What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-05-07 · 588 added, 227 removed, 540 unchanged (60% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

Successor Company

(In thousands, except share and per share data) Successor Company

2020 December 31,

CURRENT ASSETS

1 unchanged sentence

Accounts receivable, net of allowance of $ 26,201 in 2020 and $ 12,629 in 2019

570,117 902,908

Prepaid expenses 86,003 71,764

6 unchanged sentences

Other intangibles, net 2,047,954 2,176,540

Goodwill 2,101,657 3,325,622

Operating lease right-of-use assets 840,797 881,762

Other assets 110,920 96,216

Total Assets $ 8,905,859 $ 11,021,099

CURRENT LIABILITIES

8 unchanged sentences

Series A Mandatorily Redeemable Preferred Stock, par value $ 0.001 , authorized 60,000 shares, 60,000 shares issued in 2020 and 2019

60,000 60,000

Noncurrent operating lease liabilities 771,013 796,203

12 unchanged sentences

Cost of shares ( 232,623 in 2020 and 128,074 in 2019) held in treasury

( 3,018 ) ( 2,078 )

Total Stockholders' Equity 1,065,642 2,945,441

3 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share data)

Successor Company

Predecessor Company

Three Months Ended

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data) Successor Company Predecessor Company

Three Months Ended June 30, Period from May 2, 2019 through June 30, Period from April 1, 2019 through May 1,

2020 2019 2019

Revenue $ 487,648 $ 635,646 $ 277,674

Operating expenses:

4 unchanged sentences

Impairment charges 5,378 — —

Other operating expense, net

Other operating income (expense), net ( 506 ) 3,246 ( 127 )

Operating income (loss) ( 159,087 ) 133,688 47,891

Interest expense (income), net 81,963 69,711 ( 400 )

Gain on investments, net 1,280 — —

Equity in loss of nonconsolidated affiliates ( 31 ) ( 24 ) ( 59 )

Other income (expense), net ( 1,258 ) ( 9,157 ) 150

Reorganization items, net — — 9,497,944

Income (loss) from continuing operations before income taxes ( 241,059 ) 54,796 9,546,326

Income tax benefit (expense) 43,742 ( 16,003 ) ( 100,289 )

Income (loss) from continuing operations ( 197,317 ) 38,793 9,446,037

Income from discontinued operations, net of tax — — 1,854,677

Net income (loss) ( 197,317 ) 38,793 11,300,714

Less amount attributable to noncontrolling interest — — 2,190

Net income (loss) attributable to the Company $ ( 197,317 ) $ 38,793 $ 11,298,524

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 292 ( 328 ) ( 3,493 )

Other comprehensive income (loss), net of tax 292 ( 328 ) ( 3,493 )

Comprehensive income (loss) ( 197,025 ) 38,465 11,295,031

Less amount attributable to noncontrolling interest — — ( 788 )

Comprehensive income (loss) attributable to the Company $ ( 197,025 ) $ 38,465 $ 11,295,819

Net income (loss) attributable to the Company per common share:

Basic net income (loss) per share

From continuing operations $ ( 1.35 ) $ 0.27 $ 110.28

From discontinued operations — — 21.63

Basic net income (loss) per share $ ( 1.35 ) $ 0.27 $ 131.91

Weighted average common shares outstanding - Basic 145,963 145,275 85,652

Diluted net income (loss) per share

From continuing operations $ ( 1.35 ) $ 0.27 $ 110.28

From discontinued operations — — 21.63

Diluted net income (loss) per share $ ( 1.35 ) $ 0.27 $ 131.91

Weighted average common shares outstanding - Diluted 145,963 145,298 85,652

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data) Successor Company Predecessor Company

Six Months Ended June 30, Period from May 2, 2019 through June 30, Period from January 1, 2019 through May 1,

2020 2019 2019

Revenue $ 1,268,282 $ 635,646 $ 1,073,471

Operating expenses:

Direct operating expenses (excludes depreciation and amortization) 551,498 198,772 381,184

Selling, general and administrative expenses (excludes depreciation and amortization) 605,360 220,231 427,230

Corporate expenses (excludes depreciation and amortization) 66,368 26,818 53,647

Depreciation and amortization 200,115 59,383 52,834

Impairment charges 1,733,235 — 91,382

Other operating income (expense), net ( 1,572 ) 3,246 ( 154 )

Operating income (loss) ( 1,889,866 ) 133,688 67,040

Interest expense (income), net 172,052 69,711 ( 499 )

Loss on investments, net ( 8,675 ) — ( 10,237 )

