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IHEARTCOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
83
Each of the Company’s reporting units is valued using a discounted cash flow model which requires estimating future cash flows
expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values
were also estimated and discounted to their present value. Assessing the recoverability of goodwill requires the Company to make
estimates and assumptions about sales, operating margins, growth rates and discount rates based on its budgets, business plans,
economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and
management’s judgment in applying these factors.
In 2014, the Company concluded no goodwill impairment was required. In 2013, the Company concluded no goodwill impairment
was required for iHM and Americas outdoor. Based on declining future cash flows expected in one country in the International
outdoor segment, the Company recognized a non-cash impairment charge to goodwill of $10.7 million. The Company recognized no
goodwill impairment for the year ended December 31, 2012.
The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments:
(In thousands)
iHM
Americas Outdoor
Advertising
International
Outdoor
Advertising
Other
Consolidated
Balance as of December 31, 2012
$
3,236,688
$
571,932
$
290,316
$
117,149
$
4,216,085
Impairment
-
-
(10,684)
-
(10,684)
Acquisitions
-
-
-
97
97
Dispositions
-
-
(456)
-
(456)
Foreign currency
-
-
(974)
-
(974)
Other
(1,881)
-
-
-
(1,881)
Balance as of December 31, 2013
$
3,234,807
$
571,932
$
278,202
$
117,246
$
4,202,187
Acquisitions
17,900
-
-
299
18,199
Foreign currency
-
-
(33,022)
-
(33,022)
Other
60
-
-
-
60
Balance as of December 31, 2014
$
3,252,767
$
571,932
$
245,180
$
117,545
$
4,187,424
The balance at December 31, 2012 is net of cumulative impairments of $3.5 billion, $2.6 billion, $315.9 million and $212.0 million in
the Company’s iHM, Americas outdoor, International outdoor and Other segments, respectively.
NOTE 3 – INVESTMENTS
The Company’s most significant investments in nonconsolidated affiliates are listed below:
Australian Radio Network
The Company owned a fifty-percent (50%) interest in Australian Radio Network (“ARN”), an Australian company that owns and
operates radio stations in Australia and New Zealand. An impairment charge of $95.4 million was recorded during the fourth quarter
of 2013 to write down the investment to its estimated fair value. On February 18, 2014, a subsidiary of the Company sold its 50%
interest in ARN, recognizing a loss on the sale of $2.4 million and $11.5 million of foreign exchange losses that were reclassified from
accumulated other comprehensive income at the date of the sale.
Buspak
The Company owned a 50% interest in Buspak, a bus advertising company in Hong Kong. On July 18, 2014, a subsidiary of the
Company sold its 50% interest in Buspak, recognizing a gain on the sale of $4.5 million.
The following table summarizes the Company's investments in nonconsolidated affiliates: