iHeartMedia 2004 Annual Report Download - page 52

for the year ended December 31, 2004. It is estimated that a 10% change in the value of the U.S. dollar to foreign currencies would change net
income for the year ended December 31, 2004 by $1.7 million.
Our earnings are also affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies as a result of our investments
in various countries, all of which are accounted for under the equity method. It is estimated that the result of a 10% fluctuation in the value of
the dollar relative to these foreign currencies at December 31, 2004 would change our 2004 equity in earnings of nonconsolidated affiliates by
$2.5 million and would change our net income for the year ended December 31, 2004 by approximately $1.6 million.
This analysis does not consider the implications that such fluctuations could have on the overall economic activity that could exist in such
an environment in the U.S. or the foreign countries or on the results of operations of these foreign entities.
Recent Accounting Pronouncements
The SEC staff made Staff Announcement No. D-108, Use of the Residual Method to Value Acquired Assets Other Than Goodwill (“D-
108”), at the September 2004 meeting of the Emerging Issues Task Force (“EITF”). D-108 states that the residual method should no longer be
used to value intangible assets other than goodwill. Rather, a direct method should be used to determine the fair value of all intangible assets
required to be recognized under Statement of Financial Accounting Standards No. 141, Business Combinations. Registrants who have applied
the residual method to the valuation of intangible assets for purposes of impairment testing under Statement of Financial Accounting Standards
No 142, Goodwill and Other Intangible Assets, shall perform an impairment test using a direct value method on all intangible assets that were
previously valued using the residual method by no later than the beginning of their first fiscal year beginning after December 15, 2004. We
adopted D-108 for our fiscal year ended December 31, 2004. As a result of adoption, we recorded a non-cash charge of $4.9 billion, net of
deferred taxes of $3.0 billion, as a cumulative effect of a change in accounting principle during the fourth quarter of 2004.
In December 2004 the Financial Accounting Standards Board, (“FASB”) issued FASB Statement No. 153, Exchanges of Nonmonetary
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ssets, an amendment of APB Opinion No. 29 (“Statement 153”). Statement 153 eliminates the APB 29 exception for nonmonetary exchanges
of similar productive assets and replaces it with an exception for exchanges of nonmonetary assets that do not have commercial substance.
Statement 153 is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for
nonmonetary asset exchanges occurring in fiscal periods beginning after the date of issuance. The provisions of Statement 153 should be
applied prospectively. We expect to adopt Statement 153 for our fiscal year beginning January 1, 2006 and we do not believe that adoption will
materially impact our financial position or results of operations.
In December 2004, the FASB issued FSP 109-2, Accounting and Disclosure Guidance for the Foreign Repatriation Provision within the
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merican Jobs Creation Act of 2004 (“FSP 109-2”). FSP 109-2 allows an enterprise additional time beyond the financial reporting period in
which the Act was enacted to evaluate the effects of the Act on its plans for repatriation of unremitted earnings for purposes of applying FASB
Statement 109, Accounting for Income Taxes. FSP 109-2 clarifies that an enterprise is required to apply the provisions of Statement 109 in the
period, or periods, it decides on its plan(s) for reinvestment or repatriation of its unremitted foreign earnings. FSP 109-2 requires disclosure if
an enterprise is unable to reasonably estimate, at the time of issuance of its financial statements, the related range of income tax effects for the
potential range of foreign earnings that it may repatriate and requires an enterprise to recognize income tax expense (benefit) if an enterprise
decides to repatriate a portion of unremitted earnings under the repatriation provision while it is continuing to evaluate the effects of the
repatriation provision for the remaining portion of the unremitted foreign earnings. FSP 109-2 is effective upon issuance.We currently have
the ability and intent to reinvest any undistributed earnings of our foreign subsidiaries. Any impact from this legislation has not been reflected
in the amounts shown since we are reinvested for the foreseeable future.
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