iHeartMedia 2000 Annual Report Download - page 60

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60
Revenue Recognition
Radio broadcasting revenue is recognized as advertisements or programs are broadcast and is generally
billed monthly. Outdoor advertising provides services under the terms of contracts covering periods up to
three years, which are generally billed monthly. Revenue for outdoor advertising space rental is
recognized ratably over the term of the contract. Payments received in advance of billings are recorded as
deferred income. Entertainment revenue from the presentation and production of an event is recognized
on the date of the performance. Revenue collected in advance of the event is recorded as deferred income
until the event occurs. Entertainment revenue collected from advertising and other revenue, which is not
related to any single event, is classified as deferred revenue and generally amortized over the operating
season during the term of the contract.
Revenue from barter transactions is recognized when advertisements are broadcast or outdoor advertising
space is utilized. Merchandise or services received are charged to expense when received or used.
The Company believes that the credit risk, with respect to trade receivables is limited due to the large
number and the geographic diversification of its customers.
Interest Rate Protection Agreements
Periodically, the Company enters into interest rate swap agreements to modify the interest characteristics
of its outstanding debt. Each interest rate swap agreement is designated with all or a portion of the
principal balance and term of a specific debt obligation. These agreements involve the exchange of
amounts based on a fixed interest rate for amounts based on variable interest rates over the life of the
agreement without an exchange of the notional amount upon which the payments are based. The
differential to be paid or received as interest rate change is accrued and recognized as an adjustment to
interest expense related to the debt. The fair value of the swap agreements and changes in the fair value
as a result of changes in market interest rates are not recognized in these consolidated financial
statements.
Foreign Currency
Results of operations for foreign subsidiaries and foreign equity investees are translated into U.S. dollars
using the average exchange rates during the year. The assets and liabilities of those subsidiaries and
investees, other than those of operations in highly inflationary countries, are translated into U.S. dollars
using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a
separate component of shareholders’ equity, “Currency translation adjustment”. Foreign currency
transaction gains and losses, as well as gains and losses from translation of financial statements of
subsidiaries and investees in highly inflationary countries, are included in operations.
Stock Based Compensation
The Company accounts for its stock-based award plans in accordance with Accounting Principles Board
(“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, under
which compensation expense is recorded to the extent that the current market price of the underlying
stock exceeds the exercise price. Note J provides pro forma net income and pro forma earnings per share
disclosures as if the stock-based awards had been accounted for using the provisions of Statement of
Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation.