(9) Restructuring Costs and Other Charges:

Transformation Program

During the second quarter of 2018, Frontier announced a multi-year strategic plan with the objective of improving revenues, profitability, and cash flows by enhancing our operations and customer service and support processes (the “Transformation Program”). During the three months ended March 31, 2019, we incurred $13 million in costs directly associated with these activities.

We have retained a consulting firm to assist in executing on various aspects of this plan. The consulting firm is eligible to receive quarterly fees in the event that we achieve targeted improvements in the Company’s profitability, and bonus payments in the event that we achieve targeted improvements in the Company’s profitability and/or stock price. In certain circumstances, the consulting firm may become eligible to receive the bonus payments and specified fees upon a change of control or termination of the consulting arrangement. Amounts accrued in connection with the consulting agreement are recognized as operating expense under “Restructuring costs and other charges.”

Restructuring Costs

As of March 31, 2019, restructuring related liabilities of $35 million pertaining to transformation costs and employee separation charges were included in “Other current liabilities” in our consolidated balance sheet. Restructuring costs and other charges, primarily consisting of severance and other employee-related costs of $15 million and costs directly associated with the Transformation Program of $13 million, totaling $28 million, are included in “Restructuring costs and other charges” in our consolidated statement of operations for the three months ended March 31, 2019.

For the three months ended March 31, 2018, restructuring costs and other charges, consisted primarily of severance and other employee-related costs of $4 million.

The following is a summary of the changes in the liabilities established for restructuring and other programs for the three months ended March 31, 2019:



($ in millions)

Balance at January 1, 2019	$	18
Severance expense		15
Transformation costs		13
Cash payments during the period		(11)
Balance at March 31, 2019	$	35