Equity in loss of nonconsolidated affiliates ( 595 ) ( 24 ) ( 66 )

Other expense, net

Other income (expense), net ( 9,118 ) ( 9,157 ) 23

Reorganization items, net — — 9,461,826

Loss from continuing operations before income taxes

Income tax benefit

Income (loss) from continuing operations before income taxes ( 2,080,306 ) 54,796 9,519,085

Income tax benefit (expense) 194,253 ( 16,003 ) ( 39,095 )

Income (loss) from continuing operations ( 1,886,053 ) 38,793 9,479,990

Loss from discontinued operations, net of tax

Income from discontinued operations, net of tax — — 1,685,123

Net income (loss) ( 1,886,053 ) 38,793 11,165,113

Less amount attributable to noncontrolling interest — — ( 19,028 )

Net loss attributable to the Company

Net income (loss) attributable to the Company $ ( 1,886,053 ) $ 38,793 $ 11,184,141

Other comprehensive income (loss), net of tax:

1 unchanged sentence

Other comprehensive income (loss), net of tax 188 ( 328 ) ( 1,175 )

Comprehensive loss

Comprehensive income (loss) ( 1,885,865 ) 38,465 11,182,966

Less amount attributable to noncontrolling interest — — 2,784

Comprehensive loss attributable to the Company

Net loss attributable to the Company per common share:

Comprehensive income (loss) attributable to the Company $ ( 1,885,865 ) $ 38,465 $ 11,180,182

Net income (loss) attributable to the Company per common share:

Basic net income (loss) per share

6 unchanged sentences

From discontinued operations — — 19.76

Diluted net loss per share

Diluted net income (loss) per share $ ( 12.94 ) $ 0.27 $ 129.68

Weighted average common shares outstanding - Diluted 145,788 145,298 86,241

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share data)

Controlling Interest

(In thousands, except share data) Controlling Interest

Common Shares (1)

Retained Earnings (Accumulated Deficit)

Interest Common

Stock Additional

Capital Accumulated Deficit Accumulated

Comprehensive

Special Warrants

December 31, 2019 (Successor)

Loss Treasury

Shares Class B

Shares Special Warrants Total

March 31, 2020 (Successor)

59,930,396 6,899,611 78,919,386 $ 9,123 $ 67 $ 2,830,788 $ ( 1,577,657 ) $ ( 854 ) $ ( 2,165 ) $ 1,259,302

Net loss — — — ( 197,317 ) — — ( 197,317 )

Vesting of restricted stock and other

624,537 — 1 ( 23 ) — — ( 853 ) ( 875 )

Share-based compensation — — 4,240 — — — 4,240

Conversion of Special Warrants to Class A and Class B Shares

877,263 729 ( 877,992 ) — — — — — — —

Conversion of Class B Shares to Class A Shares

145 ( 145 ) — — — — — — —

Cancellation of Special Warrants ( 2,982 ) — — — — — — —

Other comprehensive income

— — — — 292 — 292

June 30, 2020 (Successor)

61,432,341 6,900,195 78,038,412 $ 9,123 $ 68 $ 2,835,005 $ ( 1,774,974 ) $ ( 562 ) $ ( 3,018 ) $ 1,065,642

(1) The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2020.

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share data) Controlling Interest

Common Shares (1)

Interest Common

Stock Additional

Capital Retained Earnings (Accumulated Deficit) Accumulated

Comprehensive

Loss Treasury

Class A Shares Class B

Shares Class C Shares Special Warrants Total

March 31, 2019 (Predecessor)

32,247,361 555,556 58,967,502 — $ 11,437 $ 92 $ 2,075,025 $ ( 13,330,821 ) $ ( 319,284 ) $ ( 2,562 ) $ ( 11,566,113 )

Net income 2,190 — — 11,298,524 — — 11,300,714

Non-controlling interest - Separation ( 13,199 ) — — — — — ( 13,199 )

Accumulated other comprehensive loss - Separation — — — — 307,813 — 307,813

Issuance of restricted stock

132 — — — — — 132

Forfeitures of restricted stock

( 64,750 ) — — — — — — —

Share-based compensation

— — 1,635 — — — 1,635

Share-based compensation - discontinued operations

614 — — — — — 614

— — — — 1 — 1

Other comprehensive loss

( 788 ) — — — ( 2,705 ) — ( 3,493 )

Cancellation of Predecessor equity

( 32,182,611 ) ( 555,556 ) ( 58,967,502 ) ( 386 ) ( 92 ) ( 2,076,660 ) 2,059,998 14,175 2,562 ( 403 )

