iHeartMedia 2009 Annual Report Download - page 55

The $6.7 million gain on marketable securities for 2007 primarily related to changes in fair value of our shares of AMT
and the related forward exchange contracts.
E
quity in Earnings of Non-consolidated Affiliates
Equity in earnings of nonconsolidated affiliates increased $64.8 million in 2008 compared to 2007 primarily from a $75.6
million gain recognized in the first quarter 2008 on the sale of our 50% interest in Clear Channel Independent, a South African
outdoor advertising company. We also recognized a gain of $9.2 million on the disposition of 20% of Grupo ACIR. These gains were
partially offset by a $9.0 million impairment charge to one of our international outdoor equity method investments and declines in
equity in income from our investments in certain international radio broadcasting companies as well as the loss of equity in earnings
from the disposition of Clear Channel Independent.
Other Income – Net
Other income of $126.4 million in 2008 relates to an aggregate gain of $124.5 million on the fourth quarter 2008 tender of
certain of our outstanding notes, a $29.3 million foreign exchange gain on translating short-term intercompany notes, an $8.0 million
dividend received, partially offset by a $29.8 million loss on the third quarter 2008 tender of certain of our outstanding notes and a
$4.7 million impairment of our investment in a radio partnership and $0.9 million of various other items.
Other income of $5.3 million in 2007 primarily relates to a foreign exchange gain on translating short-term intercompany
notes.
I
ncome Taxes
Current tax expense for 2008 decreased $302.4 million compared to 2007 primarily due to a decrease in “income (loss)
before income taxes and discontinued operations” of $1.2 billion which excludes the non-tax deductible impairment charge of $5.3
billion recorded in 2008. In addition, current tax benefits of approximately $74.6 million were recorded during 2008 related to the
termination of our cross currency swap. Also, we recognized additional tax depreciation deductions as a result of the bonus
depreciation provisions enacted as part of the Economic Stimulus Act of 2008. These current tax benefits were partially offset by
additional current tax expense recorded in 2008 related to currently non deductible transaction costs as a result of the merger.
The effective tax rate for the year ended December 31, 2008 decreased to 10.2% as compared to 34.4% for the year ended
December 31, 2007, primarily due to the impairment charge that resulted in a $5.3 billion decrease in “income (loss) before income
taxes and discontinued operations” and tax benefits of approximately $648.2 million. Partially offsetting this decrease to the effective
rate were tax benefits recorded as a result of the release of valuation allowances on the capital loss carryforwards that were used to
offset the taxable gain from the disposition of our investment in AMT and Grupo ACIR. Additionally, we sold our 50% interest in
Clear Channel Independent in 2008, which was structured as a tax free disposition. The sale resulted in a gain of $75.6 million with
no current tax expense. Further, in 2008 valuation allowances were recorded on certain net operating losses generated during the
period that were not able to be carried back to prior years. Due to the lack of earnings history as a merged company and limitations on
net operating loss carryback claims allowed, we cannot rely on future earnings and carryback claims as a means to realize deferred tax
assets which may arise as a result of future period net operating losses. Pursuant to the provision of ASC 740-10, deferred tax
valuation allowances would be required on those deferred tax assets.
For the year ended December 31, 2008, deferred tax expense decreased $662.8 million as compared to 2007 primarily due
to the impairment charge recorded in 2008 related to the tax deductible intangibles. This decrease was partially offset by increases in
deferred tax expense in 2008 related to recording of valuation allowances on certain net operating losses as well as the termination of
the cross currency swap and the additional tax depreciation deductions as a result of the bonus depreciation provisions enacted as part
of the Economic Stimulus Act of 2008 mentioned above.
I
ncome (Loss) from Discontinued Operations
Income from discontinued operations of $638.4 million recorded during 2008 primarily relates to a gain of $631.9 million,
net of tax, related to the sale of our television business and the sale of radio stations.
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