iHeartMedia 2007 Annual Report Download - page 68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A — SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Clear Channel Communications, Inc., (the “Company”) incorporated in Texas in 1974, is a diversified media company with three principal
business segments: radio broadcasting, Americas outdoor advertising and international outdoor advertising. The Company’s radio broadcasting
segment owns, programs and sells airtime generating revenue from the sale of national and local advertising. The Company’s Americas and
international outdoor advertising segments own or operate advertising display faces domestically and internationally.
Merger
The Company’s shareholders approved the adoption of the Merger Agreement, as amended, with a group led by Thomas H. Lee Partners, L.P.
and Bain Capital Partners, LLC on September 25, 2007. The transaction remains subject to customary closing conditions.
Under the terms of the Merger Agreement, as amended, the Company’s shareholders will receive $39.20 in cash for each share they own plus
additional per share consideration, if any, as the closing of the merger will occur after December 31, 2007. For a description of the computation
of any additional per share consideration and the circumstances under which it is payable, please refer to the joint proxy statement/prospectus
dated August 21, 2007, filed with the Securities & Exchange Commission (the “Proxy Statement”). As an alternative to receiving the $39.20
per share cash consideration, the Company’s unaffiliated shareholders were offered the opportunity on a purely voluntary basis to exchange
some or all of their shares of Clear Channel common stock on a one-for-one basis for shares of Class A common stock in CC Media Holdings,
Inc., the new corporation formed by the private equity group to acquire the Company (subject to aggregate and individual caps), plus the
additional per share consideration, if any.
Holders of shares of the Company’s common stock (including shares issuable upon conversion of outstanding options) in excess of the
aggregate cap provided in the Merger Agreement, as amended, elected to receive the stock consideration. As a result, unaffiliated shareholders
of the Company will own an aggregate of 30.6 million shares of CC Media Holdings Inc. Class A common stock upon consummation of the
merger.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts have been
eliminated in consolidation. Investments in nonconsolidated affiliates are accounted for using the equity method of accounting.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.
Allowance for Doubtful Accounts
The Company evaluates the collectibility of its accounts receivable based on a combination of factors. In circumstances where it is aware of a
specific customer’s inability to meet its financial obligations, it records a specific reserve to reduce the amounts recorded to what it believes
will be collected. For all other customers, it recognizes reserves for bad debt based on historical experience of bad debts as a percent of revenue
for each business unit, adjusted for relative improvements or deteriorations in the agings and changes in current economic conditions. The
Company believes its concentration of credit risk is limited due to the large number and the geographic diversification of its customers.
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