8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):   October 4, 2021

Frontier Communications Parent, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

001-11001	06-0619596
(Commission File Number)	(IRS Employer Identification No.)

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

(203) 614-5600

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

_________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:  None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 7.01 Regulation FD Disclosure

On October 4, 2021, Frontier Communications Holdings, LLC (“FCH LLC” or the “Issuer”), a consolidated subsidiary of Frontier Communications Parent, Inc. (the “Company”), commenced an offering pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), for the issuance of $1.0 billion aggregate principal amount of second lien secured notes due 2030 (the “Offering”). On October 4, 2021, the Company issued a press release regarding commencement of the Offering.  A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K (“Current Report”) and is incorporated by reference herein. The Company intends to use the net proceeds of the Offering to fund capital investments and operating costs arising from the Company’s fiber build and expansion of its fiber customer base, and for general corporate purposes.

In addition, FCH LLC has received requisite lender consents in connection with a proposed amendment to its senior secured first lien revolving credit facility (the “Exit Revolving Facility”), and expects to enter into such amendment substantially concurrently with the closing of the Offering.  Such amendment will, among other things, change the financial covenant level to a maximum first lien leverage ratio covenant (as more fully described in the Exit Revolving Facility) of 3.00:1.00. There can be no assurances, however, that such amendment to the Exit Revolving Facility will be executed and will become effective on the terms as described herein or at all.

In connection with the Offering, the Company is furnishing its unaudited pro forma condensed consolidated statements of operations (the “Pro Forma Financial Information”) and the explanatory notes thereto for the fiscal year ended December 31, 2020 and for the six month periods ended June 30, 2021 and June 30, 2020, a copy of which is attached as Exhibit 99.2 to this Current Report and is incorporated by reference herein. The Company became the successor reporting company to Frontier Communications Corporation (“Old Frontier”) upon Old Frontier’s emergence from bankruptcy on April 30, 2021 pursuant to Rule 15d-5 of the Securities Exchange Act of 1934.  The historical data provided for the year ended December 31, 2020 is derived from Old Frontier’s audited consolidated financial statements contained in the Form 10-K filed for the year ended December 31, 2020. The historical data provided for the period from January 1, 2021 through April 30, 2021 and for the period from May 1, 2021 through June 30, 2021 is derived from the Company’s unaudited interim financial statements, contained in the Form 10-Q filed for the quarterly period ended June 30, 2021.

The Pro Forma Financial Information (i) removes the results of the Northwest Operations through the date of sale on May 1, 2020 from the Company’s results of operations for the year ended December 31, 2020, (ii) reverses certain restructuring costs incurred during the six months ended June 30, 2021 and the year ended December 31, 2020 and (iii) reflects the adoption of fresh start accounting upon the Company’s emergence from Chapter 11 restructuring on April 30, 2021 as if such adoption had occurred on January 1, 2020. Each of these adjustments is described in further detail below and within the explanatory notes to the Pro Forma Financial Information.

The Pro Forma Financial Information and explanatory notes should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 and the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021.  The Pro Forma Financial Information is based upon available data and certain estimates and assumptions that the Company believes are reasonable. The Pro Forma Financial Information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the transactions been completed at the dates indicated.  In addition, the Pro Forma Financial Information does not purport to project the future results of operations of the Company.

The information being furnished under this Item 7.01, including Exhibit 99.1, of this Current Report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Forward-Looking Statements

