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Frontier Communications Reports 2013 First Quarter Results

  Frontier Communications Reports 2013 First Quarter Results

  *Strong new broadband subscriber growth of 28,200; greater than full year
    2012
  *Residential customer retention improved by 38% quarter over quarter; 57%
    year over year
  *First quarter operating cash flow margin maintained at 47%
  *Net expense reductions of $100 million on track for 2013
  *Dividend payout ratio of 48%
  *2013 guidance for cash flow, capital expenditures and cash taxes
    reaffirmed

Business Wire

STAMFORD, Conn. -- May 06, 2013

Frontier Communications Corporation (NASDAQ: FTR) today reported first quarter
2013 revenue of $1,205.4 million, operating income of $250.8 million and net
income attributable to common shareholders of Frontier of $48.1 million, or
$0.05 per share.

“In the first quarter of 2013 Frontier achieved the strongest rate of
broadband net additions since our acquisition of the Verizon properties in
July, 2010,” said Maggie Wilderotter, Chairman and CEO of Frontier
Communications. “We accelerated growth every month in the first quarter as we
phased out the Apple Gift Card Promotion and replaced it with aggressive
bundled price offers for packages and our standalone broadband offering,
Simply Broadband. In addition, our customer retention and sales efforts
substantially improved our residential net customer losses by 17,300 from Q4
2012, which improved our rate of loss from 1.5% in Q4 2012 to 1.0% in Q1 2013.
We are maintaining this strong broadband and customer retention momentum into
this second quarter through strong sales, continued investments in our network
and exceptional customer service. As a result of these efforts, we expect
revenue decline improvements in Q2. Finally, we are on track to achieve our
goal of reduced net operating expenses of $100 million for 2013.”

Revenue for the first quarter of 2013 was $1,205.4 million as compared to
$1,232.6 million in the fourth quarter of 2012 and $1,268.1 million in the
first quarter of 2012. The decrease in revenue for the first quarter of 2013
as compared to the first quarter of 2012 is attributable to decreases in voice
revenues, and lower switched and nonswitched access revenue, partially offset
by an $18.3 million, or 9%, increase in data services revenue.

At March 31, 2013, the Company had approximately 281,100business customers
and  2,859,200residential customers. During the three months ended March 31,
2013, the Company lost approximately 32,900 customers as compared to 50,400
customers in the three months ended December 31, 2012and 72,600customers in
the three months ended March 31, 2012. Also, during the most recent quarter,
the average monthly business revenue per customer was $644.55, or 4% higher
than the first quarter of 2012, and the average monthly residential revenue
per customer was $58.82, or 2% higher than the first quarter of 2012.

The Company’s broadband customer net additions were approximately 28,200
during the first quarter of 2013, which was greater than the 23,400 broadband
customer net additions for all of 2012. The Company had approximately
1,782,600 broadband customers at March 31, 2013. The Company added 18,300
video customers during the first quarter of 2013. The Company had
approximately 365,000 video customers at March 31, 2013.

Network access expenses for the first quarter of 2013 were $109.4 million as
compared to $108.5 million in the fourth quarter of 2012 and $115.6 million in
the first quarter of 2012. The Company incurred promotion costs of $6.9
million in the first quarter of 2013 and $5.5 million in the fourth quarter of
2012 related to its Apple gift card promotion. Excluding promotion costs,
network access expenses in the first quarter of 2013 decreased $12.9 million,
or 11%, as compared to the first quarter of 2012.

Other operating expenses for the first quarter of 2013 were $541.5 million as
compared to $570.7 million in the fourth quarter of 2012 and $551.6 million in
the first quarter of 2012. Included in other operating expenses were severance
costs of $2.4 million in the first quarter of 2013. Other operating expenses,
excluding severance costs, in the first quarter of 2013 were lower than the
fourth quarter of 2012 by $14.4 million, primarily due to decreased
compensation costs resulting from reduced headcount, lower outside service
costs and the absence of storm related costs.

Depreciation and amortization for the first quarter of 2013 was $303.7 million
as compared to $304.0 million in the fourth quarter of 2012 and $357.3 million
in the first quarter of 2012. Amortization expense decreased by $59.9 million
in the first quarter of 2013 as compared to the first quarter of 2012,
primarily due to the accelerated amortization in the first quarter of 2012 of
certain software licenses, as well as certain other items that were fully
amortized in 2012.

Operating income for the first quarter of 2013 was $250.8 million (reflecting
lower amortization and other operating expenses, as well as the absence of
integration costs, as compared to the first quarter of 2012) and operating
income margin was 20.8 percent as compared to operating income of $235.7
million and operating income margin of 19.1 percent in the fourth quarter of
2012 and operating income of $208.5 million and operating income margin of
16.4 percent in the first quarter of 2012.

