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 September 30, ~~2022~~2023

¨ 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~~86-2359794
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

~~401 Merritt 7~~1919 McKinney Avenue
~~Norwalk, Connecticut~~Dallas, Texas		~~06851~~75201
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: ~~(203) 614-5600~~(972) 445-0042

401 Merritt 7, Norwalk, Connecticut 06851

(Former name, former address and former fiscal year, if changed from last report)

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes __ No _X_

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes __ No _X_

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 _xX_ No __¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes _xX_ 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”, “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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o

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

Yes ¨__ No _X_x

The number of shares outstanding of the registrant’s ~~Common Stock~~common stock as of October ~~27, 2022~~30, 2023 was ~~245,004,000.~~

245,789,000.

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

Table of Contents


	Page
Part I. Financial Information (Unaudited)

Item 1. Financial Statements

Consolidated Balance Sheets as of September 30 ~~2022,~~, 2023, and December 31, ~~2021~~2022	1

Consolidated Statements of Income for the three and nine months ended September 30, 2023, and 2022 ~~(Successor), and the three months ended September 30, 2021 (Successor)~~	2

~~Consolidated Statements of Income for the nine months ended September 30, 2022 (Successor), the five months ended September 30, 2021 (Successor), and the~~ ~~four months ended April 30, 2021 (Predecessor)~~	3

Consolidated Statements of Comprehensive Income for the three ~~months ended September 30, 2022 (Successor), the three months ended September 30, 2021 (Successor), the~~and nine months ended September 30, 2023, and 2022 ~~(Successor), the five months ended September 30, 2021 (Successor), and the four months ended April 30, 2021 (Predecessor)~~	43

Consolidated Statements of Equity for the three and nine months ended September 30, 2023, and 2022 ~~(Successor); and for~~	54

Consolidated Statements of Cash Flows for the nine months ended September 30, 2023, and 2022 ~~(Successor), the five months ended September 30, 2021 (Successor), and the four months ended April 30, 2021 (Predecessor)~~	65

Notes to Consolidated Financial Statements	76

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3834

Item 3. Quantitative and Qualitative Disclosures about Market Risk	5852

Item 4. Controls and Procedures	6053


Part II. Other Information

Item 1. Legal Proceedings	6154

Item 1A. Risk Factors	61

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~	6154

Item 6. Exhibits	6255

Signature	6356

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)
September 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
230
$
2,127
Short-term investments
2,325
-
Accounts receivable, less allowances of $47 and $57, respectively
422
458
Prepaid expenses
80
73
Income taxes and other current assets
21
30
Total current assets
3,078
2,688
Property, plant and equipment, net
10,847
9,199
Other intangibles, net
3,986
4,227
Other assets
362
367
Total assets
$
18,273
$
16,481
LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year
$
15
$
15
Accounts payable
995
535
Advanced billings
195
197
Accrued other taxes
179
183
Accrued interest
178
76
Pension and other postretirement benefits
46
46
Other current liabilities
369
399
Total current liabilities
1,977
1,451
Deferred income taxes
554
387
Pension and other postretirement benefits
1,193
1,672
Other liabilities
496
403
Long-term debt
9,120
7,968
Total liabilities
13,340
11,881
Equity:
Common stock, $0.01 par value (1,750,000 authorized shares, 244,999
and 244,416 shares issued and outstanding at September 30, 2022 and
December 31, 2021, respectively)
2
2
Additional paid-in capital
4,171
4,124
Retained earnings
700
414
Accumulated other comprehensive income, net of tax
60
60
Total equity
4,933
4,600
Total liabilities and equity
$
18,273
$
16,481


	(Unaudited)
	September 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	948	$	322
Short-term investments		1,275		1,750
Accounts receivable, less allowances of $33 and $47, respectively		449		438
Prepaid expenses		79		57
Income taxes and other current assets		47		30
Total current assets		2,798		2,597

Property, plant and equipment, net		13,621		11,850
Other intangibles, net		3,665		3,906
Other assets		425		271
Total assets	$	20,509	$	18,624

LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year	$	15	$	15
Accounts payable		885		1,410
Advanced billings		202		194
Accrued other taxes		131		137
Accrued interest		183		104
Pension and other postretirement benefits		39		39
Other current liabilities		596		396
Total current liabilities		2,051		2,295

Deferred income taxes		565		558
Pension and other postretirement benefits		866		1,044
Other liabilities		529		483
Long-term debt		11,258		9,110
Total liabilities		15,269		13,490

Equity:
Common stock, $0.01 par value (1,750,000 authorized shares, 245,782
and 245,021 shares issued and outstanding at September 30, 2023 and
December 31, 2022, respectively)		2		2
Additional paid-in capital		4,271		4,198
Retained earnings		867		855
Accumulated other comprehensive income, net of tax		100		79
Total equity		5,240		5,134
Total liabilities and equity	$	20,509	$	18,624

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)

For the three months
For the three months
ended September 30,
ended September 30,
2022
2021
Revenue
$
1,444
$
1,576
Operating expenses:
Cost of service
544
590
Selling, general, and administrative expenses
431
421
Depreciation and amortization
296
273
Restructuring costs and other charges
4
8
Total operating expenses
1,275
1,292
Operating income
169
284
Investment and other income (loss), net (See Note 10)
211
(37)
Pension settlement costs
(50)
-
Interest expense
(135)
(90)
Income before income taxes
195
157
Income tax expense
75
31
Net income
$
120
$
126
Basic net earnings per share
attributable to Frontier common shareholders
$
0.49
$
0.52
Diluted net earnings per share
attributable to Frontier common shareholders
$
0.49
$
0.51
Total weighted average shares outstanding - basic
244,984
244,403
Total weighted average shares outstanding - diluted
245,212
245,667


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2023		2022		2023		2022

Revenue	$	1,436	$	1,444	$	4,325	$	4,350

Operating expenses:
Cost of service		545		544		1,615		1,643
Selling, general, and administrative expenses		405		431		1,250		1,293
Depreciation and amortization		356		296		1,040		870
Restructuring costs and other charges		16		4		48		88
Total operating expenses		1,322		1,275		3,953		3,894


Operating income		114		169		372		456

Investment and other income, net (See Note 10)		67		211		101		410
Pension settlement costs		-		(50)		-		(50)
Interest expense		(170)		(135)		(460)		(356)

Income before income taxes		11		195		13		460
Income tax expense		-		75		1		174

Net income	$	11	$	120	$	12	$	286

Basic net earnings per share
attributable to Frontier common shareholders	$	0.05	$	0.49	$	0.05	$	1.17

Diluted net earnings per share
attributable to Frontier common shareholders	$	0.05	$	0.49	$	0.05	$	1.17

Total weighted average shares outstanding - basic		245,761		244,984		245,431		244,711

Total weighted average shares outstanding - diluted		247,447		245,212		247,336		245,080

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 nine months
For the five months
For the four months
ended September 30,
ended September 30,
ended April 30,
2022
2021
2021
Revenue
$
4,350
$
2,637
$
2,231
Operating expenses:
Cost of service
1,643
986
830
Selling, general, and administrative expenses
1,293
690
537
Depreciation and amortization
870
452
506
Restructuring costs and other charges
88
19
7
Total operating expenses
3,894
2,147
1,880
Operating income
456
490
351
Investment and other income (loss),
net (See Note 10)
410
(39)
1
Pension settlement costs
(50)
-
-
Reorganization items, net
-
-
4,171
Interest expense (See Note 8)
(356)
(152)
(118)
Income before income taxes
460
299
4,405
Income tax expense (benefit)
174
74
(136)
Net income
$
286
$
225
$
4,541
Basic net earnings per share
attributable to Frontier common shareholders
$
1.17
$
0.92
$
43.42
Diluted net earnings per share
attributable to Frontier common shareholders
$
1.17
$
0.92
$
43.28
Total weighted average shares outstanding - basic
244,711
244,402
104,584
Total weighted average shares outstanding - diluted
245,080
245,600
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)

For the three months
For the three months
ended September 30,
ended September 30,
2022
2021
Net income
$
120
$
126
Other comprehensive (loss) income,
net of tax
(2)
3
Comprehensive income
$
118
$
129


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2023		2022		2023		2022

Net income	$	11	$	120	$	12	$	286
Other comprehensive income (loss), net of tax		8		(2)		21		-

Comprehensive income	$	19	$	118	$	33	$	286

Successor
Predecessor
For the nine months
For the five months
For the four months
ended September 30,
ended September 30,
ended April 30,
2022
2021
2021
Net income
$
286
$
225
$
4,541
Other comprehensive income, net of tax
-
44
359
Comprehensive income
$
286
$
269
$
4,900

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 EQUITY (DEFICIT)

($ in millions and shares in thousands)

(Unaudited)



	For the nine months ended September 30, 2022 (Successor)											For the nine months ended September 30, 2023
								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
Stock plans	60		-		15		-		-		15
Balance at January 1, 2023												245,021	$	2	$	4,198	$	855	$	79	$	5,134
Stock plans, net												211		-		22		-		-		22
Net income	-		-		-		65		-		65	-		-		-		3		-		3
Other comprehensive
loss, net of tax	-		-		-		-		(2)		(2)
Balance at March 31, 2022	244,476	$	2	$	4,139	$	479	$	58	$	4,678
income, net of tax												-		-		-		-		4		4
Balance at March 31, 2023												245,232	$	2	$	4,220	$	858	$	83	$	5,163
Stock plans, net												512		-		22		-		-		22
Net loss												-		-		-		(2)		-		(2)
Other comprehensive
income, net of tax												-		-		-		-		9		9
Balance at June 30, 2023												245,744	$	2	$	4,242	$	856	$	92	$	5,192
Stock plans	493		-		13		-		-		13	38		-		29		-		-		29
Net income	-		-		-		101		-		101	-		-		-		11		-		11
Other comprehensive
income, net of tax	-		-		-		-		4		4	-		-		-		-		8		8
Balance at June 30, 2022	244,969	$	2	$	4,152	$	580	$	62	$	4,796
Stock plans	30		-		19		-		-		19
Net income	-		-		-		120		-		120
Other comprehensive
income, net of tax	-		-		-		-		(2)		(2)
Balance at September 30, 2022	244,999	$	2	$	4,171	$	700	$	60	$	4,933
Balance at September 30, 2023												245,782	$	2	$	4,271	$	867	$	100	$	5,240


	For the nine months ended September 30, 2021
								Accumulated							For the nine months ended September 30, 2022
				Additional				Other		Treasury			Total									Accumulated
	Common Stock			Paid-In		Accumulated		Comprehensive		Common Stock			Equity					Additional				Other
	Shares	Amount		Capital		Deficit		Income (Loss)		Shares	Amount		(Deficit)		Common Stock			Paid-In		Retained		Comprehensive		Total
Balance at January 1, 2021	106,025	$	27	$	4,817	$	(8,975)	$	(755)	(1,232)	$	(14)	$	(4,900)
															Shares	Amount		Capital		Earnings		Income		Equity
Balance at January 1, 2022															244,416	$	2	$	4,124	$	414	$	60	$	4,600
Stock plans, net															60		-		15		-		-		15
Net income															-		-		-		65		-		65
Other comprehensive
loss, net of tax															-		-		-		-		(2)		(2)
Balance at March 31, 2022															244,476	$	2	$	4,139	$	479	$	58	$	4,678
Stock plans, net															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
Stock plans	-		-		-		-		-	(122)		(1)		(1)	30		-		19		-		-		19
Net income	-		-		-		60		-	-		-		60	-		-		-		120		-		120
Other comprehensive
income, net of tax	-		-		-		-		11	-		-		11	-		-		-		-		(2)		(2)
Balance at March 31, 2021 (Predecessor)	106,025	$	27	$	4,817	$	(8,915)	$	(744)	(1,354)	$	(15)	$	(4,830)
Balance at September 30, 2022															244,999	$	2	$	4,171	$	700	$	60	$	4,933

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
Stock plans	6		-		8		-		-	-		-		8
Net income	-		-		-		126		-	-		-		126
Other comprehensive
income, net of tax	-		-		-		-		3	-		-		3
Balance at September 30, 2021	244,407	$	2	$	4,114	$	225	$	44	-	$	-	$	4,385

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 CASH FLOWS

($ in millions)

(Unaudited)

Successor
Predecessor
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
2022
2021
2021
Cash flows provided from (used by) operating activities:
Net Income
$
286
$
225
$
4,541
Adjustments to reconcile net income to net cash provided
from (used by) operating activities:
Depreciation and amortization
870
452
506
Pension settlement costs
50
-
-
Stock-based compensation expense
54
8
(1)
Non-cash reorganization items, net
-
-
(5,467)
Lease Impairment
44
-
-
Bad debt expense
19
16
-
Other adjustments
(20)
(11)
1
Deferred income taxes
167
68
(148)
Change in accounts receivable
16
49
36
Change in pension and other post retirement liabilities
(527)
60
(12)
Change in accounts payable and other liabilities
94
89
(156)
Change in prepaid expenses, income taxes, and other
assets
(12)
27
46
Net cash provided from (used by) operating activities
1,041
983
(654)
Cash flows provided from (used by) investing activities:
Capital expenditures
(1,860)
(646)
(500)
Proceeds on sale of assets
4
-
9
Purchase of short-term investments
(3,225)
-
-
Sale of short-term investments
900
-
-
Other
3
1
1
Net cash used by investing activities
(4,178)
(645)
(490)
Cash flows provided from (used by) financing activities:
Long-term debt principal payments
(11)
(8)
(1)
Proceeds from long-term debt borrowings
1,200
-
225
Financing costs paid
(17)
-
(4)
Finance lease obligation payments
(15)
(9)
(7)
Proceeds from financing lease transactions
70
-
-
Taxes paid on behalf of employees for shares withheld
(7)
-
-
Other
(1)
-
(16)
Net cash provided from (used by) financing activities
1,219
(17)
197
Increase (decrease) in cash, cash equivalents, and
restricted cash
(1,918)
321
(947)
Cash, cash equivalents, and restricted cash at January 1,
2,178
940
1,887
Cash, cash equivalents, and restricted cash at
September 30,
$
260
$
1,261
$
940
Supplemental cash flow information:
Cash paid during the period for:
Interest
$
286
$
121
$
84
Income tax payments, net
$
7
$
27
$
9
Reorganization items, net
$
-
$
-
$
1,397



	For the nine months ended ‎September 30,
	2023		2022

Cash flows provided from (used by) operating activities:
Net Income	$	12	$	286
Adjustments to reconcile net income to net cash provided from (used by) operating activities:
Depreciation and amortization		1,040		870
Pension settlement costs		-		50
Stock-based compensation expense		81		54
Lease Impairment		-		44
Amortization of premium		(21)		(21)
Bad debt expense		24		19
Other adjustments		9		1
Deferred income taxes		(1)		167
Change in accounts receivable		(35)		16
Change in long-term pension and other postretirement liabilities		(149)		(527)
Change in accounts payable and other liabilities		101		94
Change in prepaid expenses, income taxes, and other assets		(13)		(12)
Net cash provided from operating activities		1,048		1,041

Cash flows provided from (used by) investing activities:
Capital expenditures		(2,882)		(1,860)
Purchase of short-term investments		(1,850)		(3,225)
Sale of short-term investments		2,325		900
Purchase of long-term investments		(63)		-
Proceeds on sale of assets		18		4
Other		1		3
Net cash (used by) investing activities		(2,451)		(4,178)

Cash flows provided from (used by) financing activities:
Long-term debt principal payments		(64)		(11)
Net proceeds from long-term debt borrowings		2,278		1,200
Premium paid to retire debt		(10)		-
Financing costs paid		(56)		(17)
Finance lease obligation payments		(18)		(15)
Proceeds from sale and lease-back transactions		21		70
Taxes paid on behalf of employees for shares withheld		(9)		(7)
Other		(7)		(1)
Net cash provided from financing activities		2,135		1,219

Increase (Decrease) in cash, cash equivalents, and ‎ restricted cash		732		(1,918)
Cash, cash equivalents, and restricted cash at January 1,		322		2,178
Cash, cash equivalents, and restricted cash at September 30,	$	1,054	$	260

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	449	$	286
Income tax payments, net	$	1	$	7

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 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.~~2022. 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, and cash flows for any interim periods are not necessarily indicative of results that may be expected for the full year.

We operate in one 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 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 September 30, ~~2022,~~2023, 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~~

~~As 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, the Company emerged from bankruptcy on April 30, 2021 (the “Effective Date”). 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 four months of 2021 as a result of the Chapter 11 Cases included 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 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 items, 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 costs and other 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 for periods 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 Frontier Communications Corporation and its subsidiaries on or before the Effective Date (“Old Frontier”).

b)~~Changes in Accounting Policies:~~

~~The accounting policy differences between Predecessor and Successor include:~~

~~Universal Service Fund and Other Surcharges~~ - Frontier collects various taxes, Universal Service Fund (“USF”) surcharges (“primarily federal USF”), and certain other surcharges, 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”.

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

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

Revenue for data &and 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 Frontier’sour 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.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Satisfaction of Performance Obligations

~~Frontier satisfies its~~We satisfy our obligations to customers by transferring goods and services in exchange for consideration received from the customer. The timing of ~~Frontier’s~~our 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 ~~service~~ is determined by allocating the total transaction price based upon the relative stand-alone selling price of ~~such~~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”~~service revenue” 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.~~life using a portfolio approach.

~~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~~we applied the practical expedient that allows such costs to be expensed as incurred.

Taxes, Surcharges and Subsidies

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

In June 2015, ~~Frontier~~we 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. The FCC is reviewing carriers’ CAF II program completion data, and if the FCC determines that we did not satisfy certain applicable CAF Phase II requirements, we could 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

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

probable and reasonably estimated, and we do not expect that any ~~potential penalties, if ultimately incurred,~~amounts of funds that may need to be returned will be material.

In May 2022, ~~Frontier~~we 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~~We accepted $37 million in annual support through 2032 in return for our 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. We are 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~~we did not satisfy applicable FCC RDOF requirements, ~~Frontier~~we 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)c)Cash Equivalents and Restricted Cash:

We consider all ~~highly~~ liquid investments with an original maturity of three months or less to be cash equivalents. WeRestricted cash amounts represent cash collateral required for certain Letter of Credit obligations and utility vendors and collateral for debt arrangements.

At September 30, 2023, the Company had $106 million in restricted cash. Pursuant to the terms of the Company’s securitized financing facility and secured fiber network revenue term notes, as described in Note 8, restricted cash is held in securitization escrow accounts. As of ~~$30~~September 30, 2023, approximately $36 million ~~included in “Other assets” on our consolidated balance sheet~~is current restricted cash held for the purpose of paying interest and certain fees. In addition, as of September 30, ~~2022, and~~2023, approximately $70 million is noncurrent restricted cash held for the purpose of ~~$17 million included in “Other current assets” and $34 million included in “Other assets” as of December 31, 2021.~~satisfying the required liquidity reserve amount.

e)d) ~~Short-Term Investments~~Investments:

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.~~liquidity to fund the investment as required.

As of September 30, ~~2022,~~2023, short-term investments of ~~$2,325~~$1,275 million are comprised of term deposits earning interest in excess of traditional bank deposit rates, maturing between ~~October 26, 2022,~~November 14, 2023, and March ~~14, 2023,~~19, 2024, 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’ 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.

