iHeartMedia 2010 Annual Report Download - page 104

CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2010 and 2009 are as follows:
Included in the Company’s net deferred tax liabilities are $25.7 million and $19.6 million of current net deferred tax assets for 2010
and 2009, respectively. The Company presents these assets in “Other current assets” on its consolidated balance sheets. The
remaining $2.0 billion and $2.2 billion of net deferred tax liabilities for 2010 and 2009, respectively, are presented in “Deferred tax
liabilities” on the consolidated balance sheets.
For the year ended December 31, 2009, the Company recorded certain impairment charges that are not deductible for tax purposes
and resulted in a reduction of deferred tax liabilities of approximately $379.6 million. Additional decreases in net deferred tax
liabilities are a result of increases in deferred tax assets associated with current period net operating losses. The Company is able to
utilize those losses through either carrybacks to prior years as a result of the November 6, 2009 tax law change and expanded loss
carryback provisions provided by the Worker, Homeownership, and Business Assistance Act of 2009 (the “Act”) or based on our
expectations as to future taxable income from deferred tax liabilities that reverse in the relevant carryforward period for those net
operating losses that cannot be carried back. Increases in 2009 deferred tax liabilities of approximately $338.9 million are a result of
the deferral of certain discharge of indebtedness income, for income tax purposes, resulting from the reacquisition of business
indebtedness (see Note 7). These gains are allowed to be deferred for tax purposes and recognized in future periods beginning in 2014
through 2019, as provided by the American Recovery and Reinvestment Act of 2009 signed into law on February 17, 2009.
At December 31, 2010, net deferred tax liabilities include a deferred tax asset of $27.5 million relating to stock-based compensation
expense under ASC 718-10, Compensation—Stock Compensation. Full realization of this deferred tax asset requires stock options to
be exercised at a price equaling or exceeding the sum of the grant price plus the fair value of the option at the grant date and restricted
stock to vest at a price equaling or exceeding the fair market value at the grant date. Accordingly, there can be no assurance that the
stock price of the Company’s common stock will rise to levels sufficient to realize the entire tax benefit currently reflected in its
balance sheet.
The deferred tax liability related to intangibles and fixed assets primarily relates to the difference in book and tax basis of acquired
FCC licenses, permits and tax deductible goodwill created from the Company’s various stock acquisitions. In accordance with ASC
350-10, Intangibles—Goodwill and Other, the Company does not amortize FCC licenses and permits. As a result, this deferred tax
liability will not reverse over time unless the Company recognizes future impairment charges related to its FCC licenses, permits and
tax deductible goodwill or sells its FCC licenses or permits. As the Company continues to amortize its tax basis in its FCC licenses,
permits and tax deductible goodwill, the deferred tax liability will increase over time.
95
(In thousands)
201
0
2009
Deferred tax liabilities:
Intan
g
ibles and fixed assets $2,202,702 $2,074,925
Lon
g
-term debt 523,846 530,519
Forei
g
n 55,102 62,661
Investments in nonconsolidated affiliates 48,88
0
36,955
Other investments
7,012 18,067
Other 18,488 17,31
0
Total deferred tax liabilities 2,856,030 2,740,437
Deferred tax assets:
Accrued ex
p
enses 123,225 117,041
Unrealized
g
ain in marketable securities 22,229 22,126
Net o
p
eratin
g
losses 658,352 365,208
Bad debt reserves 12,244 11,055
Deferred Income
70
0
717
Other 32,241 27,701
Total
g
ross deferred tax assets 848,991 543,848
Less: Valuation allowance 17,434 3,854
Total deferred tax assets 831,557 539,994
Net deferred tax liabilities $2,024,473 $2,200,443