Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our Series A and Series C common stock trade on the Nasdaq Global Select Market under the symbols “BATRA” and “BATRK,” respectively. Our Series B common stock is quoted on the OTC Markets under the symbol “BATRB,” but it is not actively traded. Stock price information for securities traded on the Nasdaq Global Select Market can be found on the Nasdaq’s website at www.nasdaq.com.
The following table sets forth the range of high and low sale prices of our Series B common stock for the periods they were outstanding during the year ended December 31, 2024. There is no established public trading market for our Series B common stock, which is quoted on the OTC Markets. Such over-the-counter market quotations reflect inter-dealer prices without retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions.
Atlanta Braves Holdings, Inc.
Series B (BATRB)
High
Low
2023
Third quarter (after July 18, 2023)
$
63.00
59.00
Fourth quarter
$
51.50
45.00
2024
First quarter
$
50.25
42.00
Second quarter
$
50.25
46.25
Third quarter
$
59.99
42.51
Fourth quarter
$
53.00
51.25
Holders
As of January 31, 2025, there were 5,051, 26 and 667 record holders of our Series A, Series B and Series C common stock, respectively. The foregoing numbers of record holders do not include the number of stockholders whose shares are held nominally by banks, brokerage houses or other institutions, but include each such institution as one stockholder.
Dividends
We have not paid any cash dividends on our common stock, and we have no present intention of so doing. Payment of cash dividends, if any, in the future will be determined by our board of directors in light of our earnings, financial condition and other relevant considerations.
Securities Authorized for Issuance Under Equity Compensation Plans
Information required by this item is incorporated by reference to our definitive proxy statement for our 2025 Annual Meeting of Stockholders.
Purchases of Equity Securities by the Issuer
There were no repurchases of our common stock during the three months ended December 31, 2024. During the three months ended December 31, 2024, zero shares of Atlanta Braves Holdings Series A, Series B or Series C common stock were surrendered by our officers and employees to pay withholding taxes and other deductions in connection with the vesting or exercise of restricted stock.
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Item 6. [Reserved]
Item 7. M anagement’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with our accompanying consolidated financial statements and the notes thereto.
Explanatory Note
On July 18, 2023, Liberty Media Corporation (“Liberty” or “Liberty Media”), the then current parent organization of Atlanta Braves Holdings, Inc. (“Atlanta Braves Holdings,” “the Company,” “us,” “we,” or “our”) completed the previously announced redemption of each outstanding share of its Liberty Braves common stock in exchange for one share of the corresponding series of common stock of the Company (the “Split-Off”). The Split-Off was intended to be tax-free to holders of Liberty Braves common stock and in September 2024, the Internal Revenue Service completed its review of the Split-Off and notified Liberty that it agreed with the non-taxable characterization of the transaction. In September 2024, the then-current officers of the Company (with limited exceptions) stepped down from their officer positions and members of its wholly-owned subsidiary Braves Holdings, LLC (“Braves Holdings”) assumed these roles (the “Corporate Governance Transition”). The Company is comprised of the businesses, assets and liabilities of Braves Holdings and corporate cash.
The intergroup interests in the Liberty Braves Group held by subsidiaries of Liberty prior to the Split-Off were settled through attribution of Atlanta Braves Holdings Series C common stock and subsequently sold in the secondary market. Atlanta Braves Holdings did not receive any of the proceeds from the sale of our common stock by these subsidiaries of Liberty. Following this transaction, neither Liberty nor Atlanta Braves Holdings has any continuing stock ownership, beneficial or otherwise, in the other.
Overview
The Company manages its business based on the following reportable segments: Baseball and Mixed-Use Development.
The Baseball segment includes operations relating to the Atlanta Braves Major League Baseball Club (“ANLBC,” the “Atlanta Braves,” the “Braves,” the “club,” or the “team”) and the Braves’ ballpark (“Truist Park” or the “Stadium”) and includes revenue generated from ticket sales, concessions, local broadcasting rights, advertising sponsorships, suites and premium seat fees, retail and licensing revenue, shared Major League Baseball (“MLB”) revenue streams, including national broadcasting rights and licensing, and other sources. Ticket sales, concessions, broadcasting rights and advertising sponsorship sales are the Baseball segment’s primary revenue drivers.
