iHeartMedia 2009 Annual Report Download - page 33

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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ntroduction
As permitted by the rules and regulations of the SEC, the financial statements and related footnotes included in Item 6 and
Item 8 of Part II of this report are those of Clear Channel Capital I, LLC (“Clear Channel Capital”), the direct parent of Clear Channel
Communications, Inc., a Texas corporation (“Clear Channel” or “Subsidiary Issuer”), and contain certain footnote disclosures
regarding the financial information of Clear Channel and Clear Channel’s domestic wholly-owned subsidiaries that guarantee certain
of Clear Channel’s outstanding indebtedness. All other financial information and other data and information contained in this report
are that of Clear Channel, unless otherwise indicated. Accordingly, all references in Item 6 and Item 7 of this report to “we,” “us” and
“our” refer to Clear Channel and its consolidated subsidiaries.
Consummation of Merger
CC Media Holdings (“CCMH”) was formed in May 2007 by private equity funds sponsored by Bain Capital Partners, LLC
and Thomas H. Lee Partners, L.P. (together, the “Sponsors”) for the purpose of acquiring the business of Clear Channel. The
acquisition was completed pursuant to the Agreement and Plan of Merger, dated November 16, 2006, as amended on April 18,
2007, May 17, 2007 and May 13, 2008. As a result of the merger, each issued and outstanding share of our common stock, other than
shares held by certain of our principals that were rolled over and exchanged for shares of CCMH’s Class A common stock, was either
exchanged for (i) $36.00 in cash consideration or (ii) one share of CCMH’s Class A common stock.
CCMH accounted for its acquisition of Clear Channel as a purchase business combination in conformity with Statement of
Financial Accounting Standards No. 141, Business Combinations, and Emerging Issues Task Force Issue 88-16, Basis in Leveraged
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uyout Transactions. CCMH allocated a portion of the consideration paid to the assets and liabilities acquired at their respective fair
values with the remaining portion recorded at the continuing shareholders’ basis. Excess consideration after this allocation was
recorded as goodwill.
During the first seven months of 2009, we decreased the initial fair value estimate of our permits, contracts, site leases and
other assets and liabilities primarily in our Americas segment by $116.1 million based on additional information received, which
resulted in an increase to goodwill of $71.7 million and a decrease to deferred taxes of $44.4 million. During the third quarter of
2009, we adjusted deferred taxes by $44.3 million to true-up our tax rates in certain jurisdictions that were estimated in the initial
purchase price allocation. Also, during the third quarter of 2009, we recorded a $45.0 million increase to goodwill in our International
outdoor segment related to the fair value of certain noncontrolling interests which existed at the merger date, with no related tax
effect. This noncontrolling interest was recorded pursuant to ASC 480-10-S99 which determines the classification of redeemable
noncontrolling interests. We subsequently determined that the increase in goodwill related to these noncontrolling interests should
have been included in the impairment charge resulting from the December 31, 2008 interim goodwill impairment test. As a result,
during the fourth quarter of 2009, we impaired this entire goodwill amount, which after considering the effects of foreign exchange
movements, was $41.4 million.
The purchase price allocation was complete as of July 30, 2009 in accordance with ASC 805-10-25, which requires that the
allocation period not exceed one year from the date of acquisition.
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(3) We recorded non-cash impairment charges of $4.1 billion in 2009 and $5.3 billion in 2008 as a result of the global
economic downturn which adversely affected advertising revenues across our businesses, as discussed more fully in
Item 7.
(4) Includes the results of operations of our live entertainment and sports representation businesses, which we spun-off on
December 21, 2005, our television business, which we sold on March 14, 2008, and certain of our non-core radio stations.
(5) Excludes the property, plant and equipment – net of our live entertainment and sports representation businesses, which we
spun-off on December 21, 2005.