<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 33-91250
FRONTIER TELEPHONE OF ROCHESTER, INC.
(Exact name of registrant as specified in its charter)
(Previously Rochester Telephone Corp.)
New York 16-1469713
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 South Clinton Avenue, Rochester, NY 14646-0700
(Address of principal executive offices) (Zip Code)
(716) 777-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No___
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
No Par, No Stated Value Common Stock: 772 shares outstanding
as of April 30, 1998
The Registrant meets the conditions set forth in general
instruction H(1)(a) and (b) of Form 10-Q and is therefore
filing this form with the reduced disclosure format.
<PAGE>
<PAGE>
FRONTIER TELEPHONE OF ROCHESTER, INC.
Form 10-Q
Index
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income for the three months ended
March 31, 1998 and March 31, 1997 3
Balance Sheets as of March 31, 1998 and
December 31, 1997 4
Statements of Cash Flows for the three months
ended March 31, 1998 and March 31, 1997 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion of the Results of
Operations and Analysis of
Financial Condition 8-12
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 12-13
Item 5. Employees and Labor Relations 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Index to Exhibits 15
<PAGE>
<PAGE>
FRONTIER TELEPHONE OF ROCHESTER, INC.
Statements of Income
(Unaudited)
3 Months Ended March 31,
In thousands of dollars 1998 1997
- ---------------------------------------------------------------------
Revenues $83,291 $80,798
Costs and Expenses
Operating expenses 39,724 36,744
Depreciation and amortization 14,342 13,672
Taxes other than income taxes 5,910 5,961
- ---------------------------------------------------------------------
Total Costs and Expenses 59,976 56,377
- ---------------------------------------------------------------------
Operating Income 23,315 24,421
Interest expense 490 652
Other (income) expense (12) 279
- ---------------------------------------------------------------------
Income Before Taxes 22,837 23,490
Income taxes 8,041 8,195
- ---------------------------------------------------------------------
Net Income $14,796 $15,295
=====================================================================
See accompanying Notes to Financial Statements.
<PAGE>
<PAGE>
FRONTIER TELEPHONE OF ROCHESTER, INC.
Balance Sheets
March 31, December 31,
1998 1997
In thousands of dollars (Unaudited)
- ---------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 28,491 $ 2,406
Accounts receivable, (less allowance
for uncollectibles of $3,516 and
$2,646, respectively) 40,345 45,673
Accounts receivable - affiliates 3,856 4,382
Advances to affiliates 15,706 11,421
Materials and supplies 791 710
Prepaid directory 9,802 13,934
Other prepayments 1,367 1,425
- ---------------------------------------------------------------------
Total Current Assets 100,358 79,951
- ---------------------------------------------------------------------
Property, plant and equipment, net 336,163 333,406
Prepaid pension 17,150 16,419
Deferred and other assets 520 709
- ---------------------------------------------------------------------
Total Assets $454,191 $430,485
=====================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable $29,378 $29,904
Accounts payable - affiliates 9,319 6,820
Advance billings 4,654 4,707
Taxes accrued 11,860 2,439
Other liabilities 4,150 6,585
- ---------------------------------------------------------------------
Total Current Liabilities 59,361 50,455
- ---------------------------------------------------------------------
Long-term debt 40,000 40,000
Deferred income taxes 20,659 21,448
Postretirement benefits obligation 26,273 25,327
Other long-term liabilities 2,264 2,417
- ---------------------------------------------------------------------
Total Liabilities 148,557 139,647
- ---------------------------------------------------------------------
Shareholder's Equity
Common stock, no par value and additional
paid in capital:
authorized, 1,000 shares:
issued, 772 shares
in 1998 and 1997 232,165 232,165
Retained earnings 73,469 58,673
- ---------------------------------------------------------------------
Total Shareholder's Equity 305,634 290,838
- ---------------------------------------------------------------------
Total Liabilities and
Shareholder's Equity $454,191 $430,485
=====================================================================
See accompanying Notes to Financial Statements.
<PAGE>
<PAGE>
FRONTIER TELEPHONE OF ROCHESTER, INC.