The Mixed-Use Development segment includes retail, office, hotel and entertainment operations primarily within The Battery Atlanta (the “Mixed-Use Development”). The Mixed-Use Development segment derives revenue primarily from office and retail rental income (including overage rent and tenant reimbursements) and, to a lesser extent, parking and advertising sponsorships throughout the year.
Strategies and Challenges
Executive Summary
The financial results of Atlanta Braves Holdings depend in large part on the ability of the Braves to achieve on-field success. The team’s successes generate significant fan enthusiasm, resulting in sustained ticket, premium seating, concession and merchandise sales, and greater shares of local broadcasting audiences. Management focuses on making operational and business decisions that enhance the on-field performance of the Braves and this may sometimes require implementing strategies and making investments that may negatively impact short-term profitability for the sake of immediate on-field success.
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Braves Holdings, affiliated entities and third-party development partners, developed a significant portion of the land around Truist Park, the Braves’ stadium, creating a 2.25 million square-foot mixed-use complex that features retail, residential, office, hotel and entertainment opportunities, known as The Battery Atlanta. We believe that the continued development and operations of The Battery Atlanta will result in increased game attendance as well as office and retail rental income (including overage rent and tenant reimbursements), and income from parking and corporate sponsorships throughout the year.
Key Drivers of Revenue
Atlanta Braves Holdings manages its business based on the following reportable segments: Baseball and Mixed-Use Development. The Baseball segment includes its operations relating to the Braves baseball franchise and Truist Park and includes revenue generated from game attendance (ticket sales), concessions, local broadcasting rights, advertising sponsorships, suites and premium seat fees, retail and licensing revenue, shared MLB revenue streams, including national broadcasting rights and licensing, and other sources.
The Mixed-Use Development segment includes retail, office, hotel and entertainment operations primarily within The Battery Atlanta. The Battery Atlanta derives revenue primarily from office and retail rental income (including overage rent and tenant reimbursements) and, to a lesser extent, parking and advertising sponsorships throughout the year.
Current Trends Affecting Our Business
The ability of Atlanta Braves Holdings to increase or maintain revenue and earnings could be adversely affected to the extent that relevant economic environments decline. Future performance is dependent in part on general economic conditions and the effect of those conditions on our customers. Weak economic conditions may lead to lower ticket demand for baseball events, which would also negatively affect concession and merchandise sales, and lower levels of advertising sponsorships. While Atlanta Braves Holdings is currently unable to predict the extent of any of these potential adverse effects as of December 31, 2024, Atlanta Braves Holdings does not believe that its operations have been materially impacted by recent inflationary pressures.
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Results of Operations – Consolidated
General. Provided in the tables below is information regarding the historical Consolidated Operating Results and Other Income and Expense of Atlanta Braves Holdings, as well as information regarding the contribution to those items from our reportable segments. The “corporate and other” category consists of those assets that do not qualify as a separate reportable segment.
A discussion regarding our financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023 is presented below. A discussion regarding our financial condition and results of operations for fiscal year 2023 compared to 2022 can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024.
Years ended December 31,
2024
2023
dollar amounts in thousands
Baseball revenue
$
595,430
581,671
Mixed-Use Development revenue
67,318
58,996
Total revenue
662,748
640,667
Operating costs and expenses:
Baseball operating costs
(504,146)
(482,391)
Mixed-Use Development costs
(9,762)
(8,834)
Selling, general and administrative, excluding stock-based compensation
(109,157)
(111,681)
Stock-based compensation
(16,519)
(13,221)
Impairment of long-lived assets and other related costs, net of insurance recoveries
—
—
Depreciation and amortization
(62,829)
(70,980)
Operating income (loss)
(39,665)
(46,440)
Other income (expense):
Interest expense
(38,789)
(37,673)
Share of earnings (losses) of affiliates, net
30,460
26,985
Realized and unrealized gains (losses) on intergroup interests, net
—
(83,178)
Realized and unrealized gains (losses) on financial instruments, net
3,424
2,343
Gains (losses) on dispositions, net
—
2,309
Other, net
8,629
6,496
Earnings (loss) before income taxes
(35,941)
(129,158)
Income tax benefit (expense)
4,673
3,864
Net earnings (loss)
$
(31,268)
(125,294)
Adjusted OIBDA (1)
$
39,683
37,761
Regular season home games
81
81
Postseason home games
—
2
Average number of attendees per regular season home game
28,469
32,542
(1) Adjusted OIBDA is a non-GAAP financial measure. See “Non-GAAP” Adjusted OIBDA” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for a reconciliation to the most comparable GAAP measure.
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Baseball revenue. Baseball revenue is derived from two primary sources: baseball event revenue (ticket sales, concessions, advertising sponsorships, suites and premium seat fees) and broadcasting revenue. The following table disaggregates baseball revenue by source:
Years ended December 31,
2024
2023
amounts in thousands
Baseball event
$
347,925
339,485
Broadcasting
166,094
160,944
Retail and licensing
47,754
51,533
Other
33,657
29,709
Total Baseball
$
595,430
581,671
Baseball revenue increased $13.8 million during the year ended December 31, 2024, as compared to the prior year, due to new sponsorship agreements and contractual rate increases on season tickets and existing sponsorship contracts, partially offset by reduced attendance at regular season home games and a reduction in ticket sales and concession revenue due to fewer postseason games in 2024. Broadcasting revenue increased $5.2 million during the year ended December 31, 2024, as compared to the prior year, primarily due to contractual rate increases. Retail and licensing revenue decreased $3.8 million during the year ended December 31, 2024, as compared to the prior year, due to a reduction in local revenue due to the decrease in regular season home game attendance and demand for City Connect and other apparel, partially offset by higher league-wide revenue. Other revenue, a component of baseball revenue, increased $3.9 million during the year ended December 31, 2024, as compared to the prior year, primarily due to an increase in spring training related revenue (ticket sales, concession revenue and other gameday related revenue), driven by increased attendance at spring training home games.
Mixed-Use Development revenue. Mixed-Use Development revenue is derived from the mixed-use facilities and primarily includes rental income and to a lesser extent, parking revenue and sponsorships. For the year ended December 31, 2024, Mixed-Use Development revenue increased $8.3 million, as compared to the prior year, primarily due to a $5.0 million increase in rental income and a $3.0 million increase in parking revenue. Increases in rental income for the year ended December 31, 2024, were primarily driven by $3.2 million in various new lease commencements and a $2.2 million increase in tenant recoveries, partially offset by a reduction in overage rent.
Baseball operating costs. Baseball operating costs primarily include costs associated with baseball and stadium operations. For the year ended December 31, 2024, baseball operating expenses increased $21.8 million, as compared to the prior year, primarily due to a $16.7 million increase under MLB’s revenue sharing plan and other shared expenses, a $6.3 million increase in minor league team and player expenses, and a $3.2 million increase in major league player salaries, partially offset by $3.0 million decrease in variable concession and retail operating expenses, due to reduced attendance at regular season home games during 2024.
Mixed-Use Development costs. Mixed-Use Development costs primarily include costs associated with maintaining and operating the mixed-use facilities. During the year ended December 31, 2024, Mixed-Use Development costs increased $0.9 million, as compared to the prior year, due to security and parking expenses and other various operating increases.
Selling, general and administrative, excluding stock-based compensation. Selling, general and administrative expense includes costs of marketing, advertising, finance and related personnel costs. Selling, general and administrative expense decreased $2.5 million for the year ended December 31, 2024, as compared to the prior year, primarily due to reduced transaction costs related to the Split-Off, partially offset by increased personnel costs as well as insurance, information technology and professional fees.
Stock-based compensation. For the year ended year ended December 31, 2024, stock-based compensation increased $3.3 million as compared to the prior year, mainly due to accelerated vesting for various awards in connection with the Corporate Governance Transition.
Depreciation and amortization. Depreciation and amortization decreased $8.2 million for the year ended December 31, 2024, as compared to the prior year, primarily due to various assets becoming fully depreciated.
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Operating income (loss). Operating loss decreased $6.8 million during the year ended December 31, 2024, as compared to the prior year, due to the above explanations.
Non-GAAP Adjusted OIBDA. To provide investors with additional information regarding the Company’s financial results, we also disclose Adjusted OIBDA, which is a non-GAAP financial measure. We define Adjusted OIBDA as operating income (loss) plus depreciation and amortization, stock-based compensation, separately reported litigation settlements, restructuring, acquisition and impairment charges. Our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources among our businesses. We believe this is an important indicator of the operational strength and performance of our businesses by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. In addition, this measure allows us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income (loss), net earnings (loss), cash flow provided by (used in) operating activities and other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The following table provides a reconciliation of Operating income (loss) to Adjusted OIBDA:
Years ended December 31,
2024
2023
amounts in thousands
Operating income (loss)
$
(39,665)
(46,440)
Impairment of long-lived assets and other related costs, net of insurance recoveries
—
—
Stock-based compensation
16,519
13,221
Depreciation and amortization
62,829
70,980
Adjusted OIBDA
$
39,683
37,761
Adjusted OIBDA is summarized as follows:
Years ended December 31,
2024
2023
amounts in thousands
Baseball
$
6,625
20,661
Mixed-Use Development
45,448
39,499
Corporate and Other
(12,390)
(22,399)
Total
$
39,683
37,761
Consolidated Adjusted OIBDA increased $1.9 million during the year ended December 31, 2024 as compared to the prior year.
Baseball Adjusted OIBDA decreased $14.0 million during the year ended December 31, 2024 as compared to the prior year, primarily due to the fluctuations in baseball revenue and operating costs, as described above.
Mixed-Use Development Adjusted OIBDA increased $5.9 million during the year ended December 31, 2024 as compared to the prior year, primarily due to the increase in Mixed-Use Development revenue and costs, as described above.
Corporate and Other Adjusted OIBDA loss decreased $10.0 million during the year ended December 31, 2024 as compared to the prior year, primarily due to decreases in costs related to the Split-Off.
Interest Expense. Interest expense increased $1.1 million during the year ended December 31, 2024 as compared to the prior year, primarily due to increased interest rates on the Company’s variable rate debt and an increase in outstanding debt.
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Share of earnings (losses) of affiliates, net. The following table presents Atlanta Braves Holdings’ share of earnings (losses) of affiliates, net:
Years ended December 31,
2024
2023
amounts in thousands
MLB Advanced Media, L.P.
$
20,015
19,747
Baseball Endowment, L.P.
5,147
2,114
Other
5,298
5,124
Total
$
30,460
26,985
Realized and unrealized gains (losses) on intergroup interests, net. As the notional shares underlying the intergroup interests were not represented by outstanding shares of common stock, such shares had not been officially designated Series A, B or C Liberty Braves common stock. However, Liberty historically assumed that the notional shares (if and when issued) related to the Formula One Group interest in the Braves Group would be comprised of Series C Liberty Braves common stock and the notional shares (if and when issued) related to the Liberty SiriusXM Group interest in the Braves Group would be comprised of Series A Liberty Braves common stock. Therefore, the market prices of Series C Liberty Braves and Series A Liberty Braves common stock were used for the mark-to-market adjustment for the intergroup interests held by Formula One Group and Liberty SiriusXM Group, respectively, through the consolidated statements of operations. During the second quarter of 2023, Liberty determined that, in connection with the Split-Off, shares of Atlanta Braves Holdings Series C common stock would be used to settle and extinguish the intergroup interest in the Braves Group attributed to the Liberty SiriusXM Group. Accordingly, effective as of June 30, 2023 and through the Split-Off date, the market price of Series C Liberty Braves common stock was used for the mark-to-market adjustment for the intergroup interest held by the Liberty SiriusXM Group. Realized and unrealized gains (losses) on intergroup interests, net were driven by changes in the market prices of Liberty Braves common stock. As disclosed above, the intergroup interests were settled and extinguished in connection with the Split-Off.
Realized and unrealized gains (losses) on financial instruments, net. Realized and unrealized gains (losses) on financial instruments, net are comprised of changes in the fair value of the Company’s interest rate swaps driven by changes in interest rates.
Gains (losses) on dispositions, net. During the year ended December 31, 2023, the Company recognized a gain on the disposition of a non-financial asset.
Other, net. Other, net income increased $2.1 million during the year ended December 31, 2024, as compared to the prior year, primarily due to increased interest and dividend income.
