iHeartMedia 2003 Annual Report Download - page 52

goodwill. No impairment charges resulted from these tests. We may incur additional impairment charges in future periods under Statement 142
to the extent we do not achieve our expected cash flow growth rates, and to the extent that market values and long-term interest rates in general
decrease and increase, respectively.
Accounting for Investments
At December 31, 2003, we had $926.4 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. For the years
ended December 31, 2003 and 2002, we recorded impairment charges of $7.0 million and $25.3 million, respectively, related to other-than-
temporary declines in value of various media companies. In addition, at December 31, 2003, we had $353.1 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. 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 impacted.
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. These estimates 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 currently are 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.
Inflation
Inflation has affected our performance in terms of higher costs for wages, salaries and equipment. Although the exact impact of inflation is
indeterminable, we believe we have offset these higher costs by increasing the effective advertising rates of most of our broadcasting stations
and outdoor display faces.
RatioofEarningstoFixedCharges
The ratio of earnings to fixed charges is as follows:
52
Year Ended December 31,
2003 2002 2001 2000 1999
3.62 2.62 * 2.20 2.04
* For the year ended December 31, 2001, fixed charges exceeded earnings before income taxes and fixed charges by $1.3 billion.