11Other Investments

In connection with the closing of the securitization transaction, approximately $63 million in the form of U.S. Treasuries was deposited in an escrow account established with a trustee, for the purpose of paying interest and principal on $47 million in remaining debt of our subsidiary Frontier Southwest Incorporated. This balance is included in “Other assets” on our consolidated balance sheets and is restricted. See Note 8 for further details.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

f)e)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, customerCustomer relationship intangibles ~~were~~have been established for business and wholesale customers. These intangibles are amortized on a straight-line basis over their assigned useful 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

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

evidence that indicates an impairment condition may exist that would necessitate a change in useful life and a different amortization period.

g)f)Lease Accounting:

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

We assess potential impairments to our leases annually, or as indicators exist, if indicators of impairment arise to determine whether there is evidence that indicate an impairment condition may exist. We continue to review our real estate portfolio and, during the first quarter of 2022, determined to either 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)~~g) ~~Recent~~Going Concern:

In accordance with the requirements of Accounting ~~Literature:~~Standards Update (“ASU”) 2014-15, “Presentation of Financial Statements Going Concern (ASU 2014-15)”, and ASC 205, “Presentation of Financial Statements”, we have the responsibility to evaluate at each reporting period, including interim periods, whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations. In its evaluation for this report, management considered our current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our conditional and unconditional obligations due within one year following the date of issuance of this Quarterly Report on Form 10-Q.

~~Recent Accounting Pronouncements Not Yet Adopted~~We believe we have the ability to meet our obligations for at least one year from the date of issuance of this Form 10-Q. Accordingly, the accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course business.

h)~~Reference Rate Reform~~Property, Plant and Equipment:

~~In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation~~Property, plant, and equipment are stated at original cost, including capitalized interest, or fair market value as of the ~~Effects~~date of ~~Reference Rate Reform on Financial Reporting". This standard provides optional expedients,~~acquisition for acquired properties. Maintenance and ~~allows for certain exceptions~~repairs are charged to ~~existing GAAP, for contract modifications triggered by the expected market transition~~operating expenses as incurred. The gross book value of ~~certain benchmark interest rates to alternative reference rates. The standard applies to contracts~~routine property, plant and other arrangements that reference the London Interbank Offering Rate (LIBOR) or any other rates ending after December 31, 2022. The adoption of this standard does not result in a material impact to our financial position or results of operations.equipment retirements is charged against accumulated depreciation.

~~Government Assistance~~i)Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of:

~~In November 2021,~~We review long-lived assets to be held and used, including customer lists and property, plant and equipment, and long-lived assets to be disposed of for impairment whenever events or changes in circumstances indicate that the ~~FASB issued ASU 2021-10, which requires business entities~~carrying amount of such assets may not be recoverable. Recoverability of assets to ~~disclose information about certain government assistance they receive. Such disclosure requirements include~~be held and used is measured by comparing the ~~nature~~carrying amount of the ~~transactions and~~asset to 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 terms and~~future

129

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

~~conditions~~undiscounted net cash flows expected to be generated by the asset. Recoverability of assets held for sale is measured by comparing the carrying amount of the ~~transactions. ASU 2021-10 will~~assets to their estimated fair market value. If any assets are considered to be ~~effective~~impaired, the impairment is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value. Also, we periodically reassess the useful lives of our long-lived assets to determine whether any changes are required.

j) Income Taxes and Deferred Income Taxes:

We file a consolidated federal income tax return. We utilize the asset and liability method of accounting for ~~annual periods beginning after December 15, 2021 (year ending December 31, 2022~~income taxes. Under the asset and liability method, deferred income taxes are recorded for the ~~Company)~~tax effect of temporary differences between the financial statement basis and the tax basis of assets and liabilities using tax rates expected to be in effect when the temporary differences are expected to reverse.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, tax-planning strategies, and results of recent operations. If we determine that we are not able to realize a portion of our net deferred tax assets in the future, we would make an adjustment to the deferred tax asset valuation allowance, which would increase the provision for income taxes.

The tax effect of a change in tax law or rates included in income tax expense from continuing operations includes effect of changes in deferred tax assets and liabilities initially recognized through a charge or credit to other comprehensive income (loss). The residual tax effects typically are released when the item giving rise to the tax effect is disposed of, liquidated, or terminated.

k) Stock Plans:

We have one stock-based compensation plan under which grants are made and awards remain outstanding. Awards under this plan may 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. Awards may be made in the form of restricted stock, restricted stock units, incentive stock options, non-qualified stock options, stock appreciation rights or other stock-based awards, including awards with performance, market, and time-vesting conditions.

The compensation cost recognized is ~~currently evaluating~~based on awards ultimately expected to vest. GAAP requires forfeitures to be estimated and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

(2) Recent Accounting Pronouncements:

Financial Accounting Standards Adopted During 2023

During the ~~impact~~quarter ended September 30, 2023, we adopted, the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) No. 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” (ASU 2022-04), which establishes interim and annual reporting disclosure requirements about a company’s supplier finance programs for its purchase of goods and services. In the year of adoption, the disclosure of payment and other key terms under the programs and outstanding balances under the obligations also applies to interim reporting dates. The adoption of this ASU ~~2021-10 will~~does not have a material effect on ~~its disclosures~~our financial statements upon adoption.

We have negotiated favorable payment terms with some of our vendors that allow for a longer payment period than our normal customary terms (referred to as vendor financing), which are excluded from capital expenditures and reported as financing activities. As of September 30, 2023 we have $169 million of vendor

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

financing liabilities included in “Other current liabilities” on our consolidated balance sheets. No vendor financing payments were made as of September 30, 2023.

(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~~non-switched 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;

Video services include revenues generated from services provided directly to consumer customers as linear terrestrial television services, through ~~DISH®~~various satellite ~~TV service,~~providers, and through partnerships with over-the-top (OTT) video providers. Video services also includes ~~pay per view~~pay-per-view revenues, video on demand, equipment rentals, and video advertising. ~~The Company has~~We have 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.~~traffic (switched access). These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies; and

Subsidy and other regulatory revenue ~~include~~includes revenues generated from cost subsidies from state and federal authorities, including the CAF II and RDOF.

‎

1311

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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

Successor
For the three months ended September 30,
For the three months ended September 30,
($ in millions)
2022
2021
Data and Internet services
$
848
$
834
Voice services
369
411
Video services
127
149
Other
82
99
Revenue from contracts with customers ⁽¹⁾
1,426
1,493
Subsidy and other revenue ⁽²⁾
18
83
Total revenue
$
1,444
$
1,576
Successor
For the three months ended September 30,
For the three months ended September 30,
($ in millions)
2022
2021
Consumer
$
785
$
800
Business and wholesale
641
693
Revenue from contracts with customers ⁽¹⁾
1,426
1,493
Subsidy and other revenue ⁽²⁾
18
83
Total revenue
$
1,444
$
1,576

Successor
Predecessor
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
($ in millions)
2022
2021
2021
Data and Internet services
$
2,531
$
1,390
$
1,125
Voice services
1,136
694
647
Video services
398
254
223
Other
245
161
125
Revenue from contracts with customers ⁽¹⁾
4,310
2,499
2,120
Subsidy and other revenue ⁽²⁾
40
138
111
Total revenue
$
4,350
$
2,637
$
2,231
Successor
Predecessor
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
($ in millions)
2022
2021
2021
Consumer
$
2,352
$
1,343
$
1,133
Business and wholesale
1,958
1,156
987
Revenue from contracts with customers ⁽¹⁾
4,310
2,499
2,120
Subsidy and other revenue ⁽²⁾
40
138
111
Total revenue
$
4,350
$
2,637
$
2,231


	For the three months ended September 30,				For the nine months ended September 30,
($ in millions)	2023		2022		2023		2022

Data and Internet services	$	895	$	848	$	2,637	$	2,531
Voice services		341		369		1,044		1,136
Video services		104		127		333		398
Other		81		82		253		245
Revenue from contracts with customers ⁽¹⁾		1,421		1,426		4,267		4,310
Subsidy and other revenue		15		18		58		40
Total revenue	$	1,436	$	1,444	$	4,325	$	4,350

	For the three months ended September 30,				For the nine months ended September 30,
($ in millions)	2023		2022		2023		2022

Consumer	$	787	$	785	$	2,323	$	2,352
Business and wholesale		634		641		1,944		1,958
Revenue from contracts with customers ⁽¹⁾		1,421		1,426		4,267		4,310
Subsidy and other revenue		15		18		58		40
Total revenue	$	1,436	$	1,444	$	4,325	$	4,350

⁽¹⁾Includes lease revenue of ~~$15~~$14 million and ~~$16~~$44 million for the three ~~months ended September 30, 2022~~ and ~~2021, respectively; and $48 million for the~~ nine months ended September 30, ~~2022. Lease revenue was $26~~2023, and $15 million ~~for the five months ended September 30, 2021,~~ and ~~$26~~$48 million ~~for the four months ended April 30, 2021.~~

⁽²⁾~~Subsidy and other revenue~~ for the three and nine months ended September 30, 2022, ~~does not include revenue from CAF II as~~respectively.

The following is a summary of the ~~program ended in 2021. We began to receive funding for RDOF~~changes in the ~~second quarter of 2022.~~contract liabilities:


	Contract Liabilities
($ in millions)	Current		Noncurrent

Balance at December 31, 2022	$	27	$	17
Revenue recognized included in opening contract balance		(29)		(9)
Credits granted, excluding amounts recognized as revenue		31		15
Reclassified between current and noncurrent		5		(5)
Balance at September 30, 2023	$	34	$	18


	Contract Liabilities
($ in millions)	Current		Noncurrent

Balance at December 31, 2021	$	27	$	11
Revenue recognized included in opening contract balance		(21)		(8)
Credits granted, excluding amounts recognized as revenue		17		17
Reclassified between current and concurrent		4		(4)
Balance at September 30, 2022	$	27	$	16

1412

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
-
-
(21)
(8)
Credits granted, excluding amounts
recognized as revenue
-
-
17
17
Reclassified between current
and noncurrent
-
-
4
(4)
Balance at September 30, 2022 (Successor)
$
-
$
-
$
27
$
16
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
-
-
(13)
(1)
Cash received, excluding amounts
recognized as revenue
-
-
17
9
Reclassified between current
and noncurrent
-
-
1
(1)
Balance at September 30, 2021 (Successor)
$
-
$
-
$
20
$
8

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.

‎

~~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 (or partially unsatisfied) at the end of the reporting period:

($ in millions)
Revenue from contracts with customers
2022 (remaining three months)
$
320
2023
410
2024
273
2025
137
2026
80
Thereafter
87
Total
$
1,307


($ in millions)	Revenue from contracts with customers
2023 (remaining three months)	$	294
2024		297
2025		169
2026		71
2027		14
Thereafter		9
Total	$	854

(4) Accounts Receivable:

The components of accounts receivable, net are as follows:

($ in millions)
September 30, 2022
December 31, 2021
Retail and wholesale
$
403
$
441
Other
66
74
Less: Allowance for doubtful accounts
(47)
(57)
Accounts receivable, net
$
422
$
458



($ in millions)	September 30, 2023		December 31, 2022
Retail and wholesale	$	406	$	416
Other		76		69
Less: Allowance for doubtful accounts		(33)		(47)
Accounts receivable, net	$	449	$	438

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 $5$24 million ~~and $10 million for the three months ended September 30, 2022 and 2021, respectively;~~ and $19 million for the nine months ended September 30, ~~2022. The provision for bad debts was $16 million for the five months ended September 30, 2021,~~2023 and ~~$14 million for the four months ended April 30, 2021.~~2022, respectively.

In accordance with ASC 326, ~~Frontier performs its calculation~~we performed calculations to estimate expected credit losses, utilizing rates that are consistent with ~~the Company’s~~our 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 nine months ended September 30, ~~2022~~2023 was as follows:


~~($ in millions)~~
~~Balance at December 31, 2021~~	$	57
~~Provision for bad debt~~		19
~~Amounts charged to revenue~~		26
~~Write offs charged against the allowance~~		~~(55)~~
~~Balance at September 30, 2022~~	$	47


($ in millions)
Balance at December 31, 2022	$	47
Provision for bad debt		24
Amounts charged to revenue		11
Write offs charged against the allowance		(49)
Balance at September 30, 2023	$	33

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)	September 30, 2023		December 31, 2022
Property, plant and equipment	$	15,714	$	13,186
Less: Accumulated depreciation		(2,093)		(1,336)
Property, plant and equipment, net	$	13,621	$	11,850

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


	For the three months ended September 30,				For the nine months ended September 30,
($ in millions)	2023		2022		2023		2022

Depreciation expense	$	276	$	215	$	799	$	629

As of September 30, 2023, our materials and supplies were $589 million, as compared to $546 million as of December 31, 2022. Components of this include fiber, network electronics, and customer premises equipment.

During the nine months ended September 30, 2023, our capital expenditures were $2,882 million which included a decrease of $514 million due to changes in accounts payable and vendor financing payables from December 31, 2022. As of September 30, 2023 there was $635 million in accounts payable and vendor financing payables associated with capital expenditures. For the nine months ended September 30, 2023, we had capitalized interest of $65 million.

Through September 2023, we had asset sales and transactions of $39 million, including approximately $34 million in net proceeds related to certain wireless towers. Approximately $13 million of the proceeds related to wireless towers that qualified as sales, included in investing cash flows, and the remaining $21 million in proceeds related to wireless towers that were subject to sale-leaseback agreements and included in financing cash flows. After taking these sales and transactions into account, along with our capital expenditures, our net capital activity was $2,843 million as of September 30, 2023.

(6) Intangibles:

We consider whether the carrying values of finite-lived intangible assets and property plant and equipment may not be recoverable or whether the carrying value of certain indefinite-lived intangible assets were impaired. There was no impairment of either intangibles or property plant and equipment as of September 30, 2023 and 2022.

‎

1614

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)
September 30, 2022
December 31, 2021
Property, plant and equipment
$
11,948
$
9,707
Less: Accumulated depreciation
(1,101)
(508)
Property, plant and equipment, net
$
10,847
$
9,199

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

For the three months ended September 30,
For the three months ended September 30,
($ in millions)
2022
2021
Depreciation expense
$
215
$
191
Successor
Predecessor
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
($ in millions)
2022
2021
2021
Depreciation expense
$
629
$
318
$
407

~~As a result~~The balances of ~~applying fresh start accounting on the Effective Date, Frontier’s fixed~~these assets were reduced from $13.0 billion to $8.5 billion. For the nine months ended September 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 nine months ended September 30, 2022, our capital expenditures were $1,860 million. In addition, we had $431 million of capital expenditures that were received but not paid~~ as of September 30, ~~2022.~~

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

~~The components of other intangibles as of September 30, 2022~~2023 and December 31, ~~2021~~2022 was as ~~follows~~:follows:

September 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
$
(103)
$
697
$
800
$
(48)
$
752
Customer Relationships - Wholesale
3,491
(309)
3,182
3,491
(146)
3,345
Trademarks & Tradenames
150
(43)
107
150
(20)
130
Total other intangibles
$
4,441
$
(455)
$
3,986
$
4,441
$
(214)
$
4,227



	September 30, 2023						December 31, 2022
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
($ in millions)	Amount		Amortization		Amount		Amount		Amortization		Amount

Intangibles:
Customer Relationships - Business	$	800	$	(176)	$	624	$	800	$	(121)	$	679
Customer Relationships - Wholesale		3,491		(527)		2,964		3,491		(364)		3,127
Trademarks & Tradenames		150		(73)		77		150		(50)		100
Total other intangibles	$	4,441	$	(776)	$	3,665	$	4,441	$	(535)	$	3,906

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Amortization expense was as ~~follows~~:follows:

For the three months ended September 30,
For the three months ended September 30,
($ in millions)
2022
2021
Amortization expense
$
81
$
82
Successor
Predecessor
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
($ in millions)
2022
2021
2021
Amortization expense
$
241
$
134
$
99


	For the three months ended September 30,				For the nine months ended September 30,
($ in millions)	2023		2022		2023		2022

Amortization expense	$	80	$	81	$	241	$	241

~~Following the Effective Date, we~~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 5five years for our trademarks and tradenames.

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 September 30, ~~2022~~2023 and December 31, ~~2021.~~2022. 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.



	September 30, 2022				December 31, 2021				September 30, 2023				December 31, 2022

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

Total debt	$	8,966	$	8,015	$	7,777	$	7,996	$	11,235	$	9,977	$	8,963	$	8,079

(

‎

1815

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), and~~

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

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

For the nine months ended
September 30, 2022

Principal
January 1,
Payments
New
September 30,
($ in millions)
2022
and Retirements
Borrowings
2022





Secured debt issued by Frontier
$
6,927
$
(11)
$
1,200
$
8,116
Secured debt issued by subsidiaries
100
-
-
100
Unsecured debt issued by subsidiaries
750
-
-
750
Principal outstanding
$
7,777
$
(11)
$
1,200
$
8,966






Less: Debt Issuance Costs
(13)

(29)
Less: Current Portion
(15)

(15)
Plus: Unamortized fair value adjustments ⁽¹⁾
219
198
Total Long-term debt
$
7,968

$
9,120



			For the nine months ended ‎September 30, 2023
			Principal
	January 1,		Payments		New		September 30,
($ in millions)	2023		and Retirements		Borrowings		2023

Secured debt issued by Frontier	$	8,113	$	(11)	$	750	$	8,852
Secured debt issued by subsidiaries		100		(53)		1,586		1,633
Unsecured debt issued by subsidiaries		750		-		-		750
Principal outstanding	$	8,963	$	(64)	$	2,336	$	11,235

Less: Debt issuance costs		(28)						(68)
Less: Current portion		(15)						(15)
Less: Debt premium / (discount)		-						(64)
Plus: Unamortized fair value adjustments ⁽¹⁾		190						170
Total Long-term debt	$	9,110					$	11,258

⁽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.

‎

1916

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Additional information regarding our senior secured debt, and ~~unsecured total long-term~~subsidiary debt ~~as of~~at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 is as ~~follows:~~follows:

September 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
$
1,453
6.063% (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 5/15/2030
1,200
8.750%
-
n/a
Second lien notes due 5/1/2029
1,000
6.750%
1,000
6.750%
Second lien notes due 11/1/2029
750
5.875%
750
5.875%
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%
Total secured debt issued by Frontier
8,116
6,927
Secured debt issued by subsidiaries
Debentures due 11/15/2031
100
8.500%
100
8.500%
Total 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%
Total unsecured debt issued by
subsidiaries
750
750
Principal outstanding
$
8,966
6.366% ⁽¹⁾
$
7,777
5.702% ⁽¹⁾


	September 30, 2023			December 31, 2022
	Principal		Interest	Principal		Interest
($ in millions)	Outstanding		Rate	Outstanding		Rate

Secured debt issued by Frontier
Term loan due 10/8/2027	$	1,438	9.180% (Variable)	$	1,450	8.500% (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 5/15/2030		1,200	8.750%		1,200	8.750%
First lien notes due 3/15/2031		750	8.625%		-	-
Second lien notes due 5/1/2029		1,000	6.750%		1,000	6.750%
Second lien notes due 11/1/2029		750	5.875%		750	5.875%
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%
Total secured debt issued by Frontier		8,851			8,113

Secured debt issued by subsidiaries
Debentures due 11/15/2031		47	8.500%		100	8.500%
Series 2023-1 Revenue Term Notes Class A-2 due 7/20/2028		1,120	6.600%		-
Series 2023-1 Revenue Term Notes Class B due 7/20/2028		155	8.300%		-
Series 2023-1 Revenue Term Notes Class C due 7/20/2028		312	11.500%		-
Total secured debt issued by subsidiaries		1,634			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%
Total unsecured debt issued by subsidiaries		750			750

Principal outstanding	$	11,235	7.098% ⁽¹⁾	$	8,963	6.760% ⁽¹⁾

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

~~Credit Facilities~~issuances. The anticipated repayment date of July 2028 is used for the Series 2023-1 Revenue Term Notes, classes A-2 B, and ~~Term Loans~~C when calculating the weighted average.

