iHeartMedia 2011 Annual Report Download - page 63

On October 1, 2011, we performed our annual impairment test in accordance with ASC 350-20-35 and recognized an
impairment charge of $1.1 million related to one country in our International outdoor segment. We utilized the option to assess
qualitative factors to determine whether it was more likely than not that the fair value of our reporting units was less than their
carrying amounts, including goodwill. As part of our qualitative assessment, we considered the following factors:
Generally, the qualitative factors for our reporting units indicated stable or improving margins despite economic
conditions, new contracts, no adverse business or management changes, favorable or stable forecasted economic conditions and the
existence of excess fair value over carrying value for the majority of our reporting units. Based on our annual assessment using the
qualitative factors described above, we determined that it was not more likely than not that the fair value of our CCME reporting unit
was less than its carrying amount. As a result, further testing of goodwill for impairment was not required for this reporting unit. Our
assessment for the reporting units within our Americas outdoor segment required further testing of goodwill for impairment in one
country while our assessment for the reporting units within our International outdoor segment required further testing for three
countries. Further testing indicated that goodwill was impaired by $1.1 million in one country within our International outdoor
segment in 2011.
We believe we have made reasonable estimates and utilized appropriate assumptions to evaluate whether it was more likely
than not that the fair value of our reporting units was less than their carrying values. If future results are not consistent with our
assumptions and estimates, we may be exposed to impairment charges in the future.
Tax Accruals
Our estimates of income taxes and the significant items giving rise to the deferred tax assets and liabilities are shown in the
notes to our consolidated financial statements and reflect our assessment of actual future taxes to be paid on items reflected in the
financial statements, giving consideration to both timing and probability of these estimates. Actual income taxes could vary from
these estimates due to future changes in income tax law or results from the final review of our tax returns by Federal, state or foreign
tax authorities. We use our judgment to determine whether it is more likely than not that we will sustain positions that we have taken
on tax returns and, if so, the amount of benefit to initially recognize within our financial statements. We regularly review our
uncertain tax positions and adjust our unrecognized tax benefits (UTBs) in light of changes in facts and circumstances, such as
changes in tax law, interactions with taxing authorities and developments in case law. These adjustments to our UTBs may affect our
income tax expense. Settlement of uncertain tax positions may require use of our cash.
Litigation Accruals
We are currently involved in certain legal proceedings. Based on current assumptions, we have accrued an estimate of the
probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably
estimated. Future results of operations could be materially affected by changes in these assumptions or the effectiveness of our
strategies related to these proceedings.
Management’s estimates used have been developed in consultation with counsel and are based upon an analysis of
potential results, assuming a combination of litigation and settlement strategies.
Insurance Accruals
We are currently self-insured beyond certain retention amounts for various insurance coverages, including general liability
and property and casualty. Accruals are recorded based on estimates of actual claims filed, historical payouts, existing insurance
coverage and projected future development of costs related to existing claims. Our self-insured liabilities contain uncertainties
because management must make assumptions and apply judgment to estimate the ultimate cost to settle reported claims and claims
incurred but not reported as of December 31, 2011.
If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be
material. A 10% change in our self-insurance liabilities at December 31, 2011 would have affected our net loss by approximately $2.3
million for the year ended December 31, 2011.
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macroeconomic characteristics of the environment in which the reporting unit operates;
an
y
si
g
nificant chan
g
es in the business’
p
roducts, o
p
eratin
g
model or laws or re
g
ulations;
an
y
si
g
nificant chan
g
es in the business’ cost structure and/or mar
g
in trends;
com
p
arisons of current and
p
rior
y
ear o
p
eratin
g
p
erformance and forecast trends for future o
p
eratin
g
p
erformance;
chan
g
es in mana
g
ement, business strate
gy
or customer base durin
g
the current
y
ear;
sustained decreases in share
p
rice relative to our
p
eers; and
the excess of fair value over carr
y
in
g
value and the si
g
nificance of recorded
g
oodwill as of October 1, 2010.