Windstream 2012 Annual Report Download - page 155

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-57
5. Long-term Debt and Capital Lease Obligations, Continued:
Gain (Loss) on Extinguishment of Debt
During the twelve months ended December 31, 2012, we retired all $300.0 million of the outstanding 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 the
twelve months ended December 31, 2012.
During 2011, we purchased all $1,746.0 million of our 2016 Notes and all $400.0 million of our Valor Notes. We financed these
transactions with proceeds from the issuance of the 2020 Notes, the 2021 Notes, the 2023 Notes and borrowings from our
revolving line of credit. 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 gain (loss) on extinguishment of debt is shown as follows for the twelve months ended December 31:
(Millions) 2012 2011
2015 PAETEC Notes:
Premium on early redemption $(14.3)$ —
Unamortized premium on original issuance 16.2 —
Gain on early extinguishment for PAETEC 2015 Notes 1.9 —
2016 Notes:
Premium on early redemption —(101.2)
Unamortized discount on original issuance —(26.6)
Third-party fees for early redemption —(3.0)
Unamortized debt issuance costs on original issuance —(1.1)
Loss on early extinguishment for 2016 Notes —(131.9)
Valor Notes:
Premium on early redemption —(10.3)
Third-party fees for early redemption —(0.4)
Unamortized premium on original issuance — 6.5
Loss on early extinguishment for Valor Notes —(4.2)
Total gain (loss) on early extinguishment of debt $ 1.9 $ (136.1)
Interest Expense
Interest expense was as follows for the years ended December 31:
(Millions) 2012 2011 2010
Interest expense related to long-term debt (a) $ 576.4 $ 500.0 $ 466.1
Impacts of interest rate swaps 56.4 64.8 57.2
Interest on capital leases and other 3.2 0.3 0.5
Less capitalized interest expense (10.9)(6.8)(2.1)
Total interest expense $ 625.1 $ 558.3 $ 521.7
(a) We recognized as interest expense in the accompanying consolidated income statements $1.8 million in arrangement
and other fees related to the increase in the revolver capacity agreements and amendment and restatement of our senior
secured credit facility in 2010, respectively.
In order to mitigate the interest rate risk inherent in our variable rate senior secured credit facility, we are party to four identical
pay fixed, receive variable interest rate swap agreements whose notional value totaled $943.8 million at December 31, 2012
(see Note 2).