Chesapeake Energy 1997 Annual Report Download - page 56

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Debt Issue Costs
Other assets include debt issue costs associated with the issuance of the 10.5% Senior Notes on May 25,
1995, the 9.125% Senior Notes on April 9, 1996, and the 7.875% and 8.5% Senior Notes on March 17, 1997
(see Note 2). The remaining unamortized costs on these issuances of Senior Notes at June 30, 1997 totaled
$12.5 million and are being amortized over the life of the Senior Notes.
Stock Options
In October 1995, the Financial Accounting Standards Board issued Statement No. 123 ("SFAS 123"),
"Accounting for Stock Based Compensation". As permitted by SFAS 123, the Company has continued its
previous method of accounting for stock compensation and has adopted the disclosure requirements of this
Statement in fiscal 1997.
Reclassifications
Certain reclassifications have been made to the consolidated financial statements for the years ended
June 30, 1996 and 1995 to conform to the presentation used for the June 30, 1997 consolidated financial
statements.
2. Senior Notes
On March 17, 1997, the Company issued $150 million principal amount of 7.875% Senior Notes due
2004 ("7.875% Senior Notes"). The 7.875% Senior Notes are redeemable at the option of the Company at
any time at the make-whole prices determined in accordance with the indenture.
On March 17, 1997, the Company issued $150 million principal amount of 8.5% Senior Notes due 2012
("8.5% Senior Notes"). The 8.5% Senior Notes are redeemable at the option of the Company at any time at
the make-whole prices determined in accordance with the indenture, or on or after March 15, 2004, at the
redemption price set forth therein.
On April 9, 1996, the Company issued $120 million principal amount of 9.125% Senior Notes due 2006
("9.125% Senior Notes"). The 9.125% Senior Notes are redeemable at the option of the Company at any time
prior to April 15, 2001 at the make-whole prices determined in accordance with the indenture and on or after
April 15, 2001, at the redemption prices set forth therein. The Company may also redeem at its option at any
time on or prior to April 15, 1999 up to $42 million of the 9.125% Senior Notes at 109.125% of the principal
amount thereof with the proceeds of an equity offering.
On May 25, 1995, the Company issued $90 million principal amount of 10.5% Senior Notes due 2002
("10.5% Senior Notes"). The 10.5% Senior Notes are redeemable at the option of the Company at any time
on or after June 1, 1999. The Company may also redeem at its option at any time on or prior to June 1, 1998
up to $30 million of the 10.5% Senior Notes at 110% of the principal amount thereof with the proceeds of an
equity offering.
The Company is a holding company and owns no operating assets and has no significant operations
independent of its subsidiaries. The Company's obligations under the 10.5% Senior Notes, the 9.125% Senior
Notes, the 7.875% Senior Notes and the 8.5% Senior Notes have been fully and unconditionally guaranteed,
on a joint and several basis, by each of the Company's "Restricted Subsidiaries" (as defined in the respective
indentures governing the Senior Notes) (collectively, the "Guarantor Subsidiaries"). Each of the Guarantor
Subsidiaries is a direct or indirect wholly-owned subsidiary of the Company.
The 10.5%, 9.125%, 7.875% and 8.5% Senior Note Indentures contain certain covenants, including
covenants limiting the Company and the Guarantor Subsidiaries with respect to asset sales; restricted
payments; the incurrence of additional indebtedness and the issuance of preferred stock; liens; sale and
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