iHeartMedia 2001 Annual Report Download - page 89

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89
As of December 31, 2001, the Company provided a contingent guarantee under a certain performance
contract of approximately $64.0 million, including approximately $6.5 million related to the performance
of a company controlled by Hicks, Muse, Tate & Furst Incorporated, of which a director of the Company
is the Chairman of the Management Committee. In addition, during 2001, the Company realized a loss of
$3.5 million under this guarantee as the company controlled by one of the Company’s directors failed to
perform under the contract.
Various acquisition agreements include deferred consideration payments including future contingent
payments based on the financial performance of the acquired companies, generally over a one to five year
period. Contingent payments involving the financial performance of the acquired companies are
typically based on the acquired company meeting certain EBITDA targets as defined in the agreement.
The contingent payment amounts are generally calculated based on predetermined multiples of the
achieved EBITDA not to exceed a predetermined maximum payment. At December 31, 2001, the
Company believes its maximum aggregate contingency, which is subject to the financial performance of
the acquired companies, is approximately $45.0 million. In addition, certain acquisition agreements
include deferred consideration payments based on performance requirements by the seller, generally over
a one to five year period. Contingent payments based on performance requirements by the seller
typically involve the completion of a development or obtaining appropriate permits that enable the
Company to construct additional advertising displays. At December 31, 2001, the Company believes its
maximum aggregate contingency, which is subject to performance requirements by the seller, is
approximately $62.0 million. As the contingencies have not been met or resolved as of December 31,
2001, these amounts are not recorded.
As of December 31, 2001 and 2000, the Company guaranteed third party debt of approximately $225.2
million and $280.0 million, respectively, primarily related to long-term operating contracts. A
substantial portion of the debt is secured by the third party’s associated operating assets.
NOTE G - INCOME TAXES
Significant components of the provision for income tax expense (benefit) are as follows:
(In thousands)
2001 2000 1999
Current - federal $ 26,598 $ 63,366 $ 82,452
Current - foreign 19,450 4,290 14,324
Current - state 11,315 10,364 14,547
Total current 57,363 78,020 111,323
Deferred - federal (137,213) 340,999 30,111
Deferred - foreign (13,462) 16,484 (10,049)
Deferred - state (11,659) 29,228 13,275
Total deferred (162,334) 386,711 33,337
Income tax expense (benefit) $(104,971) $ 464,731 $ 144,660
Included in current – federal for 1999 is $8.1 million of benefit related to the extraordinary loss resulting
from early extinguishment of long-term debt.