This Current Report contains “forward-looking statements” related to future events. Forward-looking statements address our expectations or beliefs concerning future events, including, without limitation, the transactions contemplated hereto and the use of proceeds therefrom. 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. 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; our ability to successfully implement strategic initiatives, including our fiber buildout and other initiatives to enhance revenue and realize productivity improvements; competition from cable, wireless and wireline carriers, satellite, fiber “overbuilders” and over the top companies, and the risk that we will not respond on a timely or profitable basis; our ability to successfully adjust to changes in the communications industry, including the effects of technological changes and competition on our capital expenditures, products and service offerings; risks related to disruption in our networks, infrastructure and information technology that result in customer loss and/or incurrence of additional expenses; the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions; our ability to retain or attract new customers and to maintain relationships with customers, including wholesale customers; our reliance on a limited number of key supplies and vendors; declines in revenue from our voice services, switched and nonswitched access and video and data services that we cannot stabilize or offset with increases in revenue from other products and services; 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, including participation in the proposed RDOF program; our ability to meet our CAF II and RDOF obligations and the risk of penalties or obligations to return certain CAF II and RDOF funds; our ability to defend against litigation and potentially unfavorable results from current pending and future litigation; our ability to comply with applicable federal and state consumer protection requirements; the effects of governmental legislation and regulation on our business, including costs, disruptions, possible limitations on operating flexibility and changes to the competitive landscape resulting from such legislation or regulation; the impact of regulatory, investigative and legal proceedings and legal compliance risks; our ability to effectively manage service quality in the states in which we operate and meet mandated service quality metrics; the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments; 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 and our implementation of fresh start accounting; adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally; potential adverse impacts of the COVID-19 pandemic on our business and operations, including potential disruptions to the work of our employees arising from health and safety measures such as social distancing and working remotely, our ability to effectively manage increased demand on our network, our ability to maintain relationships with our current or prospective customers and vendors as well as their abilities to perform under current or proposed arrangements with us, and stress on our supply chain; risks associated with our emergence from the Chapter 11 Cases, including, but not limited to, the continuing effects of the Chapter 11 Cases on us and our relationships with our suppliers, customers, service providers or employees and changes in the composition of our board of directors and senior management; volatility in the trading price of our common stock, which has a limited trading history; substantial market overhang from the common stock issued in the Chapter 11 reorganization; 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.  You should consider these important factors, as well as the risks and other factors contained in Frontier’s filings with the U.S. Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q.  These risks and uncertainties may cause actual future results to be materially different than those expressed in such forward-looking statements.  We do not intend, nor do we undertake any duty, to update any forward-looking statements.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description
99.1	Press Release
99.2	Pro Forma Financial Information
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

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 hereunto duly authorized.

		Frontier Communications Parent, Inc.
Date:  October 4, 2021	By:	/s/ Mark D. Nielsen
		Mark D. Nielsen
		Executive Vice President, Chief Legal and Regulatory Officer

EX-99.1

Exhibit 99.1

Frontier Offers $1.0 Billion of Second Lien Secured Notes

NORWALK, Conn. – Frontier Communications Holdings, LLC (the “Issuer”), a consolidated subsidiary of Frontier Communications Parent, Inc. (NASDAQ: FYBR) (“Frontier” or the “Company”) today announced that it intends to offer, subject to market conditions and other factors, $1.0 billion aggregate principal amount of second lien secured notes due 2030 (the “Notes”) in a private transaction.

Frontier intends to use the net proceeds of the offering to fund capital investments and operating costs arising from the Company’s fiber build and expansion of its fiber customer base, and for general corporate purposes.

The Notes and the related guarantees are being offered and sold only to persons reasonably believed to be “qualified institutional buyers” in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to certain non-U.S. persons in compliance with Regulation S under the Securities Act. The Notes and the related guarantees have not been and will not be registered for sale under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

This press release shall not constitute an offer to sell, or a solicitation of an offer to buy, the Notes or any other securities, and shall not constitute an offer to sell, solicitation of an offer to buy, or sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any offers of the Notes will be made only by means of a private offering memorandum.

About Frontier

Frontier offers a variety of services to residential and business customers over its fiber-optic and copper networks in 25 states, including video, high-speed Internet, advanced voice, and Frontier Secure® digital protection solutions. Frontier Business™ offers communications solutions to small, medium, and enterprise businesses.

