iHeartMedia 2012 Annual Report Download - page 44

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41
outdoor segment.
Equity in earnings of nonconsolidated affiliates of $5.7 million for 2010 included an $8.3 million impairment related to an
equity investment in our International outdoor segment.
Gain (Loss) on Extinguishment of Debt
Loss on extinguishment of debt of $1.4 million for 2011 primarily related to the accelerated expensing of $5.7 million of loan
fees upon the prepayment of $500.0 million of our senior secured credit facilities in connection with the February 2011 Offering
described elsewhere in this MD&A, partially offset by an aggregate gain of $4.3 million on the repurchase of our 5.5% senior notes
due 2014.
Gain on extinguishment of debt of $60.3 million in 2010 primarily related to an aggregate gain on the repurchase of our
senior toggle notes.
Other Expense - Net
Other expense of $3.2 million for 2011 primarily related to miscellaneous bank fees and foreign exchange losses on short-
term intercompany accounts.
Other expense of $13.8 million in 2010 primarily related to $12.8 million in foreign exchange transaction losses on short-
term intercompany accounts.
Income Tax Benefit
The effective tax rate for the year ended December 31, 2011 was 32.0% as compared to 25.7% for the year ended
December 31, 2010. The effective tax rate for 2011 was favorably impacted by our settlement of U.S. Federal and state tax
examinations during the year. Pursuant to the settlements, we recorded a reduction to income tax expense of approximately
$16.3 million to reflect the net tax benefits of the settlements. This benefit was partially offset by additional tax recorded during 2011
related to the write-off of deferred tax assets associated with the vesting of certain equity awards and our inability to benefit from
certain tax loss carryforwards in foreign jurisdictions.
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
jurisdictions 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.
CCME Results of Operations
Our CCME operating results were as follows:
(In thousands)
Years Ended December 31,
%
2011
2010
Change
Revenue
$
2,986,828
$
2,869,499
4%
Direct operating expenses
849,265
808,867
5%
SG&A expenses
980,960
963,853
2%
Depreciation and amortization
268,245
256,673
5%
Operating income
$
888,358
$
840,106
6%
CCME revenue increased $117.3 million during 2011 compared to 2010, primarily driven by a $107.1 million increase due to
our traffic acquisition. We experienced increases in our digital services revenue as a result of improved rates, increased listening
hours through our iHeartRadio platform and revenues related to our iHeartRadio Music Festival. Offsetting the increases were slight
declines in local and national advertising across various markets and advertising categories including telecommunication, travel and
tourism and, most notably, political.
Direct operating expenses increased $40.4 million during 2011 compared to 2010, primarily due to an increase of