iHeartMedia 2001 Annual Report Download - page 46

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46
Other Income and Expense Information
Non-cash compensation expense of $16.0 million was recorded in fiscal year 2000. In the
AMFM merger, we assumed stock options granted to AMFM employees that are now convertible into
Clear Channel stock. To the extent that these employees’ options continue to vest, we will recognize non-
cash compensation expense over the remaining vesting period. Vesting dates range from January 2001 to
April 2005.
Depreciation and amortization expense increased from $722.2 million in 1999 to $1.4 billion in
2000, a 94% increase. The increase is due primarily to additional depreciation and amortization of
approximately $460.3 million related to the AMFM and SFX acquisitions. The remaining increase is due
to additional depreciation and amortization associated with the other less significant acquisitions
accounted for under the purchase method as well as the inclusion of a full year of depreciation and
amortization associated with acquisitions completed during 1999.
Interest expense was $383.1 million and $179.4 million in 2000 and 1999, respectively, an
increase of $203.7 million or 114%. Approximately 89% of the increase was due to the overall increase
in average amounts of debt outstanding and approximately 11% of the increase was due to increases in
LIBOR. Approximately 50% of our debt accrued interest based upon LIBOR at December 31, 2000.
During 2000, LIBOR rates increased from 5.82% at December 31, 1999 to 6.57% at December 31, 2000.
The gain on sale of assets related to mergers of $783.7 million in 2000 is primarily due to the
sale of 39 stations in connection with governmental directives regarding the AMFM merger, which
realized a gain of $805.2 million. This gain for 2000 was partially offset by a loss of $5.8 million related
to the sale of 1.3 million shares of Lamar Advertising Company that we acquired in the AMFM merger;
and a net loss of $15.7 million related to write-downs of investments acquired in mergers. The gain in
1999 of $138.7 million relates to the sale of 12 radio stations as a result of governmental directives
related to the Jacor merger.
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 $11.8 million and $15.6 million in 2000 and 1999,
respectively. The expense recognized in 2000 related primarily to the reimbursements of capital costs
within certain operating contracts.
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.