iHeartMedia 2011 Annual Report Download - page 18

U.S. Federal law neither requires nor prohibits the removal of existing lawful billboards, but it does mandate the payment
of compensation if a state or political subdivision compels the removal of a lawful billboard along the controlled roads. In the past,
state governments have purchased and removed existing lawful billboards for beautification purposes using Federal funding for
transportation enhancement programs, and these jurisdictions may continue to do so in the future. From time to time, state and local
government authorities use the power of eminent domain and amortization to remove billboards. Thus far, we have been able to
obtain satisfactory compensation for our billboards purchased or removed as a result of these types of governmental action, although
there is no assurance that this will continue to be the case in the future.
We have introduced and intend to expand the deployment of digital billboards that display static digital advertising copy
from various advertisers that change up to several times per minute. We have encountered some existing regulations in the U.S. and
across some international jurisdictions that restrict or prohibit these types of digital displays. However, since digital technology for
changing static copy has only recently been developed and introduced into the market on a large scale, and is in the process of being
introduced more broadly in our international markets, existing regulations that currently do not apply to digital technology by their
terms could be revised to impose greater restrictions. These regulations may impose greater restrictions on digital billboards due to
alleged concerns over aesthetics or driver safety.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
Our results have been in the past, and could be in the future, adversely affected by economic uncertainty or deteriorations in
economic conditions
Expenditures by advertisers tend to be cyclical, reflecting economic conditions and budgeting and buying patterns. Periods
of a slowing economy or recession, or periods of economic uncertainty, may be accompanied by a decrease in advertising. The global
economic downturn that began in 2008 resulted in a decline in advertising and marketing by our customers, which resulted in a
decline in advertising revenues across our businesses. This reduction in advertising revenues had an adverse effect on our revenue,
profit margins, cash flow and liquidity. Although we believe that global economic conditions are improving, economic conditions
remain uncertain. If economic conditions do not continue to improve, economic uncertainty increases or economic conditions
deteriorate again, global economic conditions may once again adversely impact our revenue, profit margins, cash flow and liquidity.
Furthermore, because a significant portion of our revenue is derived from local advertisers, our ability to generate revenues in specific
markets is directly affected by local and regional conditions, and unfavorable regional economic conditions also may adversely
impact our results. In addition, even in the absence of a downturn in general economic conditions, an individual business sector or
market may experience a downturn, causing it to reduce its advertising expenditures, which also may adversely impact our results.
We performed impairment tests on our goodwill and other intangible assets during the fourth quarter of 2011 and 2010 and
recorded non-cash impairment charges of $7.6 million and $15.4 million, respectively. Additionally, we performed impairment tests
in 2008 and 2009 on our indefinite-lived assets and goodwill and, as a result of the global economic downturn and the corresponding
reduction in our revenues, we recorded non-cash impairment charges of $5.3 billion and $4.1 billion, respectively. Although we
believe we have made reasonable estimates and used appropriate assumptions to calculate the fair value of our licenses, billboard
permits and reporting units, it is possible a material change could occur. If actual market conditions and operational performance for
the respective reporting units underlying the intangible assets were to deteriorate, or if facts and circumstances change that would
more likely than not reduce the estimated fair value of the indefinite-lived assets or goodwill for these reporting units below their
adjusted carrying amounts, we may also be required to recognize additional impairment charges in future periods, which could have a
material impact on our financial condition and results of operations.
To service our debt obligations and to fund capital expenditures, we will require a significant amount of cash to meet our needs,
which depends on many factors beyond our control
Our ability to service our debt obligations and to fund capital expenditures will require a significant amount of cash. Our
primary source of liquidity is cash flow from operations. Based on our current and anticipated levels of operations and conditions in
our markets, we believe that cash on hand as well as cash flow from operations will enable us to meet our working capital, capital
expenditure, debt service and other funding requirements for at least the next
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