Issuance of Successor common stock and warrants

56,861,941 6,947,567 81,453,648 8,943 64 2,770,108 ( 27,701 ) — — 2,751,414

May 1, 2019 (Predecessor)

56,861,941 6,947,567 — 81,453,648 $ 8,943 $ 64 $ 2,770,108 $ — $ — $ — $ 2,779,115

May 2, 2019 (Successor)

56,861,941 6,947,567 — 81,453,648 $ 8,943 $ 64 $ 2,770,108 $ — $ — $ — $ 2,779,115

— — — 38,793 — — 38,793

Vesting of restricted stock

11,841 — — — — — — —

Share-based compensation

Conversion of Special Warrants and Class B Shares to Class A Shares

— — 3,039 — — — 3,039

Dividends declared

( 571 ) — — — — — ( 571 )

Other comprehensive loss

March 31, 2020 (Successor)

— — — — ( 328 ) — ( 328 )

June 30, 2019 (Successor)

56,873,782 6,947,567 — 81,453,648 $ 8,372 $ 64 $ 2,773,147 $ 38,793 $ ( 328 ) $ — $ 2,820,048

(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019.

The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2019.

See Notes to Consolidated Financial Statements

(In thousands, except share data)

Controlling Interest

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share data) Controlling Interest

Common Shares (1)

Accumulated Deficit

Interest Common

Stock Additional

Capital Retained Earnings (Accumulated

Deficit) Accumulated

Comprehensive

Class A Shares

Class C Shares

Loss Treasury

Shares Class B

Shares Special Warrants Total

December 31, 2019 (Successor)

57,776,204 6,904,910 81,046,593 $ 9,123 $ 65 $ 2,826,533 $ 112,548 $ ( 750 ) $ ( 2,078 ) $ 2,945,441

— — — ( 1,886,053 ) — — ( 1,886,053 )

Vesting of restricted stock and other

646,223 — 3 ( 25 ) — — ( 940 ) ( 962 )

Share-based compensation — — 8,497 — — — 8,497

Conversion of Special Warrants to Class A Shares and Class B Shares

3,003,854 1,345 ( 3,005,199 ) — — — — — — —

Conversion of Class B Shares to Class A Shares

6,060 ( 6,060 ) — — — — — — —

Cancellation of Special Warrants ( 2,982 ) — — — — — — —

— — — ( 1,469 ) — — ( 1,469 )

Other comprehensive income

— — — — 188 — 188

June 30, 2020 (Successor)

61,432,341 6,900,195 78,038,412 $ 9,123 $ 68 $ 2,835,005 $ ( 1,774,974 ) $ ( 562 ) $ ( 3,018 ) $ 1,065,642

(1) The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2020 or 2019.

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share data) Controlling Interest

Common Shares(1) Non- controlling Interest Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Treasury Stock

Class A Shares Class B Shares Class C Shares Special Warrants Total

December 31, 2018 (Predecessor)

32,292,944 555,556 58,967,502 — $ 30,868 $ 92 $ 2,074,632 $ ( 13,345,346 ) $ ( 318,030 ) $ ( 2,558 ) $ ( 11,560,342 )

Net income (loss) ( 19,028 ) — — 11,184,141 — — 11,165,113

Non-controlling interest - Separation ( 13,199 ) — — — — — ( 13,199 )

Accumulated other comprehensive loss - Separation — — — — 307,813 — 307,813

Adoption of ASC 842, Leases — — — 128,908 — — 128,908

4 unchanged sentences

Payments to non-controlling interests ( 3,684 ) — — — — — ( 3,684 )

Other — — — — 1 — 1

Other comprehensive income (loss) 2,784 — — — ( 3,959 ) — ( 1,175 )

March 31, 2019 (Predecessor)

(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019 .

Cancellation of Predecessor equity ( 32,182,611 ) ( 555,556 ) ( 58,967,502 ) ( 386 ) ( 92 ) ( 2,076,660 ) 2,059,998 14,175 2,562 ( 403 )

Issuance of Successor common stock and warrants 56,861,941 6,947,567 — 81,453,648 8,943 64 2,770,108 ( 27,701 ) — — 2,751,414

May 1, 2019 (Predecessor)

56,861,941 6,947,567 — 81,453,648 $ 8,943 $ 64 $ 2,770,108 $ — $ — $ — $ 2,779,115

May 2, 2019 (Successor)

56,861,941 6,947,567 — 81,453,648 $ 8,943 $ 64 $ 2,770,108 $ — $ — $ — $ 2,779,115

Net income — — — 38,793 — — 38,793

Vesting of restricted stock 11,841 — — — — — — —

Share-based compensation — — 3,039 — — — 3,039

Other ( 571 ) — — — — — ( 571 )

Other comprehensive loss — — — — ( 328 ) — ( 328 )

June 30, 2019 (Successor)

56,873,782 6,947,567 — 81,453,648 $ 8,372 $ 64 $ 2,773,147 $ 38,793 $ ( 328 ) $ — $ 2,820,048

(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019 or 2018.

