R.H. Donnelley 1998 Annual Report

Notes to Consolidated Financial Statements

7. Long-term Debt and Credit Facilities

Long-term debt at December 31, 1998, consisted of the following:

All long-term debt was incurred on June 5, 1998, in connection with the Distribution. Accordingly, no long-term debt was outstanding at December 31, 1997. In connection with the issuance of long-term debt, the Company incurred deferred financing costs of $9,592, which are being amortized over the term of the debt. During 1998, $793 was amortized and included in interest expense.

The Senior Subordinated Notes (the "Notes") pay interest semi-annually and mature in 2008. The Notes Indenture contains covenants which, among other things, restricts the ability of the Company and its subsidiary to incur certain additional debt and liens and engage in mergers, consolidations and asset sales. The Notes are callable at the option of the Company at any time on or after June 1, 2003.

The Company's committed bank facilities consist of an aggregate $300,000 Senior Secured Term Facilities ("Term Facilities") and a $100,000 Senior Revolving Credit Facility (the "Revolver"). The Term Facilities require quarterly principal repayments and mature between June 2004 and December 2006. The Revolver matures in June 2004. These facilities bear interest at a floating rate based on a spread over London interbank offered rate (LIBOR) or the greater of either the Prime rate or the Fed Funds rate plus 50 basis points, at the election of the Company. The committed facilities contain covenants that, among other things, restrict the ability of the Company and its subsidiary to engage in mergers, consolidations and asset sales, incur additional indebtedness and liens and require the Company to maintain certain financial ratios. At December 31, 1998, the Company had $318,625 of outstanding debt under the Term Facilities and Revolver at a weighted average interest rate of 7.1% per annum. At December 31, 1998, the Company had available borrowing capacity of $80,250 under the Revolver.

Aggregate maturities of long-term debt are:

At December 31, 1998, interest payable of $11,392 was recorded in the financial statements as a component of accrued and other current liabilities. Cash interest paid for the period ended December 31, 1998, totaled $15,866.

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