,884	$	1,006	$	2,120	$	3,126	(8)	%

⁽¹⁾

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

‎

4045

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

REVENUE

The table below presents our revenue by technology for the periods indicated:

Successor
Predecessor
For the three months
For the three months
ended March 31,
ended March 31,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Fiber
$
672
$
678
$
(6)
(1)
%
Copper
770
857
(87)
(10)
%
Other ⁽²⁾
-
58
(58)
(100)
%
Revenue from contracts with customers ⁽¹⁾
1,442
1,593
(151)
(9)
%
Subsidy revenue
5
83
(78)
(94)
%
Total revenue
$
1,447
$
1,676
$
(229)
(14)
%


	Successor		Non-GAAP Combined
	For the three months		For the three months
	ended June 30,		ended June 30,		$ Increase		% Increase
($ in millions)	2022		2021		(Decrease)		(Decrease)
Fiber	$	685	$	680	$	5	1	%
Copper		757		834		(77)	(9)	%
Other ⁽²⁾		-		19		(19)	(100)	%
Revenue from contracts with customers ⁽¹⁾		1,442		1,533		(91)	(6)	%
Subsidy revenue		17		83		(66)	(80)	%
Total revenue	$	1,459	$	1,616	$	(157)	(10)	%


	Successor		Non-GAAP Combined
	For the six months		For the six months
	ended June 30,		ended June 30,		$ Increase		% Increase
($ in millions)	2022		2021		(Decrease)		(Decrease)
Fiber	$	1,357	$	1,358	$	(1)	(0)	%
Copper		1,527		1,691		(164)	(10)	%
Other ⁽²⁾		-		77		(77)	(100)	%
Revenue from contracts with customers ⁽¹⁾		2,884		3,126		(242)	(8)	%
Subsidy revenue		22		166		(144)	(87)	%
Total revenue	$	2,906	$	3,292	$	(386)	(12)	%

⁽¹⁾Includes $16 million and $16 million, and $32 million and $37 million of lease revenue for ~~both~~ the three and six months ended ~~March 31,~~June 30, 2022 and 2021, respectively.

⁽²⁾Includes USF fees that, in conjunction with the application of fresh start accounting, are now recorded net.

Our revenue streams are primarily a result of recurring data, voice, and video services delivered over either our copper or fiber network. Revenues are considered copper or fiber based on the “last-mile” technology used to connect the customer location. With our investment strategy to expand and improve our fiber network and the corresponding fiber focus of our sales and marketing efforts, the company is experiencing growth in fiber broadband revenue and a decline in copper revenue. We expect this trend to continue ~~and accelerate~~ due to strong fiber demand and the migration of customers from copper to fiber once the fiber network is available.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Consumer ⁽²⁾
$
776
$
850
$
(74)
(9)
%
Business and wholesale ⁽²⁾
666
743
(77)
(10)
%
Revenue from contracts with customers ⁽¹⁾
1,442
1,593
(151)
(9)
%
Subsidy and other revenue
5
83
(78)
(94)
%
Total revenue
$
1,447
$
1,676
$
(229)
(14)
%


	Successor		Non-GAAP Combined
	For the three months ended June 30,		For the three months ended June 30,		$ Increase		% Increase
($ in millions)	2022		2021		(Decrease)		(Decrease)
Consumer	$	791	$	826	$	(35)	(4)	%
Business and wholesale		651		707		(56)	(8)	%
Revenue from contracts with customers ⁽¹⁾		1,442		1,533		(91)	(6)	%
Subsidy and other revenue		17		83		(66)	(80)	%
Total revenue	$	1,459	$	1,616	$	(157)	(10)	%

	Successor		Non-GAAP Combined
	For the six months ended June 30,		For the six months ended June 30,		$ Increase		% Increase
($ in millions)	2022		2021		(Decrease)		(Decrease)
Consumer	$	1,567	$	1,676	$	(109)	(7)	%
Business and wholesale		1,317		1,450		(133)	(9)	%
Revenue from contracts with customers ⁽¹⁾		2,884		3,126		(242)	(8)	%
Subsidy and other revenue		22		166		(144)	(87)	%
Total revenue	$	2,906	$	3,292	$	(386)	(12)	%

⁽¹⁾Includes $16 million and $16 million, and $32 million and $37 million of lease revenue for ~~both~~ the three and six months ended ~~March 31,~~June 30, 2022 and 2021, respectively.

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

We conduct business with a range of consumer, business and wholesale customers and we generate both recurring and non-recurring revenues. Recurring revenues are primarily billed at fixed recurring rates, with some services billed 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.

‎

4147

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Consumer

Consumer customer losses were driven by reductions in our copper broadband and stand-alone voice customers, partially offset by net additions of fiber broadband customers. Customer preferences as well as our fiber investment initiative is resulting in a migration of the customer base to fiber.

For the three and six months ended ~~March 31,~~June 30, 2022, Frontier ~~gained 4,000~~lost 10,000 and 6,000 consumer customers compared to a loss of ~~30,000~~38,000 and 68,000 for the three and six months ended ~~March 31,~~June 30, 2021. This includes net gains of consumer broadband customers of ~~22,000~~9,000 and 31,000 for the three and six months ended ~~March 31,~~June 30, 2022, as compared to net losses of our consumer broadband customers of approximately ~~9,000~~18,000 and 27,000 during the same ~~period~~periods in 2021. This improvement is a direct result of our fiber initiatives.

For the three and six months ended ~~March 31,~~June 30, 2022, compared to the three and six months ended ~~March 31,~~June 30, 2021:

we experienced 9%4% and 7% decline in consumer revenues for the three and six months ended June 30, 2022, respectively, driven by a 6%3% and 4% decrease in ARPC and 2%1% decline in the number of ~~customers.~~customers as compared to the same periods in 2021. This decline was driven predominantly a result of decreases in voice, video and copper broadband, offset by increases in fiber broadband. The Company’s fiber initiative will result in our revenue mix continuing to move to fiber broadband.

we experienced 13% and 12% ~~improvements~~improvement in consumer fiber broadband ~~revenues. These improvements are~~revenues for the three and six months ended June 30, 2022, respectively. This improvement is a result of our fiber initiative which resulted in net adds of ~~137,000~~175,000 customers during the 12 month period, and our continued focus on product positioning in both new and existing markets which resulted in ARPU improvements of ~~$1.37~~$0.25 and $0.88 for the three and six months ended ~~March 31,~~June 30, 2022.

we experienced approximately 4%2% and 3% decline in consumer copper broadband ~~revenues.~~revenues for the three and six months ended June 30, 2022. As our copper footprint is transitioned to fiber, we expect fewer copper sales opportunities, and will proactively migrate existing broadband customers from copper to fiber, both of which will reduce our copper net adds.

Business

For the three and six months ended ~~March 31,~~June 30, 2022, we experienced ~~a 10%~~an 8% and 9% decline in our business and wholesale ~~revenues. Contributing~~revenues, respectively. Business revenues declined primarily due to ~~this decline, wholesale~~the secular pressures in copper voice revenue as well as the loss of equipment revenue associated with the sale of our equipment subsidiary. Wholesale revenues ~~decreased~~declined primarily due to secular pressures in copper voice revenue, legacy circuit revenue, and lower rates for our network access services charged to our wholesale customers for the ~~three~~six months ended ~~March 31,~~June 30, 2022. ~~Our small and medium (SMB) revenues decreased primarily as a result of a decline in small business customers.~~

4248

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Revenue by product and service type was as follows:

Successor
Predecessor
For the three months ended March 31,
For the three months ended March 31,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Data and Internet services
$
836
$
842
$
(6)
(1)
%
Voice services
386
487
(101)
(21)
%
Video services
137
169
(32)
(19)
%
Other
83
95
(12)
(13)
%
Revenue from contracts with customers ⁽¹⁾
1,442
1,593
(151)
(9)
%
Subsidy and other revenue
5
83
(78)
(94)
%
Total revenue
$
1,447
$
1,676
$
(229)
(14)
%


	Successor		Non-GAAP Combined
	For the three months ended June 30,		For the three months ended June 30,		$ Increase		% Increase
($ in millions)	2022		2021		(Decrease)		(Decrease)
Data and Internet services	$	847	$	839	$	8	1	%
Voice services		381		443		(62)	(14)	%
Video services		134		159		(25)	(16)	%
Other		80		92		(12)	(13)	%
Revenue from contracts with customers ⁽¹⁾		1,442		1,533		(91)	(6)	%
Subsidy and other revenue		17		83		(66)	(80)	%
Total revenue	$	1,459	$	1,616	$	(157)	(10)	%

	Successor		Non-GAAP Combined
	For the six months ended June 30,		For the six months ended June 30,		$ Increase		% Increase
($ in millions)	2022		2021		(Decrease)		(Decrease)
Data and Internet services	$	1,683	$	1,681	$	2	0	%
Voice services		767		930		(163)	(18)	%
Video services		271		328		(57)	(17)	%
Other		163		187		(24)	(13)	%
Revenue from contracts with customers ⁽¹⁾		2,884		3,126		(242)	(8)	%
Subsidy and other revenue		22		166		(144)	(87)	%
Total revenue	$	2,906	$	3,292	$	(386)	(12)	%

⁽¹⁾Includes $16 million and $16 million, and $32 million and $37 million of lease revenue for ~~both~~ the three and six months ended ~~March 31,~~June 30, 2022 and 2021, respectively.

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

Data and Internet Services

We provide data and Internet services to our consumer, business and wholesale customers. Data and Internet services consist of fiber broadband services, copper broadband services and network access revenues.

Our fiber expansion strategy is expected to positively impact data and Internet services. This network expansion will provide faster, symmetrical broadband speeds and provide customer and revenue growth opportunities for fiber broadband and certain network access products like ethernet. This initiative will also create an opportunity for us to provide more fiber-based services to our customers.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)


($ in millions)	For the three months ended		For the six months ended
Data and Internet services revenue, June 30, 2021	$	839	$	1,681
Change in fiber broadband revenue		34		63
Change in copper broadband revenue		(9)		(21)
Change in other data and Internet services		(16)		(38)
Impact of fresh start accounting		(1)		(2)
Data and Internet services revenue, June 30, 2022	$	847	$	1,683

~~($ in millions)~~

~~For the three months ended~~

~~Data and Internet services revenue, March 31, 2021~~

~~842~~

~~Change in fiber broadband revenue~~

~~Change in copper broadband revenue~~

~~(12)~~

~~Change in other data and Internet services~~

~~(22)~~

~~Impact of fresh start accounting~~

~~(1)~~

~~Data and Internet services revenue, March 31, 2022~~

~~836~~

Upon emergence from bankruptcy, the accumulated balances in deferred installation fee revenue were eliminated as part of fresh start accounting, which has resulted in a decline in revenue recognition.

The revenue ~~declines were~~growth was primarily driven ~~by other data revenue and were offset~~ by 4% improvement in our broadband revenue offset by declines in other data revenue for both the three and six months ended ~~March 31,~~June 30, 2022, as compared to the corresponding periods in 2021. The increases in broadband revenue were driven by growth in fiber, offset somewhat by continued declines in copper. The other data revenues declines were the result of an ongoing migration of our carrier customers from legacy technology circuits to lower priced ethernet circuits. The period over period decrease in data and Internet services revenue continued to improve for the three and six months ended ~~March 31,~~June 30, 2022, as a result of the Company’s initiatives.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Voice Services

The Company provides voice services consisting of traditional local and long-distance service and voice over Internet protocol (VoIP) service provided over our fiber and copper broadband products. It also includes enhanced features such as call waiting, caller identification and voice messaging services.


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

~~Voice services revenue, March 31, 2021~~	$	~~487~~
~~Change in other voice services revenue~~		~~(44)~~
~~Impact of fresh start accounting~~		~~(57)~~
~~Voice services revenue, March 31, 2022~~	$	~~386~~


($ in millions)	For the three months ended		For the six months ended
Voice services revenue, June 30, 2021	$	443	$	930
Change in other voice services revenue		(43)		(87)
Impact of fresh start accounting		(19)		(76)
Voice services revenue, June 30, 2022	$	381	$	767

Upon implementation of fresh start accounting policies, Frontier is recording both revenue and expense related to Universal Service Fund (“USF”) surcharges on a net basis, as opposed to recording each on a gross basis prior to emergence. These declines were primarily due to net losses in business and consumer customers in addition to fewer customers bundling voice services with broadband.

Video Services

Video services include revenues generated from traditional television (TV) services provided directly to consumer customers as well as satellite TV services provide through Dish. Video services also includes pay-per-view revenues, video on demand, equipment rentals, and video advertising. The Company has made the strategic decision to limit sales of new traditional TV services, focusing on our broadband products and OTT video options. We are partnering with OTT video providers and expect this to grow as OTT options are offered with our broadband products.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)


($ in millions)	For the three months ended		For the six months ended
Video services revenue, June 30, 2021	$	159	$	328
Change in video services revenue		(23)		(49)
Impact of fresh start accounting		(2)		(8)
Video services revenue, June 30, 2022	$	134	$	271

~~($ in millions)~~

~~For the three months ended~~

~~Video services revenue, March 31, 2021~~

~~169~~

~~Change in video services revenue~~

~~(26)~~

~~Impact of fresh start accounting~~

~~(6)~~

~~Video services revenue, March 31, 2022~~

~~137~~

Under our fresh start accounting policies, Frontier is recording both revenue and expense related to certain surcharges and taxes on a net basis, as opposed to recording each on a gross basis prior to emergence. These declines were primarily driven by linear video customer losses, partially offset by price increases.

Other

Other customer revenue includes directory listing services and switched access revenue. 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. These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies.


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

~~Other revenue, March 31, 2021~~	$	95
~~Change in other services revenue~~		~~(17)~~
~~Impact of fresh start accounting~~		5
~~Other revenue, March 31, 2022~~	$	83


($ in millions)	For the three months ended		For the six months ended
Other revenue, June 30, 2021	$	92	$	187
Change in other services revenue		(14)		(32)
Impact of fresh start accounting		2		8
Other revenue, June 30, 2022	$	80	$	163

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Under our fresh start accounting policies, Frontier has classified the provision for bad debt as expense, rather than a reduction of revenue as it was recorded prior to emergence, resulting in increases to other customer revenues of ~~$10~~$4 million and $14 million for the three and six months ended ~~March 31, 2022.~~June 30, 2022, respectively. Additionally, the accumulated balances in deferred installation fee revenue were eliminated as part of fresh start accounting, which has resulted in a $5$2 million and $6 million decline in revenue recognized for the three and six months ended ~~March 31,~~June 30, 2022, as compared to the prior year ~~period.~~periods. After adjusting for the impacts of these policy changes, other customer services revenue declined ~~$17~~$14 million and $32 million for the three and six months ended ~~March 31, 2022.~~June 30, 2022, respectively. These decreases were primarily driven by reductions in CPE sales, late payment fees, early termination fees and reconnect fees.

Subsidy and other revenue

Subsidy and other revenue decreased ~~$78~~$66 million and $144 million for the three and six months ended ~~March 31,~~June 30, 2022, compared to the prior year period, primarily due to the CAF II program which was completed in 2021.


($ in millions)	For the three months ended		For the six months ended
Subsidy and other revenue, June 30, 2021	$	83	$	166
Change in CAF II subsidies		(78)		(157)
Change in RDOF, subsidy, and other services revenue		11		8
Impact of fresh start accounting		1		5
Subsidy and other revenue, June 30, 2022	$	17	$	22

~~($ in millions)~~

~~For the three months ended~~

~~Subsidy and other revenue, March 31, 2021~~

~~Change in CAF II and other subsidies~~

~~(78)~~

~~Change in subsidy and other services revenue~~

~~(4)~~

~~Impact of fresh start accounting~~

~~Subsidy and other revenue, March 31, 2022~~

Upon implementation of new fresh start accounting policies, certain governmental grants that were historically presented on a net basis as part of capital expenditures, are presented on a gross basis and included in subsidy, resulting in increases to Subsidy and other revenue of $4$1 million and $5 million for the three and six months ended ~~March 31,~~June 30, 2022.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

OPERATING EXPENSES

Successor
Predecessor
For the three months
For the three months
($ in millions)
ended March 31,
ended March 31,
Variance
Variance
2022
2021
($)
%
Operating expenses:
Cost of Service
$
553
$
620
$
(67)
(11)
%
Selling, general and administrative expenses
435
408
27
7
%
Depreciation and amortization
284
387
(103)
(27)
%
Restructuring costs and other charges
54
2
52
2,600
%
Total operating expenses
$
1,326
$
1,417
$
(91)
(6)
%


	Successor		Non-GAAP Combined
	For the three months		For the three months
($ in millions)	ended June 30,		ended June 30,		($)			%
	2022		2021		Variance			Variance
Operating expenses:
Cost of Service	$	546	$	606		$	(60)		(10)	%
Selling, general and administrative expenses		427		398			29		7	%
Depreciation and amortization		290		298			(8)		(3)	%
Restructuring costs and other charges		30		16			14		88	%
Total operating expenses	$	1,293	$	1,318		$	(25)		(2)	%


	Successor		Non-GAAP Combined
	For the six months		For the six months
($ in millions)	ended June 30,		ended June 30,			($)			%
	2022		2021			Variance			Variance
Operating expenses:
Cost of Service	$	1,099		$	1,226		$	(127)		(10)	%
Selling, general and administrative expenses		862			806			56		7	%
Depreciation and amortization		574			685			(111)		(16)	%
Restructuring costs and other charges		84			18			66		367	%
Total operating expenses	$	2,619		$	2,735		$	(116)		(4)	%

Cost of service

Cost of service 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.

As a result of the fresh start accounting policy change to account for USF fees and certain other surcharges and taxes on a net basis instead of on a gross basis in both revenue and expense, cost of service decreased by $21 million and $84 million for the three and six months ended June 30, 2022, respectively. After adjusting for this fresh start change, cost of service declined $39 million and $43 million for the three and six months ended June 30, 2022, respectively. For the three and six months ended ~~March 31,~~June 30, 2022, the decrease in cost of service expense was driven by lower video content costs as a result of declines in video customers, non-renewal of certain content agreements and decreased CPE costs. These decreases more than offset higher fuel and energy prices, and outside service rate increases resulting from increased inflation.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Selling, general, and administrative expenses

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.

As a result of the fresh start accounting policy change to classify the provision for bad debt as an expense rather than a reduction to revenue, SG&A expenses were ~~$10~~$4 million and $14 million higher for the three and six months ended ~~March 31, 2022.~~June 30, 2022, respectively. Additionally, as a result of fresh start accounting policy changes, we have expensed ~~$13~~$4 million and $17 million of certain administrative items that were previously capitalized by the predecessor for the three and six months ended ~~March 31,~~June 30, 2022. After adjusting for the fresh start impacts, SG&A ~~Expenses~~expenses increased by $4$21 million and $25 million for the three and six months ended ~~March 31,~~June 30, 2022. This increase was primarily a result of transformational investments that are non-recurring such as rebranding costs, higher~~higher~~ professional services and recruiting ~~fees.~~fees, partially offset by a non-recurring $8 million sales tax refund in the current quarter.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Pension and Other Postretirement Employee Benefit (OPEB) costs

Frontier allocates certain pension/OPEB expense to Cost of service and SG&A expenses. Total pension and OPEB service costs were as follows:


	Successor		Non-GAAP Combined
($ in millions)	For the three months ended June 30, 2022		For the three months ended June 30, 2021
Total pension/OPEB expenses	$	23	$	26
Less: costs capitalized into capital expenditures		(5)		(5)
Net pension/OPEB costs	$	18	$	21


	Successor		Non-GAAP Combined
($ in millions)	For the six months ended June 30, 2022		For the six months ended June 30, 2021
Total pension/OPEB expenses	$	48	$	55
Less: costs capitalized into capital expenditures		(11)		(11)
Net pension/OPEB costs	$	37	$	44

Depreciation and amortization

As a result of fresh start accounting, both Frontier’s fixed assets and intangible assets were adjusted to fair value as of the Effective Date. These changes, which decreased the carrying value of its fixed assets and increased the carrying value of its intangible assets. For the three and six months ended ~~March 31,~~June 30, 2022, the decreased depreciation and amortization expense was driven by lower depreciation expense as a result of reduced fixed asset bases following the fresh start adjustment noted above.

Restructuring costs and other charges

Restructuring costs and other charges consist of consulting and advisory fees related to our balance sheet restructuring prior to filing our Chapter 11 Cases and subsequent to the Emergence Date, workforce reductions, transformation initiatives, lease impairment costs, and other restructuring expenses.

For the three months ended ~~March 31,~~June 30, 2022, restructuring costs and other charges increased due to, $26 million of severance and employee costs resulting from workforce reductions, and $4 million of costs related to other restructuring activities.

For the six months ended June 30, 2022, restructuring costs and other charges increased due to $44 million of lease impairment costs from the strategic exit of certain facilities, $6$32 million of severance and employee costs resulting from workforce reductions, and $4$8 million of costs related to other restructuring activities. Of the $32 million in severance and employee costs, approximately $26 million related to the second quarter of 2022, as a result of larger workforce reductions.

~~Pension and Other Postretirement Employee Benefit (OPEB) costs~~

~~Frontier allocates certain pension/OPEB expense to network related expenses and SG&A expenses. Total pension and OPEB service costs were as follows:~~

Successor
Predecessor
For the three months ended March 31,
($ in millions)
2022
2021
Total pension/OPEB expenses
$
25
$
29
Less: costs capitalized into capital expenditures
(6)
(6)
Net pension/OPEB costs
$
19
$
23

‎

4653

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

OTHER NON-OPERATING INCOME AND EXPENSE

Successor
Predecessor
For the three months ended March 31,
Variance
Variance
($ in millions)
2022
2021
$
%
Investment and other income, net
$
77
$
2
$
75
NM
Reorganization items, net
$
-
$
(25)
$
25
(100)
%
Interest expense
$
(103)
$
(89)
$
(14)
16
%
Income tax expense
$
30
$
87
$
(57)
(66)
%
NM - Not meaningful


	Successor		Successor		Predecessor		Non-GAAP Combined
	For the three months ended June 30,		For the two months ended June 30,		For the one month ended April 30,		For the three months ended June 30,		$		%
($ in millions)	2022		2021		2021		2021		Variance		Variance

Investment and other income (loss), net	$	122	$	(2)	$	(1)	$	(3)	$	125	NM
Reorganization items, net	$	-	$	-	$	4,196	$	4,196	$	(4,196)	(100)	%
Interest expense	$	(118)	$	(62)	$	(29)	$	(91)	$	(27)	30	%
Income tax expense (benefit)	$	69	$	43	$	(223)	$	(180)	$	249	(138)	%

NM - Not meaningful
	Successor		Successor		Predecessor		Non-GAAP Combined
	For the six months ended June 30,		For the two months ended June 30,		For the four months ended April 30,		For the six months ended June 30,		$		%
($ in millions)	2022		2021		2021		2021		Variance		Variance

Investment and other income (loss), net	$	199	$	(2)	$	1	$	(1)	$	200	NM
Reorganization items, net	$	-	$	-	$	4,171	$	4,171	$	(4,171)	(100)	%
Interest expense	$	(221)	$	(62)	$	(118)	$	(180)	$	(41)	23	%
Income tax expense (benefit)	$	99	$	43	$	(136)	$	(93)	$	192	(206)	%

NM - Not meaningful

Investment and other income, net

Investment and other income, net increased by ~~$75~~$125 million and $200 million for the three and six months ended ~~March 31,~~June 30, 2022, driven by a remeasurement ofgain related to our other postretirement benefit obligation ~~and prior service credits~~ of ~~$54~~$96 million and $150 million. This was partially offset by an increase of ~~$21~~$10 million and $31 million non-operating pension ~~income. This increase was~~income, as a result of actuarial losses that are no longer being amortized from accumulated other comprehensive income (loss).

Reorganization items, net

The Company has incurred costs associated with the reorganization, primarily the write-off of certain debt issuance costs and net discounts, financing costs, and legal and professional fees and fresh start accounting adjustments. These include expenses incurred subsequent to the Petition Date. During the three and six months ended ~~March 31,~~June 30, 2021, Frontier recognized ~~$25~~$4,196 million and $4,171 million in reorganization items associated with the restructuring of our balance sheet.

Interest expense

For the three and six months ended ~~March 31,~~June 30, 2022, interest expense increased ~~$14~~$27 million and $41 million, as compared to the same period in 2021. The increase in interest expense was primarily driven by a higher debt balance, partially offset by lower interest rates.

Income tax expense

During the three and six months ended ~~March 31,~~June 30, 2022, the successor recorded income tax expense of ~~$30~~$69 million and $99 million on pre-tax income of ~~$97 million.~~ $170 million and $265 million, respectively. During the ~~three~~four months ended ~~March 31,~~April 30, 2021, the ~~predecessor~~Predecessor recorded an income tax ~~expense~~benefit of ~~$87~~$136 million on pre-tax income of ~~$147~~$4,405 million. During the two months ended June 30, 2021, the successor recorded income tax expense of $43 million on pre-tax income

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

of $142 million. Our effective tax rates for the three and six months ended ~~March 31,~~June 30, 2022 ~~compared~~were 40.6% and 37.4%, respectively. The effective rate increased as a result of increases to the ~~three~~state rate due to valuation allowances in certain states, arising from non-deductible interest expense primarily related to our $1.2 billion first lien note issuance. Our effective tax rates for the four months ended April 30, 2021 and the two months ended ~~March 31,~~June 30, 2021 were ~~31.6%~~(3.1%) and ~~59.2%~~30.3%, respectively.

‎

4755

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(b) Liquidity and Capital Resources

As of ~~March 31,~~June 30, 2022, we had liquidity of approximately ~~$2,692~~$3,745 million, comprised of cash and cash equivalents of ~~$1,300~~$678 million, short-term investments consisting of ~~$900~~$2,300 million of term deposits earning interest in excess of traditional bank deposit rates, and placed with banks with A-1/P-1 or equivalent credit quality, and undrawn revolving credit facility of ~~$492~~$767 million.

Analysis of Cash Flows

As of ~~March 31,~~June 30, 2022, we had unrestricted cash and cash equivalents aggregating ~~$1,300~~$678 million. For the ~~three~~six months ended ~~March 31,~~June 30, 2022, we used cash flow from operations, cash on hand, and cash from prior year borrowings principally to fund our cash investing and financing activities, which were primarily short-term investments and capital expenditures.

On May 12, 2022, our consolidated subsidiary Frontier Communications Holdings, LLC (“Frontier Holdings”), issued $1.2 billion aggregate principal amount of 8.750% first lien secured notes due 2030 in an offering pursuant to exemptions from the registration requirements of the Securities Act. We intend to use the net proceeds of this offering to fund capital investments and operating costs arising from our fiber build and expansion of its fiber customer base, and for other general corporate purposes.

As of ~~March 31,~~June 30, 2022, we had a working capital surplus of ~~$975~~$1,723 million compared to a $1,237 million surplus at December 31, 2021. The primary driver for the change in the working capital surplus at ~~March 31,~~June 30, 2022 was an increase in short-term investments, accounts payable and accrued interest.

Cash Flows from Operating Activities

Cash flows provided from operating activities ~~decreased $137~~increased $1,031 million to ~~$528~~$757 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to the ~~three~~six months ended ~~March 31,~~June 30, 2021. The overall ~~decrease~~increase in operating cash flows was primarily the result of changes in working capital.

We paid $2$9 million in net cash taxes during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and $0$33 million in Non-GAAP combined net cash taxes during the ~~three~~Non-GAAP combined six months ended ~~March 31,~~June 30, 2021.

