Salem Media Group, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2012

NOTE 4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:


	As of December 31,
	2011			2012
	(Dollars in thousands)
Land	$	37,107		$	28,846
Buildings		24,690			24,663
Office furnishings and equipment		37,523			37,935
Antennae, towers and transmitting equipment		73,517			74,897
Studio and production equipment		29,110			29,234
Computer software and website development costs		14,817			18,859
Record and tape libraries		65			65
Automobiles		1,031			1,107
Leasehold improvements		16,558			16,721
Construction-in-progress		2,512			2,963

	$	236,930		$	235,290
Less accumulated depreciation		(125,708	)		(135,823	)

	$	111,222		$	99,467

Depreciation expense was approximately $12.6 million, $12.5 million and $12.3 million for the years ended December 31, 2010, 2011, and 2012, respectively, which includes depreciation of $53,000 for each of the years ended December 31, 2010, 2011 and 2012 on a radio station tower that was valued at $0.8 million under a capital lease obligation. Accumulated depreciation associated with the capital lease was $185,000, $238,000 and $291,000 at December 31, 2010, 2011 and 2012, respectively.

During June 2012, based on changes in managements’ planned usage, land in Covina, CA was classified as held for sale and evaluated for impairment as of that date. In accordance with the authoritative guidance for impairment of long-lived assets held for sale, we determined the carrying value of the land exceeded the estimated fair value less cost to sell. We recorded an impairment charge of $5.6 million associated with this land based on the estimated sale price. In December 2012, after several purchase offers for the land were terminated, we obtained a third party valuation for the land. Based on this fair value appraisal, we recorded an additional $1.2 million impairment charge associated with the land.

The table below presents the fair value measurements used to value this asset.


			Fair Value Measurements Using:
			(Dollars in thousands)
Description	As of December 31, 2012		Quoted prices in active markets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Long-Lived Asset Held for Sale	$	1,700			$	1,700	$	6,808

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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