iHeartMedia 2011 Annual Report Download - page 24

unamortized discounts, which mature March 2021; (4) $31.0 million aggregate principal amount of other secured debt; (5) $796.3
million and $829.8 million outstanding of our senior cash pay notes and senior toggles notes, respectively, which mature August
2016; (6) $1.5 billion aggregate principal amount outstanding of our senior notes, net of unamortized purchase accounting discounts
of $469.8 million, which mature at various dates from 2012 through 2027; (7) $2.5 billion aggregate principal amount outstanding of
subsidiary senior notes; and (8) other long-term obligations of $19.9 million. This large amount of indebtedness could have negative
consequences for us, including, without limitation:
If compliance with our debt obligations materially hinders our ability to operate our business and adapt to changing
industry conditions, we may lose market share, our revenue may decline and our operating results may suffer. The terms of our credit
facilities and other indebtedness allow us, under certain conditions, to incur further indebtedness, including secured indebtedness,
which heightens the foregoing risks.
Our ability to make scheduled payments on our debt obligations depends on our financial condition and operating
performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors
beyond our control. In addition, because we derive a substantial portion of our operating income from our subsidiaries, our ability to
repay our debt depends upon the performance of our subsidiaries and their ability to dividend or distribute funds to us. We may not be
able to maintain a level of cash flows sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
For the year ended December 31, 2011, our earnings were not sufficient to cover fixed charges by $402.4 million and, for
the year ended December 31, 2010, our earnings were not sufficient to cover fixed charges by $617.5 million.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or
delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We may not
be able to take any of these actions, and these actions may not be successful or permit us to meet our scheduled debt service
obligations. Furthermore, these actions may not be permitted under the terms of our existing or future debt agreements.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial
condition at such time. Any refinancing of our debt could be at higher interest rates and increase our debt service obligations and may
require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or
future debt instruments may restrict us from adopting some of these alternatives. These alternative measures may not be successful
and may not permit us to meet our scheduled debt service obligations. If we cannot make scheduled payments on our indebtedness,
we will be in default under one or more of our debt agreements and, as a result we could be forced into bankruptcy or liquidation.
B
ecause we derive a substantial portion of operating income from our subsidiaries, our ability to repay our debt depends upon the
p
erformance of our subsidiaries and their ability to dividend or distribute funds to us.
We derive a substantial portion of operating income from our subsidiaries. As a result, our cash flow and the ability to
service our indebtedness depend on the performance of our subsidiaries and the ability of those entities to distribute funds to us. We
cannot assure you that our subsidiaries will be able to, or be permitted to, pay to us the amounts necessary to service our debt.
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• requiring us to dedicate a substantial portion of our cash flow to the payment of principal and interest on
indebtedness, thereby reducing cash available for other purposes, including to fund operations and capital
ex
p
enditures, invest in new technolo
gy
and
p
ursue other business o
pp
ortunities;
• limiting our liquidity and operational flexibility and limiting our ability to obtain additional financing for working
ca
p
ital, ca
p
ital ex
p
enditures, debt service re
q
uirements, ac
q
uisitions and
g
eneral cor
p
orate or other
p
ur
p
oses;
• limitin
g
our abilit
y
to ad
j
ust to chan
g
in
g
economic, business and com
p
etitive conditions;
• requiring us to defer planned capital expenditures, reduce discretionary spending, sell assets, restructure existing
indebtedness or defer ac
q
uisitions or other strate
g
ic o
pp
ortunities;
• limiting our ability to refinance any of our indebtedness or increasing the cost of any such financing in any
downturn in our o
p
eratin
g
p
erformance or decline in
g
eneral economic conditions;
• making us more vulnerable to an increase in interest rates, a downturn in our operating performance or a decline in
g
eneral economic or industr
y
conditions; and
• making us more susceptible to changes in credit ratings, which could impact our ability to obtain financing in the
future and increase the cost of such financin
g
.