Income taxes. Earnings (losses) before income taxes and income tax (expense) benefit are as follows:
Years ended December 31,
2024
2023
amounts in thousands
Earnings (loss) before income taxes
$
(35,941)
(129,158)
Income tax benefit (expense)
4,673
3,864
During the year ended December 31, 2024, the Company recognized a tax benefit less than the expected federal tax rate of 21% due primarily to executive compensation that is not deductible for tax purposes.
During the year ended December 31, 2023, the Company recognized a tax benefit less than the expected federal tax rate of 21% due primarily to intergroup interest losses that are not deductible for tax purposes.
Net earnings (loss). The Company had net losses of $31.3 million and $125.3 million for the years ended December 31, 2024 and 2023, respectively. The change in net earnings (loss) was the result of the fluctuations in Atlanta Braves Holdings’ revenue, expenses and other gains and losses, as described above.
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Liquidity and Capital Resources
As of December 31, 2024, the Company had $110.1 million of cash and cash equivalents. Substantially all of its cash and cash equivalents are invested in U.S. Treasury securities, other government securities or government guaranteed funds, AAA rated money market funds and other highly rated financial and corporate debt instruments.
During the years ended December 31, 2024 and 2023, the Company’s primary uses of cash were capital expenditures, working capital requirements and debt service, funded primarily by cash from operations, distributions from equity method affiliates and new borrowings on construction loans.
The Company’s uses of cash are expected to be payments to certain players, coaches and executives pursuant to long-term employment agreements, capital expenditures, investments in real estate ventures and debt service payments. The Company expects to fund its projected uses of cash with cash on hand, cash provided by operations and through borrowings under construction loans and revolvers. We believe that the available sources of liquidity are sufficient to cover our projected future uses of cash.
Sources of Liquidity
The following are potential sources of liquidity: available cash balances, cash generated by Braves Holdings’ operating activities (to the extent such cash exceeds Braves Holdings’ working capital needs and is not otherwise restricted), net proceeds from asset sales, debt borrowings under the LWCF, the MLBFF and the TeamCo Revolver (each as defined below) and dividend and interest receipts.
League Wide Credit Facility
In December 2013, a subsidiary of Braves Holdings executed various agreements to enter into MLB’s League Wide Credit Facility (the “LWCF”). Pursuant to the terms of a revolving credit agreement, Major League Baseball Trust may borrow from certain lenders, with Bank of America, N.A. acting as the administrative agent. Major League Baseball Trust then uses the proceeds of such borrowings to provide loans to the club trusts of the participating Clubs, including the Braves Club Trust (the “Club Trust”). The maximum amount available to the Club Trust under the LWCF was $125.0 million as of December 31, 2024 which remains undrawn. The commitment termination date of the revolving credit facility under the LWCF, which is the repayment date for all amounts borrowed under such revolving credit facility, is July 10, 2026.
MLB Facility Fund Revolver
In December 2017, a subsidiary of Braves Holdings executed various agreements to enter into the MLB Facility Fund (the “MLBFF”). Pursuant to the terms of an indenture, a credit agreement and certain note purchase agreements, Major League Baseball Facility Fund, LLC may borrow from certain lenders. Major League Baseball Facility Fund, LLC then uses the proceeds of such borrowings to provide loans to each of the participating Clubs. Amounts advanced pursuant to the MLBFF are available to fund ballpark and other baseball-related real property improvements, renovations and/or new construction. In May 2021, Braves Facility Fund LLC established a revolving credit commitment with Major League Baseball Facility Fund, LLC (the “MLB facility fund – revolver”). The commitment termination date, which is the repayment date for all amounts borrowed under the MLB facility fund – revolver, is July 10, 2026. The maximum amount available to Braves Facility Fund LLC under the MLB facility fund – revolver was $39.1 million as of December 31, 2024 and was fully drawn as of December 31, 2024.
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TeamCo Revolver
A subsidiary of Braves Holdings is party to a Revolving Credit Agreement (the “TeamCo Revolver”), which provides revolving commitments of $150.0 million and matures in August 2029. The availability under the TeamCo Revolver as of December 31, 2024 was $150.0 million.
See note 6 to the accompanying consolidated financial statements for a description of all indebtedness obligations.
Off-Balance Sheet Arrangements and Material Cash Requirements
Information concerning the amount and timing of material cash requirements, both accrued and off-balance sheet, as of December 31, 2024, is summarized below.
