iHeartMedia 2014 Annual Report Download - page 97

IHEARTCOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
95
Significant components of the Company's deferred tax liabilities and assets as of December 31, 2014 and 2013 are as follows:
(In thousands)
2014
2013
Deferred tax liabilities:
Intangibles and fixed assets
$
2,335,584
$
2,402,168
Long-term debt
119,887
183,615
Investments in nonconsolidated affiliates
1,121
-
Other investments
5,575
6,759
Other
8,857
6,655
Total deferred tax liabilities
2,471,024
2,599,197
Deferred tax assets:
Accrued expenses
111,884
106,651
Investments in nonconsolidated affiliates
-
1,824
Net operating loss carryforwards
1,445,340
1,287,239
Bad debt reserves
9,346
9,726
Other
34,017
35,527
Total gross deferred tax assets
1,600,587
1,440,967
Less: Valuation allowance
655,658
327,623
Total deferred tax assets
944,929
1,113,344
Net deferred tax liabilities
$
1,526,095
$
1,485,853
Included in the Company’s net deferred tax liabilities are $37.8 million and $52.0 million of current net deferred tax assets for 2014
and 2013, respectively. The Company presents these assets in “Other current assets” on its consolidated balance sheets. The
remaining $1.6 billion and $1.5 billion of net deferred tax liabilities for 2014 and 2013, respectively, are presented in “Deferred tax
liabilities” on the consolidated balance sheets.
The Company’s net foreign deferred tax liabilities were $13.6 million and $19.8 million for the periods ended December 31, 2014 and
December 31, 2013, respectively.
The deferred tax liability related to intangibles and fixed assets primarily relates to the difference in book and tax basis of acquired
FCC licenses, billboard permits and tax deductible goodwill created from the Company’s various stock acquisitions. In accordance
with ASC 350-10, Intangibles—Goodwill and Other, the Company does not amortize FCC licenses and billboard permits. As a result,
this deferred tax liability will not reverse over time unless the Company recognizes future impairment charges related to its FCC
licenses, permits and tax deductible goodwill or sells its FCC licenses or permits. As the Company continues to amortize its tax basis
in its FCC licenses, permits and tax deductible goodwill, the deferred tax liability will increase over time.
At December 31, 2014, the Company had recorded net operating loss carryforwards (tax effected) for federal and state income tax
purposes of approximately $1.3 billion, expiring in various amounts through 2034. The Company expects to realize the benefits of a
portion of its deferred tax assets attributable to federal and state net operating losses based upon expected future taxable income from
deferred tax liabilities that reverse in the relevant federal and state jurisdictions and carryforward periods. As of December 31, 2014,
the Company has recorded a partial valuation allowance of $487.1 million against these deferred tax assets attributable to federal and
state net operating losses. In addition, the Company had recorded deferred tax assets for foreign net operating loss carryforwards (tax
effected) of approximately $153.0 million which are offset in part by an associated valuation allowance of $146.4 million. Additional
deferred tax valuation allowance of $22.1 million offsets other foreign deferred tax assets that are not expected to be realized.
Realization of these foreign deferred tax assets is dependent upon the Company’s ability to generate future taxable income in
appropriate tax jurisdictions and carryforward periods. Due to the Company’s evaluation of negative factors including particular
negative evidence of cumulative losses in these jurisdictions, the Company continues to record valuation allowances on the foreign
deferred tax assets that are not expected to be realized. The Company expects to realize its remaining gross deferred tax assets based
upon its assessment of deferred tax liabilities that will reverse in the same carryforward period and jurisdiction and are of the same
character as the net operating loss carryforwards and temporary differences that give rise to the deferred tax assets. Any deferred tax
liabilities associated with acquired FCC licenses, billboard permits and tax-deductible goodwill intangible assets are not relied upon as
a source of future taxable income, as these intangible assets have an indefinite life.