Excluding adjustments for integration costs and severance costs, operating
income and operating income margin would have been $253.2 million and 21.0
percent, respectively, for the three months ended March 31, 2013, $266.5
million and 21.6 percent, respectively, for the three months ended December
31, 2012 and $250.1 million and 19.7 percent, respectively, for the three
months ended March 31, 2012. Operating income, excluding integration costs and
severance costs, decreased $13.3 million in the first quarter of 2013 as
compared to the fourth quarter of 2012 principally due to lower revenue.

Interest expense for the first quarter of 2013 was $171.4 million as compared
to $164.9 million in the first quarter of 2012, a $6.5 million increase,
primarily due to higher average debt levels and lower capitalized interest in
2013. Interest expense in the first quarter of 2013 was $7.5 million lower
than the $178.9 million reported in the fourth quarter of 2012, primarily due
to lower average debt levels resulting from the retirement of $502.7 million
of the Company’s 6.25% senior notes that matured on January 15, 2013.

Income tax expense for the first quarter of 2013 was $33.3 million as compared
to $18.7 million in the first quarter of 2012, a $14.6 million increase,
principally due to higher pretax income. The Company had an effective tax rate
for the first quarter of 2013 and 2012 of 39.6% and 38.0%, respectively.

Net income attributable to common shareholders of Frontier was $48.1 million,
or $0.05 per share, in the first quarter of 2013, as compared to $26.8
million, or $0.03 per share, in the first quarter of 2012. The first quarter
of 2013 includes severance costs of $2.4 million, partially offset by an
investment gain of $1.3 million (combined impact of $0.7 million after tax).
Excluding the impact of the aforementioned items, non-GAAP adjusted net income
attributable to common shareholders of Frontier for the first quarter of 2013
would be $48.8 million, or $0.05 per share, as compared to $52.5 million, or
$0.05 per share, in the first quarter of 2012.

Capital expenditures for Frontier business operations were $189.0 million for
the first quarter of 2013 as compared to $208.5 million in the first quarter
of 2012.

Operating cash flow, as adjusted and defined by the Company in the attached
Schedule A, was $561.9 million for the first quarter of 2013 resulting in an
operating cash flow margin of 46.6 percent. Operating cash flow, as reported,
of $554.5 million has been adjusted to exclude $2.4 million of severance costs
and $5.0 million of non-cash pension and other postretirement benefit costs.

Free cash flow, as defined by the Company in the attached Schedule A,  was
$206.2 million for the first quarter of 2013. The Company’s dividend
represents a payout of 48 percent of free cash flow for the first quarter of
2013.

Working Capital

At March 31, 2013, the Company had a working capital surplus of $632.2
million. On January 15, 2013, the Company retired $502.7 million of our 6.25%
senior notes that matured on such date. The repayment was made with cash
available on hand.

Debt Refinancing

On April 10, 2013, the Company completed a registered debt offering of $750.0
million aggregate principal amount of 7.625% senior unsecured notes due 2024,
issued at a price of 100% of their principal amount. The Company received net
proceeds of $736.9 million from the offering after deducting underwriting
fees. The Company used the net proceeds from the sale of the notes, together
with cash on hand, to finance the cash tender offers discussed below.

Subsequent to March 31, 2013, the Company repurchased, through a cash tender
offer and privately negotiated transactions, $906.6 million aggregate
principal amount of various senior notes tendered for total consideration of
$1,052.4 million, consisting of $194.9 million aggregate principal amount of
the 6.625% senior notes due 2015 (the March 2015 Notes); $277.9 million
aggregate principal amount of the 7.875% senior notes due 2015 (the April 2015
Notes); and $433.8 million aggregate principal amount of the 8.250% senior
notes due 2017 (the 2017 Notes), respectively.

The repurchases of the senior notes resulted in a loss on the early
extinguishment of debt of approximately $143.8 million ($89.0 million, or
$0.09 per share, after tax), which will be recognized in the second quarter of
2013. As of April 30, 2013, approximately $105.0 million aggregate principal
amount of the March 2015 Notes, $96.9 million aggregate principal amount of
the April 2015 Notes and $606.9 million aggregate principal amount of the 2017
Notes remained outstanding.

Renewal of Revolving Credit Facility

On May 3, 2013, the Company entered into a new $750.0 million revolving credit
facility that will mature on November 3, 2016. Upon entering into the new
facility, the existing facility was terminated.

Sale of Mohave Partnership Interest

On April 1, 2013, the Company closed on the sale of Mohave Cellular Limited
Partnership (Mohave) to Verizon Wireless, and the Company will recognize a
gain on sale of approximately $15.3 million before taxes (approximately $9.4
million, or $0.01 per share, after taxes) in the second quarter of 2013.

2013 Guidance Remains Unchanged

For the full year of 2013, the Company’s expectations for capital expenditures
and free cash flow remain unchanged and are within a range of $625 million to
$675 million and $825 million to $925 million, respectively. The Company
expects that in 2013, absent any further legislative changes in 2013, its cash
taxes guidance remains unchanged and will be in the range of $125 million to
$150 million.

