Frontier Communications 2014 Annual Report Download - page 74

Additionally, the Company has historically included selling, general and administrative expenses
such as 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, within the
line item “Other operating expenses” in its Consolidated Statements of Income. Effective with the year
ended December 31, 2014, these selling, general and administrative expenses are being reported
separately as “Selling, general and administrative expenses” in the Consolidated Statements of
Income.
As a result of the above, the Company also revised the Consolidated Statements of Income as
follows:
($ in thousands)
As Previously
Reported Adjustment
Revised
Reporting
Year ended December 31, 2013
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,141,068 $(2,141,068) $ —
Network related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,083,555 1,083,555
Selling, general and administrative expenses . . . . . . . . . . . . . — 1,057,513 1,057,513
Total operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,795,456 — 3,795,456
Year ended December 31, 2012
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,234,553 $(2,234,553) $ —
Network related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,133,692 1,133,692
Selling, general and administrative expenses . . . . . . . . . . . . . — 1,100,861 1,100,861
Total operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,024,685 — 4,024,685
The changes outlined above do not affect the Company’s previously reported Consolidated Total
Operating Expenses, Operating Income, Net Income or Income per Share in the Consolidated
Statements of Income, or any items reported in the Consolidated Balance Sheets, Consolidated
Statements of Comprehensive Income (Loss), Cash Flows or Changes in Stockholders’ Equity.
(2) Recent Accounting Pronouncements:
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) No. 2014-09, “Revenue from Contracts with Customers.” This standard 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 the company expects to be entitled in exchange for
those goods or services. This new standard is effective for annual and interim reporting periods
beginning after December 15, 2016. Early adoption is not permitted. 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. The Company is currently evaluating the impact of
adopting the new standard, but has not yet selected a transition method or determined the impact of
adoption on its consolidated financial statements.
Discontinued Operations
In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and
Disclosures of Disposals of Components of an Entity” which raises the threshold for a disposal to
qualify as discontinued operations and requires new disclosures for individually material disposal
transactions that do not meet the definition of a discontinued operation. Under the new standard,
companies report discontinued operations when they have a disposal that represents a strategic shift
that has or will have a major impact on operations or financial results. This new standard will be
applied prospectively and will be effective for the Company on January 1, 2015. This new standard is
not expected to have a material impact on the Company’s consolidated financial statements.
F-13
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements