iHeartMedia 2001 Annual Report Download - page 73

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revenue, which is not related to any single event, is classified as deferred revenue and generally
amortized over the operating season and the term of the contract.
Revenue from barter transactions is recognized when advertisements are broadcast or outdoor advertising
space is utilized. Merchandise or services received are charged to expense when received or used.
The Company believes that the credit risk, with respect to trade receivables is limited due to the large
number and the geographic diversification of its customers.
Interest Rate Protection Agreements
Periodically, the Company enters into interest rate swap agreements to modify the interest characteristics
of its outstanding debt. Each interest rate swap agreement is designated with all or a portion of the
principal balance and term of a specific debt obligation. These agreements involve the exchange of
amounts based on a fixed interest rate for amounts based on variable interest rates over the life of the
agreement without an exchange of the notional amount upon which the payments are based. The
differential to be paid or received as interest rates change is accrued and recognized as an adjustment to
interest expense related to the debt. The fair value of the swap agreements and changes in the fair value
as a result of changes in market interest rates are recognized in these consolidated financial statements.
Foreign Currency
Results of operations for foreign subsidiaries and foreign equity investees are translated into U.S. dollars
using the average exchange rates during the year. The assets and liabilities of those subsidiaries and
investees, other than those of operations in highly inflationary countries, are translated into U.S. dollars
using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a
separate component of shareholders’ equity, “Accumulated other comprehensive income (loss)”. Foreign
currency transaction gains and losses, as well as gains and losses from translation of financial statements
of subsidiaries and investees in highly inflationary countries, are included in operations.
Stock Based Compensation
The Company accounts for its stock-based award plans in accordance with Accounting Principles Board
(“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, under
which compensation expense is recorded to the extent that the current market price of the underlying
stock exceeds the exercise price. Note H provides pro forma net income (loss) and pro forma earnings
(loss) per share disclosures as if the stock-based awards had been accounted for using the provisions of
Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based
Compensation.
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
On January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities ("Statement 133"), as amended. Statement
133 requires that all derivative instruments be reported on the balance sheet at fair value and establishes
criteria for designation and effectiveness of hedging relationships. Upon adoption, the Company recorded
the fair value of its derivative instruments on its balance sheet. Adoption of Statement 133 had no impact
on the Company's results of operations. Also upon adoption, the Company reclassified 2.0 million shares