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Clear Channel Communications Inc. Reports Operating Results (10-Q/A)

November 13, 2009 | About:
10qk

10qk

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Clear Channel Communications Inc. (CCU) filed Amended Quarterly Report for the period ended 2009-09-30.

Compa??a Cervecer?as Unidas S. A. (CCU) has successfully positioned itself as a Chilean multinational beverage company, with diversified businesses and operations focused on the Southern Cone of South America. CCU is active in the beer industry in Chile, where it operates the country's leading brewery, and in Argentina, where it holds third place in the market. In the non-alcoholic beverages sector, it is Chile's second-largest bottler of carbonated beverages and the leader in the mineral water market. It has winemaking operations in Argentina and in Chile. Clear Channel Communications Inc. has a market cap of $2.46 billion; its shares were traded at around $38.64 with a P/E ratio of 15.9 and P/S ratio of 2. The dividend yield of Clear Channel Communications Inc. stocks is 2.1%. Clear Channel Communications Inc. had an annual average earning growth of 8.3% over the past 10 years.

Highlight of Business Operations:

During the first seven months of 2009, CCMH decreased the initial fair value estimate of our permits, contracts, site leases and other assets and liabilities primarily in our Americas segment by $116.1 million based on additional information received, which resulted in an increase to goodwill of $71.7 million and a decrease to deferred taxes of $44.4 million. During the third quarter of 2009, CCMH recorded a $45.0 million increase to goodwill in our International outdoor segment related to the fair value of certain minority interests recorded pursuant to ASC 480-10-S99, which distinguishes liabilities from equity, and which had no related tax effect. In addition, during the third quarter of 2009, CCMH adjusted deferred taxes by $44.3 million to true-up our tax rates in certain jurisdictions that were estimated in the initial purchase price allocation.

During the second quarter of 2009, we recorded a $21.3 million impairment to taxi contracts in our Americas segment and a $17.5 million impairment primarily related to street furniture and billboard contracts in our International segment. We determined fair values using a discounted cash flow model. The decline in fair value of the contracts was primarily driven by a decline in the revenue projections. The decline in revenue related to taxi contracts and street furniture and billboard contracts was in the range of 10% to 15%. The balance of these taxi contracts and street furniture and billboard contracts after the impairment charges, for the contracts that were impaired, was $3.3 million and $16.0 million, respectively.

We performed an interim impairment test on our FCC licenses as of December 31, 2008, which resulted in a non-cash impairment charge of $936.2 million. The industry cash flows forecast by BIA Financial Network, Inc. (BIA) during the first six months of 2009 were below the BIA forecast used in the discounted cash flow model used to calculate the impairment at December 31, 2008. As a result, we performed an interim impairment test as of June 30, 2009 on our FCC licenses resulting in a non-cash impairment charge of $590.3 million.

The BIA forecast for 2009 declined 8.7% and declined between 13.8% and 15.7% through 2013 compared to the BIA forecasts used in the 2008 impairment test. Additionally, the industry profit margin declined 100 basis points from the 2008 impairment test. These market driven changes were primarily responsible for the decline in fair value of the FCC licenses below their carrying value. As a result, we recognized a non-cash impairment charge in approximately one-quarter of our markets, which totaled $590.3 million. The fair value of our FCC licenses was $2.4 billion at June 30, 2009.

We performed an interim impairment test on our billboard permits as of December 31, 2008, which resulted in a non-cash impairment charge of $722.6 million. Our cash flows during the first six months of 2009 were below those in the discounted cash flow model used to calculate the impairment at December 31, 2008. As a result, we performed an interim impairment test as of June 30, 2009 on our billboard permits resulting in a non-cash impairment charge of $345.4 million.

impairment test. These market driven changes were primarily responsible for the decline in fair value of the billboard permits below their carrying value. As a result, we recognized a non-cash impairment charge in all but five of our markets in the United States and Canada, which totaled $345.4 million. The fair value of our permits was $1.1 billion at June 30, 2009.

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