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

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1) Summary of Significant Accounting Policies:

~~(a)~~ ~~Basis of Presentation and Use of Estimates~~:

Basis of Presentation and Use of Estimates:

Frontier Communications Corporation and its subsidiaries are referred to as “we,” “us,” “our,” “Frontier,” or the “Company” in this report. Our interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Certain reclassifications of amounts previously reported have been made to conform to the current ~~presentation, as described in Note 2 – Recent Accounting Literature.~~ presentation. All significant intercompany balances and transactions have been eliminated in consolidation. These interim unaudited consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary, in the opinion of Frontier’s management, to present fairly the results for the interim periods shown. Revenues, net loss and cash flows for any interim periods are not necessarily indicative of results that may be expected for the full year. For our interim financial statements as of and for the period ended June 30, ~~2017,~~2018, we evaluated subsequent events and transactions for potential recognition or disclosure through the date that we filed this Form 10-Q with the Securities and Exchange Commission (SEC).

Effective April 1, 2016, Frontier’s scope of operations and balance sheet changed materially as a result of the completion of the CTF Acquisition, as described in Note 3 – Acquisitions. Historical financial data presented for Frontier is not indicative of the future financial position or operating results for Frontier, and includes the results of the CTF Operations, as defined in Note 3 – Acquisitions, from the date of acquisition on April 1, 2016.

The preparation of our interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the financial statements, (ii) the disclosure of contingent assets and liabilities, and (iii) the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. Estimates and judgments are used when accounting for the allowance for doubtful accounts, asset impairments, indefinite-lived intangibles, depreciation and amortization, income taxes, business combinations, and pension and other postretirement benefits, among others.

We operate in one reportable segment. Frontier provides both regulated and unregulated voice, data and video services to consumer, commercial and wholesale customers and is typically the incumbent voice services provider in its service areas.

On July 10, 2017, we effected a one for fifteen reverse stock split of our common stock. The reverse stock split reduced the number of common shares issued (which includes outstanding shares and treasury shares) from approximately ~~1,193,000,000~~1,193 million shares to ~~80,000,000~~80 million shares, and reduced shares outstanding from ~~1,178,000,000~~approximately 1,178 million shares to ~~79,000,000~~79 million shares. In addition, and at the same time, the total number of shares of common stock that Frontier is authorized to issue changed from ~~1,750,000,000~~1.75 billion shares to ~~175,000,000~~175 million shares. There was no change in the par value of the common stock, and no fractional shares were issued. All share and per share amounts in the financial statements and footnotes have been retroactively adjusted for all periods presented to give effect to the reverse stock split. As a result of our reverse stock split the conversion rates of our Series A Preferred Stock were proportionately adjusted. See Note 3 for additional details.

Accounting Changes:

Except for the changes discussed below, Frontier has consistently applied the accounting policies to all periods presented in these unaudited consolidated financial statements.

Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” as modified (ASC 606). Frontier applied ASC 606 using the modified retrospective method – i.e., by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of equity at January 1, 2018. The historical periods have not been adjusted and continue to be reported under ASC 605 “Revenue Recognition.” See Note 3 for additional details.

~~(b)~~ ~~Revenue Recognition~~:7

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The table below summarizes the impact of the adoption of ASC 606 on revenue, operating expenses, and operating income for the three and six months ended June 30, 2018:




	For the three months ended June 30, 2018
					Amounts without
			Adjustments		Adoption of
($ in millions)	As Reported		for ASC 606		ASC 606

Revenue	$	2,162	$	(2)	$	2,160
Operating expenses		1,795		6		1,801
Operating income	$	367	$	(8)	$	359


	For the six months ended June 30, 2018
					Amounts without
			Adjustments		Adoption of
($ in millions)	As Reported		for ASC 606		ASC 606

Revenue	$	4,361	$	(8)	$	4,353
Operating expenses		3,628		7		3,635
Operating income	$	733	$	(15)	$	718

Revenue Recognition:

Revenue for Voice services, Data & Internet services, Video services, Switched and non-switched access services will be recognized as the service is ~~recognized when services~~provided. Services that are ~~provided or when products are delivered to customers. Revenue that is~~ billed in advance ~~includes~~include monthly recurring network access services (including data services), special access services, and monthly recurring voice, video, and related charges. The unearned portion of these fees is initially deferred as a component of “Advanced billings” on our consolidated balance sheet and recognized as revenue over the period that the services are provided. ~~Revenue~~Services that isare billed in arrears ~~includes~~include non-recurring network access services (including data services), switched access services, and non-recurring voice and video services. The earned but unbilled portion of these fees is recognized as revenue in our consolidated statements of operations and accrued in “Accounts receivable” on our consolidated balance sheet in the period that ~~the~~ services are provided. Excise taxes are recognized as a

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

liability when billed. Installation fees and their related direct and incremental costs are initially deferred and recognized as revenue and expense over the average term of a customer relationship. We recognize as current period expense the portion of installation costs that exceeds installation fee revenue.

Frontier collects various taxes from its customers and subsequently remits these taxes to governmental authorities. Substantially all of these taxes are recorded through the consolidated balance sheet and presented on a net basis in our consolidated statements of operations. We also collect Universal Service Fund (USF) surcharges from customers (primarily federal USF), $53 million and $55 million, and $110 million and $108 million for the three and six months ended June 30, 2018 and 2017, respectively, and video franchise fees of $12 million and $13 million, and $24 million and $27 million for the three and six months ended June 30, 2018 and 2017, respectively, that we have recorded on a gross basis in our consolidated statements of operations and included within “Revenue” and “Network related ~~expenses” of $55 million and $62 million, and $108 million and $101 million for the three and six months ended June 30, 2017 and 2016, respectively.~~expenses.

In 2015, we accepted the FCC’s Connect America Fund (CAF) Phase II offer of support, which is a successor to and augments the USF frozen high cost support that we had been receiving pursuant to a 2011 FCC order. Upon completion of the ~~CTF Acquisition,~~2016 acquisition of properties in California, Texas, and Florida with Verizon (CTF Acquisition), Frontier assumed the CAF Phase II support and related obligations that Verizon had previously accepted with regard to California and Texas. ~~CAF Phase II funding is a program intended to subsidize the high cost of establishing and delivering communications services to certain unserved or underserved areas.~~ We are recognizing these subsidies into revenue on a straight line basis, which is consistent with how the costs related to these subsidies are being and are expected to be incurred. CAF Phase II is a multi-year program which requires us to deploy broadband to a specified number of households in each of the states where funding was accepted. Failure to meet our deployment obligations at the end of the program in 2020 will result in a return of a portion of the funding received. We regularly evaluate our ability to meet our broadband deployment obligations and adjust revenue accordingly.straight-line basis.

~~We categorize~~For additional information about our ~~products, services~~revenue policies and other ~~revenues among the following five categories:~~required disclosures in accordance with ASC 606, refer to Note 3.

~~Data and Internet services~~ include broadband services for consumer and commercial customers. We provide data transmission services to high volume commercial customers and other carriers with dedicated high capacity circuits (“nonswitched access”) including services to wireless providers (“wireless backhaul”);

~~Voice services~~ include traditional local and long distance wireline services, Voice over Internet Protocol (VoIP) services, as well as a number of unified messaging services offered to our consumer and commercial customers. Voice services also include the long distance voice origination and termination services that we provide to our commercial customers and other carriers;

~~Video services~~ ~~include revenues generated from services provided directly to consumer customers through the FiOS~~® ~~and Vantage video brands, and through DISH~~® ~~satellite TV services;~~

~~Other~~ ~~customer revenue includes sales of customer premise equipment to our commercial customers and directory services, less our provision for bad debts; and~~

~~Switched Access and Subsidy~~ revenues include revenues derived from allowing other carriers to use our network to originate and/or terminate their local and long distance voice traffic (“switched access”). These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies. We also receive cost subsidies from state and federal authorities, including the Connect America Fund Phase II.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Cash Equivalents:

~~The following table provides~~We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash of $50 million is included within “Income taxes and other current assets” on our consolidated balance sheet as of June 30, 2018. This amount represents funds held as collateral by a ~~summary~~bank against letters of ~~revenues from external customers by the categories of Frontier’s products and services:~~credit issued predominately to insurance carriers.

For the three months ended

For the six months ended

June 30,

June 30,

($ in millions)

2017

2016

2017

2016

Data and Internet services

$
974

$
1,048

$
1,967

$
1,635

Voice services

724

836

1,475

1,303

Video services

329

419

676

487

Other

79

78

147

145

Customer revenue

2,106

2,381

4,265

3,570

Switched access and subsidy

198

227

395

393

Total revenue

$
2,304

$
2,608

$
4,660

$
3,963

Goodwill and Other Intangibles:

~~(c)Goodwill and Other Intangibles~~:

Goodwill represents the excess of purchase price over the fair value of identifiable tangible and intangible net assets acquired in a business combination. We have undertaken studies to determine the fair values of assets and liabilities acquired as well as to allocate the purchase price to assets and liabilities, including property, plant and equipment, goodwill and other identifiable intangibles. We examine the carrying value of our goodwill and trade name annually as of December 31, or more frequently as circumstances warrant, to determine whether there are any impairment losses. We test for goodwill impairment at the “operating segment” level, as that term is defined in GAAP.

We determined that we have one operating segment based on a number of factors that our management uses to evaluate and run our business operations, including similarities of customers, products and technology. We tested goodwill for impairment as of June 30, ~~2017~~2018 as a result of the ~~significant~~continued decline in share price of our common stock since ~~March~~December 31, ~~2017. Refer to Note 6 for a discussion~~2017, the date of our last goodwill impairment ~~testing~~test.There was no indication of impairment as a result of our testing. Changes in the assumptions or estimates used in our impairment analyses, such as a reduction in profitability and/or cash flows, could result in a non-cash goodwill and ~~results~~indefinite-lived intangible asset impairment charge and materially affect our operating results. Decrease in the assumptions for either of our EBITDA (defined as operating income, net of ~~June 30, 2017. As stated~~acquisition and integration costs, pension and OPEB expense, stock based compensation expense, and restructuring costs and other charges, plus depreciation and amortization) or EBITDA multiple could result in ~~Note 2, we early adopted ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” during the second quarter of 2017~~an impairment. Further declines in ~~conjunction with~~ our ~~goodwill impairment assessment.~~stock price could also indicate impairment.

Frontier amortizes finite-lived intangible assets over their estimated useful lives on the accelerated method of sum of the years digits. We review such intangible assets at least annually as of December 31 to assess whether any potential impairment exists and whether factors exist that would necessitate a change in useful life and a different amortization period.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(2) Recent Accounting Literature:

~~Recent~~Recently Adopted Accounting Pronouncements ~~Not Yet Adopted~~

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, ~~“Revenue~~“Revenue from Contracts with Customers.” This standard, along with its related amendments, requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which ~~Frontier expects~~they expect to be entitled in exchange for those goods or services. ~~This new standard will be~~Frontier adopted ~~by Frontier for annual and interim reporting periods beginning with the first quarter of 2018.~~

The FASB allows two adoption methods under ASC 606. Companies are permitted to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. We currently plan to adopt the standard induring the first quarter of 2018, using the ~~“modified~~modified retrospective ~~method.” Under that~~ method ~~we will apply~~– i.e., by recognizing the ~~rules~~cumulative effect of initially applying Accounting Standards Codification Topic (ASC) 606 as an adjustment to ~~all contracts existing as~~the opening balance of shareholders’ equity at January 1, 2018. The comparative information for historical periods has not been adjusted and continues to be reported under ASC 605. See Note 3 for additional details and disclosures.

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Effective January 1, 2018, ~~recognizing in beginning retained earnings, a cumulative-effect adjustment~~we adopted FASB ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This standard was established to ~~include~~improve the ~~establishment~~presentation of ~~contract asset~~net periodic pension cost and ~~contract liability accounts with a corresponding adjustment to retained earnings and providing additional disclosures comparing revenue recognized under ASC 606 to revenue reported under~~net periodic postretirement benefit cost by requiring that an employer disaggregate the ~~previous accounting standards.~~

~~Upon initial evaluation, we believe~~service cost component of periodic benefit cost from the ~~key changes~~other components of net benefit cost. The amendments in the ~~standard that impact our revenue recognition relate~~update also provide explicit guidance on how to present the ~~allocation~~service cost component and other components of contract revenues among various services and equipment, and the timing of when those revenues are recognized. Additionally, the new standard will impact the timing of recognizing costs to obtain contracts. This includes a change in our existing policy related to the way we account for customer incentives, upfront non-recurring charges, commission payments, customer disputes and the allocation of discounts.

~~We have established a cross-functional team to implement the standard and are~~net benefit cost in the ~~process~~income statement and allow only the service cost components of ~~identifying and implementing~~net benefit cost to be eligible for capitalization. For adoption, Frontier retrospectively applied changes to our ~~systems, processes, policies~~presentation of pension settlement costs and ~~internal controls to meet~~certain other benefit costs.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table summarizes the ~~standard’s reporting and disclosure requirements.~~impacts of adopting ASU No. 2017-07.



	For the three months ended June 30, 2017
			Impact of Adoption
($ in millions)	As Reported		of ASU 2017-07		As Restated
Operating expenses:
Network related expenses	$	477	$	-	$	477
Selling, general and administrative expenses	$	531	$	-	$	531
Pension settlement costs	$	19	$	(19)	$	-

Non-operating income/expenses:
Investment and other income, net	$	-	$	-	$	-
Pension settlement costs	$	-	$	19	$	19


	For the six months ended June 30, 2017
			Impact of Adoption
($ in millions)	As Reported		of ASU 2017-07		As Restated
Operating expenses:
Network related expenses	$	971	$	(1)	$	970
Selling, general and administrative expenses	$	1,075	$	(2)	$	1,073
Pension settlement costs	$	62	$	(62)	$	-

Non-operating income/expenses:
Investment and other income, net	$	3	$	(3)	$	-
Pension settlement costs	$	-	$	62	$	62

Recent Accounting Pronouncements Not Yet Adopted

Leases

In February 2016, the FASB issued ASU No. 2016 – 02, “Leases (Topic 842).” This standard establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. Upon implementation, lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal ~~years.~~years using modified retrospective application. Early application is permitted. Frontier is in the initial stages of evaluating the potential impact this new standard, along with its related amendments, may have on the consolidated financial statements.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Compensation – Retirement Benefits~~

In ~~March 2017, the~~February 2018, FASB issued ASU ~~No. 2017-07, “Improving~~2018-02, which allows for the ~~Presentation~~reclassification of ~~Net Periodic Pension Cost~~certain income tax effects related to the Tax Cuts and ~~Net Periodic Postretirement Benefit Cost”.~~Jobs Act (the “Tax Act”) between “Accumulated other comprehensive income” and “Retained earnings.” This ~~standard was established~~ASU relates to ~~improve~~ the ~~presentation of net periodic pension cost~~requirement that adjustments to deferred tax liabilities and ~~net periodic postretirement benefit cost by requiring that an employer disaggregate~~assets related to a change in tax laws or rates to be included in “Income from continuing operations,” even in situations where the ~~service cost component of periodic benefit cost~~related items were originally recognized in “Other comprehensive income” (rather than in “Income from ~~the other components of net benefit cost.~~continuing operations”). The amendments in the update also provide explicit guidance on how to present the service cost component and other components of net benefit cost in the income statement and allow only the service cost components of net benefit cost to be eligible for capitalization. The new guidance isthis ASU are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Frontier is currently evaluating the impact of adopting the new standard and has not yet determined the impact of adoption on its consolidated financial statements.

~~Recently Adopted Accounting Pronouncements~~

~~Share-Based Payments - Scope of Modification Accounting~~

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting which amends the scope of modification accounting for share-based payment arrangements. This standard provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods and early adoption is permitted including in any interim period. Frontier has adopted this standard during the second quarter 2017, with no impact to our share-based payment awards.

~~Intangibles – Goodwill~~

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment.” This standard was established to simplify how an entity is required to test goodwill for impairment by eliminating Step 2from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new guidance is effectiveentities for fiscal years beginning after December 15, ~~2019, including~~2018, and interim periods within those fiscal ~~years. Early~~years, with early adoption ~~is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Frontier has adopted~~permitted. Adoption of this ~~standard during the second quarter of 2017 in conjunction with our goodwill impairment assessment. See Note 1 and Note 6 for further discussion.~~

~~Compensation – Stock Compensation~~

~~In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” to amend ASC Topic 718, “Compensation – Stock Compensation.” The~~ ASU is ~~part~~to be applied either in the period of adoption or retrospectively to each period in which the FASB’s ongoing simplification initiative, which is designed to reduce cost and complexity while maintaining or improving the usefulness of the information provided to the users of financial statements. The simplifications address a variety of areas for public entities, including the following: 1) accounting for income taxes, 2) classification of excess tax benefits on the statement of cash flows, 3) forfeitures, 4) minimum statutory tax withholding requirements, 5) classifications of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes, and 6) classification of awards with repurchase features. Thiseffect

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~guidance was effective for Frontier as~~ of the ~~second quarter~~change in the tax laws or rates were recognized. We are still evaluating certain aspects of ~~2017. During~~this ASU as well as the ~~six months ended June 30, 2017~~ related impacts it may have on our financial statements.

(3) ASC 606 Adoption and Revenue Recognition:

Frontier ~~recognized $2 million of income tax expense and recorded a~~applied ASC 606 using the modified retrospective method – i.e., by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to ~~beginning accumulated deficit~~the opening balance of ~~$1 million~~equity at January 1, 2018. The historical periods have not been adjusted and continue to ~~recognize all unrecognized deferred tax benefits~~be reported under ASC 605 “Revenue Recognition.”

The following table includes information for the transition adjustment recorded as of January 1, ~~2017. For~~2018 to record the ~~six months ended June 30, 2016, Frontier reclassified $10 million~~cumulative impact of ~~taxes paid on behalf~~adoption of ~~employees related to shares withheld from “Cash flows provided from (used by) operations” to “Cash flows used by financing activities” in accordance with the new standard.~~ ASC 606 for prior periods.

~~(3)~~ ~~Acquisitions~~:

~~The CTF Acquisition~~

On April 1, 2016, Frontier acquired the wireline operations of Verizon Communications, Inc. in California, Texas and Florida for a purchase price of $10,540 million in cash and assumed debt (the CTF Acquisition), pursuant to the February 5, 2015 Securities Purchase Agreement, as amended. In addition, Frontier and Verizon settled the working capital and net debt adjustments with $15 million paid to Frontier in October 2016. As a result of the CTF Acquisition, Frontier now operates these former Verizon properties, which included approximately ~~2.5 million total customers, 2.1 million broadband subscribers, and 1.2 million FiOS video subscribers as of April 1, 2016 (the CTF Operations).~~

The final allocation of the purchase price presented below represents the effect of recording the fair value of assets acquired and liabilities assumed as of the date of the CTF Acquisition, based on the total transaction cash consideration of $9,871 million.



~~($ in millions)~~

~~Current assets~~	$	~~353~~
~~Property, plant & equipment~~		~~6,096~~
~~Goodwill~~		~~2,606~~
~~Other intangibles - primarily customer list~~		~~2,262~~
~~Current liabilities~~		~~(579)~~
~~Long-term debt~~		~~(544)~~
~~Other liabilities~~		~~(323)~~
~~Total net assets acquired~~	$	~~9,871~~



			(Unaudited)
	As Reported		ASC 606		Adjusted
($ in millions)	December 31, 2017		Transition Adjustment		January 1, 2018
Assets
Accounts receivable, net	$	819	$	(32)	$	787
Contract acquisition costs	$	-	$	87	$	87
Other current assets	$	64	$	4	$	68
Property, plant and equipment, net	$	14,377	$	15	$	14,392
Other assets	$	97	$	127	$	224

Liabilities and Equity
Other current liabilities	$	330	$	5	$	335
Other liabilities	$	317	$	(9)	$	308
Deferred income taxes	$	1,139	$	51	$	1,190
Accumulated deficit	$	(2,263)	$	154	$	(2,109)

The ~~fair value estimates related~~details of the significant changes are set out below.

Bundled Service and Allocation of Discounts

When customers purchase more than one service, the revenue allocable to each service under ASC 606 is determined based upon the relative stand-alone selling price of each service received. While this change results in different allocations to each of the services, it does not change total customer revenue. We frequently offer service discounts as an incentive to customers. Service discounts reduce the total transaction price allocated to the ~~allocation~~performance obligations that are satisfied over the term of the ~~purchase~~customer contract. We may also offer incentives which are considered cash equivalents (e.g. Visa gift cards) that similarly result in a reduction of the total transaction price ~~to Other intangibles were revised and updated~~as well as lower revenue over the term of the contract. A contract asset is often created during the ~~first quarter~~beginning of ~~2017~~the contract term when the term of the incentive is shorter than the contract term. These contract assets are realized over the term of the contract as our performance obligations are satisfied and customer consideration is received.

