Attached files
| file | filename |
|---|---|
| 8-K - PRO FORMA HISTORICAL DATA 8-K - Frontier Communications Parent, Inc. | form8-k.htm |
Exhibit 99.1
|
Frontier Communications Corporation
|
|
Pro Forma Combined Historical Financial and Operating Data
|
|
2009 and 2010 (Quarterly Unaudited Data)
|
|
The following schedules are presented in order to provide unaudited pro forma combined historical financial and operating data for Frontier Communications Corporation, including financial and operating data for the properties acquired from Verizon Communications Inc. (Verizon) on July 1, 2010 in a merger transaction.
|
|
The unaudited pro forma combined statements of operations information, which has been prepared for the three months ended March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010 and June 30, 2010, gives effect to the transactions and other events as if they had occurred on January 1, 2009. The pro forma information is not necessarily indicative of what the financial position or results of operations actually would have been had the acquisition been completed at the beginning of each period presented. The pro forma information assumes that the debt of Verizon's Separate Telephone Operations (VSTO or the Acquired Properties) was assumed by Frontier as of January 1, 2009, the Frontier common stock was issued to Verizon shareholders as of January 1, 2009 and the Frontier annual cash dividend policy was $0.75 per share in 2009 and 2010.
|
|
Frontier is considered the accounting acquirer. The historical financial information of Frontier and VSTO has been adjusted to give effect to events that are directly attributable to the transactions and factually supportable and, in the case of the statements of operations information, that are expected to have a continuing impact. Pro Forma adjustments were made: to adjust the historical pension and other postretirement employee benefit obligations retained by Verizon; to conform the bad debt expense classification of VSTO to Frontier's policy; to remove acquisition, integration and realignment expenditures; to include interest expense on $3.2 billion of notes assumed by Frontier in the acquisition; to include amortization of acquired customer assets, and to exclude interest charged to VSTO by Verizon.
|
|
The unaudited pro forma financial information does not purport to project the future financial position or operating results of Frontier after completion of the acquisition. The actual depreciation and amortization expense will be based on the final fair value attributed to the identifiable tangible and intangible assets based upon the results of the third-party valuation of the acquired assets. The depreciation and amortization rates may also change based on the results of this third-party valuation. There can be no assurance that the actual depreciation and amortization expense will not differ significantly from the pro forma information included in the following schedules. The unaudited pro forma financial information does not give effect to any potential cost savings or other operating efficiencies that could result from the merger.
|
| Certain figures have been revised from the previously disclosed amounts to conform to Frontier reporting methodologies. |
|
Pro Forma Combined Historical Financial Data
|
|||||||||||||||||||||||||
|
For the quarter ended:
|
|||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
|||||||||||||||
|
(Amounts in millions, except per share amounts)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
||||||||||||||
|
Income Statement Data
|
|||||||||||||||||||||||||
|
Revenue
|
$ 1,562
|
$ (21
|
) |
$ 1,541
|
$ (27
|
) |
$ 1,514
|
$ (60
|
) |
$ 1,454
|
$ 2
|
$ 1,456
|
$ (22
|
) |
$ 1,434
|
||||||||||
|
Costs and expenses (1)
|
809
|
(5
|
) |
804
|
(23
|
) |
781
|
18
|
799
|
(22
|
) |
777
|
18
|
795
|
|||||||||||
|
Depreciation and amortization
|
394
|
5
|
399
|
(32
|
) |
367
|
(22
|
) |
345
|
(1
|
) |
344
|
2
|
346
|
|||||||||||
|
Total operating expenses
|
1,203
|
-
|
1,203
|
(55
|
) |
1,148
|
(4
|
) |
1,144
|
(23
|
) |
1,121
|
20
|
1,141
|
|||||||||||
|
Operating income
|
359
|
(21
|
) |
338
|
28
|
366
|
(56
|
) |
310
|
25
|
335
|
(42
|
) |
293
|
|||||||||||
|
Investment and other income (loss), net
|
8
|
(5
|
) |
3
|
2
|
5
|
(57
|
) |
(52
|
)(2)
|
59
|
7
|
3
|
10
|
|||||||||||
|
Interest expense
|
158
|
9
|
167
|
1
|
168
|
2
|
170
|
(5
|
) |
165
|
1
|
166
|
|||||||||||||
|
Income before income taxes
|
209
|
(35
|
) |
174
|
29
|
203
|
(115
|
) |
88
|
89
|
177
|
(40
|
) |
137
|
|||||||||||
|
Income tax expense
|
71
|
(10
|
) |
61
|
13
|
74
|
(39
|
) |
35
|
50
|
85
|
(3)
|
(38
|
) |
47
|
||||||||||
|
Net income
|
138
|
(25
|
) |
113
|
16
|
129
|
(76
|
) |
53
|
39
|
92
|
(2
|
) |
90
|
|||||||||||
|
Weighted average shares outstanding
|
988
|
-
|
988
|
1
|
989
|
-
|
989
|
-
|
989
|
-
|
989
|
||||||||||||||
|
Basic net income per share
|
|||||||||||||||||||||||||
|
attributable to common shareholders of Frontier
|
$ 0.14
|
$ (0.03
|
) |
$ 0.11
|
$ 0.02
|
$ 0.13
|
$ (0.08
|
) |
$ 0.05
|
$ 0.04
|
$ 0.09
|
$ -
|
$ 0.09
|
||||||||||||
|
(1)
|
Sequential quarterly changes in Costs and Expenses of the acquired properties are impacted by variations in employee and contractor levels at the acquired properties prior to
closing on July 1, 2010, including an increase in employees and contractors in the first six months of 2010.
|
||||||||||||||||||||||||
|
(2)
|
Includes premium on debt repurchases of $54 million ($34 million or $0.03 per share after tax).
|
||||||||||||||||||||||||
|
(3)
|
Includes tax expense of $21 million related to the impact of health care reform legislation enacted in March 2010.
|
||||||||||||||||||||||||
|
Note: Refer to the cover page for explanatory notes which are an integral part of the pro forma combined historical financial data. The unaudited pro forma financial
information makes certain assumptions for illustrative purposes and is subject to change based on the results of the third-party valuation of the acquired assets and other
factors.
