iHeartMedia 2011 Annual Report Download - page 99

CLEAR CHANNEL CAPITAL I, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The reconciliation of income tax computed at the U.S. Federal statutory tax rates to income tax benefit (expense) is:
A tax benefit was recorded for the year ended December 31, 2011 of 32%. The effective tax rate for 2011 was impacted by the
Company’s settlement of U.S. Federal and state tax examinations during the year. Pursuant to the settlements, the Company recorded
a reduction to income tax expense of approximately $16.3 million to reflect the net tax benefits of the settlements. This benefit was
partially offset by additional tax recorded during 2011 related to the write-off of deferred tax assets associated with the vesting of
certain equity awards and the inability to benefit from certain tax loss carryforwards in foreign jurisdictions. Foreign income before
income taxes was approximately $94.0 million for 2011.
A tax benefit was recorded for the year ended December 31, 2010 of 26%. The effective tax rate for 2010 was impacted by the
Company’s inability to benefit from tax losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those
losses in future years. In addition, the Company recorded a valuation allowance of $13.6 million against deferred tax assets in foreign
j
urisdictions due to the uncertainty of the ability to realize those assets in future periods. Foreign income before income taxes was
approximately $40.8 million for 2010.
A tax benefit was recorded for the year ended December 31, 2009 of 11%. The effective tax rate for 2009 was primarily impacted by
the goodwill impairment charges which are not deductible for tax purposes (see Note 2). In addition, the Company was unable to
benefit tax losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future years. These
impacts were partially offset by the reversal of valuation allowances on certain net operating losses as a result of the Company’s
ability to utilize those losses through either carrybacks to prior years 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.
The Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense. The total
amount of interest accrued at December 31, 2011 and 2010 was $61.0 million and $87.5 million, respectively. The total amount of
unrecognized tax benefits and accrued interest and penalties at December 31, 2011 and 2010 was $236.8 million and $312.9 million,
respectively, of which $212.7 million and $269.3 million is included in “Other long-term liabilities”, and $4.5 million and $35.3
million is included in “Accrued Expenses” on the Company’s consolidated balance sheets, respectively. In addition, $19.6 million of
unrecognized tax benefits are recorded net with the Company’s deferred tax assets for its net operating losses as opposed to being
recorded in “Other long-term liabilities” at December 31, 2011. The total amount of unrecognized tax benefits at December 31, 2011
and 2010 that, if recognized, would impact the effective income tax rate is $146.0 million and $204.6 million, respectively.
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Years Ended December 31,
(In thousands)
2011 2010 2009
Amount Percent Amount Percent Amount Percent
Income tax benefit (expense) at statutory rates
$137,903 35% $217,991 35% $1,589,825 35%
State income taxes, net of Federal tax benefit
18,877 5% (1,376) 0% 7,660 0%
Forei
g
n taxes (4,683) (1%) (30,967) (5%) (92,648) (2%)
Nondeductible items
(3,154) (1%) (3,165) (0%) (3,317) (0%)
Changes in valuation allowance and other
estimates
(15,816) (4%) (16,263) (3%) 54,579 1%
Im
p
airment char
g
e
—
0%
—
0% (1,050,535) (23%)
Other, net (7,149) (2%) (6,240) (1%) (12,244) (0%)
Income tax benefit (ex
p
ense) $ 125,978 32% $159,980 26% $ 493,320 11%
(In thousands)
Years Ended December 31,
Unreco
g
nized Tax Benefits
2011 2010
Balance at beginning of period
$225,469 $237,517
Increases for tax
p
osition taken in the current
y
ear 5,373 5,222
Increases for tax
p
ositions taken in
p
revious
y
ears 12,115 22,990
Decreases for tax
p
osition taken in
p
revious
y
ears (37,677) (20,705)
Decreases due to settlements with tax authorities (29,443) (14,462)
Decreases due to la
p
se of statute of limitations (55) (5,093)
Balance at end of
p
eriod $175,782 $225,469