iHeartMedia 2006 Annual Report Download - page 36

36
Gain (Loss) on Marketable Securities
The gain of $2.3 million for the year ended December 31, 2006 related to a $3.8 million gain from terminating
our secured forward exchange contract associated with our investment in XM Satellite Radio Holdings, Inc. partially
offset by a loss of $1.5 million from the change in fair value of AMT securities that are classified as trading and a related
secured forward exchange contract associated with those securities. The loss of $0.7 million recorded in 2005 related to
the change in fair value of AMT securities that were classified as trading and a related secured forward exchange
contract associated with those securities.
Other Income (Expense) - Net
Other expense of $8.4 million recorded in 2006 primarily relates to foreign exchange losses while the income
of $11.3 million recorded in 2005 was comprised of various miscellaneous amounts.
Income Taxes
Current tax expense increased $255.3 million in 2006 as compared to 2005. In addition to higher earnings
before tax in 2006, we received approximately $204.7 million in current tax benefits in 2005 from ordinary losses for tax
purposes resulting from restructuring our international businesses consistent with our strategic realignment, the July
2005 maturity of our Euro denominated bonds, and a 2005 current tax benefit related to an amendment on a previously
filed return. Deferred tax expense decreased $179.9 million primarily related to the tax losses mentioned above that
increased deferred tax expense in 2005.
Minority Interest, net of tax
Minority interest expense increased $14.1 million during 2006 as compared to 2005 as a result of the initial
public offering of 10% of our subsidiary Clear Channel Outdoor Holdings, Inc., which we completed on November 11,
2005.
Discontinued Operations
We completed the spin-off of our live entertainment and sports representation businesses on December 21,
2005. Therefore, we reported the results of operations for these businesses through December 21, 2005 in discontinued
operations.
We had definitive asset purchase agreements for the sale of 39 of our radio stations as of December 31, 2006.
The results of operations for these stations, along with 5 stations which were sold in the fourth quarter of 2006, are
reported as discontinued operations.
Radio Broadcasting Results of Operations
Our radio broadcasting operating results were as follows:
(In thousands) Years Ended December 31, % Change
2006 2005 2006 v. 2005
Revenue $ 3,697,190 $ 3,502,508 6%
Direct operating expenses 1,028,439 958,071 7%
Selling, general and administrative expense 1,252,556 1,207,800 4%
Depreciation and amortization 135,980 139,276 (2%)
Operating income $ 1,280,215 $ 1,197,361 7%
Our radio broadcasting revenue increased 6% during 2006 as compared to 2005 primarily from an increase in
both local and national advertising revenues. This growth was driven by an increase in yield and average unit rates. The
number of 30 second and 15 second commercials broadcast as a percent of total minutes sold increased during 2006 as
compared to 2005. The overall revenue growth was primarily focused in our top 100 media markets. Significant
advertising categories contributing to the revenue growth for the year were political, services, automotive, retail and
entertainment.
Our radio broadcasting direct operating expenses increased $70.4 million during 2006 as compared to 2005.
Included in direct operating expenses for 2006 were share-based payments of $11.1 million as a result of adopting FAS
123(R). Also contributing to the increase were added costs of approximately $45.2 million from programming expenses
primarily related to an increase in talent expenses, music license fees, new shows and affiliations in our syndicated radio
business and new distribution initiatives. Our SG&A expenses increased $44.8 million primarily as a result of