|
|||||||||||||||||||||||||
1
|
Pro Forma Combined Historical Financial and Operating Data
|
|||||||||||||||||||||||||
| For the quarter ended: | |||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
|||||||||||||||
|
(Amounts in millions)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
||||||||||||||
|
Selected Income Statement Data
|
|||||||||||||||||||||||||
|
Revenue
|
|||||||||||||||||||||||||
|
Local and long distance services
|
$ 795
|
$ 2
|
$ 797
|
$ (30
|
) |
$ 767
|
$ (7
|
) |
$ 760
|
$ (38
|
) |
$ 722
|
$ (13
|
) |
$ 709
|
||||||||||
|
Data and internet services
|
463
|
2
|
465
|
(8
|
) |
457
|
2
|
459
|
(1
|
) |
458
|
5
|
463
|
||||||||||||
|
Switched access and subsidy
|
193
|
(4
|
) |
189
|
7
|
196
|
(6
|
) |
190
|
-
|
190
|
(16
|
) |
174
|
|||||||||||
|
Directory services
|
28
|
(1
|
) |
27
|
(1
|
) |
26
|
-
|
26
|
(1
|
) |
25
|
(1
|
) |
24
|
||||||||||
|
Other
|
83
|
(20
|
) |
63
|
5
|
68
|
(49
|
) |
19
|
42
|
61
|
3
|
64
|
||||||||||||
|
Total revenue
|
1,562
|
(21
|
) |
1,541
|
(27
|
) |
1,514
|
(60
|
) |
1,454
|
2
|
1,456
|
(22
|
) |
1,434
|
||||||||||
|
Expenses
|
|||||||||||||||||||||||||
|
Costs and expenses (1)
|
809
|
(5
|
) |
804
|
(23
|
) |
781
|
18
|
799
|
(22
|
) |
777
|
18
|
795
|
|||||||||||
|
Depreciation and amortization
|
394
|
5
|
399
|
(32
|
) |
367
|
(22
|
) |
345
|
(1
|
) |
344
|
2
|
346
|
|||||||||||
|
Total operating expenses
|
1,203
|
-
|
1,203
|
(55
|
) |
1,148
|
(4
|
) |
1,144
|
(23
|
) |
1,121
|
20
|
1,141
|
|||||||||||
|
Operating Income
|
$ 359
|
$ (21
|
) |
$ 338
|
$ 28
|
$ 366
|
$ (56
|
) |
$ 310
|
$ 25
|
$ 335
|
$ (42
|
) |
$ 293
|
|||||||||||
|
Other Financial Data
|
|||||||||||||||||||||||||
|
Adjusted operating income (2)
|
$ 370
|
$ (24
|
) |
$ 346
|
$ 23
|
$ 369
|
$ 9
|
$ 378
|
$ (25
|
) |
$ 353
|
$ (44
|
) |
$ 309
|
|||||||||||
|
Adjusted operating income %
|
23.7%
|
-1.2%
|
22.5%
|
1.9%
|
24.4%
|
1.6%
|
26.0%
|
-1.8%
|
24.2%
|
-2.7%
|
21.5%
|
||||||||||||||
|
Operating cash flow, as adjusted (2)
|
$ 764
|
$ (19
|
) |
$ 745
|
$ (9
|
) |
$ 736
|
$ (13
|
) |
$ 723
|
$ (26
|
) |
$ 697
|
$ (42
|
) |
$ 655
|
|||||||||
|
Operating cash flow %, as adjusted
|
48.9%
|
-0.6%
|
48.3%
|
0.3%
|
48.6%
|
1.1%
|
49.7%
|
-1.8%
|
47.9%
|
-2.2%
|
45.7%
|
||||||||||||||
|
Free cash flow (2)
|
$ 370
|
$ (73
|
) |
$ 297
|
$ 15
|
$ 312
|
$ (12
|
) |
$ 300
|
$ 57
|
$ 357
|
$ (72
|
) |
$ 285
|
|||||||||||
|
Dividends (3)
|
$ 186
|
$ -
|
$ 186
|
$ -
|
$ 186
|
$ -
|
$ 186
|
$ -
|
$ 186
|
$ -
|
$ 186
|
||||||||||||||
|
Dividend payout ratio (3)
|
50.3%
|
12.3%
|
62.6%
|
-3.0%
|
59.6%
|
2.4%
|
62.0%
|
-9.9%
|
52.1%
|
13.2%
|
65.3%
|
||||||||||||||
|
(1)
|
Sequential quarterly changes in Costs and Expenses of the acquired properties are impacted by variations in employee and contractor levels at the acquired properties prior to
closing on July 1, 2010, including an increase in employees and contractors in the first six months of 2010.
|
||||||||||||||||||||||||
| (2) | A reconciliation to this measure is presented in Schedules 5 and 6. | ||||||||||||||||||||||||
|
(3)
|
Assumes annual cash dividend of $0.75 per common share.
|
||||||||||||||||||||||||
|
Note: Refer to the cover page for explanatory notes which are an integral part of the pro forma combined historical financial data. The unaudited pro forma financial information makes
certain assumptions for illustrative purposes and is subject to change based on the results of the third-party valuation of the acquired assets and other factors.
|
|||||||||||||||||||||||||
2
|
Pro Forma Combined Historical Financial and Operating Data
|
||||||||||||||||||||||||
|
For the quarter ended:
|
||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
||||||||||||||
|
(Amounts in millions of dollars)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||
|
Other Financial Data
|
||||||||||||||||||||||||
|
Revenue:
|
||||||||||||||||||||||||
|
Residential
|
714
|
(6
|
) |
708
|
(18
|
) |
690
|
(17
|
) |
673
|
(18
|
) |
655
|
(10
|
) |
645
|
||||||||
|
Business
|
655
|
(11
|
) |
644
|
(16
|
) |
628
|
(37
|
) |
591
|
20
|
611
|
4
|
615
|
||||||||||
|
Total customer revenue
|
1,369
|
(17
|
) |
1,352
|
(34
|
) |
1,318
|
(54
|
) |
1,264
|
2
|
1,266
|
(6
|
) |
1,260
|
|||||||||
|
% of total revenue
|
88%
|
-
|
88%
|
-1.0%
|
87%
|
-
|
87%
|
-
|
87%
|
1%
|
88%
|
|||||||||||||
|
Switched Access Revenue
|
111
|
-
|
111
|
(3
|
) |
108
|
(3
|
) |
105
|
(2
|
) |
103
|
(6
|
) |
97
|
|||||||||
|
Federal Subsidies
|
47
|
(6
|
) |
41
|
7
|
48
|
(1
|
) |
47
|
(1
|
) |
46
|
(11
|
) |
35
|
|||||||||
|
State Subsidies
|
8
|
(1
|
) |
7
|
(1
|
) |
6
|
1
|
7
|
-
|
7
|
-
|
7
|
|||||||||||
|
Surcharges
|
27
|
3
|
30
|
4
|
34
|
(3
|
) |
31
|
3
|
34
|
1
|
35
|
||||||||||||
|
Total regulatory revenue
|
193
|
(4
|
) |
189
|
7
|
196
|
(6
|
) |
190
|
-
|
190
|
(16
|
) |
174
|
||||||||||
|
% of total revenue
|
12%
|
-
|
12%
|
1.0%
|
13%
|
-
|
13%
|
-
|
13%
|
(1%
|
) |
12%
|
||||||||||||
|
Total revenue
|
1,562
|
(21
|
) |
1,541
|
(27
|
) |
1,514
|
(60
|
) |
1,454
|
2
|
1,456
|
(22
|
1,434
|
||||||||||
|
Capital expenditures:
|
||||||||||||||||||||||||
|
Base wireline operations
|
143
|
-
|
143
|
17
|
160
|
14
|
174
|
(59
|
) |
115
|
29
|
144
|
||||||||||||
|
FiOS
|
47
|
7
|
54
|
(23
|
) |
31
|
4
|
35
|
(14
|
) |
21
|
(3
|
) |
18
|
||||||||||
|
Subtotal
|
190
|
7
|
197
|
(6
|
) |
191
|
18
|
209
|
(73
|
) |
136
|
26
|
162
|
|||||||||||
|
Integration
|
-
|
3
|
3
|
(3
|
) |
-
|
22
|
22
|
8
|
30
|
3
|
33
|
||||||||||||
|
Total
|
190
|
10
|
200
|
(9
|
) |
191
|
40
|
231
|
(65
|
) |
166
|
29
|
195
|
|||||||||||
3
|
Pro Forma Combined Historical Financial and Operating Data
|
||||||||||||||||||||||||
| For the quarter ended: | ||||||||||||||||||||||||
|
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
|||||||||||||
|
(Amounts in millions, except operating data)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||
|
Other Financial and Operating Data
|
||||||||||||||||||||||||
|
Access lines:(1)
|
||||||||||||||||||||||||
|
Residential
|
4,511,705
|
(130,381
|
) |
4,381,324
|
(152,049
|
) |
4,229,275
|
(126,356
|
) |
4,102,919
|
(111,174
|
) |
3,991,745
|
(128,275
|
) |
3,863,470
|
||||||||
|
Business
|
2,311,482
|
(32,583
|
) |
2,278,899
|
(32,859
|
) |
2,246,040
|
(33,694
|
) |
2,212,346
|
(32,679
|
) |
2,179,667
|
(29,271
|
) |
2,150,396
|
||||||||
|
Total access lines
|
6,823,187
|
(162,964
|
) |
6,660,223
|
(184,908
|
) |
6,475,315
|
(160,050
|
) |
6,315,265
|
(143,853
|
) |
6,171,412
|
(157,546
|
) |
6,013,866
|
||||||||
|
Residential customer metrics:
|
||||||||||||||||||||||||
|
Customers
|
4,259,589
|
(118,666
|
) |
4,140,923
|
(140,065
|
) |
4,000,858
|
(115,556
|
) |
3,885,302
|
(103,155
|
) |
3,782,147
|
(120,484
|
) |
3,661,663
|
||||||||
|
Revenue
|
$ 714
|
$ (6
|
) |
$ 708
|
$ (18
|
) |
$ 690
|
$ (17
|
)
|
$ 673
|
$ (18
|
) |
$ 655
|
$ (10
|
) |
$ 645
|
||||||||
|
Average monthly residential revenue per customer
|
||||||||||||||||||||||||
|
(ARPU)
|
$ 55.68
|
$ 0.46
|
$ 56.14
|
$ 0.28
|
$ 56.42
|
$ 0.47
|
$ 56.89
|
$ 0.05
|
$ 56.94
|
$ 0.82
|
$ 57.76
|
|||||||||||||
|
Customer monthly churn
|
2.06%
|
0.00%
|
2.06%
|
0.17%
|
2.23%
|
-0.22%
|
2.01%
|
-0.15%
|
1.86%
|
0.14%
|
2.00%
|
|||||||||||||
|
Products per residential customer (2)
|
2.12
|
0.04
|
2.16
|
0.03
|
2.19
|
0.03
|
2.22
|
0.01
|
2.23
|
(0.02
|
) |
2.21
|
||||||||||||
|
Business customer metrics:
|
||||||||||||||||||||||||
|
Customers
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||
|
Revenue
|
$ 655
|
$ (11
|
) |
$ 644
|
$ (16
|
) |
$ 628
|
$ (37
|
) |
$ 591
|
$ 20
|
$ 611
|
$ 4
|
$ 615
|
||||||||||
|
Average monthly business revenue per customer (ARPU)
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||
|
Other data:
|
||||||||||||||||||||||||
|
Employees
|
NA
|
NA
|
NA
|
NA
|
NA
|
14,800
|
||||||||||||||||||
|
High-Speed Internet (HSI) subscribers
|
1,629,120
|
32,508
|
1,661,628
|
14,638
|
1,676,266
|
20,236
|
1,696,502
|
14,337
|
1,710,839
|
(10,766
|
) |
1,700,073
|
||||||||||||
|
Video subscribers
|
414,205
|
38,802
|
453,007
|
19,145
|
472,152
|
17,962
|
490,114
|
12,024
|
502,138
|
10,830
|
512,968
|
|||||||||||||
|
Switched access minutes of use (in millions)
|
6,663
|
(391
|
) |
6,272
|
(222
|
) |
6,050
|
(276
|
) |
5,774
|
134
|
5,908
|
(452
|
) |
5,456
|
|||||||||
|
Average monthly total revenue per access line
|
$ 75.34
|
$ 0.85
|
$ 76.19
|
$ 0.65
|
$ 76.84
|
$ (1.06
|
) |
$ 75.78
|
$ 1.96
|
$ 77.74
|
$ 0.72
|
$ 78.46
|
||||||||||||
|
Average monthly customer revenue per access line
|
$ 66.03
|
$ 0.82
|
$ 66.85
|
$ 0.04
|
$ 66.89
|
$ (1.01
|
) |
$ 65.88
|
$ 1.71
|
$ 67.59
|
$ 1.35
|
$ 68.94
|
||||||||||||
|
(1)
|
Revised from the previously disclosed amounts to conform access line count to the Frontier reporting methodology.
|
|||||||||||||||||||||||
|
(2)
|
Products per residential customer: primary residential voice line, HSI and video products have a value of 1. Long distance,
Frontier Peace of Mind, second lines, feature packages and dial-up have a value of 0.5. Acquired Properties did not have Frontier
Peace of Mind.
|
|||||||||||||||||||||||
4
|
Frontier Communications Corporation
|
||||||||||||||||
|
Pro Forma Combined Historical Reconciliation of Non-GAAP Financial Measures
|
||||||||||||||||
|
For the quarter ended:
|
For the year ended
|
For the six
|
||||||||||||||
|
March 31,
|
June 30,
|
September 30,
|
December 31,
|
December 31,
|
March 31,
|
June 30,
|
months ended
|
|||||||||
|
(Amounts in millions)
|
2009
|
2009
|
2009
|
2009
|
2009
|
2010
|
2010
|
June 30, 2010
|
||||||||
|
Net Income to Free Cash Flow;
|
||||||||||||||||
|
Net Cash Provided by Operating Activities
|
||||||||||||||||
|
Net income
|
$ 138
|
$ 113
|
$ 129
|
$ 53
|
$ 433
|
$ 92
|
$ 90
|
$ 182
|
||||||||
|
Add back:
|
||||||||||||||||
|
Depreciation and amortization
|
394
|
399
|
367
|
345
|
1,505
|
344
|
346
|
690
|
||||||||
|
Income tax expense
|
71
|
61
|
74
|
35
|
241
|
85
|
47
|
132
|
||||||||
|
Pension costs (non-cash)
|
8
|
8
|
3
|
67
|
86
|
18
|
15
|
33
|
||||||||
|
Stock based compensation
|
2
|
3
|
2
|
2
|
9
|
3
|
2
|
5
|
||||||||
|
Subtract:
|
||||||||||||||||
|
Cash paid (refunded) for income taxes (1)
|
48
|
86
|
67
|
47
|
248
|
44
|
43
|
87
|
||||||||
|
Other income, net
|
5
|
4
|
5
|
(54
|
) |
(40
|
) |
5
|
10
|
15
|
||||||
|
Capital expenditures - Business operations
|
190
|
197
|
191
|
209
|
787
|
136
|
162
|
298
|
||||||||
|
Free cash flow
|
$ 370
|
$ 297
|
$ 312
|
$ 300
|
$ 1,279
|
$ 357
|
$ 285
|
$ 642
|
||||||||
|
(1)
|
Cash paid for income taxes in 2009 for the acquired properties was allocated evenly across all four quarters of 2009. Actual amounts for 2010 were not available and have been estimated.
