iHeartMedia 2001 Annual Report Download - page 39

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39
write-downs of investments acquired in mergers.
The gain on marketable securities is primarily related to the reclassification of 2.0 million shares
of American Tower Corporation to a trading security under Financial Accounting Standards No. 115
Accounting for Certain Investments in Debt and Equity Securities and Financial Accounting Standards
No. 133 Accounting for Derivative Instruments and Hedging Activities. On January 1, 2001, the shares
were transferred to a trading classification at their fair market value of $76.2 million and an unrealized
pretax holding gain of $69.7 million was recognized. During the year ended December 31, 2001, we
entered into two secured forward exchange contracts that monetized part of our investment in American
Tower. The fair value adjustment of the American Tower trading shares and the secured forward
exchange contract netted a gain of $11.7 million during 2001. In addition, during 2001, a loss of $55.6
million was recognized related to impairments of other investments that had declines in their market
values that were considered to be other-than-temporary.
Equity in earnings of nonconsolidated affiliates for the year ended December 31, 2001 was $10.4
million as compared to $25.2 million for the same period of 2000. The decrease was due to declining
operating results primarily in our radio broadcasting equity investments.
For the year ended December 31, 2001 and 2000, other income (expense) - net was an income of
$152.3 million and an expense of $11.8 million, respectively. The additional income recognized in 2001
related primarily to a $168.0 million gain on a non-cash, tax-free exchange of the assets of one television
station for the assets of two television stations.
Income taxes for the year ended December 31, 2001 and 2000 were provided at the federal and
state statutory rates plus permanent differences. The effective rates in all periods presented have been
adversely impacted by permanent differences, primarily amortization of intangibles that is not deductible
for tax purposes.
The September 11, 2001 Terrorist Attacks
We have been adversely affected by the events of September 11, 2001, in New York,
Washington, D.C., and Pennsylvania, as well as by the actions taken by the United States in response to
such events. As a result of expanded news coverage following the attacks and subsequent military
action, we experienced a loss in advertising revenues and increased incremental operating expenses. The
events of September 11 have further depressed economic activity in the United States and globally,
including the markets in which we operate.
Radio Broadcasting
(In thousands)
As Reported Basis: Years Ended December 31, % Change
2001 2000 2001 v. 2000
Revenue $ 3,455,553 $ 2,431,544 42%
Divisional Operating Expenses 2,104,719 1,385,848 52%
EBITDA as Adjusted * $ 1,350,834 $ 1,045,696 29%
* See page 35 for cautionary disclosure