Frontier Communications Reports 2012 Second Quarter Results

• Continued improvement in revenue and customer metrics

• Second quarter free cash flow of $285 million

• Second quarter operating cash flow margin of 49%, as adjusted

• Second quarter synergy cost savings of $9 million and $640 million since closing

• Access line annual loss rate improved to 7.6%

• Dividend payout ratio of 37% for the first 6 months of 2012

STAMFORD, Conn.--(BUSINESS WIRE)-- Frontier Communications Corporation (NASDAQ: FTR) today reported second quarter 2012 revenue of $1,258.8 million, operating income of $267.8 million and net income attributable to common shareholders of Frontier of $18.0 million, or $0.02 per share. Non-GAAP adjusted net income attributable to common shareholders of Frontier would be $75.3 million, or $0.08 per share.

"Frontier's second quarter 2012 showed solid revenue performance and the highest operating margin since the closing of our acquisition," said Maggie Wilderotter, Chairman & CEO of Frontier Communications. "Our strong results were positively impacted by our proactive revenue initiatives commenced in the second quarter to rationalize our product set and our customer pricing. Our new, residential tiered pricing gives customers flexibility and choice, which should enhance the run-rate of our financials for the second half of 2012. During the quarter, we expanded our network's broadband reach to an additional 60,000 households and are aggressively focused on increasing our overall network speeds over the next eighteen months. Frontier is also excited to be connecting 92,876 additional broadband homes through our $71.9 million receipt of the Federal Communications Commission's Connect America Fund, which is aligned with our corporate goal of improved broadband connectivity for rural America and we will connect even more broadband households starting in Q4 2012 through our recent agreement with Hughes Network Systems."

Net income attributable to common shareholders of Frontier was $18.0 million, or $0.02 per share, in the second quarter of 2012, as compared to $32.3 million, or $0.03 per share, in the second quarter of 2011. The second quarter of 2012 includes a loss on the early extinguishment of debt of $70.8 million, integration costs of $28.6 million and severance and early retirement costs of $1.5 million, partially offset by an investment gain of $9.8 million (combined impact of $57.3 million or $0.06 per share after tax). Excluding the impact of the aforementioned items, non-GAAP adjusted net income attributable to common shareholders of Frontier for the second quarter of 2012 would be $75.3 million, or $0.08 per share.

Revenue for the second quarter of 2012 was $1,258.8 million as compared to $1,268.1 million in the first quarter of 2012 and $1,322.3 million in the second quarter of 2011. The decrease in revenue for the second quarter of 2012 as compared to the second quarter of 2011 is attributable to decreases in the number of residential and business customers, switched access, data services and video revenue.

At June 30, 2012, the Company had 2,978,900 residential customers and 296,500 business customers. The Company's broadband customer additions were 5,400 during the second quarter of 2012, reflecting an expected increase in conversion non-pay disconnects and less robust marketing promotions. The Company had 1,781,300 broadband customers at June 30, 2012. The Company had net additions of 6,300 video customers during the second quarter of 2012, which includes 13,300 net additions of satellite TV customers and a net loss of 7,000 FiOS video customers. The Company had 568,200 video customers at June 30, 2012.

Network access expenses and other operating expenses for the second quarter of 2012 were $655.3 million as compared to $667.2 million in the first quarter of 2012 and $704.7 million in the second quarter of 2011. Other operating expenses included severance and early retirement costs of $1.5 million in the second quarter of 2012, $6.5 million in the first quarter of 2012 and $11.0 million in the second quarter of 2011.

Depreciation and amortization for the second quarter of 2012 was $307.0 million as compared to $357.3 million in the first quarter of 2012 and $359.0 million in the second quarter of 2011. Amortization expense decreased by $48.4 million in the second quarter of 2012 as compared to the first quarter of 2012, primarily due to the accelerated write-off of software licenses during the first quarter of 2012 as a result of the completed systems conversions.

Integration costs of approximately $28.6 million ($0.02 per share after tax) were incurred during the second quarter of 2012, as compared to approximately $35.1 million ($0.02 per share after tax) in the first quarter of 2012 and $20.3 million ($0.01 per share after tax) in the second quarter of 2011, in connection with our integration of the acquired properties. These nonrecurring costs in 2012 were incurred in connection with our successful conversion of the final nine states onto our platform of system applications in March 2012, and other ongoing network integration work. Our integration costs and related capital expenditures will be completed by the end of 2012.