Summaries of our various credit and debt agreements, including our credit agreements and the 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 the respective~~including agreements filed as ~~an Exhibit to our Annual Report on Form 10-K.~~exhibits thereto.

~~First Lien Notes due 2030~~
‎

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 (the “First Lien 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 our fiber customer base, and for general corporate purposes.

The First Lien Notes due 2030 are secured by a first-priority lien, subject to permitted liens, by all the assets that secure the issuer’s obligations under its senior secured credit facilities and existing senior secured notes. The First Lien Notes due 2030 were issued pursuant to an indenture, dated as of May 12, 2022, by and among

2017

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

~~Frontier Holdings, the guarantors party thereto, the grantor party thereto, Wilmington Trust, National Association, as trustee~~

Credit Facilities and ~~JPMorgan Chase Bank, N.A., as collateral agent.~~Term Loans

Revolving Facility

On ~~May 12, 2022,~~March 8, 2023, Frontier Holdings entered into an amendment ~~(“Amendment No. 2”)~~ to its Revolving ~~Facility. Amendment No. 2,~~Facility, which, among other things, ~~increased~~(i) extends the maturity with respect to the commitments of certain revolving lenders (in addition to certain amendments to springing maturity provisions); (2) amends the financial maintenance covenant for the benefit of the Revolving Facility by ~~an additional $275 million,~~increasing the maximum first lien leverage ratio thereunder to ~~a total of $900 million~~3.50:1.00, with step-downs to: (a) 3.25:1.00 in ~~aggregate principal amount of revolving credit commitments,~~2026; and ~~provided that the Revolving Facility be amended~~(b) 3.00:1.00 in 2027 and continuing thereafter; and (3) provides for certain amendments to ~~reflect Secured Overnight Financing Rate “SOFR” based interest rates (including a customary spread adjustment).~~debt incurrence and other restrictive covenants.

The $900 million Revolving Facility will be available on a revolving basis until April 30, ~~2025.~~2025 and with respect to certain lenders currently representing $850 million thereunder, the maturity date of the Revolving Facility will be the earliest of (a) April 30, 2028, (b) 91 days prior to the maturity date of the term loan facility, (c) unless such notes have been repaid and/or redeemed in full, the date that is 91 days prior to the stated maturity date of our 5.875% First Lien Notes due 2027, and (d) unless such notes have been repaid and/or redeemed in full, the date that is 91 days prior to the stated maturity date of our 5.000% First Lien Notes due 2028.

At Frontier’s election, the determination of interest rates for the Revolving Facility is based on margins over the alternate base rate or over ~~SOFR.~~Secured Overnight Financing Rate (“SOFR”). The interest rate margin with respect to any SOFR loan under the ~~Exit~~ Revolving Facility is 3.50% or 2.50% with respect to any alternate base rate loans, with a 0% 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 currently limited to certain specified pledged entities and substantially all personal property of Frontier Video, which same assets also secure ~~the~~our First Lien Notes. The Revolving Facility is guaranteed by the same subsidiaries that guarantee the First Lien Notes. After giving effect to ~~$133~~approximately $249 million of ~~revolver~~ letters of credit previously outstanding, ~~as of September 30, 2022, the Company has $767~~we have $651 million of available borrowing capacity under the Revolving Facility.

Senior Secured Notes

First Lien Notes due 2031

On March 8, 2023, our consolidated subsidiary Frontier Communications Holdings, LLC (“Frontier Holdings”) issued $750 million aggregate principal amount of 8.625% first lien secured notes due 2031 (the “First Lien Notes due 2031”) in an offering pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). We intend to use the net proceeds of the offering to fund capital investments and operating costs arising from our fiber build and expansion of our fiber customer base, and for general corporate purposes.

The First Lien Notes due 2031 are secured by a first-priority lien, subject to permitted liens, by all the assets that secure the issuer’s obligations under its senior secured credit facilities and existing senior secured notes. The First Lien Notes due 2031 were issued pursuant to an indenture, dated as of March 8, 2023, by and among Frontier Holdings, the guarantors party thereto, the grantor party thereto, Wilmington Trust, National Association, as trustee and JPMorgan Chase Bank, N.A., as collateral agent.

Fiber Securitization Transaction

Secured Fiber Network Revenue Term Notes

On August 8, 2023, our limited-purpose, bankruptcy remote, subsidiary, Frontier Issuer, issued $1.586 billion aggregate principal amount of secured Fiber Term Notes, less $58 million in original issue discounts, consisting of $1.120 billion 6.60% Series 2023-1, Class A-2 term notes, $155 million 8.30% Series 2023-1, Class B term

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

notes and $312 million 11.50% Series 2023-1, Class C term notes, each with an anticipated term ending in July 2028 (such anticipated repayment date, the “ARD”), in an offering exempt from registration under the Securities Act. We intend to use the proceeds from the offering of the Fiber Term Notes for, among other things, general corporate purposes, including potential investments or expenditures, such as capital expenditures and research and development, in line with our fiber expansion and copper migration strategies. In addition, we used a portion of the proceeds to retire and defease certain outstanding indebtedness of our subsidiary Frontier Southwest Incorporated.

The Fiber Term Notes were issued as part of a securitization transaction, pursuant to which the Company’s fiber network assets and associated customer contracts in certain neighborhoods in the Dallas, Texas metropolitan area were contributed to AssetCo, a direct, wholly-owned subsidiary of Frontier Issuer. The Fiber Term Notes are secured by these fiber assets and associated customer contracts. The Fiber Term Notes were issued pursuant to an indenture, dated as of August 8, 2023 (the “Base Indenture”), as supplemented by the Series 2023-1 Supplement thereto, dated as of August 8, 2023 (the “Series 2023-1 Supplement”), in each case entered into by and among the Issuer, Frontier Dallas TX Fiber 1 LLC (“AssetCo”) and Citibank, N.A. as the indenture trustee (the “Trustee”).

The Base Indenture, together with the Series 2023-1 Supplement and Series 2023-2 Supplement, and any other series supplements to the Base Indenture, are referred to herein as the “Fiber Term Notes Indenture.”

The table below sets forth the material terms of Fiber Term Notes as of September 30, 2023:


Security	Issue Date	Amount Outstanding		Interest Rate ⁽¹⁾	Anticipated Repayment Date	Final Maturity Date
Series 2023-1, Class A-2 term notes	August 8, 2023	$	1,120,000,000	6.60%	July 20, 2028	August 20, 2053
Series 2023-1, Class B term notes	August 8, 2023	$	155,000,000	8.30%	July 20, 2028	August 20, 2053
Series 2023-1, Class C term notes	August 8, 2023	$	312,000,000	11.50%	July 20, 2028	August 20, 2053

⁽¹⁾If Frontier Issuer has not repaid or refinanced any Fiber Term Note prior to the monthly payment date in July of 2028, additional interest will accrue thereon in an amount equal to the greater of (i) 5.00% per annum and (ii) the excess amount, if any, by which the sum of the following exceeds the interest rate for such note: (A) the yield to maturity (adjusted to a “mortgage-equivalent basis” pursuant to the standards and practices of the Securities Industry and Financial Markets Association) on the ARD for such note of the United States Treasury Security having a remaining term closest to 10 years plus (B) 5.00% plus (C) the post-ARD note spread applicable to such Note.

While the Fiber Term Notes are outstanding, scheduled payments of interest are required to be made on the Notes on a monthly basis. From and after the ARD, principal payments will also be required to be made on the Notes on a monthly basis. No principal payments will be due on the Fiber Term Notes prior to the ARD, unless certain rapid amortization or acceleration triggers are activated.

The Fiber Term Notes are subject to a series of covenants and restrictions customary for transactions of this type. These covenants and restrictions include (i) that Frontier Issuer maintains a liquidity reserve account to be used to make required payments in respect of the Notes, (ii) provisions relating to optional and mandatory prepayments, including specified make-whole payments in the case of certain optional prepayments of the Fiber Term Notes prior to the monthly payment date in July 2026, (iii) certain indemnification payments in the event, among other things, that the transfers of the assets pledged as collateral for the Fiber Term Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. As provided in the Base Indenture, the Fiber Term Notes are also subject to rapid amortization in the event of a failure to maintain a stated debt service coverage ratio. A rapid amortization may be cured if the debt service coverage ratio exceeds a certain threshold for a certain period of time, upon which cure, regular amortization, if any, will resume. The Fiber Term Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

with respect to the Fiber Term Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective and certain judgments.

Securitized Financing Facility

In connection with the Fiber Term Notes, Frontier Issuer entered into a financing facility for the issuance of up to $500 million in Series 2023-2 Secured Fiber Network Revenue Variable Funding Senior Notes, Class A-1 (the “Variable Funding Notes”). Frontier Issuer had not drawn on the Variable Funding Notes as of September 30, 2023.

The Variable Funding Notes were issued pursuant to the Base Indenture, as supplemented by the Series 2023-1 Supplement and the Series 2023-2 Supplement, dated as of August 24, 2023 (the “Series 2023-2 Supplement”), in each case entered into by and among Frontier Issuer, AssetCo and the Trustee.

Drawings and certain additional terms related to the Variable Funding Notes are governed by the Class A-1 Note Purchase Agreement, dated as of August 24, 2023 (the “Variable Funding Note Purchase Agreement”), among Frontier Issuer, AssetCo, Frontier Communications Holdings, LLC (as the “Manager”), certain conduit investors, financial institutions and funding agents, and Barclays Bank plc, as administrative agent. The Variable Funding Notes will be governed, in part, by the Variable Funding Note Purchase Agreement and by certain generally applicable terms contained in the Indenture. The initial anticipated repayment date for the Variable Funding Notes is July 2026, and Frontier Issuer and Manager have the option to elect two one-year extensions of the anticipated repayment date. Following the initial anticipated repayment date (and any extensions thereof), additional interest will accrue on the Variable Funding Notes equal to 5.0% per annum.

Defeasance of Notes

As of September 30, 2023, the Company extinguished $53 million of notes issued by its subsidiary Frontier Southwest Incorporated and transferred assets to an escrow account to pay the future interest and principal on the remaining $47 million of notes, which remain on the Company’s balance sheet as outstanding debt and restricted assets.

(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~~

During the nine month period ended September 30, 2023, we incurred $48 million in restructuring charges and other costs consisting of $48 million of severance and employee costs resulting from workforce reductions, of which, approximately $23 million and $15 million related to ~~our Chapter 11 Cases that were incurred after~~larger workforce reductions during the ~~Effective Date as well as professional fees related to our restructuring~~second and ~~transformation that were incurred prior to the Petition Date.~~

third quarters of 2023, respectively.

During the nine month period ended September 30, 2022, we incurred $88 million in restructuring charges and other costs consisting of $44 million of lease impairment costs from the strategic exit of certain facilities, $35 million of severance and employee costs resulting from workforce reductions, and $9 million of costs related to other restructuring activities. Of the $35 million in severance and employee costs, approximately $26 million related to the second quarter of 2022, as a result of larger workforce ~~reductions in that period.~~reductions.

As part of Frontier’s cost reduction strategy, certain real estate leases will not be retained, or will be marketed for sublease. We evaluated the related right-of-use assets and other lease related assets for impairment under ASC 360. In connection with this analysis, we reassessed our 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 four months ended April 30, 2021, we incurred $7 million of severance and employee costs resulting from workforce reductions. During the five months ended September 30, 2021, we incurred $19 million in expenses consisting of $6 million of severance and employee costs resulting from workforce reductions and $13 million of professional fees related to our balance sheet restructuring.

2120

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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
35
Other costs
9
Cash payments during the period
(45)
Balance at September 30, 2022
$
6



($ in millions)

Balance at January 1, 2023	$	9
Severance expense		48
Cash payments during the period		(39)
Balance at September 30, 2023	$	18

‎

~~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:

For the three months ended September 30,
For the three months ended September 30,
($ in millions)
2022
2021
Interest and dividend income
$
16
$
1
Pension benefit
24
23
OPEB costs
(5)
(59)
OPEB remeasurement gain
84
-
Pension remeasurement gain
91
-
All other, net
1
(2)
Total investment and other income (loss), net
$
211
$
(37)


	For the three months ended ‎September 30,				For the nine months ended ‎September 30,
($ in millions)	2023		2022		2023		2022

Interest and dividend income	$	22	$	16	$	60	$	24
Pension benefit		5		24		14		74
OPEB costs		(2)		(5)		(7)		(13)
OPEB remeasurement gain		46		84		38		234
Pension remeasurement gain		-		91		-		91
All other, net		(4)		1		(4)		-
Total investment and other income, net	$	67	$	211	$	101	$	410

Successor
Predecessor
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
($ in millions)
2022
2021
2021
Interest and dividend income
$
24
$
1
$
-
Pension benefit
74
36
6
OPEB costs
(13)
(76)
(4)
OPEB remeasurement gain
234
-
-
Pension remeasurement gain
91
-
-
All other, net
-
-
(1)
Total investment and other income (loss), net
$
410
$
(39)
$
1

In the first nine months of ~~2022,~~2023, Frontier amended the medical coverage for certain postretirement benefit plans, which resulted in an $38 million net remeasurement ~~gains~~gain. The net gain was comprised of ~~$234~~a loss of $20 million in the first quarter, offset by a remeasurement gain of $12 million in the second quarter, and a gain of $46 million in the third quarter, primarily due to discount rate changes. ~~As a result of pension settlement charges incurred during the period,~~ ~~Frontier remeasured its pension plan~~ ~~obligations,~~ ~~resulting in a remeasurement gain of $91 million for the nine months ended September 30, 2022.~~ ~~Refer to Note 15 for further details.~~

Pension and OPEB benefit ~~(costs)~~(cost) consist of interest income ~~(loss)~~(costs), expected return on plan assets, amortization of prior service ~~costs (credit)~~(costs) and recognition of actuarial ~~gain (loss).~~(gain) loss. Service cost components of pension and OPEB benefit costs are included in “Selling, general, and administrative expenses” on our consolidated statements of income.

‎

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

(11) Stock Plans:

~~Upon emergence, the~~ Frontier Communications Parent, Inc. has one stock-based compensation plan under which grants are made and awards remain outstanding: the 2021 Management Incentive Plan (the “2021 Incentive Plan”) ~~was approved and adopted by the Board.~~. The 2021 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. Equity awards have been issued in the form of time-based restricted stock units (RSUs) and performance-based stock units (PSUs). As of September 30, ~~2022, unvested awards relating to~~2023, approximately ~~2,090,000~~4,155,000 shares were ~~outstanding~~available to grant under ~~our long-term incentive plan. Further, upon emergence, all outstanding stock-based compensation plans of Old Frontier were terminated.~~the 2021 Incentive Plan.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Restricted Stock Units

The following summary presents information regarding unvested RSUs outstanding 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
1,078
$
25.86
$
25
Restricted stock vested
(862)
$
25.73
$
(20)
Restricted stock forfeited
(140)
$
25.86

Balance at September 30, 2022
2,559
$
25.83
$
60


		Weighted
		Average
	Number of	Grant Date		Aggregate
	Shares	Fair Value		Fair Value
	(in thousands)	(per share)		(in millions)
Balance at January 1, 2023	2,514	$	25.78	$	64
Restricted stock units granted	1,364	$	23.19	$	21
Restricted stock units vested	(1,179)	$	25.73	$	(18)
Restricted stock units forfeited	(166)	$	25.06
Balance at September 30, 2023	2,533	$	24.46	$	40

For purposes of determining compensation expense, the fair value of each RSU grant is based on the closing price of our common stock on the date of grant. The non-vested RSUs granted in 2021, 2022, and ~~2022~~2023 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 RSU awards that is deferred at September 30, ~~2022~~2023 was ~~$56~~$46 million and the weighted average vesting period over which this cost is expected to be recognized is approximately ~~2 years.~~1 year.

None of the RSU awards may be sold, assigned, pledged, or otherwise transferred, voluntarily or involuntarily, by the employees until the applicable time-based restrictions lapse, subject to limited exceptions. ~~RSUs, when vested, will be paid out in the form of common stock.~~ Compensation expense, including compensation related to non-employee directors, recognized in “Selling, general, and administrative expenses”, of $29 million and $27 million for the nine ~~month-period~~month-periods ended September 30, 2023, and 2022, ~~has~~respectively, have been recorded in connection with RSUs.

Performance Stock Units

Under the 2021 Incentive Plan, a target number of ~~PSUs are~~performance units (“PSU”) have been awarded to ~~certain~~applicable participants with respect to a three-year performance ~~period (a~~periods (each a “Measurement Period”). The performance metrics under the 2021, 2022, and ~~2022~~2023 PSU ~~grants~~awards 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~~our 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 on a cumulative basis for each performance metric, and the number of awards earned will be determined at the end of the three-year Measurement Period 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 PSUs. The payout of the 2022 and 2023 PSUs can range from 0% to a maximum award payout of 200% of the target PSUs.

The number of PSU awards earned at the end of a Measurement Period may be more or less than the number of target PSUs granted as a result of performance. An executive must maintain a satisfactory performance rating during the Measurement Period and, except for limited circumstances, 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 PSUs earned for the Measurement Period in the first quarter of the year following the end of the Measurement Period. PSU awards, to the extent earned, will be paid out in the form of common stock on a one-for-one basis.

2422

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

~~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.~~

The number of PSU awards earned at the end of the Measurement Period may be more or less than the number of target PSUs granted as a result of performance. An executive must maintain a satisfactory performance rating during the Measurement Period and generally 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. PSUs, to the extent earned, will be paid out in the form of common stock shortly following this determination.

Under ASC 718, Stock Based Compensation Expense, a grant date, and the fair value of a performance award are determined once the targets are finalized. ~~All~~For the 2021, 2022 and 2023 PSU awards, targets for all of the ~~2021 awards~~metrics have been fully set for each performance period and the ~~fair value of the grants~~related expense will be amortized over the appropriate ~~period. For the 2022 PSU awards, the targets related to two of the three~~ performance ~~metrics have not been established. As a result, we are recognizing expense with respect to~~ ~~1/3~~ ~~of the aggregate outstanding 2022 PSU awards over the appropriate~~ period.