Non-GAAP Measures

The Company uses certain non-GAAP financial measures in evaluating its
performance. These include non-GAAP adjusted net income attributable to common
shareholders of Frontier, free cash flow and operating cash flow. A
reconciliation of the differences between non-GAAP adjusted net income
attributable to common shareholders of Frontier, free cash flow and operating
cash flow and the most comparable financial measures calculated and presented
in accordance with GAAP is included in the tables that follow. The non-GAAP
financial measures are by definition not measures of financial performance
under GAAP, and are not alternatives to operating income or net income
attributable to common shareholders of Frontier as reflected in the statement
of operations or to cash flow as reflected in the statement of cash flows, and
are not necessarily indicative of cash available to fund all cash flow needs.
The non-GAAP financial measures used by the Company may not be comparable to
similarly titled measures of other companies.

The Company believes that the presentation of non-GAAP financial measures
provides useful information to investors regarding the Company’s financial
condition and results of operations because these measures, when used in
conjunction with related GAAP financial measures, (i) together provide a more
comprehensive view of the Company’s core operations and ability to generate
cash flow, (ii) provide investors with the financial analytical framework upon
which management bases financial, operational, compensation and planning
decisions and (iii) presents measurements that investors and rating agencies
have indicated to management are useful to them in assessing the Company and
its results of operations. In addition, the Company believes that non-GAAP
adjusted net income attributable to common shareholders of Frontier, free cash
flow and operating cash flow, as the Company defines them, can assist in
comparing performance from period to period, without taking into account
factors affecting operating income or net income attributable to common
shareholders of Frontier in the statement of operations, or cash flow
reflected in the statement of cash flows, including changes in working capital
and the timing of purchases and payments. The Company has shown adjustments to
its financial presentations to exclude losses on the early extinguishment of
debt, investment gains, discrete tax items, integration costs, severance costs
and non-cash pension and other postretirement benefit costs, as disclosed in
the attached Schedules A and B, because investors have indicated to management
that such adjustments are useful to them in assessing the Company and its
results of operations.

Management uses these non-GAAP financial measures to (i) assist in analyzing
the Company’s underlying financial performance from period to period, (ii)
evaluate the financial performance of its business units, (iii) analyze and
evaluate strategic and operational decisions, (iv) establish criteria for
compensation decisions, and (v) assist management in understanding the
Company’s ability to generate cash flow and, as a result, to plan for future
capital and operational decisions. Management uses these non-GAAP financial
measures in conjunction with related GAAP financial measures.

These non-GAAP financial measures have certain shortcomings. In particular,
free cash flow does not represent the residual cash flow available for
discretionary expenditures, since items such as debt repayments and dividends
are not deducted in determining such measure. Operating cash flow has similar
shortcomings as interest, income taxes, capital expenditures, debt repayments
and dividends are not deducted in determining this measure. Management
compensates for the shortcomings of these measures by utilizing them in
conjunction with their comparable GAAP financial measures. The information in
this press release should be read in conjunction with the financial statements
and footnotes contained in our documents filed with the U.S. Securities and
Exchange Commission.

Conference Call and Webcast

The Company will host a conference call today at 4:30 P.M. Eastern time. In
connection with the conference call and as a convenience to investors, the
Company furnished today on a Current Report on Form 8-K certain materials
regarding first quarter 2013 results. The conference call will be webcast and
may be accessed at:

http://investor.frontier.com/eventdetail.cfm?eventid=128130

A telephonic replay of the conference call will be available for one week
beginning at 7:30 P.M. Eastern time, Monday, May 6, 2013 via dial-in at
888-203-1112 for U.S. and Canadian callers or, outside the U.S. and Canada, at
719-457-0820, passcode 9321559. A webcast replay of the call will be available
at www.frontier.com/ir.

About Frontier Communications

Frontier Communications Corporation (NASDAQ: FTR) offers broadband, voice,
satellite video, wireless Internet data access, data security solutions,
bundled offerings and specialized bundles for residential customers, small
businesses and home offices, and advanced business communications for medium
and large businesses in 27 states. Frontier’s approximately 14,400 employees
are based entirely in the United States. More information is available at
www.frontier.com and www.frontier.com/ir.

