iHeartMedia 2005 Annual Report Download - page 79

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79
NOTE J - GUARANTEES
Within the Company’s $1.75 billion credit facility, there exists a $150.0 million sub-limit available to certain of the
Company’s international subsidiaries. This $150.0 million sub-limit allows for borrowings in various foreign
currencies, which are used to hedge net assets in those currencies and provides funds to the Company’s international
operations for certain working capital needs. Subsidiary borrowings under this sub-limit are guaranteed by the
Company. At December 31, 2005, this portion of the $1.75 billion credit facility’s outstanding balance was $15.0
million, which is recorded in “Long-term debt” on the Company’s financial statements.
Within the Company's bank credit facility agreement is a provision that requires the Company to reimburse lenders
for any increased costs that they may incur in an event of a change in law, rule or regulation resulting in their
reduced returns from any change in capital requirements. In addition to not being able to estimate the potential
amount of any future payment under this provision, the Company is not able to predict if such event will ever occur.
The Company currently has guarantees that provide protection to its international subsidiary’s banking institutions
related to overdraft lines up to approximately $39.0 million. The Company also provides a guarantee related to
credit card charge backs of approximately $25.8 million for a third party. As of December 31, 2005, no amounts
were outstanding under these agreements.
As of December 31, 2005, the Company has outstanding commercial standby letters of credit and surety bonds of
$169.7 million and $40.1 million, respectively. These letters of credit and surety bonds relate to various operational
matters including insurance, bid, and performance bonds as well as other items. These letters of credit reduce the
borrowing availability on the Company’s bank credit facilities, and are included in the Company’s calculation of its
leverage ratio covenant under the bank credit facilities. The surety bonds are not considered as borrowings under
the Company’s bank credit facilities.
NOTE K - INCOME TAXES
Significant components of the provision for income tax expense (benefit) are as follows:
(In thousands)
2005 2004 2003
Current - federal $ (11,636) $ 310,596 $ 268,769
Current - foreign 56,879 34,895 22,734
Current - state (1,730) 22,188 29,019
Total current 43,513 367,679 320,522
Deferred - federal 397,942 138,180 445,894
Deferred - foreign (35,040) (18,339) (27,714)
Deferred - state 19,921 11,844 38,219
Total deferred 382,823 131,685 456,399
Income tax expense (benefit) $ 426,336 $ 499,364 $ 776,921