iHeartMedia 2002 Annual Report Download - page 76

stock-based employee compensation. Statement 148 also amends the disclosure provisions of Statement 123 and Accounting Principals Board
Opinion No. 28, Interim Financial Reporting, to require disclosures in the summary of significant accounting policies of the effects of an
entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and
interim financial statements. Statement 148 does not amend Statement 123 to require companies to account for employee stock options using
the fair value method. The Company adopted the disclosure provisions required in Statement 148 and has provided the necessary disclosures
within Note A and further discussed within Note J.
NOTE B —INTANGIBLE ASSETS AND GOODWILL
On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
(“Statement 142”). Statement 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and
supersedes APB Opinion No. 17, Intangible Assets. Statement 142 establishes new accounting for goodwill and other intangible assets recorded
in business combinations. Under the new rules, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are
subject to annual impairment tests in accordance with the statement. Other intangible assets continue to be amortized over their useful lives.
The following table presents the impact of Statement 142 on net earnings (loss) and net earnings (loss) per share as if the standard had been in
effect for the two years ended December 31, 2001 and 2000:
(In thousands, except per share data)
D
efinite-lived Intangibles
The Company has definite-lived intangible assets recorded that continue to be amortized in accordance with Statement 142. These assets
consist primarily of transit and street furniture contracts and other contractual rights in the outdoor segment, talent and program right contracts
in the radio segment, and in the Company’s other segment, representation contracts for non-affiliated television and radio stations, all of which
are amortized over the respective lives of the agreements. Other definite-lived intangible assets are amortized over the period of time the assets
are expected to contribute directly or indirectly to the Company’s future cash flows. In accordance with the transitional requirements of
Statement 142, the Company reassessed the useful lives of these intangibles and made no material changes to their useful lives. The following
table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible asset at December 31,
2002 and 2001:
70
2001 2000
Adjusted net income (loss):
Reported net income (loss) $(1,144,026) $ 248,808
Add back: goodwill amortization 894,467 513,451
Add back: license amortization 888,781 411,395
Tax impac
t
(390,633)(209,652)
Adjusted net income $ 248,589 $ 964,002
Basic earnings (loss) per share:
Reported net income (loss) $ (1.93) $ .59
Add back: goodwill amortization 1.51 1.21
Add back: license amortization 1.50 .97
Tax impac
t
(.66)(.50)
Adjusted earnings per share- Basic $ .42 $ 2.27
Diluted earnings (loss) per share:
Reported net income (loss) $ (1.93) $ .57
Anti-dilutive adjustment .04 .03
Add back: goodwill amortization 1.48 1.11
Add back: license amortization 1.47 .89
Tax impac
t
(.65) (.46)
Adjusted earnings per share- Dilute
d
$.41 $2.14