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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

or

¨ 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

Picture 2

FRONTIER COMMUNICATIONS PARENT, INC.

(Exact name of registrant as specified in its charter)

Delaware

86-2359749

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

401 Merritt 7

Norwalk, Connecticut

06851

(Address of principal executive offices)

(Zip Code)

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

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

FYBR

The NASDAQ Stock Market LLC

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

Yes x No ¨

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

Yes x No ¨

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

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

Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

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

Yes ¨ No x

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


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, and December 31, 2021

1

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

4

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

5

Consolidated Statements of Cash Flows 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)

6

Notes to Consolidated Financial Statements

7

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

38

Item 3. Quantitative and Qualitative Disclosures about Market Risk

58

Item 4. Controls and Procedures

60

Part II. Other Information

Item 1. Legal Proceedings

61

Item 1A. Risk Factors

61

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

61

Item 6. Exhibits

62

Signature

63


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 

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


2


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

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


3


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.