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LONG-TERM DEBT: | 3 Months Ended
--- | ---
Mar. 31, 2014
Debt Disclosure [Abstract] |
Debt Disclosure [Text Block] | 5. LONG-TERM DEBT: Long-term debt consists of the following:
|  | March 31, 2014 |  | December 31, 2013 |
|  | (Unaudited) |  |  |  |
|  | (In thousands) |
Senior bank term debt |  | $ | 372,496 |  | $ | 373,456 |
9.25% Senior Subordinated Notes due February 2020 |  |  | 335,000 |  |  | — |
121/2%/15% Senior Subordinated Notes due May 2016 |  |  | — |  |  | 327,034 |
10% Senior Secured TV One Notes due March 2016 |  |  | 119,000 |  |  | 119,000 |
Total debt |  |  | 826,496 |  |  | 819,490 |
Less: current portion |  |  | 3,840 |  |  | 3,840 |
Less: original issue discount |  |  | 3,460 |  |  | 3,855 |
Long-term debt, net |  | $ | 819,196 |  | $ | 811,795 |
Credit Facilities Current Credit Facilities On March 31, 2011, the Company entered into a senior secured credit facility (the “2011 Credit Agreement”) with a syndicate of banks, and simultaneously borrowed $386.0 million to retire all outstanding obligations under the Company’s previous amended and restated credit agreement and to fund our obligation with respect to a capital call initiated by TV One. The total amount available under the 2011 Credit Agreement is $411.0 million, consisting of a $386.0 million term loan facility that matures on March 31, 2016 and a $25.0 million revolving loan facility that matures on March 31, 2015. Borrowings under the credit facilities are subject to compliance with certain covenants including, but not limited to, certain financial covenants. Proceeds from the credit facilities can be used for working capital, capital expenditures made in the ordinary course of business, its common stock repurchase program, permitted direct and indirect investments and other lawful corporate purposes. On December 19, 2012, the Company entered into an amendment to the 2011 Credit Agreement (the “December 2012 Amendment”). The December 2012 Amendment: (i) modifies financial covenant levels with respect to the Company's total-leverage, secured-leverage, and interest-coverage ratios; (ii) increases the amount of cash the Company can net for determination of its net indebtedness tests; and (iii) extends the time for certain of the 2011 Credit Agreement's call premium while reducing the time for its later and lower premium. The 2011 Credit Agreement, as amended, contains affirmative and negative covenants that the Company is required to comply with, including: (a) maintaining an interest coverage ratio of no less than:
§ | 1.10 to 1.00 on December 31, 2012, and the last day of each fiscal quarter through December 31, 2013;
§ | 1.20 to 1.00 on March 31, 2014, and the last day of each fiscal quarter through September 30, 2014;
§ | 1.25 to 1.00 on December 31, 2014, and the last day of each fiscal quarter through September 30, 2015; and
§ | 1.50 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter.
(b) maintaining a senior secured leverage ratio of no greater than:
§ | 4.50 to 1.00 on September 30, 2012, and the last day of each fiscal quarter through December 31, 2013;
§ | 4.25 to 1.00 on March 31, 2014, and the last day of each fiscal quarter through June 30, 2014;
§ | 4.00 to 1.00 on September 30, 2014;
§ | 3.75 to 1.00 on December 31, 2014;
§ | 3.25 to 1.00 on March 31, 2015, and the last day of each fiscal quarter through September 30, 2015; and
§ | 2.75 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter.
(c) maintaining a total leverage ratio of no greater than:
§ | 8.50 to 1.00 on December 31, 2012, and the last day of each fiscal quarter through December 31, 2013;
§ | 8.25 to 1.00 on March 31, 2014, and June 30, 2014;
§ | 8.00 to 1.00 on September 30, 2014;
§ | 7.50 to 1.00 on December 31, 2014;
§ | 6.50 to 1.00 on March 31, 2015, and the last day of each fiscal quarter through September 30, 2015; and
§ | 6.00 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter.
(d) limitations on:
§ | liens;
§ | sale of assets;
§ | payment of dividends; and
§ | mergers.
As of March 31, 2014, ratios calculated in accordance with the 2011 Credit Agreement, as amended, are as follows:
|  | As of March 31, 2014 |  | Covenant Limit |  | Excess Coverage |
Pro Forma Last Twelve Months Covenant EBITDA (In millions) |  | $ | 98.7 |  |  |  |  |  |  |
Pro Forma Last Twelve Months Interest Expense (In millions) |  | $ | 61.3 |  |  |  |  |  |  |
Senior Debt (In millions) |  | $ | 351.1 |  |  |  |  |  |  |
Total Debt (In millions) |  | $ | 686.1 |  |  |  |  |  |  |
Interest Coverage |  |  |  |  |  |  |  |  |  |
Covenant EBITDA / Interest Expense |  |  | 1.61 | x |  | 1.20 | x |  | 0.41 | x
Senior Secured Leverage |  |  |  |  |  |  |  |  |  |
Senior Secured Debt / Covenant EBITDA |  |  | 3.56 | x |  | 4.25 | x |  | 0.69 | x
Total Leverage |  |  |  |  |  |  |  |  |  |
Total Debt / Covenant EBITDA |  |  | 6.95 | x |  | 8.25 | x |  | 1.30 | x
EBITDA - Earnings before interest, taxes, depreciation and amortization |  |  |  |  |  |  |  |  |  |
In accordance with the 2011 Credit Agreement, as amended, the calculations for the ratios above do not include the operating results or related debt of TV One, but rather include our proportionate share of cash dividends received from TV One for periods presented. As of March 31, 2014, the Company was in compliance with all of its financial covenants under the 2011 Credit Agreement, as amended. Under the terms of the 2011 Credit Agreement, as amended, interest on base rate loans is payable quarterly and interest on LIBOR loans is payable monthly or quarterly. The base rate is equal to the greater of: (i) the prime rate; (ii) the Federal Funds Effective Rate plus 0.50%; or (iii) the LIBOR Rate for a one-month period plus 1.00%. The applicable margin on the 2011 Credit Agreement is between (i) 4.50% and 5.50% on the revolving portion of the facility and (ii) 5.00% (with a base rate floor of 2.5% per annum) and 6.00% (with a LIBOR floor of 1.5% per annum) on the term portion of the facility. The average interest rate was 7.5% for the three months ended March 31, 2014. Quarterly installments of 0.25%, or $960,000, of the principal balance on the term loan are payable on the last day of each March, June, September and December. As of March 31, 2014, the Company had approximately $24.0 million of borrowing capacity under its revolving credit facility, after adjusting for outstanding letters of credit. After taking into consideration the financial covenants under the 2011 Credit Agreement, as amended, and adjusting for the outstanding letters of credit, approximately $24.0 million was available to be borrowed. As of March 31, 2014, the Company had outstanding approximately $372.5 million on its term credit facility. During the quarter ended March 31, 2014, the Company repaid approximately $1.0 million under the 2011 Credit Agreement, as amended. The original issue discount is being reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the credit facility. According to the terms of the Credit Agreement, as amended, the Company made an excess cash flow payment of approximately $1.0 million during April 2014. Senior Subordinated Notes On November 24, 2010, we issued $286.8 million of our 12.5%/15% Senior Subordinated Notes due May 2016 (the “2016 Notes”) in a private placement and exchanged and then cancelled approximately $97.0 million of $101.5 million in aggregate principal amount outstanding of our 8 ⅞% senior subordinated notes due 2011 (the “2011 Notes”) and approximately $199.3 million of $200.0 million in aggregate principal amount outstanding of our 63/8% Senior Subordinated Notes that matured in February 2013 (the “2013 Notes” and the 2013 Notes together with the 2011 Notes, the “Prior Notes”). Subsequently, we repurchased or redeemed all remaining Prior Notes pursuant to the terms of their respective indenture. Effective March 13, 2014, the Company repurchased or otherwise redeemed all of the amounts outstanding under the 2016 Notes. The Company recorded a loss on retirement of debt of approximately $5.7 million for the three months ended March 31, 2014. This amount includes a write-off of approximately $4.1 million of previously capitalized debt financing costs and approximately $1.6 million associated with the net premium paid to retire the 2016 Notes. On February 10, 2014, the Company closed a private placement offering of $335.0 million aggregate principal amount of 9.25% senior subordinated notes due 2020 (the “2020 Notes”). The 2020 Notes were offered at an original issue price of 100.0% plus accrued interest from February 10, 2014. The 2020 Notes mature on February 15, 2020. Interest accrues at the rate of 9.25% per annum and is payable semiannually in arrears on February 15 and August 15 in the amount of approximately $15.5 million, commencing on August 15, 2014. The 2020 Notes are guaranteed by certain of the Company’s existing and future domestic subsidiaries and any