Forward-Looking Statements

This press release contains forward-looking statements that are made pursuant
to the safe harbor provisions of The Private Securities Litigation Reform Act
of 1995. These statements are made on the basis of management’s views and
assumptions regarding future events and business performance. Words such as
“believe,” “anticipate,” “expect” and similar expressions are intended to
identify forward-looking statements. Forward-looking statements (including
oral representations) involve risks and uncertainties that may cause actual
results to differ materially from any future results, performance or
achievements expressed or implied by such statements. These risks and
uncertainties are based on a number of factors, including but not limited to:
the effects of greater than anticipated competition which could require us to
implement new pricing, marketing strategies or new product or service
offerings and the risk that we will not respond on a timely or profitable
basis; reductions in the number of our voice customers that we cannot offset
with increases in broadband subscribers and sales of other products and
services; the effects of competition from cable, wireless and other wireline
carriers; our ability to maintain relationships with customers, employees or
suppliers; the effects of ongoing changes in the regulation of the
communications industry as a result of federal and state legislation and
regulation, or changes in the enforcement or interpretation of such
legislation and regulation; the effects of any unfavorable outcome with
respect to any current or future legal, governmental or regulatory
proceedings, audits or disputes; the effects of changes in the availability of
federal and state universal funding to us and our competitors; our ability to
adjust successfully to changes in the communications industry and to implement
strategies for growth; continued reductions in switched access revenues as a
result of regulation, competition or technology substitutions; our ability to
effectively manage service quality in our territories and meet mandated
service quality metrics; our ability to successfully introduce new product
offerings, including our ability to offer bundled service packages on terms
that are both profitable to us and attractive to customers; the effects of
changes in accounting policies or practices adopted voluntarily or as required
by generally accepted accounting principles or regulations; our ability to
effectively manage our operations, operating expenses and capital
expenditures, and to repay, reduce or refinance our debt; the effects of
changes in both general and local economic conditions on the markets that we
serve, which can affect demand for our products and services, customer
purchasing decisions, collectability of revenues and required levels of
capital expenditures related to new construction of residences and businesses;
the effects of technological changes and competition on our capital
expenditures, products and service offerings, including the lack of assurance
that our network improvements in speed and capacity will be sufficient to meet
or exceed the capabilities and quality of competing networks; the effects of
increased medical, pension and postemployment expenses and related funding
requirements; the effects of changes in income tax rates, tax laws,
regulations or rulings, or federal or state tax assessments; our ability to
successfully renegotiate union contracts in 2013 and thereafter; changes in
pension plan assumptions and/or the value of our pension plan assets, which
could require us to make increased contributions to the pension plan in 2013
and beyond; the effects of customer bankruptcies and home foreclosures, which
could result in difficulty in collection of revenues and loss of customers;
adverse changes in the credit markets or in the ratings given to our debt
securities by nationally accredited ratings organizations, which could limit
or restrict the availability, or increase the cost, of financing; our cash
flow from operations, amount of capital expenditures, debt service
requirements, cash paid for income taxes and liquidity may affect our payment
of dividends on our common shares; 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; and the effects of
severe weather events such as hurricanes, tornadoes, ice storms or other
natural or man-made disasters. These and other uncertainties related to our
business are described in greater detail in our filings with the Securities
and Exchange Commission, including our reports on Forms 10-K and 10-Q, and the
foregoing information should be read in conjunction with these filings. We do
not intend to update or revise these forward-looking statements to reflect the
occurrence of future events or circumstances.

                                                           
Frontier Communications Corporation
Consolidated Financial Data
                                                                 
                                 For the quarter ended
                                 March 31,       December 31,    March 31,
(Amounts in thousands,            2013          2012          2012      
except per share amounts)
                                                                 
Income Statement Data
Revenue                          $ 1,205,396    $ 1,232,553    $ 1,268,054 
                                                                 
Network access expenses            109,398         108,535         115,569
Other operating expenses           541,499         570,711         551,583
^(1)
Depreciation and                   303,675         304,044         357,300
amortization
Integration costs ^(2)            -             13,533        35,144    
Total operating expenses          954,572       996,823       1,059,596 
                                                                 
Operating income                   250,824         235,730         208,458
                                                                 
Losses on early                    -               (19,300   )     -
extinguishment of debt
Investment and other               4,654           1,138           5,588
income, net
Interest expense                  171,420       178,881       164,862   
Income before income taxes         84,058          38,687          49,184
Income tax expense                33,275        9,488         18,694    
Net income ^ (2)                   50,783          29,199          30,490
Less: Income attributable
to the noncontrolling
interest in a
partnership                       2,643         4,320         3,722     
Net income attributable to
common shareholders of           $ 48,140       $ 24,879       $ 26,768    
Frontier
                                                                 
Weighted average shares            991,873         991,316         988,873
outstanding
                                                                 
Basic net income per share
attributable to
common shareholders of           $ 0.05          $ 0.02          $ 0.03
Frontier ^ (3)
                                                                 
Non-GAAP adjusted net
income per share
attributable to common
shareholders of Frontier         $ 0.05          $ 0.06          $ 0.05
^(3) (4)
                                                                 
