iHeartMedia 2002 Annual Report Download - page 58

(In thousands)
During the year ended December 31, 2002, we repurchased $70.4 million of our outstanding notes and convertible notes with maturities
prior to December 31, 2003.
Market Risk
Interest Rate Risk
At December 31, 2002, approximately 41% of our long-term debt, including fixed rate debt on which we have entered into interest rate swap
agreements, bears interest at variable rates. Accordingly, our earnings are affected by changes in interest rates. Assuming the current level of
borrowings at variable rates and assuming a two percentage point change in the year’s average interest rate under these borrowings, it is
estimated that our 2002 interest expense would have changed by $72.8 million and that our 2002 net income would have changed by
$45.1 million. In the event of an adverse change in interest rates, management may take actions to further mitigate its exposure. However, due
to the uncertainty of the actions that would be taken and their possible effects, this interest rate analysis assumes no such actions. Further the
analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.
We have entered into interest rate swap agreements that effectively float interest at rates based upon LIBOR on $1.5 billion of our current
fixed rate borrowings. These agreements expire from September 2003 to June 2005. The fair value of these agreements at December 31, 2002
was an asset of $119.8 million.
Equity Price Risk
The carrying value of our available-for-sale and trading equity securities is affected by changes in their quoted market prices. It is estimated
that a 20% change in the market prices of these securities would change their carrying value at December 31, 2002 by $12.3 million and would
change accumulated comprehensive income (loss) and net income (loss) by $6.7 million and $.9 million, respectively. At December 31, 2002,
we also held $28.3 million of investments that do not have a quoted market price, but are subject to fluctuations in their value.
Foreign Currency
We have operations in countries throughout the world. Foreign operations are measured in their local currencies except in hyper-inflationary
countries in which we operate. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates
or weak economic conditions in the foreign markets in which we have operations. To mitigate a portion of the exposure to risk of international
currency fluctuations, we maintain a natural hedge through borrowings in currencies other than the U.S. dollar. This hedge position is reviewed
monthly. We currently maintain no derivative instruments to mitigate the exposure to translation and/or transaction risk. However, this does not
preclude the adoption of specific hedging strategies in the future. Our foreign operations reported a net loss of $7.1 million for the year ended
December 31, 2002. It is estimated that a 10% change in the value of the U.S. dollar to foreign currencies would change net loss for the year
ended December 31, 2002 by $.7 million.
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Non-
Other Cancelable Non-
Credit Lon
g
-Term O
p
eratin
g
Cancelable Ca
p
ital
Facilities Deb
t
Leases Contracts Ex
p
enditures
2003 $ — $1,396,532 $318,878 $500,027 $216,680
2004 —12,649 285,195 280,462 88,217
2005 2,152,265 1,446,992 251,332 226,290 39,195
2006 —753,534 220,586 156,093 26,337
2007 —576,719 200,537 105,179 11,175
Thereafter —2,439,931 1,194,507 365,803 —
Total $2,152,265 $6,626,357 $2,471,035 $1,633,854 $381,604