|
|||||||||||||||
|
Note: Refer to the cover page for explanatory notes which are an integral part of the pro forma combined historical financial data. The unaudited pro forma financial information makes certain assumptions
for illustrative purposes and is subject to change based on the results of the third-party valuation of the acquired assets and other factors.
|
||||||||||||||||
5
|
Pro Forma Combined Historical Reconciliation of Non-GAAP Financial Measures
|
||||||||||||||||
|
For the year ended
|
For the six
|
|||||||||||||||
|
For the quarter ended:
|
March 31,
|
June 30,
|
September 30,
|
December 31,
|
December 31,
|
March 31,
|
June 30,
|
months ended
|
||||||||
|
(Amounts in millions)
|
2009
|
2009
|
2009
|
2009
|
2009
|
2010
|
2010
|
June 30, 2010
|
||||||||
|
Operating Cash Flow and
|
||||||||||||||||
|
Operating Cash Flow Margin
|
||||||||||||||||
|
Operating income, pro forma
|
$ 359
|
$ 338
|
$ 366
|
$ 310
|
$ 1,373
|
$ 335
|
$ 293
|
$ 628
|
||||||||
|
Add back:
|
||||||||||||||||
|
Depreciation and amortization
|
394
|
399
|
367
|
345
|
1,505
|
344
|
346
|
690
|
||||||||
|
Operating cash flow, pro forma
|
$ 753
|
$ 737
|
$ 733
|
$ 655
|
$ 2,878
|
$ 679
|
$ 639
|
$ 1,318
|
||||||||
|
Adjustments:
|
||||||||||||||||
|
Non-cash pension costs
|
8
|
8
|
3
|
67
|
86
|
18
|
15
|
33
|
||||||||
|
Severance and early retirement costs
|
3
|
-
|
-
|
1
|
4
|
-
|
1
|
1
|
||||||||
|
Operating income, pro forma as adjusted
|
$ 370
|
$ 346
|
$ 369
|
$ 378
|
$ 1,463
|
$ 353
|
$ 309
|
$ 662
|
||||||||
|
Operating cash flow, pro forma as adjusted
|
$ 764
|
$ 745
|
$ 736
|
$ 723
|
$ 2,968
|
$ 697
|
$ 655
|
$ 1,352
|
||||||||
|
Revenue
|
$ 1,562
|
$ 1,541
|
$ 1,514
|
$ 1,454
|
$ 6,071
|
$ 1,456
|
$ 1,434
|
$ 2,890
|
||||||||
|
Operating income margin
|
||||||||||||||||
|
(Operating income divided by revenue)
|
23.0%
|
21.9%
|
24.2%
|
21.3%
|
22.6%
|
23.0%
|
20.4%
|
21.7%
|
||||||||
|
Operating income margin, as adjusted
|
23.7%
|
22.5%
|
24.4%
|
26.0%
|
24.1%
|
24.2%
|
21.5%
|
22.9%
|
||||||||
|
Operating cash flow margin
|
||||||||||||||||
|
(Operating cash flow divided by revenue)
|
48.2%
|
47.8%
|
48.4%
|
45.0%
|
47.4%
|
46.6%
|
44.6%
|
45.6%
|
||||||||
|
Operating cash flow margin, as adjusted
|
48.9%
|
48.3%
|
48.6%
|
49.7%
|
48.9%
|
47.9%
|
45.7%
|
46.8%
|
||||||||
|
Note: Refer to the cover page for explanatory notes which are an integral part of the pro forma combined historical financial data. The unaudited pro forma financial information makes certain assumptions
for illustrative purposes and is subject to change based on the results of the third-party valuation of the acquired assets and other factors.
|
||||||||||||||||
6
|
Pro Forma Combined Historical Financial Support Data
|
||||||||||||||||||||||||
|
For the quarter ended:
|
||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
||||||||||||||
|
(Amounts in millions of dollars)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||
|
Revenue:
|
||||||||||||||||||||||||
|
Legacy Frontier
|
538
|
(6
|
) |
532
|
(5
|
) |
527
|
(6
|
) |
521
|
(1
|
) |
520
|
(4
|
) |
516
|
||||||||
|
Acquired properties
|
1,024
|
(15
|
) |
1,009
|
(22
|
) |
987
|
(54
|
) |
933
|
3
|
936
|
(18
|
) |
918
|
|||||||||
|
Total revenue
|
1,562
|
(21
|
) |
1,541
|
(27
|
) |
1,514
|
(60
|
) |
1,454
|
2
|
1,456
|
(22
|
) |
1,434
|
|||||||||
|
Cash operating expenses
|
||||||||||||||||||||||||
|
Legacy Frontier
|
250
|
(6
|
) |
244
|
(5
|
) |
239
|
(3
|
) |
236
|
3
|
239
|
(2
|
) |
237
|
|||||||||
|
Acquired properties (1)
|
548
|
4
|
552
|
(13
|
) |
539
|
(44
|
) |
495
|
25
|
520
|
22
|
542
|
|||||||||||
|
Total cash operating expenses
|
798
|
(2
|
) |
796
|
(18
|
) |
778
|
(47
|
) |
731
|
28
|
759
|
20
|
779
|
||||||||||
|
Operating cash flow, pro forma as adjusted
|
||||||||||||||||||||||||
|
Legacy Frontier
|
288
|
-
|
288
|
-
|
288
|
(3
|
) |
285
|
(4
|
) |
281
|
(2
|
) |
279
|
||||||||||
|
%
|
53.5%
|
0.7%
|
54.2%
|
0.4%
|
54.6%
|
0.1%
|
54.7%
|
-0.7%
|
54.0%
|
0.0%
|
54.0%
|
|||||||||||||
|
Acquired properties
|
476
|
(19
|
) |
457
|
(9
|
) |
448
|
(10
|
) |
438
|
(22
|
) |
416
|
(40
|
) |
376
|
||||||||
|
%
|
46.5%
|
(0
|
) |
45.3%
|
0
|
45.4%
|
0
|
46.9%
|
(0
|
) |
44.4%
|
(0
|
) |
41.0%
|
||||||||||
|
Total operating cash flow, pro forma as adjusted
|
764
|
(19
|
) |
745
|
(9
|
) |
736
|
(13
|
) |
723
|
(26
|
) |
697
|
(42
|
) |
655
|
||||||||
|
%
|
48.9%
|
-0.6%
|
48.3%
|
0.3%
|
48.6%
|
1.1%
|
49.7%
|
-1.8%
|
47.9%
|
-2.2%
|
45.7%
|
|||||||||||||
|
Capital expenditures (excluding integration):
|
||||||||||||||||||||||||
|
Legacy Frontier
|
55
|
(2
|
) |
53
|
(1
|
) |
52
|
17
|
69
|
(29
|
) |
40
|
13
|
53
|
||||||||||
|
% of revenue
|
10%
|
0%
|
10%
|
0%
|
10%
|
3%
|
13%
|
(5%
|
) |
8%
|
2%
|
10%
|
||||||||||||
|
Acquired properties
|
135
|
9
|
144
|
(5
|
) |
139
|
1
|
140
|
(44
|
) |
96
|
13
|
109
|
|||||||||||
|
% of revenue
|
13%
|
1%
|
14%
|
0%
|
14%
|
1%
|
15%
|
(5%
|
) |
10%
|
2%
|
12%
|
||||||||||||
|
Total capital expenditures
|
190
|
7
|
197
|
(6
|
) |
191
|
18
|
209
|
(73
|
) |
136
|
26
|
162
|
|||||||||||
|
% of revenue
|
12%
|
1%
|
13%
|
0%
|
13%
|
1%
|
14%
|
(5%
|
) |
9%
|
2%
|
11%
|
||||||||||||
| (1) |
Sequential quarterly changes in Costs and Expenses of the acquired properties are impacted by variations in employee and contractor levels at the
acquired properties prior to closing on July 1, 2010, including an increase in employees and contractors in the first six months of 2010.