other subsidiaries that guarantee the existing senior credit facility or any of the Issuer's other syndicated bank indebtedness or capital markets securities. The Company used the net proceeds from the offering to repurchase or otherwise redeem all of the amounts currently outstanding under its 2016 Notes and to pay the related accrued interest, premiums, fees and expenses associated therewith. As of March 31, 2014, the Company had $335.0 million of our 2020 Notes outstanding. During the three months ended March 31, 2014, the Company capitalized approximately $4.5 million of costs associated with our 2020 Notes. Pursuant to Rule 3-10 of Regulation S-X, the Company has in its past periodic reports, including its most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, included in a footnote to its financial statements, condensed consolidating financial information for the Company, the wholly-owned guarantor subsidiaries on a combined basis, the non-wholly owned guarantor subsidiaries on a combined basis, the non-guarantor subsidiaries on a combined basis, consolidating adjustments and the total consolidated amounts. Pursuant to Rule 3-10 of Regulation S-X, the Company also included in its past periodic reports the stand-alone financial statements of Reach Media, beginning with its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2013. Given the redemption of the 2016 Notes in March 2014, the Company and its subsidiary guarantors filed a Form 15 under the Securities Exchange Act of 1934, as amended, with the Securities and Exchange Commission on March 18, 2014 with respect to its 2016 Notes. As the 2020 Notes are not registered, the Company will no longer be required to present expanded information with respect to Reach Media or the non-guarantor subsidiaries. Interest payments under the terms of the 63/8% Senior Subordinated Notes that matured in February 2013, were due in February and August. Based on the $747,000 principal balance of the 63/8% Senior Subordinated Notes outstanding at December 31, 2012, interest payments of $24,000 were paid each February and August through February 2013. Interest on the 121/2%/15% Senior Subordinated Notes, that the Company repurchased or otherwise redeemed in March 2014, was initially payable in cash, or at our election, partially in cash and partially through the issuance of additional 121/2%/15% Senior Subordinated Notes (a “PIK Election”) on a quarterly basis in arrears on February 15, May 15, August 15 and November 15, commencing on February 15, 2011. We made a PIK Election with respect to interest accruing up to but not including May 15, 2012. Beginning on May 15, 2012, interest accrued at a rate of 121/2% and was payable wholly in cash and the Company no longer had an option to pay any portion of its interest through the issuance of PIK Notes. During the period the PIK Election was in effect, the interest paid in cash and the interest paid-in-kind (“PIK”) by issuance of additional 121/2%/15% Senior Subordinated Notes due May 2016 (“PIK Notes”) accrued for such quarterly period at 6.0% cash per annum and 9.0% PIK per annum. The indenture that governs the 2020 Notes also contains covenants that restrict, among other things, the ability of the Company to incur additional debt, purchase common stock, make capital expenditures, make investments or other restricted payments, swap or sell assets, engage in transactions with related parties, secure non-senior debt with assets, or merge, consolidate or sell all or substantially all of its assets. TV One Senior Secured Notes TV One issued $119.0 million in senior secured notes on February 25, 2011. The proceeds from the notes were issued to purchase equity interests from certain financial investors and TV One management. The notes bear interest at 10.0% per annum, which is payable monthly, and the entire principal amount is due on March 15, 2016. The Company conducts a portion of its business through its subsidiaries. Certain of the Company’s subsidiaries have fully and unconditionally guaranteed the Company’s obligations under the 2020 Notes and the 2011 Credit Agreement, as amended. Future scheduled minimum principal payments of debt as of March 31, 2014, are as follows:
|  | Credit Facility |  | Senior Subordinated Notes due 2020 |  | TV One Senior Secured Notes |  | Total |
April – December 2014 |  | $ | 2,880 |  | $ | — |  | $ | — |  | $ | 2,880 |
2015 |  |  | 3,840 |  |  | — |  |  | — |  |  | 3,840 |
2016 |  |  | 365,776 |  |  | — |  |  | 119,000 |  |  | 484,776 |
2017 |  |  | — |  |  | — |  |  | — |  |  | — |
2018 |  |  | — |  |  | — |  |  | — |  |  | — |
2019 |  |  | — |  |  | — |  |  | — |  |  | — |
2020 |  |  | — |  |  | 335,000 |  |  | — |  |  | 335,000 |
Total Debt |  | $ | 372,496 |  | $ | 335,000 |  | $ | 119,000 |  | $ | 826,496 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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