Forward-Looking Statements

This release contains “forward-looking statements” related to future events. Forward-looking statements address our expectations or beliefs concerning future events, including, without limitation, the transactions contemplated hereto and the use of proceeds therefrom. 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. 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; our ability to successfully implement strategic initiatives, including our fiber buildout and other initiatives to enhance revenue and realize productivity improvements; competition from cable, wireless and wireline carriers, satellite, fiber “overbuilders” and over the top companies, and the risk that we will not respond on a timely or profitable basis; our ability to successfully adjust to changes in the communications industry, including the effects of technological changes and competition on our capital expenditures, products and service offerings; risks related to disruption in our networks, infrastructure and information technology that result in customer loss and/or incurrence of additional expenses; the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions; our ability to retain or attract new customers and to maintain relationships with customers, including wholesale customers; our reliance on a limited number of key supplies and vendors; declines in revenue from our voice services, switched and nonswitched access and video and data services that we cannot stabilize or offset with increases in revenue from other products and services; 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, including participation in the proposed RDOF program; our ability to meet our CAF II and RDOF obligations and the risk of penalties or obligations to return certain CAF II and RDOF funds; our ability to defend against litigation and potentially unfavorable results from current pending and future litigation; our ability to comply with applicable federal and state consumer protection requirements; the effects of governmental legislation and regulation on our business, including costs, disruptions, possible limitations on operating flexibility and changes to the competitive landscape resulting from such legislation or regulation; the impact of regulatory, investigative and legal proceedings and legal compliance risks; our ability to effectively manage service quality in the states in which we operate and meet mandated service quality metrics; the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments; 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 and our implementation of fresh start accounting; adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally; potential adverse impacts of the COVID-19 pandemic on our business and operations, including potential disruptions to the work of our employees arising from health and safety measures such as social distancing and working remotely, our ability to effectively manage increased demand on our network, our ability to maintain relationships with our current or prospective customers and vendors as well as their abilities to perform under current or proposed arrangements with us, and stress on our supply chain; risks associated with our emergence from the Chapter 11 Cases, including, but not limited to, the continuing effects of the Chapter 11 Cases on us and our relationships with our suppliers, customers, service providers or employees and changes in the composition of our board of directors and senior management; volatility in the trading price of our common stock, which has a limited trading history; substantial market overhang from the common stock issued in the Chapter 11 reorganization; 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.  You should consider these important factors, as well as the risks and other factors contained in Frontier’s filings with the U.S. Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q.  These risks and uncertainties may cause actual future results to be materially different than those expressed in such forward-looking statements.  We do not intend, nor do we undertake any duty, to update any forward-looking statements.

Investor Contact

Spencer KurnSVP, Investor Relations

+1 401 225 0475

spencer.kurn@ftr.com

Source: Frontier Communications Parent, Inc.

EX-99.2

Exhibit 99.2

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Consolidated Financial Information

Introduction

The following unaudited pro forma condensed consolidated statements of operations (the “Pro Forma Financial Information”) and explanatory notes set forth the historical consolidated statement of operations for Frontier Communications Corporation and its subsidiaries (“Old Frontier”) and the historical consolidated statement of operations for Frontier Communications Parent, Inc (“Frontier,” the “Company,” “we,” “us” or “our”) and its subsidiaries after giving effect to the consummation of the Plan (as defined below), the application of fresh start accounting and the sale of the Northwest Operations. Frontier became the successor reporting company upon Old Frontier’s emergence from bankruptcy on April 30, 2021 (the “Effective Date”) pursuant to Rule 15d-5 of the Securities Exchange Act of 1934. References to “Successor” relate to the results of operations of the Company subsequent to the Effective Date, and references to “Predecessor” relate to the results of operations of Frontier Communications Corporation through the Effective Date. The historical data presented for the year ended December 31, 2020 is derived from the Predecessor’s audited consolidated financial statements contained the Form 10-K filed for the year ended December 31, 2020. The historical data presented for the period from January 1, 2021 through April 30, 2021 and for the period from May 1, 2021 through June 30, 2021 is derived from the Successor’s unaudited interim financial statements, contained in the Form 10-Q filed for the quarterly period ended June 30, 2021.

The Pro Forma Financial Information and explanatory notes should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 and the Quarterly Reports on Form 10-Q for the quarterly period ended June 30, 2021. The Pro Forma Financial Information has been prepared to give effect to the adjustments described below, principally the consummation of the Fifth Amended Joint Plan of Reorganization of Frontier Communications Corporation and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the “Plan”), the application of fresh start accounting and the sale of the Northwest Operations, as if these transactions and related events had occurred on January 1, 2020.  Each of the adjustments is described in further detail below and within the explanatory notes to the Pro Forma Financial Information. The Pro Forma Financial Information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the transactions been completed at the dates indicated. In addition, the Pro Forma Financial Information does not purport to project the future results of operations of the Company.

Our historical financial statements prior to the Effective Date are not comparable to our financial statements after that date due primarily to the effects of the Plan and the adoption and application of Financial Accounting Standards Board Codification Topic 852, Reorganizations (“ASC 852”), provided in accounting principles generally accepted in the United States of America (“U.S. GAAP”) with respect to entities that have emerged from bankruptcy proceedings.

Reorganization Adjustments

The “Reorganization and other Adjustments” column of the Pro Forma Financial Information gives effect to the consummation of the Plan, including the following transactions:

• our previously outstanding common stock was canceled, extinguished and discharged;

• all amounts previously outstanding under our unsecured senior note indentures were fully extinguished;

• the issuance of 244,401,000 shares of common stock, par value $0.001 per share;

• the issuance of $750 million in Takeback Notes (as defined below) and an incremental $225 million in Exit Term Loan Facility borrowings on the Effective Date; and

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Consolidated Financial Information

• On September 17, 2020, we repaid in full the $749 million of outstanding principal under the Company’s $850 million secured revolving credit facility maturing on February 27, 2024.  This facility was terminated on October 8, 2020 and replaced with the DIP Revolving Facility.

Fresh Start Adjustments

We adopted fresh start accounting in accordance with ASC 852 as of the Effective Date, resulting in the Company becoming a new entity for financial reporting purposes. Upon the adoption of fresh start accounting, our assets and liabilities were recorded at their fair values as of April 30, 2021. Subsequent to the Effective Date, as permitted by fresh start accounting, we also adopted certain accounting policies which differed from those of the Predecessor.  The “Fresh Start Adjustments” column of the accompanying Pro Forma Financial Information gives effect to the application of fresh start accounting, including the changes in accounting policy, assuming we had emerged from bankruptcy on January 1, 2020.

Northwest Operations Adjustments

On May 1, 2020, Old Frontier completed the sale of its Northwest Operations pursuant to the terms and conditions of the Purchase Agreement, dated as of May 28, 2019. The Northwest Operations Adjustments column of the Pro Forma Financial Information gives effect to the reversal of the results of operations for the Northwest Operations through the date of sale on May 1, 2020. During the six months ended June 30, 2020, and the twelve months ended December 31, 2020, Frontier recorded a loss on disposal of $160 million and $162 million, respectively, associated with the sale of the Northwest Operations. These losses have been reversed as part of the Pro Forma Financial Information.

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2020

(in millions)

