Derivative Financial Instruments

12 Months Ended

Dec. 31, 2011

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Successor Company

The Company has entered into the following interest rate swaps that effectively convert $500.0 million, or approximately 23%, of the Company’s variable rate debt to fixed rate debt as of December 31, 2011. Since the RHDI Amended and Restated Credit Facility and the Dex Media West Amended and Restated Credit Facility are subject to a LIBOR floor of 3.00% and the LIBOR rate is below that floor at December 31, 2011, both credit facilities are effectively fixed rate debt until such time LIBOR exceeds the stated floor. At December 31, 2011, approximately 88% of our total debt outstanding consisted of variable rate debt, excluding the effect of our interest rate swaps. Including the effect of our interest rate swaps, total fixed rate debt comprised approximately 32% of our total debt portfolio as of December 31, 2011. The interest rate swaps mature at varying dates from February 2012 through February 2013.

Interest Rate Swaps – Dex Media East

Effective Dates	Notional Amount			Pay Rates	Maturity Dates
(amounts in millions)
February 26, 2010	$	300	(2)	1.20%-1.796%	February 29, 2012 – February 28, 2013
March 5, 2010	100		(1)	1.69%	January 31, 2013
March 10, 2010	100		(1)	1.75%	January 31, 2013
Total	$	500

Under the terms of the interest rate swap agreements, we receive variable interest based on the three-month LIBOR and pay a weighted average fixed rate of 1.5%. The weighted average rate received on our interest rate swaps was 0.5% for the year ended December 31, 2011. These periodic payments and receipts are recorded as interest expense.

Under the terms of the interest rate cap agreements, the Company will receive payments based on the spread in rates if the three-month LIBOR rate increases above the cap rates noted in the table below. The Company paid $2.1 million for the interest rate cap agreements entered into during the first quarter of 2010. We are not required to make any future payments related to these interest rate cap agreements.

Interest Rate Caps – RHDI

Effective Dates	Notional Amount			Cap Rates	Maturity Dates
(amounts in millions)
February 26, 2010	$	200	(3)	3.0%-3.5%	February 29, 2012 – February 28, 2013
March 8, 2010	100		(4)	3.50%	January 31, 2013
March 10, 2010	100		(4)	3.00%	April 30, 2012
Total	$	400

⁽¹⁾  Consists of one swap

⁽²⁾  Consists of three swaps

⁽³⁾  Consists of two caps

⁽⁴⁾  Consists of one cap

The following tables present the fair value of our interest rate swaps and interest rate caps at December 31, 2011 and 2010. The fair value of our interest rate swaps is presented in accounts payable and accrued liabilities and other non-current liabilities and the fair value of our interest rate caps is presented in prepaid expenses and other current assets and other non-current assets on the consolidated balance sheet at December 31, 2011 and 2010. The following tables also present the (gain) loss recognized in interest expense from the change in fair value of our interest rate swaps and interest rate caps for the year ended December 31, 2011 and eleven months ended December 31, 2010.

	Fair Value Measurements at						(Gain) Loss Recognized in Interest Expense From the Change in Fair Value of Interest Rate Swaps
	December 31, 2011			December 31, 2010			Year Ended December 31, 2011			Eleven Months Ended December 31, 2010
Interest Rate Swaps:
Accounts payable and accrued liabilities	$	(2,269	)	$	(4,376	)	$	(2,106	)	$	4,376
Other non-current liabilities	(425		)	(1,989		)	(1,565		)	1,989
Total	$	(2,694	)	$	(6,365	)	$	(3,671	)	$	6,365

	Fair Value Measurements at				Loss Recognized in Interest Expense From the Change in Fair Value of Interest Rate Caps
	December 31, 2011		December 31, 2010		Year Ended December 31, 2011		Eleven Months Ended December 31, 2010
Interest Rate Caps:
Prepaid expenses and other current assets	$	1	$	5	$	4	$	64
Other non-current assets	4		303		299		1,766
Total	$	5	$	308	$	303	$	1,830

The Company recognized expense related to our interest rate swaps and interest rate caps into earnings, including accrued interest, of $2.8 million and $13.2 million during the year ended December 31, 2011 and eleven months ended December 31, 2010, respectively.

Predecessor Company

As a result of filing the Chapter 11 petitions, the Predecessor Company did not have any interest rate swaps designated as cash flow hedges. During the one month ended January 31, 2010 and year ended December 31, 2009, the Predecessor Company recognized interest expense of $2.3 million and $4.5 million, respectively, associated with the change in fair value of its interest rate swaps. During the one month ended January 31, 2010 and year ended December 31, 2009, the Predecessor Company recognized expense of $3.0 million and $41.0 million, respectively, related to interest rate swaps into earnings, including accrued interest. For the year ended December 31, 2009, the Predecessor Company recognized a gain in accumulated other comprehensive loss of $3.7 million from effective interest rate swaps. In accordance with fresh start accounting, unamortized amounts previously charged to accumulated other comprehensive loss of $15.3 million related to the Predecessor Company’s interest rate swaps were eliminated as of the Fresh Start Reporting Date.