|
|||||||||||||||||||||||
7
|
Pro Forma Combined Historical Revenue Support Data
|
||||||||||||||||||||||||||
| For the quarter ended: | ||||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
||||||||||||||||
|
(Amounts in millions of dollars)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||||
|
Revenue:
|
||||||||||||||||||||||||||
|
Residential revenue:
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
231
|
(3
|
) |
228
|
(4
|
) |
224
|
(6
|
) |
218
|
2
|
220
|
1
|
221
|
||||||||||||
|
Acquired properties
|
483
|
(3
|
) |
480
|
(14
|
) |
466
|
(11
|
) |
455
|
(20
|
) |
435
|
(11
|
) |
424
|
||||||||||
|
Total residential revenue
|
714
|
(6
|
) |
708
|
(18
|
) |
690
|
(17
|
) |
673
|
(18
|
) |
655
|
(10
|
) |
645
|
||||||||||
|
Business revenue:
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
217
|
-
|
217
|
(5
|
) |
212
|
-
|
212
|
(1
|
) |
211
|
4
|
215
|
|||||||||||||
|
Acquired properties
|
438
|
(11
|
) |
427
|
(11
|
) |
416
|
(37
|
) |
379
|
21
|
400
|
-
|
400
|
||||||||||||
|
Total business revenue
|
655
|
(11
|
) |
644
|
(16
|
) |
628
|
(37
|
) |
591
|
20
|
611
|
4
|
615
|
||||||||||||
|
Regulatory revenue:
|
||||||||||||||||||||||||||
|
Switched access revenue
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
62
|
-
|
62
|
(2
|
) |
60
|
1
|
61
|
(1
|
) |
60
|
(3
|
) |
57
|
||||||||||||
|
Acquired properties
|
49
|
-
|
49
|
(1
|
) |
48
|
(4
|
) |
44
|
(1
|
) |
43
|
(3
|
) |
40
|
|||||||||||
|
Total switched access revenue
|
111
|
-
|
111
|
(3
|
) |
108
|
(3
|
) |
105
|
(2
|
) |
103
|
(6
|
) |
97
|
|||||||||||
|
Federal subsidy revenue
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
18
|
(4
|
) |
14
|
5
|
19
|
-
|
19
|
(2
|
) |
17
|
(7
|
) |
10
|
||||||||||||
|
Acquired properties
|
29
|
(2
|
) |
27
|
2
|
29
|
(1
|
) |
28
|
1
|
29
|
(4
|
) |
25
|
||||||||||||
|
Total Federal USF revenue
|
47
|
(6
|
) |
41
|
7
|
48
|
(1
|
) |
47
|
(1
|
) |
46
|
(11
|
) |
35
|
|||||||||||
|
State subsidy revenue
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
2
|
-
|
2
|
-
|
2
|
-
|
2
|
-
|
2
|
-
|
2
|
|||||||||||||||
|
Acquired properties
|
6
|
(1
|
) |
5
|
(1
|
) |
4
|
1
|
5
|
-
|
5
|
-
|
5
|
|||||||||||||
|
Total State USF revenue
|
8
|
(1
|
) |
7
|
(1
|
) |
6
|
1
|
7
|
-
|
7
|
-
|
7
|
|||||||||||||
|
Surcharges revenue
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
8
|
1
|
9
|
1
|
10
|
(1
|
) |
9
|
1
|
10
|
1
|
11
|
||||||||||||||
|
Acquired properties
|
19
|
2
|
21
|
3
|
24
|
(2
|
) |
22
|
2
|
24
|
-
|
24
|
||||||||||||||
|
Total surcharges revenue
|
27
|
3
|
30
|
4
|
34
|
(3
|
) |
31
|
3
|
34
|
1
|
35
|
||||||||||||||
|
Total regulatory revenue
|
193
|
(4
|
) |
189
|
7
|
196
|
(6
|
) |
190
|
-
|
190
|
(16
|
) |
174
|
||||||||||||
|
Total revenue:
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
538
|
(6
|
) |
532
|
(5
|
) |
527
|
(6
|
) |
521
|
(1
|
) |
520
|
(4
|
) |
516
|
||||||||||
|
Acquired properties
|
1,024
|
(15
|
) |
1,009
|
(22
|
) |
987
|
(54
|
) |
933
|
3
|
936
|
(18
|
) |
918
|
|||||||||||
|
Total revenue
|
1,562
|
(21
|
) |
1,541
|
(27
|
) |
1,514
|
(60
|
) |
1,454
|
2
|
1,456
|
(22
|
) |
1,434
|
|||||||||||
8
|
Pro Forma Combined Historical Operating Expenses Support Data
|
||||||||||||||||||||||||||
|
For the quarter ended:
|
||||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
||||||||||||||||
|
(Amounts in millions of dollars)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||||
|
Wages and benefits
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
93
|
(7
|
) |
86
|
7
|
93
|
(4
|
) |
89
|
6
|
95
|
(8
|
) |
87
|
||||||||||||
|
Acquired properties
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
|
Total wages
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
|
Non-wages and benefits
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
168
|
(3
|
) |
165
|
(10
|
) |
155
|
3
|
158
|
(6
|
) |
152
|
3
|
155
|
||||||||||||
|
Acquired properties
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
|
Total non-wages
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
|
Cash operating expenses
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
250
|
(6
|
) |
244
|
(5
|
) |
239
|
(3
|
) |
236
|
3
|
239
|
(2
|
) |
237
|
|||||||||||
|
Acquired properties (1)
|
548
|
4
|
552
|
(13
|
) |
539
|
(44
|
) |
495
|
25
|
520
|
22
|
542
|
|||||||||||||
|
Total cash operating expenses
|
798
|
(2
|
) |
796
|
(18
|
) |
778
|
(47
|
) |
731
|
28
|
759
|
20
|
779
|
||||||||||||
|
Non-cash operating expenses
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
11
|
(4
|
) |
7
|
2
|
9
|
2
|
11
|
(3
|
) |
8
|
(3
|
) |
5
|
||||||||||||
|
Acquired properties
|
-
|
1
|
1
|
(7
|
) |
(6
|
) |
63
|
57
|
(47
|
) |
10
|
1
|
11
|
||||||||||||
|
Total non-cash operating expenses
|
11
|
(3
|
) |
8
|
(5
|
) |
3
|
65
|
68
|
(50
|
) |
18
|
(2
|
) |
16
|
|||||||||||
|
Depreciation and Amortization
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
138
|
(5
|
) |
133
|
(30
|
) |
103
|
-
|
103
|
(2
|
) |
101
|
(1
|
) |
100
|
|||||||||||
|
Acquired properties
|
256
|
