iHeartMedia 2005 Annual Report Download - page 75

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All fees and initial offering discounts are being amortized as interest expense over the life of the respective notes.
The aggregate face value and market value of the senior notes was approximately $5.9 billion and $5.8 billion,
respectively, at December 31, 2005. The aggregate face value and market value of the senior notes was
approximately $6.2 billion and $6.4 billion, respectively, at December 31, 2004.
Interest Rate Swaps: The Company entered into interest rate swap agreements on the 3.125% senior notes due 2007,
the 4.25% senior notes due 2009, the 4.4% senior notes due 2011 and the 5.0% senior notes due 2012 whereby the
Company pays interest at a floating rate and receives the fixed rate coupon. The fair value of the Company’s swaps
was a liability of $29.0 million and an asset of $6.5 million at December 31, 2005 and 2004, respectively.
Subsidiary Level Notes
AMFM Operating Inc.’s long-term bonds, of which are all 8% senior notes due 2008, include a purchase accounting
premium of $10.5 million and $13.8 million at December 31, 2005 and 2004, respectively. The fair value of the
notes was $715.2 million and $755.4 million at December 31, 2005 and 2004, respectively.
Other Borrowings
Other debt includes various borrowings and capital leases utilized for general operating purposes. Included in the
$217.1 million balance at December 31, 2005, is $141.2 million that matures in less than one year.
Debt Covenants
The Company’s significant covenants on its $1.75 billion five-year, multi-currency revolving credit facility relate to
leverage and interest coverage contained and defined in the credit facility. The leverage ratio covenant requires the
Company to maintain a ratio of consolidated funded indebtedness to operating cash flow (as defined by the credit
facility) of less than 5.25x. The interest coverage covenant requires the Company to maintain a minimum ratio of
operating cash flow (as defined by the credit facility) to interest expense of 2.50x. In the event that the Company
does not meet these covenants, it is considered to be in default on the credit facility at which time the credit facility
may become immediately due. At December 31 2005, the Company’s leverage and interest coverage ratios were
3.4x and 4.9x, respectively. This credit facility contains a cross default provision that would be triggered if the
Company were to default on any other indebtedness greater than $200.0 million.
The Company’s other indebtedness does not contain such provisions that would make it a default if it were to
default on one of its credit facilities.
The fees paid on the Company’s $1.75 billion, five-year multi-currency revolving credit facility depend on the
Company’s long-term debt ratings. Based on current ratings level of BBB-/Baa3, the Company’s fees are 17.5 basis
points on the total $1.75 billion facility and a 45.0 basis point spread to LIBOR on borrowings. In the event the
Company’s ratings improve, the fee on borrowings and facility fee decline gradually to 9.0 basis points and 20.0
basis points, respectively, at ratings of A/A3 or better. In the event that the Company’s ratings decline, the fee on
borrowings and facility fee increase gradually to 30.0 basis points and 120.0 basis points, respectively, at ratings of
BB/Ba2 or lower. The Company believes there are no other agreements that contain provisions that trigger an event
of default upon a change in long-term debt ratings that would have a material impact to its financial statements.
Additionally, the AMFM long-term bonds contain certain restrictive covenants that limit the ability of AMFM
Operating Inc., a wholly-owned subsidiary of Clear Channel, to incur additional indebtedness, enter into certain
transactions with affiliates, pay dividends, consolidate, or affect certain asset sales.
At December 31, 2005, the Company was in compliance with all debt covenants.