iHeartMedia 2002 Annual Report Download - page 80

Company’s common shares issued, which were at the average share price at the signing of the merger agreement, the historical cost of the
Ackerley shares held prior to the merger date and the fair value of the employee stock options at the merger date. In addition, the Company
assumed all of Ackerley’s outstanding debt, which had a fair value of $319.0 million at the merger date. The Company refinanced Ackerley’s
credit facility and made a tender offer for Ackerley’s public debt concurrent with the merger. The tender offer was finalized on July 3, 2002 at
a price of $1,129 per $1,000 tendered, resulting in the repurchase of substantially all of Ackerley’s public debt.
This merger resulted in the recognition of approximately $361.0 million of goodwill. The goodwill was recorded as a result of the benefit to the
existing inter-divisional and intra-divisional opportunities that the Company expects from the combined assets. The acquisition helps complete
the Company’s national platform and is expected to provide more efficient and cost-effective ways for the Company’s clients to reach
consumers. Therefore, the Company believes that combining Ackerley’s assets with the Company’s assets provides greater value than
operating Ackerley’s assets on a stand-alone basis.
Ackerley operates approximately 6,000 outdoor displays in the Boston, Seattle and Portland, Oregon metropolitan markets. In addition,
Ackerley owns the FCC licenses of 16 television stations and provides some or all of the programming and sales for two other television
stations. Ackerley also owns four radio stations in Seattle and provides sales and other services to one additional radio station. The merger
allows the Company to enter Boston, Seattle and Portland, Oregon, three of the top 25 U.S. outdoor advertising markets. Seattle is also a top 25
U.S. radio market where the Company had no presence. In addition, the acquisition enables the Company to offer advertisers more cross-
platform advertising opportunities, as the Company has radio broadcasting operations, outdoor advertising operations or live entertainment
venue presence in 15 of Ackerley’s 18 television markets.
The following table summarizes the estimated fair value of Ackerley’s assets acquired and liabilities assumed at the date of merger. This
purchase price allocation is preliminary pending completion of third-party appraisals and other fair value analysis of assets and liabilities.
(In thousands)
Included in intangible assets is approximately $229.4 million and $194.8 million, for FCC licenses and billboard permits, respectively, which
are not subject to amortization and $.5 million of definite-lived intangibles. Also included in intangible assets is $361.0 million of goodwill, of
which $.4 million, $358.9 million, and $1.7 million was assigned to the radio, outdoor and other reporting segments, respectively.
The results of operations for the year ended December 31, 2002 include the operations of Ackerley from June 14, 2002. Unaudited pro forma
consolidated results of operations, assuming the Ackerley acquisition had occurred on January 1, 2001 would have been as follows:
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June 14, 2002
Current assets $53,645
Property, plant and equipment 142,736
Intangible assets 785,724
Other assets 16,318
Total Assets Acquired $998,423
Current liabilities (67,485)
Long-term debt (318,970)
Deferred income taxes (94,525)
Other long-term liabilities (24,443)
Total Liabilities Assumed (505,423)
Net Assets Acquire
d
$493,000