iHeartMedia 2010 Annual Report Download - page 43

E
quity in Earnings (Loss) of Nonconsolidated Affiliates
Equity in loss of nonconsolidated affiliates of $20.7 million in 2009 is primarily related to a $22.9 million impairment of equity
investments in our International outdoor segment in addition to a $4.0 million loss on the sale of a portion of our investment in Grupo
ACIR. Subsequent to the January 2009 sale of 57% of our remaining 20% interest in Grupo ACIR, we no longer accounted for our
investment as an equity method investment and began accounting for it at cost in accordance with ASC 323.
Included in equity in earnings of nonconsolidated affiliates in 2008 is a $75.6 million gain on the sale of our 50% interest in
Clear Channel Independent, a South African outdoor advertising company.
Other Income (Expense) – Net
Other income of $679.7 million in 2009 relates to an aggregate gain of $368.6 million on the repurchases of certain of our senior
notes and an aggregate gain of $373.7 million on the repurchases of certain of our senior toggle notes and senior cash pay notes. The
gains on extinguishment of debt were partially offset by a $29.3 million loss related to loan costs associated with the $2.0 billion
retirement of certain of our outstanding senior secured debt. Please refer to the “Debt Repurchases, Tender Offers, Maturities and
Other” section within this MD&A for additional discussion of the repurchases and debt retirement.
Other income of $126.4 million in 2008 relates to an aggregate net gain of $94.7 million on the tender of certain of our
outstanding notes, a $29.3 million foreign exchange gain on translating short-term intercompany notes and an $8.0 million dividend
received from a cost investment, partially offset by a $4.7 million impairment of our investment in a radio partnership.
I
ncome Taxes
The effective tax rate for the year ended December 31, 2009 was 10.9% as compared to 10.2% for the year ended December 31,
2008. The effective tax rate for 2009 was impacted by the goodwill impairment charges, which are not deductible for tax purposes,
along with our inability to benefit tax losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses
in future years.
The 2008 effective tax rate was impacted by 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.
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 o
f
tax, related to the sale of our television business and the sale of radio stations.
Radio Broadcasting Results of Operations
Our radio broadcasting operating results were as follows:
38
(In thousands)
Years Ended December 31,
2009
Post-Mer
g
er
2008
Combined
% Chan
g
e
Revenue $ 2,736,404 $ 3,293,874 (17%)
Direct o
p
eratin
g
ex
p
enses 901,799 979,324 (8%)
SG&A ex
p
enses 933,505 1,182,607 (21%)
De
p
reciation and amortization 261,246 152,822 71%
O
p
eratin
g
income $ 639,854 $ 979,121 (35%)