Operating income for the second quarter of 2012 was $267.8 million (reflecting lower depreciation and amortization, integration costs, network access expenses and other operating expenses as compared to the first quarter of 2012) and operating income margin was 21.3 percent as compared to operating income of $208.5 million and operating income margin of 16.4 percent in the first quarter of 2012 and operating income of $238.3 million and operating income margin of 18.0 percent in the second quarter of 2011.

Excluding integration costs and severance and early retirement costs, operating income and operating income margin for the three months ended June 30, 2012 would have been $297.9 million and 23.7 percent, respectively. Excluding the comparable adjustments in each period, operating income and operating income margin for the three months ended March 31, 2012 would have been $250.1 million and 19.7 percent, respectively, and for the three months ended June 30, 2011 would have been $269.5 million and 20.4 percent, respectively.

Losses on early extinguishment of debt for the second quarter of 2012 reflects losses of $70.8 million ($0.04 per share after tax) recognized on the early extinguishment of debt. In May 2012, the Company completed a registered offering of $500.0 million aggregate principal amount of 9.250% senior unsecured notes due 2021. We received net proceeds of approximately $490.6 million from the offering which we used, along with cash on hand, to retire debt through a cash tender offer during the second quarter of 2012. We retired early $400.0 million of the Company's debt maturing in 2014 which had an effective interest cost of 10.855%, reflecting the fact that such notes were issued at a discount in April 2009.

Interest expense for the second quarter of 2012 was $172.1 million as compared to $166.9 million in the second quarter of 2011, a $5.2 million increase, primarily due to lower capitalized interest in 2012.

Income tax expense for the second quarter of 2012 was $11.7 million as compared to $37.2 million in the second quarter of 2011, a $25.5 million decrease, due to lower pretax income and the comparable prior year period included a $10.5 million charge resulting from the enactment on May 25, 2011 of the Michigan Corporate Income Tax which eliminated certain future tax deductions.

Capital expenditures for Frontier business operations were $167.6 million for the second quarter of 2012 and $376.1 million for the first six months of 2012. Capital expenditures related to integration activities were $12.2 million for the second quarter of 2012 and $27.9 million for the first six months of 2012.

Operating cash flow, as adjusted and defined by the Company in the attached Schedule B, was $620.4 million for the second quarter of 2012 resulting in an operating cash flow margin of 49.3 percent. Operating cash flow, as reported, of $574.8 million has been adjusted to exclude $28.6 million of integration costs, $15.5 million of non-cash pension and other postretirement benefit costs, and $1.5 million of severance and early retirement costs for the second quarter of 2012.

Free cash flow, as defined by the Company in the attached Schedule A, was $284.9 million for the second quarter of 2012 and $538.0 million for the first six months of 2012. The Company's dividend represents a payout of 37 percent of free cash flow for the first six months of 2012.

Working Capital

At June 30, 2012, we had a working capital deficiency of $240.8 million, which includes the classification of certain debt maturing in the first quarter of 2013 of $522.7 million as a current liability. We had a working capital surplus of $281.9 million at June 30, 2012, after excluding the debt classification. We believe our operating cash flows, existing cash balances and existing revolving credit facility will be adequate to meet our working capital and other cash requirements.

2012 Guidance

For the full year of 2012, the Company's expectations for capital expenditures and free cash flow, excluding integration costs and integration capital expenditures, are unchanged and within a range of $725 million to $775 million and $900 million to $1 billion, respectively. We expect that in 2012 our cash taxes will be approximately $25 million. We expect to incur operating expenses and capital expenditures for integration activities of approximately $80 million and $40 million, respectively, in 2012. We expect to make net contributions to our pension plan of approximately $30 million to $40 million in 2012, which reflects the positive impact of funding rate changes contained in the Highway Investment Act of 2012.

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 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 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: $70.8 million of losses on the early extinguishment of debt for the quarter and six months ended June 30, 2012, with no comparable amounts in the other periods presented; $9.8 million of investment gains for the quarter and six months ended June 30, 2012, with no comparable amounts in the other periods presented; $10.5 million of discrete tax items for the quarter and six months ended June 30, 2011, with no comparable amounts in the other periods presented; $28.6 million, $35.1 million and $20.3 million of integration costs in the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, respectively, and $63.7 million and $33.5 million of integration costs in the first six months of 2012 and 2011, respectively; $1.5 million, $6.5 million and $11.0 million of severance and early retirement costs in the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, respectively, and $8.0 million and $11.0 million of severance and early retirement costs in the first six months of 2012 and 2011, respectively; and in free cash flow and operating cash flow, $15.5 million, $12.4 million and $5.3 million of non-cash pension and other postretirement benefit costs in the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, respectively, and $27.9 million and $16.6 million of non-cash pension and other postretirement benefit costs in the first six months of 2012 and 2011, respectively, 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 second quarter 2012 results. The conference call will be webcast and may be accessed at:

http://investor.frontier.com/eventdetail.cfm?eventid=114880

A telephonic replay of the conference call will be available for one week beginning at 7:30 P.M. Eastern time, July 31, 2012 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 1556446. A webcast replay of the call will be available at www.frontier.com/ir.

About Frontier Communications

Frontier Communications Corporation (NASDAQ: FTR) offers voice, broadband, 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 15,300 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 risk that the growth opportunities from the Transaction may not be fully realized or may take longer to realize than expected; the effects of greater than anticipated competition requiring 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 access lines that cannot be offset by 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; 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 and product and service offerings, including the lack of assurance that our network improvements 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; changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments; 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; our ability to successfully renegotiate union contracts in 2012 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 ability to pay dividends on our common shares, which may be affected by our cash flow from operations, amount of capital expenditures, debt service requirements, cash paid for income taxes and liquidity; 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.

TABLES TO FOLLOW

Frontier Communications Corporation
Consolidated Financial Data
		For the quarter ended												For the six months ended
		June 30,				March 31,				June 30,				June 30,
(Amounts in thousands, except per share amounts)		2012				2012				2011				2012				2011
Income Statement Data
Revenue		$	1,258,777			$	1,268,054			$	1,322,255			$	2,526,831			$	2,668,952
Network access expenses			115,433				115,569				126,629				231,002				277,913
Other operating expenses (1)			539,911				551,583				578,096				1,091,494				1,158,436
Depreciation and amortization			307,047				357,300				358,986				664,347				710,243
Integration costs (2)			28,602				35,144				20,264				63,746				33,487
Total operating expenses			990,993				1,059,596				1,083,975				2,050,589				2,180,079
Operating income			267,784				208,458				238,280				476,242				488,873
Losses on early extinguishment of debt			(70,818	)			-				-				(70,818	)			-
Investment and other income (loss), net			8,804				5,588				(382	)			14,392				9,203
Interest expense			172,054				164,862				166,864				336,916				334,279
Income before income taxes			33,716				49,184				71,034				82,900				163,797
Income tax expense			11,717				18,694				37,190				30,411				73,757
Net income (2)			21,999				30,490				33,844				52,489				90,040
Less: Income attributable to the noncontrolling interest in a partnership			4,010				3,722				1,583				7,732				3,068
Net income attributable to common shareholders of Frontier		$	17,989			$	26,768			$	32,261			$	44,757			$	86,972
Weighted average shares outstanding			991,183				988,873				989,357				989,869				989,480
Basic net income per share attributable to common shareholders of Frontier (3)		$	0.02			$	0.03			$	0.03			$	0.04			$	0.09
Non-GAAP adjusted net income per share attributable to common shareholders of Frontier (3) (4)		$	0.08			$	0.05			$	0.06			$	0.13			$	0.12
Other Financial Data
Capital expenditures - Business operations		$	167,551			$	208,522			$	210,505			$	376,073			$	414,039
Capital expenditures - Integration activities			12,209				15,731				13,408				27,940				18,986
Operating cash flow, as adjusted (4)			620,363				619,834				633,770				1,240,197				1,260,207
Free cash flow (4)			284,867				253,160				242,390				538,027				495,247
Dividends paid			99,851				99,851				186,610				199,702				373,215
Dividend payout ratio (5)			35	%			39	%			77	%			37	%			75	%

	(1)		Includes severance and early retirement costs of $1.5 million, $6.5 million and $11.0 million for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, respectively, and $8.0 million and $11.0 million for the six months ended June 30, 2012 and 2011, respectively.
	(2)		Reflects integration costs of $28.6 million ($18.1 million or $0.02 per share after tax), $35.1 million ($21.7 million or $0.02 per share after tax) and $20.3 million ($12.5 million or $0.01 per share after tax) for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, respectively. Reflects integration costs of $63.7 million ($39.8 million or $0.04 per share after tax) and $33.5 million ($20.7 million or $0.02 per share after tax) for the six months ended June 30, 2012 and 2011, respectively.
	(3)		Calculated based on weighted average shares outstanding.
	(4)		Reconciliations to the most comparable GAAP measures are presented in Schedules A, B and C 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												For the six months ended
		June 30,				March 31,				June 30,				June 30,
(Amounts in thousands, except operating data)		2012				2012				2011				2012				2011
Selected Income Statement Data
Revenue:
Local and long distance services		$	559,837			$	572,162			$	617,744			$	1,131,999			$	1,252,858
Data and internet services			454,706				450,670				461,599				905,376				920,126
Other			97,337				96,877				85,067				194,214				171,902
Customer revenue			1,111,880				1,119,709				1,164,410				2,231,589				2,344,886
Switched access and subsidy			146,897				148,345				157,845				295,242				324,066
Total revenue		$	1,258,777			$	1,268,054			$	1,322,255			$	2,526,831			$	2,668,952
Other Financial and Operating Data
Revenue:
Residential		$	535,089			$	534,836			$	576,304			$	1,069,925			$	1,165,470
Business			576,791				584,873				588,106				1,161,664				1,179,416
Customer revenue			1,111,880				1,119,709				1,164,410				2,231,589				2,344,886
Switched access and subsidy			146,897				148,345				157,845				295,242				324,066
Total revenue		$	1,258,777			$	1,268,054			$	1,322,255			$	2,526,831			$	2,668,952
Residential customer metrics:
Customers - Legacy Frontier			1,047,036				1,066,537				1,123,506				1,047,036				1,123,506
- Acquired properties			1,931,860				1,972,381				2,128,453				1,931,860				2,128,453
Total residential customers			2,978,896				3,038,918				3,251,959				2,978,896				3,251,959
Revenue		$	535,089			$	534,836			$	576,304			$	1,069,925			$	1,165,470
Products per residential customer (1)			2.51				2.50				2.40				2.51				2.40
Average monthly residential revenue per customer (2)		$	58.19			$	57.06			$	57.71			$	57.61			$	57.51
Customer monthly churn - Legacy Frontier			1.43	%			1.38	%			1.34	%			1.41	%			1.34	%
- Acquired properties			1.75	%			1.66	%			1.83	%			1.70	%			1.92	%
Total residential customer monthly churn			1.63	%			1.56	%			1.66	%			1.60	%			1.73	%
Business customer metrics:
Customers			296,458				302,142				326,763				296,458				326,763
Revenue		$	576,791			$	584,873			$	588,106			$	1,161,664			$	1,179,416
Average monthly business revenue per customer		$	642.38			$	637.07			$	593.90			$	639.33			$	587.37
Access line metrics:
Residential			3,130,090				3,196,951				3,428,911				3,130,090				3,428,911
Business			1,942,013				1,967,877				2,060,951				1,942,013				2,060,951
Total access lines			5,072,103				5,164,828				5,489,862				5,072,103				5,489,862
Legacy Frontier			1,814,061				1,844,010				1,930,838				1,814,061				1,930,838
Acquired properties			3,258,042				3,320,818				3,559,024				3,258,042				3,559,024
Total access lines			5,072,103				5,164,828				5,489,862				5,072,103				5,489,862
Average monthly total revenue per access line		$	81.98			$	81.04			$	79.42			$	81.49			$	79.22
Average monthly customer revenue per access line		$	72.41			$	71.56			$	69.94			$	71.97			$	69.60
Employees			15,332				15,479				14,930				15,332				14,930
Broadband subscribers			1,781,295				1,775,853				1,738,670				1,781,295				1,738,670
Video subscribers			568,154				561,878				554,218				568,154				554,218
Switched access minutes of use (in millions)			4,771				4,517				4,785				9,288				9,785

(1)		Products per residential customer: primary residential voice line, broadband and video products have a value of 1. Long distance, Frontier Secure, second lines, feature packages and dial-up have a value of 0.5.
(2)		Calculation excludes the Mohave Cellular Limited Partnership.

