iHeartMedia 2000 Annual Report Download - page 38

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38
Equity in earnings of nonconsolidated affiliates for 2000 was $25.2 million as compared to $18.2
million for 1999. The increase was due to improved operations primarily in our international outdoor
equity investments.
Other income (expense) net was an expense of $17.1 million in 2000 as compared to income of
$7.3 million in 1999. The additional expense recognized in 2000 related primarily to the reimbursements
of capital costs within certain operating contracts. The income amount in 1999 includes a $22.9 million
gain on sale of marketable securities.
Income tax expense was $464.7 million in 2000, an increase of 204% or $312.0 million from
1999 income tax expense of $152.7 million. The increase is primarily related to the taxes on the gain on
sale of assets related to mergers recorded in 2000. The provision for income taxes represents federal,
state and foreign income taxes on earnings before income taxes. The annual effective tax rates of 65% for
2000 and 64% for 1999 were both adversely affected by amortization of intangibles in excess of amounts
that are deductible for tax purposes.
For the reasons described above, net income of $248.8 million for 2000 increased $176.3 million,
or 243%, from $72.5 million for 1999.
Radio Broadcasting
(In thousands)
As Reported
Years Ended December 31,
% Change
As Reported
% Change
Pro Forma
2000 1999 2000 v. 1999 2000 v. 1999
Net Revenue $2,431,544
$1,230,754
98% 15%
Operating Expenses 1,385,848
731,062
90% 9%
EBITDA $1,045,696
$ 499,692
109% 22%
Net revenues and operating expenses increased on a reported basis due to our 2000 and 1999
acquisitions and internal growth. Included in our fiscal year 2000 reported basis amounts are net
revenues and operating expenses for a twelve-month period from our acquisition of Jacor that was
acquired in May 1999 and Dame Media which was acquired in July 1999. In addition, our acquisition of
AMFM in August 2000 increased net revenues and operating expenses in fiscal year 2000.
On a pro forma basis, net revenue increased due to various factors. During the first part of fiscal
year 2000, advertising rates were significantly higher than the prior year as rates reacted to inventory sell-
outs primarily related to the rapid growth period of the Internet industry as well as an overall increase in
advertising demand across the industry. Although some of our larger markets continued to enjoy
significantly higher rates in the second part of fiscal year 2000, when the Internet industry demand
slowed, rates in our other markets normalized compared to the prior year. In addition, our national
platform approach to selling advertising to our national clients helped increase our overall rates,
especially in our larger markets. On a pro forma basis, operating expenses increased primarily due to
incremental selling costs associated with the increase in net revenue.