The following summary presents information regarding ~~performance shares~~PSU awards as of September 30, ~~2022~~2023, and changes during the nine months then ended with regard to ~~performance shares~~PSUs 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
388
$
25.66
$
9
Target performance shares forfeited
(47)
$
25.62
Balance at September 30, 2022
3,485
$
25.62
$
82


			Weighted
			Average
	Number of		Award Date
	Shares		Fair Value
	(in thousands)		(per share) ⁽¹⁾
Balance at January 1, 2023	3,485	$	25.62
Target performance shares awarded, net	1,040	$	24.36
Target performance shares forfeited	(33)	$	25.59
Balance at September 30, 2023	4,492	$	25.33

⁽¹⁾ Represents the weighted average of the closing price of our stock on the date of the awards.

For purposes of determining compensation expense, the fair value of each ~~performance share grant~~PSU award 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 nine months ended September 30, 2023, and 2022, we recognized net compensation expense, reflected in “Selling, general, and administrative expenses,” of $52 million and $27 million, respectively, related to PSU awards.

Non-Employee Directors

Compensation expense related to the board of directors, recognized in “Selling, general, and administrative expenses”, was $1 million for the nine months ended September 30, 2023.

‎

2523

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:~~rates:

Successor
Predecessor
For the three months ended September 30,
For the nine months ended September 30,
For the five months ended September 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
14.7
13.1
2.8
0.5
Changes in certain deferred tax balances
2.1
1.5
-
-
Restructuring cost
-
-
-
0.3
Fresh start and reorganization adjustments
-
-
-
(24.9)
Sec.162(m) - nondeductible Executive Compensation
1.5
2.5
-
-
All other, net
(0.8)
(0.3)
0.9
-
Effective tax rate
38.5
%
37.8
%
24.7
%
(3.1)
%



	For the three months ended ‎September 30,				For the nine months ended ‎September 30,
	2023		2022		2023		2022

Consolidated tax provision at federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
State income tax provisions, net of federal
income tax benefit	(4.3)		14.7		5.1		13.1
Changes in certain deferred tax balances	-		2.1		-		1.5
Tax reserve adjustment	(3.0)		-		(3.1)		-
Tax Credit	6.0		-		6.3		-
Sec.162(m) - nondeductible Executive Compensation	(18.5)		1.5		(19.1)		2.5
All other, net	(0.5)		(0.8)		(0.5)		(0.3)
Effective tax rate	0.7	%	38.5	%	9.7	%	37.8	%

Frontier considered positive and negative evidence in regard to evaluating certain state deferred tax assets during the third quarter of ~~2022,~~2023, including the development of recent years of pre-tax book losses. On the basis of this evaluation, a valuation allowance of ~~$77~~$28 million ($6122 million net of federal benefit) was recorded as of September 30, ~~2022.~~2023.

The effective rate for the three and nine months ended September 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.

The effective rate changes between the three and nine months ended September 30, 2022, as compared to 2021 are primarily due to, as described more fully in Note 1, the Company emergence from bankruptcy on April 30, 2021, and 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”).

The Inflation Reduction Act was signed into law on August 16, 2022. The law contains numerous changes to tax laws effective January 1, 2023. The Company ~~is currently evaluating~~evaluated the effects ~~if any, of these changes.~~and does not believe the Company will be materially impacted by the Inflation Reduction Act.

‎

2624

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(13) Net Earnings Per Share:

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

($ in millions and shares in thousands, except per share amounts)
For the three months ended September 30,
For the three months ended September 30,
2022
2021
Net income used for basic and diluted earnings
per share:
Total basic net income
attributable to Frontier common shareholders
$
120
$
126
Effect of loss related to dilutive stock units
-
-
Total diluted net income
attributable to Frontier common shareholders
$
120
$
126
Basic earnings per share:
Total weighted average shares and unvested restricted stock
awards outstanding - basic
244,984
244,403
Less: Weighted average unvested restricted stock awards
-
-
Total weighted average shares outstanding - basic
244,984
244,403
Basic net earnings per share
attributable to Frontier common shareholders
$
0.49
$
0.52
Diluted earnings per share:
Total weighted average shares outstanding - basic
244,984
244,403
Effect of dilutive restricted stock awards
228
1,264
Total weighted average shares outstanding - diluted
245,212
245,667
Diluted net earnings per share
attributable to Frontier common shareholders
$
0.49
$
0.51


	For the three months ended September 30,				For the nine months ended September 30,
($ in millions and shares in thousands, except per share amounts)	2023		2022		2023		2022
Net income used for basic and diluted earnings
per share:
Total basic net income
attributable to Frontier common shareholders	$	11	$	120	$	12	$	286
Effect of loss related to dilutive stock units		-		-		-		-
Total diluted net income
attributable to Frontier common shareholders	$	11	$	120	$	12	$	286

Basic earnings per share:
Total weighted average shares and unvested restricted
stock awards outstanding - basic		245,761		244,984		245,431		244,711
Less: Weighted average unvested restricted stock awards		-		-		-		-
Total weighted average shares outstanding - basic		245,761		244,984		245,431		244,711

Basic net earnings per share
attributable to Frontier common shareholders	$	0.05	$	0.49	$	0.05	$	1.17

Diluted earnings per share:
Total weighted average shares outstanding - basic		245,761		244,984		245,431		244,711
Effect of dilutive performance stock awards		1,686		-		1,493		-
Effect of dilutive restricted stock awards		-		228		412		369
Total weighted average shares outstanding - diluted		247,447		245,212		247,336		245,080

Diluted net earnings per share
attributable to Frontier common shareholders	$	0.05	$	0.49	$	0.05	$	1.17

‎

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Successor
Predecessor
($ in millions and shares in thousands, except per share amounts)
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
2022
2021
2021
Net income used for basic and diluted earnings
per share:
Total basic net income
attributable to Frontier common shareholders
$
286
$
225
$
4,541
Effect of loss related to dilutive stock units
-
-
-
Total diluted net income
attributable to Frontier common shareholders
$
286
$
225
$
4,541
Basic earnings per share:
Total weighted average shares and unvested restricted stock
awards outstanding - basic
244,711
244,402
104,799
Less: Weighted average unvested restricted stock awards
-
-
(215)
Total weighted average shares outstanding - basic
244,711
244,402
104,584
Basic net earnings per share
attributable to Frontier common shareholders
$
1.17
$
0.92
$
43.42
Diluted earnings per share:
Total weighted average shares outstanding - basic
244,711
244,402
104,584
Effect of dilutive stock units
-
-
340
Effect of dilutive restricted stock awards
369
1,198
-
Total weighted average shares outstanding - diluted
245,080
245,600
104,924
Diluted net earnings per share
attributable to Frontier common shareholders
$
1.17
$
0.92
$
43.28

In calculating diluted net income per common share for the nine months ended September 30, ~~2022,~~2023, the effect of ~~all~~certain outstanding PSUs is ~~excluded from~~included in the computation as their respective performance metrics have ~~not~~ been satisfied as of September 30, ~~2022.~~2023.

~~Stock Units~~

At September 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.

‎

2825

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 shareholders’ equity ~~(deficit)~~ and pension/postretirement benefit (OPEB) liabilities that, under GAAP, are excluded from net ~~loss.~~income.

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

Pension
OPEB
($ in millions)
Costs
Costs
Total
Balance at January 1, 2022 (Successor) ⁽¹⁾
$
-
$
60
$
60
Other comprehensive income
before reclassifications
-
8
8
Amounts reclassified from accumulated other
comprehensive income to net income
-
(8)
(8)
Net current-period other comprehensive
income
-
-
-
Balance at September 30, 2022 (Successor) ⁽¹⁾
$
-
$
60
$
60
Pension
OPEB
($ in millions)
Costs
Costs
Total
Balance at January 1, 2021 (Predecessor) ⁽¹⁾
$
(699)
$
(56)
$
(755)
Other comprehensive income
before reclassifications
270
74
344
Amounts reclassified from accumulated other
comprehensive loss to net income
19
(4)
15
Net current-period other comprehensive
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
-
46
46
Amounts reclassified from accumulated other
comprehensive income to net income
-
(2)
(2)
Net current-period other comprehensive
income
-
44
44
Balance at September 30, 2021 (Successor) ⁽¹⁾
$
-
$
44
$
44


	OPEB
($ in millions)	Costs
Balance at January 1, 2023 ⁽¹⁾	$	79
Other comprehensive income before reclassifications		33
Amounts reclassified from accumulated other
comprehensive income to net loss		(12)
Net current-period other comprehensive income		21
Balance at September 30, 2023 ⁽¹⁾	$	100


	OPEB
($ in millions)	Costs
Balance at January 1, 2022 ⁽¹⁾	$	60
Other comprehensive income before reclassifications		8
Amounts reclassified from accumulated other
comprehensive loss to net loss		(8)
Net current-period other comprehensive loss		-
Balance at September 30, 2022 ⁽¹⁾	$	60

⁽¹⁾~~Pension and~~ OPEB amounts are net of deferred tax balances of $23 million and $15 million as of January 1, ~~2022~~2023 and ~~$234 million as of January 1, 2021. The tax impact was $16~~2022,

respectively and $31 million and ~~$12~~$16 million as of September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

‎

~~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:


	Amount Reclassified from					Amount Reclassified from
	Accumulated Other					Accumulated Other
	Comprehensive Loss ⁽¹⁾					Comprehensive Income ⁽¹⁾
($ in millions)					Affected Line Item in									Affected Line Item in
	For the three months		For the three months		the Statement Where	For the three months ended				For the nine months ended				the Statement Where
Details about Accumulated Other	ended September 30,		ended September 30,		Net Income (Loss)	September 30,				September 30,				Net Income (Loss)
Comprehensive Loss Components	2022		2021		is Presented	2023		2022		2023		2022		is Presented
Amortization of OPEB Cost Items Prior-service costs	$	4	$	2	Income (Loss) before income taxes

Amortization of OPEB Cost Items Prior-service credits (costs)						$	6	$	4	$	16	$	10	Income (loss) before income taxes
Tax impact		-		(1)	Income tax benefit		(2)		-		(4)		(2)	Income tax benefit
	$	4	$	1	Net income (loss)	$	4	$	4	$	12	$	8	Net income (loss)

Successor
Predecessor
Amount Reclassified from
Accumulated Other
Comprehensive Loss ⁽¹⁾
($ in millions)
Affected Line Item in
For the nine months
For the five months
For the four months
the Statement Where
Details about Accumulated Other
ended September 30,
ended September 30,
ended April 30,
Net Income (Loss)
Comprehensive Loss Components
2022
2021
2021
is Presented
Amortization of Pension Cost Items
Actuarial losses
$
-
$
-
$
(24)
Income (Loss) before income taxes
Tax impact
-
-
5
Income tax benefit
$
-
$
-
$
(19)
Net income (loss)
Amortization of OPEB Cost Items
Prior-service costs
$
10
$
3
$
10
Actuarial losses
-
-
(5)
10
3
5
Income (Loss) before income taxes
Tax impact
(2)
(1)
(1)
Income tax benefit
$
8
$
2
$
4
Net income (loss)

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

‎

3026

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~~statements of income.

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

Pension Benefits
For the three months ended September 30,
For the three months ended September 30,
($ in millions)
2022
2021
Components of total pension benefit cost
Service cost
$
14
$
20
Interest cost on projected benefit obligation
22
26
Expected return on plan assets
(46)
(49)
Amortization of unrecognized loss
-
-
Net periodic pension (benefit)
(10)
(3)
Pension settlement costs
50
-
Pension remeasurement gain
(91)
-
Total pension (benefit)
$
(51)
$
(3)
Successor
Predecessor
Pension Benefits
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
($ in millions)
2022
2021
2021
Components of total pension benefit cost
Service cost
$
55
$
33
$
32
Interest cost on projected benefit obligation
71
44
31
Expected return on plan assets
(145)
(80)
(61)
Amortization of unrecognized loss
-
-
24
Net periodic pension (benefit) cost
$
(19)
$
(3)
$
26
Pension settlement costs
50
-
-
Pension remeasurement gain
(91)
-
-
Total pension (benefit) cost
$
(60)
$
(3)
$
26


	Pension Benefits
	For the three months ended ‎ September 30,				For the nine months ended ‎ September 30,
($ in millions)	2023		2022		2023		2022

Components of total pension benefit cost
Service cost	$	12	$	14	$	39	$	55
Interest cost on projected benefit obligation		31		22		97		71
Expected return on plan assets		(36)		(46)		(111)		(145)
Net periodic pension (benefit)		7		(10)		25		(19)
Pension settlement costs		-		50		-		50
Pension remeasurement gain		-		(91)		-		(91)
Total pension benefit cost (income)	$	7	$	(51)	$	25	$	(60)

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

The value of our pension plan assets ~~decreased $696~~increased $50 million from ~~$2,655~~$2,033 million at December 31, ~~2021~~2022 to ~~$1,959~~$2,083 million at September 30, ~~2022.~~2023. This ~~decrease~~increase primarily resulted from changes in the market value of investments of ~~$635~~$85 million ~~including~~net of plan expenses, and contributions of $116 million, offset by benefit payments to participants of ~~$233 million, partially offset by contributions of $172~~$151 million.

The pension plan contains provisions that provide certain employees with the option of receiving a lump sum payment upon retirement. Frontier’s accounting policy is to record these payments as a settlement only if, in the aggregate, they exceed the sum of the annual service and interest costs for the Pension Plan’s net periodic

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

pension benefit cost. During the nine months ended September 30, 2022, lump sum pension settlement payments to terminated or retired individuals amounted to $177 million, which exceeded the settlement threshold of $169 million, and as a result, Frontier recognized non-cash settlement charges totaling $50 million during the nine months ended September 30, 2022.

As a result of pension settlement charges incurred during the period, Frontier remeasured its pension plan obligations resulting in a remeasurement gain of $91 million for the nine months ended September 30, 2022. 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 and other income, net” on our consolidated statements of income.

‎

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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


	Postretirement
	For the three months ended ‎September 30,				For the nine months ended September 30,
($ in millions)	2023		2022		2023		2022

Components of net periodic postretirement benefit cost
Service cost	$	2	$	3	$	6	$	10
Interest cost on projected benefit obligation		8		9		23		23
Amortization of prior service credit (gain) loss recognized		(6)		(4)		(16)		(10)
OPEB remeasurement (gain) loss		(46)		(84)		(38)		(234)
Total periodic postretirement (benefit) cost	$	(42)	$	(76)	$	(25)	$	(211)

In the first nine months of 2023, Frontier amended the medical coverage for certain postretirement benefit plans, which resulted in a $38 million net remeasurement gain. The net gain was comprised of a loss of $20 million in the first quarter, offset by remeasurement gains of $12 million in the second quarter and $46 million in the third quarter, primarily due to discount rate changes.

For the nine months ended September 30 2022, Frontier amended the medical coverage for certain postretirement benefit plans, which necessitated a remeasurement of its OPEB obligations. This remeasurement resulted in the recognition of a net actuarial gain of $234 million, which was driven primarily from a higher assumed discount rate relative to the previous measurement date. ~~Upon emergence from bankruptcy,~~ Frontier ~~revised its accounting policy to recognize~~recognizes actuarial gains and losses in the period in which they occur. As such, this gain was recorded in “Investment and other income, net” on our consolidated statements of income.

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

Postretirement
For the three months ended September 30,
For the three months ended September 30,
($ in millions)
2022
2021
Components of net periodic postretirement benefit cost
Service cost
$
3
$
4
Interest cost on projected benefit obligation
9
7
Amortization of prior service benefit
(4)
(2)
OPEB remeasurement (gain) loss
(84)
54
Total periodic postretirement (benefit) cost
$
(76)
$
63
Successor
Predecessor
Postretirement
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
($ in millions)
2022
2021
2021
Components of net periodic postretirement benefit cost
Service cost
$
10
$
7
$
7
Interest cost on projected benefit obligation
23
12
9
Amortization of prior service benefit
(10)
(3)
(10)
OPEB remeasurement (gain) loss
(234)
67
-
Amortization of unrecognized loss
-
-
5
Net periodic postretirement (benefit) cost
$
(211)
$
83
$
11

During the nine months ended September 30, 2023, and 2022 we capitalized $14 million and $15 million of pension and OPEB expense, respectively, into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities. ~~During the four months of April 30, 2021, we capitalized $7 million of pension and OPEB expense into the cost~~

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

of our capital expenditures, as the costs relate to our engineering and plant construction activities. During the three and five months ended September 30, 2021, we capitalized $6 million and $10 million of pension and OPEB expense, respectively.

(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 expansion build, we have prioritized diversifying our vendor base and ~~finalizing~~solidifying partnership agreements with vendors for relevant labor and ~~materials.~~materials, to enable our build growth and customer expansion. Some of these key supplier agreements have ~~initial~~ ~~two-year~~multi-year terms ~~with an option~~and purchase commitments as we deem advisable in order to ~~extend for two years through 2025.~~strengthen future supply.

In ~~2015,~~2014, Citynet, a competitive local exchange carrier doing business in West Virginia, filed a qui tam action in federal court in the District Court for the Southern District of West Virginia against Frontier ~~accepted the FCC’s CAF Phase II offer, which provided $313 million in annual support through 2021, to make available 10 Mbps downstream/1 Mbps upstream broadband service to households across some~~West Virginia, Inc. and others on behalf of the ~~25 states where we operate.~~U.S. Government concerning billing practices relating to a government grant. The ~~deployment deadline was December 31, 2021,~~complaint became public in 2016 after the U.S. Government declined to participate in the case and ~~final review and audit of households is not complete. To~~instead allowed Citynet to pursue 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 CAF Phase II requirements, Frontier will be required to return a portionclaims on behalf 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.

U.S. On January 30, 2020, the FCC adopted an order establishing RDOF, a competitive reverse auction to provide support to serve high cost areas. Under the FCCs RDOF Phase I auction, 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 began receiving RDOF funding in the second quarter of 2022 and we will be required to complete the buildout to the awarded locations by~~ December ~~31, 2028, with interim target milestones over this period.~~

~~On July 27,~~6, 2022, the ~~Connecticut Public Utility Regulatory Authority (“PURA”) issued~~parties reached a ~~Notice~~settlement in principle. On May 23, 2023, the parties finalized the terms of ~~Violation~~the settlement agreement to resolve the case in its entirety, the terms of which were made part of the public record and ~~Assessment~~which requires a payment 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 alleged that Frontier and its contractors failed to comply with certain state excavation regulations which created public safety and compliance issues. The NOV prescribed a fine and ordered Frontier to discontinue certain underground fiber deployment work until the Company submitted a compliance plan to ensure compliance with the applicable regulations. Frontier submitted a compliance and inspection plan consistent with the NOV and paid the fine. On August 26, 2022, PURA approved Frontier’s compliance and inspection plan, and the Company is proceeding with underground fiber deployment in Connecticut.approximately $18 million.

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

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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, environmental, 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.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

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,~~transaction, 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,~~estimable, and we do not expect that any potential penalties, if ultimately incurred, will be material.

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.

In 2015, Frontier accepted the FCC’s CAF Phase II offer, which provided $313 million in annual support through 2021 in our current 25 states in return for the Company’s commitment to make broadband available to households within the CAF II eligible areas. The Company was required to complete the CAF II deployment by December 31, 2021. Thereafter, the FCC has been reviewing carriers’ CAF II program completion data, and if the FCC determines that the Company did not satisfy applicable FCC CAF Phase II requirements, Frontier could be required to return a portion of the funds previously received and may be subject to certain fines, or additional requirements and obligations.

On January 30, 2020, the FCC adopted an order establishing the RDOF competitive reverse auction to provide support to serve high-cost areas. Under the FCCs RDOF Phase I auction, we were 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). We began receiving RDOF funding in the second quarter of 2022 and we will be required to complete the buildout to the awarded locations by December 31, 2028, with interim target milestones over this period. To the extent that Frontier is unable to meet the milestones or construct to all locations by the required deadlines, Frontier could be required to return a portion of funds previously received and may be subject to certain fines or additional requirements and obligations.

The FCC currently classifies fixed consumer broadband services as information services, subject to light-touch regulation. In October 2023 the FCC released a notice of proposed rulemaking seeking to reclassify certain broadband services as lightly regulated telecommunications services imposing certain network neutrality requirements on the reclassified internet services. At this time, it remains uncertain whether the FCC will adopt these new network neutrality regulations and what impact that may have on Frontier’s business.

On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act (IIJA) into law. The legislation appropriated funding for the establishment of the Affordable Connectivity Program (ACP), and FCC-administered monthly, low-income broadband benefit program. The ACP provides qualified customers

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

up to $30 dollars per month (or $75 dollars per month for those on Tribal lands) to assist with their internet bill. Frontier is a participating provider in the ACP program. Absent additional funding, at present pace, the ACP funds will likely exhaust in 2024.

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

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

‎

3430

PART I. FINANCIAL INFORMATION (Continued)

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 implement strategic initiatives, such as our fiber build and fiber penetration and our ability to realize cost savings initiatives, our ability to comply with the covenants in the agreements governing our indebtedness, our capital expenditures 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.~~statements, except as required by law.

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 and revenue relative to historical levels that we are unable to offset;

economic uncertainty, volatility in financial markets, and rising interest rates could limit our ability to access capital or increase the cost of capital needed to fund business operations, including our fiber expansion plans;

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;

inflationary pressures on costs, including tightening labor markets and increased fuel and electricity costs, and 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~~financial condition or results of operations and hinder our fiber expansion plans;

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

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

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 existing 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;~~

3531

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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

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

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~~comply with the applicable CAF II and RDOF ~~obligations~~requirements and the risk of penalties or obligations to return certain CAF II and RDOF funds;

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

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;~~metrics or regulatory requirements;

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, ~~increased fuel and electricity costs, the cost of borrowing,~~ or other adverse changes resulting from epidemics, pandemics and outbreaks of contagious diseases, including the COVID-19 pandemic, natural disasters, economic or political instability, terrorist attacks and wars, including the ongoing war in Ukraine, or other adverse ~~public health~~widespread developments;

potential adverse impacts of ~~the COVID-19 pandemic on our business~~climate change and ~~operations, including potential disruptions to the work of our employees arising from health~~increasingly stringent environmental laws, rules and ~~safety measures such as social distancing, working remotely~~regulations, and ~~recent applicable federal, state~~customer expectations and ~~local mandates and prohibitions, our ability to~~other environmental liabilities;

3632

PART I. FINANCIAL INFORMATION (Continued)

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~~due to substantial common stock 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.

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive. 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.

‎

3733

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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

Frontier Communications Parent, Inc. is a leading communications and technology provider ~~of communications services in the United States,~~offering gigabit speeds that empower and connect approximately 2.9 million broadband subscribers, with approximately ~~2.8 million broadband customers and 14,746~~13,800 employees, operating in 25 states as of September 30, ~~2022.~~2023. We ~~offer~~are building critical infrastructure across the country with our fiber-optic network and cloud-based solutions, enabling secure high-speed connections. Rallied around our purpose of Building Gigabit America^TM, we are focused on supporting a ~~broad portfolio of communications services for consumer~~digital society, closing the digital divide, and ~~business customers. These services include data and Internet services, video services, voice services, access services, and advanced hardware and network solutions.~~ working toward a more sustainable environment.

Business Overview

~~Frontier’s purpose is to Build Gigabit America~~^TM ~~by expanding~~In 2020, we began the expansion and ~~transforming~~transformation of 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~~pass 10 million total ~~fiber passings by December 31, 2025.~~locations with fiber. We are prioritizing our ~~fiber build~~ activities to locations which we believe will provide the highest investment returns. In these expansion markets, we target penetration between 15% and 20% within 12 months and between 25% and 30% within 24 months. 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, operational efficiency, and improving the customer ~~experience, and operational efficiency.~~experience. We accomplished the following objectives in the third quarter of ~~2022:~~2023:

We ~~built~~passed 332,000 new fiber tolocations. As of September 30, 2023, we had approximately ~~351,000 locations, resulting in approximately 4.8~~6.2 million total locations passed with ~~fiber as of September 30, 2022.~~fiber.

We added ~~66,000~~79,000 fiber broadband customer net additions, resulting in fiber broadband customer growth of ~~15.8% versus~~19% as compared to the ~~third quarter of 2021.~~

oIn our Base Fiber Network of 3.2 million locations, we achieved broadband penetration of 42.9%, an increase of 140bps from the third quarter of 2021 and approaching our terminal penetration target of 45%.

oIn our Expansion Fiber markets, our target penetration is 15% - 20% after 12 months, 25% - 30% penetration after 24 months, and a terminal penetration of 45%. We have met or exceeded our targets for fiber locations constructed in 2020 and 2021:

~~Fiber locations constructed in 2020 reached broadband penetration of 22% and 42% after 12 and 24 months, respectively.~~

~~Fiber locations constructed in 2021 reached penetration of 17% after 12 months, which is within our target range of 15% - 20%.~~

prior year period. Fiber broadband customer net additions continued to outpace copper broadband customer net losses, resulting in ~~4,000~~16,000 total broadband customer net additions.

Consumer fiber revenue growth of 13% offset consumer copper revenue declines of 15%, resulting in positive consumer revenue growth for the first time as a new public company.

We continue to make progress towards achieving our annualized gross run rate cost savings target of $500 million by the end of 2023. As of September 30, 2023, we had realized ~~$244~~$484 million of gross annualized cost savings ~~as of September 30, 2022, achieving our 2023 target more than one year ahead of plan, and raised our target of gross annualized cost savings to $400 million by the end of 2024.~~since 2021.

~~During~~We completed $2.1 billion offering of secured fiber revenue term notes in August 2023, consisting of $1.6 billion of aggregate principal amount of secured fiber network revenue term notes and $500 million in Series 2023-2 Secured Fiber Network Revenue Variable Funding Senior Notes.

We announced the ~~third quarter~~relocation of ~~2022, markets remained volatile and the economic outlook remains uncertain. We continue~~our corporate headquarters to closely monitor market factors including potential disruptions in our supply chain, tightening labor markets, actual or perceived inflation, increased fuel and electricity costs, 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 conditionDallas, Texas.

3834

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Our fiber build plans include significant expenditures which could be adversely impacted by supply chain delays, actual or perceived inflation, tightening labor markets, increased fuel and electricity costs, increases in the cost of borrowing, and other risks. In addition to higher costs, the availability of building materials and other supply chain risks could negatively impact our ability to achieve the fiber build plans we are executing against. During the third quarter of 2023, markets remained volatile, and the economic outlook was uncertain. We continue to closely monitor and 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 September 30, 2022 the overall operational and financial impacts to our business have not been material.~~

Financial Overview – Operating Income

We reported operating income of ~~$169~~$114 million and ~~$284~~$169 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, a decrease of ~~$115~~$55 million.

We reported operating income of ~~$456~~$372 million and ~~Non-GAAP operating income of $841~~$456 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, a decrease of ~~$385~~$84 million. ~~After adjusting for the impact of fresh start accounting, our Non-GAAP operating income would have decreased by $365 million, as compared to the prior year period.~~

~~Our operating results~~Operating income decreased primarily due to decreases in ~~subsidy and other~~ revenue from voice and video services and ~~lease impairment charges,~~increases in depreciation and amortization expense. These factors were partially offset by ~~a reduction~~an increase in ~~cost of~~data and internet services, as well as decreases in selling, general and ~~depreciation~~administrative expenses and ~~amortization expense as a result of the lower asset bases established upon our implementation of fresh start accounting and lower video content costs~~other charges as compared to the corresponding ~~periods~~period in ~~2021.~~2022.

Presentation of Results of Operations

The sections below include tables that present customer counts, average monthly consumer revenue per customer (“ARPC”), average monthly revenue per unit (“ARPU”), 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, ARPC, ARPU, and ~~average monthly revenue per~~consumer customer churn 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.~~2022. 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 nine months ended September 30, ~~2022,~~2023, as compared to the financial results for the three and nine months ended September 30, ~~2021.~~2022.

‎

3935

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Customer Trends

As of or for the three months ended September 30,
(Customer and Employee Metrics in thousands)
2022
2021
% Change
Customers
Consumer
3,142
3,173
(1)
%
Consumer Customer Metrics
Net customer additions (losses)
(17)
(23)
(26)
%
ARPC
$
83.05
$
83.77
(1)
%
Customer Churn
1.76%
1.64%
7
%
Broadband Customer Metrics ⁽¹⁾
Fiber Broadband
Consumer customers
1,502
1,292
16
%
Business customers
104
95
9
%
Consumer net customer additions
64
29
121
%
Consumer customer churn
1.60%
1.56%
3
%
Consumer customer ARPU
$
62.97
$
63.35
(1)
%
Copper Broadband
Consumer customers
1,105
1,264
(13)
%
Business customers
120
138
(13)
%
Consumer net customer additions (losses)
(58)
(33)
76
%
Consumer customer churn
2.02%
1.89%
7
%
Consumer customer ARPU
$
49.65
$
45.44
9
%
Other Metrics
Employees
14,746
15,803
(7)
%


	As of or for the three months ended September 30,
(Customer and Employee Metrics in thousands)	2023		2022		% Change
Customers
Consumer		3,118		3,142	(1)	%

Consumer Customer Metrics
Net customer losses		(9)		(17)	(47)	%
ARPC	$	83.99	$	83.05	1	%
Customer Churn		1.70%		1.76%	(4)	%

Broadband Customer Metrics ⁽¹⁾
Fiber Broadband
Consumer customers		1,797		1,502	20	%
Business customers		117		104	13	%
Consumer net customer additions		75		64	17	%
Consumer customer churn		1.47%		1.60%	(8)	%
Consumer customer ARPU	$	64.49	$	62.97	2	%
Copper Broadband
Consumer customers		870		1,105	(21)	%
Business customers		97		120	(19)	%
Consumer net customer losses		(58)		(58)	-	%
Consumer customer churn		2.18%		2.02%	8	%
Consumer customer ARPU	$	54.62	$	49.65	10	%

Other Metrics
Employees		13,756		14,746	(7)	%

For the nine months ended September 30,
(Customer and Employee Metrics in thousands)
2022
2021
% Change
Consumer Customer Metrics
Net customer additions (losses)
(23)
(92)
(75)
%
ARPC
$
82.68
$
85.49
(3)
%
Customer Churn
1.55%
1.54%
1
%
Broadband Customer Metrics ⁽¹⁾
Fiber Broadband
Consumer net customer additions
166
54
207
%
Consumer customer churn
1.41%
1.50%
(6)
%
Consumer customer ARPU
$
62.84
$
62.38
1
%
Copper Broadband
Consumer net customer additions (losses)
(129)
(85)
52
%
Consumer customer churn
1.76%
1.73%
2
%
Consumer customer ARPU
$
47.93
$
44.47
8
%
⁽¹⁾
Amounts presented exclude related metrics for our wholesale customers.


		For the nine months ended September 30,
	(Customer and Employee Metrics in thousands)	2023		2022		% Change
	Consumer Customer Metrics
	Net customer losses		(15)		(23)	(35)	%
	ARPC	$	82.49	$	82.68	(0)	%
	Customer Churn		1.55%		1.55%	0	%

	Broadband Customer Metrics ⁽¹⁾
	Fiber Broadband
	Consumer net customer additions		222		166	34	%
	Consumer customer churn		1.36%		1.41%	(4)	%
	Consumer customer ARPU	$	63.10	$	62.84	0	%
	Copper Broadband
	Consumer net customer losses		(173)		(129)	34	%
	Consumer customer churn		1.91%		1.76%	9	%
	Consumer customer ARPU	$	51.81	$	47.93	8	%

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

‎

4036

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Customers

We experienced a decrease in consumer customers of approximately 1% as of September 30, ~~2022,~~2023, as compared to the prior year period.

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 initiatives resulted in an increase in the number of our consumer broadband customers and a migration of our customer base to fiber.

We lost approximately 9,000 and 15,000 consumer customers for the three and nine months ended September 30, 2023, and lost approximately 17,000 and 23,000 consumer customers for the three and nine months ended September 30, 2022, driven by losses in copper broadband, voice and video customers, offset by growth in fiber broadband customers.

In the three and nine months ended September 30, 2023, we experienced a net gain of consumer broadband customers of approximately 17,000 and 49,000 as compared to a net gain of approximately 6,000 and 37,000 for the three and nine months ended September 30, 2022.

oThe average monthly consumer revenue per customer (“consumer ARPC”) ~~decreased $0.72,~~increased $0.94, or 1%, to ~~$83.05~~$83.99 for the three months ended September 30, ~~2022,~~2023, compared to the prior year ~~period;~~period. The slight increase was driven primarily by growth in fiber data and ~~decreased $2.81, or 3%, to $82.68 for the nine months ended September 30, 2022, compared to the prior year period.~~

~~The decrease for the quarter ended September 30, 2022, was primarily a result of decreased video~~value-added services ~~and consumer voice services, slightly~~along with price increases, partially offset by ~~increased fiber data as well as price adjustments and promotional roll-offs on our~~declines in 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 historically been a material part of the overall ARPC. ~~In our expansion markets,~~Going forward, we expect ~~fiber~~moderate movements in ARPC as our customer mix becomes more weighted towards broadband ~~penetration of 15% and 20% within 12 months and 25% - 30% after 24 months.~~services.

oARPC decreased $0.19, or less than 1%, to $82.49 for the nine months ended September 30, 2023, compared to the prior year period. The slight decrease was driven primarily by growth in fiber data and value-added services, more than offset by declines in voice and video services.

Fiber Broadband Customers

~~We have initiated an~~Our investment strategy is focused on expanding ~~and improving~~ our fiber network. In conjunction with this strategy, we are also working to improve our product positioning in both existing and new fiber markets.

~~Although still in the early stages of this fiber investment strategy, results are promising.~~ The quarter ended September 30, ~~2022~~2023 represents the ~~thirteenth~~seventeenth consecutive quarter of positive ~~consumer~~ fiber net adds. For the ~~quarter~~three and nine months ended September 30, ~~2022, Frontier~~2023, we added ~~64,000~~approximately 75,000 and 222,000 consumer fiber broadband customers compared to ~~29,000~~64,000 and 166,000 for the three and nine months ended September 30, ~~202~~1.2022. Customers who migrated from our copper base constituted a ~~minor~~small portion of these consumer fiber broadband customer net additions in the three and nine months ended September 30, ~~2022.~~2023.

For the three and nine months ended September 30, ~~2022, Frontier~~2023, we added ~~2,000~~approximately 4,000 and ~~8,000~~10,000 business fiber broadband customers compared to ~~zero~~approximately 2,000 and 8,000 net additions for ~~both~~ the three and nine months ended September 30, ~~2021.~~2022.

Our focus on expanding and improving our fiber network ~~is contributing~~has contributed to healthy customer retention. Our average monthly consumer fiber broadband churn was ~~1.60%~~1.47% and 1.36% for the three and nine months ended September 30, 2023, respectively, compared to 1.60% and 1.41% for the three and nine months ended September 30, 2022, ~~compared to 1.56% for the prior year period. Improvements in customer churn due to~~respectively. These improvements were driven by our increased focus aton key customer touchpoints such as installation and first bill and reflect the end of certain promotion pricing periods, and ~~improved~~ retention activities associated with inflation-related pricing ~~actions, were offset by increases in involuntary related churn.~~actions.

The average monthly consumer fiber broadband revenue per customer (“Consumer ARPU”) decreased $0.38 to $62.97 for the three months ended September 30, 2022, compared to the prior year period, as the positive impacts of price increases and customers adopting faster speed tiers were offset by the negative impacts of gift cards and auto-pay discounts. During the three months ended September 30, 2022 we had a greater degree of gift card issuances than we did in the prior year quarter. Gift cards had a negative impact to consumer fiber broadband ARPU of $1.66 for the three months ended September 30, 2022, as compared to $0.24 for the three months ended September 30, 2021.

Consumer ARPU increased $0.46 to $62.84 for the nine months ended September 30, 2022, compared to the prior year period, primarily 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. Gift cards had a negative impact to ARPU of $1.38 for the nine months ended September 30, 2022, as compared to $0.08 for the nine months ended September 30, 2021.

4137

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

oThe average monthly consumer fiber broadband revenue per customer (“consumer ARPU”) increased $1.52, or 2%, to $64.49 and $0.26, or less than 1%, to $63.10 for the three and nine months ended September 30, 2023, respectively, compared to the prior year periods.

oThe increase in consumer ARPU for the three and nine months ended September 30, 2023 was due to higher intake pricing, customer shifts to higher broadband speeds, customers rolling off promotional pricing, and lower gift card redemptions, all partially offset by increased retention activity and autopay take rates.

Copper Broadband Customers

For the three and nine months ended September 30, ~~2022, Frontier~~2023, we lost approximately 58,000 and 173,000 consumer copper broadband customers compared to a loss of ~~33,000~~approximately 58,000 and 129,000 for the three ~~months ended September 30, 2021.~~

~~Consumer copper broadband customer losses were 129,000 for the~~and nine months ended September 30, ~~2022, compared to a loss of 85,000 for the nine months ended September 30, 2021.~~2022.

For the three and nine months ended September 30, ~~2022,~~2023, Frontier lost ~~4,000~~approximately 5,000 and 17,000 business copper broadband customers compared to a loss of approximately 4,000 and 13,000 in the three ~~months ended September 30, 2021. Business copper broadband customers losses were 13,000 in the~~and nine months ended September 30, ~~2022, compared to a loss of 14,000 in the nine months ended September 30, 2021.~~2022.

Our average monthly consumer copper broadband churn was ~~2.02%~~2.18% and 1.91% for the three ~~months ended September 30, 2022, compared to 1.89% in the three months ended September 30, 2021. Consumer copper broadband churn was 1.76% for the~~and nine months ended September 30, ~~2022,~~2023, compared to ~~1.73%~~2.02% and 1.76% in the three and nine months ended September 30, ~~2021.~~2022. The increase in consumer copper broadband churn was driven by the impact of inflationary price increases, copper to fiber migration activities reducing the copper customer base in newly built fiber areas, ~~the rationalization of~~and changes to our copper ~~acquisition strategy, and adverse weather.~~

broadband go to market approach which impacted gross add volume.

