iHeartMedia 2012 Annual Report Download - page 43

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40
Consolidated Selling, General and Administrative (“SG&A”) Expenses
SG&A expenses increased $47.0 million during 2011 including an increase of $16.6 million due to the effect of movements
in foreign exchange compared to 2010. CCME SG&A expenses increased $17.1 million, primarily due to an increase of $41.0 million
related to our traffic acquisition, partially offset by declines in compensation expense. SG&A expenses increased $1.1 million in our
Americas outdoor segment, which was primarily as a result of increased commission expense associated with the increase in revenue.
International outdoor SG&A expenses increased $45.1 million primarily due to a $16.6 million increase from movements in foreign
exchange, a $6.5 million increase related to the unfavorable impact of litigation and increased selling and marketing expenses
associated with the increase in revenue.
Corporate Expenses
Corporate expenses decreased $56.9 million during 2011 compared to 2010 primarily as a result of a decrease in bonus
expense related to our variable compensation plans and decreased expense related to employee benefits. Also contributing to the
decline was a decrease in share-based compensation related to the shares tendered by Mark P. Mays to us in the third quarter of 2010
pursuant to a put option included in his amended employment agreement and the cancellation of certain of his options during 2011,
and a decrease in restructuring expenses. Partially offsetting the decreases was an increase in general corporate infrastructure support
services and initiatives.
Depreciation and Amortization
Depreciation and amortization increased $30.4 million during 2011 compared to 2010, primarily due to increases in
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. Increased depreciation and amortization of $7.5 million related to
our traffic acquisition also contributed to the increase. In addition, the impact of movements in foreign exchange contributed an
increase of $7.4 million during 2011.
Impairment Charges
We performed our annual impairment tests on October 1, 2011 and 2010 on our goodwill, FCC licenses, billboard permits,
and other intangible assets and recorded impairment charges of $7.6 million and $15.4 million, respectively. Please see Note 2 to the
consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for a further description of the
impairment charges.
Other Operating Income (Expense) - Net
Other operating income of $12.7 million in 2011 primarily related to a gain on the sale of a tower and proceeds received from
condemnations of bulletins.
Other operating expense of $16.7 million for 2010 primarily related to a $25.3 million loss recorded as a result of the transfer
of our subsidiary’s interest in its Branded Cities business, partially offset by a $6.2 million gain on the sale of representation contracts.
Interest Expense
Interest expense decreased $67.1 million during 2011 compared to 2010. Higher interest expense associated with the 2011
issuances of our 9.0% Priority Guarantee Notes was offset by decreased expense on term loan facilities due to the prepayment of
$500.0 million of our senior secured credit facilities made in connection with the February 2011 Offering and the paydown of our
receivables-based credit facility made prior to, and in connection with, the June 2011 Offering. Also contributing to the decline in
interest expense was the timing of repurchases and repayments at maturity of certain of our senior notes. Our weighted average cost of
debt during 2011 and 2010 was 6.2% and 6.1%, respectively.
Loss on Marketable Securities
The loss on marketable securities of $4.8 million and $6.5 million during 2011 and 2010, respectively, primarily related to
the impairment of our investment in 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 value was less
than cost, the financial condition and the 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.
Equity in Earnings of Nonconsolidated Affiliates
Equity in earnings of nonconsolidated affiliates of $27.0 million for 2011 related to an equity investment in our International