(3) Acquisitions:

The Connecticut Acquisition

On October 24, 2014, pursuant to the stock purchase agreement dated December 16, 2013, as amended, Frontier acquired the wireline properties of AT&T Inc. (AT&T) in Connecticut (the Connecticut Acquisition) for a purchase price of $2,018 million in cash, including adjustments for working capital. Following the Connecticut Acquisition, Frontier now owns and operates the wireline business and fiber optic network servicing residential, commercial and wholesale customers in Connecticut. Frontier also acquired the AT&T U-verse® video and DISH® satellite TV customers in Connecticut.

In connection with the Connecticut Acquisition, Frontier incurred $38 million of operating expenses, consisting of $1 million and $37 million of acquisition and integration costs, respectively, and $23 million in capital expenditures during the nine months ended September 30, 2015. Frontier incurred $72 million of operating expenses, consisting of $3 million and $69 million of acquisition and integration costs, respectively, and $82 million in capital expenditures during the nine months ended September 30, 2014.

Our consolidated statement of operations for the nine months ended September 30, 2015 includes $792 million of revenue and $74 million of operating income related to the results of the Connecticut operations.

The final allocation of the purchase price presented below represents the effect of recording the fair value of assets acquired, liabilities assumed and related deferred income taxes as of the date of the Connecticut Acquisition, based on the total transaction consideration of $2,018 million. An adjustment to the allocation of the purchase price for the Connecticut Acquisition during the third quarter of 2015 resulted in a $71 million decrease to Deferred income taxes and Goodwill.



($ in millions)

Current assets	$	69
Property, plant & equipment		1,459
Goodwill		815
Other intangibles - customer list		570
Current liabilities		(94)
Deferred income taxes		(576)
Other liabilities		(225)
Total net assets acquired	$	2,018

The following unaudited pro forma financial information presents the combined results of operations of Frontier and the Connecticut operations as if the Connecticut Acquisition had occurred as of January 1, 2014. The pro forma information is not necessarily indicative of what the financial position or results of operations actually would have been had the Connecticut Acquisition been completed as of January 1, 2014. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the future financial position or operating results of Frontier. The unaudited pro forma financial information excludes acquisition and integration costs and does not give effect to any estimated and potential cost savings or other operating efficiencies that may result from the Connecticut Acquisition.



($ in millions, except per share amounts)	(Unaudited)		(Unaudited)
	For the three months ended		For the nine months ended
	September 30, 2014		September 30, 2014

Revenue	$	1,448	$	4,366

Operating income	$	250	$	744

Net income	$	62	$	135


Basic and diluted net income per share	$	0.07	$	0.14

The Verizon Transaction

On February 5, 2015, we entered into an agreement with Verizon Communications Inc. (Verizon) to acquire Verizon’s wireline operations that provide services to residential, commercial and wholesale customers in California, Florida and Texas for a purchase price of $10,540 million in cash and assumed debt (the Verizon Transaction), with adjustments for working capital. Upon completion of the pending Verizon Transaction, Frontier will operate Verizon properties that included 3.5 million voice connections, 2.2 million broadband connections, and 1.2 million FiOS® video connections as of June 30, 2015. The transaction is expected to close at the end of the first quarter of 2016 subject to regulatory approval and the completion of operational matters.

In the third quarter of 2015, Frontier received regulatory approvals from the FCC and the Public Utilities Commission of Texas. The approval from the California Public Utilities Commission is pending. In the third quarter of 2015, Frontier reached agreement with the Communications Workers of America and the International Brotherhood of Electrical Workers, representing employees that support operations in California, Florida and Texas, to extend their existing collective bargaining agreements by two years. In addition, Verizon has conditionally accepted $49 million in annual support in California and Texas under the CAF Phase II program.

Acquisition costs include legal, financial advisory, accounting, regulatory and other related costs. Integration costs include expenses incurred to integrate the network and information technology platforms and to enable other integration initiatives. Frontier incurred $112 million of operating expenses, consisting of $37 million of acquisition costs and $75 million of integration costs, related to the pending Verizon Transaction during the nine months ended September 30, 2015. We also invested $78 million in capital expenditures related to the Verizon Transaction during the nine months ended September 30, 2015.

Frontier completed a private debt offering of $6,600 million of unsecured senior notes in September 2015 and entered into a credit agreement for a new $1,500 million senior secured delayed-draw term loan facility in August 2015, each for the purpose of financing the Verizon Transaction. Frontier issued $2,750 million in preferred and common stock in June 2015 for the purpose of financing the Verizon Transaction. Net proceeds from these debt and equity offerings in the amount of $8,440 million are included in “Restricted cash” in the consolidated balance sheet as of September 30, 2015. See Notes 8 and 9 for further discussion.