Customer Incentives

In the process of acquiring and/or retaining customers, we may issue a variety of incentives aside from service discounts or cash equivalent incentives. Those incentives that have stand-alone value (e.g gift cards not considered cash equivalents or free goods/services) are considered a separate performance obligation under ASC606. As a result, while these incentives are free to the customer, a portion of the consideration received from the ~~previous estimates as~~customer over the contract term is ascribed to them based upon their relative stand-alone selling price. The revenue, reflected in “Other revenue” and costs, reflected in “Network access expense”, for these incentives are recognized when they are delivered to the customer and the performance obligation is satisfied. Similar to discounts, these types of ~~December 31, 2016. The allocation that was reported as~~incentives generally result in the creation of ~~December 31, 2016 for Other intangibles increased $100~~a contract asset during the beginning of the contract term. As part of the above transition adjustment, $40 million ~~from $2,162 million to $2,262 million. These measurement period adjustments resulted in $20~~and $37 million of ~~amortization expense during the first quarter~~Short-term and Long-term contract assets were recorded, respectively. As of ~~2017 that would~~June 30, 2018, we have ~~been recorded in 2016 if the adjustments had been recognized as~~included $42 million of the acquisition date. Other adjustments to the allocation of the purchase price for the CTF Acquisition during the first quarter of 2017 resulted in a $140 million decrease in Property, plant & equipment, a $61 million increase in Current liabilities, and a $98 million increase in Goodwill.

The total consideration exceeded the net estimated fair value of the assets acquired and liabilities assumed by $2,606 million, which we recognized as goodwill. This goodwill is attributable to strategic benefits, including enhanced financial and operational scale, market diversification and leveraged combined networks that we expect to realize. This amount of goodwill associated with the CTF Acquisition will be deductible for income tax purposes.

Short-

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~The following unaudited pro forma financial information presents~~term contract assets in Other current assets and $41 million of Long-term contract assets in Other assets on our consolidated balance sheet.

Upfront Fees

All non-refundable upfront fees provide our customers with a material right to renew and therefore must be deferred and amortized into revenue over the ~~combined results~~expected period for which related services are provided. With upfront fees assessed at the beginning of ~~operations~~a contract, a contract liability is often created, which is reduced over the term of the contract as the performance obligations are satisfied. As part of the transition adjustment above, $13 million and $9 million of Short-term and Long-term contract liabilities were recorded, respectively, for carrier upfront fees. As of June 30, 2018, we have included $13 million of Short-term contract liabilities in Other current liabilities and $9 million of Long-term contract liabilities in Other liabilities on our consolidated balance sheet related to carrier upfront fees.

Contract Acquisition Costs

Under ASC 606, certain costs to acquire customers must be deferred and amortized over the related contract period or expected customer life (average of 3.8 years). For Frontier, ~~and the CTF Operations as if the CTF Acquisition had occurred as of~~this includes certain commissions paid to acquire new customers. Beginning January 1, ~~2016. The pro forma information is not necessarily indicative~~2018, commissions attributable to new customer contracts are being deferred and amortized into expense.Historically these acquisition costs were expensed as incurred. Frontier expects that the incremental commissions paid as a result of ~~what~~acquiring customers are recoverable and therefore, as part of the ~~financial position or results~~transition adjustment above, short-term acquisition costs of operations actually would have been had the CTF Acquisition been completed as of January 1, 2016. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the future financial position or operating results of Frontier. The unaudited pro forma financial information excludes acquisition and integration costs and does not give effect to any estimated and potential cost savings or other operating efficiencies that may result from the CTF Acquisition.




	~~(Unaudited)~~
		~~For the six months ended~~
~~($ in millions, except per share amounts)~~	~~June 30, 2016~~

~~Revenue~~			$	~~5,322~~

~~Operating income~~			$	~~743~~

~~Net loss attributable to Frontier common shareholders~~			$	~~(96)~~

~~Basic and diluted net loss per share attributable~~
~~to Frontier common shareholders~~			$	~~(1.24)~~

~~Acquisition and Integration Costs~~

Acquisition costs include financial advisory, accounting, regulatory, legal and other related costs. Integration costs include expenses that are incremental and directly related to the acquisition, which were incurred to integrate the network and information technology platforms. Integration costs also include costs to achieve synergies and operational efficiencies directly associated with the acquisition.

~~Frontier incurred operating expenses related to the CTF Acquisition as follows~~:

For the three months ended June 30,

For the six months ended June 30,
($ in millions)

2017

2016

2017

2016

Acquisition costs

$
-

$
21

$
-

$
23
Integration costs

12

106

14

242
Total acquisition and

integration costs

$
12

$
127

$
14

$
265

~~We also invested $5~~$87 million and ~~$88~~long-term contract acquisition costs of $117 million ~~in capital expenditures related to the CTF Acquisition during~~were deferred. For the six months ended June 30, ~~2017~~2018, Frontier deferred $72 million of costs and ~~2016, respectively.~~amortized deferred costs of $53 million to Selling, general and administrative expense. As of June 30, 2018, we have recorded short-term contract acquisition costs of $97 million and included $126 million of long-term contract acquisition costs in Other assets on our consolidated balance sheet.

Reserves and Disputes

For carrier disputes, Frontier previously recorded a reserve as a reduction of commercial revenue on a case by case basis once the carrier claim was validated by Frontier. Under ASC 606, credits issued for disputes are variable consideration and an estimate for the credits to be issued is now being recorded at the time of customer billing and the related contract liability is reflected in our Allowance for doubtful accounts (see Note 4). Other than the transition adjustment, there was no impact to our operating results for the six months ended June 30, 2018 related to this change.

Switched Access

Contributions in Aid of Construction (CIAC)

It is customary for us to charge customers for certain construction activities requested by them. Historically, these amounts were reflected as offsets to the costs of construction and were recorded net in property, plant and equipment accounts. Under ASC 606, certain CIAC amounts will now be recognized as other customer revenue. For the six months ended June 30, 2018, we recognized $16 million in Revenue for performance obligations that were satisfied during the period.

USF Fees

Universal Service Fund Fees assessed to our customers were previously reflected in regulatory revenue. Under ASC 606, these amounts are being included in contract value and allocated to the services which have been delivered based on relative stand-alone selling price of each service.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~(4)Accounts Receivable~~:The following table summarizes the impacts of adopting ASC 606 on Frontier’s consolidated balance sheet as of June 30, 2018.



	June 30, 2018
			Impact of		Amounts Excluding
($ in millions)	As Reported		Adoption of ASC 606		Adoption of ASC 606
Assets
Accounts receivable, net	$	751	$	35	$	786
Contract acquisition costs	$	97	$	(97)	$	-
Prepaid expenses	$	90	$	6	$	96
Other current assets	$	106	$	(2)	$	104
Property, plant and equipment, net	$	14,282	$	(39)	$	14,243
Other assets	$	236	$	(137)	$	99

Liabilities and Equity
Other current liabilities	$	387	$	(12)	$	375
Other liabilities	$	274	$	5	$	279
Deferred income taxes	$	1,219	$	(54)	$	1,165
Accumulated deficit	$	(2,107)	$	(173)	$	(2,280)

The ~~components~~following tables summarize the impacts of ~~accounts receivable,~~adopting ASC 606 on Frontier’s statement of operations for the three and six months ended June 30, 2018.



	For the three months ended June 30, 2018
			Impact of		Amounts Excluding
	As Reported		Adoption of ASC 606		Adoption of ASC 606
($ in millions)
Revenue	$	2,162	$	(2)	$	2,160

Operating expenses:
Network access expenses		369		(3)		366
Network related expenses		478		-		478
Selling, general and administrative expenses		460		9		469
Other operating expenses		488		-		488
Total operating expenses		1,795		6		1,801

Operating income	$	367	$	(8)	$	359

	For the six months ended June 30, 2018
			Impact of		Amounts Excluding
	As Reported		Adoption of ASC 606		Adoption of ASC 606
($ in millions)
Revenue	$	4,361	$	(8)	$	4,353

Operating expenses:
Network access expenses		741		(6)		735
Network related expenses		961		-		961
Selling, general and administrative expenses		929		13		942
Other operating expenses		997		-		997
Total operating expenses		3,628		7		3,635

Operating income	$	733	$	(15)	$	718

The impact of adoption of ASC 606 on net ~~are as follows~~:income, basic and diluted net loss per share, consolidated statement of comprehensive income, and the consolidated statement of cash flows were not material for the three and six months ended June 30, 2018.

($ in millions)

June 30, 2017

December 31, 2016

Retail and wholesale

$
778

$
979
Other

84

90
Less: Allowance for doubtful accounts

(73)

(131)
Accounts receivable, net

$
789

$
938

We ~~maintain an allowance for doubtful accounts based on~~categorize our ~~estimate of our ability to collect accounts receivable. During~~products, services and other revenues into the second quarter of 2017 we resolved settlements with carriers resulting in a reduction to our reserves of approximately $35 million. Bad debt expense, which is recorded as a reduction to revenue, was as follows:

For the three months ended June 30,

For the six months ended June 30,
($ in millions)

2017

2016

2017

2016

Bad debt expense

$
25

$
34

$
57

$
48

following categories:

~~(5)~~ Data and Internet services~~Property, Plant~~ include broadband services for residential and ~~Equipment~~:

~~Property, plant~~business customers. We provide data transmission services to high volume business customers and ~~equipment, net is as follows~~:other carriers with dedicated high capacity circuits (“nonswitched access”) including services to wireless providers (“wireless backhaul”);

($ in millions)

June 30, 2017

December 31, 2016

Property, plant and equipment

$
25,857

$
25,541
Less: Accumulated depreciation

(11,375)

(10,639)
Property, plant and equipment, net

$
14,482

$
14,902

~~Depreciation expense is principally based on the composite group method. Depreciation expense was as follows~~:

For the three months ended June 30,

For the six months ended June 30,
($ in millions)

2017

2016

2017

2016

Depreciation expense

$
379

$
446

$
755

$
686

We adopted new estimated remaining useful lives for certain plant assets as of October 1, 2016, as a result of an annual independent study of the estimated remaining useful lives of our plant assets, with an insignificant impact to depreciation expense.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Voice services include traditional local and long distance wireline services, Voice over Internet Protocol (VoIP) services, as well as a number of unified messaging services offered to our residential and business customers. Voice services also include the long distance voice origination and termination services that we provide to our business customers and other carriers;

~~In 2017,~~

Video services include revenues generated from services provided directly to residential customers through the FiOS® and Vantage video brands, and through DISH® satellite TV services;

Other customer revenue includes switched access revenue, sales of customer premise equipment to our business customers, rents collected for collocation services, and revenue from other services and fees. Switched access revenue includes revenues derived from allowing other carriers to use our network to originate and/or terminate their local and long distance voice traffic (“switched access”). These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies; and

Subsidy and other regulatory revenue includes revenues generated from cost subsidies from state and federal authorities, including the Connect America Fund Phase II.

The following tables provide a summary of revenues, by category. Because of limited comparability for historical periods, we ~~sold and leased back certain properties, generating $86 million in net proceeds. We~~ have ~~deferred $59 million in gains, of which $26 million and $33 million are included in Other~~reflected the current ~~liabilities and Other liabilities, respectively on our consolidated balance sheet~~period under both an ASC 606 basis as ~~of June 30, 2017, and are being amortized over~~well as the ~~related lease terms of 2 years.~~historical ASC 605 basis.

~~(6)~~ ~~Goodwill and Other Intangibles~~:

~~The activity in goodwill from January 1, 2017 to June 30, 2017 was as follows~~:



~~($ in millions)~~

~~Balance at January 1, 2017~~	$	~~9,674~~
~~CTF Acquisition adjustments~~		98
~~Impairment~~		~~(670)~~
~~Balance at June 30, 2017~~	$	~~9,102~~


	For the three months ended June 30,
	2018

			Impact		Amounts Excluding
			Adoption of		Adoption of
($ in millions)	As reported		ASC 606		ASC 606		2017

Data and Internet services	$	973	$	(25)	$	948	$	974
Voice services		682		(34)		648		724
Video services		270		27		297		329
Other		140		(54)		86		79
Revenue from contracts
with customers		2,065		(86)		1,979		2,106
Subsidy and other regulatory revenue		97		84		181		198
Total revenue	$	2,162	$	(2)	$	2,160	$	2,304


	For the three months ended June 30,
	2018

			Impact of		Amounts Excluding
			Adoption of		Adoption of
($ in millions)	As reported		ASC 606		ASC 606		2017


Consumer	$	1,095	$	(27)	$	1,068	$	1,124
Commercial		970		(59)		911		982
Revenue from contracts
with customers		2,065		(86)		1,979		2,106
Subsidy and other regulatory revenue		97		84		181		198
Total revenue	$	2,162	$	(2)	$	2,160	$	2,304

We are required to perform impairment tests related to our goodwill annually, which we perform as of December 31, or sooner if an indicator of impairment occurs. In the second quarter of 2017, a triggering event prompted us to perform the quantitative impairment test. The triggering event was the significant decrease in the share price of our common stock during the period.

We use a market multiples approach to determine fair value. Marketplace company comparisons and analyst reports within the telecommunications industry have historically supported a range of fair values of multiples between 5.0x and 7.9x annualized EBITDA (defined as operating income, net of acquisition and integration costs, noncash pension and OPEB costs, pension settlement costs, goodwill impairment and restructuring costs and other charges, as well as depreciation and amortization). We estimated the enterprise fair value using a multiple of 5.8x EBITDA.

Our quantitative assessment indicated that the carrying value of the enterprise exceeded its fair value and, therefore, an impairment existed, principally due to the decline in our profitability during the second quarter of 2017. We elected to early adopt the simplified goodwill method under ASU 2017-04, and recorded our goodwill impairment based on the amount that the enterprise carrying value exceeded the fair value, which resulted in a goodwill impairment of $670 million.

The market multiples approach that we use incorporates significant estimates and assumptions related to the forecasted results for the remainder of the year including revenues, expenses, and the achievement of other cost synergies. Our assessment includes many qualitative factors that require significant judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the need for, or size of, an impairment. Continued declines in our profitability or cash flows or in the trading value of our common stock may result in further impairment.

We also considered whether the carrying values of finite-lived intangible assets and property plant and equipment may not be recoverable or whether the carrying value of certain indefinite-lived intangible assets were impaired, noting no additional impairment was present as of June 30, 2017.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



	For the six months ended June 30,
	2018

			Impact		Amounts Excluding
			Adoption of		Adoption of
($ in millions)	As reported		ASC 606		ASC 606		2017

Data and Internet services	$	1,958	$	(68)	$	1,890	$	1,967
Voice services		1,384		(66)		1,318		1,475
Video services		550		56		606		676
Other		275		(104)		171		147
Revenue from contracts
with customers		4,167		(182)		3,985		4,265
Subsidy and other regulatory revenue		194		174		368		395
Total revenue	$	4,361	$	(8)	$	4,353	$	4,660


	For the six months ended June 30,
	2018

			Impact of		Amounts Excluding
			Adoption of		Adoption of
($ in millions)	As reported		ASC 606		ASC 606		2017


Consumer	$	2,223	$	(66)	$	2,157	$	2,288
Commercial		1,944		(116)		1,828		1,977
Revenue from contracts
with customers		4,167		(182)		3,985		4,265
Subsidy and other regulatory revenue		194		174		368		395
Total revenue	$	4,361	$	(8)	$	4,353	$	4,660

Frontier satisfies its obligations to customers by transferring goods and services in exchange for consideration received from the customer. The timing of Frontier’s satisfaction of the performance obligation often differs from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liability. Frontier recognizes a contract asset or liability when the Company transfers goods or services to a customer and bills an amount which differs from the revenue allocated to the related performance obligations.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The opening and closing balances of Frontier’s contract asset, contract liability, receivables, and advanced billings balances for the six months ended June 30, 2018 are as follows:



	Contract			Contract
($ in millions)	Assets			Liabilities

Balance January 1, 2018	$	77	(1)	$	(60)	(2)
Revenue recognized included
in opening contract balance		(21)			64
Cash received, excluding amounts
recognized as revenue		-			(86)
Credits granted, excluding amounts
recognized as revenue		27			-
Other		-			6
Balance June 30, 2018	$	83	(1)	$	(76)	(2)

(1) Includes $42 million and $40 million in other current assets and $41 million and $37 million in other assets as of June 30, 2018 and January 1, 2018, respectively.

(2) Includes $51 million and $41 million in other current liabilities and $25 million and $19 million in other liabilities as of June 30, 2018 and January 1, 2018, respectively.

Short-term contract assets, Long-term contract assets, Short-term contract liabilities, and Long-term contract liabilities are included in other current assets, other assets, other current liabilities, and other liabilities, respectively, on our consolidated balance sheet.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.



($ in millions)	Revenue from contracts with customers
2018 (remaining six months)	$	2,197
2019		2,396
2020		878
2021		367
2022		224
Thereafter		274
Total	$	6,336

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(4) Accounts Receivable:

The components of accounts receivable, net are as follows:



($ in millions)	June 30, 2018		December 31, 2017

Retail and wholesale	$	765	$	801
Other		88		87
Less: Allowance for doubtful accounts		(102)		(69)
Accounts receivable, net	$	751	$	819

We maintain an allowance for doubtful accounts based on our estimate of our ability to collect accounts receivable. A transition adjustment of $32 million was recorded for the impact of ASC 606 to the Allowance for doubtful accounts as of January 1, 2018 to reflect the cumulative impact of this change on prior periods.

Bad debt expense, which is recorded as a reduction to revenue, is as follows:


	For the three months ended June 30,				For the six months ended June 30,
($ in millions)	2018		2017		2018		2017

Bad debt expense	$	22	$	25	$	41	$	57

(5) Property, Plant and Equipment:

Property, plant and equipment, net is as follows:



($ in millions)	June 30, 2018		December 31, 2017

Property, plant and equipment	$	27,085	$	26,496
Less: Accumulated depreciation		(12,803)		(12,119)
Property, plant and equipment, net	$	14,282	$	14,377

In 2018, we sold certain properties subject to leaseback, generating $11 million in net proceeds. For these properties, we have deferred $9 million in related gains that will be amortized over the related lease terms of two years.

For the six months ended June 30, 2018, amortization of deferred gains for properties sold in 2017 and 2018 totaled $18 million, which are included in “Selling, general and administrative expenses” on our consolidated statement of operations. We have a remaining deferred gain balance of $35 million, which is included in “Other current liabilities.”

Depreciation expense is principally based on the composite group method. Depreciation expense was as follows:


	For the three months ended June 30,				For the six months ended June 30,
($ in millions)	2018		2017		2018		2017

Depreciation expense	$	343	$	379	$	688	$	755

We adopted new estimated remaining useful lives for certain plant assets as of October 1, 2017, as a result of an annual independent study of the estimated remaining useful lives of our plant assets, with an insignificant impact to depreciation expense.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(6) Goodwill and Other Intangibles:

We are required to perform impairment tests related to our goodwill annually, which we perform as of December 31, or sooner if an indicator of impairment occurs. Accumulated goodwill impairment charges were $2,788 million as of June 30, 2018 and December 31, 2017.

The components of other intangibles are as follows:


	June 30, 2017						December 31, 2016						June 30, 2018						December 31, 2017
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
($ in millions)	Amount		Amortization		Amount		Amount		Amortization		Amount		Amount		Amortization		Amount		Amount		Amortization		Amount

Other Intangibles:
Customer base	$	5,188	$	(2,978)	$	2,210	$	5,088	$	(2,604)	$	2,484	$	5,188	$	(3,590)	$	1,598	$	5,188	$	(3,294)	$	1,894
Trade name		122		-		122		122		-		122		122		-		122		122		-		122
Royalty agreement		72		(18)		54		72		(16)		56		72		(32)		40		72		(25)		47
Total other intangibles	$	5,382	$	(2,996)	$	2,386	$	5,282	$	(2,620)	$	2,662	$	5,382	$	(3,622)	$	1,760	$	5,382	$	(3,319)	$	2,063

Amortization expense primarily represents the amortization of our customer base acquired as a result of ~~the CTF Acquisition, the Connecticut Acquisition~~our acquisitions in 2010, 2014, and ~~the acquisition of certain Verizon properties in 2010~~2016 with each based on a useful life of 8 to 12 years on an accelerated method.

The following table summarizes the carrying amounts and estimated fair values for long-term debt at June 30, ~~2017~~2018 and December 31, ~~2016.~~2017. For the other financial instruments including cash, accounts receivable, restricted cash, long-term debt due within one year, accounts payable and other current liabilities, the carrying amounts approximate fair value due to the relatively short maturities of those instruments.

The fair value of our long-term debt is estimated based upon quoted market prices at the reporting date for those financial instruments.

The activity in our long-term debt from January 1, ~~2017~~2018 through June 30, ~~2017~~2018 is summarized as follows:

* Interest rate includes amortization of debt issuance costs and debt premiums or discounts. The interest rates at June 30, ~~2017~~2018 represent a weighted average of multiple issuances.

Additional information regarding our ~~senior unsecured~~long-term debt ~~senior secured debt~~as of June 30, 2018 and ~~subsidiary debt~~December 31, 2017 is as follows:

June 30, 2017

December 31, 2016

Principal

Interest

Principal

Interest
($ in millions)

Outstanding

Rate

Outstanding

Rate

Senior Unsecured Debt Due:

4/15/2017

$
-

8.250%

$
210

8.250%
10/1/2018

583

8.125%

583

8.125%
3/15/2019

434

7.125%

434

7.125%
4/15/2020

642

8.500%

1,169

8.500%
9/15/2020

303

8.875%

1,066

8.875%
7/1/2021

500

9.250%

500

9.250%
9/15/2021

775

6.250%

775

6.250%
4/15/2022

500

8.750%

500

8.750%
9/15/2022

2,188

10.500%

2,188

10.500%
1/15/2023

850

7.125%

850

7.125%
4/15/2024

750

7.625%

750

7.625%
1/15/2025

775

6.875%

775

6.875%
9/15/2025

3,600

11.000%

3,600

11.000%
11/1/2025

138

7.000%

138

7.000%
8/15/2026

2

6.800%

2

6.800%
1/15/2027

346

7.875%

346

7.875%
8/15/2031

945

9.000%

945

9.000%
10/1/2034

1

7.680%

1

7.680%
7/1/2035

125

7.450%

125

7.450%
10/1/2046

193

7.050%

193

7.050%

13,650

15,150

Senior Secured Debt Due:

10/24/2019 (1)

263

5.105% (Variable)

280

4.145% (Variable)
3/31/2021 (2)

1,523

3.980% (Variable)

1,564

3.270% (Variable)
10/12/2021 (3)

291

5.105% (Variable)

307

4.145% (Variable)
6/15/2024 (4)

1,500

4.910% (Variable)

-

3,577

2,151

Subsidiary Debt Due:

05/15/2027

200

6.750%

200

6.750%
02/01/2028

300

6.860%

300

6.860%
2/15/2028

200

6.730%

200

6.730%
10/15/2029

50

8.400%

50

8.400%
11/15/2031

100

8.500%

100

8.500%

850

850

Total

$
18,077

8.1% (5)

$
18,151

8.3% (5)



	June 30, 2018			December 31, 2017

	Principal		Interest	Principal		Interest
($ in millions)	Outstanding		Rate	Outstanding		Rate

Secured debt issued by Frontier
Term loan due 10/24/2019 (1)	$	228	8.375% (Variable)	$	245	5.445% (Variable)
Term loan due 3/31/2021 (2)		1,442	4.850% (Variable)		1,483	4.320% (Variable)
Term loan due 10/12/2021(3)		260	8.375% (Variable)		276	5.445% (Variable)
Term loan due 6/15/2024 (4)		1,485	5.850% (Variable)		1,492	5.320% (Variable)
Second lien notes due 4/1/2026		1,600	8.500%		-
IDRB due 5/1/2030		13	6.200%		13	6.200%
Equipment financings		1	0.000%		2	0.000%
Total secured debt issued by Frontier		5,029			3,511

Unsecured debt issued by Frontier
Senior notes due 10/1/2018		443	8.125%		491	8.125%
Senior notes due 3/15/2019		404	7.125%		404	7.125%
Senior notes due 4/15/2020		172	8.500%		619	8.500%
Senior notes due 9/15/2020		55	8.875%		303	8.875%
Senior notes due 7/1/2021		89	9.250%		490	9.250%
Senior notes due 9/15/2021		220	6.250%		775	6.250%
Senior notes due 4/15/2022		500	8.750%		500	8.750%
Senior notes due 9/15/2022		2,188	10.500%		2,188	10.500%
Senior notes due 1/15/2023		850	7.125%		850	7.125%
Senior notes due 4/15/2024		750	7.625%		750	7.625%
Senior notes due 1/15/2025		775	6.875%		775	6.875%
Senior notes due 9/15/2025		3,600	11.000%		3,600	11.000%
Debentures due 11/1/2025		138	7.000%		138	7.000%
Debentures due 8/15/2026		2	6.800%		2	6.800%
Senior notes due 1/15/2027		346	7.875%		346	7.875%
Senior notes due 8/15/2031		945	9.000%		945	9.000%
Debentures due 10/1/2034		1	7.680%		1	7.680%
Debentures due 7/1/2035		125	7.450%		125	7.450%
Debentures due 10/1/2046		193	7.050%		193	7.050%
Total unsecured debt issued by Frontier		11,796			13,495

Secured debt issued by subsidiaries
Debentures due 11/15/2031		100	8.500%		100	8.500%
RUS loan contracts due 1/3/2028		6	6.152%		7	6.152%
Total secured debt issued by subsidiaries		106			107

Unsecured debt issued by subsidiaries
Debentures due 5/15/2027		200	6.750%		200	6.750%
Debentures due 2/1/2028		300	6.860%		300	6.860%
Debentures due 2/15/2028		200	6.730%		200	6.730%
Debentures due 10/15/2029		50	8.400%		50	8.400%
Total unsecured debt issued by subsidiaries		750			750

Total debt	$	17,681	8.7%(5)	$	17,863	8.1%(5)

(1) Represents borrowings under the 2014 CoBank Credit Agreement, as defined below.

(2) Represents borrowings under the JPM Credit Agreement Term Loan A, as defined below.

(3) Represents borrowings under the 2016 CoBank Credit Agreement, as defined below.

(4) Represents borrowings under the JPM Credit Agreement Term Loan B, as defined below.

(5) Interest rate represents a weighted average of the stated interest rates of multiple issuances.

~~On April 17, 2017, Frontier used cash available on hand to retire $210 million of 8.25% Senior Notes that matured on such date.~~

agreement, dated as of August 12, 2015. Under the JPM Credit Agreement, as further amended on June 15, 2017 by Increase Joinder No.1 and on July 3, 2018 by Increase Joinder No. 2 (as so amended, the JPM Credit Agreement), Frontier has a $1,625 million senior secured term loan A facility (the Term Loan A) maturing on March 31, 2021, an $850 million undrawn secured revolving credit facility maturing on February 27, 2022 (the Revolver), and ~~$1,500~~a $1,740 million senior secured term loan B facility (the Term Loan B) maturing on June 15, 2024. The maturities of the Term Loan A, the Revolver, and the Term Loan B, in each case if still outstanding, will be accelerated in the following circumstances: (i) if, 91 days before the maturity date of any series of Senior Notes maturing in 2020, 2023 and 2024, more than $500 million in principal amount remains outstanding on such series; or (ii) if, 91 days before the maturity date of the first series of Senior Notes maturing in 2021 or 2022, more than $500 million in principal amount remains outstanding, in the aggregate, on the two series of Senior Notes maturing in such year.

On January 25, 2018 Frontier amended the JPM Credit Agreement to, among other things, expand the security package to include the interests of certain subsidiaries previously not pledged and replace the net leverage ratio maintenance test with a first lien net leverage ratio maintenance test.

The determination of interest rates for each of the facilities under the JPM Credit Agreement is based on margins over the Base Rate (as defined in the JPM Credit Agreement) or over LIBOR, at the election of Frontier. Interest rate margins on the Term Loan A and Revolver (ranging from 0.75% to 1.75% for Base Rate borrowings and 1.75% to 2.75% for LIBOR borrowings) are subject to adjustment based on Frontier’s Total Leverage Ratio (as defined in the JPM Credit Agreement). The interest rate on the Term Loan A as of June 30, 2018 was LIBOR plus 2.75%. Interest rate margins on the Term Loan B (2.75% for Base Rate borrowings and 3.75% for LIBOR borrowings) are not subject to adjustment. The JPM Credit Agreement contains a covenant that Frontier’s Leverage Ratio (as defined in the JPM Credit Agreement) not be above 5.25 to 1.0 initially, migrating to 5.0 to 1.0 beginning in the second quarter of 2018, 4.75 to 1.0 in the second quarter of 2019, and 4.5 to 1.0 in the second quarter of 2020. The security package under the JPM Credit Agreement includes pledges of the equity interests in certain Frontier subsidiaries and guaranties by certain Frontier subsidiaries. As of June 30, ~~2017,~~2018, the ~~revolving credit facility was fully available and~~company had no borrowings ~~had been made thereunder. The revolving~~outstanding under the revolver (with letters of credit ~~facility is available for general corporate purposes but may not be used to fund dividend payments.~~issued under the revolver totaling $62 million).

~~In June 2017, Frontier used cash proceeds from the Term Loan B offering to retire $763 million~~CoBank Credit Facilities

As of 8.875% Notes due 2020 and $527 million of 8.500% Notes due 2020. Frontier recorded a loss on early extinguishment of debt of $90 million driven by premiums paid to retire the notes and unamortized original issuance costs.

Upon completion of the CTF Acquisition on April 1, 2016, we also assumed additional debt of $600 million, including $200 million aggregate principal amount of 6.75% Senior Notes due May 15, 2027, $300 million aggregate principal amount of 6.86% Senior Notes due February 1, 2028 and $100 million aggregate principal amount of 8.50% Senior Notes due November 15, 2031.

On September 25, 2015, Frontier completed a private offering of $6,600 million aggregate principal amount of unsecured Senior Notes, as follows: $1,000 million of 8.875% Senior Notes due 2020; $2,000 million of 10.500% Senior Notes due 2022; and $3,600 million of 11.000% Senior Notes due 2025. Each was issued at a price equal to 100% of its principal amount. Frontier used the net proceeds from the offering (after deducting underwriting fees) to finance a portion of the cash consideration paid in connection with the CTF Acquisition and to pay related fees and expenses. In June 2016, we completed an exchange offer of registered senior notes for the privately placed senior notes.

~~On February 5, 2015, we entered into a commitment for a bridge loan facility (the Verizon Bridge Facility) and recognized related interest expense of $10 million during the six months ended~~ June 30, ~~2016.~~

2018, Frontier ~~has~~had two senior secured credit agreements with CoBank, ACB, as administrative agent, lead arranger and a lender, and the other lenders party thereto: ~~the first, for~~(i) a $350 million senior term loan facility drawn in 2014 (the 2014 CoBank Credit Agreement), ~~matures on October 24, 2019,~~ and ~~the second, for~~(ii) a $315 million senior term loan facility drawn in October 2016 (the 2016 CoBank Credit Agreement), which matures on October 12, 2021. We refer to the 2014 CoBank Credit Agreement and the 2016 CoBank Credit Agreement collectively as the CoBank Credit Agreements.

~~Repayment of the outstanding principal balance under each of~~On March 29, 2017, Frontier amended the CoBank Credit Agreements ~~is being made~~to provide for increases in ~~quarterly installments ($9 million, with respect~~the maximum Leverage Ratio and expansion of the security package identical to those contained in the ~~2014~~JPM Credit Agreement. On January 25, 2018 Frontier amended the CoBank Credit ~~Agreement,~~Agreements to, among other things, expand the security package to include the interests of certain subsidiaries previously not pledged and ~~$8 million,~~replace the net leverage ratio maintenance test with ~~respect to the 2016 CoBank Credit Agreement), in each case with the remaining outstanding principal balance to be repaid on the applicable maturity date.~~ a first lien net leverage ratio maintenance test.

based on the margins over the Base Rate (as defined in the applicable CoBank Credit Agreement) or over LIBOR, at the election of Frontier.

~~On March 29, 2017, Frontier amended the 2014 and 2016 CoBank Credit Agreements. The amendments provide that interest~~ Interest rate margins under each of these facilities will range from 0.875% to 3.875% for Base Rate borrowings and 1.875% to 4.875% for LIBOR borrowings, subject to adjustment based on our Total Leverage Ratio, as defined in each credit agreement. The interest rate on each of the facilities as of June 30, ~~2017~~2018 was the Base Rate plus 3.375%. Following the extinguishment of the 2014 CoBank Credit Agreement and partial repayment of the 2016 CoBank Credit Agreement on July 3, 2018 as described in “Subsequent Events” below, the interest rate on the

2016 CoBank Credit Agreement was reverted to LIBOR plus ~~3.875%~~4.375%. ~~In addition,~~For June 30, 2018 the ~~amendments provide for increases in the maximum Leverage Ratio~~Base Rate and ~~expansion of the security package identical to those contained in the JPM Credit Agreement.~~one-month LIBOR were 5.0% and 2.09% respectively.

As of June 30, ~~2017,~~2018, we were in compliance with all of our indenture and credit facility covenants.

On March 19, 2018, Frontier completed a private offering of $1,600 million aggregate principal amount of 8.500% Second Lien Secured Notes due 2026 (the “Second Lien Notes”). The Second Lien Notes are guaranteed by each of the Company’s subsidiaries that guarantees its senior secured credit facilities. The guarantees are unsecured obligations of the guarantors and subordinated in right of payment to all of the guarantor’s obligations under the Company’s senior secured credit facilities and certain other permitted future senior indebtedness but equal in right of payment with all other unsubordinated obligations of the guarantors. The Second Lien Notes indenture provides that (a) the aggregate amount of all guaranteed obligations guaranteed by the guarantees are limited and shall not, at any time, exceed the lesser of (x) the principal amount of the Second Lien Notes then outstanding and (y) the Maximum Guarantee Amount (as defined in the Second Lien Notes indenture), and (b) for the avoidance of doubt, nothing in the Second Lien Notes indenture shall, on any date or from time to time, allow the aggregate amount of all such guaranteed obligations guaranteed by the guarantors to cause or result in the Company or any subsidiary violating any indenture governing the Company’s existing senior notes. The Second Lien Notes are secured on a second-priority basis by all the assets that secure Frontier’s obligations under its senior secured credit facilities on a first-priority basis. The collateral securing the Second Lien Notes and the Company’s senior secured credit facilities is limited to the equity interests of certain subsidiaries of the Company and substantially all personal property of Frontier Video Services, Inc. The Second Lien Notes bear interest at a rate of 8.500% per annum and mature on April 1, 2026. Interest on the Second Lien Notes is payable to holders of record semi-annually in arrears on April 1 and October 1 of each year, commencing October 1, 2018.

During the six months ended June 30, 2018, Frontier used cash on hand for the scheduled retirement of $83 million contractual payments of principal indebtedness and open market purchases of $48 million of 8.125% senior notes due 2018. Additionally, Frontier used cash proceeds from the $1,600 million Second Lien Notes offering and cash on hand to retire an aggregate principal amount of $1,651 million senior unsecured notes prior to maturity, consisting of $447 million of 8.500% senior notes due 2020, $249 million 8.875% senior notes due 2020, $555 million of 6.250% senior notes due 2021, and $400 million of 9.250% senior notes due 2021. During the first six months of 2018, Frontier recorded a gain on early extinguishment of debt of $33 million driven primarily by discounts received on the retirement of certain notes, slightly offset by premiums paid to retire certain notes and unamortized original issuance costs.

Subsequent to the end of the quarter, on July 3, 2018, Frontier further amended the JPM Credit Agreement and the CoBank Credit Agreements. Among other things, the amendments replace certain operating subsidiary equity pledges with pledges of the equity interests of certain direct subsidiaries of Frontier. Corresponding changes were made to the collateral package securing the Second Lien Notes.

In addition, on July 3, 2018, the Company entered into Increase Joinder No. 2 to the JPM Credit Agreement, pursuant to which the Company borrowed an incremental $240 million under the Term Loan B maturing in 2024. The Company used the incremental borrowings to repay in full the 2014 CoBank Credit Agreement, repay a portion of the 2016 CoBank Credit Agreement and pay certain fees and expenses related to this incremental borrowing. As a result of the extinguishment of the 2014 CoBank Credit Facility and partial repayment of the 2016 CoBank Credit Facility as described above, we reclassified $197 million to “Long-term debt due within one year” that would have otherwise have been classified as “Long-term debt.”

The table below represents our future principal payments ~~are as follows~~ as of June 30, ~~2017:~~2018 and as of July 3, 2018. The changes reflect the incremental Term Loan B and the repayment of the CoBank Credit Agreements as discussed above.

As of June 30, ~~2017,~~2018, restructuring related liabilities of ~~$13~~$6 million pertaining to employee separation charges were included in “Other current liabilities” in our consolidated balance sheet.

Restructuring costs and other charges, primarily consisting of severance and other employee-related costs of ~~$32~~$6 million and $41 million in connection with workforce reductions, are included in “Restructuring costs and other charges” in our consolidated statement of operations for the six months ended June 30, ~~2017. During the second quarter of 2017, Frontier sold its Frontier Secure Strategic Partnerships business at a loss of $9 million, which is also included in restructuring costs~~2018 and ~~other charges for the six months ended June 30,~~ 2017.

The following is a summary of the changes in the liabilities established for restructuring programs at June 30, ~~2017:~~2018:

The following is a summary of the components of Investment and Other Income ~~Taxes:~~for the three and six months ended June 30, 2018 and 2017:

The following is a reconciliation of the provision for income taxes computed at the federal statutory rate to income taxes computed at the effective ~~rate~~:

~~Income taxes for the three and six months ended June 30, 2017 includes the federal~~Under ASC 605, income tax ~~impact of $107~~benefit would have been $3 million ~~related to the goodwill impairment recorded during the second quarter of 2017.~~

~~Income taxes~~more for the six months ended June 30, ~~2017 includes the impact~~2018, as a result of ~~$2 million of~~changes in pre-tax income ~~tax expense resulting from the adoption of ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.”~~as discussed in Note 3.

Amounts pertaining to income tax related accounts of ~~$51~~$2 million and ~~$55~~$2 million are included in “Income taxes and other current assets” in the consolidated balance sheets as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

~~During the first half of 2017, we received state income tax refunds of $3 million.~~

All share and per share amounts in the tables below have been retroactively adjusted for all periods presented to give effect to the reverse stock split. See Note 1 – Summary of Significant Accounting Policies for additional details.

In calculating diluted net loss per common share for the three and six months ended June 30, ~~2016,~~2018, the effect of all common stock equivalents is excluded from the computation as the effect would be antidilutive.

For the three and six months ended June 30, 2018 and 2017, ~~and 2016,~~previously granted options to purchase 1,334 and 2,664 shares, issuable under employee compensation plans were excluded from the computation of diluted earnings (loss) per share (EPS) for those periods because the exercise prices were greater than the average market price of our common stock and, therefore, the effect would be antidilutive.

At June 30, ~~2017~~2018 and ~~2016,~~2017, we had ~~155,616~~247,634 and ~~108,827~~155,616 stock units, respectively, issued under the Non-Employee Directors’ Deferred Fee Equity Plan (Deferred Fee Plan), the Non-Employee Directors’ Equity Incentive Plan (Directors’ Equity Plan), the 2013 Equity Incentive Plan and the 2017 Equity Incentive Plan. These securities have not been included in the diluted EPS calculation for ~~2016~~the six months ended June 30, 2018 and 2017 because their inclusion would have an antidilutive effect. Compensation costs associated with the issuance of stock units were ~~$(3) million~~$0 and $1$(3) million for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

The impact of the common share equivalents associated with ~~the~~approximately 19,250,000 shares of Series A Preferred stock were not included in the diluted EPS calculation as of June 30, 2017, ~~and 2016,~~ as their impact was antidilutive.

On June 10, 2015, prior to the reverse stock split, we completed a registered offering of 17,500,000 shares of our 11.125% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share (the “Series A Preferred Stock”), at an offering price of $100 per share. On June 24, 2015, Frontier issued an additional 1,750,000 shares of Series A Preferred Stock in connection with the over-allotment option that was exercised in full by the underwriters.

On June 29, 2018, pursuant to the provisions of Frontier’s Certificate of Designation governing the Series A Preferred Stock, all outstanding shares of the Series A Preferred Stock converted at a rate of 1.3333 common shares per share of preferred stock into an aggregate of approximately 25,529,000 shares (net of fractional shares) of the Company’s common stock. Frontier issued cash in lieu of fractional shares of common stock. These payments were recorded as a reduction to Additional paid-in capital.

At June 30, 2018, $54 million of dividends payable were included in “Other current liabilities” in our consolidated balance sheet representing the final dividend payable to holders of the Series A Preferred Stock. The final dividend was paid on July 2, 2018.

At June 30, ~~2017,~~2018, we had seven stock-based compensation plans under which grants were made and awards remained outstanding. No further awards may be granted under six of the plans: the 1996 Equity Incentive Plan (the 1996 EIP), the Amended and Restated 2000 Equity Incentive Plan (the 2000 EIP), the 2009 Equity Incentive Plan (the 2009 EIP), the 2013 Equity Incentive Plan (the 2013 EIP), the Deferred Fee Plan and the Directors’ Equity Plan. At June 30, ~~2017,~~2018, there were approximately 5,667,000 shares authorized for grant and approximately ~~4,360,000~~2,405,000 shares available for grant under the 2017 Equity Incentive Plan (the 2017 EIP and together with the 1996 EIP, the 2000 EIP, the 2009 EIP and the 2013 EIPS, the EIPs). ~~Our general policy is to issue treasury shares upon the grant of restricted shares and the exercise of options.~~

On February ~~16, 2017,~~14, 2018, the Compensation Committee of our Board of Directors granted approximately ~~157,400~~284,000 performance shares under the Frontier Long Term Incentive Plan (the LTIP) and set the operating cash flow performance goal for 2017, which applies to the first year in the 2017-2019 measurement period, the second year of the 2016-2018 measurement period and the third year of the 2015-2017 measurement period.

The following summary presents information regarding LTIP target performance shares as of June 30, ~~2017~~2018 and changes during the six months then ended with regard to LTIP shares awarded under the 2013 EIP and the 2017 EIP:

For purposes of determining compensation expense, the fair value of each performance share is measured at the end of each reporting period and, therefore, will fluctuate based on the price of Frontier common stock as well as performance relative to the targets. For the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, we recognized net compensation expense, reflected in “Selling, general and administrative expenses,” of $0$2 million and $3$0 million, respectively, for the LTIP.

The following summary presents information regarding unvested restricted stock as of June 30, ~~2017~~2018 and changes during the six months then ended with regard to restricted stock granted under the 2013 EIP and the 2017 EIP:

For purposes of determining compensation expense, the fair value of each restricted stock grant is estimated based on the average of the high and low market price of a share of our common stock on the date of grant, for shares granted prior to May 10, 2017. Beginning on May 10, 2017, the fair value of each restricted stock grant is estimated based on the closeclosing price of a share of our common stock on the date of the grant. Total remaining unrecognized compensation cost associated with unvested restricted stock awards that is deferred at June 30, ~~2017~~2018 was ~~$34~~$36 million, and the weighted average vesting period over which this cost is expected to be recognized is approximately 2 years.

Shares of restricted stock granted during the first six months of ~~2016~~2017 totaled ~~364,527.~~454,000. The total fair value of shares of restricted stock granted and vested at June 30, ~~2016~~2017 was approximately ~~$27~~$8 million and ~~$18~~$4 million, respectively. The total fair value of unvested restricted stock at June 30, ~~2016~~2017 was ~~$44~~$13 million. The weighted average grant date fair value of restricted shares granted during the six months ended June 30, ~~2016~~2017 was ~~$65.85~~$48.40 per share.

We have granted restricted stock awards to employees in the form of our common stock. None of the restricted stock awards may be sold, assigned, pledged or otherwise transferred, voluntarily or involuntarily, by the employees until the restrictions lapse, subject to limited exceptions. The restrictions are time-based. Compensation expense, recognized in “Selling, general and administrative expenses,” of $9$7 million and ~~$10~~$9 million for each of the six month periods ended June 30, 2018 and 2017, ~~and 2016,~~respectively, has been recorded in connection with these grants.

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting shareholders’ ~~investment~~equity and pension/postretirement benefit (OPEB) liabilities that, under GAAP, are excluded from net loss.

The components of accumulated other comprehensive loss, net of tax at June 30, ~~2017~~2018 and ~~2016,~~2017, and changes for the six months then ended, are as follows:

As a result of ~~the~~ pension settlement accounting, ~~discussed in Note 14,~~ the Frontier Communications Pension Plan (the Pension Plan) was remeasured as of June 30, ~~2017. This remeasurement resulted in a decrease in the discount rate from 4.10% at March 31, 2017 to 3.80% at~~2018 and as of June 30, ~~2017, resulting in~~2017. For the ~~recording~~three and six months ended June 30, 2018, Frontier recorded a net gain on remeasurement of ~~a loss on remeasurement~~$65 million to Other comprehensive income (loss) ~~during the quarter.~~ . Additionally, Frontier recorded pension settlement charges totaling $25 million ($19 million net of tax) to other comprehensive income.

For the three and six months ended June 30, 2017, Frontier recorded a net loss on remeasurement of $28 million ~~and a net gain on remeasurement of $20 million, respectively,~~ to Other comprehensive income (loss)~~. Additionally, Frontier recorded pension~~, respectively. Pension settlement charges ~~totaling~~of $19 million and $62 million ~~($36 million net of tax)~~were recorded to ~~Other~~other comprehensive ~~income.~~income for the three and six months ended June 30, 2017, respectively. Refer to Note 1416 for details about the settlement accounting.

The significant items reclassified from each component of accumulated other comprehensive loss for the three and six months ended June 30, ~~2017~~2018 and ~~2016~~2017 are as follows:

(b) These accumulated other comprehensive loss components are included in the computation of net periodic pension and OPEB costs (see Note 1416 - Retirement Plans for additional details).

During the first six months of ~~2017~~2018 and ~~2016,~~2017, we capitalized $14 million and ~~$13~~$14 million, respectively, of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities.

The Pension Plan contains provisions that provide certain employees with the option of receiving a lump sum payment upon retirement. Frontier’s accounting policy is to record these payments as a settlement only if, in the aggregate, they exceed the sum of the annual service and interest costs for the Pension Plan’s net periodic pension benefit cost. During the six months ended June 30, 2018, lump sum pension settlement payments to terminated or retired individuals amounted to $171 million. We expect lump sum pension settlement payments to exceed the settlement threshold of $216 million in 2018, and as a result, Frontier recognized a non-cash settlement charge of $25 million during the first six months of 2018. The non-cash charge accelerated the recognition of a portion of the previously unrecognized actuarial losses in the Pension Plan. These non-cash charges decreased our recorded net income (loss), with an offset to Accumulated other comprehensive loss in shareholders’ equity. As a result of the recognition of the settlement charges in the first six months of 2018, the net pension plan liability was remeasured as of June 30, 2018 to be $570 million, as compared to the $689 million measured and recorded at December 31, 2017.

During the six months ended June 30, 2017, lump sum pension settlement payments to terminated or retired individuals amounted to $362 million, which exceeded the settlement threshold of $234 million, and as a result, Frontier recognized a non-cash settlement ~~charges totaling~~charge of $62 million during the first six months of 2017. The non-cash charge accelerated the recognition of a portion of the previously unrecognized actuarial losses in the Pension Plan. These non-cash charges increased our recorded net loss and accumulated deficit, with an offset to accumulated other comprehensive loss in shareholders’ equity. ~~Additional pension settlement charges will be required in each subsequent quarter of 2017, the amount of which will be dependent on the lump sum benefit payments made during the applicable quarter.~~ As a result of the recognition of the settlement charges in the ~~first six months of 2017, the net pension plan liability was remeasured as of June 30, 2017 and March 31, 2017 to be $711 million and $665million, respectively, as compared to the $699 million measured and recorded at December~~

~~31, 2016. The~~first six months of 2017, the net pension plan liability was remeasured ~~funded status of the Pension Plan was approximately 80%,~~ as of June 30, 2017 ~~similar~~ to ~~December~~be $711 million, as compared to the $665 million measured and recorded at March 31, ~~2016.~~2017. Frontier did not record any adjustment to the pension plan liability, beyond the settlement charge, as a result of this remeasurement.

Required pension plan contributions for the full year 2018 are approximately $150 million, of which $64 million was contributed to the Plan during the first six months of 2018.

Our Pension Plan assets decreased from ~~$2,766~~$2,674 million at December 31, ~~2016~~2017 to ~~$2,609~~$2,499 million at June 30, ~~2017,~~2018, a decrease of ~~$157~~$175 million, or 6%7%. This decrease was a result of benefit payments of ~~$390~~$202 million ~~partially offset by positive~~and negative investment returns of ~~$154~~$37 million, net of investment management and administrative fees, ~~increased receivable from Verizon and the Verizon pension plan trusts of $38 million related to the CTF Acquisition, and Frontier~~partially offset by contributions of ~~$41 million during the first six months of 2017.~~

As part of the CTF Acquisition, Verizon is required to make a cash payment to Frontier for the difference in assets transferred by Verizon into the Pension Plan and the related obligation (the Differential), which is estimated to be $131$64 million. We expect to receive the payment from Verizon during the third quarter of 2017. Once received, we will retain $34 million for contributions paid by Frontier during the second quarter of 2017, and remit the remaining cash received to the Pension Plan to offset future contributions.

Although from time to time we make short-term purchasing commitments to vendors with respect to capital expenditures, we generally do not enter into firm, written contracts for such activities.

In June 2015, Frontier accepted the Federal Communications Commission’s (FCC) offer of support to price cap carriers under the Connect America Fund (CAF) Phase II program, which is intended to provide long-term support for broadband in high cost unserved or underserved areas. This program provides $332 million in annual support ~~including $49 million in annual support related to the properties acquired in the CTF Acquisition,~~ through 2020 to make available 10 Mbps downstream/1 Mbps upstream broadband service to approximately 774,000 households across certain of the 29 states where we ~~now~~ operate. To the extent we do not enable the required number of households with 10 Mbps downstream/1 Mbps upstream broadband service by the end of the CAF Phase II term in 2020 or we ~~will~~are unable to satisfy other FCC CAF Phase II requirements, we would be required to return a portion of the funds previously received. Frontier’s frozen high-cost phasedown support is expected to be $6 million in 2018.

On April 20, 2017, the FCC issued an Order that ~~will~~ significantly ~~alter~~altered how Commercial Data Services are ~~regulated once the rules go into effect.~~regulated. Specifically, the Order adopted a test to determine, on a county-by-county basis, whether price cap ~~ILECs’,~~ILECs, like Frontier’s DS1 and DS3 services, will continue to be regulated. The test ~~is likely to result~~resulted in deregulation in a substantial number of our ~~markets. Once implemented, the deregulation will allow~~markets and is allowing Frontier to offer its DS1 and DS3 services in a manner that better responds to the competitive marketplace and allows for commercial negotiation. The areas that remain regulated may be subject to price fluctuations depending upon the price cap formula that year. Multiple parties have appealed ~~and requested a stay of this Order.~~the Order, which is pending in the 8th Circuit. Frontier cannot predict ~~how~~the extent to which these regulatory changes will ~~result in changes to~~affect revenues at this time.

On April 30, 2018, an amended consolidated class action complaint was filed in the United States District Court for the District of Connecticut on behalf of certain purported stockholders against Frontier, certain of its current and former directors and officers and the underwriters of certain Frontier securities offerings. The complaint is brought on behalf of all persons who (1) acquired Frontier common stock between February 6, 2015 and February 28, 2018, inclusive, and/or (2) acquired Frontier common stock or Mandatory Convertible Preferred Stock either in or traceable to Frontier’s offerings of common and preferred stock conducted on or about June 2, 2015 and June 8, 2015. The complaint asserts, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 thereunder, Section 20(a) of the Exchange Act and Sections 11 and 12 of the Securities Act of 1933, as amended, in connection with certain disclosures relating to the CTF Acquisition. The complaint seeks, among other things, damages and equitable and injunctive relief. We dispute the allegations in the complaint described above and intend to vigorously defend against such claims. Given that this matter is in the early stages of litigation, we are unable to estimate a reasonably possible range of loss, if any, that may result from this matter.

In addition, we are party to various other legal proceedings (including individual, class and putative class ~~actions)~~actions as well as governmental investigations) arising in the normal course of our business covering a wide range of matters and types of claims including, but not limited to, general contracts, billing disputes, rights of access, taxes and surcharges, consumer protection, trademark and patent infringement, employment, regulatory, tort, claims of competitors and disputes with other carriers. Such matters are subject to uncertainty and the outcome

of individual matters is not predictable. However, we believe that the ultimate resolution of these matters, after considering insurance coverage or other indemnities to which we are entitled, will not have a material adverse effect on our financial position, results of operations, or cash flows.

We accrue an expense for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. Legal defense costs are expensed as incurred. None of our existing accruals for pending matters, after considering insurance coverage, is material. We monitor our pending litigation for the purpose of adjusting our accruals and revising our disclosures accordingly, when required. Litigation is, however, subject to uncertainty, and the outcome of any particular matter is not predictable. We will vigorously defend our interests in pending litigation, and as of this date, we believe that the ultimate resolution of all such matters, after considering insurance coverage or other indemnities to which we are entitled, will not have a material adverse effect on our consolidated financial position, results of operations, or our cash flows.

In October 2013, the California Attorney General’s Office notified certain Verizon companies, including one of the subsidiaries that we acquired in the CTF Acquisition, of potential violations of California state hazardous waste statutes primarily arising from the disposal of electronic components, batteries and aerosol cans at certain California facilities. We are cooperating with this investigation. We have accrued an amount for potential penalties that we deem to be probable and reasonably estimated, and we do not expect that any potential penalties, if ultimately incurred, will be material in comparison to the established accrual.

2933

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains"forward-looking statements" related to future events. Forward-looking statements address our expected future business and financial performance and financial condition, 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. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

competition from cable, wireless and wireline carriers, satellite, and OTT 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;

declines in revenue from our voice services, switched and non-switched access and video and data services that we cannot stabilize or offset with increases in revenue from other products and services;

our ability to successfully implement strategic initiatives, including opportunities to enhance revenue and realize productivity improvements;

risks related to disruptions in our networks, infrastructure and information technology that may result in customer loss and/or incurrence of additional expenses;

our ability to retain or attract new customers and to maintain relationships with customers, employees or suppliers;

our ability to realize anticipated benefits from recent acquisitions;

our ability to successfully introduce new product offerings;

our ability to dispose of certain assets or asset groups on terms that are attractive to us, or at all;

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;

government infrastructure projects (such as highway construction) that impact our capital expenditures;

continued reductions in switched access revenues as a result of regulation, competition or technology substitutions;

the effects of changes in the availability of federal and state universal service funding or other subsidies to us and our competitors;

our ability to meet our remaining CAF II funding obligations on a timely basis and the risk of penalties or obligations to return certain CAF II funds;

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

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 accounting policies or practices, including potential future impairment charges with respect to our intangible assets;

the effects of increased medical expenses and pension and postemployment expenses;

the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments, including the risk that such changes may benefit our competitors more than us;

our ability to successfully renegotiate union contracts;

changes in pension plan assumptions, interest rates, discount rates, regulatory rules and/or the value of our pension plan assets, which could require us to make increased contributions to our pension plans;

our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirements and cash paid for income taxes and liquidity;

adverse changes in the credit markets, which could impact the availability and cost of financing;

adverse changes in the ratings given to our debt securities by nationally accredited ratings organizations;

covenants in our indentures and credit agreements that may limit our operational and financial flexibility as well as our ability to access the capital markets in the future;

the effects of state regulatory cash management practices that could limit our ability to transfer cash among our subsidiaries or dividend funds up to the parent company;

the effects of changes in both general and local economic conditions in the markets that we serve;

our ability to hire or retain key personnel;

the effects of severe weather events or other natural or man-made disasters, which has, and may in the future, increase our operating and capital expenses or adversely impact customer revenue;

the impact of potential information technology or data security breaches or other disruptions; and

the risks and other factors contained in our most recent Form 10-K and other filings with the SEC.

Investors should also be aware that while we do, at various times, communicate with securities analysts, it is against our policy to disclose to them selectively any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by an analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

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

~~Forward-Looking Statements~~Overview

~~This Quarterly Report~~Frontier Communications Corporation (Frontier) is a provider of communications services in the United States, with approximately 4.7 million customers, 3.9 million broadband subscribers and 21,700 employees, operating in 29 states. We offer a broad portfolio of communications services for consumer and commercial customers. These services which include Data and Internet services, video services, voice services, access services, and advanced hardware and network solutions, are offered on Form 10-Q contains "forward-looking statements," related to future, not past, events. Forward-looking statements address our expected future business and financial performance and financial condition, and contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would,"either a standalone basis or "target." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in ~~our forward-looking statements include:~~

~~competition from cable, wireless and wireline carriers, satellite, and OTT companies, and the risk that we will not respond on a timely or profitable basis;~~

~~our ability to implement successfully our organizational structure changes;~~

risks related to the operation of properties acquired from Verizon, including our ability to retain or obtain customers in those markets, our ability to realize anticipated cost savings, and our ability to meet commitments made in connection with the acquisition;

~~reductions in revenue from our voice customers that we cannot offset with increases in revenue from broadband and video subscribers and sales of other products and services;~~

~~our ability to maintain relationships with customers, employees or suppliers;~~

~~our ability to attract/retain key talent;~~

~~the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks;~~

~~continued reductions in switched access revenues as a result of regulation, competition or technology substitutions;~~

~~the effects of changes in the availability of federal and state universal service funding or other subsidies to us and our competitors;~~

~~our ability to effectively manage service quality in our territories and meet mandated service quality metrics;~~

~~our ability to successfully introduce new product offerings;~~

~~the effects of changes in accounting policies or practices, including potential future impairment charges with respect to our intangible assets;~~

our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirements and cash paid for income taxes and liquidity, which may affect payment of dividends on our common and preferred shares;

~~the effects of changes in both general and local economic conditions on the markets that we serve;~~

~~the effects of increased medical expenses and pension and postemployment expenses;~~

~~the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments;~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~our ability to successfully renegotiate union contracts;~~

changes in pension plan assumptions, interest rates, regulatory rules and/or the value of our pension plan assets, which could require us to make increased contributions to the pension plan in 2017 and beyond;

~~adverse changes in the credit markets;~~

~~adverse changes in the ratings given to our debt securities by nationally accredited ratings organizations;~~

~~the availability and cost of financing in the credit markets;~~

~~covenants in our indentures and credit agreements that may limit our operational and financial flexibility;~~

~~the effects of state regulatory cash management practices that could limit our ability to transfer cash among our subsidiaries or dividend funds up to the parent company;~~

~~the effects of severe weather events or other natural or man-made disasters, which may increase our operating expenses or adversely impact customer revenue;~~

~~the impact of potential information technology or data security breaches or other disruptions; and~~

~~the risks and other factors contained in our other filings with the U.S. Securities and Exchange Commission, including our reports on Form 10-K.~~

Any of the foregoing events, or other events, could cause our results to vary from management’s forward-looking statements included in this report. You should consider these important factors in evaluating any statement in this report or otherwise made by us ora bundled package, depending on our behalf. The following information is unaudited and should be read in conjunction with the consolidated financial statements and related notes included in this report. We have no obligation to update or revise these forward-looking statements and do not undertake to do so.each customer’s needs.

~~Investors should also be aware that while we do, at various times, communicate with securities analysts, it is against~~On June 29, 2018, pursuant to the provisions of Frontier’s Certificate of Designation governing our policy to disclose to them selectively any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by an analyst irrespective11.125% Mandatory Convertible Preferred Stock, Series A, par value $0.01 per share (the “Series A Preferred Stock”), all outstanding shares of the ~~content~~Series A Preferred Stock converted at a rate of 1.3333 common shares per share of preferred stock into an aggregate of 26 million shares of the ~~statement or report. To~~Company’s common stock. Frontier issued cash in lieu of fractional shares of common stock. These payments were recorded as a reduction to Additional paid-in capital. In addition, on July 2, 2018, the ~~extent that reports~~Company paid the final dividend of $54 million to holders of the Series A Preferred Stock. The Series A Preferred stock was issued ~~by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~Management’s Discussion and Analysis~~

~~On April 1, 2016,~~in June 2015 when we completed ~~our acquisition~~a registered offering of ~~Verizon’s wireline properties in California, Texas, and Florida (the CTF Operations).Frontier’s scope~~19.25 million preferred shares at an offering price of operations and balance sheet changed materially as a result of the completion of the CTF Acquisition. Historical financial and operating data presented for Frontier includes the results of the CTF Operations that were acquired in the CTF Acquisition from the date of acquisition on April 1, 2016 and is not indicative of future operating results. The financial discussion below includes a comparative analysis of our results of operations on a historical basis as of and for the six months ended June 30, 2017 and 2016.$100 per share.