Frontier Communications Corporation
Condensed Consolidated Balance Sheet Data
(Amounts in thousands)
		June 30, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents		$	410,014		$	326,094
Accounts receivable, net			545,818			585,157
Other current assets			342,947			327,779
Total current assets			1,298,779			1,239,030
Restricted cash			105,591			144,680
Property, plant and equipment, net			7,481,896			7,547,523
Other assets - principally goodwill			8,259,329			8,498,535
Total assets		$	17,145,595		$	17,429,768
LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year		$	616,575		$	94,016
Accounts payable and other current liabilities			922,977			1,058,200
Total current liabilities			1,539,552			1,152,216
Deferred income taxes and other liabilities			3,603,902			3,602,577
Long-term debt			7,670,517			8,205,841
Equity			4,331,624			4,469,134
Total liabilities and equity		$	17,145,595		$	17,429,768

Frontier Communications Corporation
Consolidated Cash Flow Data
(Amounts in thousands)
			For the six months ended June 30,
			2012				2011
Cash flows provided by (used in) operating activities:
Net income			$	52,489			$	90,040
Adjustments to reconcile net income to net cash provided
by operating activities:
	Depreciation and amortization expense			664,347				710,243
	Stock based compensation expense			7,775				7,677
	Pension/OPEB costs			27,853				16,560
	Losses on early extinguishment of debt			70,818				-
	Other non-cash adjustments			8,386				(6,735	)
	Deferred income taxes			27,158				51,133
	Change in accounts receivable			31,696				29,705
	Change in accounts payable and other liabilities			(136,003	)			(49,414	)
	Change in other current assets			3,274				15,022
Net cash provided by operating activities				757,793				864,231
Cash flows provided from (used by) investing activities:
	Capital expenditures - Business operations			(376,073	)			(414,039	)
	Capital expenditures - Integration activities			(27,940	)			(18,986	)
	Cash transferred from escrow			39,089				12,364
	Other assets purchased and distributions received, net			(12,085	)			(7,289	)
Net cash used by investing activities				(377,009	)			(427,950	)
Cash flows provided from (used by) financing activities:
	Long-term debt borrowings			500,000				-
	Financing costs paid			(10,288	)			-
	Long-term debt payments			(536,968	)			(78,024	)
	Premium paid to retire debt			(52,078	)			-
	Dividends paid			(199,702	)			(373,215	)
	Repayment of customer advances for construction,
	distributions to noncontrolling interests and other			2,172				(3,633	)
Net cash used by financing activities				(296,864	)			(454,872	)
Increase/(Decrease) in cash and cash equivalents				83,920				(18,591	)
Cash and cash equivalents at January 1,				326,094				251,263
Cash and cash equivalents at June 30,			$	410,014			$	232,672
Cash paid (received) during the period for:
	Interest		$	328,771			$	328,728
	Income taxes (refunds)		$	(208	)		$	27,203

																Schedule A
Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures
				For the quarter ended												For the six months ended
				June 30,				March 31,				June 30,				June 30,
		(Amounts in thousands)		2012				2012				2011				2012				2011
		Net Income to Free Cash Flow;
		Net Cash Provided by Operating Activities
		Net income		$	21,999			$	30,490			$	33,844			$	52,489			$	90,040
		Add back:
		Depreciation and amortization			307,047				357,300				358,986				664,347				710,243
		Income tax expense			11,717				18,694				37,190				30,411				73,757
		Integration costs			28,602				35,144				20,264				63,746				33,487
		Pension/OPEB costs (non-cash) (1)			15,450				12,403				5,281				27,853				16,560
		Severance and early retirement costs (2)			1,480				6,529				10,959				8,009				11,044
		Stock based compensation			4,057				3,718				4,093				7,775				7,677
		Subtract:
		Cash paid (refunded) for income taxes			161				(369	)			18,257				(208	)			27,203
		Losses on early extinguishment of debt			(70,818	)			-				-				(70,818	)			-
		Other income (loss), net			8,591				2,965				(535	)			11,556				6,319
		Capital expenditures - Business operations (3)			167,551				208,522				210,505				376,073				414,039
		Free cash flow (2)			284,867				253,160				242,390				538,027				495,247
		Add back:
		Deferred income taxes			11,394				15,764				23,389				27,158				51,133
		Non-cash (gains)/losses, net			26,356				17,658				5,638				44,014				17,502
		Other income (loss), net			8,591				2,965				(535	)			11,556		#		6,319
		Cash paid (refunded) for income taxes			161				(369	)			18,257				(208	)			27,203
		Capital expenditures - Business operations (3)			167,551				208,522				210,505				376,073				414,039
		Subtract:
		Changes in current assets and liabilities			62,334				38,699				71,740				101,033				4,687
		Income tax expense			11,717				18,694				37,190				30,411				73,757
		Integration costs			28,602				35,144				20,264				63,746				33,487
		Pension/OPEB costs (non-cash) (1)			15,450				12,403				5,281				27,853				16,560
		Severance and early retirement costs (2)			1,480				6,529				10,959				8,009				11,044
		Stock based compensation			4,057				3,718				4,093				7,775				7,677
		Net cash provided by operating activities		$	375,280			$	382,513			$	350,117			$	757,793			$	864,231

	(1)		Reflects pension and other postretirement benefit (OPEB) expense, net of capitalized amounts, of $16.5 million, $15.8 million and $15.3 million for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, respectively, less cash pension contributions and certain OPEB costs/payments of $1.0 million, $3.4 million and $10.0 million for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, respectively. Reflects pension and other postretirement benefit (OPEB) expense, net of capitalized amounts, of $32.3 million and $31.2 million for the six months ended June 30, 2012 and 2011, respectively, less cash pension contributions and certain OPEB costs/payments of $4.4 million and $14.6 million for the six months ended June 30, 2012 and 2011, respectively.
	(2)		The definition of free cash flow has been revised as of January 1, 2012 to add back severance and early retirement costs, with all prior periods conformed to the current calculation.
	(3)		Excludes capital expenditures for integration activities.

																									Schedule B
Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures
			For the quarter ended June 30, 2012																		For the quarter ended June 30, 2011
	(Amounts in thousands)
													Severance																		Severance
										Non-cash			and Early															Non-cash			and Early
	Operating Cash Flow and		As				Integration			Pension/OPEB			Retirement			As					As				Integration			Pension/OPEB			Retirement			As
	Operating Cash Flow Margin		Reported				Costs			Costs (1)			Costs			Adjusted					Reported				Costs			Costs (1)			Costs			Adjusted
	Operating Income		$	267,784			$	28,602		$	15,450		$	1,480		$	313,316				$	238,280			$	20,264		$	5,281		$	10,959		$	274,784
	Add back:
	Depreciation and
	amortization			307,047				-			-			-			307,047					358,986				-			-			-			358,986
	Operating cash flow		$	574,831			$	28,602		$	15,450		$	1,480		$	620,363				$	597,266			$	20,264		$	5,281		$	10,959		$	633,770
	Revenue		$	1,258,777												$	1,258,777				$	1,322,255												$	1,322,255
	Operating income margin
	(Operating income divided
	by revenue)			21.3	%												24.9	%				18.0	%												20.8	%
	Operating cash flow margin
	(Operating cash flow divided
	by revenue)			45.7	%												49.3	%				45.2	%												47.9	%
			For the quarter ended March 31, 2012
													Severance
										Non-cash			and Early
	Operating Cash Flow and		As				Integration			Pension/OPEB			Retirement			As
	Operating Cash Flow Margin		Reported				Costs			Costs (1)			Costs			Adjusted
	Operating Income		$	208,458			$	35,144		$	12,403		$	6,529		$	262,534
	Add back:
	Depreciation and
	amortization			357,300				-			-			-			357,300
	Operating cash flow		$	565,758			$	35,144		$	12,403		$	6,529		$	619,834
	Revenue		$	1,268,054												$	1,268,054
	Operating income margin
	(Operating income divided
	by revenue)			16.4	%												20.7	%
	Operating cash flow margin
	(Operating cash flow divided
	by revenue)			44.6	%												48.9	%

(1)		Reflects pension and other postretirement benefit (OPEB) expense, net of capitalized amounts, of $16.5 million, $15.8 million and $15.3 million for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, respectively, less cash pension contributions and certain OPEB costs/payments of $1.0 million, $3.4 million and $10.0 million for the quarters ended June 30, 2012, March 31 2012 and June 30, 2011, respectively.

