iHeartMedia 2000 Annual Report Download - page 71

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71
Senior Notes due 2008, 8.125% Senior Subordinated Notes due 2007 and 8.75% Senior Subordinated
Notes due 2007, originally issued by Chancellor Media Corporation or one of its subsidiaries, as well as
the 12.625% Exchange Debentures due 2006, originally issued by SFX Broadcasting (AMFM Operating
Inc.). The aggregate remaining balance of these series of AMFM long-term bonds was $1.4 billion at
December 31, 2000.
Chancellor Media Corporation, Capstar Radio Broadcasting Partners, Inc., Capstar Broadcasting Partners,
Inc., SFX Broadcasting, and AMFM Operating Inc., or their successors are all indirect wholly-owned
subsidiaries of the Company.
Future maturities of long-term debt at December 31, 2000 are as follows:
(In thousands)
2001 $ 67,736
2002 1,570,304
2003 1,773,644
2004 445,074
2005 3,504,150
Thereafter 2,806,856
$10,167,764
NOTE E – FINANCIAL INSTRUMENTS
The Company is exposed to market risks, such as changes in interest rate and currency exchange rates.
To manage the volatility relating to these exposures, the Company enters into various derivative
transactions. The financial impact of these hedging instruments are offset in part or in whole by
corresponding changes in the underlying exposures being hedged. The Company does not hold or issue
derivative financial instruments for trading purposes.
Interest Rate Management
The Company’ s policy is to manage interest cost using a mix of fixed and variable rate debt. To manage
this mix in a cost-efficient manner, the Company enters into interest rate swaps in which the Company
agrees to exchange, at specified variables, the difference between fixed and variable interest amounts
calculated by reference to an agreed-upon notional principal amount. These swaps are designated to
hedge underlying debt obligations. The terms of the underlying debt and the interest rate swap agreement
coincide, therefore the hedge will perfectly offset the changes in the fair value of the underly ing debt.
Currently, the interest rate differential is reflected as an adjustment to interest expense over the life of the
swap. The incremental effect on interest expense for 2000 was not material.
At December 31, 2000, the notional amount of interest rate swaps and the underlying principal amount of
the debt were $1.5 billion. The fair value of the underlying debt and the related interest rate swaps as of
December 31, 2000, was $1.5 billion and $49 million, respectively.