‎

4238

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Financial Results

For the three months ended September 30,
For the three months ended September 30,
2022
2021
% Change
Data and Internet services
$
848
$
834
2
%
Voice services
369
411
(10)
%
Video services
127
149
(15)
%
Other
82
99
(17)
%
Revenue from contracts
with customers
1,426
1,493
(4)
%
Subsidy and other revenue
18
83
(78)
%
Revenue
1,444
1,576
(8)
%
Operating expenses:
Cost of Service
544
590
(8)
%
Selling, general, and administrative expenses
431
421
2
%
Depreciation and amortization
296
273
8
%
Restructuring costs and other charges
4
8
(50)
%
Total operating expenses
$
1,275
$
1,292
(1)
%
Operating income
169
284
(40)
%
Consumer
785
800
(2)
%
Business and wholesale
641
693
(8)
%
Revenue from contracts
with customers
$
1,426
$
1,493
(4)
%
Fiber revenue
691
684
1
%
Copper revenue
735
809
(9)
%
Revenue from contracts
with customers
$
1,426
$
1,493
(4)
%


	For the three months ended September 30,				%		For the nine months ended September 30,				%
($ in millions)	2023		2022		Change		2023		2022		Change
Data and Internet services	$	895	$	848	6	%	$	2,637	$	2,531	4	%
Voice services		341		369	(8)	%		1,044		1,136	(8)	%
Video services		104		127	(18)	%		333		398	(16)	%
Other		81		82	(1)	%		253		245	3	%
Revenue from contracts with customers ‎		1,421		1,426	(0)	%		4,267		4,310	(1)	%
Subsidy and other revenue		15		18	(17)	%		58		40	45	%
Revenue		1,436		1,444	(1)	%		4,325		4,350	(1)	%

Operating expenses:
Cost of service		545		544	0	%		1,615		1,643	(2)	%
Selling, general, and administrative expenses		405		431	(6)	%		1,250		1,293	(3)	%
Depreciation and amortization		356		296	20	%		1,040		870	20	%
Restructuring costs and other charges		16		4	300	%		48		88	(45)	%
Total operating expenses	$	1,322	$	1,275	4	%	$	3,953	$	3,894	2	%

Operating income		114		169	(33)	%		372		456	(18)	%

Consumer		787		785	0	%		2,323		2,352	(1)	%
Business and wholesale		634		641	(1)	%		1,944		1,958	(1)	%
Revenue from contracts with customers ‎	$	1,421	$	1,426	(0)	%	$	4,267	$	4,310	(1)	%

Fiber revenue		760		691	10	%		2,235		2,048	9	%
Copper revenue		661		735	(10)	%		2,032		2,262	(10)	%
Revenue from contracts with customers ‎	$	1,421	$	1,426	(0)	%	$	4,267	$	4,310	(1)	%

‎

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

Successor
Predecessor
Non-GAAP Combined
For the nine months ended September 30,
For the five months ended September 30,
For the four months ended April 30,
For the nine months ended September 30,
2022
2021
2021
2021
% Change
Data and Internet services
$
2,531
$
1,390
$
1,125
$
2,515
1
%
Voice services
1,136
694
647
1,341
(15)
%
Video services
398
254
223
477
(17)
%
Other
245
161
125
286
(14)
%
Revenue from contracts
with customers
4,310
2,499
2,120
4,619
(7)
%
Subsidy and other revenue
40
138
111
249
(84)
%
Revenue
4,350
2,637
2,231
4,868
(11)
%
Operating expenses:
Cost of Service
1,643
986
830
1,816
(10)
%
Selling, general, and administrative expenses
1,293
690
537
1,227
5
%
Depreciation and amortization
870
452
506
958
(9)
%
Restructuring costs and other charges
88
19
7
26
238
%
Total operating expenses
$
3,894
$
2,147
$
1,880
$
4,027
(3)
%
Operating income
456
490
351
841
(46)
%
Consumer
2,352
1,343
1,133
2,476
(5)
%
Business and wholesale
1,958
1,156
987
2,143
(9)
%
Revenue from contracts
with customers
$
4,310
$
2,499
$
2,120
$
4,619
(7)
%
Fiber revenue
2,048
1,139
903
2,042
0
%
Copper revenue
2,262
1,360
1,140
2,500
(10)
%
Non-network specific revenue
-
-
77
77
(100)
%
Revenue from contracts
with customers
$
4,310
$
2,499
$
2,120
$
4,619
(7)
%

‎

4439

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
For the three months
For the three months
ended September 30,
ended September 30,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Fiber
$
691
$
684
$
7
1
%
Copper
735
809
(74)
(9)
%
Revenue from contracts with customers ⁽¹⁾
1,426
1,493
(67)
(4)
%
Subsidy revenue
18
83
(65)
(78)
%
Total revenue
$
1,444
$
1,576
$
(132)
(8)
%


	For the three months ended
	September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)
Fiber	$	760	$	691	$	69	10	%
Copper		661		735		(74)	(10)	%
Revenue from contracts with customers ⁽¹⁾		1,421		1,426		(5)	(0)	%
Subsidy revenue		15		18		(3)	(17)	%
Total revenue	$	1,436	$	1,444	$	(8)	(1)	%

Successor
Non-GAAP Combined
For the nine months
For the nine months
ended September 30,
ended September 30,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Fiber
$
2,048
$
2,042
$
6
0
%
Copper
2,262
2,500
(238)
(10)
%
Other ⁽²⁾
-
77
(77)
(100)
%
Revenue from contracts with customers ⁽¹⁾
4,310
4,619
(309)
(7)
%
Subsidy revenue
40
249
(209)
(84)
%
Total revenue
$
4,350
$
4,868
$
(518)
(11)
%


	For the nine months ended
	September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)
Fiber	$	2,235	$	2,048	$	187	9	%
Copper		2,032		2,262		(230)	(10)	%
Revenue from contracts with customers ⁽¹⁾		4,267		4,310		(43)	(1)	%
Subsidy revenue		58		40		18	45	%
Total revenue	$	4,325	$	4,350	$	(25)	(1)	%

⁽¹⁾Includes lease revenue of ~~$15~~$14 million and ~~$16~~$44 million for the three and nine months ended September 30, ~~2022~~2023, and ~~2021, respectively. Lease revenue was~~$15 million and $48 million ~~and $47 million~~ for the three and nine months ended September 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 ~~generated by~~a result of recurring data, voice, and video services delivered over ~~either~~ our fiber and copper ~~or fiber~~ network. Revenues are considered ~~copper~~fiber or ~~fiber~~copper 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, we are 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~~as we expand our fiber ~~network is available.~~network.

4540

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

~~Revenue~~The table below presents our revenue for our consumer and business and wholesale customers ~~was as follows:~~for the periods indicated:

Successor
For the three months ended September 30,
For the three months ended September 30,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Consumer
$
785
$
800
$
(15)
(2)
%
Business and wholesale
641
693
(52)
(8)
%
Revenue from contracts with customers ⁽¹⁾
1,426
1,493
(67)
(4)
%
Subsidy and other revenue
18
83
(65)
(78)
%
Total revenue
$
1,444
$
1,576
$
(132)
(8)
%
Successor
Non-GAAP Combined
For the nine months ended September 30,
For the nine months ended September 30,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Consumer
$
2,352
$
2,476
$
(124)
(5)
%
Business and wholesale
1,958
2,143
(185)
(9)
%
Revenue from contracts with customers ⁽¹⁾
4,310
4,619
(309)
(7)
%
Subsidy and other revenue
40
249
(209)
(84)
%
Total revenue
$
4,350
$
4,868
$
(518)
(11)
%



	For the three months ended ‎September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)
Consumer	$	787	$	785	$	2	0	%
Business and wholesale		634		641		(7)	(1)	%
Revenue from contracts with customers ⁽¹⁾		1,421		1,426		(5)	(0)	%
Subsidy and other revenue		15		18		(3)	(17)	%
Total revenue	$	1,436	$	1,444	$	(8)	(1)	%

	For the nine months ended ‎September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)
Consumer	$	2,323	$	2,352	$	(29)	(1)	%
Business and wholesale		1,944		1,958		(14)	(1)	%
Revenue from contracts with customers ⁽¹⁾		4,267		4,310		(43)	(1)	%
Subsidy and other revenue		58		40		18	45	%
Total revenue	$	4,325	$	4,350	$	(25)	(1)	%

⁽¹⁾Includes lease revenue of ~~$15~~$14 million and ~~$16~~$44 million for the three ~~months ended September 30, 2022~~ and ~~2021, respectively. Lease revenue was $48 million and $47 million for the~~ nine months ended September 30, ~~2022~~2023, and ~~2021,~~$15 million and $48 million for the three and nine months ended September 30, 2022, respectively.

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.

‎Consumer

For the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022:

Consumer revenues were up less than 1% for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. The revenue growth was the result of growth in fiber data and value added service revenues along with inflationary price increases, offset by declines in voice, video, and copper broadband.

We experienced a 1% decline in consumer revenues for nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. This decline was predominantly a result of decreases in voice, video, and copper broadband, offset by increases in fiber broadband. Our fiber initiative will result in increasing revenue mix toward fiber broadband.

oWe experienced 22% and 20% improvement in consumer fiber broadband revenues for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022.

oThis improvement is a result of higher consumer fiber broadband ARPU as well as continued net adds of consumer fiber broadband customers due to our expanded fiber footprint and continued focus on product positioning in both new and existing markets.

4641

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 are resulting in a migration of our customer base to fiber.

~~We lost 17,000 and 23,000 consumer customers in the three months ended September 30, 2022 and 2021.~~

~~We lost 23,000 and 92,000 consumer customers in the nine months ended September 30, 2022 and 2021.~~

~~Our loss in 2022 includes net gains of consumer broadband customers of 6,000 and 37,000 for the three and nine months ended September 30, 2022.~~

~~Our improvement in consumer broadband customers is a direct result of our fiber initiatives.~~

~~For the three and nine months ended September 30, 2022, compared to the three and nine months ended September 30, 2021:~~

We experienced 2% decline in consumer revenues for the three months ended September 30, 2022, driven by a 1% decrease in ARPC, as compared to the three months ended September 30, 2021. For the nine months ended September 30, 2022, consumer revenues declined 5% driven by a 3% decrease in ARPC and 1% decline in the number of customers as compared to the same period in 2021. This decline was driven predominantly as 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 14% and 13% improvement in consumer fiber broadband revenues for the three and nine months ended September 30, 2022, respectively. This improvement is a result of our fiber initiative which resulted in net adds of 210,000 customers during the twelve month period, and our continued focus on product positioning in both new and existing markets which resulted in ARPU decline of $0.38 and improvement of $0.46 for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021. ARPU for both periods of 2022 were impacted by credits issued to incentivize customers to auto-pay bills and by the issuance of gift cards as part of our acquisition offers.

We experienced approximately 3%13% and 3%12% decline in consumer copper broadband revenues for the three and nine months ended September 30, ~~2022.~~2023. As our copper footprint ~~is transitioned~~transitions to fiber, we expect fewer copper sales opportunities, and will proactively migrate certain existing broadband customers from copper to fiber, both of which will reduce our copper net adds.

Business

For the three and nine months ended September 30, ~~2022, we experienced an 8% and 9% decline in~~2023, our business and wholesale revenues ~~respectively. Business revenues declined primarily~~decreased 1%, as compared to the prior year periods. This decline was driven by decreases in voice revenue predominantly in business, largely offset by increases in fiber broadband and network access services. The increase in fiber broadband was due to ~~the secular pressures~~continued growth of our customer base, and a shift towards higher broadband speeds. The increase in ~~copper voice revenue~~network access services is due primarily to price adjustments as well as ~~the loss of equipment revenue associated with the sale of our equipment subsidiary. Wholesale revenues declined primarily due to secular pressures in copper voice revenue, legacy circuit revenue,~~install and ~~lower rates for our network access services charged to our wholesale customers for the nine months ended September 30, 2022.~~

47upgrade activity.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

~~Revenue~~The table below presents our revenue by product and service type ~~was as follows:~~for the periods indicated:

For the three months ended September 30,
For the three months ended September 30,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Data and Internet services
$
848
$
834
$
14
2
%
Voice services
369
411
(42)
(10)
%
Video services
127
149
(22)
(15)
%
Other
82
99
(17)
(17)
%
Revenue from contracts with customers ⁽¹⁾
1,426
1,493
(67)
(4)
%
Subsidy and other revenue
18
83
(65)
(78)
%
Total revenue
$
1,444
$
1,576
$
(132)
(8)
%
Successor
Non-GAAP Combined
For the nine months ended September 30,
For the nine months ended September 30,
$ Increase
% Increase
($ in millions)
2022
2021
(Decrease)
(Decrease)
Data and Internet services
$
2,531
$
2,515
$
16
1
%
Voice services
1,136
1,341
(205)
(15)
%
Video services
398
477
(79)
(17)
%
Other
245
286
(41)
(14)
%
Revenue from contracts with customers ⁽¹⁾
4,310
4,619
(309)
(7)
%
Subsidy and other revenue
40
249
(209)
(84)
%
Total revenue
$
4,350
$
4,868
$
(518)
(11)
%


	For the three months ended ‎September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)
Data and Internet services	$	895	$	848	$	47	6	%
Voice services		341		369		(28)	(8)	%
Video services		104		127		(23)	(18)	%
Other		81		82		(1)	(1)	%
Revenue from contracts with customers ⁽¹⁾		1,421		1,426		(5)	(0)	%
Subsidy and other revenue		15		18		(3)	(17)	%
Total revenue	$	1,436	$	1,444	$	(8)	(1)	%

	For the nine months ended ‎September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)
Data and Internet services	$	2,637	$	2,531	$	106	4	%
Voice services		1,044		1,136		(92)	(8)	%
Video services		333		398		(65)	(16)	%
Other		253		245		8	3	%
Revenue from contracts with customers ⁽¹⁾		4,267		4,310		(43)	(1)	%
Subsidy and other revenue		58		40		18	45	%
Total revenue	$	4,325	$	4,350	$	(25)	(1)	%

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.~~revenues (data transmission services and dedicated high-capacity circuits including data services to wireless providers commonly called wireless backhaul). Network access services are provided primarily to our business and wholesale customers, while fiber and copper broadband are provided to all customer segments.

Our fiber expansion strategy is expected to positively impact data and Internet services. This network expansion ~~will~~is designed to 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.~~

‎

4842

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

for fiber broadband and certain network access products like ethernet. We believe this initiative will create opportunities for us to provide more fiber-based services to our customers.

($ in millions)
For the three months ended
For the nine months ended
Data and Internet services revenue, September 30, 2021
$
834
$
2,515
Change in fiber broadband revenue
38
101
Change in copper broadband revenue
(9)
(31)
Change in other data and Internet services
(15)
(52)
Impact of fresh start accounting
-
(2)
Data and Internet services revenue, September 30, 2022
$
848
$
2,531


($ in millions)	For the three months ended		For the nine months ended
Data and Internet services revenue, September 30, 2022	$	848	$	2,531
Change in fiber broadband revenue		65		167
Change in copper broadband revenue		(26)		(72)
Change in other data and internet services		8		11
Data and Internet services revenue, September 30, 2023	$	895	$	2,637

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

~~The revenue growth was primarily driven by a~~increased $47 million, or 6%, to $895 million, and ~~5% improvement in our broadband revenue offset by declines in other data revenue~~increased $106 million, or 4%, to $2,637 million for the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared to the ~~corresponding periods in 2021.~~prior year periods. The ~~increases in broadband revenue were~~increase was driven by growth in the fiber broadband revenue, partly 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 nine months ended September 30, 2022, as a result of the Company’s initiatives.copper broadband revenue.

Voice ~~Services~~services

~~The Company provides~~We provide 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
For the nine months ended
Voice services revenue, September 30, 2021
$
411
$
1,341
Change in other voice services revenue
(42)
(129)
Impact of fresh start accounting
-
(76)
Voice services revenue, September 30, 2022
$
369
$
1,136

~~Upon implementation of fresh start accounting policies, Frontier is recording both~~Voice services revenue declined $28 million, or 8%, to $341 million, and ~~expense related~~$92 million, or 8%, to ~~Universal Service Fund (“USF”) surcharges on a net basis,~~$1,044 million for the three and nine months ended September 30, 2023, respectively, as ~~opposed~~compared to ~~recording each on a gross basis~~the prior ~~to emergence. These declines were~~year periods. The decline was primarily due to net losses in business and consumer customers in addition to fewer customers bundling voice services with ~~broadband.~~broadband as compared to the prior year period, all partially offset by higher voice services ARPU.

Video ~~Services~~services

Video services include revenues generated from traditional television (TV) services provided directly to consumer customers as well as satellite TV services provided through ~~Dish.~~various satellite providers. Video services also includes pay-per-view revenues, video on demand, equipment rentals, and video advertising. ~~The Company has~~We have 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.

‎

Video services revenue declined $23 million, or 18%, to $104 million and $65 million, or 16%, to $333 million for the three and nine months ended September 30, 2023, as compared to the prior year period. The decline was primarily driven by linear video customer losses, partially offset by price increases as compared to the prior year period.

Other

Other customer revenue includes non-recurring equipment sales, network facility rental income, ancillary customer fees, 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 switched access services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies.

Other customer services revenue decreased $1 million, or 1%, to $81 million for the three months ended September 30, 2023, as compared to the prior year period driven primarily by declines in switched network access revenue. Other customer services revenue increased by $8 million, or 3%, to $253 million for the nine months ended

4943

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

($ in millions)
For the three months ended
For the nine months ended
Video services revenue, September 30, 2021
$
149
$
477
Change in video services revenue
(22)
(71)
Impact of fresh start accounting
-
(8)
Video services revenue, September 30, 2022
$
127
$
398

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
For the nine months ended
Other revenue, September 30, 2021
$
99
$
286
Change in other services revenue
(17)
(49)
Impact of fresh start accounting
-
8
Other revenue, September 30, 2022
$
82
$
245

Under our fresh start accounting policies, we have 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 $14 million for the nine months ended September 30, 2022. Additionally, the accumulated balances in deferred installation fee revenue were eliminated as part of fresh start accounting, which has resulted in a $6 million decline in revenue recognized for the nine months ended September 30, 2022,2023, as compared to the prior year ~~periods.~~ ~~After adjusting for the impacts of these policy changes, other customer services revenue declined $49 million for the nine months ended September 30, 2022.~~ ~~These decreases were primarily~~period driven by ~~reductions~~increases in ~~CPE sales, late payment fees, early termination~~pole rentals and related application fees and ~~reconnect fees.~~equipment sales partially offset by declines in switched network access revenue.