Capital expenditures -           $ 189,009       $ 177,300       $ 208,522
Business operations
Capital expenditures -             -               15,329          15,731
Integration activities
Operating cash flow, as            561,932         574,368         619,834
adjusted ^(4)
Free cash flow ^(4)                206,207         221,984         253,160
Dividends paid                     99,812          99,843          99,851
Dividend payout ratio ^(5)         48        %     45        %     39        %
                                                                             

       Includes severance costs of $2.4 million, $17.2 million and $6.5
^(1)  million for the quarters ended March 31, 2013, December 31, 2012 and
       March 31, 2012, respectively.
       Reflects integration costs of $13.5 million ($9.1 million or $0.01 per
^(2)   share after tax) and $35.1 million ($21.7 million or $0.02 per share
       after tax) for the quarters ended December 31, 2012 and March 31, 2012,
       respectively.
^(3)   Calculated based on weighted average shares outstanding.
^(4)   Reconciliations to the most comparable GAAP measures are presented in
       Schedules A and B at the end of these tables.
^(5)   Represents dividends paid divided by free cash flow, as defined in
       Schedule A.
       

                                                           
Frontier Communications Corporation
Consolidated Financial and Operating Data
                                                                 
                                 For the quarter ended
                                 March 31,       December 31,    March 31,
(Amounts in thousands,            2013          2012          2012      
except operating data)
                                                                 
Selected Income Statement
Data
Revenue:
Local and long distance          $ 525,944       $ 542,538       $ 576,242
services
Data and internet                  454,836         453,493         443,883
services
Other                             82,358        90,503        90,860    
Customer revenue                   1,063,138       1,086,534       1,110,985
Switched access and               142,258       146,019       157,069   
subsidy
Total revenue                    $ 1,205,396    $ 1,232,553    $ 1,268,054 
                                                                 
Other Financial and
Operating Data
                                                                 
Revenue:
Business                         $ 548,340       $ 564,919       $ 569,088
Residential                       514,798       521,615       541,897   
Customer revenue                   1,063,138       1,086,534       1,110,985
Switched access and               142,258       146,019       157,069   
subsidy
Total revenue                    $ 1,205,396    $ 1,232,553    $ 1,268,054 
Customers                          3,140,281       3,173,169       3,341,060
Business customer
metrics:
Customers                          281,052         286,106         302,142
Revenue                          $ 548,340       $ 564,919       $ 569,088
Average monthly business         $ 644.55        $ 652.14        $ 619.88
revenue per customer
Residential customer
metrics:
Customers                          2,859,229       2,887,063       3,038,918
Revenue                          $ 514,798       $ 521,615       $ 541,897
Average monthly
residential revenue per          $ 58.82         $ 58.54         $ 57.83
customer ^(1)
Customer monthly churn             1.64      %     1.62      %     1.58      %
                                                                 
Employees                          14,363          14,659          15,479
Broadband subscribers              1,782,599       1,754,422       1,742,714
Video subscribers ^(2)             364,961         346,627         309,026
Switched access minutes            4,290           4,523           4,517
of use (in millions)
                                                                             

^(1)  Calculation excludes the Mohave Cellular Limited Partnership.
       Video subscribers excludes the loss of 203,100 DirecTV subscribers in
^(2)   the third quarter of 2012 as Frontier no longer provides DirecTV as
       part of its bundled packages. Video subscribers excludes 214,600
       DirecTV subscribers as of March 31, 2012.
       

Note: Prior period revenue and certain operating statistics have been revised
from the previously disclosed amounts to reflect the immaterial
reclassification of certain revenues and the related impact on average monthly
revenue per customer amounts, as summarized in Schedule C. Broadband
subscriber counts have also been revised to reflect a one-time opening balance
adjustment of 33,139 subscribers.


                                                        
Frontier Communications Corporation
Condensed Consolidated Balance Sheet Data
                                                             
(Amounts in thousands)
                                                             
                                            March 31, 2013   December 31, 2012
            ASSETS
Current assets:
Cash and cash equivalents                   $  875,909       $    1,326,532
Accounts receivable, net                       480,746            533,704
Restricted cash                                22,126             15,408
Other current assets                          169,374           211,559
Total current assets                           1,548,155          2,087,203
                                                             
Restricted cash                                20,545             27,252
Property, plant and equipment, net             7,417,746          7,504,896
Other assets - principally goodwill           8,023,116         8,114,280
Total assets                                $  17,009,562    $    17,733,631
                                                             
            LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year          $  57,899        $    560,550
Accounts payable and other current            858,038           992,970
liabilities
Total current liabilities                      915,937            1,553,520
                                                             
Deferred income taxes and other                3,654,514          3,678,893
liabilities
Long-term debt                                 8,368,729          8,381,947
Equity                                        4,070,382         4,119,271
Total liabilities and equity                $  17,009,562    $    17,733,631
                                                                  

                                                             
Frontier Communications Corporation
Consolidated Cash Flow Data
                                                                  
(Amounts in thousands)
                                               For the quarter ended March 31,
                                                 2013            2012     
                                                                  
