Frontier Communications 2013 Annual Report Download - page 51

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GAIN ON SALE OF MOHAVE PARTNERSHIP INTEREST
($ in thousands) 2013 2012 2011
Gain on sale of Mohave partnership interest . . . . . . . . . . . . . ................................................ $14,601 $— $—
On April 1, 2013, the Company sold its 33
1
⁄
3
% interest in the Mohave partnership, in which Frontier was
the General Partner. The Company received proceeds on sale of $17.8 million and recognized a gain on sale of
$14.6 million before taxes in the second quarter of 2013.
INVESTMENT INCOME / LOSSES ON EARLY EXTINQUISHMENT OF DEBT / OTHER
INCOME, NET / INTEREST EXPENSE / INCOME TAX EXPENSE
($ in thousands) Amount
$ Increase
(Decrease)
% Increase
(Decrease) Amount
$ Increase
(Decrease)
% Increase
(Decrease) Amount
2013 2012 2011
Investment income ................... $ 3,808 $ (9,203) (71%) $ 13,011 $ 10,620 NM $ 2,391
Losses on early extinguishment
of debt . . . . . . . . . ................... $159,780 $ 69,417 77% $ 90,363 $ 90,363 100% $ —
Other income, net . ................... $ 5,369 $ (1,752) (25%) $ 7,121 $ (2,014) (22%) $ 9,135
Interest expense . . . ................... $667,398 $(20,587) (3%) $687,985 $ 22,789 3% $665,196
Income tax expense . . . . . . . . . . . . . . . . . . $ 47,242 $(28,396) (38%) $ 75,638 $(12,705) (14%) $ 88,343
Investment Income
Investment income for 2013 decreased $9.2 million to $3.8 million, as compared with 2012, primarily due
to the $1.4 million in investment gains associated with cash received during 2013, as compared to $9.8 million
in 2012, in connection with our previously written-off investment in Adelphia.
Investment income for 2012 increased $10.6 million to $13.0 million, as compared with 2011, primarily
due to $9.8 million in investment gains associated with cash received during 2012 in connection with our
previously written-off investment in Adelphia.
Our average cash balances were $858.4 million, $705.6 million and $275.0 million for 2013, 2012 and
2011, respectively. Our average total restricted cash balances were $28.1 million, $105.9 million and $170.5
million for 2013, 2012 and 2011, respectively.
Losses on Early Extinguishment of Debt
Losses on early extinguishment of debt for 2013 increased $69.4 million to $159.8 million, as compared
with 2012.
In 2013, we recognized losses of $104.9 million on the early extinguishment of debt from debt tender
offers that resulted in the retirement of $194.9 million of the March 2015 Notes, $277.9 million of the April
2015 Notes and $225.0 million of the 2017 Notes. Additionally, we recognized losses of $54.9 million for
$208.8 million in privately negotiated repurchases of our 2017 Notes and for $17.3 million and $78.5 million in
open market repurchases of our 8.125% senior notes due 2018 and 8.500% senior notes due 2020, respectively.
During 2012, we recognized losses of $90.4 million on the early extinguishment of debt, comprised of
$69.0 million in connection with a $500.0 million debt tender offer for the Notes, a loss of $2.1 million for
$78.1 million in open market repurchases of our 6.25% Senior Notes due 2013 and a loss of $19.3 million for
open market repurchases of $75.7 million of the April 2015 Notes and $59.3 million of the 2017 Notes.
Other Income, Net
Other income, net for 2013 decreased $1.8 million to $5.4 million, as compared with 2012, primarily due
to a decrease of $4.5 million in the settlement of customer advances, partially offset by proceeds of $2.3
million in the settlement of a split-dollar life insurance policy for a former senior executive during 2013.
Other income, net for 2012 decreased $2.0 million to $7.1 million, as compared with 2011.
50
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES