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CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 – FAIR VALUE MEASUREMENTS
ASC 820-10-35 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers
include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted
prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or
no market data exists, therefore requiring an entity to develop its own assumptions.
Marketable Equity Securities
The Company’s marketable equity securities and interest rate swap are measured at fair value on each reporting date.
The marketable equity securities are measured at fair value using quoted prices in active markets. Due to the fact that the inputs used
to measure the marketable equity securities at fair value are observable, the Company has categorized the fair value measurements of
the securities as Level 1.
The cost, unrealized holding gains or losses, and fair value of the Company’s investments at December 31, 2011 and 2010 are as
follows:
Other cost investments include various investments in companies for which there is no readily determinable market value.
The Company’s available-for-sale security, Independent News & Media PLC (“INM”), was in an unrealized loss position for an
extended period of time throughout 2009 through 2011. As a result, the Company considered the guidance in ASC 320-10-S99 and
reviewed the length of the time and the extent to which the market value was less than cost and the financial condition and near-term
prospects of the issuer. After this assessment, the Company concluded that the impairment was other than temporary and recorded a
non-cash impairment charge of $4.8 million, $6.5 million and $11.3 million in “Loss on marketable securities” for the years ended
December 31, 2011, 2010 and 2009, respectively.
Interest Rate Swap
The Company’s $2.5 billion notional amount interest rate swap agreement is designated as a cash flow hedge and the effective portion
of the gain or loss on the swap is reported as a component of other comprehensive income (loss). Ineffective portions of a cash flow
hedging derivative’s change in fair value are recognized currently in earnings. In accordance with ASC 815-20-35-9, as the critical
terms of the swap and the floating-rate debt being hedged were the same at inception and remained the same during the current
period, no ineffectiveness was recorded in earnings.
90
(In thousands)
2012
$275,649
2013
420,495
2014
2,809,772
2015
253,535
2016
12,236,000
Thereafter
4,726,054
Total
$20,721,505
(1) Excludes purchase accounting adjustments and original issue discount of $514.3 million, which is amortized through
interest ex
p
ense over the life of the underl
y
in
g
debt obli
g
ations.
(In thousands)
Gross
Unrealized
Gross
Unrealized
Fair
Investments
Cost
Losses
Gains
Value
2011
Available-for sale
$ 7,786
$
—
$ 65,214
$ 73,000
Other cost investments
4,766
—
—
4,766
Total
$ 12,552
$
—
$ 65,214
$ 77,766
201
0
Available-for sale
$ 12,614
$
—
$ 57,945
$ 70,559
Other cost investments
4,773
—
—
$ 4,773
Total
$ 17,387
$
—
$ 57,945
$ 75,332
(1)