	For the year ended December 31, 2020
				Pro Forma Adjustments
$ in millions	Predecessor			Reorganization and other Adjustments				Fresh Start Adjustments				Northwest Operations Adjustments				Pro Forma
Revenues	$	7,155		$	-			$	(186	)	(e)	$	(192	)	(m)	$	6,777
Operating expenses:
Network access expenses		975			-				(220	)	(f)		(14	)	(m)		741
Network related expenses		1,726			-				-				(26	)	(m)		1,700
Selling, general and administrative expenses		1,648			-				109		(g)		(26	)	(m)		1,731
Depreciation and amortization		1,598			-				(605	)	(h)		-				993
Loss on disposal of Northwest Operations		162			-				(88	)	(i)		(74	)	(m)		-
Restructuring costs and other charges		87			(72	)	(a)		-				-				15
Total operating expenses		6,196			(72	)			(804	)			(140	)			5,180
Operating income (loss)		959			72				618				(52	)			1,597
Investment and other loss, net		(43	)		-				(383	)	(i)		-				(426	)
Pension settlement costs		(159	)		-				159		(i)		-				-
Loss on early extinguishment of debt		(72	)		-				-				-				(72	)
Reorganization items, net		(409	)		409		(b)		-				-				-
Interest expense		(762	)		267		(c)		43		(j)		-				(452	)
Net income (loss) before income taxes		(486	)		748				437				(52	)			647
Income tax expense (benefit)		(84	)		187		(d)		109		(k)		(57	)	(m)		155
Net income (loss)	$	(402	)	$	561			$	328			$	5			$	492
Capital expenditures	$	1,181		$	-			$	(28	)	(l)	$	-			$	1,153

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the six months ended June 30, 2020

(in millions)

	For the six months ended June 30, 2020
				Pro Forma Adjustments
$ in millions	Predecessor			Reorganization and other Adjustments				Fresh Start Adjustments				Northwest Operations Adjustments				Pro Forma
Revenues	$	3,734		$	-			$	(91	)	(e)	$	(192	)	(m)	$	3,451
Operating expenses:
Network access expenses		541			-				(106	)	(f)		(14	)	(m)		421
Network related expenses		874			-				-				(26	)	(m)		848
Selling, general and administrative expenses		851			-				53		(g)		(26	)	(m)		878
Depreciation and amortization		812			-				(321	)	(h)		-				491
Loss on disposal of Northwest Operations		160			-				(88	)	(i)		(72	)	(m)		-
Restructuring costs and other charges		84			(72	)	(a)		-				-				12
Total operating expenses		3,322			(72	)			(462	)			(138	)			2,650
Operating income (loss)		412			72				371				(54	)			801
Investment and other loss, net		(15	)		-				(659	)	(i)		-				(674	)
Pension settlement costs		(159	)		-				159		(i)		-				-
Reorganization items, net		(142	)		142		(b)		-				-				-
Interest expense		(543	)		289		(c)		24		(j)		-				(230	)
Net income (loss) before income taxes		(447	)		503				(105	)			(54	)			(103	)
Income tax expense (benefit)		(80	)		126		(d)		(26	)	(k)		(50	)	(m)		(30	)
Net income (loss)	$	(367	)	$	377			$	(79	)		$	(4	)		$	(73	)
Capital expenditures	$	511		$	-			$	(12	)	(l)	$	-			$	499

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the six months ended June 30, 2021

(in millions)

	For the two months ended June 30, 2021			For the four months ended April 30, 2021			For the six months ended June 30, 2021
							Pro Forma Adjustments
$ in millions	Successor			Predecessor			Reorganization and other Adjustments				Fresh StartAdjustments				Pro Forma
Revenues	$	1,061		$	2,231		$	-			$	(74	)	(e)	$	3,218
Operating expenses:
Network access expenses		127			264			-				(84	)	(f)		307
Network related expenses		269			566			-				-				835
Selling, general and administrative expenses		269			537			-				31		(g)		837
Depreciation and amortization		179			506			-				(167	)	(h)		518
Restructuring costs and other charges		11			7			(9	)	(a)		-				9
Total operating expenses		855			1,880			(9	)			(220	)			2,506
Operating income		206			351			9				146				712
Investment and other loss, net		(2	)		1			-				19		(i)		18
Reorganization items, net		-			4,171			(4,171	)	(b)		-				-
Interest expense		(62	)		(118	)		(18	)	(c)		9		(j)		(189	)
Net income (loss) before income taxes		142			4,405			(4,180	)			174				541
Income tax expense (benefit)		43			(136	)		188		(d)		44		(k)		139
Net income (loss)	$	99		$	4,541		$	(4,368	)		$	130			$	402
Capital expenditures	$	269		$	500		$	-			$	(12	)	(l)	$	757

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Financial Information

Note 1. Basis of Presentation

The Pro Forma Financial Information and explanatory notes present the statement of operations of Frontier Communications Parent, Inc. assuming the Effective Date and related events had occurred on January 1, 2020.

