SG&A costs for the three-month period ended December 31, 2012 were $8.5 million which is similar to the costs incurred in the 2011-period. Included in SG&A costs are share-based payments of $0.4 million in the 2012-quarter as compared to a $0.5 million in the 2011-quarter. Excluding these costs, SG&A costs represented 10 percent of consolidated revenue in the 2012 three-month period compared to 11 percent in the 2011-period.
For the year ended December 31, 2012, SG&A costs increased by 9 percent to $34.5 million as compared to $31.6 million in 2011. Excluding share-based payments of $2.3 million in the 2012-year and $3.0 million in the 2011-year, SG&A costs as a percentage of consolidated revenue were 11 percent in both years.
SG&A costs, excluding share-based payments, generally increased in dollar terms during 2012 due to higher payroll expenses and marketing related costs associated with stronger US and international activity.
Share-based payments relate to the amortization of the fair values of issued options of the Corporation using the Black-Scholes model. In the three-month period and year ended December 31, 2012, share-based payments decreased by 15 percent and 24 percent, respectively, as the Corporation has not made significant option issuances since December 2011.
(Stated in thousands of dollars)
Three-month periods ended Years ended December 31, December 31, % % 2012 2011 Change 2012 2011 Change--------------------------------------------------------------------------------------------------------------------------------------------------------Research and development expense 321 503 (36) 1,985 2,124 (7)--------------------------------------------------------------------------------------------------------------------------------------------------------
Research and development ("R&D") expenditures charged to net earnings during the three-month periods ended December 31, 2012 and 2011 were $0.3 million and $0.5 million, respectively. In addition, during the same 2012-period, $39,000 (2011 - $128,000) were capitalized as development costs on certain projects.
For the year ended December 31, 2012, R&D expenditures of $2.1 million were incurred, of which $151,000 were capitalized as deferred development costs. R&D expenditures for the year ended December 31, 2011 were $3.2 million, of which $1.1 million were capitalized.
(Stated in thousands of dollars)
Three-month periods ended Years ended December 31, December 31, 2012 2011 % Change 2012 2011 % Change--------------------------------------------------------------------------------------------------------------------------------------------------------Finance expense 1,091 646 69 3,233 2,097 54--------------------------------------------------------------------------------------------------------------------------------------------------------
Finance expenses relate to interest charges on the Corporation's long-term and short-term bank facilities. For the three-month period ended December 31, 2012, finance charges increased to $1.1 million from $0.6 million in the 2011-period. Finance charges increased to $3.2 million in the 2012-year from $2.1 million in 2011. The increase in the finance expense in both 2012-periods is the result of additional bank borrowings made to fund PHX Energy's capital expenditure programs in 2011 and 2012.
