iHeartMedia 2012 Annual Report Download - page 41

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38
$9.4 million, compared to 2011. These increases are partially offset by a favorable court ruling resulting in a $7.8 million decrease in
expenses.
Depreciation and amortization decreased $19.0 million, primarily due to increases in 2011 for accelerated depreciation and
amortization related to the removal of various structures, including the removal of traditional billboards in connection with the
continued deployment of digital billboards.
International Outdoor Advertising Results of Operations
Our International outdoor operating results were as follows:
(In thousands)
Years Ended December 31,
%
2012
2011
Change
Revenue
$
1,667,687
$
1,751,149
(5%)
Direct operating expenses
1,024,596
1,067,022
(4%)
SG&A expenses
364,502
339,748
7%
Depreciation and amortization
205,258
219,908
(7%)
Operating income
$
73,331
$
124,471
(41%)
International outdoor revenue decreased $83.5 million during 2012 compared to 2011, including $78.9 million of negative
movements in foreign exchange. Excluding the impact of movements in foreign exchange, revenues declined in certain geographies as
a result of weakened macroeconomic conditions, particularly in France, southern Europe and the Nordic countries, as well as the
impact of $15.1 million due to the divestiture of our international neon business during the third quarter of 2012. These decreases were
partially offset by countries including Australia, China and Mexico where economic conditions were stronger, and in the United
Kingdom which benefited from the 2012 Summer Olympics in London. These and other countries experienced increased revenues,
primarily related to our shelters, street furniture, equipment sales and billboard businesses. New contracts won during 2011 helped
drive revenue growth.
Direct operating expenses decreased $42.4 million, attributable to a $49.4 million decrease from movements in foreign
exchange. The increase in expenses excluding the impact of foreign exchange was primarily due to higher site lease expense of
$12.5 million associated with new contracts, partially offset by lower site lease expenses in those markets where revenue declined as a
result of weakened macroeconomic conditions. The divestiture of our international neon business resulted in a $9.0 million decline in
direct operating expenses. SG&A expenses increased $24.8 million including a $21.6 million decrease from movements in foreign
exchange. The increase was primarily due to $22.7 million of expense related to the negative impact of litigation in Latin America.
Also contributing to the increase were $13.9 million related to revenue and cost initiatives and $4.1 million related to increased shelter
maintenance in Latin America, partially offset by a $3.2 million impact from the divestiture of our international neon business.
Depreciation and amortization declined $14.7 million, including $9.3 million of negative movements in foreign exchange,
primarily as a result of assets that became fully depreciated or amortized during 2011.