Windstream 2012 Annual Report Download - page 111

F-13
Operating Income before Depreciation and Amortization ("OIBDA")
OIBDA increased $374.1 million, or 20.7 percent, during the year ended December 31, 2012, as compared to the same period
in 2011 (see "Reconciliation of non-GAAP Financial Measures"). This increase was primarily due to OIBDA from Acquired
Companies of $337.5 million and a decrease in pension expense partially offset by restructuring charges. OIBDA increased
$83.8 million, or 4.9 percent, in 2011. This increase was primarily attributable to OIBDA from Acquired Companies of $200.3
million and a decrease in merger and integration expense, partially offset by an increase in pension expense, discussed above.
Other Income (Expense), Net
Set forth below is a summary of other income (expense), net for the years ended December 31:
(Millions) 2012 2011 2010
Interest income $ 1.0 $ 1.5 $ 1.2
Gain on sale of investments (a) 6.9 1.1 0.5
Mark-to-market of interest rate swap agreements — — (0.3)
Ineffectiveness of interest rate swaps (b) (7.5)(5.2)—
Interest expense on de-designated swap (c) — — (4.5)
Other income (expense), net 4.2 2.5 (0.4)
Other income (expense), net $ 4.6 $ (0.1)$ (3.5)
(a) The increase for 2012 was primarily due to the sale of wireless assets associated with Iowa Telecom and D&E
Communications, Inc ("D&E"). See Note 2 to the consolidated financial statements.
(b) This increase in expense was due to a charge to earnings related to ineffectiveness of our cash flow hedges during
2012 and 2011, primarily due to declines in the LIBOR rate.
(c) 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.
Gain (Loss) on Extinguishment of Debt
During the first quarter of 2012, we retired all $300.0 million of the outstanding 9.500 percent notes due July 15, 2015
("PAETEC 2015 Notes"). The PAETEC 2015 Notes were purchased using borrowings on our revolving line of credit. The
retirements were accounted for under the extinguishment method, and as a result we recognized a gain on extinguishment of
debt of $1.9 million during 2012.
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.