(7) Long-Term Debt:

The activity in our long-term debt from December 31, 2012 to December 31, 2013 is summarized as follows:



			Year Ended
			December 31, 2013						Interest
									Rate at
	December 31,		Payments		New		December 31,		December 31,
($ in thousands)	2012		and Retirements		Borrowings		2013		2013 *

Senior Unsecured Debt	$	8,919,696	$	(1,562,630)	$	750,000	$	8,107,066	7.95%
Industrial Development Revenue Bonds		13,550		-		-		13,550	6.33%
Rural Utilities Service Loan Contracts		9,322		(392)		-		8,930	6.15%
Total Long-Term Debt	$	8,942,568	$	(1,563,022)	$	750,000	$	8,129,546	7.95%

Less: Debt (Discount)/Premium		(71)						2,037
Less: Current Portion		(560,550)						(257,916)
	$	8,381,947					$	7,873,667

* Interest rate includes amortization of debt issuance costs and debt premiums or discounts. The interest rates at December 31, 2013 represent a weighted average of multiple issuances.

Additional information regarding our Senior Unsecured Debt at December 31, 2013 and 2012 is as follows:



($ in thousands)	2013			2012

	Principal		Interest	Principal		Interest
	Outstanding		Rate	Outstanding		Rate

Senior Notes and Debentures Due:
1/15/2013	$	-	-	$	502,658	6.250%
5/1/2014		200,000	8.250%		200,000	8.250%
3/15/2015		105,026	6.625%		300,000	6.625%
4/15/2015		96,872	7.875%		374,803	7.875%
10/14/2016 *		460,000	3.045% (Variable)		517,500	3.095% (Variable)
4/15/2017		606,874	8.250%		1,040,685	8.250%
10/1/2018		582,739	8.125%		600,000	8.125%
3/15/2019		434,000	7.125%		434,000	7.125%
4/15/2020		1,021,505	8.500%		1,100,000	8.500%
7/1/2021		500,000	9.250%		500,000	9.250%
4/15/2022		500,000	8.750%		500,000	8.750%
1/15/2023		850,000	7.125%		850,000	7.125%
4/15/2024		750,000	7.625%		-	-
11/1/2025		138,000	7.000%		138,000	7.000%
8/15/2026		1,739	6.800%		1,739	6.800%
1/15/2027		345,858	7.875%		345,858	7.875%
8/15/2031		945,325	9.000%		945,325	9.000%
10/1/2034		628	7.680%		628	7.680%
7/1/2035		125,000	7.450%		125,000	7.450%
10/1/2046		193,500	7.050%		193,500	7.050%
		7,857,066			8,669,696
Subsidiary Senior Notes and Debentures Due:
2/15/2028		200,000	6.730%		200,000	6.730%
10/15/2029		50,000	8.400%		50,000	8.400%
Total	$	8,107,066	7.78% **	$	8,919,696	7.69% **

* Represents borrowings under the Credit Agreement with CoBank.

** Interest rate represents a weighted average of the stated interest rates of multiple issuances.

The Company has a credit agreement with CoBank, ACB, as administrative agent, lead arranger and a lender, and the other lenders party thereto, for a $575.0 million senior unsecured term loan facility with a final maturity of October 14, 2016 (the Credit Agreement). The entire facility was drawn upon execution of the Credit Agreement in October 2011. Repayment of the outstanding principal balance is made in quarterly installments in the amount of $14.4 million, which commenced on March 31, 2012, with the remaining outstanding principal balance to be repaid on the final maturity date. Borrowings under the Credit Agreement bear interest based on the margins over the Base Rate (as defined in the Credit Agreement) or LIBOR, at the election of the Company. Interest rate margins under the facility (ranging from 0.875% to 2.875% for Base Rate borrowings and 1.875% to 3.875% for LIBOR borrowings) are subject to adjustments based on the Total Leverage Ratio of the Company, as such term is defined in the Credit Agreement. The current pricing on this facility is LIBOR plus 2.875%. Proceeds of the facility were used to repay in full the remaining outstanding principal on three debt facilities (Frontier’s $200 million Rural Telephone Financing Cooperative term loan maturing October 24, 2011, its $143 million CoBank term loan maturing December 31, 2012, and its $130 million CoBank term loan maturing December 31, 2013) and the remaining proceeds were used for general corporate purposes.

