iHeartMedia 2004 Annual Report Download - page 55

If actual results are not consistent with our assumptions and estimates, we may be exposed to impairment charges in the future. If our
assumption on market revenue growth rate decreased 10%, our non-cash charge, net of tax, would increase $61.2 million. Similarly, if our
assumption on market revenue growth rate increased 10%, our non-cash charge, net of tax, would decrease $62.0 million.
Accounting for Investments
At December 31, 2004, we had $387.6 million recorded as other investments. Other investments are composed primarily of equity
securities. These securities are classified as available-for-sale or trading and are carried at fair value based on quoted market prices. Securities
are carried at historical value when quoted market prices are unavailable. The net unrealized gains or losses on available-for-sale securities, net
of tax, are reported as a separate component of shareholders’ equity. The net unrealized gains or losses on trading securities are reported in the
statement of operations. In addition, we hold investments that do not have quoted market prices. We review the value of these investments and
record an impairment charge in the statement of operations for any decline in value that is determined to be other-than-temporary. We recorded
no impairment charges during the year ended December 31, 2004. We recorded an impairment charge of $7.0 million during the year ended
December 31, 2003, related to other-than-temporary declines in value of various media companies. In addition, at December 31, 2004, we had
$395.4 million recorded as investments accounted for under the equity method. We review the value of these investments and record an
impairment charge in the statement of operations for any decline in value that is determined to be other-than-temporary.
Tax Accruals
The Internal Revenue Service and other taxing authorities routinely examine our tax returns. From time to time, the IRS challenges certain
of our tax positions. We believe our tax positions comply with applicable tax law and we would vigorously defend these positions if
challenged. The final disposition of any positions challenged by the IRS could require us to make additional tax payments. We believe that we
have adequately accrued for any foreseeable payments resulting from tax examinations and consequently do not anticipate any material impact
upon their ultimate resolution.
The estimate of our tax accruals contains uncertainty because management uses judgment to estimate the exposure associated with our
various filing positions.
Although management believes that our estimates and judgments are reasonable, actual results could differ, and we may be exposed to gains
or losses that could be material. To the extent there are changes in the expected outcome of tax examinations, our effective tax rate in a given
financial statement period could be materially affected.
Litigation Accruals
We are currently involved in certain legal proceedings and, as required, have accrued our estimate of the probable costs for the resolution of
these claims.
Management’s estimates used have been developed in consultation with counsel and are based upon an analysis of potential results,
assuming a combination of litigation and settlement strategies.
It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions
or the effectiveness of our strategies related to these proceedings.
Insurance Accruals
We are currently self-insured beyond certain retention amounts for various insurance coverages, including general liability and property and
casualty. Accruals are recorded based on estimates of actual claims filed, historical payouts, existing insurance coverage and projections of
future development of costs related to existing claims.
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