Payments due by period
Total
Less than 1 year
2 - 3 years
4 - 5 years
After 5 years
amounts in thousands
Long-term debt (1)
$
620,066
104,193
249,038
129,793
137,042
Interest payments (2)
116,856
26,305
41,881
17,339
31,331
Employment agreements (3)
762,744
221,141
290,082
168,321
83,200
Lease obligations
173,309
12,247
22,479
20,045
118,538
Other obligations (4)
33,213
4,393
7,112
4,648
17,060
Total consolidated
$
1,706,188
368,279
610,592
340,146
387,171
(1) Amounts are stated at the face amount at maturity and do not assume additional borrowings or refinancings of existing debt.
(2) Amounts (i) are based on the Company’s outstanding debt at December 31, 2024, (ii) assume the interest rates on the Company’s variable rate debt remain constant at the December 31, 2024 rates, (iii) include any impacts of outstanding interest rate swaps and (iv) assume that its existing debt is repaid at maturity.
(3) The Braves have entered into long-term employment contracts with certain of their players (current and former), coaches and employees. Amounts due under such contracts as of December 31, 2024 aggregated $762.7 million. In addition, certain players, coaches and executives may earn incentive compensation under the terms of their employment contracts. The Braves are under no legal obligation to pay Major League player salaries during any period that players do not render services during a labor dispute.
(4) Amounts include obligations for capital maintenance of Truist Park and software contracts.
Critical Accounting Estimates
The preparation of Atlanta Braves Holdings’ consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Listed below are the accounting estimates that Atlanta Braves Holdings believes are critical to its consolidated financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being reported.
Non-Financial Instrument Valuations. Atlanta Braves Holdings’ non-financial instrument valuations are primarily comprised of its annual assessment of the recoverability of its goodwill and franchise rights (collectively, “indefinite-lived intangible assets”), and its evaluation of the recoverability of its other long-lived assets upon certain triggering events. If the carrying value of Atlanta Braves Holdings’ long-lived assets exceeds their estimated fair value, Atlanta Braves Holdings is required to write the carrying value down to fair value. Any such writedown is included in impairment of long-lived assets in the consolidated statement of operations. Judgment is required to estimate the fair value of Atlanta Braves Holdings’ long-lived assets. Atlanta Braves Holdings may use quoted market prices, prices for similar assets, present value techniques and other valuation techniques to prepare these estimates. Atlanta Braves Holdings may need to make estimates of future cash
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flows and discount rates as well as other assumptions in order to implement these valuation techniques. Due to the judgment involved in Atlanta Braves Holdings’ estimation techniques, any value ultimately derived from Atlanta Braves Holdings’ long-lived assets may differ from its estimate of fair value.
As of December 31, 2024, the Company had $175.8 million of goodwill and $123.7 million of franchise rights. The Company’s goodwill and franchise rights are both entirely allocated to the Baseball reportable segment. The Company performs its annual assessment of the recoverability of its indefinite-lived intangible assets in the fourth quarter each year, or more frequently if events and circumstances indicate impairment may have occurred. The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. The accounting guidance also allows entities the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative impairment test. The entity may resume performing the qualitative assessment in any subsequent period. In evaluating goodwill on a qualitative basis, the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of its reporting units. The Company considers whether there are any negative macroeconomic conditions, industry-specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods. As part of the analysis, the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current and prior year for other purposes. If based on the qualitative analysis it is more likely than not that an impairment exists, the Company performs the quantitative impairment test.
Income Taxes. The Company is required to estimate the amount of tax payable or refundable for the current year and the deferred income tax liabilities and assets for the future tax consequences of events that have been reflected in its consolidated financial statements or tax returns for each taxing jurisdiction in which the Company operates. This process requires the Company’s management to make judgments regarding the timing and probability of the ultimate tax impact of the various agreements and transactions that it enters into. Based on these judgments, the Company may record tax reserves or adjustments to valuation allowances on deferred tax assets to reflect the expected realizability of future tax benefits. Actual income taxes could vary from these estimates due to future changes in income tax law, significant changes in the jurisdictions in which the Company operates, our inability to generate sufficient future taxable income or unpredicted results from the final determination of each year’s liability by taxing authorities. These changes could have a significant impact on the Company’s financial position.