Cash flows provided by (used in)
operating activities:
Net income                                     $  50,783          $ 30,490
Adjustments to reconcile net income to
net cash provided
by operating activities:
Depreciation and amortization expense             303,675           357,300
Stock based compensation expense                  3,885             3,718
Pension/OPEB costs                                5,018             12,403
Other non-cash adjustments                        1,710             1,537
Deferred income taxes                             (10,133    )      15,764
Change in accounts receivable                     48,951            59,905
Change in accounts payable and other              (84,756    )      (102,042 )
liabilities
Change in other current assets                   40,159          3,438    
Net cash provided by operating                    359,292           382,513
activities
                                                                  
Cash flows provided from (used by)
investing activities:
Capital expenditures - Business                   (189,009   )      (208,522 )
operations
Capital expenditures - Integration                -                 (15,731  )
activities
Network expansion funded by Connect               (1,815     )      -
America Fund
Grant funds received for network expansion from Connect
America Fund                                      5,998             -
Cash transferred from escrow                      (11        )      5,425
Other assets purchased and distributions         528             (5,918   )
received, net
Net cash used by investing activities             (184,309   )      (224,746 )
                                                                  
Cash flows provided from (used by)
financing activities:
Long-term debt payments                           (517,129   )      (14,502  )
Dividends paid                                    (99,812    )      (99,851  )
Repayment of customer advances for
construction,
distributions to noncontrolling                  (7,279     )     (3,694   )
interests and other
Net cash used by financing activities             (624,220   )      (118,047 )
                                                                  
Increase (decrease) in cash and cash              (449,237   )      39,720
equivalents
Cash reclassed to assets held for sale            (1,386     )      -
Cash and cash equivalents at January 1,          1,326,532       326,094  
                                                                  
Cash and cash equivalents at March 31,         $  875,909        $ 365,814  
                                                                  
Cash paid (received) during the period
for:
Interest                                       $  168,095         $ 118,524
Income taxes (refunds)                         $  947             $ (369     )
                                                                  

                                                              
                                                                 Schedule A
Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures
                                                                 
                                 For the quarter ended
                                 March 31,       December 31,    March 31,
(Amounts in thousands)            2013          2012          2012      
                                                                 
Operating Income to Adjusted
Operating Cash Flow to Free Cash
Flow
                                                                 
Revenue                          $ 1,205,396     $ 1,232,553     $ 1,268,054
Total operating expenses          954,572       996,823       1,059,596 
Operating income                   250,824         235,730         208,458
                                                                 
Depreciation and amortization     303,675       304,044       357,300   
Operating cash flow                554,499         539,774         565,758
                                                                 
Add back:
Integration costs                  -               13,533          35,144
Pension/OPEB costs (non-cash)      5,018           3,867           12,403
^(1)
Severance costs                   2,415         17,194        6,529     
Adjusted operating cash flow       561,932         574,368         619,834
                                                                 
Add back:
Interest and dividend income       1,766           594             2,623
Stock based compensation           3,885           3,825           3,718
                                                                 
Subtract:
Cash paid (refunded) for income    947             622             (369      )
taxes
Capital expenditures - Business    189,009         177,300         208,522
operations ^(2)
Interest expense                  171,420       178,881       164,862   
Free cash flow                   $ 206,207      $ 221,984      $ 253,160   
                                                                 
Operating income margin
(Operating income divided by
revenue)
As Reported                        20.8      %     19.1      %     16.4      %
As Adjusted ^(3)                   21.4      %     21.9      %     20.7      %
                                                                 
Operating cash flow margin
(Operating cash flow divided by
revenue)
As Reported                        46.0      %     43.8      %     44.6      %
As Adjusted                        46.6      %     46.6      %     48.9      %
                                                                 

       Reflects pension and other postretirement benefit (OPEB) expense, net
       of capitalized amounts, of $20.5 million, $16.8 million and $15.8
       million for the quarters ended March 31, 2013, December 31, 2012 and
^(1)  March 31, 2012, respectively, less cash pension contributions and
       certain OPEB costs/payments of $15.5 million, $13.0 million and $3.4
       million for the quarters ended March 31, 2013, December 31, 2012 and
       March 31, 2012, respectively.
^(2)   Excludes capital expenditures for integration activities.
^(3)   Excludes integration costs, pension and other postretirement benefit
       costs (non-cash) and severance costs.
       

                                                                        
                                                                                 Schedule
                                                                                 B
Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures
                                                                                 
                                                                                 
(Amounts in
thousands,
except
per share            For the quarter ended
amounts)
                     March 31, 2013           December 31, 2012      March 31, 2012
                                                                                 
Net income
attributable                       Earnings               Earnings               Earnings
to common
shareholders         Net Income    Per        Net         Per        Net         Per
of Frontier                        Share      Income      Share      Income      Share
                                                                                 
GAAP, as             $ 48,140      $  0.05    $ 24,879    $  0.02    $ 26,768    $  0.03
reported
Losses on
early                  -              -         12,120       0.01      -            -
extinguishment
of debt
Gain on                (785   )       -         -            -         -            -
investment
Integration            -              -         9,067        0.01      21,701       0.02
costs
Severance              1,462          -         11,520       0.01      4,032        -
costs
Discrete tax          -            -        361         -        -           -
items ^(1)
Non-GAAP, as         $ 48,817     $  0.05    $ 57,947    $  0.06    $ 52,501    $  0.05
adjusted ^(2)
                                                                                 

^(1)  Includes the reversal of uncertain tax positions and changes in certain
       deferred tax balances.
^(2)   Non-GAAP, as adjusted may not sum due to rounding.
       

                                                
                                                                      Schedule
                                                                      C
Frontier Communications Corporation
Revenue Reclassifications
                                                                      
Prior period revenue and certain operating statistics have been revised from
the previously disclosed amounts to reflect the immaterial reclassification of
certain revenues and the related impact on average monthly revenue per
customer amounts. Broadband subscriber counts have also been revised to
reflect a one-time opening balance adjustment of 33,139 subscribers.


(Amounts in millions, except per customer
amounts)

For the Quarter Ended:
                12/31/2012   9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010 
Revenue
As Reported
Local and
long              $ 542.5        $ 556.4       $ 559.8       $ 572.2       $ 592.9        $ 605.6       $ 617.7       $ 635.1       $ 662.1        $ 688.4
distance
services
Data and
internet            456.4          461.2         454.7         450.7         464.9          457.9         461.6         458.5         452.8          453.1
services
Other              92.4         94.9        97.3        96.9        78.4         79.4        85.1        86.8        83.4         93.2      
Customer            1,091.4        1,112.5       1,111.9       1,119.7       1,136.1        1,142.9       1,164.4       1,180.5       1,198.3        1,234.7
revenue
Switched
access and         141.2        140.0       146.9       148.3       147.0        148.0       157.8       166.2       160.4        168.3     
subsidy
Total             $ 1,232.6     $ 1,252.5    $ 1,258.8    $ 1,268.1    $ 1,283.2     $ 1,290.9    $ 1,322.3    $ 1,346.7    $ 1,358.7     $ 1,403.0   
revenue
                                                                                                                                                   
As Revised
Local and
long              $ 542.5        $ 561.0       $ 562.9       $ 576.2       $ 597.5        $ 612.3       $ 624.4       $ 642.3       $ 669.2        $ 695.5
distance
services
Data and
internet            453.5          455.8         452.2         443.9         456.1          451.2         454.6         452.1         444.9          447.0
services
Other              90.5         87.6        88.1        90.9        73.8         72.4        78.0        78.6        76.7         84.8      
Customer            1,086.5        1,104.3       1,103.1       1,111.0       1,127.4        1,136.0       1,157.0       1,173.0       1,190.7        1,227.3
revenue
Switched
access and         146.0        148.1       155.7       157.1       155.8        155.0       165.2       173.7       168.0        175.6     
subsidy
Total             $ 1,232.6     $ 1,252.5    $ 1,258.8    $ 1,268.1    $ 1,283.2     $ 1,290.9    $ 1,322.3    $ 1,346.7    $ 1,358.7     $ 1,403.0   
revenue
                                                                                                                                                   
Adjustments
Local and
long              $ -            $ 4.6         $ 3.1         $ 4.1         $ 4.7          $ 6.7         $ 6.7         $ 7.1         $ 7.1          $ 7.1
distance
services
Data and
internet            (2.9       )   (5.4      )   (2.5      )   (6.8      )   (8.7       )   (6.7      )   (7.0      )   (6.5      )   (7.9       )   (6.1      )
services
Other              (1.9       )  (7.3      )  (9.3      )  (6.0      )  (4.6       )  (7.0      )  (7.0      )  (8.2      )  (6.7       )  (8.3      )
Customer            (4.8       )   (8.2      )   (8.8      )   (8.7      )   (8.7       )   (6.9      )   (7.4      )   (7.5      )   (7.6       )   (7.4      )
revenue
Switched
access and         4.8          8.2         8.8         8.7         8.7          6.9         7.4         7.5         7.6          7.4       
subsidy
Total             $ -           $ -          $ -          $ -          $ -           $ -          $ -          $ -          $ -           $ -         
revenue
                                                                                                                                                               

               
                                                                                                                                                    Schedule C
                                                                                                                                                    (continued)
Frontier Communications Corporation
Revenue Reclassifications
                                                                                                                                                                  
(Amounts in millions, except per customer
amounts)
                                                                                                                                                                  
For the Quarter Ended:
                    12/31/2012   9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010  7/1/2010  
                                                                                                                                                                  
