Frontier Communications 2014 Annual Report Download - page 71

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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
mainly 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.
Effective October 24, 2014, Frontier’s scope of operations and balance sheet capitalization
changed materially as a result of the completion of the Connecticut 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 Connecticut
operations, as defined in Note 3—Acquisitions, from the date of acquisition on October 24, 2014.
(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). Certain reclassifications of
amounts previously reported have been made to conform to the current presentation, as described in
Note 1(l)—Disaggregation of Network Related Expenses and Selling, General and Administrative
Expenses. 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 income 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 $18 million. The Company recognized a gain
on sale of approximately $15 million before taxes in 2013.
For our financial statements as of and for the period ended December 31, 2014, 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 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.
(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
F-10
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements