Windstream 2011 Annual Report Download - page 121
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F-13
Other Expense, Net
Set forth below is a summary of other income (expense), net for the years ended December 31:
(Millions)
Interest income
Gain on sale of investments
Mark-to-market of interest rate swap agreements
Ineffectiveness of interest rate swaps (a)
Interest expense on de-designated swap (b)
Other income (expense), net
Other expense, net
2011
$ 1.5
1.1
—
(5.2)
—
2.5
$(0.1)
2010
$ 1.2
0.5
(0.3)
—
(4.5)
(0.4)
$(3.5)
2009
$ 1.4
—
3.0
—
(4.7)
(0.8)
$(1.1)
(a) This increase in expense was due to a charge to earnings related to ineffectiveness of our cash flow hedges during
2011, primarily due to declines in the LIBOR rate.
(b) The decline in 2010 was primarily due to changes in the non-cash, mark-to-market adjustment of the de-designated
portion of the interest rate swaps incurred prior to the “blend and extend” swap transaction entered into on
December 10, 2010. See Financial Condition, Liquidity and Capital Resources for further discussion of the “blend and
extend” swap transaction.
Loss on Extinguishment of Debt
During 2011, we repurchased all $1,746.0 million of our 2016 8.625 percent Senior Notes ("2016 Notes") and all of our $400.0
million 7.750 percent Valor Notes ("Valor Notes"). We financed these transactions with proceeds from various debt offerings
and borrowings from our revolving line of credit. See Note 5 for detailed information regarding our debt activity in 2011. These
transactions allowed us to extend our existing debt maturities and lower our interest rates. The retirements were accounted for
under the extinguishment method, and as a result we recognized a loss on extinguishment of debt of $136.1 million during
2011.
The loss on extinguishment of debt is shown as follows for the twelve months ended December 31, 2011:
(Millions)
2016 Notes:
Premium on early redemption
Unamortized discount on original issuance
Third-party fees for early redemption
Unamortized debt issuance costs on original issuance
Loss on early extinguishment for 2016 Notes
Valor Notes:
Premium on early redemption
Third-party fees for early redemption
Unamortized premium on original issuance
Loss on early extinguishment for Valor Notes
Total loss on early extinguishment of debt
Twelve Months
Ended
$ 101.2
26.6
3.0
1.1
131.9
10.3
0.4
(6.5)
4.2
$ 136.1