iHeartMedia 2005 Annual Report Download - page 33

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international markets, is weighted to account for such factors as illumination, proximity to other displays and the speed
and viewing angle of approaching traffic. To monitor our business, management typically reviews the average rates,
average revenues per display, occupancy, and inventory levels of each of our display types by market. In addition,
because a significant portion of our advertising operations are conducted in foreign markets, principally France and the
United Kingdom, management reviews the operating results from our foreign operations on a constant dollar basis. A
constant dollar basis allows for comparison of operations independent of foreign exchange movements. Because
revenue-sharing and minimum guaranteed payment arrangements are more prevalent in our international operations, the
margins in our international operations typically are less than the margins in our Americas operations. Foreign currency
transaction gains and losses, as well as gains and losses from translation of financial statements of subsidiaries and
investees in highly inflationary countries, are included in operations.
The significant expenses associated with our operations include (i) direct production, maintenance and
installation expenses, (ii) site lease expenses for land under our displays and (iii) revenue-sharing or minimum
guaranteed amounts payable under our street furniture and transit display contracts. Our direct production, maintenance
and installation expenses include costs for printing, transporting and changing the advertising copy on our displays, the
related labor costs, the vinyl and paper costs and the costs for cleaning and maintaining our displays. Vinyl and paper
costs vary according to the complexity of the advertising copy and the quantity of displays. Our site lease expenses
include lease payments for use of the land under our displays, as well as any revenue-sharing arrangements we may have
with the landlords. The terms of our Americas site leases generally range from 1 to 50 years. Internationally, the terms
of our site leases generally range from 3 to 15 years, but may vary across our networks.
Fiscal Year 2005 Compared to Fiscal Year 2004
Consolidated
(In thousands) Years Ended December 31, % Change
2005 2004 2005 v. 2004
Revenue $ 6,610,418 $ 6,634,890 0%
Operating expenses:
Direct operating expenses (excludes non-cash compensation expense
of $212 and $930 in 2005 and 2004, respectively and depreciation
and amortization) 2,466,755 2,330,817 6%
Selling, general and administrative expenses (exclusive of non-cash
compensation expense and depreciation and amortization) 1,919,640 1,911,788 0%
Non-cash compensation expense 6,081 3,596 69%
Depreciation and amortization 630,389 630,521 0%
Corporate expenses (excludes non-cash compensation expense of
$5,869 and $2,666 in 2005 and 2004, respectively and
depreciation and amortization) 165,207 164,722 0%
Gain on disposition of assets - net 45,247 39,552 14%
Operating income 1,467,593 1,632,998 (10%)
Interest expense 443,245 367,503
Gain (loss) on marketable securities (702) 46,271
Equity in earnings of nonconsolidated affiliates 38,338 22,285
Other income (expense) - net 17,344 (30,293)
Income before income taxes, minority interest expense, discontinued
operations and cumulative effect of a change in accounting
principle 1,079,328 1,303,758
Income tax benefit (expense):
Current (43,513)
(367,679)
Deferred (382,823) (131,685)
Income tax benefit (expense) (426,336) (499,364)
Minority interest expense, net of tax 17,847 7,602
Income before discontinued operations and cumulative effect of a
change in accounting principle 635,145 796,792
Income from discontinued operations, net 300,517 49,007
Cumulative effect of a change in accounting principle, net of tax of
$2,959,003 ―
(4,883,968)
Net income (loss) $ 935,662 $ (4,038,169)