The Pro Forma Financial Information does not purport to represent what the results of operations of the Company would have been had the emergence from bankruptcy occurred on January 1, 2020, or to project the results of operations of the Company for any future periods. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable and supportable. The pro forma adjustments are attributable to transactions and events related to the emergence from bankruptcy. The pro forma adjustments also remove the financial results of our Northwest Operations, which was disposed of on May 1, 2020. In the opinion of management, the pro forma adjustments represent all necessary adjustments and all adjustments necessary to present the Pro Forma Financial Information fairly have been made.

The Company has not presented herein a pro forma condensed consolidated balance sheet, as the effects of the Plan, the application of fresh start accounting, and the sale of the Northwest Operations are presented in the consolidated balance sheet in the Company’s Form 10- Q for the six months ended June 30, 2021. Thus, no further pro forma adjustments were necessary.

Note 2. Pro Forma Adjustments

Reorganization Adjustments

(a) This adjustment reflects a reduction in expenses of $9 million, $72 million and $72 million for the six months ended June 30, 2021 and 2020, and the twelve months ended December 31, 2020, respectively, associated with consulting and advisory costs.

(b) This adjustment represents the reversal of certain reorganization costs recognized during the period.

(c) The interest expense adjustment reflects a net reduction of interest expense as a result of the Plan as follows:

	For theyear ended			For thesix months ended
$ in millions	December 31,2020			June 30,2021			June 30,2020
Debt Reductions
Interest associated with debt that was cancelled in bankruptcy(1)	$	297		$	-		$	297
Interest & fees associated with drawn revolver(2)		28			-			20
Interest expense related to cancelled debt		325			-			317
Debt Additions
Fees associated with new revolver(2)		(4	)		-			(1	)
Interest associated with debt issued at emergence(3)		(54	)		(18	)		(27	)
Interest expense related to new debt issued		(58	)		(18	)		(28	)
Total adjustment to interest expense	$	267		$	(18	)	$	289

⁽¹⁾ Interest expense recognized in conjunction with the cancellation of Old Frontier’s unsecured senior note indentures in connection with the emergence from bankruptcy.

⁽²⁾ The Predecessor had an $850 million secured revolving credit facility that had a stated maturity date of February 27, 2024.  All amounts outstanding were required to be repaid in connection with the $625 million DIP Revolving Facility that was entered into on October 8, 2020 and which converted to an exit revolving facility on the Effective Date (the “Exit Revolving Facility”).  No amounts are assumed to be outstanding related to the Exit Revolving Facility.

⁽³⁾ Upon emergence from bankruptcy, we issued $750 million aggregate principal amount of 5.875% Second Lien Secured Notes (the “Takeback Notes”) and received $225 million in proceeds from the Exit Term Loan Facility.

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Financial Information

In addition to the adjustments noted above, in October 2020, Frontier issued $1,150 million aggregate principal amount of 5.875% First Lien Notes due 2027 and borrowed $500 million pursuant to the DIP Term Loan Facility.  The proceeds of these borrowings were used to repay in full the Company’s $1,650 million aggregate principal amount of 8.000% First Lien Notes due 2027.  In November 2020, Frontier issued $1,550 million aggregate principal amount of 5.000% First Lien Notes due 2028, issued $1,000 million aggregate principal amount of 6.750% Second Lien Notes due 2029 and borrowed an incremental $750 million pursuant to the DIP Term Loan Facility.  The proceeds were used to repay the $1,740 million outstanding under the Term Loan B and repay in full the $1,600 million aggregate principal amount of 8.500% Second Lien Notes due 2026.

