Reorganizations Items, Net and Liabilities Subject to Compromise

Reorganization Items, Net

In accordance with ASC 852, reorganization items represent charges that are directly associated with the process of reorganizing the business under Chapter 11 of the Bankruptcy Code. For the three months ended March 31, 2013, the Company recorded $35.9 million of reorganization items on the condensed consolidated statement of comprehensive income (loss). The following table displays the details of reorganization items for the three months ended March 31, 2013:



	Three Months Ended March 31, 2013
Write-off of remaining unamortized fair value adjustments	$	31,761
Professional fees	4,142
Total reorganization items, net	$	35,903

The write-off of remaining unamortized fair value adjustments relates to our senior secured credit facilities, which are classified as liabilities subject to compromise at March 31, 2013. See Note 4, "Long-Term Debt - Impact of Fresh Start Accounting" for additional information on the fair value adjustments recognized in conjunction with our adoption of fresh start accounting on the Fresh Start Reporting Date. ASC 852 specifies that when debt classified as liabilities subject to compromise is an allowed claim and the allowed claim differs from the net carrying amount of the debt, the carrying amount shall be adjusted to the amount of the allowed claim. The gain or loss resulting from this adjustment shall be recognized as reorganization items. Based on our plan of reorganization and approved first-day motions of the Bankruptcy Court, the allowed claims exclude the unamortized fair value adjustments associated with our senior secured credit facilities. Therefore, we have recognized the remaining unamortized fair value adjustments associated with our senior secured credit facilities as reorganization items during the three months ended March 31, 2013, which resulted in the adjustment of the carrying amounts of our senior secured credit facilities to their respective aggregate principal amounts due at March 31, 2013.

The Company has incurred professional fees for financial consulting and legal services directly associated with the reorganization process.

Liabilities Subject to Compromise

Liabilities subject to compromise refers to unsecured obligations that will be accounted for under a plan of reorganization. ASC 852 requires pre-petition liabilities, including those that became known after filing the Chapter 11 petitions, that are subject to compromise to be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. These liabilities represent the estimated amount expected to be resolved on known or potential claims through the Chapter 11 process and remain subject to future adjustments from either negotiated settlements, actions of the Bankruptcy Court or non-acceptance of certain executory contracts. Liabilities subject to compromise also includes items that may be assumed under the plan of reorganization and may be subsequently reclassified to liabilities not subject to compromise.

Although our plan of reorganization specifies payment of scheduled amortization and interest on our senior secured credit facilities throughout the Chapter 11 proceedings, these debt obligations are deemed impaired for bankruptcy purposes based upon the proposed amendments to certain terms and conditions presented in the Amended and Restated Merger Agreement. In addition, the Company has determined that the carrying value of our senior secured credit facilities exceeds the fair value of the collateral securing these debt obligations. As a result, the carrying value of our senior secured credit facilities of $1,745.0 million is classified as liabilities subject to compromise on the condensed consolidated balance sheet at March 31, 2013. The Dex One Senior Subordinated Notes have not been impaired by our plan of reorganization and are therefore included in liabilities not subject to compromise at March 31, 2013. As disclosed in Note 1, "Business and Basis of Presentation - Going Concern,” the Bankruptcy Court has not approved a motion and we believe it is unlikely that the Bankruptcy Court would approve a motion during pendency of the Chapter 11 Cases to accelerate the financial obligations under the Dex One Senior Subordinated Notes and our senior secured credit facilities. However, there can be no assurance that this will not occur. Accordingly, we have classified the Dex One Senior Subordinated Notes as current obligations at March 31, 2013 and December 31, 2012. Our senior secured credit facilities were classified as current obligations at December 31, 2012 however, they are now classified as liabilities subject to compromise at March 31, 2013 for the reasons discussed above. In conjunction with our plan of reorganization, interest payments on the Dex One Senior Subordinated Notes for the semi-annual interest period ending March 31, 2013 will be made 50% in cash and 50% in paid-in-kind ("PIK") interest upon the effective date of our plan of reorganization. The Company's cash flow from operations for the three months ended March 31, 2013 was favorably impacted by the deferral of interest payments on the Dex One Senior Subordinated Notes.