On May 3, 2013, the Company entered into a new $750.0 million revolving credit facility (the Revolving Credit Facility) and terminated the Company’s previously existing revolving credit facility. As of December 31, 2013, no borrowings had been made under the Revolving Credit Facility. The terms of the Revolving Credit Facility are set forth in the credit agreement, dated as of May 3, 2013, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and the other parties named therein (the Revolving Credit Agreement). Associated commitment fees under the Revolving Credit Facility will vary from time to time depending on the Company’s debt rating (as defined in the Revolving Credit Agreement) and were 0.400% per annum as of December 31, 2013. The Revolving Credit Facility is scheduled to terminate on November 3, 2016. During the term of the Revolving Credit Facility, the Company may borrow, repay and reborrow funds, and may obtain letters of credit, subject to customary borrowing conditions. Loans under the Revolving Credit Facility will bear interest based on the alternate base rate or the adjusted LIBO Rate (each as determined in the Revolving Credit Agreement), at the Company’s election, plus a margin based on the Company’s debt rating (ranging from 0.50% to 1.50% for alternate base rate borrowings and 1.50% to 2.50% for adjusted LIBO Rate borrowings). The current pricing on this facility would have been 1.0% or 2.0%, respectively, as of December 31, 2013. Letters of credit issued under the Revolving Credit Facility will also be subject to fees that vary depending on the Company’s debt rating. The Revolving Credit Facility is available for general corporate purposes but may not be used to fund dividend payments. The maximum permitted leverage ratio is 4.5 times.

On September 8, 2010, the Company entered into a letter of credit facility, the terms of which are set forth in the Credit Agreement with the Lenders party thereto and Deutsche Bank AG, New York Branch (the Bank), as Administrative Agent and Issuing Bank (the Letter of Credit Agreement). An initial letter of credit for $190.0 million was issued to the West Virginia Public Service Commission to guarantee certain of our capital investment commitments in West Virginia in connection with the 2010 Transaction. The initial commitments under the Letter of Credit Agreement expired in September 2011, with the Bank exercising its option to extend $100.0 million of the commitments to September 2012. In September 2012, the Company entered into an amendment to the Letter of Credit Agreement to extend $40 million of the commitments. Two letters of credit were issued in September 2012, one for $20 million that expired in March 2013, and the other for $20 million that expired in September 2013. The Letter of Credit Agreement expired on September 20, 2013.

On April 10, 2013, the Company completed a registered debt offering of $750.0 million aggregate principal amount of 7.625% senior unsecured notes due 2024, issued at a price of 100% of their principal amount. We received net proceeds of $736.9 million from the offering after deducting underwriting fees. The Company used the net proceeds from the sale of the notes, together with cash on hand, to finance the cash tender offers discussed below.

On April 10, 2013, the Company accepted for purchase $471.3 million aggregate principal amount of its senior notes tendered for total consideration of $532.4 million, consisting of $194.2 million aggregate principal amount of the Company’s 6.625% senior notes due 2015 (the March 2015 Notes), tendered for total consideration of $216.0 million, and $277.1 million aggregate principal amount of the Company’s 7.875% senior notes due 2015 (the April 2015 Notes), tendered for total consideration of $316.4 million. On April 24, 2013, the Company accepted for purchase $0.7 million aggregate principal amount of the March 2015 Notes, tendered for total consideration of $0.8 million, $0.8 million of the April 2015 Notes, tendered for total consideration of $0.9 million, and $225.0 million aggregate principal amount of the Company’s 8.250% senior notes due 2017 (the 2017 Notes), tendered for total consideration of $267.7 million. The repurchases in the debt tender offers for the senior notes resulted in a loss on the early extinguishment of debt of $104.9 million, ($64.9 million or $0.06 per share after tax), which was recognized in the second quarter of 2013.

Additionally, during the second quarter of 2013, the Company repurchased $208.8 million of the 2017 Notes in a privately negotiated transaction, along with $17.3 million of its 8.125% senior notes due 2018 and $78.5 million of its 8.500% senior notes due 2020 in open market repurchases. These transactions resulted in a loss on the early extinguishment of debt of $54.9 million ($34.0 million or $0.04 per share after tax), which was recognized in the second quarter of 2013.

On May 17, 2012, the Company completed a registered offering of $500 million aggregate principal amount of 9.250% senior unsecured notes due 2021, issued at a price of 100% of their principal amount. We received net proceeds of $489.6 million from the offering after deducting underwriting fees and offering expenses. The Company also commenced a tender offer to purchase the maximum aggregate principal amount of its 8.250% Senior Notes due 2014 (the 2014 Notes) and the April 2015 Notes (and together with the 2014 Notes, the Notes) that it could purchase for up to $500 million in cash (the 2012 Debt Tender Offer).

Pursuant to the 2012 Debt Tender Offer, the Company accepted for purchase $400 million aggregate principal amount of 2014 Notes, tendered for total consideration of $446.0 million, and $49.5 million aggregate principal amount of April 2015 Notes, tendered for total consideration of $54.0 million. The Company used proceeds from the sale of its May 2012 offering of $500 million of 9.250% Senior Notes due 2021, plus cash on hand, to purchase the Notes.

In connection with the 2012 Debt Tender Offer and repurchase of the Notes, the Company recognized a loss of $69.0 million for the premium paid on the early extinguishment of debt during 2012. We also recognized losses of $2.1 million during 2012 for $78.1 million in total open market repurchases of our 6.25% Senior Notes due 2013.

