iHeartMedia 2011 Annual Report Download - page 75

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CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income Taxes
The Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the
enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be
realized or settled. Deferred tax assets are reduced by valuation allowances if the Company believes it is more likely than not that
some portion or the entire asset will not be realized. As all earnings from the Company’s foreign operations are permanently
reinvested and not distributed, the Company’s income tax provision does not include additional U.S. taxes on foreign operations. It is
not practical to determine the amount of Federal income taxes, if any, that might become due in the event that the earnings were
distributed.
Revenue Recognition
CCME revenue is recognized as advertisements or programs are broadcast and is generally billed monthly. Outdoor advertising
contracts typically cover periods of a few weeks up to one year and are generally billed monthly. Revenue for outdoor advertising is
recognized ratably over the term of the contract. Advertising revenue is reported net of agency commissions. Agency commissions
are calculated based on a stated percentage applied to gross billing revenue for the Company’s broadcasting and outdoor operations.
Payments received in advance of being earned are recorded as deferred income.
Barter transactions represent the exchange of advertising spots or display space for merchandise or services. These transactions are
recorded at the estimated fair market value of the advertising spots or display space or the fair value of the merchandise or services
received, whichever is most readily determinable. Revenue is recognized on barter and trade transactions when the advertisements are
broadcasted or displayed. Expenses are recorded ratably over a period that estimates when the merchandise or service received is
utilized, or when the event occurs. Barter and trade revenues and expenses from continuing operations are included in consolidated
revenue and selling, general and administrative expenses, respectively. Barter and trade revenues and expenses from continuing
operations were as follows:
Barter and trade expenses for 2009 include $14.9 million of trade receivables written off as it was determined they no longer had
value to the Company.
Advertising Expense
The Company records advertising expense as it is incurred. Advertising expenses were $92.2 million, $82.0 million and $67.3 million
for the years ended December 31, 2011, 2010 and 2009, respectively.
Share-Based Compensation
Under the fair value recognition provisions of ASC 718-10, share-based compensation cost is measured at the grant date based on the
fair value of the award. For awards that vest based on service conditions, this cost is recognized as expense on a straight-line basis
over the vesting period. For awards that will vest based on market or performance conditions, this cost will be recognized when it
becomes probable that the performance conditions will be satisfied. Determining the fair value of share-based awards at the grant date
requires assumptions and judgments about expected volatility and forfeiture rates, among other factors. If actual results differ
significantly from these estimates, the Company’s results of operations could be materially impacted.
The Company does not have any equity incentive plans under which it grants stock awards to employees. Employees of subsidiaries
of the Company receive equity awards from CCMH’s equity incentive plan or CCOH’s equity incentive plan. Prior to the merger,
Clear Channel granted equity awards to its employees under its own equity incentive plans.
72
(In millions)
Years Ended December 31,
2011
2010
2009
Barter and trade revenues
$61.2
$67.
0
$71.9
Barter and trade ex
p
enses
63.4
66.4
86.7