Statements of Cash Flows
(Unaudited)
3 Months Ended March 31,
In thousands of dollars 1998 1997
- ------------------------------------------------------------------------
Operating Activities
Net income $14,796 $15,295
- ------------------------------------------------------------------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 14,342 13,672
Changes in operating assets and liabilities:
Decrease in accounts receivable 5,854 3,199
(Increase) decrease in materials
and supplies (81) 461
Decrease in prepaid directory 4,132 3,599
Decrease (increase) in other prepayments 58 (358)
Increase in prepaid pension (731) (917)
Decrease (increase) in deferred and
other assets 178 (152)
Increase (decrease) in accounts payable 1,973 (20,457)
Decrease in advance billings (53) (86)
Increase in taxes accrued 9,421 9,006
Decrease in other liabilities (2,435) (2,247)
Decrease in deferred income taxes (789) (852)
Increase in postretirement benefits
obligation 946 598
(Decrease) increase in other long-term
liabilities (153) 222
- ------------------------------------------------------------------------
Total adjustments 32,662 5,688
- ------------------------------------------------------------------------
Net cash provided by operating activities 47,458 20,983
- ------------------------------------------------------------------------
Investing Activities
Expenditures for property, plant and equipment (17,088) (9,376)
- ------------------------------------------------------------------------
Net cash used in investing activities (17,088) (9,376)
- ------------------------------------------------------------------------
Financing Activities
Repayments of long-term debt - (9,085)
Advances to/from affiliate (4,285) (5,103)
- ------------------------------------------------------------------------
Net cash used in financing activities (4,285) (14,188)
- ------------------------------------------------------------------------
Net Increase (decrease) in Cash and
Cash Equivalents 26,085 (2,581)
Cash and Cash Equivalents at Beginning of Period 2,406 3,591
- ------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $28,491 $ 1,010
========================================================================
See accompanying Notes to Financial Statements.
<PAGE>
<PAGE>
Frontier Telephone of Rochester, Inc.
Notes to Financial Statements
(Unaudited)
Note 1: Accounting Policies
The financial statements of Frontier Telephone of
Rochester, Inc. ("FTR" or the "Company") (formerly
Rochester Telephone Corp.), a wholly owned subsidiary of
Frontier Corporation ("Frontier"), are unaudited and have
been prepared in accordance with generally accepted
accounting principles for interim financial reporting and
Securities and Exchange Commission ("SEC") regulations.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. In the
opinion of management, the financial statements reflect all
adjustments (of a normal and recurring nature) which are
necessary to present fairly the financial position, results
of operations, and cash flows for the interim periods.
These financial statements should be read in conjunction
with the Annual Report of the Company on Form 10-K for the
year ended December 31, 1997.
Preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Note 2: Long-Term Debt
Effective June 30, 1997, the Company reduced its
available line of credit under its Revolving Credit
Agreement from $100.0 million to $50.0 million.
On March 31, 1997, Standard & Poor's ("S&P") announced
their new domestic telephone company rating methodology,
which addresses the impact of deregulation on operating and
holding company ratings. As a result, the ratings of 16
companies were affected by S&P's announcement, and S&P
lowered their rating of the Company's long-term debt from
"AA" to "AA-". Under S&P's revised rating methodology, a
local telephone company is typically allowed a rating one
"notch" higher than that of the consolidated entity (i.e.,
holding company and operating subsidiaries). However, the
Company was allowed a two "notch" differential, largely as a
result of the regulatory controls in existence under the
Company's Open Market Plan.
Note 3: Regulatory Matters
The Open Market Plan prohibits the payment of dividends
by the Company to Frontier Corporation if (i) the
Company's senior debt has been downgraded to "BBB" by S&P,
or the equivalent rating by other rating agencies or is
placed on credit watch for such a downgrade, or (ii) certain
service quality measures fall below minimum levels
stipulated in the Open Market Plan. Dividend payments to
Frontier also require that the Company's directors certify
that such dividends will not impair the Company's service
quality or its ability to finance its short and long-term
capital needs on reasonable terms while maintaining an S&P
debt rating target of "A".
In 1996, the Company failed to achieve the service
quality levels required by the Open Market Plan. On
December 19, 1996, pursuant to the Open Market Plan, the
Company requested the New York State Public Service
Commission ("NYSPSC") staff to exclude certain months from
the calculation used to measure service quality, due to
operating conditions considered by management to be abnormal
and beyond the Company's control. In April 1997, the Company
received notice from the NYSPSC that its request for a
waiver of certain conditions in the Open Market Plan related
to service quality results was denied. The NYSPSC's ruling
resulted in a temporary restriction on the payment of
dividends from the Company to Frontier and a refund to the
Company's customers of approximately $.9 million. Reserves
sufficient to cover the refund were established in 1996. On
October, 1997, the NYSPSC adopted an order requiring the
Company to issue refunds of approximately $2.60 per
customer. These refunds have been completed.
The temporary restriction of dividend payments to
Frontier will remain in place until the NYSPSC is satisfied
that the Company's 1997 service levels demonstrate that the
Company has rectified the service deficiency. The NYSPSC is
currently examining one or more of service level data for
the period 1993-1997 and may reopen the calculation of
service levels for one or more of these years. It is
unclear whether there will be any action taken related to
any of these years. Based on the level of customer
complaints to the NYSPSC in 1996 and 1997, the Company will
be required to refund approximately $150,000 in 1998.
Reserves sufficient to cover this refund were established in
1997.
Note 4: Cash Flows
For purposes of the Statement of Cash Flows, the
Company considers all highly-liquid investments with an
original maturity of three months or less to be cash
equivalents.
As a result of the temporary restriction on dividends
discussed in Note 3, no dividends were paid during the
first quarters of 1998 or 1997.
Actual interest paid was $1.2 million and $1.4 million
for the three months ended March 31, 1998 and 1997,
respectively. Interest costs associated with the
construction of capital assets are capitalized. Total
amounts capitalized for the first three months of 1998 were
$.3 million and $.4 million in 1997. During the first
quarter of 1998, the Company paid income taxes of $8.9
million. An income tax refund of $.8 million was received
in the first quarter of 1997.
ITEM 2 - MANAGEMENT'S DISCUSSION OF THE RESULTS OF
OPERATIONS AND ANALYSIS OF FINANCIAL CONDITION
Three Months Ended March 31, 1998 and 1997
The matters discussed throughout this Form 10-Q, except
for historical financial results contained herein, may be
forward-looking in nature or "forward-looking statements."
Actual results may differ materially from the forecasts or
projections presented. Forward-looking statements are
identified by such words as "expects," "anticipates,"
"believes," "intends," "plans," and variations of such words
and similar expressions. The Company believes that its
primary risk factors include, but are not limited to:
changes in the overall economy and the economy in Rochester,
New York, the nature and pace of technological change, the
number and size of competitors in the Company's market,
changes in law and regulatory policy, and the mix of
products and services offered in the Company's markets. Any
forward-looking statements in the March 31, 1998 Form 10-Q
should be evaluated in light of these important risk
factors. For additional disclosure regarding risk factors
refer to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
DESCRIPTION OF BUSINESS
Frontier Telephone of Rochester, Inc. ("FTR" or the
"Company") (formerly Rochester Telephone Corp.) is a
regulated independent telephone company that serves
approximately 544,000 access lines in the greater Rochester,
New York area. The Company was incorporated in December
1994 as a wholly owned subsidiary of Frontier Corporation.
Frontier has served the Rochester market since 1920 and has
evolved into a diversified national telecommunications firm.
The Company is the primary provider of basic telephone
services in the Rochester market and offers its customers a
full complement of local telephone network services, access
to long distance network services, directory, and other
operator services. The Company also offers all of its
network services for sale on a wholesale basis to other
telecommunication service providers in the Rochester market.
RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 1998 and
1997 were $83.3 million and $80.8 million, respectively.
This $2.5 million or 3.1% revenue growth is attributable to
an increase in demand for dedicated circuits, enhanced
features, and the expansion of the Internet customer base.
Costs and expenses for the three months ended March 31,
1998 and 1997 were $60.0 million and $56.4 million, an
increase of $3.6 million or 6.4%. The increase is
attributed to increased depreciation expense, higher
operating costs for repair and maintenance in 1998 and an
increase in customer service costs due to access line
growth. A portion of the repair and maintenance increase
was caused by severe flooding.
Depreciation and amortization expense for the first
three months of 1998 increased $.7 million or 4.9% over the
comparable period in 1997. The increase is primarily due to
capital additions to telephone plant and equipment in
service.
Net income for the first three months of 1998 was $14.8
million, a decrease of $.5 million or 3.3% over the
comparable period in 1997. The decrease in net income is
largely due to the increase in operating expenses during the
first three months of 1998 as compared to the same period in
the prior year.
During 1995, management committed to a plan which makes
Frontier Telephone of Rochester, Inc. the first company in
the United States to undertake a major central office switch
consolidation project in a major market. The three-year
plan to consolidate host switches by over 60% is projected
to improve network efficiency and reduce the cost of
maintenance and software upgrades. As of March 31, 1998 the
project is substantially complete.
Other Income Statement Items
Interest expense was $.5 million and $.7 million for
the three months ended March 31, 1998 and 1997,
respectively, representing a decrease of $.2 million. The
decrease is primarily attributable to lower average debt
levels as well as lower interest rates for the same periods.
The effective income tax rate for the first quarter of
1998 is 35.2%, which is relatively consistent with the
comparable period in 1997 of 34.9%.
FINANCIAL CONDITION
Review of Cash Flow Activity
Cash provided from operations for the three months of
1998 increased $26.5 million or 126.2%. The primary drivers
of the change in cash provided from operations include a
decrease in accounts receivable and an increase in both
accounts payable and taxes accrued. The decrease in
accounts receivable is due to the timing of receipt of
payments. The increase in accounts payable and taxes
accrued is a function of timing of payments.
Cash used for investing activities was $17.1 million
for the three months ended March 31, 1998, an increase of
$7.7 million or 82% over the same period in 1997. This
increase is driven by an increase in capital expenditures
and is primarily due to technological advancements and
expansion of the network to meet customer demand.
Financing activities resulted in a cash outflow of $4.3
million for the three months ended March 31, 1998 compared
with an outflow of $14.2 million for the same period last
year. During the first quarter of 1998, advances to
affiliates increased $4.3 million. In the first quarter of
1997, the Company repaid $9.1 million of outstanding debt
under its commercial paper program and made advances to
affiliates in the amount of $5.1 million to Frontier. No
cash dividends were paid to Frontier Corporation during 1998
or 1997.
Debt
At March 31, 1998, the Company's total outstanding long-
term debt amounted to $40.0 million of medium-term notes.
Effective June 30, 1997, the Company reduced its
available line of credit under its Revolving Credit
Agreement from $100.0 million to $50.0 million.
On March 31, 1997, Standard & Poor's ("S&P") announced
their new domestic telephone company rating methodology,
which addresses the impact of deregulation on operating and
holding company ratings. As a result, the ratings of 16
companies were affected by S&P's announcement, and S&P
lowered their rating of the Company's long-term debt from
"AA" to "AA-". Under S&P's revised rating methodology, a
local telephone company is typically allowed a rating one
"notch" higher than that of the consolidated entity (i.e.,
holding company and operating subsidiaries). However, the
Company was allowed a two "notch" differential, largely as a
result of the regulatory controls in existence under the
Company's Open Market Plan.
Debt Ratio and Interest Coverage
The Company's debt ratio (total debt as a percent of
total capitalization) decreased from 12.1% at December 31,
1997 to 11.6% at March 31, 1998. Pre-tax interest coverage
was 29.9 times through the first three months of 1998, as
compared with 23.8 times for the first three months of 1997.
Capital Spending
Total gross expenditures for property, plant, and
equipment in 1998 are anticipated to be approximately $65.0
million. These expenditures are primarily attributable to
technological advancements and expansion of the network to
meet customer demand.
OTHER ITEMS
Open Market Plan
The Company began its fourth year of operations under the
Open Market Plan in January 1998. The Open Market Plan
promotes telecommunications competition in the Rochester,
New York marketplace by providing for (1) interconnection of
competing local networks including reciprocal compensation
for terminating traffic, (2) equal access to network
databases, (3) access to local telephone numbers, (4)
service provider telephone number portability, and (5)
certain wholesale discounts to resellers of local services.
The inherent risk associated with opening the Rochester
market to competition is that some customers are able to
purchase services from competitors, which may reduce the
number of retail customers and potentially cause a decrease
in the revenues and profitability for the Company.
Increased competition may also lead to additional price
decreases for services, adversely impacting the Company's
margins. However, results since implementation of the Open
Market Plan indicate that a stimulation of demand in the use
of the network and new product revenue may offset the losses
of some retail customers. An additional positive feature of
the Open Market Plan provides that the Company can retain
additional earnings achieved through operating efficiencies.
Previously these earnings would have been shared with
customers. After three years of operating in a competitive
marketplace, the Company retains a market share of
approximately 98% of wholesale and 95% of retail local
service access lines.
During the seven year period of the Open Market Plan, rate
reductions of $21.0 million (the "Rate Stabilization Plan")
will be implemented for Rochester area consumers, including
$15.0 million of which occurred through 1997, and an
additional $1.5 million which commenced in January 1998.
Rates charged for basic residential and business telephone
service may not be increased during the seven year period of
the Plan. The Company is allowed to raise prices on certain
enhanced products such as caller ID and call forwarding.
During the second quarter of 1997 the FCC issued decisions
that are intended to implement provisions of the
Telecommunications Act. Of significance were decisions that
outlined changes in the structure of universal service
support and in the framework that applies to certain
interstate rates that are generally characterized as access-
related charges. During the second and third quarters of
1997, a Federal appeals court issued a series of decisions
reversing parts of an earlier FCC order that set out
conditions governing the provision of interconnection
services. These orders are not expected to have a material
impact on the Company.
Under the Telecommunications Act and a statewide
proceeding, the NYSPSC is considering the prices that local
exchange companies in New York may charge for "unbundled"
service elements such as links (the wire from the switch to
the customer premise), ports (the portion of the switch that
terminates the link) and switch usage features. The Company
is actively participating in this proceeding and expects the
NYSPSC to issue a decision on service elements in 1998.
Management believes there are significant market and
business opportunities associated with the Company's Open
Market Plan. However, there are also uncertainties
associated with the Plan. In the Company's opinion, the
most significant risks relate to increased competition in
the Rochester, New York market and the risk inherent in the
Rate Stabilization Plan.
There can be no assurance that the changing regulatory
environment will not have a negative impact on the Company.
Dividend Policy
The Open Market Plan prohibits the payment of dividends by
the Company to Frontier Corporation if (i) the Company's
senior debt has been downgraded to "BBB" by Standard &
Poor's ("S&P"), or the equivalent rating by other rating
agencies or is placed on credit watch for such a downgrade,
or (ii) certain service quality measures fall below minimum
levels stipulated in the Open Market Plan. Dividend
payments to Frontier also require that the Company's
directors certify that such dividends will not impair the
Company's service quality or its ability to finance its
short and long-term capital needs on reasonable terms while
maintaining an S&P debt rating target of "A".
In 1996, the Company failed to achieve the service quality
levels required by the Open Market Plan. On December 19,
1996, pursuant to the Open Market Plan, FTR requested the
New York State Public Service Commission ("NYSPSC") staff to
exclude certain months from the calculation used to measure
service quality, due to operating conditions considered by
management to be abnormal and beyond the Company's control.
In April 1997, the Company received notice from the NYSPSC
that its request for a waiver of certain conditions in the
Open Market Plan related to service quality results was
denied. The NYSPSC's ruling resulted in a temporary
restriction on the payment of dividends from the Company to
Frontier and a refund to the Company's customers of
approximately $.9 million. Reserves sufficient to cover
this refund were established in 1996. On October 22, 1997,
the NYSPSC adopted an order requiring the Company to issue
returns of approximately $2.60 per customer. These refunds
have been completed.
The temporary restriction of dividend payments to Frontier
will remain in place until the NYSPSC is satisfied that the
Company's 1997 service levels demonstrate that the Company
has rectified the service deficiency. The NYSPSC is
currently examining service level data for the period 1993-
1997 and may reopen the calculation of service levels for
these years. Frontier has had continuing discussions with
the NYSPSC and a decision resolving outstanding issues is
now expected in midyear. Based on the level of customer
complaints to the NYSPSC in 1996 and 1997, the Company will
be required to refund approximately $150,000 in 1998.
Reserves sufficient to cover this refund were established in
1997.
Part II - Other Information
Item 1. Legal Proceedings
AT&T Communications of New York filed a complaint with the
NYSPSC for reconsideration of the Open Market Plan on
October 3, 1995. The complaint sought a change in the
wholesale discount, a change in the minutes of use surcharge
and also changes in a number of operational and support
activities. Some of these issues are also being considered
in other states in other unrelated local competition
proceedings. On July 18, 1996, the NYSPSC increased the
wholesale discount from 5.0% to 13.5% on a temporary basis,
effective July 24, 1996. On November 27, 1996, the NYSPSC
established permanent wholesale discounts, retroactive to
July 24, 1996, of 17.0% for resellers using the Company's
operator services and 19.6% for resellers providing their
own operator services. In a statewide proceeding also
examining New York Telephone Company's and the Company's
wholesale prices, the NYSPSC is determining the prices
applicable to the purchase of unbundled network elements
such as subscriber loops ("links"), switch ports and
transport and switching services. In a related statewide
proceeding, the NYSPSC is also examining possible changes in
the prices and rate structure of intrastate access charges
paid by long distance companies for the origination and
termination of long distance calls.
Item 5. Employees and Labor Relations
As of March 31, 1998, the Company had 1,534 employees,
of which 312 were management employees and 1,222 were
clerical, service and craft workers. The Frontier Telephone
of Rochester, Inc. Workers Association ("RTWA") represents
563 employees and the Communications Workers of America,
Local 1170 ("CWA Local") represents 659 craft and service
workers. The union labor contracts are normally negotiated
in three year cycles.
Under the current three year contract between the
Company and the RTWA, effective August 10, 1997, bargaining
unit employees will receive a 2.0% general increase on
August 16, 1998 and August 15, 1999. On February 12, 1995,
February 18, 1996 and February 16, 1997, they received a
1.0% general increase.
The labor contract between the CWA Local and the Company
expired on January 31, 1996. The contract negotiations
reached an impasse, and the Company implemented the terms of
its final offer as of April 9, 1996. Members of CWA Local
ratified a tentative agreement with the Company on April 29,
1997 which contained provisions that differed from the
Company's final offer implemented at the time of impasse.
The differences between the Company's final offer and the
agreement that was subsequently reached are not material.
This new agreement provides several operational improvements
and will result in a more consistent alignment of benefits
with the rest of Frontier. The CWA Local continues to
appeal one issue with the National Labor Relations Board
related to the declaration of impasse. Hearings on this
issue were completed in June 1997, and a decision is
anticipated by the second quarter of 1998. This decision
may be appealed by either the CWA Local or the Company. The
Company cannot predict the final outcome of these matters at
this time. The agreement ratified on April 29, 1997 is
scheduled to expire in January, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Index
(b) Reports on Form 8-K filed during the quarter: None
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
FRONTIER TELEPHONE OF ROCHESTER, INC.
--------------------------------------
(Registrant)
Dated: May 14, 1998 By: /s/Michael L. Evans
---------------------------
Michael L. Evans
Vice President and Treasurer
(principal financial officer)
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description Reference
3.1 Certificate of Incorporation Incorporated by reference
to Exhibit 3.1 to Form 10-K
for the year ended
December 31, 1995.
3.2 Certificate of Amendment to Incorporated by reference
Certificate of Incorporation to Exhibit 3.2 to Form 10-K
for the year ended
December 31, 1995.
3.3 Bylaws Incorporated by reference
to Exhibit 3.3 to Form 10-K
for the year ended
December 31, 1995.
27 Financial Data Schedule Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FRONTIER TELEPHONE OF ROCHESTER'S FINANCIAL STATEMENTS FOR THE THREE
MONTHS PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000936105
<NAME> FRONTIER TELEPHONE OF ROCHESTER, INC.
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 28,491
<SECURITIES> 0
<RECEIVABLES> 43,861
<ALLOWANCES> 3,516
<INVENTORY> 791
<CURRENT-ASSETS> 100,358
<PP&E> 941,104
<DEPRECIATION> 604,941
<TOTAL-ASSETS> 454,191
<CURRENT-LIABILITIES> 59,361
<BONDS> 40,000
0
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<COMMON> 232,165
<OTHER-SE> 73,469
<TOTAL-LIABILITY-AND-EQUITY> 454,191
<SALES> 0
<TOTAL-REVENUES> 83,291
<CGS> 0
<TOTAL-COSTS> 59,976
<OTHER-EXPENSES> (12)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 490
<INCOME-PRETAX> 22,837
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<INCOME-CONTINUING> 14,796
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<NET-INCOME> 14,796
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