Subsidy and other revenue

Subsidy and other revenue decreased $3 million, or 17%, to $15 million for the three months ended September 30, 2023, compared to the prior year period, and increased $18 million, or 45%, to $58 million for the nine months ended September 30, ~~2022,~~2023, compared to the prior year period primarily due to ~~the completion of the CAF II program~~increases in ~~2021.~~

($ in millions)
For the three months ended
For the nine months ended
Subsidy and other revenue, September 30, 2021
$
83
$
249
Change in CAF II subsidies
(74)
(231)
Change in RDOF, subsidy, and other services revenue
9
17
Impact of fresh start accounting
-
5
Subsidy and other revenue, September 30, 2022
$
18
$
40

As a result of a fresh start accounting policy change, 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 subsidyRDOF and other ~~revenue of $5 million for the nine months ended September 30, 2022.~~

‎

50services revenue.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

OPERATING EXPENSES

The table below presents our operating expenses for the periods indicated:

For the three months
For the three months
($ in millions)
ended September 30,
ended September 30,
($)
%
2022
2021
Variance
Variance
Operating expenses:
Cost of Service
$
544
$
590
$
(46)
(8)
%
Selling, general, and administrative expenses
431
421
10
2
%
Depreciation and amortization
296
273
23
8
%
Restructuring costs and other charges
4
8
(4)
(50)
%
Total operating expenses
$
1,275
$
1,292
$
(17)
(1)
%


	For the three months ended
	September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)
Operating expenses:
Cost of Service	$	545	$	544	$	1	0	%
Selling, general, and administrative expenses		405		431		(26)	(6)	%
Depreciation and amortization		356		296		60	20	%
Restructuring costs and other charges		16		4		12	300	%
Total operating expenses	$	1,322	$	1,275	$	47	4	%

Successor
Non-GAAP Combined
For the nine months
For the nine months
($ in millions)
ended September 30,
ended September 30,
($)
%
2022
2021
Variance
Variance
Operating expenses:
Cost of Service
$
1,643
$
1,816
$
(173)
(10)
%
Selling, general, and administrative expenses
1,293
1,227
66
5
%
Depreciation and amortization
870
958
(88)
(9)
%
Restructuring costs and other charges
88
26
62
238
%
Total operating expenses
$
3,894
$
4,027
$
(133)
(3)
%


	For the nine months ended
	September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)
Operating expenses:
Cost of Service	$	1,615	$	1,643	$	(28)	(2)	%
Selling, general, and administrative expenses		1,250		1,293		(43)	(3)	%
Depreciation and amortization		1,040		870		170	20	%
Restructuring costs and other charges		48		88		(40)	(45)	%
Total operating expenses	$	3,953	$	3,894	$	59	2	%

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~~Cost of service increased $1 million and decreased ~~by $84~~$28 million for ~~the nine months ended September 30, 2022. After adjusting for this fresh start change, cost of service declined $89 million for the nine months ended September 30, 2022. For~~ the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared to the prior year period. For the nine months ended September 30, 2023, 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.~~costs, and no rebranding costs in 2023. These decreases more than offset higher ~~fuel~~energy and ~~energy prices,~~benefits costs and outside service rate increases resulting from ~~increased inflation.~~higher inflation.

Selling, ~~general,~~General, and ~~administrative expenses~~Administrative Expenses

Selling, general, and administrative expenses (SG&A expenses) include the salaries, wages and the 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 $14 million higher for the nine months ended September 30, 2022. Additionally, as a result of fresh start accounting policy changes, we have expensed $17 million of certain administrative items that were previously capitalized by the predecessor for nine months ended September 30, 2022. After adjusting for the fresh start impacts, SG&A expenses increased by $35 million for the nine months ended September 30, 2022.~~This increase was primarily a result of transformational investments that are non-recurring such as rebranding costs, higher~~ ~~professional services and recruiting fees, partially offset by a non-recurring $11 million sales tax refund in 2022.~~

5144

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

SG&A expense decreased by $26 million and $43 million for the three and nine months ended September 30, 2023 as compared to the prior year period.This decrease was primarily a result of lower compensation and benefit costs, and other fees, partially offset by increased commissions and a non-recurring $11 million sales tax refund in 2022.

Pension and Other ~~Postretirement Employee Benefit (OPEB)~~post-employment benefits (“OPEB”) costs

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

($ in millions)
For the three months ended September 30, 2022
For the three months ended September 30, 2021
Total pension/OPEB expenses
$
17
$
24
Less: costs capitalized into capital expenditures
(4)
(6)
Net pension/OPEB costs
$
13
$
18


	For the three months ended September 30,				For the nine months ended September 30,
($ in millions)	2023		2022		2023		2022

Total pension/OPEB expenses	$	14	$	17	$	45	$	65
Less: costs capitalized into capital expenditures		(5)		(4)		(14)		(15)
Net pension/OPEB expense	$	9	$	13	$	31	$	50

Successor
Non-GAAP Combined
($ in millions)
For the nine months ended September 30, 2022
For the nine months ended September 30, 2021
Total pension/OPEB expenses
$
65
$
79
Less: costs capitalized into capital expenditures
(15)
(17)
Net pension/OPEB costs
$
50
$
62

Depreciation and ~~amortization~~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 decreased the carrying value of its fixed assets and increased the carrying value of its intangible assets. For the three and nine months ended September 30, ~~2022,~~2023, the ~~decreased~~increased depreciation and amortization expense was driven by ~~lower~~higher depreciation expense as a result of ~~reduced fixed asset bases following the fresh start adjustment noted above.~~higher property, plant and equipment in service.

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 Effective Date,~~ workforce reductions, transformation initiatives, ~~lease impairment costs,~~ and other restructuring expenses.

For the three months ended September 30, ~~2022,~~2023, restructuring costs and other charges ~~decreased~~increased $12 million, as compared to the three months ended September 30, 2022, primarily due to ~~lower~~higher severance and employee ~~costs resulting from workforce reductions~~costs. For the nine months ended September 30, 2023, restructuring cost and other charges decreased $40 million, as compared to the nine months ended September 30, 2022, due to the non-recurrence of $3a one-time lease impairment charge of $44 million in the prior year, and lower costs related to other restructuring activities, ~~of $1 million.~~

~~For the nine months ended September 30, 2022, restructuring costs and other charges increased due to~~ partially offset by higher~~$44 million of lease impairment costs from the strategic exit of certain facilities, $35 million of~~ severance and employee costs resulting from workforce reductions, and $9 million of costs related to other restructuring activities. Of the $35 million in severance and employee costs, approximately $26 million related to the second quarter of 2022, as a result of larger workforce reductions in that period.

‎

5245

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

OTHER NON-OPERATING INCOME AND EXPENSE

For the three months ended
September 30,
For the three months ended
September 30,
$
%
($ in millions)
2022
2021
Variance
Variance
Investment and other
income (loss), net
$
211
$
(37)
$
248
NM
Pension settlement costs
$
(50)
$
-
$
(50)
100
%
Interest expense
$
(135)
$
(90)
$
(45)
50
%
Income tax expense
$
75
$
31
$
44
142
%
Successor
Predecessor
Non-GAAP Combined
For the nine months ended
September 30,
For the five months ended
September 30,
For the four months ended
April 30,
For the nine months ended
September 30,
$
%
($ in millions)
2022
2021
2021
2021
Variance
Variance
Investment and other
income (loss), net
$
410
$
(39)
$
1
$
(38)
$
448
NM
Pension settlement costs
$
(50)
$
-
$
-
$
-
$
(50)
100
%
Reorganization items, net
$
-
$
-
$
4,171
$
4,171
$
(4,171)
(100)
%
Interest expense
$
(356)
$
(152)
$
(118)
$
(270)
$
(86)
32
%
Income tax expense
(benefit)
$
174
$
74
$
(136)
$
(62)
$
236
(381)
%
NM - Not meaningful


	For the three months ended September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)

Investment and other income, net	$	67	$	211	$	(144)	(68)	%
Pension settlement costs	$	-	$	(50)	$	50	100	%
Interest expense	$	(170)	$	(135)	$	(35)	26	%
Income tax expense	$	-	$	75	$	(75)	(100)	%

	For the nine months ended ‎September 30,				$ Increase		% Increase
($ in millions)	2023		2022		(Decrease)		(Decrease)

Investment and other income, net	$	101	$	410	$	(309)	(75)	%
Pension settlement costs	$	-	$	(50)	$	50	(100)	%
Interest expense	$	(460)	$	(356)	$	(104)	29	%
Income tax expense	$	1	$	174	$	(173)	(99)	%

Investment and other income, ~~(loss),~~ net

Investment and other income, net ~~increased~~decreased by ~~$248~~$144 million and ~~$448~~$309 million for the three and nine months ended September 30, ~~2022, respectively. These increases were~~2023, as compared to September 30, 2022. This decrease was primarily driven by a remeasurement ~~gains~~gain for our other postretirement benefit obligation of $84 million for the three months ended September 30, 2022 and $234 million for the nine months ended September 30, 2022. Additionally, we recorded a remeasurement gain related to our pension plan of $91 million during the three months ended September 30, 2022.

~~We had additional increases as a result of favorable changes in our non-operating pension and other postretirement costs of $55~~$46 million and ~~$99~~$38 million for the three and nine months ended September 30, ~~2022, respectively,~~2023, compared to a remeasurement gain of $84 million and $234 million for the three and nine months ended September 30, 2022; a decrease of $91 million for both the three and nine months ended September 30, 2023, due to the non-recurrence of a $91 million pension remeasurement in the third quarter of 2022; a decrease of $16 million and $54 million in pension and other postretirement benefits for the three and nine months ended September 30, 2023; partially offset by an $6 million and $36 million increase in interest and dividend income, as compared to the prior year periods.

~~Pension settlement~~

During the nine months ended September 30, 2022, lump sum pension settlement payments to terminated or retired individuals amounted to $177 million, which exceeded the settlement threshold of $169 million, and as a result, Frontier recognized non-cash settlement charges totaling $50 million for the nine months ended September 30, 2022.

~~Reorganization items, net~~

We 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 nine months ended September 30, 2021, Frontier recognized $4,171 million in reorganization items associated with the restructuring of our balance sheet.~~

Interest expense

For the three and nine months ended September 30, ~~2022,~~2023, interest expense increased ~~$45~~$35 million and ~~$86~~

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

$104 million, respectively, as compared to the same periods in ~~2021.~~2022. The increase in interest expense was primarily driven by a higher debt balance, as well as higher interest rates.

Income tax expense

During the three and nine months ended September 30, 2023, we recorded an income tax expense of less than $1 million and $1 million, on pre-tax income of $11 million and $13 million, respectively. During the three and nine months ended September 30, 2022, we recorded income tax expense of $75 million ~~on pre-tax income of $195 million. During the three months ended September 30, 2021, we recorded income tax expense of $31 million on pretax income of $157 million.~~

~~During the nine months ended September 30, 2022 we recorded income tax expense of~~and $174 million on pre-tax income of $195 million and $460 ~~million.~~ ~~During the five months ended September 30, 2021, we recorded income tax expense of $74~~ million, ~~on pre-tax income of $299 million.During the four months ended April 30, 2021, we recorded an income tax benefit of $136 million on pre-tax income of $4,405 million.~~respectively.

Our effective tax rates for the three and nine months ended September 30, ~~2022 were 38.5%~~2023 was 0.7% and 37.8%, respectively. The effective rate 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. Our effective tax rates9.7% and for the ~~five~~three and nine months ended September 30, ~~2021~~2022 was 38.5% and ~~the~~ ~~four months~~ ~~ended April 30, 2021 were 24.7% and (3.1%), respectively.~~37.8%.

‎

5446

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

(b) Liquidity and Capital Resources

As of September 30, ~~2022,~~2023, we had liquidity of approximately ~~$3,322~~$3,374 million, comprised of $948 million of cash and cash equivalents, ~~of $230 million, $2,325~~$1,275 million of short-term investments consisting 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, $500 million available variable funding note capacity, subject to customary conditions to draw, and ~~our~~ available capacity on our undrawn revolving credit facility of ~~$767~~$651 million.

Analysis of Cash Flows

As of September 30, ~~2022,~~2023, we had unrestricted cash and cash equivalents aggregating ~~$230~~$948 million. For the nine months ended September 30, ~~2022,~~2023, 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 September 30, ~~2022,~~2023, we had a working capital surplus of ~~$1,101~~$747 million compared to a ~~$1,237~~$302 million surplus at December 31, ~~2021.~~2022. The ~~primary driver for the~~ change in ~~the~~ working capital ~~surplus at September 30, 2022~~ was driven by an increase in ~~short-term~~cash, net of movements between short term investments, as a result of funding our capital expenditures related to our fiber build, partially offset by a decrease in accounts ~~payable~~payable.

In August 2023, our limited-purpose, bankruptcy remote, subsidiary, Frontier Issuer LLC (“Frontier Issuer”), issued $1.586 billion aggregate principal amount of secured fiber network revenue term notes, less $58 million in original issue discounts, consisting of $1,120 million 6.60% Series 2023-1, Class A-2 term notes, $155 million 8.30% Series 2023-1, Class B term notes and ~~accrued interest.~~$312 million 11.50% Series 2023-1, Class C term notes (collectively, the “Fiber Term Notes”), each with an anticipated repayment date, or ARD, in July 2028, in an offering exempt from registration under the Securities Act. We intend to use the proceeds from the offering of the Fiber Term Notes for, among other things, general corporate purposes, including potential investments or expenditures, such as capital expenditures and research and development, in line with our fiber expansion and copper migration strategies. In addition, we used a portion of the proceeds to retire and defease certain outstanding indebtedness of our subsidiary Frontier Southwest Incorporated.

Cash Flows ~~from~~provided by Operating Activities

Cash flows provided ~~from~~by operating activities increased ~~$712~~$7 million to ~~$1,041~~$1,048 million for the nine months ended September 30, ~~2022~~2023 as compared to the nine months ended September 30, ~~2021.~~2022. The overall increase in operating cash flows was primarily the result of changes in working capital.

We paid $1 million and $7 million in net cash taxes during the nine months ended September 30, 2023 and 2022, ~~and $36 million in Non-GAAP combined net cash taxes during the Non-GAAP combined nine months ended September 30, 2021.~~respectively.

Cash Flows ~~from~~used by Investing Activities

Cash flows used inby investing activities were ~~$4,178~~$2,451 million for the nine months ended September 30, ~~2022,~~2023, compared to ~~Non-GAAP combined~~ cash flows used in investing activities of ~~$1,135~~$4,178 million for the ~~corresponding period in 2021.~~prior year period. Given the long-term nature of our fiber build, as of September 30, ~~2022,~~2023, we have invested ~~$2,325~~$1,275 million cash in short-term investments to improve interest income, while preserving funding flexibility.

Capital Expenditures

For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, our capital expenditures were $2,882 million and $1,860 million, ~~and $1,146 million,~~ respectively. ~~Approximately 57% of our capital expenditures in the first nine months of 2022 related to fiber network projects.~~ The increase in capital expenditures was driven by increased spending for ~~fiber upgrades to our existing copper network, a trend that we expect to continue as we execute our strategy~~transformation of ~~investing in~~ our fiber network. ~~In addition to the~~ We expect cash capital expenditures ~~noted above, we had a balance of $431 million~~to be approximately $3.0 billion to $3.2 billion in ~~“Accounts payable” on our consolidated balance sheet related to capital expenditures that had not been paid as of September 30, 2022.~~

~~Cash Flows from Financing Activities~~2023.

Cash flows provided from financing activities increased $1,039 million to $1,219 million for the nine months ended September 30, 2022 as compared to the Non-GAAP combined corresponding period in 2021. The increase in financing activities was primarily driven by $1,200 million proceeds from long-term debt borrowings partially offset

5547

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Cash Flows provided from Financing Activities

Cash flows provided from financing activities increased $916 million to $2,135 million for the nine months ended September 30, 2023 as compared to the corresponding period in 2022. The increase in financing activities was primarily driven by ~~financing costs, lease obligations payments,~~an increase in proceeds from long-term debt ~~principal payments and other costs.~~borrowings in the first three quarters of 2023 as compared to the prior year period.

Capital Resources

Our primary anticipated uses of liquidity 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 $900 million Revolving Facility (as reduced by ~~$133~~$249 million of revolver Letters of ~~Credit.)~~Credit). In addition, potential future sources of capital may include debt and equity (or equity-linked) financing and $500 million in Series 2023-2 Secured Fiber Network Revenue Variable Funding Senior Notes.

On ~~May 12, 2022,~~March 8, 2023, Frontier Holdings entered into an amendment to its Revolving Facility which, among other things, ~~increased~~(i) extends the maturity with respect to the commitments of certain revolving lenders (in addition to certain amendments to springing maturity provisions); (2) amends the financial maintenance covenant for the benefit of the Revolving Facility by ~~an additional $275 million,~~increasing the maximum first lien leverage ratio thereunder to ~~a total of $900 million~~3.50:1.00, with step-downs to: (a) 3.25:1.00 in ~~aggregate principal amount of revolving credit commitments,~~2026; and ~~provided that the Revolving Facility be amended~~(b) 3.00:1.00 in 2027 and continuing thereafter; and (3) provides for certain amendments to reflect Secured Overnight Financing Rate “SOFR” based interest rates (including a customary spread adjustment). We anticipate that Frontier Holdings will transition to SOFR based borrowing under its Term Loan Facility, in accordance with the terms thereof, upon the final phase out of LIBOR at the end of June 2023. We do not expect this transition to materially impact the amount of interest payments under the Term Loan Facility.debt incurrence and other restrictive covenants.

During the nine months ended September 30, 2023, we paid $449 million of cash interest. Our Amended and Restated Credit Agreement, including our ~~$1,453 million Term Loan Facility~~$1.4 billion term loan facility and $900 million Revolving Facility, and the indentures governing our outstanding secured ~~First Lien Notes~~first lien notes and ~~Second Lien Notes~~second lien notes are described in detail in Note 8 to the financial statements contained in Part I of this report. A summary of certain covenants and our borrowing capacity is provided below.

In August 2023, our limited-purpose, bankruptcy remote, subsidiary, Frontier Issuer, issued $1.6 billion of aggregate principal amount of secured Fiber Term Notes, less $58 million in original issue discounts, consisting of $1.120 billion 6.60% Series 2023-1, Class A-2 term notes, $155 million 8.30% Series 2023-1, Class B term notes and $312 million 11.50% Series 2023-1, Class C term notes, each with an anticipated repayment date of five years. The Notes are secured by certain of Frontier’s fiber assets and associated customer contracts in the Dallas, Texas metropolitan area. Certain cash and other accounts for the benefit of the Trustee and noteholders are restricted.

In connection with the offering of the Fiber Term Notes, Frontier Issuer entered into a $500 million variable funding note facility with a delayed draw feature, subject to leverage tests and other customary drawing conditions.

We have negotiated payment terms with certain of our vendors, (referred to as vendor financing), which are excluded from capital expenditures and reported as financing activities. As of September 30, 2023 we have $169 million of vendor financing liabilities included in “Other current liabilities” on our consolidated balance sheets. No vendor financing payments were made as of September 30, 2023.

As of September 30, 2023, the Company extinguished $53 million of notes and transferred assets to an escrow account to pay the future interest and principal on the remaining $47 million of notes, which remain on the Company’s balance sheet as outstanding debt and restricted assets.

During the nine months ended September 30, 2022, we paid $286 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.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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 September 30, ~~2022,~~2023, 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.~~payments over the next twelve months. A number of factors, including but not limited to, ~~losses~~loss 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.

Debt Covenants and Borrowing Capacity

Our Amended and Restated Credit Agreement includes usual and customary negative covenants for loan agreements of this type, including covenants limiting us and our 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 subordinated indebtedness, in each case subject to customary exceptions for loan agreements of this type.

Our Amended and Restated Credit Agreement also contains a “financial covenant” which provides that our first lien leverage ratio shall not exceed as of the last day of each fiscal quarter 3.50:1.00, with step-downs to: (a) 3.25:1.00 in 2026; and (b) 3.00:1.00 in 2027 and continuing thereafter.

