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Actionable news in FTR: Frontier Communications Corporation,

Frontier Communications: Q3 2015 Earnings Release

The following excerpt is from the company's SEC filing.

Exhibit 99.1

401 Merritt 7

Norwalk, CT 06851


Frontier Communications Reports 201

Quarter Results

Continued positive broadband momentum

with 2

broadband additions



Connecticut revenue


Completed financing for the

acquisition of Verizon CA, FL and TX


Maintained an attractive and sustainable dividend payout

ratio of

, excluding acquisition financing

, Conn.,


— Frontier Communica tions Corporation (NASDAQ: FTR) today reported

quarter 201


million, operating income of $

million and net

million, or $

per share.


sition related interest expense

acquisition and integration costs of



impact of $

), non-GAAP adjusted net income

million, or $

quarter of 201


attached Schedule B

executed well in the third quarter

”, said Dan McCarthy, Frontier’s President and Chief Executive Officer. “We extended our consistent track record of strong broadband net additions, achieved another quarter of sequential stability in our Connecticut operations, and grew our Data and Internet services revenue once again. In addition, we completed two very significant debt transactions totaling $8.1 billion which, together with our June 2015 equity offering, provides the permanent funding to complete our acquisition of Verizon’s California, Texas an

d Florida wireline operations.”

Frontier continues to make good progress toward completing our integration efforts

for the Verizon acquisition

Mr. McCarthy said

We are in the process of expanding our infrastructure and adding resources in order to have capabilities and capacity in place in advance of the anticipated March 31, 2016 closing. We remain confident in our ability to achieve the substantial synergies we have targeted post-closing and have begun planning on additional cost efficiency opportunities that

will be

a result of our significantly larger scale.

Our fourth quarter focus is all about operational execution to improve our customer revenue, lower our costs and prepare for the successful integration of the Verizon


n increase


Subsidy revenue improved by $

million during the third quarter due to incremental funding from the Connect America Fund Phase II


In the

quarter, the $

million in revenue attributable to our Connecticut operations


reported for the


Customer revenue


million in the

residential revenue

million for the

compared to $

million in the


business revenue

was $

million for the


, 2015


resulted in a


% of our

a net

The average monthly residential revenue per customer

average monthly business revenue per customer


an increase of

% over the

, as the business customer decline was primarily from the small business customer set

broadband customers

compared to


net additions in the



resulted in a net


, including

satellite video customers

compared to the

00 video customers, including

,500 satellite video customers

Network access expenses

Network related expenses

were $

Selling, general and administrative expenses

(SG&A expenses)

Our cash operating expenses increased during the third quarter due to storm

related costs

higher compensation

related to increased headcount

and outside services.

Depreciation and amortization


quarter of 2015

these costs

include $

million related to the

October 2014

cquisition and $

pending Verizon t


Operating income

million and operating income margin

compared to operating income of $

Interest expense

million compared to $

Interest expense


, primarily due to

commitment fees for

the Verizon t



loan facilities


reduced after

quarter with the completion of the June 2015 equity offering

Income tax


a tax

x benefit

effective tax rate for the

quarter of 2015

due to additional state tax benefits

Net income

a net loss

share, in the

, compared to

per share, in the


related interest expense of $

Excluding the impact of


, the non

-GAAP adjusted net income for the

, as compared to

Capital expenditures

for Frontier operations

compared to $17

In addition, a

cquisition related capital expenditures were $

quarter. Capital expenditures funded by the Connect America Fund Phase I were $

million and $

of 2015, respectively.

erating cash flow

resulting in an operating cash flow margin of

, compared to operating cash flow of $5

million and an operating cash flow margin of 3

% for the


Operating cash flow

as adjusted

million of acquis


pension and other postretirement benefit

and $1 million of severance costs

(See attached Schedule A).

Free cash flow

(See attached Schedule A). Our

s on common



of free cash flow

, as adjusted,


the additional dividends paid on the common and preferred stock issued in the June 2015 equity offerings

and interest costs on our September 2015 private notes offering,

our dividend represented a 46% payout of free cash flow for the third quarter of 2015.

Debt Issuance

On September 25, 2015,

completed a private debt offering of $6.6 billion aggregate

principal amount of senior


$1.0 billion of 8.875%

otes due 2020

$2.0 billion of 10.500%

2; and $3.6 billion of 11.000

% senior n

otes due 2025. Each was issued at a price equal to 100% of its principal amount. Frontier

use the proceeds from the offering to finance a portion of the cash consideration payable in connection with the Verizon Transaction and to pay related fees and expenses.

Term Loan Agreement

On August 12, 2015,

entered into a credit agreement for a new $1.5 billion senior secured delayed-draw term loan facility. The term loan will be drawn

the closing of the Verizon Transaction. The final maturity date is the earlier of the fifth anniversary of the draw date

March 31, 2021.

Pension Contributions

Cash contributions to the pension plan

million during the first

months of 2015

We expect

that no further contributions

will be made

in 2015.

2015 Guidance

For the full year of 2015,

million to $

, excluding integration activities,

to $75

0 million

expects that

absent any further legislative changes in 2015,

cash taxes

Non-GAAP Measures

uses certain non-GAAP financial measures in evaluating its performance. These include non-GAAP adjusted net income, free cash flow

and adjusted operating cash flow

. A reconciliation of the differences between

and the most comparable financial measures calculated and presented in accordance with GAAP is included in the tables that follow.

The non-GAAP financial measures are by definition not measures of financial performance under GAAP

and are not alternatives to operating income or net income


as reflected in the statement of

or to cash flow as reflected in the statement of cash flows

and are not necessarily indicative of cash available to fund all cash flow needs. The non-GAAP financial measures used by

may not be comparable to similarly titled measures of other companies.

believe that the presentation of

non-GAAP financial measures provides useful information to investors regarding

financial condition and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) together provide a more comprehensive...