iHeartMedia 2009 Annual Report Download - page 54

SG&A Expenses
Our SG&A expenses increased approximately $67.3 million during 2008 compared to 2007. Approximately $48.3 million
of this increase occurred during the fourth quarter primarily as a result of an increase in severance. Our international outdoor business
contributed approximately $41.9 million to the increase primarily from movements in foreign exchange of $11.2 million and an
increase in severance in 2008 associated with the restructuring program of approximately $20.1 million. Our Americas outdoor
SG&A expenses increased approximately $26.4 million largely from increased bad debt expense of $15.5 million and an increase in
severance in 2008 associated with the restructuring program of $4.5 million. SG&A expenses in our radio business decreased
approximately $7.5 million primarily from reduced marketing and promotional expenses and a decline in commissions associated
with the decline in revenues, partially offset by increase in severance in 2008 associated with the restructuring program of
approximately $32.6 million.
D
epreciation and Amortization
Depreciation and amortization expense increased $130.2 million in 2008 compared to 2007 primarily due to $86.0 million
in additional depreciation and amortization associated with the preliminary purchase accounting adjustments to the acquired assets,
$29.3 million of accelerated depreciation in our Americas and International outdoor segments from billboards that were removed and
approximately $11.3 million related to impaired advertising display contracts in our international segment.
Corporate Expenses
The increase in corporate expenses of $46.4 million in 2008 compared to 2007 primarily relates to a $16.7 million increase
in non-cash compensation related to awards that vested at closing of the merger, a $6.3 million management fee to the Sponsors in
connection with the management and advisory services provided following the merger, and $6.2 million related to outside
professional services.
M
erger Expenses
Merger expenses for 2008 were $155.8 million and include accounting, investment banking, legal and other expenses.
I
mpairment Charge
The global economic downturn has adversely affected advertising revenues across our businesses in recent months. As
discussed above, we performed an impairment test in the fourth quarter of 2008 and recognized a non-cash impairment charge to our
indefinite-lived intangible assets and goodwill of $5.3 billion.
Other Operating Income - Net
The $28.0 million income for 2008 consists of a gain of $3.3 million from the sale of sports broadcasting rights, a $7.0
million gain on the disposition of a representation contract, a $4.0 million gain on the sale of property, plant and equipment, a $1.7
million gain on the sale of international street furniture and $9.6 million from the favorable settlement of a lawsuit. The $14.1 million
income in 2007 related primarily to $8.9 million gain from the sale of street furniture assets and land in our international outdoor
segment as well as $3.4 million from the disposition of assets in our radio segment.
I
nterest Expense
The increase in interest expense for 2008 over 2007 is the result of the increase in our average debt outstanding after the
merger. Our outstanding debt was $19.5 billion and $6.6 billion at December 31, 2008 and 2007, respectively.
Gain (Loss) on Marketable Securities
During the fourth quarter of 2008, we recorded a non-cash impairment charge to certain available-for-sale securities. The
fair value of these available-for-sale securities was below their cost each month subsequent to the closing of the merger. 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 value was less
than cost and the financial condition and near-term prospects of the issuer. After this assessment, we concluded that the impairment
was other than temporary and recorded a $116.6 million impairment charge. This loss was partially offset by a net gain of $27.0
million recorded in the second quarter of 2008 on the unwinding of our secured forward exchange contracts and the sale of our AMT
shares.
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