These transactions were not adjusted for in determining the Pro Forma Financial Information. The impact of these transactions, for the year ended December 31, 2020 would have resulted in a reduction to our interest expense of approximately $80 million if they had occurred on January 1, 2020.

(d) For the year ended, December 31, 2020 and the six months ended June 30, 2020, this adjustment reflects the recalculation of income tax expense using an estimated statutory rate of approximately 25% related to reorganization and other pro forma adjustments.

For the six months ended June 30, 2021, the Company consummated a taxable disposition of substantially all of the assets and/or subsidiary stock of Old Frontier and utilized substantially all of the Company’s net operating losses, resulting in income tax expense of $111 million related to the gain from bankruptcy emergence.  In addition, $299 million of income tax liabilities, net, were derecognized as part of the income tax provision with the implementation of fresh start accounting. These amounts are adjusted for in the pro forma adjustments to income taxes.

Fresh Start Adjustments

(e) This adjustment reflects changes to reported revenue had accounting policies adopted upon the Effective Date and other fresh start accounting impacts been effected as of January 1, 2020. The pro forma adjustments to revenue were as follows:

	For theyear ended			For thesix months ended
$ in millions	December 31, 2020			June 30, 2021			June 30, 2020
USF Fees(1)	$	(220	)	$	(84	)	$	(106	)
Bad debt provision(2)		51			14			23
Government grants(3)		30			5			18
Deferred installation fees(4)		(47	)		(9	)		(26	)
Total Revenue Adjustment		(186	)		(74	)		(91	)

⁽¹⁾ Historically, we have reported USF fees collected from customers as revenue and USF fees remitted to the government as expense. Upon emergence from bankruptcy, we made an accounting policy election to treat the amounts on a net revenue basis. Since regulatory rate changes related to USF are outside of our control and may vary from period to period, we believe net presentation is more useful. This policy change has no impact on operating income.

⁽²⁾ Historically, we have reported the provision for bad debts as a reduction in revenue. Upon emergence from bankruptcy, we made an accounting policy election to classify the provision for bad debts as an expense, consistent with our industry peers. This policy change has no impact on operating income.

⁽³⁾ 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 statement of operations.

⁽⁴⁾ Although there is no change to Frontier’s accounting policy of deferring and amortizing installation fees assessed to its customers, there will be a decline in revenue recognized since the balance of deferred and unrecognized installation revenue account was written off as part of the adoption of fresh start accounting.

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Financial Information

(f) This adjustment reflects the reduction in expense related to the accounting policy election for USF fees described in adjustment (e) above.

(g) This adjustment reflects the additional expense related to the accounting policy elections that affect selling, general, and administrative expenses on our consolidated statement of operations. The impact of the changes are as follows:

	For theyear ended		For thesix months ended
$ in millions	December 31,2020		June 30,2021		June 30,2020
Bad debt provision(1)	$	51	$	14	$	23
Capitalization of costs(2)		58		17		30
Total adjustment to Selling, general, and administrative expense	$	109	$	31	$	53

⁽¹⁾ This adjustment reflects the accounting policy election for the bad debt provision described in adjustment (e) above.

⁽²⁾ This adjustment reflects the increase in expense associated with our accounting policy election adopted upon emergence from bankruptcy to cease capitalization of certain administrative expenses that are indirectly associated with capital activities.

(h) Upon emergence from bankruptcy, we reduced the carrying value of our property, plant and equipment by $4,473 million and increased the values of our intangible assets by $3,863 million as a result of a valuation that was performed as of the Effective Date. Had these valuation adjustments been made as of January 1, 2020, our reported depreciation and amortization expense would have been impacted as follows:

	For the year ended			For the six months ended
$ in millions	December 31, 2020			June 30, 2021			June 30, 2020
Depreciation expense	$	(582	)	$	(176	)	$	(299	)
Amortization expense		(23	)		9			(22	)
Total adjustment to Depreciation and Amortization Expense	$	(605	)	$	(167	)	$	(321	)

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Financial Information

(i) Historically, actuarial gains (losses) related to our defined benefit plans were recorded in “Accumulated other comprehensive income (loss)”, a component of equity, and were amortized into “Investment and other income (loss)” over the estimated average remaining service period of the plan participants.  As part of fresh start accounting, the unamortized balances related to these actuarial gains (losses) were de-recognized.  Additionally, on the Effective Date, an accounting policy election was made to recognize these gains and losses immediately in the period they occur as “Investment and other income (loss)” on the consolidated statement of operations.