Segmentation
As Reported
Business           $ 574.5        $ 581.1       $ 576.8       $ 584.9       $ 592.0        $ 582.0       $ 588.1       $ 591.3       $ 587.6        $ 600.9
Residential         516.9        531.4       535.1       534.8       544.1        560.9       576.3       589.2       610.7        633.8     
Customer             1,091.4        1,112.5       1,111.9       1,119.7       1,136.1        1,142.9       1,164.4       1,180.5       1,198.3        1,234.7
revenue
Switched
access and          141.2        140.0       146.9       148.3       147.0        148.0       157.8       166.2       160.4        168.3     
subsidy
Total              $ 1,232.6     $ 1,252.5    $ 1,258.8    $ 1,268.1    $ 1,283.2     $ 1,290.9    $ 1,322.3    $ 1,346.7    $ 1,358.7     $ 1,403.0   
revenue
                                                                                                                                                                  
As Revised
Business           $ 564.9        $ 573.0       $ 569.1       $ 569.1       $ 575.9        $ 573.5       $ 577.4       $ 574.3       $ 576.7        $ 590.4
Residential         521.6        531.3       534.0       541.9       551.5        562.5       579.6       598.7       614.0        636.9     
Customer             1,086.5        1,104.3       1,103.1       1,111.0       1,127.4        1,136.0       1,157.0       1,173.0       1,190.7        1,227.3
revenue
Switched
access and          146.0        148.1       155.7       157.1       155.8        155.0       165.2       173.7       168.0        175.6     
subsidy
Total              $ 1,232.6     $ 1,252.5    $ 1,258.8    $ 1,268.1    $ 1,283.2     $ 1,290.9    $ 1,322.3    $ 1,346.7    $ 1,358.7     $ 1,403.0   
revenue
                                                                                                                                                                  
Adjustments
Business           $ (9.5       ) $ (8.1      ) $ (7.7      ) $ (15.8     ) $ (16.1      ) $ (8.5      ) $ (10.7     ) $ (17.0     ) $ (10.9      ) $ (10.5     )
Residential         4.7          (0.1      )  (1.1      )  7.1         7.4          1.6         3.3         9.5         3.3          3.2       
Customer             (4.8       )   (8.2      )   (8.8      )   (8.7      )   (8.7       )   (6.9      )   (7.4      )   (7.5      )   (7.6       )   (7.4      )
revenue
Switched
access and          4.8          8.2         8.8         8.7         8.7          6.9         7.4         7.5         7.6          7.4       
subsidy
Total              $ -           $ -          $ -          $ -          $ -           $ -          $ -          $ -          $ -           $ -         
revenue
                                                                                                                                                                  
Business
ARPC
As Reported        $ 663.15       $ 659.01      $ 642.38      $ 637.07      $ 627.14       $ 600.48      $ 593.90      $ 582.10      $ 561.19       $ 561.81
As Revised         $ 652.14       $ 649.85      $ 633.80      $ 619.88      $ 610.14       $ 591.67      $ 583.13      $ 565.32      $ 550.81       $ 551.98
Adjustments        $ (11.00     ) $ (9.16     ) $ (8.58     ) $ (17.19    ) $ (17.00     ) $ (8.81     ) $ (10.78    ) $ (16.78    ) $ (10.38     ) $ (9.83     )
                                                                                                                                                                  
Residential
ARPC
As Reported        $ 58.00        $ 58.72       $ 58.19       $ 57.06       $ 56.95        $ 57.52       $ 57.71       $ 57.36       $ 57.85        $ 58.34
As Revised         $ 58.54        $ 58.71       $ 58.07       $ 57.83       $ 57.73        $ 57.69       $ 58.05       $ 58.30       $ 58.16        $ 58.57
Adjustments        $ 0.54         $ (0.01     ) $ (0.12     ) $ 0.77        $ 0.78         $ 0.17        $ 0.34        $ 0.94        $ 0.32         $ 0.23
                                                                                                                                                                  
Broadband
Subscribers
As Reported          1,787,561      1,782,278     1,781,295     1,775,853     1,764,160      1,754,842     1,738,670     1,730,336     1,718,959      1,711,911   1,715,454
As Revised           1,754,422      1,749,139     1,748,156     1,742,714     1,731,021      1,721,703     1,705,531     1,697,197     1,685,820      1,678,772   1,682,315
Adjustments          (33,139    )   (33,139   )   (33,139   )   (33,139   )   (33,139    )   (33,139   )   (33,139   )   (33,139   )   (33,139    )   (33,139   ) (33,139   )
                                                                                                                                                                            

Contact:

Frontier Communications Corporation
INVESTORS:
Luke Szymczak, 203-614-5044
Vice President, Investor Relations
luke.szymczak@FTR.com
or
MEDIA:
Brigid Smith, 203-614-5042
AVP Corporate Communications
brigid.smith@FTR.com
 
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