iHeartMedia 2010 Annual Report Download - page 59

Interest payments related to the revolving credit facility assume the balance and interest rate as of December 31, 2010 is held
constant over the remaining term.
Interest payments on $2.5 billion of the Term Loan B facility are effectively fixed at an interest rate of 4.4%, plus applicable
margins, per annum, as a result of an aggregate $2.5 billion interest rate swap agreement. On October 29, 2010, $3.5 billion
notional amount of interest rate swap agreements matured with the remaining interest rate swap agreement maturing in
September 2013. Interest expense assumes the rate is fixed through maturity of the remaining swap, at which point the rate
reverts back to the floating rate in effect at December 31, 2010.
Seasonality
Typically, our Radio broadcasting, Americas outdoor and International outdoor segments experience their lowest financial
performance in the first quarter of the calendar year, with International outdoor historically experiencing a loss from operations in that
period. Our Radio broadcasting and Americas outdoor segments historically experience consistent performance for the remainder of
the calendar year. Our International outdoor segment typically experiences its strongest performance in the second and fourth quarters
of the calendar year. We expect this trend to continue in the future.
Market Risk
I
nterest Rate Risk
A significant amount of our long-term debt bears interest at variable rates. Accordingly, our earnings will be affected by changes
in interest rates. At December 31, 2010 we had an interest rate swap agreement with a $2.5 billion notional amount that effectively
fixes interest rates on a portion of our floating rate debt at a rate of 4.4%, plus applicable margins, per annum. The fair value of this
agreement at December 31, 2010 was a liability of $213.1 million. At December 31, 2010, approximately 55% of our aggregate
principal amount of long-term debt, including taking into consideration debt on which we have entered into a pay-fixed-rate-receive-
floating-rate swap agreement, bears interest at floating rates.
Assuming the current level of borrowings and interest rate swap contracts and assuming a 30% change in LIBOR, it is estimated
that our interest expense for the year ended December 31, 2010 would have changed by approximately $9.1 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, the preceding interest rate sensitivity 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.
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(2) Interest payments on the senior secured credit facilities, other than the revolving credit facility, assume the obligations are repaid
in accordance with the amortization schedule (after giving effect to the December 2009 prepayment of $2.0 billion of term loans
with proceeds from the issuance of subsidiary senior notes discussed elsewhere in this MD&A) and the interest rate is held
constant over the remainin
g
term.
(3) The non-current portion of the unrecognized tax benefits is included in the “Thereafter” column as we cannot reasonably
estimate the timing or amounts of additional cash payments, if any, at this time. For additional information, see Note 12 included
in Item 8 of Part II of this Annual Re
p
ort on Form 10-K.
(4) Other long-term obligations consist of $52.1 million related to asset retirement obligations recorded pursuant to ASC 410-20,
which assumes the underlying assets will be removed at some period over the next 50 years. Also included are $32.9 million of
contract payments in our syndicated radio and media representation businesses and $58.2 million of various other long-term
obli
g
ations.
(5) Excluded from the table is $364.3 million related to various obligations with no specific contractual commitment or maturity,
$213.1 million of which relates to the fair value of our interest rate swa
p
a
g
reement.