Cash Flows from Investing Activities

Cash flows used in investing activities were ~~$1,345~~$3,385 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022, compared to Non-GAAP combined cash flows used in investing activities of ~~$380~~$759 million for the corresponding period in 2021. Given the long-term nature of our fiber build, as of ~~March 31,~~June 30, 2022, we have invested ~~$900~~$2,300 million cash in short-term investments to improve interest income, while preserving funding flexibility.

Capital Expenditures

For the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, our capital expenditures were ~~$447~~$1,088 million and ~~$384~~$769 million, respectively. Approximately ~~52%~~58% of our capital expenditures in the ~~first~~second quarter of 2022 related to fiber network projects. The driver for the increase in capital expenditure was increased spending for fiber upgrades to our existing copper network, a trend that we expect to continue as we execute our strategy of investing in our fiber network. In addition to the capital expenditures noted above, we had a balance of $250 million in “Accounts payable” on our consolidated balance sheet related to capital expenditures that had not been paid as of June 30, 2022.

Cash Flows from Financing Activities

Cash flows used by financing activities increased $5$968 million to ~~$12~~$1,158 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to the Non-GAAP combined corresponding period in 2021.

The increase in financing activities were primarily driven by $1,200 million proceeds from long-term debt borrowings partially offset by financing costs,

4856

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

lease obligations payments, long-term debt principal payments and other costs.

Capital Resources

~~We expect our~~Our primary anticipated uses of liquidity ~~will be~~are to fund the costs of operations, working capital and capital expenditures and to fund interest payments on our long-term debt. Our primary sources of liquidity are cash flows from operations, cash on hand and borrowing capacity under our ~~$625~~$900 million Revolving Facility (as reduced by $133 million of Letters of Credit.).

On May 12, 2022, Frontier Holdings entered into an amendment to its Revolving Facility which, among other things, increased the Revolving Facility by an additional $275 million, to a total of $900 million in aggregate principal amount of revolving credit commitments. Our Amended and Restated Credit Agreement, including our ~~$1,460~~$1,456 million Term Loan Facility and ~~$625~~$900 million Revolving Facility, and the indentures governing our outstanding secured First Lien Notes and Second Lien Notes are described in detail in Note 8 to the financial statements contained in Part I of this report.

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, we paid ~~$36~~$198 million of cash interest. Our long-term debt is described in detail in Note 8 to the financial statements contained in Part I of this report.

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, 2022, 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, pay taxes and make other 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.

Net Operating Losses

In connection with the Company’s emergence from bankruptcy, ~~the Company~~we consummated a taxable disposition of substantially all of the assets and/or subsidiary stock of the Company. Certain of the NOLs were utilized in offsetting gains from the disposition, certain of the 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 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 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.

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, the acceleration of substantially all of our debt, 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, 2021.

4957

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Future Commitments

~~In April 2015,~~Frontier participated in the ~~FCC released its right of first refusal offer of support to price cap carriers under the~~FCC’s CAF Phase II program, which iswas intended to provide long-term support for broadband in high-cost unserved or underserved areas. ~~Frontier~~We accepted the FCC’s CAF Phase II offer in 25 states, which provided $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.

The deployment deadline for CAF Phase II was December 31, 2021, and final review and audit of households is not complete. To the extent it is determined we did not enable the required number of households with 10 Mbps downstream/1 Mbps upstream broadband service or we were unable to satisfy other FCC CAF Phase II requirements, Frontier will be required to return a portion of the funds previously received and may be subject to certain other requirements and obligations. We have accrued an amount for any potential shortfall in the household build commitment 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.

On January 30, 2020, the FCC adopted an order establishing ~~the Rural Digital Opportunity Fund (RDOF),~~RDOF, a competitive reverse auction to provide support to serve ~~high-cost~~high cost areas. The FCC ~~held~~announced the results of its 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 in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia). ~~Frontier submitted its~~The FCC approved Frontier’s Long Form application ~~to the FCC on January 29, 2021~~in March 2022 and ~~on March 10, 2022 received preliminary authorization of its RDOF award.~~ Frontier ~~anticipates final authorization in the 2nd quarter and that it will begin~~began receiving funding in the ~~first half~~second quarter of 2022. Frontier will be required to complete the buildout to these locations ~~within six years after funding starts,~~by December 31, 2028, with interim target milestones over this period. Beginning in 2022, Frontier is 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.

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 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, 2021.

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.

Regulatory Developments

Connect America Fund (“CAF”)/ Rural Digital Opportunity Fund (“RDOF”): In 2015, Frontier accepted the FCC’s CAF Phase II offer in 29 states, which provided $332 million in annual support and in return the Company is committed to make broadband with at least 10 Mbps downstream/1 Mbps upstream speeds available to approximately 774,000 high-cost unserved or underserved 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 deployment deadline for the CAF phase II program was December 31, 2021 and funding ended on that date. Thereafter, the FCC ~~will~~has initiated a review of carriers’ CAF II program completion data, and if the FCC determines that the Company did not satisfy certain applicable CAF Phase II requirements, Frontier could be

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

required to return a portion of the funds previously received and may be subject to certain other requirements and obligations.

On January 30, 2020, the FCC adopted an order establishing RDOF, a competitive reverse auction to provide support to serve high cost areas. The FCC announced the results of its RDOF Phase I auction 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 in eight states (California, Connecticut, Florida,

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Illinois, New York, Pennsylvania, Texas, and West Virginia). The FCC approved Frontier’s Long Form application in March 2022 and ~~anticipates that it will begin~~Frontier began receiving funding in the ~~first half~~second quarter of 2022. Frontier will be required to complete the buildout to these locations ~~within six years after funding starts,~~by December 31, 2028, with interim target milestones over this period.

As part of its RDOF order, the FCC indicated it would hold a follow-on auction for the unawarded funding following the Phase I auction. However, it remains uncertain whether any such follow-on auction will occur given the recent passage of significant federal funding for broadband infrastructure funding.

COVID-19 Initiatives: The Federal government has undertaken several measures to address the ongoing impacts of the COVID-19 pandemic and to facilitate enhanced access to high speed broadband, including through several new funding programs. As these large amounts of federal funding flow through the broadband ecosystem, we will evaluate and pursue funding opportunities that make sense for our business. Because of the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain and rapidly changing, the impact of the crisis and the governmental responses to the crisis on our business in 2022 and beyond remains uncertain and difficult to predict.

The challenges and continuing uncertainty of the COVID-19 pandemic could result in further impacts to our business and operations, such as disruptions in our supply chain, inflation in pricing for key materials or labor, or other adverse changes. In particular, network electronics that require microchip processors have experienced supply chain constraints due to the global microchip shortage.

Current and Potential Internet Regulatory Obligations: 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 remanded back to the FCC other parts of the 2018 Order. California’s network neutrality provisions have gone into ~~effect and remain the subject of litigation in the Eastern District of California.~~effect. It is unclear whether pending or future appeals will have any impact on the regulatory structure, and it is unclear what impact future federal and/or state legislative or regulatory actions will have on net neutrality issues.

Privacy: 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 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. On May 10, 2022, the state of Connecticut enacted privacy legislation that became effective on July 1, 2022. Frontier's privacy protections are consistent with this new legislation.

Video Programming: Federal, state, and local governments extensively regulate the video services industry. Our linear video services are subject to, among other things: subscriber privacy regulations; requirements that we carry a local broadcast station or obtain consent to carry a local or distant broadcast station; rules for franchise renewals and transfers; the manner in which program packages are marketed to subscribers; and program access requirements.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

We provide video programming in some of our markets including California, Connecticut, Florida, Indiana, and Texas pursuant to franchises, permits and similar authorizations issued by state and local franchising authorities. Most franchises are subject to termination proceedings in the event of a material breach or expire in the ordinary course. In addition, most franchises require payment of a franchise fee as a requirement to the granting of authority.

Many franchises establish comprehensive facilities and service requirements, as well as specific customer service standards and monetary penalties for non-compliance. In many cases, franchises are terminable if the franchisee fails to comply with material provisions set forth in the franchise agreement governing system operations. We believe that we are in compliance and meeting all material standards and requirements. Franchises are generally granted for fixed terms and must be periodically renewed. Local franchising authorities may resist granting a renewal if either past performance or the prospective operating proposal is considered inadequate.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Our agreement with Verizon for use of the FiOS brand and trademark in markets acquired from them expired on March 31, 2021 and was not renewed or extended. Frontier rebranded our related data and video services as Frontier FiberOptic Internet and Frontier TV, respectively.

Environmental Regulation: The local exchange carrier subsidiaries we operate are subject to federal, state, and local laws, and regulations governing the use, storage, disposal of, and exposure to hazardous materials, the release of pollutants into the environment and the remediation of contamination. As an owner and former owner of property, we are subject to environmental laws that could impose liability for the entire cost of cleanup at contaminated sites, including sites formerly owned by us, regardless of fault or the lawfulness of the activity that resulted in contamination. We believe that our operations are in substantial compliance with applicable environmental laws and regulations.

Item 3. Quantitative and ~~Qualitative~~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, 2022, ~~81%~~84% of our total debt had fixed interest rates. We had no interest rate swap agreements in effect at ~~March 31,~~June 30, 2022. We believe that our currently outstanding obligation exposure to interest rate changes is minimal.

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, only our $1.456 billion term loan facility has a floating interest rate at June 30, 2022. The annual impact of a 100 basis point change in LIBOR would result in approximately $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. Interest income from cash invested in term deposits offsets the impact of higher interest expense from floating rate debt. 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.

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, 2022, our discount rate utilized in calculating our benefit plan obligation ~~was~~continues to reflect the December 31, 2021 discount rate of 2.90%.

Our ~~objectives~~discount rate assumption for our OPEB obligation is determined in ~~managing~~a similar manner to the pension plan. As of December 31, 2021, the discount rate was 3.00%. The discount rate was updated in connection with the remeasurements in February and May of 2022. As of June 30, 2022, our ~~interest~~discount rate ~~risk are to limit~~utilized for purposes of calculating our OPEB plan obligation reflects the ~~impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, 19% of our outstanding borrowings at March~~May 31, 2022 ~~have floating interest rates. The annual impact~~discount rate of 100 basis points change in the LIBOR would result in approximately $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 in4.50%.

At June 30, 2022, the fair value of our ~~fixed rate obligations. Based upon~~debt was estimated to be approximately $8.0 billion, based on quoted market prices, our overall ~~interest~~weighted average borrowing rate ~~exposure,~~was 6.163% and our overall weighted average maturity was

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PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

~~a near-term change in interest rates would not materially affect our consolidated financial position, results of operations or cash flows.~~

At March 31, 2022, the fair value of our debt was estimated to be approximately $7.5 billion, based on quoted market prices, our overall weighted average borrowing rate was 5.704% and our overall weighted average maturity was approximately seven years. Refer to Note 8 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, 2022 is primarily limited to our pension plan assets. We have no other security investments of any significant amount.

The value of our pension plan assets decreased ~~$184~~$545 million from $2,655 million at December 31, 2021 to ~~$2,471~~$2,110 million at ~~March 31,~~June 30, 2022. This decrease primarily resulted from changes in the market value of investments of ~~$183~~$506 million including plan expenses, benefit payments to participants of ~~$33~~$113 million, partially offset by contributions of ~~$32~~$74 million.While there is a significant reduction in the assets of the pension plan, the related liability is also expected to decrease due to increases in the related discount rate.

