Frontier Communications 2013 Annual Report Download - page 72

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(1) Description of Business and Summary of Significant Accounting Policies:
(a) Description of Business:
Frontier Communications Corporation (Frontier) is a communications company providing services
predominantly to rural areas and small and medium-sized towns and cities as an incumbent local exchange
carrier (ILEC). Frontier was incorporated in 1935, originally under the name of Citizens Utilities Company and
was known as Citizens Communications Company until July 31, 2008. Frontier and its subsidiaries are referred
to as “we,” “us,” “our,” “Frontier,” or the “Company” in this report. On July 1, 2010, Frontier completed the
2010 Transaction for the acquisition of the 2010 Acquired Business, as described further in Note 3—The
Transactions.
(b) Basis of Presentation and Use of Estimates:
Our consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP). All significant intercompany balances and
transactions have been eliminated in consolidation.
Frontier had a 33
1
⁄
3
% controlling general partner interest in a partnership entity, the Mohave Cellular
Limited Partnership (Mohave). Mohave’s results of operations and balance sheet were included in our
consolidated financial statements through its date of disposal on April 1, 2013. The minority interest of the
limited partners was reflected in the consolidated balance sheet as “Noncontrolling interest in a partnership”
and in the consolidated statements of operations as “Income attributable to the noncontrolling interest in a
partnership.” On April 1, 2013, the Company sold its partnership interest in Mohave and received proceeds of
$17.8 million. The Company recognized a gain on sale of approximately $14.6 million before taxes in 2013.
For our financial statements as of and for the period ended December 31, 2013, we evaluated subsequent
events and transactions for potential recognition or disclosure through the date that we filed this annual report
on Form 10-K with the Securities and Exchange Commission (SEC).
The preparation of our financial statements in conformity with U.S. 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 revenue recognition including the allowance for doubtful accounts,
impairment of long-lived assets, intangible assets, depreciation and amortization, income taxes, contingencies,
and pension and other postretirement benefits, among others.
(c) Cash Equivalents:
We consider all highly liquid investments with an original maturity of three months or less to be cash
equivalents.
(d) Revenue Recognition:
Revenue is recognized when services are provided or when products are delivered to customers. Revenue
that is billed in advance includes: 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 that is billed in arrears includes: non-recurring
network access services (including data services), switched access services, 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 in the period that the services are provided. Excise taxes are
recognized as a liability when billed. Installation fees and their related direct and incremental costs are initially
F-10
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements