iHeartMedia 2005 Annual Report Download - page 41

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41
Americas Outdoor Advertising Results of Operations
Our Americas outdoor advertising operating results were as follows:
(In thousands) Years Ended December 31, % Change
2004 2003 2004 v. 2003
Revenue $ 1,092,089 $ 1,006,376 9%
Direct operating expenses 468,571 435,075 8%
Selling, general and administrative expenses 173,010 161,579 7%
Depreciation and amortization 186,620 194,237 (4%)
Operating income $ 263,888 $ 215,485 22%
During 2004, revenues increased approximately $85.7 million, or 9%, over 2003. Revenue growth occurred
across our inventory, with bulletins and posters leading the way. Increased rates drove the growth in bulletin revenues,
partially offset by a decrease in occupancy. We also grew rates on our poster inventory in 2004, with occupancy flat
compared to 2003. Revenue growth occurred across the nation, fueled by growth in Los Angeles, New York, Miami,
San Antonio, Seattle and Cleveland. The client categories leading revenue growth remained consistent throughout the
year, the largest being entertainment. Business and consumer services was also a strong client category and was led by
advertising spending from banking and telecommunications clients. Revenues from the automotive client category
increased due to national, regional and local auto dealer advertisements.
Direct operating expenses increased approximately $33.5 million, or 8%, during 2004 as compared to 2003
primarily as a result of $21.8 million from site lease rent expense as a result of an increase in revenue-share payments
associated with the increase in revenues. Our SG&A in 2004 increased approximately $11.4 million, or 7%, primarily
from approximately $5.1 million related to commission and wage expenses relative to the growth in revenue.
International Outdoor Advertising Results of Operations
Our international outdoor advertising operating results were as follows:
(In thousands) Years Ended December 31, % Change
2004 2003 2004 v. 2003
Revenue $ 1,354,951 $ 1,168,221 16%
Direct operating expenses 793,630 698,311 14%
Selling, general and administrative expenses 326,447 295,314 11%
Depreciation and amortization 201,597 185,403 9%
Operating income $ 33,277 $ (10,807) 408%
During 2004, revenues increased approximately $186.7 million, or 16%, over 2003, including approximately
$128.6 million from foreign exchange increases. Street furniture sales in the United Kingdom, Belgium, Australia, New
Zealand and Denmark were the leading contributors to our revenue growth. We saw strong demand for our street
furniture inventory, enabling us to realize an increase in the average revenues per display. Our billboard revenues
increased slightly as a result of an increase in average revenues per display. Also contributing to the increase was
approximately $10.4 million related to the consolidation of our outdoor advertising joint venture in Australia during the
second quarter of 2003, which we had previously accounted for under the equity method of accounting. Tempering our
2004 results were a difficult competitive environment for billboard sales in the United Kingdom and challenging market
conditions for all of our products in France.
Direct operating expenses increased $95.3 million, or 14%, during 2004 as compared to 2003. Included in the
increase is approximately $76.0 million from foreign exchange increases. In addition to foreign exchange, direct
operating expenses grew approximately $19.3 million during this period, principally from higher site lease rent expense
and approximately $6.2 million from the consolidation of a joint venture in Australia, which was previously accounted
for under the equity method. SG&A increased $31.1 million, or 11%, during 2004 as compared to 2003. Included in
the increase is approximately $31.3 million from foreign exchange increases. After the effect of foreign exchange
increases, SG&A declined approximately $0.2 million. The decline is primarily due to a restructuring charge of $13.8
million in France taken during 2003, partially offset by a restructuring charge of $4.1 million in Spain taken during
2004, $2.6 million associated with the consolidation of a joint venture in Australia, as well as increased commission
expenses associated with the increase in revenue during 2004.
Depreciation and amortization increased approximately $16.2 million in 2004 as compared to 2003 primarily
attributable to foreign exchange increases.