While there is a significant reduction in the assets of the pension plan, discount rates have also risen by approximately 190 basis points to about 4.80%, as of June 30, 2022. If these discount rates remain in effect through the end of 2022 our projected benefit obligation would decrease by about $650 million. On the funding side, a sustained pension asset loss could result in a reduced funding percentage and an increased minimum contribution for the 2023 plan year.

Item 4. Controls ~~and~~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, 2022, 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 ~~three~~six months of 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

5361

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 and in connection with certain disclosures relating to the acquisition of properties in California, Texas and Florida from Verizon on April 1, 2016 (“CTF transaction”). 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. On March 8, 2019, the District Court granted in its entirety Frontier’s motion to dismiss the complaint and on March 24, 2020, the court denied plaintiffs’ motion for leave to amend. Plaintiffs appealed and prior to oral argument, the parties reached an agreement in principle to resolve the matter. The settlement, which has preliminary court approval, will be covered by insurance and will have no material financial impact on the Company.

On May 19, 2021, the FTC, joined by the attorneys general of Arizona, Indiana, Michigan, North Carolina, and Wisconsin, and two California District Attorneys, filed a complaint against Frontier in the Federal District Court for the Central District of California alleging that Frontier violated federal and state laws by knowingly misrepresenting in its advertisements the Internet speeds it was capable of delivering to DSL customers. On October 4, 2021, the court granted in part and denied in part Frontier’s motion dismiss by dismissing the non-California state claims, but permitting the FTC’s and California’s claims to proceed in the litigation. Frontier ~~has~~expressly denies any wrongdoing but, in the interest of resolving the matter, entered into a settlement with the FTC and California, which ~~would require~~required Frontier to make a financial payment of approximately $9 million in costs and civil penalties, along with certain modifications to its DSL advertising and other practices. ~~The settlement must be approved by the court.~~ An accrual ~~has been~~was established as of March 31, 2022 for the financial impact of this settlement, which is not material to these financial statements. The settlement was approved by the court and the financial payment was made in the second quarter of 2022.

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.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors described in Part 1, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

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, 2022.~~

‎

5462

PART II. OTHER INFORMATION

There were no unregistered sales of equity securities during the quarter ended June 30, 2022.

‎

PART II. OTHER INFORMATION

Item 6. ~~Exhibits~~Exhibits


(a)	Exhibits:
	Exhibit Number	Description
	4.1	Indenture, dated as of ~~October 13, 2021,~~May 12, 2022, by and among Frontier Communications Holdings, LLC, the guarantors party thereto, the collateral grantor party ~~thereto and~~thereto. Wilmington Trust, National Association, ~~a national banking association,~~ as trustee, and JPMorgan Chase Bank, N.A., as collateral agent (filed as Exhibit 4.1 to Frontier’s Current Report on Form 8-K filed on ~~October 14, 2021)~~May 16, 2022).
	4.2	Form of ~~6.000% Second~~8.750% First Lien Secured Notes due 2030 (included in Exhibit 4.1 to Frontier’s Current Report on Form 8-K filed on ~~October 14, 2021)~~May 16, 2022).
	10.1	Amendment No. 12 to Amended and Restated Credit Agreement, dated as of ~~October 13, 2021,~~May 12, 2022, by and among Frontier Communications Holdings, LLC, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, Goldman Sachs Bank USA, as revolver agent, and the lenders party thereto (filed as Exhibit 10.1 to Frontier’s Current Report on Form 8-K filed on ~~October 14, 2021)~~May 12, 2022).
	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, 2022, formatted in iXBRL (inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (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, 2022, formatted in iXBRL and contained in Exhibit 101.

‎

5564

PART II. OTHER INFORMATION

~~SIGNATURE~~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 PARENT, INC.



	By: /s/ ~~Donald Daniels~~William McGloin
	~~Donald Daniels~~William McGloin
	~~Senior Vice President and~~ Chief Accounting Officer and Controller
	(Principal Accounting Officer)

Date: ~~May 6,~~August 5, 2022

5665


($ in millions)	Revenue from contracts with customers
2022 (remaining nine months)	$	601
2023		379
2024		221
2025		98
2026		55
Thereafter		84
Total	$	1,438


		As of or for the three months ended March 31,
	(Customer, Subscriber, and Employee Metrics in thousands)	2022		2021		% Change

	Customers ⁽²⁾
	Consumer		3,169		3,234	(2)	%

	Consumer Customer Metrics ⁽²⁾
	Net customer additions (losses)		4		(30)	(113)	%
	ARPC	$	81.67	$	87.16	(6)	%
	Customer Churn		1.35%		1.45%	(7)	%

	Broadband Customer Metrics ^{(1) (2)}
	Fiber Broadband
	Consumer customers		1,388		1,251	11	%
	Business customers		98		95	3	%
	Consumer net customer additions		52		13	300	%
	Consumer customer churn		1.19%		1.41%	(16)	%
	Consumer customer ARPU	$	62.10	$	60.73	2	%
	Copper Broadband
	Consumer customers		1,204		1,327	(9)	%
	Business customers		129		147	(12)	%
	Consumer net customer additions (losses)		(30)		(22)	36	%
	Consumer customer churn		1.53%		1.62%	(6)	%
	Consumer customer ARPU	$	45.72	$	43.23	6	%

	Other Metrics
	Employees		15,373		16,201	(5)	%

⁽¹⁾	Amounts presented exclude related metrics for our wholesale customers.
⁽²⁾	Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.