10
|
266
|
(2
|
) |
264
|
(22
|
) |
242
|
1
|
243
|
3
|
246
|
|||||||||||||
|
Total depreciation and amortization
|
394
|
5
|
399
|
(32
|
) |
367
|
(22
|
) |
345
|
(1
|
) |
344
|
2
|
346
|
||||||||||||
|
Total operating expenses
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
399
|
(15
|
) |
384
|
(33
|
) |
351
|
(1
|
) |
350
|
(2
|
) |
348
|
(6
|
) |
342
|
||||||||||
|
Acquired properties
|
804
|
15
|
819
|
(22
|
) |
797
|
(3
|
) |
794
|
(21
|
) |
773
|
26
|
799
|
||||||||||||
|
Total operating expenses
|
1,203
|
-
|
1,203
|
(55
|
) |
1,148
|
(4
|
) |
1,144
|
(23
|
) |
1,121
|
20
|
1,141
|
||||||||||||
|
(1)
|
Sequential quarterly changes in Costs and Expenses of the acquired properties are impacted by variations in employee and contractor levels at the acquired properties prior to
closing on July 1, 2010, including an increase in employees and contractors in the first six months of 2010.
|
|||||||||||||||||||||||||
9
|
Pro Forma Combined Historical Capital Expenditures Support Data
|
||||||||||||||||||||||||||
| For the quarter ended: | ||||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
||||||||||||||||
|
(Amounts in millions of dollars)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||||
|
Capital expenditures:
|
||||||||||||||||||||||||||
|
Base wireline operations
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
55
|
(2
|
) |
53
|
(1
|
) |
52
|
17
|
69
|
(29
|
) |
40
|
13
|
53
|
||||||||||||
|
% of revenue
|
10%
|
0%
|
10%
|
0%
|
10%
|
3%
|
13%
|
(5%
|
) |
8%
|
2%
|
10%
|
||||||||||||||
|
Acquired properties
|
88
|
2
|
90
|
18
|
108
|
(3
|
) |
105
|
(30
|
) |
75
|
16
|
91
|
|||||||||||||
|
% of revenue
|
9%
|
0%
|
9%
|
2%
|
11%
|
0%
|
11%
|
(3%
|
) |
8%
|
2%
|
10%
|
||||||||||||||
|
Total capital expenditures
|
143
|
-
|
143
|
17
|
160
|
14
|
174
|
(59
|
) |
115
|
29
|
144
|
||||||||||||||
|
% of revenue
|
9%
|
0%
|
9%
|
2%
|
11%
|
1%
|
12%
|
(4%
|
) |
8%
|
2%
|
10%
|
||||||||||||||
|
FiOS
|
47
|
7
|
54
|
(23
|
) |
31
|
4
|
35
|
(14
|
) |
21
|
(3
|
) |
18
|
||||||||||||
|
% of revenue
|
3%
|
1%
|
4%
|
(2%
|
) |
2%
|
0%
|
2%
|
(1%
|
) |
1%
|
0%
|
1%
|
|||||||||||||
|
Capital Expenditures
|
||||||||||||||||||||||||||
|
(excluding integration):
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
55
|
(2
|
) |
53
|
(1
|
) |
52
|
17
|
69
|
(29
|
) |
40
|
13
|
53
|
||||||||||||
|
% of revenue
|
10%
|
0%
|
10%
|
0%
|
10%
|
3%
|
13%
|
(5%
|
) |
8%
|
2%
|
10%
|
||||||||||||||
|
Acquired properties
|
135
|
9
|
144
|
(5
|
) |
139
|
1
|
140
|
(44
|
) |
96
|
13
|
109
|
|||||||||||||
|
% of revenue
|
13%
|
1%
|
14%
|
0%
|
14%
|
1%
|
15%
|
(5%
|
) |
10%
|
2%
|
12%
|
||||||||||||||
|
Total capital expenditures
|
190
|
7
|
197
|
(6
|
) |
191
|
18
|
209
|
(73
|
) |
136
|
26
|
162
|
|||||||||||||
|
% of revenue
|
12%
|
1%
|
13%
|
0%
|
13%
|
1%
|
14%
|
(5%
|
) |
9%
|
2%
|
11%
|
||||||||||||||
10
|
Pro Forma Combined Historical Residential Customer Metrics Support Data
|
||||||||||||||||||||||||||
| For the quarter ended: | ||||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
||||||||||||||||
|
(Amounts in millions, except operating data)
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||||
|
Residential customer metrics:
|
||||||||||||||||||||||||||
|
Customers -
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
1,323,369
|
(19,125
|
) |
1,304,244
|
(27,178
|
) |
1,277,066
|
(22,558
|
) |
1,254,508
|
(24,082
|
) |
1,230,426
|
(23,827
|
) |
1,206,599
|
||||||||||
|
Acquired properties
|
2,936,220
|
(99,541
|
) |
2,836,679
|
(112,887
|
) |
2,723,792
|
(92,998
|
) |
2,630,794
|
(79,073
|
) |
2,551,721
|
(96,657
|
) |
2,455,064
|
||||||||||
|
Total residential customers
|
4,259,589
|
(118,666
|
) |
4,140,923
|
(140,065
|
) |
4,000,858
|
(115,556
|
) |
3,885,302
|
(103,155
|
) |
3,782,147
|
(120,484
|
) |
3,661,663
|
||||||||||
|
Revenue -
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
$ 231
|
$ (3
|
) |
$ 228
|
(4
|
) |
$ 224
|
(6
|
) |
$ 218
|
2
|
$ 220
|
1
|
$ 221
|
||||||||||||
|
Acquired properties
|
483
|
(3
|
) |
480
|
(14
|
) |
466
|
(11
|
) |
455
|
(20
|
) |
435
|
(11
|
) |
424
|
||||||||||
|
Total residential revenue
|
$ 714
|
$ (6
|
) |
$ 708
|
(18
|
) |
$ 690
|
(17
|
) |
$ 673
|
(18
|
) |
$ 655
|
(10
|
) |
$ 645
|
||||||||||
|
ARPU -
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
$ 57.53
|
$ 0.21
|
$ 57.74
|
$ (0.06
|
) |
$ 57.68
|
$ (0.16
|
) |
$ 57.52
|
$ 1.61
|
$ 59.13
|
$ 1.31
|
$ 60.44
|
|||||||||||||
|
Acquired properties
|
$ 54.84
|
$ 0.57
|
$ 55.41
|
$ 0.43
|
$ 55.84
|
$ 0.81
|
$ 56.65
|
$ (0.76
|
) |
$ 55.89
|
$ 0.56
|
$ 56.45
|
||||||||||||||
|
Total residential ARPU
|
$ 55.68
|
$ 0.46
|
$ 56.14
|
$ 0.28
|
$ 56.42
|
$ 0.47
|
$ 56.89
|
$ 0.05
|
$ 56.94
|
$ 0.82
|
$ 57.76
|
|||||||||||||||
|
Percent of customers on price protection plans -
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
48.2%
|
1.4%
|
49.6%
|
1.4%
|
51.0%
|
2.3%
|
53.3%
|
2.0%
|
55.3%
|
1.5%
|
56.8%
|
|||||||||||||||
|
Customer monthly churn -
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