This financial covenant is only applicable for the benefit of the Revolving Lenders (as defined in the Amended and Restated Credit Agreement) thereunder and failure to comply with the financial covenant would not cause an Event of Default with respect to any loans pursuant to our term loan facility unless and until the Required Revolving Lenders (as defined in the Amended and Restated Credit Agreement) have declared all amounts outstanding under the revolving facility to be immediately due and payable and all outstanding commitments under the revolving facility to be immediately terminated.

The indentures governing our First Lien Notes and Second Lien Notes also include usual and customary negative covenants for debt securities of this type, including covenants limiting us and our 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 subordinated indebtedness, in each case subject to customary exceptions for debt securities of this type.

The indentures governing the outstanding subsidiary debentures include covenants that limit such subsidiary’s ability to create liens and/or merge or consolidate with other companies. These covenants are subject to important exceptions and qualifications.

The indenture governing Frontier Issuer’s Fiber Term Notes includes covenants and restrictions customary for transactions of this type. These covenants and restrictions include the maintenance of a liquidity reserve account to be used to make required payments in respect of the Fiber Term Notes, provisions relating to prepayments, required indemnification payments in certain circumstances. The Fiber Term Notes are also subject to rapid amortization in the event of a failure to maintain a stated debt service coverage ratio. A rapid amortization may be cured if the debt service coverage ratio exceeds a certain threshold for a certain period of time, upon which cure, regular amortization, if any, will resume. The Fiber Term Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the Fiber Term Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective and certain judgments.

The Fiber Term Notes are subject to covenants and restrictions customary for transactions of this type, including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the Fiber

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

Term Notes and pay certain reserved fixed costs of the fiber networks, (ii) provisions relating to optional and mandatory prepayments of the Fiber Term Notes and the related payment of specified amounts, including specified make-whole payments in the case of prepayments of the Fiber Term Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Fiber Term Notes are in stated ways defective or ineffective, and (iv) covenants relating to recordkeeping, access to information and similar matters. In addition, the terms of the indenture governing the Fiber Term Notes provide that a larger portion of Frontier Issuer’s available funds will be used towards the repayment of the Fiber Term Notes during a cash sweep period, which period would result from, among other things, the failure to maintain a certain debt service coverage ratio or a certain minimum penetration rate in the markets that were securitized at closing. The Fiber Term Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, the acceleration of the maturity of the Fiber Term Notes following the occurrence of an event of default and the failure to repay or refinance on the applicable anticipated repayment date.

The customary events of default to which the Fiber Term Notes are subject include events relating to non-payment of required interest, principal or other amounts due on or with respect to the Fiber Term Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective and certain judgments. In addition, the Indenture and the related management agreement contain various covenants that limit the ability of the Company’s securitized subsidiaries to engage in specified types of transactions, subject to certain exceptions, including, for example, to incur or guarantee additional indebtedness, sell certain assets, create or incur liens on certain assets to secure indebtedness or consolidate, merge, sell or otherwise dispose of all or substantially all of their assets.

As of September 30, 2023, we were in compliance with all of the covenants under our existing indentures and the Amended and Restated Credit Agreement.

Net Operating Losses

In connection with ~~Frontier’s~~our emergence from bankruptcy, we consummated a taxable disposition of substantially all of the assets and/or subsidiary stock of the Company. Certain of the ~~NOLs~~net operating losses (“NOLs”) were utilized in offsetting gains from the disposition, certain of the ~~NOLS~~NOLs were extinguished as part of attribute reduction and certain subsidiary ~~NOLS~~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.~~NOLs. 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.

Future Contractual Obligations and Commitments

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, thereThere have been no material changes outside the ordinary course of business to the information provided with respect to our contractual obligations,

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

including indebtedness and purchase and lease obligations, as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Future Commitments

See “Regulatory Developments” immediately below for information regarding Frontier’s known and potential future commitments related to our participation in the FCC’s CAF Phase II program and RDOF Phase I auction.

Regulatory Developments

Connect America Fund (“CAF”)/ Rural Digital Opportunity Fund (“~~RDOF~~RDOF”)”): In 2015, Frontier accepted the FCC’s CAF Phase II offer, which provided $313 million in annual support through 2021 in return for the Company’s commitment

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

to make ~~available 10 Mbps downstream/1 Mbps upstream~~ broadband ~~service~~available to households ~~across some of~~within the CAF II areas in our existing 25 ~~states where we operate.~~states. The Company was required to complete the CAF II deployment ~~deadline was~~by December 31, ~~2021,~~2021. Thereafter, the FCC has been reviewing carriers’ CAF II program completion data, and ~~final review and audit of households is not complete. To~~if the ~~extent it is determined we~~FCC determines that the Company did not ~~enable the required number of households with 10 Mbps downstream/1 Mbps upstream broadband service or we were unable to~~ satisfy ~~other~~certain applicable CAF Phase II requirements, Frontier ~~will~~could be required to return a portion of the funds previously received and may be subject to certain other fines, 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.

On January 30, 2020, the FCC adopted an order establishing the RDOF a competitive reverse auction to provide support to serve ~~high cost~~high-cost areas. ~~Under~~The FCC announced the ~~FCC’s~~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, Illinois, New York, Pennsylvania, Texas, and West Virginia). ~~Frontier~~We began receiving RDOF funding ~~under RDOF~~ in the second quarter of 2022 and we will be required to complete the buildout to ~~these~~the awarded locations by December 31, 2028, with interim target milestones over this period. To the extent that Frontier is unable to meet the milestones or construct to all locations by the required deadlines, Frontier could be required to return a portion of funds previously received and may be subject to certain fines or additional requirements and obligations.

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.~~infrastructure.

~~COVID-19 Initiatives~~Internet: The ~~Federal government has undertaken several measures~~FCC currently classifies fixed consumer broadband services as information services, subject to ~~address~~light-touch regulation. In October 2023 the ~~ongoing impacts~~FCC released a notice of proposed rulemaking seeking to reclassify certain broadband services as lightly regulated telecommunications services imposing certain network neutrality requirements on 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 beyondreclassified internet services. At this time, it remains uncertain whether the FCC will adopt these new network neutrality regulations and ~~difficult to predict.~~what impact that may have on Frontier’s business.

~~Current~~On November 15, 2021, President Biden signed the Infrastructure Investment and ~~Potential Internet Regulatory Obligations: On October 1, 2019,~~Jobs Act (IIJA) into law. The legislation appropriated funding for 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 partsestablishment of the ~~2018 Order. California’s network neutrality provisions have gone into effect. It~~Affordable Connectivity Program (ACP), and FCC-administered monthly, low-income broadband benefit program. The ACP provides qualified customers up to $30 per month (or $75 per month for those on Tribal lands) to assist with their internet bill. Frontier is ~~unclear whether pending or future appeals~~a participating provider in the ACP program. Absent additional funding, at present pace, the ACP funds 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.~~likely exhaust in 2024.

~~Privacy~~Privacy:: Our businesses are subject to federal and state laws and regulations that impose various restrictions and obligations related to privacy and the handling of customers’ personal information. Privacy-related legislation has been ~~considered~~adopted in a number of ~~states. Legislative and regulatory action could result~~states in which we operate. Certain state requirements give consumers 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 consumersrights including 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~~obtain a copy of ~~this information. Subject to certain exceptions, it also gives consumers the right to~~such information, opt-out of the sale of personal information or sharing of personal information for purposes of certain targeted advertising, and to request the correction or deletion of this information. ~~The law applies~~Complying with such laws, as well as other legislative and regulatory action related to privacy, could result in increased costs of compliance, claims against the ~~same rules~~Company or investigations related to ~~all companies that collect~~

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

compliance, and increased uncertainty in the use and availability of certain 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.~~data.

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.

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.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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.~~

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 or our predecessors, 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.

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’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.~~2022.

Recent Accounting Pronouncements

~~See~~For additional information regarding FASB Accounting Standards Updates (‘‘ASU’’s) that have been issued but not yet adopted and that may impact the Company, refer to Note 2 of– ‘‘Recent Accounting Pronouncements’’ to the ~~Notes to~~ Consolidated Financial Statements included in Part I of this report for additional information related to recent accounting literature.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk in the normal course of our business operations due to ongoing investing and funding activities, including those associated with our pension plan assets. Market risk refers to the potential change in fair value of a financial instrument as a result of fluctuations in interest rates and equity prices. We do not hold or issue derivative instruments, derivative commodity instruments or other financial instruments for trading purposes. As a

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

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 September 30, ~~2022, 84%~~2023, 87% of our total debt had fixed interest rates. We had no interest rate swap agreements in effect at September 30, ~~2022.~~2023. 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 ~~$1.45~~$1.4 billion term loan facility has a floating ~~interest~~ rate at September 30, ~~2022. The~~2023. Commencing July 1, 2023 the annual impact of a 100 basis ~~point~~points change in ~~LIBOR~~the SOFR would result in approximately ~~$15~~$14 million of additional interest expense, provided that the ~~LIBOR~~SOFR rate exceeds the ~~LIBOR~~SOFR 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~~To date, interest income from cash invested in term deposits ~~offsets~~has offset the impact of higher interest expense from floating rate debt. Based

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

(Unaudited)

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.

~~The~~Our discount rate assumption for our pension benefit obligation is determined at least annually, or ~~when~~whenever required, with assistance from our actuaries. The discount rate is 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 December 31, ~~2021, the discount rate was 2.90%. As of September 30,~~ 2022, the discount rate ~~is 5.60% which~~utilized in calculating our benefit plan obligation was ~~updated in connection with the September 30, 2022 remeasurement.~~ 5.50%.

The discount rate assumption for our OPEB obligation is determined in a similar manner to the pension plan. As of December 31, ~~2021, the~~2022, our discount rate utilized in calculating our benefit plan obligation was ~~3.00%~~5.50%. The discount rate was updated in connection with the remeasurements in February, May, July and September of 2022. As of September 30, 2022, the discount rate is 5.60% which was updated in connection with the September 30, 2022 remeasurement.

At September 30, ~~2022,~~2023, the fair value of our debt was estimated to be approximately ~~$8.02~~$10 billion, based on quoted market prices, our overall weighted average borrowing rate was ~~6.366%~~7.098% and our overall weighted average maturity was approximately ~~seven~~5.74 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 September 30, ~~2022~~2023 is primarily limited to our pension plan assets. We have no other security investments of any significant amount.

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

FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

~~(Unaudited)~~

While there is a significant reduction in the assets of the pension plan, discount rates have risen by 270 basis points from 2.90% as of December 31, 2021, to 5.60% as of September 30, 2022. If these discount rates remain in effect through the end of 2022, the projected benefit obligation at December 31, 2022 would be lower by $930 million compared to the projected benefit obligation at December 31, 2021. On the funding side, a sustained pension asset loss could result in a reduced funding percentage and an increased minimum required contribution for the 2023 plan year.

Item 4. Controls and Procedures

(a)Evaluation of ~~disclosure controls~~Disclosure Controls and ~~procedures~~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, September 30, ~~2022,~~2023, 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.effective.

(b)Changes in internal control over financial reporting

There have been no changes into our internal control over financial reporting (as ~~such term is~~ defined in ~~Rules~~Rule 13a-15(f) and 15d-15(f) under the Securities Exchange ~~Act)~~Act of 1934, as amended) identified in an evaluation thereof that occurred during the first nine months of ~~2022~~2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

6053

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For more information regarding pending and threatened legal actions and proceedings see Note 16 - ‘‘Commitments and Contingencies’’ to the Consolidated Financial Statements included in Part I of this report.

In 2014, Citynet, a competitive local exchange carrier doing business in West Virginia, filed a qui tam action in federal court in the District Court for the Southern District of West Virginia against Frontier West Virginia, Inc. and others on behalf of the U.S. Government concerning billing practices relating to a government grant. The complaint became public in 2016 after the U.S. Government declined to participate in the case and instead allowed Citynet to pursue the claims on behalf of the U.S. On ~~July 27,~~December 6, 2022, the ~~Connecticut Public Utility Regulatory Authority (“PURA”) issued~~parties reached a ~~Notice~~settlement in principle. On May 23, 2023, the parties finalized the terms of ~~Violation~~the settlement agreement to resolve the case in its entirety, the terms of which were made part of the public record and ~~Assessment~~which requires a payment 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 alleged that Frontier and its contractors failed to comply with certain state excavation regulations which created public safety and compliance issues. The NOV prescribed a fine and ordered Frontier to discontinue certain underground fiber deployment work until the Company submitted a compliance plan to ensure compliance with the applicable regulations. Frontier submitted a compliance and inspection plan consistent with the NOV and paid the fine. On August 26, 2022, PURA approved Frontier’s compliance and inspection plan, and the Company is proceeding with underground fiber deployment in Connecticut.approximately $18 million.

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, environmental, 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~~Except as disclosed in our Quarterly Report for the quarterly period ended June 30, 2023, 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~~2022 and ~~Use of Proceeds~~

~~There were no unregistered sales of equity securities during~~Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2022.~~2023.

‎

6154

PART II. OTHER INFORMATION

Item 6. Exhibits


(a)	Exhibits:
	Exhibit Number	Description
	4.1	Base Indenture, dated as of August 8, 2023, by and among Frontier Issuer LLC, Frontier Dallas TX Fiber 1 LLC, and Citibank N.A. (filed as Exhibit 4.1 to Frontier’s Current Report on Form 8-K filed on August 10, 2023.)
	4.2	Series 2023-1 Supplement, dated as of August 8, 2023, by and among Frontier Issuer LLC, Frontier Dallas TX Fiber 1 LLC, and Citibank N.A. (filed as Exhibit 4.2 to Frontier’s Current Report on Form 8-K filed on August 10, 2023.)
	4.3	Series 2023-2 Supplement, dated as of August 24, 2023, by and among Frontier Issuer LLC, Frontier Dallas TX Fiber 1 LLC, and Citibank N.A. (filed as Exhibit 4.1 to Frontier’s Current Report on Form 8-K filed on August 25, 2023.)
	10.1	Class A-1 Note Purchase Agreement, dated as of August 24, 2023, among Frontier Issuer LLC, Frontier Dallas TX Fiber 1 LLC, Frontier Communications Holdings, LLC, certain conduit investors, financial institutions and funding agents, and Barclays Bank plc. (filed as Exhibit 10.1 to Frontier’s Current Report on Form 8-K filed on August 25, 2023.)
	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.~~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.~~2002.
	101	The following materials from Frontier’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2022,~~2023, 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 September 30, ~~2022,~~2023, formatted in iXBRL and contained in Exhibit 101.

6255

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/ William McGloin
	William McGloin
	Chief Accounting Officer and Controller
	(Principal Accounting Officer)

Date: November ~~2, 2022~~1, 2023

6356


	Successor				Predecessor
	For the nine months		For the five months		For the four months
	ended September 30,		ended September 30,		ended April 30,
	2022		2021		2021

Revenue	$	4,350	$	2,637	$	2,231

Operating expenses:
Cost of service		1,643		986		830
Selling, general, and administrative expenses		1,293		690		537
Depreciation and amortization		870		452		506
Restructuring costs and other charges		88		19		7
Total operating expenses		3,894		2,147		1,880


Operating income		456		490		351

Investment and other income (loss), net (See Note 10)		410		(39)		1
Pension settlement costs		(50)		-		-
Reorganization items, net		-		-		4,171
Interest expense (See Note 8)		(356)		(152)		(118)

Income before income taxes		460		299		4,405
Income tax expense (benefit)		174		74		(136)

Net income	$	286	$	225	$	4,541

Basic net earnings per share
attributable to Frontier common shareholders	$	1.17	$	0.92	$	43.42

Diluted net earnings per share
attributable to Frontier common shareholders	$	1.17	$	0.92	$	43.28

Total weighted average shares outstanding - basic		244,711		244,402		104,584

Total weighted average shares outstanding - diluted		245,080		245,600		104,924


	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		-		-		(21)		(8)
Credits granted, excluding amounts
recognized as revenue		-		-		17		17
Reclassified between current
and noncurrent		-		-		4		(4)
Balance at September 30, 2022 (Successor)	$	-	$	-	$	27	$	16


	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		-		-		(13)		(1)
Cash received, excluding amounts
recognized as revenue		-		-		17		9
Reclassified between current
and noncurrent		-		-		1		(1)
Balance at September 30, 2021 (Successor)	$	-	$	-	$	20	$	8


($ in millions)	Revenue from contracts with customers
2022 (remaining three months)	$	320
2023		410
2024		273
2025		137
2026		80
Thereafter		87
Total	$	1,307


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	1,078	$	25.86	$	25
Restricted stock vested	(862)	$	25.73	$	(20)
Restricted stock forfeited	(140)	$	25.86
Balance at September 30, 2022	2,559	$	25.83	$	60


	Pension		OPEB
($ in millions)	Costs		Costs		Total
Balance at January 1, 2022 (Successor) ⁽¹⁾	$	-	$	60	$	60
Other comprehensive income
before reclassifications		-		8		8
Amounts reclassified from accumulated other
comprehensive income to net income		-		(8)		(8)
Net current-period other comprehensive
income		-		-		-
Balance at September 30, 2022 (Successor) ⁽¹⁾	$	-	$	60	$	60


	Pension		OPEB
($ in millions)	Costs		Costs		Total
Balance at January 1, 2021 (Predecessor) ⁽¹⁾	$	(699)	$	(56)	$	(755)
Other comprehensive income
before reclassifications		270		74		344
Amounts reclassified from accumulated other
comprehensive loss to net income		19		(4)		15
Net current-period other comprehensive
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		-		46		46
Amounts reclassified from accumulated other
comprehensive income to net income		-		(2)		(2)
Net current-period other comprehensive
income		-		44		44
Balance at September 30, 2021 (Successor) ⁽¹⁾	$	-	$	44	$	44


	Successor				Predecessor		Non-GAAP Combined
	For the nine months ended September 30,		For the five months ended September 30,		For the four months ended April 30,		For the nine months ended September 30,
	2022		2021		2021		2021		% Change
Data and Internet services	$	2,531	$	1,390	$	1,125	$	2,515	1	%
Voice services		1,136		694		647		1,341	(15)	%
Video services		398		254		223		477	(17)	%
Other		245		161		125		286	(14)	%
Revenue from contracts with customers		4,310		2,499		2,120		4,619	(7)	%
Subsidy and other revenue		40		138		111		249	(84)	%
Revenue		4,350		2,637		2,231		4,868	(11)	%

Operating expenses:
Cost of Service		1,643		986		830		1,816	(10)	%
Selling, general, and administrative expenses		1,293		690		537		1,227	5	%
Depreciation and amortization		870		452		506		958	(9)	%
Restructuring costs and other charges		88		19		7		26	238	%
Total operating expenses	$	3,894	$	2,147	$	1,880	$	4,027	(3)	%

Operating income		456		490		351		841	(46)	%

Consumer		2,352		1,343		1,133		2,476	(5)	%
Business and wholesale		1,958		1,156		987		2,143	(9)	%
Revenue from contracts with customers	$	4,310	$	2,499	$	2,120	$	4,619	(7)	%

Fiber revenue		2,048		1,139		903		2,042	0	%
Copper revenue		2,262		1,360		1,140		2,500	(10)	%
Non-network specific revenue		-		-		77		77	(100)	%
Revenue from contracts with customers	$	4,310	$	2,499	$	2,120	$	4,619	(7)	%