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

Annual report pursuant to Section 13 and 15(d)

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 6. PROPERTY AND EQUIPMENT

The following is a summary of the categories of our property and equipment:

	As of December 31,
	2014		2015
	(Dollars in thousands)
Land	$	29,424	$	31,565
Buildings		24,898		25,448
Office furnishings and equipment		39,772		39,040
Antennae, towers and transmitting equipment		78,628		84,296
Studio, production and mobile equipment		30,202		30,598
Computer software and website development costs		26,593		28,134
Record and tape libraries		59		55
Automobiles		1,205		1,298
Leasehold improvements		19,634		20,799
Construction-in-progress		4,307		6,632
	$	254,722	$	267,865
Less accumulated depreciation		(155,495)		(162,382)
	$	99,227	$	105,483

Depreciation expense was approximately $12.4 million, $12.6 million, and $12.4 million for the years ended December 31, 2015, 2014, and 2013, respectively, which includes depreciation of $53,000 for each of these years on a radio station tower valued at $0.8 million under a capital lease obligation. Accumulated depreciation associated with the capital lease was $464,000, $411,000 and $344,000 at December 31, 2015, 2014 and 2013, respectively.

Based on changes in management’s planned usage, we classified land in Covina, California as held for sale as of June 2012. We evaluated the land for impairment in accordance with guidance for impairment of long-lived assets held for sale. We determined that the carrying value of the land exceeded the estimated fair value less costs to sell. We recorded an impairment charge of $5.6 million associated with the land based on our 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 the fair value determined by the third-party, we recorded an additional impairment charge of $1.2 million associated with the land. We continue to market the land for sale and do not intend on using the land in our operations.

There were no indications of impairment present during the period ending December 31, 2015 and it is our intent to continue to pursue the sale of this 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, 2015

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