iHeartMedia 2006 Annual Report Download - page 71

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71
Goodwill
The Company tests goodwill for impairment using a two-step process. The first step, used to screen for potential
impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. The second
step, used to measure the amount of the impairment loss, compares the implied fair value of the reporting unit
goodwill with the carrying amount of that goodwill. The following table presents the changes in the carrying
amount of goodwill in each of the Company’s reportable segments for the years ended December 31, 2005 and
2006:
(In thousands)
Radio
Americas
Outdoor
International
Outdoor
Other
Total
Balance as of December 31, 2004 $ 6,325,598 $ 398,065 $ 389,629 $ 29,139 $ 7,142,431
Acquisitions 7,497 1,896 4,407 2,957 16,757
Foreign currency ― ― (50,232) ― (50,232)
Adjustments (55,285) 6,003 (193) 8,883 (40,592)
Balance as of December 31, 2005 6,277,810 405,964 343,611 40,979 7,068,364
Acquisitions 42,761 249,527 42,222 8,084 342,594
Dispositions (10,532) (1,913) ― ― (12,445)
Foreign currency ― 14,085 40,109 ― 54,194
Adjustments (2,872) 323 (312) 5 (2,856)
Balance as of December 31, 2006 $ 6,307,167 $ 667,986 $ 425,630 $ 49,068 $ 7,449,851
Included in the Americas’ acquisitions amount above is $148.6 million related to the acquisition of Interspace, all of
which is expected to be deductible for tax purposes.
NOTE D - BUSINESS ACQUISITIONS
2006 Acquisitions
CCO completed the acquisition of Interspace on July 1, 2006, by issuing 4.2 million shares of CCO’s Class A
common stock and the payment of approximately $81.3 million. The acquisition was valued at approximately
$170.4 million based on CCO’s common shares issued at the closing share price on the date of acquisition and the
cash consideration paid. The terms of the acquisition provide for additional consideration based on Interspace’s
financial performance. As a result, the Company has accrued $20.9 million of additional purchase consideration as
of December 31, 2006. Interspace’s 2005 revenues and operating expenses (excluding depreciation and
amortization) were approximately $45.8 million and $32.5 million, respectively.
The Company acquired radio stations for $16.4 million and a music scheduling company for $44.3 million in cash
plus $10.0 million of deferred purchase consideration during the year ended December 31, 2006. The Company
also acquired Americas and international outdoor display faces and additional equity interests in international
outdoor companies for $242.4 million in cash, which includes cash paid for Interspace. The Company exchanged
assets in one of its Americas outdoor markets for assets located in a different market and recognized a gain of $13.2
million in “Gain on disposition of assets - net”. In addition, the Company’s national representation firm acquired
representation contracts for $38.1 million in cash and its television business acquired a station for $21.0 million in
cash.
2005 Acquisitions
During 2005 the Company acquired radio stations for $12.5 million in cash. The Company also acquired Americas
outdoor display faces for $113.2 million in cash. The Company’s international outdoor segment acquired display
faces for $17.1 million and increased its investment to a controlling majority interest in Clear Media Limited for
$8.9 million. Clear Media is a Chinese outdoor advertising company and as a result of consolidating its operations
during the third quarter of 2005, the acquisition resulted in an increase in the Company’s cash of $39.7 million.
Also, the Company’s national representation business acquired new contracts for a total of $47.7 million and the
Company’s television business acquired a television station for $5.5 million.