The impact of these changes on our consolidated statement of operations, assuming an effective date of January 1, 2020, was as follows:

	For the year ended			For the six months ended
$ in millions	December 31, 2020			June 30, 2021		June 30, 2020
(Gain) Loss on disposal of Northwest Operations(1)	$	(88	)	$	—	$	(88	)
Investment & Other Income (expense), net(2)		(383	)		19		(659	)
Pension Settlement Cost(3)		159			—		159

⁽¹⁾ This adjustment removes historical actuarial losses recognized within “Loss on disposal of the Northwest Operations” that had been previously deferred in “Accumulated other comprehensive income (loss).”

⁽²⁾ This adjustment reflects our new accounting policy election to recognize actuarial gains and losses measured during the period. Since these amounts were previously deferred in “Accumulated other comprehensive income (loss)” and amortized into income, an additional adjustment was necessary to remove the historical amortization recorded. These adjustments were as follows:

	For theyear ended			For the six months ended
$ in millions	December 31,2020			June 30,2021		June 30,2020
Actuarial gain (loss) occurring during the period	$	(456	)	$	—	$	(693	)
Amortization of prior service costs and other actuarial losses		73			19		34
Total adjustment to Investment and other income (loss), net	$	(383	)	$	19	$	(659	)

⁽³⁾ Includes the adjustment to eliminate the recognition of pension settlement costs recorded for the year ended December 31, 2020 and the six months ended June 30, 2020.

(j) Upon emergence from bankruptcy, we revalued our debt instruments which resulted in a $236 million increase to our historical debt balances which subsequently is being amortized into interest expense.  This adjustment reflects the change to interest expense, had this valuation adjustment been made on January 1, 2020.

(k) The adjustment reflects the recalculation of income tax expense using an estimated statutory rate of 25% related to fresh start pro forma adjustments for all periods.

(l) This adjustment reflects increases of $5 million, $18 million and $30 million for the six months ended June 30, 2021 and 2020, and the twelve months ended December 31, 2020, respectively, related to the accounting policy change to report government grants in revenue instead of as offsets to capital, as described in adjustment (e) above. Capital expenditures also reflect decreases of $17 million, $30 million and $58 million for the six months ended June 30, 2021 and 2020, and the twelve months ended December 31, 2020, respectively, associated with our accounting policy election adopted upon the Effective Date to cease capitalization of certain administrative expenses that are indirectly associated with capital activities as described in adjustment (g) above.

Frontier Communications Parent, Inc

Unaudited Pro Forma Condensed Financial Information

Northwest Operations Adjustments

(m) On May 1, 2020, Frontier completed the sale of its Northwest Operations.  These adjustments remove revenue and expenses related to the Northwest Operations from January 1, 2020 through the May 1, 2020 sale date, as well as the elimination of the loss recorded related to the disposal of the assets for the six months ended June 30, 2020 (As adjusted by changes to the pension and postretirement benefit plans as described in adjustment (i) above).

This adjustment also reflects the reversal of the tax impact on the loss on disposal of the Northwest Operations for the six months ended June 30, 2020 and the twelve months ended December 31, 2020.

XML

Document and Entity Information	Oct. 04, 2021
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 04, 2021
Entity Registrant Name	Frontier Communications Parent, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-11001
Entity Tax Identification Number	06-0619596
Entity Address, Address Line One	401 Merritt 7
Entity Address, City or Town	Norwalk
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06851
City Area Code	203
Local Phone Number	614-5600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000020520