1.49%
|
-0.09%
|
1.40%
|
0.15%
|
1.55%
|
-0.14%
|
1.41%
|
-0.04%
|
1.37%
|
0.00%
|
1.37%
|
|||||||||||||||
|
Acquired properties
|
2.32%
|
0.04%
|
2.36%
|
0.18%
|
2.54%
|
-0.24%
|
2.30%
|
-0.21%
|
2.09%
|
0.22%
|
2.31%
|
|||||||||||||||
|
Total residential customer monthly churn
|
2.06%
|
-
|
2.06%
|
0.17%
|
2.23%
|
-0.22%
|
2.01%
|
-0.15%
|
1.86%
|
0.14%
|
2.00%
|
|||||||||||||||
|
Products per residential customer - (1)
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
2.44
|
0.02
|
2.46
|
0.02
|
2.48
|
0.06
|
2.54
|
-
|
2.54
|
0.03
|
2.57
|
|||||||||||||||
|
Acquired properties
|
1.98
|
0.04
|
2.02
|
0.03
|
2.05
|
0.03
|
2.08
|
0.01
|
2.09
|
(0.05
|
) |
2.04
|
||||||||||||||
|
Total products per residential customer
|
2.12
|
0.04
|
2.16
|
0.03
|
2.19
|
0.03
|
2.22
|
0.01
|
2.23
|
(0.02
|
) |
2.21
|
||||||||||||||
|
(1)
|
Products per residential customer: primary residential voice line, HSI and video products have a value of 1. Long distance, Frontier
Peace of Mind, second lines, feature packages and dial-up have a value of 0.5. Acquired properties did not have Frontier Peace of Mind.
|
|||||||||||||||||||||||||
11
|
Pro Forma Combined Historical Business Customer Metrics Support Data
|
||||||||||||||||||||||||||
|
For the quarter ended:
|
||||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
||||||||||||||||
|
(Amounts in millions,
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||||
|
except operating data)
|
||||||||||||||||||||||||||
|
Business customer metrics:
|
||||||||||||||||||||||||||
|
Customers -
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
149,901
|
(3,068
|
) |
146,833
|
(902
|
) |
145,931
|
(5,168
|
) |
140,763
|
(2,540
|
) |
138,223
|
305
|
138,528
|
|||||||||||
|
Acquired properties (1)
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
|
Total business customers
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
|
Revenue -
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
$ 217
|
-
|
$ 217
|
(5
|
) |
$ 212
|
-
|
$ 212
|
(1
|
) |
$ 211
|
4
|
$ 215
|
|||||||||||||
|
Acquired properties
|
438
|
(11
|
) |
427
|
(11
|
) |
416
|
(37
|
) |
379
|
21
|
400
|
-
|
400
|
||||||||||||
|
Total business revenue
|
$ 655
|
(11
|
) |
$ 644
|
(16
|
) |
$ 628
|
(37
|
) |
$ 591
|
20
|
$ 611
|
4
|
$ 615
|
||||||||||||
|
ARPU -
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
$ 478.56
|
$ 9.27
|
$ 487.83
|
$ (4.56
|
) |
$ 483.27
|
$ 8.95
|
$ 492.22
|
$ 11.19
|
$ 503.41
|
$ 14.30
|
$ 517.71
|
||||||||||||||
|
Acquired properties (1)
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
|
Total business ARPU
|
NA
|
NA
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
|
(1)
|
Business customer metrics for the acquired properties is not available for prior periods.
|
|||||||||||||||||||||||||
12
|
Frontier Communications Corporation
|
|||||||||||||||||||||||||
|
Pro Forma Combined Historical Access Lines Support Data
|
|||||||||||||||||||||||||
| For the quarter ended: | |||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
|||||||||||||||
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||||
|
Access lines:
|
|||||||||||||||||||||||||
|
Residential -
|
|||||||||||||||||||||||||
|
Legacy Frontier
|
1,427,149
|
(21,891
|
) |
1,405,258
|
(30,436
|
) |
1,374,822
|
(25,312
|
) |
1,349,510
|
(26,845
|
) |
1,322,665
|
(26,194
|
) |
1,296,471
|
|||||||||
|
Acquired properties (1)
|
3,084,556
|
(108,490
|
) |
2,976,066
|
(121,613
|
) |
2,854,453
|
(101,044
|
) |
2,753,409
|
(84,329
|
) |
2,669,080
|
(102,081
|
) |
2,566,999
|
|||||||||
|
Total residential access lines (1)
|
4,511,705
|
(130,381
|
) |
4,381,324
|
(152,049
|
) |
4,229,275
|
(126,356
|
) |
4,102,919
|
(111,174
|
) |
3,991,745
|
(128,275
|
) |
3,863,470
|
|||||||||
|
Business -
|
|||||||||||||||||||||||||
|
Legacy Frontier
|
789,654
|
(5,785
|
) |
783,869
|
(6,983
|
) |
776,886
|
(8,884
|
) |
768,002
|
(7,855
|
) |
760,147
|
(4,599
|
) |
755,548
|
|||||||||
|
Acquired properties (1)
|
1,521,828
|
(26,798
|
) |
1,495,030
|
(25,876
|
) |
1,469,154
|
(24,810
|
) |
1,444,344
|
(24,824
|
) |
1,419,520
|
(24,672
|
) |
1,394,848
|
|||||||||
|
Total business access lines (1)
|
2,311,482
|
(32,583
|
) |
2,278,899
|
(32,859
|
) |
2,246,040
|
(33,694
|
) |
2,212,346
|
(32,679
|
) |
2,179,667
|
(29,271
|
) |
2,150,396
|
|||||||||
|
Total -
|
|||||||||||||||||||||||||
|
Legacy Frontier
|
2,216,803
|
(27,676
|
) |
2,189,127
|
(37,419
|
) |
2,151,708
|
(34,196
|
) |
2,117,512
|
(34,700
|
) |
2,082,812
|
(30,793
|
) |
2,052,019
|
|||||||||
|
Acquired properties (1)
|
4,606,384
|
(135,288
|
) |
4,471,096
|
(147,489
|
) |
4,323,607
|
(125,854
|
) |
4,197,753
|
(109,153
|
) |
4,088,600
|
(126,753
|
) |
3,961,847
|
|||||||||
|
Total access lines (1)
|
6,823,187
|
(162,964
|
) |
6,660,223
|
(184,908
|
) |
6,475,315
|
(160,050
|
) |
6,315,265
|
(143,853
|
) |
6,171,412
|
(157,546
|
) |
6,013,866
|
|||||||||
|
(1)
|
Revised from the previously disclosed amounts to conform access line count to the Frontier reporting
methodology.