On July 10, 2017, we effected a one for fifteen reverse stock split of our common stock. The reverse stock split reduced the number of common shares issued (which includes outstanding shares and treasury shares) from approximately ~~1,193,000,000~~1,193 million shares to ~~80,000,000~~80 million shares, and reduced shares outstanding from ~~1,178,000,000~~approximately 1,178 million shares to ~~79,000,000~~79 million shares. In addition, and at the same time, the total number of shares of common stock that Frontier is authorized to issue changed from ~~1,750,000,000~~1.75 billion shares to ~~175,000,000~~175 million shares. There was no change in the par value of the common stock, and no fractional shares were issued. All share and per share amounts in the financial discussion below have been retroactively adjusted for all periods presented to give effect to the reverse stock split. As a result of our reverse stock split the conversion rates of our Series A Preferred Stock were proportionately adjusted.

Our financial results for the first half of 2017 include the CTF Operations for the first quarter of 2017. With the acquisition occurring April 1, 2016, there are no comparative results for the same period in 2016. The table below reflects the results of operations for the CTF Operations for the first quarter of 2017. In the narrative that follows for the six month period, unless otherwise noted we will discuss only the remaining variance.



	~~For the three months ended~~
(~~$ in millions~~)	~~March 31, 2017~~

~~Data and Internet services~~	$	~~422~~
~~Voice services~~		~~327~~
~~Video services~~		~~281~~
~~Other~~		5
~~Customer revenue~~		~~1,035~~
~~Switched access and subsidy~~		52
~~Total revenue~~	$	~~1,087~~

~~Network access expenses~~	$	~~261~~
~~Network related expenses~~		~~197~~
~~Selling, general and administrative expenses~~		~~226~~
~~Depreciation and amortization~~		~~280~~
~~Acquisition and integration costs~~		-
~~Pension settlement costs~~		22
~~Restructuring costs and other charges~~		1
~~Total operating expenses~~	$	~~987~~

3236

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” as modified (ASC 606) using the modified retrospective method. Under this approach, prior period results were not restated to reflect the impact of ASC 606, resulting in limited comparability between 2017 and 2018 operating results. The table below reflects the results for the six months ended June 30, 2018 under the historical method of accounting as well as under ASC 606. The significant adjustments have been broken out and a brief explanation for each provided. See Notes to the Consolidated Financial Statements for additional details.


		For the six months ended June 30, 2018
	Amounts						Switched
	excluding		Discounts				access				As reported
	adoption of		and		Upfront		and USF				under
($ in millions)	ASC 606		incentives		fees		Fees		Other		ASC 606

Revenue:
Data and Internet services	$	1,890	$	44	$	28	$	4	$	(8)	$	1,958
Voice services		1,318		(27)		(5)		103		(5)		1,384
Video services		606		(38)		(19)		1		-		550
Other		171		14		(1)		66		25		275
Revenue from contracts
with customers		3,985		(7)		3		174		12		4,167
Subsidy and other
regulatory revenue		368		-		-		(174)		-		194
Total revenue	$	4,353	$	(7)	$	3	$	-	$	12	$	4,361

Operating Expenses:
Network access expenses	$	735	$	6	$	-	$	-	$	-	$	741
Network related expenses		961		-		-		-		-		961
Selling, general and
administrative expenses		942		-		6		-		(19)		929
Depreciation and
amortization		991		-		-		-		-		991
Restructuring costs and
other charges		6		-		-		-		-		6
Total operating expenses	$	3,635	$	6	$	6	$	-	$	(19)	$	3,628

Operating income		718		(13)		(3)		-		31		733

Customer Revenue:
Consumer	$	2,157	$	11	$	-	$	54	$	1	$	2,223
Commercial		1,828		(18)		3		120		11		1,944
Revenue from contracts
with customers	$	3,985	$	(7)	$	3	$	174	$	12	$	4,167

Average monthly consumer
revenue per customer	$	83.26									$	85.79

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

Discounts and Incentives

When customers purchase more than one service, the amount allocable to each service under ASC 606 is determined based upon the relative stand-alone selling price of each service received. While this change results in different allocations to each of the services, it does not change total customer revenue. Customer incentives (i.e., goods and or services offered for free) are considered separate performance obligations under ASC 606 and a portion of consideration received from the customer over the contract will be allocated to them. Other customer revenue is recognized when the incentives are granted to the customer and our performance obligation is satisfied. The costs for these incentives will continue to be recognized as marketing expense and included in Network access expenses.

Upfront Fees

Under ASC 606, upfront non-refundable customer fees that provide the customer with a material right to renew must be deferred and amortized into revenue over the typical contract term. For our carrier customers, these were previously recognized as revenue when billed.

Switched Access and USF Fees

Under ASC 606, switched access revenue, which has been historically reflected in Other regulatory revenue, is considered revenue from a customer; therefore, will be reflected in commercial customer revenue on a prospective basis. Universal Service Fund Fees assessed to our customers were previously reflected in regulatory revenue. Under ASC 606, these amounts are being included in contract value and allocated to the services which have been delivered based on relative stand-alone selling price of each service.

The sections below include tables that present customer counts, average monthly consumer revenue per customer (ARPC) and consumer customer churn, which we define as the average of the number of consumer customer deactivations during the month divided by the number of consumer customers at the beginning of the month.

Management believes that consumer customer counts and average monthly revenue per customer are important factors in evaluating our consumer customer trends. Among the key services we provide to consumer customers are voice service, data service and video service. We continue to explore the potential to provide additional services to our customer base, with the objective of meeting all of our customers’ communications needs.

The following should be read in conjunction with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

3338

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(a)

Results of Operations

CUSTOMER RELATED METRICS

Because of the limited comparability between ASC 606 results and historical results, the comparative analysis that follows is based upon the historical comparative results assuming ASC 606 was not implemented, unless otherwise noted.


	As of or for the three months ended												As of or for the three months ended
	June 30, 2017			December 31, 2016		% Increase (Decrease)		June 30, 2016			% Increase (Decrease)		June 30, 2018			December 31, 2017		% Increase (Decrease)		June 30, 2017		% Increase (Decrease)

Customers (in thousands)		5,058			5,393	(6)	%		5,717	(1)	(12)	%		4,667			4,850	(4)	%		5,058	(8)	%

Consumer customer metrics
Customers (in thousands)		4,585			4,891	(6)	%		5,189	(1)	(12)	%		4,237			4,397	(4)	%		4,585	(8)	%
Net customer additions/(losses)		(151)			(144)	5	%		2,101		(107)	%		(86)			(89)	(3)	%		(151)	(43)	%
Average monthly consumer
revenue per customer	$	80.38		$	80.33	0	%	$	83.20		(3)	%	$	83.17	(1)	$	81.61	2	%	$	80.38	3	%
Customer monthly churn		2.24%			2.08%	8	%		1.91%		17	%		1.95%			1.98%	(2)	%		2.24%	(13)	%

Commercial customer metrics
Customers (in thousands)		473			502	(6)	%		528	(1)	(10)	%		430			453	(5)	%		473	(9)	%

Broadband subscriber metrics
(in thousands)
Broadband subscribers		4,063			4,271	(5)	%		4,462	(2)	(9)	%		3,863			3,938	(2)	%		4,063	(5)	%
Net subscriber additions/(losses)		(100)			(91)	10	%		1,975		(105)	%		(32)			(63)	(49)	%		(100)	(68)	%

Video (excl. DISH) subscriber metrics
(in thousands)
Video subscribers (in thousands)		1,007			1,145	(12)	%		1,304	(2)	(23)	%		902			961	(6)	%		1,007	(10)	%
Net subscriber additions/(losses)		(58)			(77)	(25)	%		1,066		(105)	%		(32)			(20)	60	%		(58)	(45)	%

DISH subscriber metrics
(in thousands)
DISH subscribers (in thousands)		254			274	(7)	%		292	(2)	(13)	%		219			235	(7)	%		254	(14)	%
Net subscriber additions/(losses)		(12)			(7)	71	%		(13)		(8)	%		(8)			(9)	(11)	%		(12)	(33)	%

Employees		23,924	(3)		28,332	(16)	%		30,308		(21)	%		21,718			22,736	(4)	%		23,924	(9)	%
Switched Access Minutes of Use
(in thousands)		4,746			5,034	(6)	%		5,485		(13)	%

	As of or for the six months ended
	June 30, 2017			June 30, 2016		% Increase (Decrease)
													As of or for the six months ended
													June 30, 2018			June 30, 2017		% Increase (Decrease)
Consumer customer metrics
Average monthly consumer
revenue per customer	$	80.59		$	72.88	11	%						$	83.26		$	80.59	3	%
Customer monthly churn		2.31%			1.87%	24	%							1.94%			2.31%	(16)	%

We provide service and product options in our consumer and commercial offerings in each of our markets. As of June 30, ~~2017, 68%~~2018, 64% of our consumer broadband customers were subscribed to at least one other service offering.

We had approximately ~~4,585,000~~4.2 million and ~~5,189,000~~4.6 million total consumer customers as of June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. Our consumer customer churn was ~~2.24%~~1.95% and 1.94%, respectively, for the three and six months ended June 30, 2018, compared to 2.24% and 2.31%, respectively for the three and six months ended June 30, 2017, ~~(1.95% for Frontier legacy~~ and ~~2.69% for CTF Operations) compared to 1.91% (1.71% for Frontier legacy and 2.19% for CTF Operations) for the second quarter of 2016 and 2.37% (1.95% for Frontier legacy and 3.01% for CTF Operations)~~1.94% for the first quarter of ~~2017, respectively.~~2018. The consolidated average monthly consumer revenue per customer (consumer ARPC) decreased by $2.82 or 4% to $80.38 during the second quarter of 2017 compared to the same period in 2016. The overall decrease in consumer ARPC is a result of lower voice services revenue and lower video revenue from our CTF Operations, partially offset by higher Frontier Secure revenue. We anticipate continuing declines in voice services revenue as fewer consumer customers subscribe to landline voice services.

ARPC) increased by $2.79, or 3%, to $83.17 and increased by $2.67, or 3%, to $83.26 for the three and six months ended June 30, 2017 (1.95% for Frontier legacy and 2.85% for CTF Operations) compared to 1.87% (1.77% for Frontier legacy and 2.19% for CTF Operations) for the six months ended June 30, 2016. The consolidated average monthly consumer revenue per customer (consumer ARPC) increased by $7.71 or 11% to $80.59 during the first half of 20172018, respectively as compared to the ~~same period in 2016.~~prior year period. The overall increase in consumer ARPC is primarily a result of ~~higher revenue due to having six months~~residential and broadband initiatives that were implemented during the fourth quarter of ~~CTF Operations in 2017 and only three months in 2016, partially offset by lower voice services revenue.~~2017.

We had approximately ~~473,000~~430,000 and ~~528,000~~473,000 total commercial customers as of June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. We lost approximately 11,000 and 23,000 commercial customers, respectively, during the three and six months ended June 30, 2018 compared to a loss of 11,000 and 29,000 customers, respectively, for the three and six months ended June 30, 2017, ~~compared to a gain of 243,000 customers (including 250,000 commercial customers acquired) for the three months ended June 30, 2016~~ and a loss of ~~18,000~~12,000 customers for the ~~three months ended March 31, 2017.~~first quarter of 2018. Frontier expects the declines in voice services revenue and ~~wireless backhaul revenues~~ from commercial customers to continue for the remainder of ~~2017.~~2018. Our Ethernet product revenues from our SME (small business, medium business and larger enterprise customers) and carrier customers have grown by ~~13% for the Frontier legacy operations~~3% during the second quarter of ~~2017,~~2018, compared to the ~~second quarter of 2016,~~prior year period, and grown by ~~12% (including CTF Operations)~~3% compared to the first quarter of ~~2017.~~2018.

We had approximately ~~4,063,000~~3,863,000 and ~~4,462,000~~4,063,000 broadband subscribers as of June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. During the three and six months ended June 30, 2018, we lost approximately 32,000 and 75,000 net broadband subscribers, respectively, compared to a loss of 100,000 and 208,000 subscribers, respectively for the three and six months ended June 30, 2017, ~~we lost approximately 100,000 net broadband subscribers compared to a gain of 1,975,000 (including 2,052,000 broadband subscribers acquired)~~ and a loss of ~~107,000~~43,000 for the ~~three months ended June 30, 2016 and March 31, 2017, respectively.~~ first quarter of 2018.

We offer video services ~~under the Vantage brand to certain of our customers in portions of Connecticut, North Carolina, South Carolina and Minnesota, and~~ under the FiOS® brand in portions of California, Texas, ~~and~~ Florida, ~~(and on a limited basis in~~ Indiana, Oregon and ~~Washington)~~Washington, and the VantageTM brand in portions of Connecticut, North Carolina, South Carolina, Minnesota, Illinois, New York, and Ohio. We also offer satellite TV video service to our customers under an agency relationship with DISH® in all of our markets. For the three and six months ended June 30, ~~2017,~~2018, we lost approximately ~~70,000~~40,000 and 75,000 net video subscribers, respectively, across all markets. At June 30, ~~2017,~~2018, we had ~~1,007,000~~902,000 linear video subscribers that are served with FiOS® or Vantage video service. In addition to our linear video subscribers, we have approximately ~~254,000~~219,000 DISH® satellite video customers.


									For the three months ended June 30,
	For the three months ended June 30,				$ Increase		% Increase
($ in millions)	2017		2016		(Decrease)		(Decrease)

Data and Internet services	$	974	$	1,048	$	(74)	(7)	%
Voice services		724		836		(112)	(13)	%
Video services		329		419		(90)	(21)	%
Other		79		78		1	1	%
Customer revenue		2,106		2,381		(275)	(12)	%
Switched access and
subsidy		198		227		(29)	(13)	%
Total revenue	$	2,304	$	2,608	$	(304)	(12)	%



	For the three months ended June 30,				$ Increase		% Increase
	2017		2016		(Decrease)		(Decrease)

Consumer	$	1,124	$	1,332	$	(208)	(16)	%
Commercial		982		1,049		(67)	(6)	%
Customer revenue		2,106		2,381		(275)	(12)	%
Switched access and
subsidy		198		227		(29)	(13)	%
Total revenue	$	2,304	$	2,608	$	(304)	(12)	%
									2018
														Amounts
										As reported		Impact of		Excluding
	For the six months ended June 30,				$ Increase		% Increase			under		Adoption		Adoption of				$ Increase		% Increase
($ in millions)	2017		2016		(Decrease)		(Decrease)			ASC 606		of 606		ASC 606		2017		(Decrease)		(Decrease)

Data and Internet services	$	1,967	$	1,635	$	332	20	%	$	973	$	(25)	$	948	$	974	(1)	$	(26)	(3)	%
Voice services		1,475		1,303		172	13	%		682		(34)		648		724			(76)	(10)	%
Video services		676		487		189	39	%		270		27		297		329			(32)	(10)	%
Other		147		145		2	1	%		140		(54)		86		79			7	9	%
Customer revenue		4,265		3,570		695	19	%
Switched access and
subsidy		395		393		2	1	%
Revenue from contracts
with customers										2,065		(86)		1,979		2,106	(1)		(127)	(6)	%
Subsidy and other
regulatory revenue										97		84		181		198			(17)	(9)	%
Total revenue	$	4,660	$	3,963	$	697	18	%	$	2,162	$	(2)	$	2,160	$	2,304	(1)	$	(144)	(6)	%

									For the three months ended June 30,
																		$ Increase		% Increase
	For the six months ended June 30,				$ Increase		% Increase
	2017		2016		(Decrease)		(Decrease)
($ in millions)									2018							2017		(Decrease)		(Decrease)

Consumer	$	2,288	$	1,915	$	373	19	%	$	1,095	$	(27)	$	1,068	$	1,124		$	(56)	(5)	%
Commercial		1,977		1,655		322	19	%		970		(59)		911		982	(1)		(71)	(7)	%
Customer revenue		4,265		3,570		695	19	%
Switched access and
subsidy		395		393		2	1	%
Revenue from contracts
with customers										2,065		(86)		1,979		2,106	(1)		(127)	(6)	%
Subsidy and other
regulatory revenue										97		84		181		198			(17)	(9)	%
Total revenue	$	4,660	$	3,963	$	697	18	%	$	2,162	$	(2)	$	2,160	$	2,304	(1)	$	(144)	(6)	%

We generate revenues primarily through either a monthly recurring fee or a fee based on usage, and revenue recognition is not dependent upon significant judgments by management, with the exception of a determination of the provision for uncollectible amounts.

~~Consolidated~~The decreases in consolidated total revenue for both the three and six months ended June 30, 2018 was primarily due to decreased Voice and Data and Internet services revenues driven by a decline in customers.

The decrease in consolidated customer revenue of $127 million for the three months ended June 30, 2018 consisted of decreases of $56 million and $71 million of consumer customer revenue and commercial customer revenue, respectively. The decrease of $280 million for the six months ended June 30, 2017 increased $697 million to $4,660 million as compared to the first half of 2016. Excluding additional revenue from the CTF Operations for the first quarter of 2017, our revenue for the first half of 2017 decreased $390 million, or 10%, as compared to the first half of 2016. This decline in 2017 is primarily the result2018 consisted of decreases ~~in voice services revenues, lower switched~~of $131 million and ~~nonswitched access revenue, video, and data services revenue, each as described in more detail below.~~

~~Customer revenue for the six months ended June 30, 2017 increased $695~~$149 million ~~to $4,265 million as compared to the first half~~ of 2016. Excluding additional revenue from the CTF Operations for the first quarter of 2017, our customer revenue for the first half of 2017 decreased $340 million, or 10%, as compared to the first half of 2016.

~~Consolidated~~ consumer customer revenue ~~for the six months ended June 30, 2017 increased $373 million, or 19%, as compared to the first half of 2016. Excluding additional consumer~~and commercial customer revenue, ~~from the CTF Operations~~respectively. The decreases for ~~the first quarter of 2017, revenues for the first half of 2017 decreased $241 million, or 13%, compared~~both periods were primarily due to ~~the first half of 2016, primarily as a result of~~ decreases in ~~voice, video~~Voice, Data and ~~data~~Internet, and Video services revenue. ~~Similar to other wireline providers, we~~We have experienced declines in the number of traditional voice customers ~~and switched access minutes of use~~ as a result of competition and the availability of substitutes, a trend we expect to continue.

~~Consolidated~~ The decrease in consolidated commercial customer revenue for the six months ended June 30, 2017 increased $322 million, or 19%, as compared to the first half of 2016. Excluding additional commercial customer revenue from the CTF Operations for the first quarter of 2017, revenues for 2017 declined $99 million, or 6%, as compared to the first half of 2016, principally as a result ofwas primarily driven by decreases in our voice services revenue and nonswitched revenue, including wireless backhaul ~~revenue.~~revenue and a decrease in revenue from our Frontier Secure Strategic Partnerships business which was sold in May 2017.

The decrease in Subsidy and ~~subsidy~~other regulatory revenue of ~~$395~~$17 million ~~represented 8% of our revenues~~and $27 million, respectively, for the three and six months ended June 30, ~~2017. Switched access revenue~~2018, was ~~$92 million for the first half of 2017, or 2% of our revenues, up from $88 million, or 2% of our revenues, in the second quarter of 2016. The Report and Order released~~primarily driven by ~~the FCC on November 18, 2011 (the 2011 Order) provided for the gradual elimination of terminating traffic charges by 2017 with~~ a related decline in operating expenses. Switched access revenue declined sequentially in the third quarter of 2016, reflecting the rate reductions mandated by the 2011 Order, and we anticipate that we have experienced nearly all of the rate decline related to the 2011 Order. We have been able to recover a significant portion of these lost revenues through end user rates and other replacement support mechanisms, a trend we expect will continue throughout 2017. We expect declining revenue trends due to reduced volumedecrease in switched access ~~revenue to continue in 2017 in our legacy operations. Subsidy revenue, including CAF Phase II subsidies, was $303 million for the six months ended June 30, 2017, or 7%~~minutes of ~~our revenues, which decreased from $305 million, or 8% of our revenues, in the first half of 2016.~~use.

We categorize our products, services, and other revenues into the following five categories:

Data and ~~internet~~Internet services include broadband services for ~~consumer~~residential and ~~commercial~~business customers. We provide data transmission services to high volume ~~commercial~~business customers and other carriers with dedicated high capacity circuits (“nonswitched access”) including services to wireless providers (“wireless backhaul”). ~~In addition, we offer our Frontier Secure~~® ~~suite of products, including computer security, cloud back-up and sharing, identity protection and equipment insurance. Frontier Secure also provides technical support services for businesses.~~

~~Data and Internet services revenue for~~For the three months ended June 30, ~~2017 decreased $74 million as compared with 2016. Data services revenue for~~2018, the ~~three months ended June 30, 2017 decreased $46 million, or 8%, to $566 million, primarily due to a 10%~~ decrease in the total number of broadband subscribers since June 30, 2016, and an additional month of revenue of $6 million in the second quarter of 2016 attributable to Frontier Secure Strategic Partnerships. Nonswitched access revenues for the three months ended June 30, 2017 decreased $28 million, or

~~6%, to $408 million, primarily due to lower monthly recurring revenues for wireless backhaul and other carrier services.~~

Consolidated ~~data~~Data and Internet services revenue consisted of decreases of $12 million and $14 million for consolidated data services and consolidated nonswitched access services, respectively. The decrease in data was primarily driven by lost revenues due to the sale of the Frontier Secure Strategic Partnerships business in May 2017, offset by an increase in dedicated internet billings. The decrease in nonswitched access services was primarily driven by a migration of our carrier customers to lower price ethernet, offset by lower churn.

For the six months ended June 30, ~~2017 increased $332~~2018, the decrease in Consolidated Data and Internet services revenue consisted of decreases of $44 million ~~as compared with 2016. Consolidated~~and $33 million for consolidated data services ~~revenue for the six months ended June 30, 2017 increased $192 million, or 20%, to $1,148 million as compared with 2016. Excluding additional~~and consolidated nonswitched access services, respectively. The decrease in data ~~service revenue from the CTF Operations for the first quarter of 2017, revenue decreased $47 million, or 5%,~~was primarily driven by ~~a decrease in~~lost revenues due to the sale of the Frontier Secure Strategic Partnerships ~~revenue because of its sale on~~business in May ~~31, 2017 and a~~2017. The decrease in ~~the total number of broadband subscribers.~~

~~Consolidated~~ nonswitched access revenues for the six months ended June 30, 2017 increased $140 million or 21% to $819 million as compared with 2016. Excluding additional nonswitched access revenue from the CTF Operations for the first quarterservices was primarily driven by a migration of 2017, revenue decreased $42 million, or 6%, due to lower monthly recurring revenue for wireless backhaul and other carrier services. We expect wireless data usage to continue to increase, which may drive the need for additional wireless backhaul capacity. Despite the need for additional capacity, in the near term, we anticipate that our overall wireless backhaul revenues (which comprise approximately 2.9% of consolidated total revenues) will continue to decline in 2017, as our carrier customers ~~migrate~~ to ~~Ethernet solutions at~~ lower price ~~points or migrate to our competitors.~~ethernet, offset by lower churn.

Voice services include traditional local and long distance wireline services, data-based Voice over Internet Protocol (VoIP) services, as well as voice messaging services offered to our consumer and commercial customers. Voice services also include the long distance voice origination and termination services that we provide to our commercial customers and other carriers.

~~Voice~~The decreases in voice services revenue, for both the three and six months ended June 30, ~~2017 decreased $112 million, or 13%, to $724 million as compared with 2016,~~2018, were primarily ~~due to~~driven by the continued loss of voice customers and decreases in ~~long distance~~long-distance revenue among those customers that do not have a bundled ~~long distance~~long-distance plan.

Voice services revenue for the six months ended June 30, 2017 increased $172 million, or 13%, to $1,475 million as compared with 2016. Excluding additional voice services revenue from the CTF Operations for the first quarter of 2017, revenues decreased $155 million, or 12%, due to the continued loss of voice customers and decreases in long distance revenue.

Video services include revenues generated from services provided directly to consumer customers through the FiOS® video and Vantage video brands, and through DISH® satellite TV services.

~~Video~~The decreases in video services revenue for both the three ~~months~~and six month ended June 30, ~~2017 decreased $90 million, or 21%, to $329 millionas compared with 2016~~2018, were primarily ~~due to~~driven by a decrease in the total number of video subscribers.

Video services revenue for the six months ended June 30, 2017 increased $189 million, or 39%, to $676 million compared with 2016. Excluding additional video services revenue from the CTF Operations for the first quarter of 2017, revenues decreased $92 million, or 19%, due to a decrease in the total number of video subscribers.

Other customer revenue includes switched access revenue and sales of ~~customer premise equipment~~Customer Premise Equipment (CPE) to our ~~commercial~~business customers and directory ~~services, less our provision for bad debts.~~

Other revenue for the three months ended June 30, 2017 increased $1 million, or 1%, as compared with 2016 primarily due to a decrease in uncollectibles, partially offset by a decrease in customer premise equipment sales during the second quarter of 2017. Other revenue for the six months ended June 30, 2017 decreased $2 million, or 1%. Excluding additional other revenue from the CTF Operations for the first quarter of 2017, revenues decreased $4 million due to a decrease in uncollectibles, colocation rent, and customer premise equipment sales partially offset by maintenance contracts.

services. Switched access ~~and subsidy revenues include~~revenue includes revenues derived from allowing other carriers to use our network to originate and/or terminate their local and long distance voice traffic (“switched access”). These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies. ~~We also receive~~

As noted above, as part of our adoption of ASC 606, switched access was reclassified from switched access and subsidy revenue to other customer revenue on our consolidated statement of operations. Prior period results have not been adjusted to reflect this change.

The increases in other revenue, for both the three and six months ended June 30, 2018, were primarily driven by a decrease in uncollectible revenue and an increase in service installations, slightly offset by a decrease in directory services.

Subsidy and other regulatory revenue includes revenues generated from cost subsidies from state and federal authorities, including the Connect America ~~Fund.~~Fund Phase II.

~~Switched~~As noted above, as part of our adoption of ASC 606, switched access was reclassified from switched access and subsidy revenue to other customer revenue on our consolidated statement of operations. Prior period results have not been adjusted to reflect this change.

The decreases in Subsidy and other regulatory revenue, for both the three months ended June 30, 2017 decreased $29 million, or 13%, as compared with 2016. Switched access revenue decreased $3 million for the three months ended June 30, 2017, primarily due to the impact of the decline in minutes of use related to access line losses and the displacement of minutes of use by wireless and other communications services, combined with the lower rates required by the FCC’s 2011 Order on intercarrier compensation reform. Subsidy revenues decreased $26 million for the three months ended June 30, 2017, primarily due to one-time true-up payments and phasedown support recognized in the second quarter of 2016 in connection with the CAF Phase II program.

~~Switched access and subsidy revenue for the~~ six months ended June 30, ~~2017 increased $2 million, or 1%, as compared with 2016. Switched access revenue for the six months ended June 30, 2017 increased $3 million. Excluding additional~~2018, were driven by decreased switched access revenue ~~from~~due to reduced rates mandated by the CTF Operations for the first quarter of 2017, revenue decreased $12 million, or 14%. Subsidy revenues for the six months ended June 30, 2017 decreased $1 million. Excluding additional subsidiary revenue from the CTF Operations for the first quarter of 2017, revenue decreased $37 million, or 12%. We expect that the trends underlying the reductionUniversal Service Fund/Intercarrier Compensation Report and Order with a related decline in ~~switched access revenue will continue through 2017~~.operating expenses.

Network access expenses include access charges and other third-party costs directly attributable to connecting customer locations to our network, and video content costs. Such access charges and other third-party costs exclude network related expenses, depreciation and amortization, and employee related expenses.

~~Network~~The decreases in network access expenses for both the three and six months ended June 30, ~~2017 decreased $45 million, or 10%,~~2018, were primarily ~~due to~~driven by lower ~~long distance costs, pole and conduit rental expense, and~~ video content costs as a result of a decline in video customers, ~~partially offset by higher customer premise equipment~~combined with lower CPE costs and lower network costs. Excluding additional expenses from the CTF Operations for the first quarter of 2017, network access expenses for the six months ended June 30, 2017 decreased $55 million, or 9%, primarily due to lower video content and long distance costs.

Network related expenses include expenses associated with the delivery of services to customers and the operation and maintenance of our network, such as facility rent, utilities, maintenance and other costs, as well as salaries, wages and related benefits associated with personnel who are responsible for the delivery of services, and the operation and maintenance of our network.

Network related expenses for the three months ended June 30, ~~2017 decreased $69 million, or 13%, primarily due~~2018, were relatively flat as compared to athe prior year period. The decrease in network related expenses for the six months ended June 30, 2018 was primarily driven by decreased compensation costs related to lower employee headcount and certain benefits, including incentive compensation, pension and OPEB expense (as discussed below)~~. There was also a reduction~~, offset by an increase in rental costs for vehicles previously under operating leases that were modified during late 2016, resulting in the classification as capital leases. Excluding additional expenses from the CTF Operations for the first quarter of 2017, network related expenses for the six months ended June 30, 2017 decreased $98 million, or 11%, primarilyoutside services due to ~~lower compensation and other employee related costs~~a West Virginia work stoppage and a ~~reduction~~decrease in ~~rental costs for vehicles.~~capitalized expense.

Selling, general and administrative expenses (SG&A expenses) include the salaries, wages and related benefits and the related costs of corporate and sales personnel, travel, insurance, non-network related rent, advertising, and other administrative expenses.

The decreases in SG&A expenses for both the three and six months ended June 30, ~~2017 decreased $65 million, or 11%, due to lower costs for compensation,~~2018 primarily related to decreased employee headcount, lower ~~incentive~~ compensation costs, certain

benefits decreasing, including pension and OPEB expense (as discussed below), reduced facilities costs, and lower information technology and other outside services costs. Approximately $5 million of the decline in SG&A expense for the three months ended June 30, 2017 is attributable to one less month of costs in 2017 for the Frontier Secure Strategic Partnerships business. Excluding additional expenses from the CTF Operations for the first quarter of 2017, SG&A expenses for the six months ended June 30, 2017 decreased $104 million, or 11%, primarily due to lower compensation and other employee related costs and reduced costs for outside services.

Frontier allocates ~~pension and~~ pension/OPEB ~~costs~~expense to network related expenses and SG&A expenses. Total consolidated pension and OPEB costs, excluding pension settlement costs, for the three and six months ended June 30, ~~2017~~2018 and ~~2016~~2017 were as follows:

The fair value estimates related to the allocation of the purchase price of the CTF Operations to Other intangibles were revised and finalized during the first quarter of 2017 from the previous estimates as of December 31, 2016. The allocation that was reported as of December 31, 2016 for Other intangibles increased $100 million, from $2,162 million to $2,262 million. These adjustments resulted in higher amortization expense during the six months ended June 30, 2017 ($20 million of which is attributable to 2016).

Depreciation and amortization expense for the three and six months ended June 30, 2017 decreased $23 million, or 4%, and increased $240 million, or 27%, respectively. Depreciation expense for the three months ended June 30, 2017 decreased $67 million, or 15%. The decrease was primarily driven by the changes in the remaining lives of certain plant assets and lower net asset bases. Excluding additional expense from the CTF Operations for the first quarter of

The decreases in depreciation expense ~~decreased $70 million, or 10%, due to changes in~~for both the ~~remaining lives of certain plant assets~~three and ~~lower net asset bases.~~

~~Amortization expense for the three~~six months ended June 30, ~~2017 increased $44 million, or 34%. The increase was~~2018 were primarily driven by ~~an increase~~lower net asset bases of certain plant assets.

The decreases in amortization expense for both the ~~value of the acquired CTF customer base subsequent to the second quarter of 2016, offset~~three and six months ended June 30, 2018 were primarily driven by the accelerated method of amortization related to customer bases acquired in 2010, 2014, and 2014. Excluding additional expense from the CTF Operations for the first quarter of 2017, amortization expense increased $30 million, or 15%, due to an increase in the value of the acquired CTF customer base subsequent to the second quarter of 2016, offset by the accelerated method of amortization related to customer bases acquired in 2010 and 2014.

As a result of the significant decline in the share price of our common stock in the second quarter of 2018 and 2017, we tested goodwill for impairment. The results of our quantitative goodwill impairment test resulted in a $670 million goodwill impairment in the second quarter of 2017, principally due to the decline in our profitability during the ~~period (See Note 6).~~period. Results from our quantitative goodwill impairment test during the second quarter of 2018 did not result in additional impairment charges. Further declines in our profitability or share price could result in additional impairment in the future.

network and information technology platforms. Integration costs also include costs to achieve synergies and operational efficiencies directly associated with the acquisition.

We invested $5 ~~million and $88~~ million in capital expenditures related to the ~~CTF Acquisition~~2016 acquisition of properties in California, Texas, and Florida with Verizon (CTF Acquisition) during the six months ended June 30, ~~2017 and 2016, respectively.~~

The Pension Plan contains provisions that provide certain employees with the option of receiving a lump sum payment upon retirement. Frontier’s accounting policy is to record these payments as a settlement only if, in the aggregate, they exceed the sum of the annual service and interest costs for the Pension Plan’s net periodic pension benefit cost. During the three and six months ended June 30, 2017, lump sum pension settlement payments to terminated or retired individuals amounted to $107 million and $362 million, respectively, which exceeded the settlement threshold of $234 million, and as a result, Frontier recognized non-cash settlement charges totaling $62 million during the first half of 2017. The non-cash charge accelerated the recognition of a portion of the previously unrecognized actuarial losses in the Pension Plan. Additional pension settlement charges will be required in each subsequent quarter of 2017, the amount of which will be dependent on the lump sum benefit payments made during the applicable quarter.

Restructuring costs and other charges consist of expenses related to changes in the composition of our business, including workforce reductions, the sale of business lines or divisions, and corresponding changes to our retirement plans.

Restructuring costs and other charges ~~increased in~~decreased for both the ~~second quarter of 2017~~three and six months ended June 30, 2018 compared to the ~~second quarter of 2016~~same periods in 2017, primarily due to a reduction in the ~~workforce~~number of ~~approximately 400~~severed employees ~~in 2017, and the loss on the sale of the Frontier Secure Strategic Partnerships business of $9 million.~~ during both periods.

Restructuring costs and other charges increased for the six months ended June 30, 2017 compared to the six months ended June 30, 2016 primarily due to a reduction in the workforce and the loss on the sale of the Frontier Secure Strategic Partnerships business.

Investment and other income, net for the six months ended June 30, ~~2016~~2018 and 2017 included ~~interest~~non-operating pension and OPEB income of ~~$11~~$10 million ~~primarily due to interest earned on restricted cash. The decrease~~and expense of $8$3 million, ~~was driven by less restricted cash on hand in 2017.~~respectively.

Frontier recognized non-cash settlement charges of $25 million and $62 million during the first six months of 2018 and 2017, respectively. The non-cash charge accelerated the recognition of a portion of the previously unrecognized actuarial losses in the Pension Plan.

During the ~~second quarter~~six months ended June 30, 2018, Frontier recorded a gain on early extinguishment of ~~2017, Frontier recorded~~debt of $33 million, driven by discounts received on the retirement of certain notes, slightly offset by premiums paid to retire certain notes and unamortized original issuance costs and a loss on early extinguishment of debt of $90 million for the six months ended June 30, 2017 driven primarily by premiums paid to retire certain senior notes prior to their ~~maturity and unamortized original issuance costs, as described below.~~ maturity.

Interest expense for the three and six months ended June 30, ~~2017 increased $2~~2018 decreased $3 million, or 1%, and $17 million, or 2%, respectively, as compared to the three and six months ended June 30, ~~2016. We incurred additional interest of $16 million in the first half of 2017 on the $1,625 million term loan facility related to the CTF Acquisition.~~2017. Our composite average borrowing rate as of June 30, 2018 and 2017 was 8.69% and ~~2016 was~~ 8.35% ~~and 8.47%~~, respectively.

Income tax benefit for the six months ended June 30, 2018 decreased due to a lower pretax loss in 2018 as compared to 2017 as well as a decrease in the federal tax rate on income. The effective tax rates on our pretax income for the three and six months ended June 30, 2018 were 54.0% and 138.7%, respectively, compared with 24.0% and 25.2% for the pretax loss for the three and six months ended June 30, 2017, ~~increased $162 million and $83 million, as compared to~~respectively. The change in the ~~three and six months ended June 30, 2016. The~~ effective tax rate ~~on our pretax loss for the six months ended June 30, 2017 was 25.2% as compared with 43.8% for the six months ended June 30, 2016. The increase in income tax benefit was~~is primarily due to a lower pre-tax loss and the ~~impact~~remeasurement of ~~the Goodwill impairment charge incurred during the second quarter of 2017.~~

Net loss attributable to Frontier common shareholders for the ~~second quarter~~first six months of ~~2017~~2018 was ~~$715~~$105 million, or ~~($9.20)~~$(1.35) per share, as compared to a net loss of ~~$80~~$844 million, or ~~($1.05)~~$(10.88) per share, in the ~~second quarter~~first six months of ~~2016~~, ~~and net loss for~~2017. For 2018, the first half of 2017 of $844 million, or ($10.88) per share, as compared to a net loss of $320 million, or ($4.14) per share for the first half of 2016. For both the second quarter and first half of 2017, the increasedecrease in net loss was primarily driven by ~~the $532 million (after-tax) goodwill impairment charge.~~decreased operating expenses and pension settlement costs, partially offset by decreased revenues.

Diluted net loss attributable to Frontier common shareholders for the ~~second quarter~~first six months of ~~2017~~2018 was ~~$718~~$105 million, or ~~($9.21)~~$(1.35) per share, as compared to a diluted net loss of ~~$80 million, or ($1.05) per share, in the second quarter of 2016, and diluted net loss for the first half of 2017 was~~ $848 million, or ~~($10.89)~~$(10.89) per share, ~~as compared to a net loss of $320 million, or ($4.14) per share for~~ the first ~~half~~six months of ~~2016.~~2017. For ~~both~~2018, the ~~second quarter and first half of 2017, the increase~~decrease in net loss was primarily driven by ~~the $532 million (after-tax) goodwill impairment charge.~~decreased operating expenses and pension settlement costs, partially offset by decreased revenues.

As of June 30, ~~2017,~~2018, we had unrestricted cash and cash equivalents aggregating ~~$387 million.~~$384 million and restricted cash of $50 million included within income taxes and other current assets on our consolidated balance sheet. Our primary source of funds during the six months ended June 30, ~~2017~~2018 was cash on hand, cash generated from operations, and cash received from issuance of our ~~Term Loan B.~~Second Lien Notes. For the six months ended June 30, ~~2017,~~2018, we used cash flow from operations, cash on hand, and borrowings to principally fund all of our cash investing and financing activities, which were primarily capital expenditures, dividends and debt repayments.

At June 30, ~~2017,~~2018, we had a working capital deficit of ~~$554~~$1,628 million, including ~~$166~~$1,228 million of long-term debt due within one year, as compared to a working capital deficit of ~~$788~~$1,185 million at December 31, ~~2016.~~2017. The ~~decrease~~increase in the working capital deficit is primarily due to ~~a decrease~~an increase in ~~current liabilities~~long term debt due within one year of ~~$465~~$572 million, partially offset by ~~a reduction in accounts receivable~~the addition of ~~$149 million.~~ Contract Acquisition costs as part of the adoption of ASC 606.

Cash flows provided by operating activities increased ~~$188~~$94 million to ~~$829~~$923 million for the six months ended June 30, ~~2017~~2018 as compared with the prior year period. The increase was primarily the result of a decrease in depreciation expense from the ~~addition of our CTF Operations, partially offset by unfavorable~~prior year and favorable changes in working ~~capital, along with higher interest expense.~~capital.

We paid $5 million in net cash taxes and received $3 million ~~and $32 million~~ in cash tax refunds during the six months ended June 30, 2018 and 2017, ~~and 2016,~~ respectively.

In connection with the CTF Acquisition, Frontier recognized acquisition and integration costs of $14 million during the first six months of 2017 compared to $265 million during the first six months of 2016. Interest expense of $397 million was incurred during the first six months of 2017 related to the September 2015 debt offering and the term loan credit agreement, dated as of August 12, 2015, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, compared to $368 million in interest expense during the first six months of 2016. Additionally, Frontier incurred $10 million of interest expense related to the Verizon Bridge Facility (as defined below) during the first six months of 2016.

For the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, our capital expenditures were $618 million and $583 million, ~~and $645 million, respectively, including $5 million and $88 million, respectively, of integration related capital expenditures associated with the CTF Acquisition.~~respectively. Capital expenditures related to CAF Phase II are included in our reported amounts for capital expenditures. ~~We anticipate capital expenditures for business operations to be approximately $1.1 billion to $1.2 billion in 2017, as compared to $1.26 billion in 2016.~~

~~Cash Flows used by~~to retire an aggregate principal amount of $1,651 million senior unsecured notes prior to maturity, consisting of $447 million of 8.500% senior notes due 2020, $249 million 8.875% senior notes due 2020, $555 million of 6.250% senior notes due 2021, and ~~provided from Financing Activities~~

$400 million of 9.250% senior notes due 2021. During the first six months of 2017, Frontier used cash on hand for the scheduled retirement of $286 million of debt, including $210 million of unsecured 8.25% senior notes at maturity, and contractual payments of principal for debt of $76 million. Additionally, Frontier used cash proceeds from the Term Loan B to retire $1,290 million of unsecured senior notes prior to maturity, consisting of $763 million of 8.875% Notes due 2020 and $527 million of 8.5% Notes due 2020. During the first six months of 2017,2018, Frontier recorded a ~~loss~~gain on early extinguishment of debt of ~~$90~~$33 million driven primarily by discounts received on the retirement of certain notes, slightly offset by premiums paid to retire ~~the~~certain notes and unamortized original issuance costs.

