iHeartMedia 2007 Annual Report Download - page 77

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growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during
the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information
representing an average station within a market.
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 Company’s reporting units for
radio broadcasting and Americas outdoor advertising are the reportable segments. The Company determined that each country in its
International outdoor segment constitutes a reporting unit and therefore tests goodwill for impairment at the country level. 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, 2006
and 2007:
Included in the Americas’ acquisitions amount above in 2006 is $148.6 million related to the acquisition of Interspace, all of which is expected
to be deductible for tax purposes.
In 2007, the Company recorded a $97.4 million adjustment to its balance of goodwill related to tax positions established as part of various radio
station acquisitions for which the IRS audit periods have now closed.
NOTE D — BUSINESS ACQUISITIONS
2007 Acquisitions
The Company acquired domestic outdoor display faces and additional equity interests in international outdoor companies for $69.1 million in
cash during 2007. The Company’s national representation business acquired representation contracts for $53.0 million in cash during 2007.
2006 Acquisitions
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 2006. The Company also acquired Interspace Airport Advertising, Americas and international outdoor
display faces and additional equity interests in international outdoor companies for $242.4 million in cash. 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.
2005 Acquisitions
During 2005 the Company acquired radio stations for $3.6 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
76
Americas International
(In thousands) Radio Outdoor Outdoor Other Total
Balance as of December 31, 2005 $5,948,384 $405,964 $343,611 —$6,697,959
Acquisitions 42,761 249,527 42,222 — 334,510
Dispositions (10,532)(1,913) — — (12,445)
Foreign currency — 14,085 40,109 — 54,194
Adjustments (2,872)323 (312) 578 (2,283)
Balance as of December 31, 2006 5,977,741 667,986 425,630 578 7,071,935
Acquisitions 5,608 20,361 13,733 1,994 41,696
Dispositions (4,909) — — — (4,909)
Foreign currency
—
78 35,430 — 35,508
Adjustments (96,720) (89) (540)
—(97,349)
Balance as of December 31, 2007 $5,881,720 $688,336 $474,253 $ 2,572 $7,046,881