On August 15, 2012, the Company completed a registered offering of $600 million aggregate principal amount of 7.125% senior unsecured notes due 2023 (the 2023 Notes), issued at a price of 100% of their principal amount. We received net proceeds of $588.1 million from the offering after deducting underwriting fees and offering expenses. The Company used the net proceeds from the sale of the notes to repurchase or retire existing indebtedness in 2013.

On October 1, 2012, the Company completed a registered debt offering of $250 million aggregate principal amount of the 2023 Notes, issued at a price of 104.250% of their principal amount. We received net proceeds of $255.9 million from the offering after deducting underwriting fees and offering expenses. The notes are an additional issuance of, are fully fungible with and form a single series voting together as one class with the $600 million aggregate principal amount of the 2023 Notes issued by the Company on August 15, 2012. The Company used the net proceeds from the sale of the notes to repurchase or retire existing indebtedness in 2013.

On October 1, 2012, the Company accepted for purchase $75.7 million and $59.3 million aggregate principal amount of the April 2015 Notes and the 2017 Notes, respectively, in open market repurchases for total consideration of $154.7 million. The repurchases resulted in a loss on the early retirement of debt of $19.3 million.

In 2011, we retired an aggregate principal amount of $552.4 million of debt, consisting of $551.4 million of senior unsecured debt and $1.0 million of rural utilities service loan contracts.

As of December 31, 2013, we were in compliance with all of our debt and credit facility financial covenants.

On December 16, 2013, we signed a commitment letter for a bridge loan facility (the Bridge Facility) and recognized interest expense of $1.3 million related to this commitment during 2013. On January 29, 2014, we entered into a bridge loan agreement (the Bridge Loan Agreement) with the Lenders party thereto and JP Morgan Chase Bank, N.A., as administrative agent, pursuant to which the Lenders have agreed at closing of the AT&T Transaction to provide to us an unsecured bridge loan facility for up to $1.9 billion for the purposes of funding (i) substantially all of the purchase price for the AT&T Transaction and (ii) the fees and expenses incurred in connection with the transactions contemplated by the stock purchase agreement for the AT&T Transaction. Pursuant to the Bridge Loan Agreement, if and to the extent we do not, or are unable to, issue debt securities yielding up to $1.9 billion in gross cash proceeds on or prior to the closing of the AT&T Transaction, we shall draw down up to $1.9 billion, less the amount of the debt securities, if any, issued by us on or prior to the closing of the AT&T Transaction, in aggregate principal amount of loans under the Bridge Facility to fund the purchase price of the AT&T Transaction.

Our principal payments for the next five years are as follows as of December 31, 2013:



	Principal
($ in thousands)	Payments

2014	$	257,916
2015	$	259,840
2016	$	345,466
2017	$	607,375
2018	$	583,273

Other Obligations

During 2013, the Company contributed four real estate properties to its qualified defined benefit pension plan. The pension plan obtained independent appraisals of the properties and, based on these appraisals, the pension plan recorded the contributions at their fair value of $23.4 million. The Company has entered into leases for the contributed properties for 15 years at a combined aggregate annual rent of approximately $2.1 million. The properties are managed on behalf of the pension plan by an independent fiduciary, and the terms of the leases were negotiated with the fiduciary on an arm’s-length basis.

The contribution and leaseback of the properties was treated as a financing transaction and, accordingly, the Company continues to depreciate the carrying value of the properties in its financial statements and no gain or loss was recognized. An obligation of $23.4 million was recorded in our consolidated balance sheet within “Other liabilities” for $23.3 million and within “Other current liabilities” for $0.1 million and these liabilities will be reduced by a portion of the lease payments made to the pension plan.

During 2012, the Company entered into a sale and leaseback arrangement for a facility in Everett, Washington and entered into a capital lease for the use of fiber in the state of Minnesota. These agreements have lease terms of 12 and 23 years, respectively. These capital lease obligations as of December 31, 2012 are included in our consolidated balance sheet within “Other liabilities” and “Other current liabilities.”

During 2011, the Company contributed four real estate properties to its qualified defined benefit pension plan. The pension plan recorded the contributions at their fair value of $58.1 million and the Company entered into a financing lease for the contributed properties for 15 years at a combined aggregate annual rent of approximately $5.8 million.

Future minimum payments for finance lease obligations and capital lease obligations as of December 31, 2013 are as follows:



($ in thousands)	Finance Lease Obligations		Capital Lease Obligations

Year ending December 31:
2014	$	6,891	$	3,107
2015		7,043		3,162
2016		7,225		3,216
2017		7,418		3,273
2018		7,633		3,331
Thereafter		70,892		18,976
Total future payments		107,102		35,065
Less: Amounts representing interest		(63,174)		(9,983)
Present value of minimum lease payments	$	43,928	$	25,082