During the first six months of 2016, Frontier used cash on hand to retire an aggregate principal amount of $69 million of debt, $22 million of which was senior unsecured debt and $47 million of which was secured debt.

Subject to limitations contained in our indentures and credit facilities, we may from time to time make repurchases of our debt in the open market, through tender offers, exchanges of debt securities, by exercising rights to call or in privately negotiated transactions. We may also refinance existing debt or exchange existing debt for newly issued debt obligations.

Our primary source of cash is cash flows from operations. We believe our operating cash flows, existing cash balances, existing revolving credit facility and access to the capital markets, as necessary, will be adequate to finance our working capital requirements, fund capital expenditures, make required debt interest and principal payments, pay taxes ~~pay dividends to our stockholders,~~ and support our short-term and long-term operating strategies for the next twelve months. A number of factors, including but not limited to, losses of customers, pricing pressure from increased competition, lower subsidy and switched access revenues, and the impact of economic conditions may negatively affect our cash generated from operations. ~~As of June 30, 2017,~~Subsequent to the July debt activity noted below, we ~~had $83~~have $508 million of debt maturing during the last six months of ~~2017; $748~~2018; $595 million and ~~$833~~$437 million of debt will mature in ~~2018~~2019 and ~~2019,~~2020, respectively.

Borrowings under each of Frontier’s credit agreements are secured by a pledge of the stock of certain Frontier subsidiaries and guaranties by certain Frontier subsidiaries, primarily representing Frontier operations in Illinois, Indiana, Michigan, Ohio, and Wisconsin.

On February 27, 2017, Frontier entered into a first amended and restated credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, ~~(the JPM Credit Agreement),~~ pursuant to which Frontier combined its revolving credit agreement, dated as of June 2, 2014, and its term loan credit agreement, dated as of August 12, 2015. Under the JPM Credit Agreement, as further amended on June 15, 2017 by Increase Joinder No.1 and on July 3, 2018 by Increase Joinder No. 2 (as so amended, the JPM Credit Agreement), Frontier has a $1,625 million senior secured term loan A facility (the Term Loan A) maturing on March 31, 2021, an $850 million undrawn secured revolving credit facility maturing on February 27, 2022 (the Revolver), and ~~$1,500~~a $1,740 million senior secured term loan B facility (the Term Loan B) maturing on June 15, 2024. The maturities of the Term Loan A, the Revolver, and the Term Loan B, in each case if still outstanding, will be accelerated in the following circumstances: (i) if, 91 days before the maturity date of any series of Senior Notes maturing in 2020, 2023 and 2024, more than $500 million in principal amount remains outstanding on such series; or (ii) if, 91 days before the maturity date of the first series of Senior Notes maturing in 2021 or 2022, more than $500 million in principal amount remains outstanding, in the aggregate, on the two series of Senior Notes maturing in such year.

~~was fully available and~~company had no borrowings ~~had been made thereunder. The revolving~~outstanding under the revolver (with letters of credit ~~facility is available for general corporate purposes but may not be used to fund dividend payments.~~issued under the revolver totaling $62 million).

As of June 30, 2018, Frontier ~~has~~had two senior secured credit agreements with CoBank, ACB, as administrative agent, lead arranger and a lender, and the other lenders party thereto: ~~the first, for~~(i) a $350 million senior term loan facility drawn in 2014 (the 2014 CoBank Credit Agreement), ~~matures on October 24, 2019,~~ and ~~the second, for~~(ii) a $315 million senior term loan facility drawn in October 2016 (the 2016 CoBank Credit Agreement), which matures on October 12, 2021. We refer to the 2014 CoBank Credit Agreement and the 2016 CoBank Credit Agreement collectively as the CoBank Credit Agreements.

On January 25, 2018 Frontier amended the CoBank Credit ~~Agreement,~~Agreements to, among other things, expand the security package to include the interests of certain subsidiaries previously not pledged and ~~$8 million,~~replace the net leverage ratio maintenance test with ~~respect to the 2016 CoBank Credit Agreement), in each case with the remaining outstanding principal balance to be repaid on the applicable maturity date.~~ a first lien net leverage ratio maintenance test.

Borrowings under each of the CoBank Credit Agreements bear interest based on the margins over the Base Rate (as defined in the applicable CoBank Credit Agreement) or over LIBOR, at the election of Frontier.

As of June 30, 2018, we were in compliance with all of our indenture and credit facility covenants.

Subsequent to the ~~maximum Leverage Ratio and expansion~~end of the ~~security package identical to those contained in~~quarter, on July 3, 2018, Frontier further amended the JPM Credit ~~Agreement.~~Agreement and the CoBank Credit Agreements. Among other things, the amendments replace certain operating subsidiary equity pledges with pledges of the equity interests of certain direct subsidiaries of Frontier. Corresponding changes were made to the collateral package securing the Second Lien Notes.

Frontier has a Continuing Agreement for Standby Letters of Credit with Deutsche Bank AG New York Branch and Bank of Tokyo – Mitsubishi UFJ, LTD. (the LC Agreements). Frontier can also issue letters of credit under the revolver up to a maximum of $134 million. As of June 30, ~~2017, $109~~2018, $74 million and $62 million of undrawn Standby Letters of Credit had been issued under the LC ~~Agreements.~~Agreements and revolver respectively. Borrowings under the LC ~~Agreement~~Agreements are secured by a ~~pledge of~~security package identical to those contained in the ~~stock of certain Frontier subsidiaries and guaranties by certain Frontier subsidiaries.~~JPM Credit Amendment.

The terms and conditions contained in our indentures, the CoBank Credit Agreements, and the JPM Credit Agreement include the timely payment of principal and interest when due, the maintenance of our corporate existence, keeping proper books and records in accordance with GAAP, restrictions on the incurrence of liens on our assets securing indebtedness and our subsidiaries’ assets, restrictions on the incurrence of indebtedness by our subsidiaries, ~~and~~ restrictions on asset sales and transfers, mergers and other changes in corporate control and restrictions on dividends and distributions, each subject to important qualifications and exceptions. We would be restricted from declaring dividends by the CoBank Credit Agreements and the JPM Credit Agreement if an event of default occurred and was continuing at the time or would result from the dividend declaration. In addition, under the Certificate of Designations of our 11.125% Mandatory Convertible Preferred Stock, Series A, we would be restricted from paying dividends on our common stock if we failed to declare and pay dividends on our Series A Preferred Stock.

Indentures for our senior unsecured debt obligations limit our ability to create liens on our assets securing indebtedness and our subsidiaries’ assets or merge or consolidate with other companies, our subsidiaries’ ability to borrow funds and to engage in change of control transactions, subject to important exceptions and qualifications. The indentures for our 8.875% Senior Notes due 2020, our 10.50% Senior Notes due 2022, and our 11.00% Senior Notes due 2025 contain covenants that are customary for similarly rated issuers. Among other things, these covenants, subject to important qualifications and exceptions, limit our ability to incur additional indebtedness if our leverage ratio exceeds 4.5 to 1 (as defined in the indentures); limits liens and subsidiary debt to 1.25 times EBITDA and additional monetary thresholds based on capital available for use by the Company (as defined in the indentures); limits cumulative restricted payments, including dividends, to cumulative EBITDA less 1.4 times cumulative interest expense (as defined in the indenture), if our leverage ratio does not exceed 4.5 to 1; limits cumulative restricted payments, including dividends, to a lesser amount during periods, if any, in which our leverage ratio exceeds 4.5 to 1; and restricts our ability to divest substantially all of the assets of Frontier.

As of June 30, ~~2017,~~2018, we were in compliance with all of our indenture and credit facility covenants.

We intend to continue to pay regular quarterly dividends on our common and preferred stock. Our ability to fund a regular quarterly dividend will be impacted by our ability to generate cash from operations. Holders of ~~the~~our Series A Preferred Stock ~~are~~were entitled to receive cumulative dividends at an annual rate of 11.125% of the initial liquidation preference of $100 per share, or $11.125 per year per share. Series A Preferred Stock dividends of ~~$107~~$53 million were paid during ~~each of~~ the six ~~month periods~~months ended June 30, ~~2017~~2018 and ~~2016.~~

~~On May 2, 2017 (prior to~~ the ~~reverse stock split), we announced that our Board of Directors declared a regular quarterly cash~~final dividend of ~~$0.04 per~~$54 million was paid on July 2, 2018. Each share of ~~common stock, payable on June 30, 2017 to holders of record at the close of business on June 15, 2017. The Board of Directors also declared a regular quarterly cash dividend on Frontier’s 11.125%~~ Series A Preferred Stock automatically converted into 1.3333 shares of ~~$2.78125 per share, payable on June 30, 2017 to holders of record at the close of business on June 15, 2017.~~

~~The declaration and payment of future dividends on~~ our common stock is at the discretion of our Board of Directors, and will depend upon many factors, including our financial condition, results of operations, growth prospects, funding requirements, payment of cumulative dividends on ~~Series A Preferred Stock, applicable law, restrictions in agreements governing our indebtedness and other factors our Board of Directors deem relevant.~~June 29, 2018.

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial statements.

OnIn April ~~29,~~ 2015, the FCC released its right of first refusal offer of support to price cap carriers under the CAF Phase II program, which is intended to provide long-term support for broadband in high cost unserved or underserved areas. In June 2015, Frontier accepted the CAF Phase II offer, which provides for $332 million in annual support through 2020, including $49 million in annual support related to the properties acquired in the CTF Acquisition, to make available 10 Mbps downstream/1 Mbps upstream broadband service to approximately 774,000 households across some of the 29 states where we ~~now~~ operate.

To the extent we do not enable the required number of households with 10 Mbps downstream/1 Mbps upstream broadband service by the end of the CAF Phase II term or we ~~will~~are unable to satisfy other FCC CAF Phase II requirements, Frontier, we would be required to return a portion of the funds previously received.

The preparation of our financial statements requires management to make estimates and assumptions. There are inherent uncertainties with respect to such estimates and assumptions; accordingly, it is possible that actual results could differ from those estimates and changes to estimates could occur in the near term.

These critical accounting estimates have been reviewed with the Audit Committee of our Board of Directors.

~~Other than the updated indefinite-lived intangibles discussion below, there~~There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7. “Management Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

Our indefinite-lived intangibles consist of goodwill and trade name, which were generated as a result of business combinations. We test for impairment of these assets annually as of December 31 or more frequently, whenever events occur or facts and circumstances change that make it more likely than not that the fair value of a reporting unit has been reduced below its carrying amount. Events that might indicate impairment include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on our customer base, material negative changes in relationships with significant customers, and/or a significant decline in our stock price for a sustained period.

~~We early adopted ASU~~ 2017-04 “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”) during the second quarter of 2017. In accordance with ASU 2017-04, our annual goodwill impairment test (and interim test if determined to be necessary) will consist of comparing the fair value of our reporting unit to its carrying value. To the extent that the carrying value exceeds fair value, an impairment will be recognized.

For the purpose of our goodwill impairment test, we first assess qualitative factors to determine if it is more likely than not that fair value of the reporting unit is less than the carrying amount. If it is less, an additional quantitative evaluation must be performed. Our quantitative assessment consists of using a market multiples approach to determine fair value. Marketplace company comparisons and analyst reports within the telecommunications industry have historically supported a range of fair values of multiples between 5.0x and 7.9x annualized EBITDA (defined as operating income, net of acquisition and integration costs, noncash pension and OPEB costs, pension settlement costs, goodwill impairment and restructuring costs and other charges, as well as depreciation and amortization). In estimating the enterprise fair value we used 5.8x as the multiple.

As a result of the significant decline in the share price of our common stock in the second quarter of 2017, we tested goodwill for impairment. The quantitative assessment, as described above, resulted in a conclusion that the estimated enterprise fair value was lower than its carrying value, principally due to the decline in our profitability during the period. Accordingly, we have recorded goodwill impairment expense of $670 million in the second quarter of 2017.

The market multiples approach that we use incorporates significant estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of other cost synergies. Our assessment includes many qualitative factors that require significant judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding need for, or size of, an impairment. Continued declines in our profitability or cash flows or in the share price of our common stock may result in further impairment.

The enterprise fair value is sensitive to the amount of EBITDA generated by Frontier and the EBITDA multiple used in the calculation. Significant changes in the assumptions or estimates used in our impairment analyses, such as a reduction in profitability and/or cash flows, could result in a non-cash goodwill and indefinite-lived intangible asset impairment charge and materially affect our operating results. The market multiples approach is sensitive to changes in the estimated annual EBITDA, with each $100 million change equating to approximately $580 million of estimated enterprise value. Similarly, a 1% change in the multiple used would affect the estimated enterprise value by approximately $200 million. Declines in our stock price could also affect the reconciliation of our market capitalization and indicate impairment.

We also considered whether the carrying values of finite-lived intangible assets and property plant and equipment may not be recoverable or whether the carrying value of certain finite-lived intangible assets were impaired, noting no additional impairment was present as of June 30, 2017.

See Note 2 of the Notes to Consolidated Financial Statements included in Part I of this report for additional information related to recent accounting literature.

On April 29, 2015, the FCC released offers of support to price cap carriers under the CAF Phase II program. The intent of these offers is to provide long-term support for carriers for establishing and providing broadband service with at least 10 Mbps downstream/1 Mbps upstream speeds in ~~high cost~~high-cost unserved or underserved areas. Frontier accepted the CAF Phase II offer in 29 states, ~~including our CTF properties,~~ which provides for $332 million in annual support through 2020 and a commitment to make broadband available to approximately 774,000 households. CAF Phase II support is a successor to the approximately ~~$156~~$198 million in annual USF frozen ~~high cost~~high-cost support that Frontier ~~had been receiving prior to the CTF acquisition, and the $42 million in annual transitional USF frozen high cost support that Verizon had been receiving in California and Texas.~~has received. In addition to the annual support levels, these amounts also include frozen support phasedown amounts in states where the annual CAF II funding is less than the prior annual frozen ~~high cost~~high-cost support funding. ~~The~~Frontier’s frozen ~~support~~high-cost phasedown support ~~was $35 million in 2015 and $27 million in 2016, and~~ is expected to be ~~$17 million in 2017 and~~ $6 million in 2018.

InOn February ~~2017,~~1, 2018, the FCC ~~adopted an Order further explaining its competitive bidding~~issued a Public Notice establishing the process ~~to continue to distribute CAF~~for the Connect America Fund Phase II ~~funding~~auction. The Phase II auction will award up to $198 million annually for 10 years to service providers that commit to offer voice and broadband services to fixed locations in ~~those~~unserved high-cost ~~areas where price cap carriers declined~~areas; the ~~FCC’s offer of support. This~~ auction ~~could possibly present a new support~~will also account for other service elements such as the minimum data speed provided and ~~deployment opportunity. The FCC’s competitive bidding process~~data usage allowances. Frontier has ~~not yet been finalized, however. Therefore, Frontier is unable~~applied to ~~determine whether it will~~ participate in ~~any competitive bid process at this time.~~the auction, which will begin in July 2018.

We are exposed to market risk in the normal course of our business operations due to ongoing investing and funding activities, including those associated with our pension plan assets. Market risk refers to the potential change in fair value of a financial instrument as a result of fluctuations in interest rates and equity prices. We do not hold or issue derivative instruments, derivative commodity instruments or other financial instruments for trading purposes. As a result, we do not undertake any specific actions to cover our exposure to market risks, and we are not party to any market risk management agreements other than in the normal course of business. Our primary market risk exposures from interest rate risk and equity price risk are as follows:

Our exposure to market risk for changes in interest rates relates primarily to the interest-bearing portion of our pension investment portfolio and the related actuarial liability for pension obligations, as well as our floating rate indebtedness. As of June 30, ~~2017, 80%~~2018, 81% of our total debt had fixed interest rates. We had no interest rate swap agreements in effect at June 30, ~~2017.~~2018. We believe that our currently outstanding obligation exposure to interest rate changes is minimal. Our objectives in managing our interest rate risk are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, ~~only $3,577 million~~19% of our outstanding borrowings at June 30, ~~2017~~2018 have floating interest rates. The annual impact of 100 basis points change in the LIBOR would result in approximately $34 million of additional interest expense. Our undrawn $850 million revolving credit facility has interest rates that float with the ~~LIBO Rate,~~LIBOR, as defined. Consequently, we have limited material future earnings or cash flow exposures from changes in interest rates on our debt. An adverse change in interest rates would increase the amount that we pay on our variable rate obligations and could result in fluctuations in the fair value of our fixed rate obligations. Based upon our overall interest rate exposure, a near-term change in interest rates would not materially affect our consolidated financial position, results of operations or cash flows.

At June 30, ~~2017,~~2018, the fair value of our long-term debt was estimated to be approximately ~~$16.5~~$13.6 billion, based on ~~prevailing interest rates,~~quoted market prices, our overall weighted average borrowing rate was ~~8.35%~~8.69% and our overall weighted average maturity was approximately seven years. As of June 30, ~~2017,~~2018, there has been no significant change in the weighted average maturity applicable to our obligations since December 31, ~~2016.~~2017.

Our exposure to market risks for changes in equity security prices as of June 30, ~~2017~~2018 is limited to our pension plan assets. We have no other security investments of any significant amount.

Our ~~pension plan~~Pension Plan assets decreased from ~~$2,766~~$2,674 million at December 31, ~~2016~~2017 to ~~$2,609~~$2,499 million at June 30, ~~2017,~~2018, a decrease of ~~$157~~$175 million, or 6%7%. This decrease was a result of benefit payments of ~~$390~~$202 million ~~partially offset by positive~~and negative investment returns of ~~$154~~$37 million, net of investment management and administrative fees, ~~increased receivable from Verizon and the Verizon pension plan trusts of $38 million related to the CTF Acquisition, and Frontier~~partially offset by contributions of ~~$41 million during the first six months of 2017.~~$64 million.

~~We made cash contributions to the Pension Plan during the six months ended June 30, 2017 of $41 million. We made no non-cash contributions during the six months ended June 30, 2017.~~ As part of the CTF Acquisition, Verizon is required to make a cash payment to Frontier for the difference in assets transferred by Verizon into the Plan and the related obligation (the Differential), which is estimated to be $131 million. We expect to receive the payment from Verizon during the third quarter of 2017. Once received, we will retain $34 million for contributions paid by Frontier during the second quarter of 2017, and remit the remaining cash received to the pension plan to offset future contributions.

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, regarding the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon this evaluation, our principal executive officer and principal financial officer concluded, as of the end of the period covered by this report, June 30, ~~2017,~~2018, that our disclosure controls and procedures were effective.

~~We reviewed~~Effective January 1, 2018, we adopted the new revenue guidance under ASC Topic 606, Revenue from Contracts with Customers. The adoption of this guidance requires the implementation of new accounting policies and processes, including enhancements to our information systems, which changed the Company’s internal ~~control~~controls over financial reporting ~~at June 30, 2017. There~~for revenue recognition and related disclosures. Other than the above noted change, there have been no changes in our internal control over financial reporting identified in an evaluation thereof that occurred during the second fiscal quarter of ~~2017~~2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting~~.reporting.


Delaware		06-0619596
(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)


	Page ~~No.~~
Part I. Financial Information (Unaudited)

Item 1. Financial Statements

Consolidated Balance Sheets as of June 30, ~~2017~~2018 and December 31, ~~2016~~2017	2

Consolidated Statements of Operations for the three and six months ended June 30, ~~2017~~2018 and ~~2016~~2017	3

Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) for the three and six months ended June 30, ~~2017~~2018 and ~~2016~~2017	4

Consolidated Statement of Equity for the six months ended June 30, ~~2017~~2018	5

Consolidated Statements of Cash Flows for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017	6

Notes to Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3036

Item 3. Quantitative and Qualitative Disclosures about Market Risk	5055

Item 4. Controls and Procedures	5156

Part II. Other Information

Item 1. Legal Proceedings	5257

Item 1A. Risk Factors	5257

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53

~~Item 4. Mine Safety Disclosure~~	5358

Item 6. Exhibits	5459

Signature	5560



	(Unaudited)				(Unaudited)
	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	387	$	522	$	384	$	362
Accounts receivable, less allowances of $73 and $131, respectively		789		938
Accounts receivable, less allowances of $102 and $69, respectively						751		819
Contract acquisition costs						97		-
Prepaid expenses		109		88		90		78
Income taxes and other current assets		140		108		106		64
Total current assets		1,425		1,656		1,428		1,323

Property, plant and equipment, net		14,482		14,902		14,282		14,377
Goodwill		9,102		9,674		7,024		7,024
Other intangibles, net		2,386		2,662		1,760		2,063
Other assets		116		119		236		97
Total assets	$	27,511	$	29,013	$	24,730	$	24,884

LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year	$	166	$	363	$	1,228	$	656
Accounts payable		523		698		513		564
Advanced billings		286		301		265		270
Accrued content costs		99		164		88		102
Accrued other taxes		144		134		159		156
Accrued interest		407		437		387		401
Pension and other postretirement benefits		23		23		29		29
Other current liabilities		331		324		387		330
Total current liabilities		1,979		2,444		3,056		2,508

Deferred income taxes		2,299		2,516		1,219		1,139
Pension and other postretirement benefits		1,613		1,602		1,571		1,676
Other liabilities		374		372		274		317
Long-term debt		17,680		17,560		16,209		16,970

Equity:
Preferred stock, $0.01 par value (50,000 authorized shares,
11.125%, Series A, 19,250 shares issued and outstanding)		-		-
11.125%, Series A, 0 and 19,250 shares issued and outstanding
at June 30, 2018 and December 31, 2017, respectively)						-		-
Common stock, $0.25 par value (175,000 authorized shares,
79,532 issued and 78,517 and 78,170 outstanding,
at June 30, 2017 and December 31, 2016, respectively)		20		20
106,025 and 79,532 issued and 105,810 and 78,441 outstanding,
at June 30, 2018 and December 31, 2017, respectively)						27		20
Additional paid-in capital		5,218		5,561		4,788		5,034
Accumulated deficit		(1,196)		(460)		(2,107)		(2,263)
Accumulated other comprehensive loss, net of tax		(329)		(387)		(296)		(366)
Treasury common stock		(147)		(215)		(11)		(151)
Total equity		3,566		4,519		2,401		2,274
Total liabilities and equity	$	27,511	$	29,013	$	24,730	$	24,884



	For the six months ended June 30, 2017
											Accumulated
							Additional				Other		Treasury
	Preferred Stock			Common Stock			Paid-In		Accumulated		Comprehensive		Common Stock			Total
	Shares	Amount		Shares	Amount		Capital		Deficit		Loss		Shares	Amount		Equity

Balance January 1, 2017 (See Note 1)	19,250	$	-	79,532	$	20	$	5,561	$	(460)	$	(387)	(1,362)	$	(215)	$	4,519
Cumulative-effect adjustment from adoption of ASU 2016-09	-		-	-		-		-		1		-	-		-		1
Stock plans	-		-	-		-		(64)		-		-	347		68		4
Dividends on common stock	-		-	-		-		(172)		-		-	-		-		(172)
Dividends on preferred stock	-		-	-		-		(107)		-		-	-		-		(107)
Net loss	-		-	-		-		-		(737)		-	-		-		(737)
Pension settlement costs, net of tax	-		-	-		-		-		-		36	-		-		36
Other comprehensive income, net of tax	-		-	-		-		-		-		22	-		-		22
Balance June 30, 2017	19,250	$	-	79,532	$	20	$	5,218	$	(1,196)	$	(329)	(1,015)	$	(147)	$	3,566



					For the six months ended June 30,
	2017		2016		2018		2017

Cash flows provided from (used by) operating activities:
Net loss	$	(737)	$	(213)
Adjustments to reconcile net loss to net cash provided from (used by)
Net income (loss)					$	2	$	(737)
Adjustments to reconcile net income (loss) to net cash provided from (used by)
operating activities:
Depreciation and amortization		1,131		891		991		1,131
Loss on extinguishment of debt and debt exchanges		90		-
(Gain) loss on extinguishment of debt						(33)		90
Pension settlement costs		62		-		25		62
Pension/OPEB costs		34		35
Stock based compensation expense		6		15
Stock-based compensation expense						9		6
Amortization of deferred financing costs		17		28		17		17
Other adjustments		(4)		2		(20)		(4)
Deferred income taxes		(254)		(171)		(9)		(254)
Goodwill impairment		670		-		-		670
Change in accounts receivable		151		(141)		37		151
Change in accounts payable and other liabilities		(287)		180		(72)		(253)
Change in prepaid expenses, income taxes and other current assets		(50)		15		(24)		(50)
Net cash provided from operating activities		829		641		923		829

Cash flows provided from (used by) investing activities:
Capital expenditures - Business operations		(578)		(557)		(618)		(578)
Capital expenditures - Integration activities		(5)		(88)		-		(5)
Cash paid for the Verizon Acquisition		-		(9,886)
Proceeds on sale of assets		94		-		11		94
Other		5		6		(10)		5
Net cash used by investing activities		(484)		(10,525)		(617)		(484)

Cash flows provided from (used by) financing activities:
Proceeds from long-term debt borrowings		1,500		1,625		1,600		1,500
Long - term debt payments		(1,576)		(69)		(1,714)		(1,576)
Financing costs paid		(15)		(7)		(39)		(15)
Premium paid to retire debt		(80)		-		(17)		(80)
Dividends paid on common stock		(172)		(246)		-		(172)
Dividends paid on preferred stock		(107)		(107)		(53)		(107)
Capital lease obligation payments		(25)		-		(17)		(25)
Taxes paid on behalf of employees for shares withheld		(5)		(10)
Other		-		1		(8)		(5)
Net cash provided from (used by) financing activities		(480)		1,187
Net cash used by financing activities						(248)		(480)

Decrease in cash, cash equivalents, and restricted cash		(135)		(8,697)
Increase (decrease) in cash, cash equivalents, and restricted cash						58		(135)
Cash, cash equivalents, and restricted cash at January 1,		522		9,380		376		522

Cash, cash equivalents, and restricted cash at June 30,	$	387	$	683	$	434	$	387

Supplemental cash flow information:
Cash paid (received) during the period for:
Interest	$	797	$	711	$	716	$	797
Income tax refunds, net	$	(3)	$	(32)
Income tax payments (refunds), net					$	5	$	(3)



	For the three months ended				For the six months ended				For the three months ended				For the six months ended
	June 30,				June 30,				June 30,				June 30,

	2017		2016		2017		2016		2018		2017		2018		2017

Revenue	$	2,304	$	2,608	$	4,660	$	3,963	$	2,162	$	2,304	$	4,361	$	4,660

Operating expenses:
Network access expenses		408		453		819		613		369		408		741		819
Network related expenses		477		546		971		872		478		477		961		970
Selling, general and administrative expenses		531		596		1,075		953		460		531		929		1,073
Depreciation and amortization		552		575		1,131		891		486		552		991		1,131
Goodwill impairment		670		-		670		-		-		670		-		670
Acquisition and integration costs		12		127		14		265		-		12		-		14
Pension settlement costs		19		-		62		-
Restructuring costs and other charges		29		-		41		-		2		29		6		41
Total operating expenses		2,698		2,297		4,783		3,594		1,795		2,679		3,628		4,718

Operating income (loss)		(394)		311		(123)		369		367		(375)		733		(58)

Investment and other income, net		-		-		3		11		5		-		13		-
Loss on extinguishment of debt and debt exchanges		90		-		90		-
Pension settlement costs										25		19		25		62
Gain (loss) on extinguishment of debt										-		(90)		33		(90)
Interest expense		388		386		776		759		385		388		759		776

Loss before income taxes		(872)		(75)		(986)		(379)		(38)		(872)		(5)		(986)
Income tax benefit		(210)		(48)		(249)		(166)		(20)		(210)		(7)		(249)

Net loss		(662)		(27)		(737)		(213)
Net income (loss)										(18)		(662)		2		(737)
Less: Dividends on preferred stock		53		53		107		107		54		53		107		107
Net loss attributable to
Frontier common shareholders	$	(715)	$	(80)	$	(844)	$	(320)	$	(72)	$	(715)	$	(105)	$	(844)

Basic net loss per share
attributable to Frontier common shareholders	$	(9.20)	$	(1.05)	$	(10.88)	$	(4.14)	$	(0.92)	$	(9.20)	$	(1.35)	$	(10.88)

Diluted net loss per share
attributable to Frontier common shareholders	$	(9.21)	$	(1.05)	$	(10.89)	$	(4.14)	$	(0.92)	$	(9.21)	$	(1.35)	$	(10.89)

Total weighted average shares outstanding - basic		77,795		77,625		77,679		77,611		78,026		77,795		77,685		77,679

Total weighted average shares outstanding - diluted		77,951		77,625		77,835		77,611		78,026		77,951		77,685		77,835




			Six months ended June 30, 2017

($ in millions)	January 1, 2017		Payments and Retirements		New Borrowings		June 30, 2017		Interest Rate at June 30, 2017*

Senior and Subsidiary Unsecured Debt	$	15,900	$	(1,500)	$	-	$	14,400	9.22%
Senior Secured Debt		2,151		(74)		1,500		3,577	4.86%
Secured Subsidiary Debt		100		-		-		100	8.50%
Other Secured Debt		19		(2)		-		17	4.98%
Rural Utilities Service Loan Contracts		8		-		-		8	6.15%
Total Long-Term Debt	$	18,178	$	(1,576)	$	1,500	$	18,102	8.35%

Less: Debt Issuance Costs		(209)						(199)
Less: Debt Premium/(Discount)		(46)						(57)
Less: Current Portion		(363)						(166)
	$	17,560					$	17,680



					Change in
					principal payments
	Principal		Principal payments as of		from July 3, 2018		Principal payments as of
($ in millions)	Payments		June 30, 2018		activity		July 3, 2018

2017 (remaining six months)	$	83
2018	$	748
2018 (remaining six months)			$	740	$	(232)	$	508
2019	$	833	$	592	$	3	$	595
2020	$	1,156	$	434	$	3	$	437
2021	$	2,569	$	1,601	$	3	$	1,604
2022	$	2,703	$	2,703	$	3	$	2,706
2023			$	866	$	2	$	868
Thereafter	$	10,010	$	10,744	$	227	$	10,971



($ in millions)

Balance, January 1, ~~2017~~2018	$	4725
Severance ~~costs~~expense		326
Cash payments during the period		~~(66)~~(25)
Balance, June 30, ~~2017~~2018	$	136


														��
	For the three months ended				For the six months ended				For the three months ended				For the six months ended
	June 30,				June 30,				June 30,				June 30,

($ in millions and shares in thousands, except per share amounts)	2017		2016		2017		2016		2018		2017		2018		2017

Net loss used for basic and diluted loss
per share:
Net loss attributable to Frontier common shareholders	$	(715)	$	(80)	$	(844)	$	(320)	$	(72)	$	(715)	$	(105)	$	(844)
Less: Dividends paid on unvested restricted stock awards		(1)		(1)		(2)		(2)		-		(1)		-		(2)
Total basic net loss
attributable to Frontier common shareholders	$	(716)	$	(81)	$	(846)	$	(322)	$	(72)	$	(716)	$	(105)	$	(846)
Effect of loss related to dilutive stock units		(2)		-		(2)		-		-		(2)		-		(2)
Total diluted net loss
attributable to Frontier common shareholders	$	(718)	$	(81)	$	(848)	$	(322)	$	(72)	$	(718)	$	(105)	$	(848)

Basic loss per share:
Total weighted average shares and unvested restricted stock
awards outstanding - basic		78,531		78,198		78,365		78,104		80,201		78,531		79,429		78,365
Less: Weighted average unvested restricted stock awards		(736)		(573)		(686)		(493)		(2,175)		(736)		(1,744)		(686)
Total weighted average shares outstanding - basic		77,795		77,625		77,679		77,611		78,026		77,795		77,685		77,679

Basic net loss per share
attributable to Frontier common shareholders	$	(9.20)	$	(1.05)	$	(10.88)	$	(4.14)	$	(0.92)	$	(9.20)	$	(1.35)	$	(10.88)

Diluted loss per share:
Total weighted average shares outstanding - basic		77,795		77,625		77,679		77,611		78,026		77,795		77,685		77,679
Effect of dilutive stock units		156		-		156		-		-		156		-		156
Total weighted average shares outstanding - diluted		77,951		77,625		77,835		77,611		78,026		77,951		77,685		77,835

Diluted net loss per share
attributable to Frontier common shareholders	$	(9.21)	$	(1.05)	$	(10.89)	$	(4.14)	$	(0.92)	$	(9.21)	$	(1.35)	$	(10.89)



		Number of
		Shares
		(in thousands)
Balance at January 1, ~~2017~~2018		~~190~~306
LTIP target performance shares granted, net		~~165~~284
LTIP target performance shares earned		~~(41)~~(18)
LTIP target performance shares forfeited		~~(19)~~(47)
Balance at June 30, ~~2017~~2018		~~295~~525



		Weighted					Weighted
		Average					Average
	Number of	Grant Date		Aggregate		Number of	Grant Date		Aggregate
	Shares	Fair Value		Fair Value		Shares	Fair Value		Fair Value
	(in thousands)	(per share)		(in millions)		(in thousands)	(per share)		(in millions)
Balance at January 1, 2017	549	$	78.00	$	28
Balance at January 1, 2018						633	$	58.63	$	4
Restricted stock granted	454	$	62.25	$	8	1,996	$	8.30	$	11
Restricted stock vested	(217)	$	79.80	$	4	(221)	$	66.47	$	(1)
Restricted stock forfeited	(64)	$	63.15			(276)	$	19.24
Balance at June 30, 2017	722	$	69.00	$	13
Balance at June 30, 2018						2,132	$	15.81	$	11



($ in millions)	Pension Costs		OPEB Costs		Deferred Taxes on Pension and OPEB Costs		Total		Pension Costs		OPEB Costs		Total

Balance at January 1, 2017	$	(647)	$	29	$	231	$	(387)
Balance at January 1, 2018 (a)									$	(345)	$	(21)	$	(366)
Other comprehensive income (loss) before reclassifications		25		(5)		(9)		11		45		1		46
Amounts reclassified from accumulated other comprehensive loss to net loss		17		(4)		(2)		11		27		(3)		24
Recognition of net actuarial loss for pension settlement costs in net loss		62		-		(26)		36
Net current-period other comprehensive income (loss)		104		(9)		(37)		58		72		(2)		70
Balance at June 30, 2017	$	(543)	$	20	$	194	$	(329)
Balance at June 30, 2018 (a)									$	(273)	$	(23)	$	(296)



	Amount Reclassified from										Amount Reclassified from Accumulated Other Comprehensive Loss (a)
($ in millions)	Accumulated Other Comprehensive Loss (a)
														��				Affected Line Item in
																		the Statement Where
Details about Accumulated Other	For the three months ended June 30,				For the six months ended June 30,				Affected Line Item in the Statement Where		For the three months ended June 30,			For the six months ended June 30,				Net Income (Loss)
Comprehensive Loss Components	2017		2016		2017		2016		Net Income (Loss) is Presented	2018		2017		2018		2017		is Presented
Amortization of Pension Cost Items (b)
Actuarial gains (losses)	$	(9)	$	(10)	$	(17)	$	(21)		$	(6)	$	(9)	$	(13)	$	(17)
Pension settlement costs		(19)		-		(62)		-			(25)		(19)		(25)		(62)
		(28)		(10)		(79)		(21)	Income (loss) before income taxes		(31)		(28)		(38)		(79)	Income (loss) before income taxes
Tax impact		10		4		29		8	Income tax (expense) benefit		8		10		11		29	Income tax (expense) benefit
	$	(18)	$	(6)	$	(50)	$	(13)	Net income (loss)	$	(23)	$	(18)	$	(27)	$	(50)	Net income (loss)

Amortization of OPEB Cost Items (b)
Prior-service costs	$	3	$	3	$	5	$	5		$	3	$	3	$	5	$	5
Actuarial gains (losses)		(1)		(1)		(1)		(1)			-		(1)		(1)		(1)
		2		2		4		4	Income (loss) before income taxes		3		2		4		4	Income (loss) before income taxes
Tax impact		-		(1)		(1)		(2)	Income tax (expense) benefit		(1)		-		(1)		(1)	Income tax (expense) benefit
	$	2	$	1	$	3	$	2	Net income (loss)	$	2	$	2	$	3	$	3	Net income (loss)



	Pension Benefits
	For the three months ended				For the six months ended
	June 30,				June 30,

($ in millions)	2017		2016		2017		2016

Components of total pension benefit cost
Service cost	$	25	$	34	$	50	$	47
Interest cost on projected benefit obligation		33		42		67		65
Expected return on plan assets		(48)		(65)		(96)		(92)
Amortization of unrecognized loss		9		11		17		21
Net periodic pension benefit cost	$	19	$	22	$	38	$	41
Pension settlement costs		19		-		62		-
Total pension benefit cost	$	38	$	22	$	100	$	41



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased	Average Price Paid per Share

April 1, 2017 to April 30, 2017
April 1, 2018 to April 30, 2018
Employee Transactions (1)	50	$	32.08	108	$	7.30

May 1, 2017 to May 31, 2017
May 1, 2018 to May 31, 2018
Employee Transactions (1)	33	$	26.34	134	$	8.46

June 1, 2017 to June 30, 2017
June 1, 2018 to June 30, 2018
Employee Transactions (1)	419	$	19.94	73	$	7.61


Totals April 1, 2017 to June 30, 2017
Totals April 1, 2018 to June 30, 2018
Employee Transactions (1)	502	$	21.57	315	$	7.86


(a)	Exhibits:

	~~3.1~~	Restated Certificate of Incorporation (filed as Exhibit 3.200.1 to Frontier’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000).*
	~~3.2~~	Certificate of Amendment of Restated Certificate of Incorporation, effective July 31, 2008 (filed as Exhibit 3.1 to Frontier’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008).*
	~~3.3~~	Certificate of Amendment of Restated Certificate of Incorporation, effective June 28, 2010 (filed as Exhibit 99.2 to Frontier’s Current Report on Form 8-K filed July 1, 2010).*
	~~3.4~~	Certificate of Amendment of the Restated Certificate of Incorporation, effective July 10, 2017 (filed as Exhibit 3(i) to Frontier’s Current Report on Form 8-K filed July 10, 2017).*
	10.1	~~Increase Joinder~~Consent and Amendment No. 1,3, dated as of ~~June 15, 2017, among Frontier, certain subsidiaries party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent,~~July 3, 2018, to the First Amended and Restated Credit Agreement, dated as of February 27, 2017, as amended, among Frontier ~~the Lenders party thereto and~~Communications Corporation, JPMorgan Chase Bank, N.A., as ~~Administrative Agent.~~administrative agent, and the lenders from time to time party thereto (filed as Exhibit 10.1 to Frontier’s Current Report on Form 8-K filed on July 5, 2018.)*
	10.2	~~Offer~~Third Amendment, dated as of ~~Employment Letter,~~July 3, 2018, to the Credit Agreement, dated ~~April 27, 2017, between~~as of October 12, 2016, as amended, among Frontier Communications Corporation, CoBank, ACB, as administrative agent, and ~~Christopher Levendos.~~the lenders from time to time party thereto (filed as Exhibit 10.2 to Frontier’s Current Report on Form 8-K filed on July 5, 2018.)*
	10.3	~~Offer~~Sixth Amendment, dated as of ~~Employment Letter, dated June 12, 2017, between Frontier and John Maduri.~~
	~~10.4~~	~~Form of Change in Control~~July 3, 2018, to the Credit Agreement, dated as of June 2, 2014, as amended, among Frontier Communications Corporation, CoBank, ACB, as administrative agent, and the lenders from time to time party thereto (filed as Exhibit 10.3 to Frontier’s Current Report on Form 8-K filed on July 10, 2017, by and between Frontier and each of Kenneth A. Arndt, Steve Gable, Christopher D. Levendos, John Maduri, R. Perley McBride, Mark D. Nielsen and Kathleen Weslock (synchronizing the terms of existing change in control provisions).5, 2018.)*
	31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of ~~1934.~~1934.
	31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of ~~1934.~~1934.
	32	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002.
	101.INS	XBRL Instance Document.
	101.SCH	XBRL Taxonomy Extension Schema Document.
	101.PRE	XBRL Taxonomy Presentation Linkbase Document.
	101.CAL	XBRL Taxonomy Calculation Linkbase Document.
	101.LAB	XBRL Taxonomy Label Linkbase Document.
	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.


	FRONTIER COMMUNICATIONS CORPORATION
	~~(Registrant)~~


	By: ~~/s/~~/s/ Donald Daniels
	Donald Daniels
	Senior Vice President and ~~Controller~~Chief Accounting Officer
	(Principal Accounting Officer)

Date: August ~~3, 2017~~2, 2018