|
||||||||||||||||||||||||
13
|
Pro Forma Combined Historical Other Operating Support Data
|
||||||||||||||||||||||||||
| For the quarter ended: | ||||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
||||||||||||||||
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
||||||||||||||||
|
HSI subscribers (DSL and FiOS)
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
600,047
|
13,763
|
613,810
|
7,521
|
621,331
|
14,616
|
635,947
|
8,113
|
644,060
|
3,427
|
647,487
|
|||||||||||||||
|
Acquired properties
|
1,029,073
|
18,745
|
1,047,818
|
7,117
|
1,054,935
|
5,620
|
1,060,555
|
6,224
|
1,066,779
|
(14,193
|
) |
1,052,586
|
(1)
|
|||||||||||||
|
Total HSI subscribers
|
1,629,120
|
32,508
|
1,661,628
|
14,638
|
1,676,266
|
20,236
|
1,696,502
|
14,337
|
1,710,839
|
(10,766
|
) |
1,700,073
|
||||||||||||||
|
Video subscribers
|
||||||||||||||||||||||||||
|
Direct Broadcast Satellite (DBS)
|
||||||||||||||||||||||||||
|
Legacy Frontier
|
146,010
|
11,343
|
157,353
|
7,182
|
164,535
|
8,426
|
172,961
|
2,814
|
175,775
|
3,784
|
179,559
|
|||||||||||||||
|
Acquired properties
|
181,147
|
11,716
|
192,863
|
7,671
|
200,534
|
5,620
|
206,154
|
5,914
|
212,068
|
4,103
|
216,171
|
|||||||||||||||
|
Total DBS subscribers
|
327,157
|
23,059
|
350,216
|
14,853
|
365,069
|
14,046
|
379,115
|
8,728
|
387,843
|
7,887
|
395,730
|
|||||||||||||||
|
FiOS - acquired properties
|
87,048
|
15,743
|
102,791
|
4,292
|
107,083
|
3,916
|
110,999
|
3,296
|
114,295
|
2,943
|
117,238
|
|||||||||||||||
|
Total video subscribers
|
414,205
|
38,802
|
453,007
|
19,145
|
472,152
|
17,962
|
490,114
|
12,024
|
502,138
|
10,830
|
512,968
|
|||||||||||||||
|
(1)
|
Revised from the previously disclosed amount to conform HSI subscriber count to the Frontier reporting
methodology.
|
|||||||||||||||||||||||||
14
|
Pro Forma Combined Historical ARPU Support Data
|
|||||||||||||||||||||||||
|
For the quarter ended:
|
|||||||||||||||||||||||||
|
March 31,
|
Sequential
|
June 30,
|
Sequential
|
September 30,
|
Sequential
|
December 31,
|
Sequential
|
March 31,
|
Sequential
|
June 30,
|
|||||||||||||||
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2009
|
Variance
|
2010
|
Variance
|
2010
|
|||||||||||||||
|
Average monthly total revenue per access line
|
|||||||||||||||||||||||||
|
Legacy Frontier
|
$ 80.21
|
$ 0.31
|
$ 80.52
|
$ 0.39
|
$ 80.91
|
$ 0.44
|
$ 81.35
|
$ 1.16
|
$ 82.51
|
$ 0.71
|
$ 83.22
|
||||||||||||||
|
Acquired properties
|
$ 73.01
|
$ 1.09
|
$ 74.10
|
$ 0.72
|
$ 74.82
|
$ (1.83
|
) |
$ 72.99
|
$ 2.31
|
$ 75.30
|
$ 0.72
|
$ 76.02
|
|||||||||||||
|
Total average monthly total revenue per access line
|
$ 75.34
|
$ 0.85
|
$ 76.19
|
$ 0.65
|
$ 76.84
|
$ (1.06
|
) |
$ 75.78
|
$ 1.96
|
$ 77.74
|
$ 0.72
|
$ 78.46
|
|||||||||||||
|
Average monthly customer revenue (1) per access line
|
|||||||||||||||||||||||||
|
Legacy Frontier
|
$ 66.78
|
$ 0.51
|
$ 67.29
|
$ (0.39
|
) |
$ 66.90
|
$ 0.26
|
$ 67.16
|
$ 1.26
|
$ 68.42
|
$ 1.85
|
$ 70.27
|
|||||||||||||
|
Acquired properties
|
$ 65.74
|
$ 0.87
|
$ 66.61
|
$ 0.32
|
$ 66.93
|
$ (1.68
|
) |
$ 65.25
|
$ 1.93
|
$ 67.18
|
$ 1.06
|
$ 68.24
|
|||||||||||||
|
Total average monthly customer revenue
(1) per access line
|
$ 66.03 | $ 0.82 | $ 66.85 | $ 0.04 | $ 66.89 | $ (1.01 | ) | $ 65.88 | $ 1.71 | $ 67.59 | $ 1.35 | $ 68.94 | |||||||||||||
|
(1)
|
Customer revenue is defined as total revenue less regulatory revenue. Regulatory revenue includes switched access and
subsidies.
|
||||||||||||||||||||||||
15
|
Frontier Communications Corporation
|
||||||||
|
Pro Forma Combined Historical Miscellaneous Operating Data
|
||||||||
|
As of
|
||||||||
|
June 30, 2010
|
||||||||
|
High-speed availability (% of households)
|
||||||||
|
Legacy Frontier
|
92%
|
|||||||
|
Acquired properties
|
64%
|
|||||||
|
Homes passed with fiber ready video
|
||||||||
|
Acquired properties
|
567,634
|
|||||||