																												Schedule B
																												(continued)
Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures
			For the six months ended June 30, 2012																		For the six months ended June 30, 2011
	(Amounts in thousands)
													Severance																		Severance
										Non-cash			and Early															Non-cash			and Early
	Operating Cash Flow and		As				Integration			Pension/OPEB			Retirement			As					As				Integration			Pension/OPEB			Retirement			As
	Operating Cash Flow Margin		Reported				Costs			Costs (1)			Costs			Adjusted					Reported				Costs			Costs (1)			Costs			Adjusted
	Operating Income		$	476,242			$	63,746		$	27,853		$	8,009		$	575,850				$	488,873			$	33,487		$	16,560		$	11,044		$	549,964
	Add back:
	Depreciation and
	amortization			664,347				-			-			-			664,347					710,243				-			-			-			710,243
	Operating cash flow		$	1,140,589			$	63,746		$	27,853		$	8,009		$	1,240,197				$	1,199,116			$	33,487		$	16,560		$	11,044		$	1,260,207
	Revenue		$	2,526,831												$	2,526,831				$	2,668,952												$	2,668,952
	Operating income margin
	(Operating income divided
	by revenue)			18.8	%												22.8	%				18.3	%												20.6	%
	Operating cash flow margin
	(Operating cash flow divided
	by revenue)			45.1	%												49.1	%				44.9	%												47.2	%

(1)

Reflects pension and other postretirement benefit (OPEB) expense, net of capitalized amounts, of $32.3 million and $31.2 million for the six months ended June 30, 2012 and 2011, respectively, less cash pension contributions and certain OPEB costs/payments of $4.4 million and $14.6 million for the six months ended June 30, 2012 and 2011, respectively.

																	Schedule C
Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures
	(Amounts in thousands, except
	per share amounts)		For the quarter ended
			June 30, 2012								March 31, 2012						June 30, 2011
	Net income attributable to common						Earnings							Earnings						Earnings
	shareholders of Frontier		Net Income				Per Share				Net Income			Per Share			Net Income			Per Share
	GAAP, as reported		$	17,989			$	0.02			$	26,768		$	0.03		$	32,261		$	0.03
	Losses on early extinguishment of debt			44,474				0.04				-			-			-			-
	Integration costs			18,105				0.02				21,701			0.02			12,513			0.01
	Severance and early retirement costs			937				-				4,032			-			6,767			0.01
	Gain on investment in Adelphia			(6,191	)			(0.01	)			-			-			-			-
	Discrete tax item			-				-				-			-			10,500			0.01
	Non-GAAP, as adjusted (1)		$	75,314			$	0.08			$	52,501		$	0.05		$	62,041		$	0.06
			For the six months ended
			June 30, 2012								June 30, 2011
	Net income attributable to common						Earnings							Earnings
	shareholders of Frontier		Net Income				Per Share				Net Income			Per Share
	GAAP, as reported		$	44,757			$	0.04			$	86,972		$	0.09
	Losses on early extinguishment of debt			44,474				0.04				-			-
	Integration costs			39,806				0.04				20,678			0.02
	Severance and early retirement costs			4,969				0.01				6,820			0.01
	Gain on investment in Adelphia			(6,191	)			(0.01	)			-			-
	Discrete tax item			-				-				10,500			0.01
	Non-GAAP, as adjusted (1)		$	127,815			$	0.13			$	124,970		$	0.12

(1)

Non-GAAP, as adjusted may not sum due to rounding

INVESTOR CONTACT:
Gregory Lundberg
VP, Investor Relations & Assistant Treasurer
203-614-5044
greg.lundberg@FTR.com
or
MEDIA CONTACT:
Brigid Smith
AVP Corporate Communications
203-614-5042
brigid.smith@FTR.com

Source: Frontier Communications Corporation

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