iHeartMedia 2011 Annual Report Download - page 41

I
nterest Expense
Interest expense increased $32.5 million during 2010 compared to 2009, primarily as a result of the issuance of $2.5 billion
in subsidiary senior notes in December 2009. This increase was partially offset by decreased interest expense due to maturities of our
4.5% senior notes due January 2010, repurchases of our senior toggle notes during the first quarter of 2010, repurchases of our senior
notes during the fourth quarter of 2009 and prepayment of $2.0 billion of term loans in December 2009. Our weighted average cost of
debt for 2010 and 2009 was 6.1% and 5.8%, respectively.
L
oss on Marketable Securities
The loss on marketable securities of $6.5 million and $13.4 million in 2010 and 2009, respectively, related primarily to the
impairment of INM. The fair value of INM was below cost for an extended period of time. As a result, we considered the guidance in
ASC 320-10-S99 and reviewed the length of the time and the extent to which the market was less than cost and the financial condition
and near-term prospects of the issuer. After this assessment, we concluded that the impairment at each date was other than temporary
and recorded non-cash impairment charges to our investment in INM as noted above.
E
quity in Earnings (Loss) of Nonconsolidated Affiliates
Equity in earnings of nonconsolidated affiliates in 2010 included an $8.3 million impairment of an equity investment in our
International outdoor segment.
Equity in loss of nonconsolidated affiliates for 2009 included 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
Communicaciones (“Grupo ACIR”).
Other Income – Net
Other income of $46.5 million in 2010 primarily related to an aggregate gain of $60.3 million on the repurchase of our
senior toggle notes partially offset by a $12.8 million foreign exchange loss on the translation of short-term intercompany notes.
Please refer to the “Debt Repurchases, Maturities and Other” section within this MD&A for additional discussion of the repurchase.
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, Maturities and Other”
section within this MD&A for additional discussion of the repurchases and debt retirement.
I
ncome Tax Benefit
The effective tax rate for the year ended December 31, 2010 was 25.7% as compared to 10.9% for the year ended
December 31, 2009. The effective tax rate for 2010 was impacted by our inability to benefit from tax losses in certain foreign
j
urisdictions due to the uncertainty of the ability to utilize those losses in future years. In addition, we recorded a valuation allowance
of $13.6 million in 2010 against deferred tax assets related to capital allowances in foreign jurisdictions due to the uncertainty of the
ability to realize those assets in future periods.
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 from tax losses in certain foreign jurisdictions as discussed above.
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