iHeartMedia 2000 Annual Report Download - page 61

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61
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 133 Accounting for Derivative Instruments and Hedging Activities (“Statement 133”).
Statement 133 establishes new rules for the recognition and measurement of derivatives and hedging
activities. Statement 133 is amended by Statement 137 Accounting for Derivative Instruments and
Hedging Activities – Deferral of the Effective Date of FASB Statement No. 133, and Statement 138
Accounting for Derivative Instruments and Hedging Activities (an amendment to Statement 133), is
effective for years beginning after June 15, 2000. The Company adopted this statement January 1, 2001.
Had the Company elected early adoption of Statement 133, total assets and long-term debt at December
31, 2000 would have increased $49.0 million each. As part of the adoption of Statement 133 on January
1, 2001, the Company reclassified 2.0 million shares of its investment in American Tower Corporation
that had been classified as available -for-sale securities under Financial Accounting Standards No. 115
Accounting for Certain Investments in Debt and Equity Securities (“Statement 115”) to a trading
securities classification. In accordance with Statement 115 and Statement 133, on January 1, 2001, the
shares were transferred to a trading classification at their fair market value of $76.2 million, and an
unrealized holdin g gain of $69.7 million was recognized in earnings.
In December 1999, the SEC issued Staff Accounting Bulletin 101, Revenue Recognition in Financial
Statements, (“SAB 101”). The bulletin summarizes certain of the SEC staff’ s views in applying generally
accepted accounting principles to revenue recognition. SAB 101, as amended through June 26, 2000 is
required to be implemented in the fourth quarter of 2000. Accordingly, the Company has implemented
SAB 101 in the financial statements filed herewith. Implementation of this statement did not materially
impact the financial position or results of operations of the Company.
In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44.
"Accounting for Certain Transactions involving Stock Compensation" ("FIN 44"). FIN 44 provides
guidance for issues arising in applying APB Opinion No. 25 "Accounting for Stock Issued to Employees."
FIN 44 applies specifically to new awards, exchanges of awards in a business combination, modification
to outstanding awards, and changes in grantee status that occur on or after July 1, 2000, except for the
provisions related to repricings and the definition of an employee which apply to awards issued after
December 15, 1998. The requirements of FIN 44 are consistent with the Company's existing accounting
policies.
NOTE B - BUSINESS ACQUISITIONS
2000 Acquisitions:
Ackerley’s South Florida Outdoor Advertising Division
On January 5, 2000, the Company closed its acquisition of Ackerley’ s South Florida outdoor advertising
division (“Ackerley”) for $300.2 million. The Company funded the acquisition with advances on its
credit facilities. The acquisition was accounted for as a purchase, with resulting goodwill of
approximately $208.3 million, which is being amortized over 25 years on a straight-line basis. The
results of operations of Ackerley have been included in the financial statements of the Company