The Successor Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2019.

See Notes to Consolidated Financial Statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Successor Company

Predecessor Company

Three Months Ended

(In thousands) Successor Company Predecessor Company

Six Months Ended June 30, Period from May 2, 2019 through June 30, Period from January 1, 2019 through May 1,

2020 2019 2019

Cash flows from operating activities:

Loss from discontinued operations

Net income (loss) $ ( 1,886,053 ) $ 38,793 $ 11,165,113

Income from discontinued operations — — ( 1,685,123 )

Reconciling items:

6 unchanged sentences

Share-based compensation 8,497 3,039 498

Loss on disposal of operating and other assets

(Gain) Loss on disposal of operating and other assets 426 ( 3,960 ) ( 143 )

Loss on investments 8,675 — 10,237

3 unchanged sentences

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:

Decrease in accounts receivable

Decrease (increase) in accounts receivable 314,515 ( 108,613 ) 117,263

Increase in prepaid expenses and other current assets ( 12,720 ) ( 14,773 ) ( 24,044 )

Increase in other long-term assets ( 654 ) ( 1,591 ) ( 7,098 )

Decrease in accounts payable and accrued expenses

Increase (decrease) in accounts payable and accrued expenses ( 90,103 ) 21,001 ( 156,885 )

Increase (decrease) in accrued interest ( 12,099 ) 69,294 256

Increase in deferred income 8,281 4,745 13,377

Increase in other long-term liabilities

Cash provided by operating activities from continuing operations

Increase (decrease) in other long-term liabilities 13,002 1,367 ( 79,609 )

Cash provided by (used in) operating activities from continuing operations 102,909 83,201 ( 7,505 )

Cash used for operating activities from discontinued operations — — ( 32,681 )

Net cash provided by operating activities

Net cash provided by (used in) operating activities 102,909 83,201 ( 40,186 )

Cash flows from investing activities:

8 unchanged sentences

Payments on long-term debt and credit facilities ( 283,335 ) — ( 8,294 )

Proceeds from Mandatorily Redeemable Preferred Stock — — 60,000

Settlement of intercompany related to discontinued operations — — ( 159,196 )

Change in other, net ( 1,153 ) ( 684 ) ( 5 )

1 unchanged sentence

Cash provided by financing activities from discontinued operations — — 51,669

Net cash provided by financing activities

Net cash provided by (used for) financing activities 65,512 ( 684 ) ( 55,557 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 325 ) 11 562

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash 117,415 64,741 ( 356,325 )

Cash, cash equivalents and restricted cash at beginning of period 411,618 74,009 430,334

Cash, cash equivalents and restricted cash at end of period

Less cash, cash equivalents and restricted cash of discontinued operations at end of period

Cash, cash equivalents and restricted cash of continuing operations at end of period $ 529,033 $ 138,750 $ 74,009

28 unchanged sentences

See Note 2, Discontinued Operations .

On March 26, 2020, the Company issued a press release announcing that it was withdrawing its previously announced financial guidance for the fiscal year ending December 31, 2020 due to heightened uncertainty related to the novel coronavirus pandemic (“COVID-19”), its impact on the operating and economic environment and related, near-term advertiser spending decisions.

In addition, iHeartCommunications borrowed $ 350.0 million principal amount under its $ 450.0 million senior secured asset-based revolving credit facility (the “ABL Facility”) as a precautionary measure to preserve iHeartCommunications’ financial flexibility in light of the current uncertainty in the global economy resulting from COVID-19.

The proceeds will be available if needed to fund iHeartCommunications’ future working capital requirements or other general corporate purposes.

As of March 31, 2020, after considering $ 47.3 million of outstanding letters of credit, iHeartCommunications had $ 52.7 million available for borrowing under its ABL Facility, such availability being subject to further restrictions contained within the credit agreement governing the ABL Facility.

The Company's revenue in the latter half of the month ended March 31, 2020 was significantly and negatively impacted as a result of a decline in advertising spend driven by COVID-19, and the Company's management took proactive actions to expand the Company’s financial flexibility by reducing expenses and preserving cash as a result of such impact.

Our business has been adversely impacted by the novel coronavirus pandemic (“COVID-19”), its impact on the operating and economic environment and related, near-term advertiser spending decisions.

On March 26, 2020, the Company announced that it was withdrawing its previously issued financial guidance for the fiscal year ending December 31, 2020 due to heightened uncertainty related to COVID-19.

In the second quarter of 2020, the Company repaid $ 115.0 million of the amounts borrowed under the ABL Facility.

As of June 30, 2020, the ABL Facility had a borrowing base of $ 289.4 million and utilization of $ 235.0 million in outstanding borrowings and $ 41.2 million of outstanding letters of credit, resulting in $ 13.2 million of availability, such availability being subject to further restrictions contained within the credit agreement governing the ABL Facility.

In July 2020, iHeartCommunications issued $ 450.0 million of incremental term loans pursuant to an amendment (the “Amendment No.

2”) to the credit agreement (as amended, the “Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Bank of America, N.A., as administrative agent, governing the Company’s $ 2.5 billion aggregate principal amount of senior secured term loans (the “Term Loan Facility”) and used a portion of the proceeds to repay the $ 235.0 million outstanding balance under the ABL Facility.

The remaining proceeds will be available if needed to fund iHeartCommunications' future working capital requirements or other general corporate purposes.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's revenue in the latter half of the month ended March 31, 2020 and in the three months ended June 30, 2020 was significantly and negatively impacted as a result of a decline in advertising spend driven by COVID-19, and the Company's management took proactive actions to expand the Company’s financial flexibility by reducing expenses and preserving cash as a result of such impact.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES Act”).

2 unchanged sentences

For more information on the expected benefits of the CARES Act on the Company's income tax liabilities, see Note 8, Income Taxes .

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2020 , the Company had approximately $ 646.8 million in cash, which includes the $ 350.0 million borrowed under the ABL Facility.

As of June 30, 2020, the Company had approximately $ 517.7 million in cash, which includes the $ 235.0 million borrowed under the ABL Facility that was subsequently repaid in July 2020 using the proceeds of the $ 450.0 million issuance of incremental term loans.

While the Company expects COVID-19 to negatively impact the results of operations, cash flows and financial position of the Company, the related financial impact cannot be reasonably estimated at this time.

Based on the plans that the Company has put in place, it expects to be able to meet its obligations as they become due over the coming year.

As discussed below, the Company applied fresh start accounting as of May 1, 2019 in connection with its emergence from Chapter 11 bankruptcy, which required stating the Company’s assets and liabilities, including intangible assets and goodwill, at estimated fair values.

Such fair values recorded in fresh start accounting reflected the economic conditions in place at the time of emergence.

As a result of uncertainty related to COVID-19 and its negative impact on the Company's business and the public trading values of its debt and equity, the Company was required to perform interim impairment tests on its long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020 because such factors indicated that the Company's long-lived assets, intangible assets and goodwill balances may be impaired.

The estimated fair value of the Company’s Federal Communication Commission (“FCC”) licenses, which have indefinite lives, was below their carrying values, which resulted in a non-cash impairment charge of $ 502.7 million .

As discussed, the United States economy is undergoing a period of economic disruption and uncertainty, which has caused, among other things, lower consumer and business spending.

These disruptions and the continuing impact of adverse economic, financial and industry conditions on the demand for advertising negatively impacted the key assumptions in the discounted cash flow models used to value FCC licenses.

The Company also performed interim goodwill impairment tests as of March 31, 2020 .

The estimated fair value of one of the reporting units was below its carrying value, which required the Company to compare the implied fair value of the reporting units’ goodwill with its carrying value.

As a result, the Company recognized a non-cash impairment charge of $ 1.2 billion to reduce goodwill.

The macroeconomic factors discussed above had an adverse effect on the estimated cash flows and discount rates used in the discounted cash flow model.

The Company used the best information available to estimate fair values of its long-lived assets, intangible assets and goodwill for purposes of interim impairment testing.

Uncertainty regarding the full extent of the economic downturn as a result of COVID-19, as well as the timing of any recovery, may result in additional non-cash impairment charges being taken in future periods and such charges could be material.

The interim impairment tests resulted in a non-cash impairment of the Company's Federal Communication Commission (“FCC”) licenses of $ 502.7 million and a non-cash impairment charge of $ 1.2 billion to reduce goodwill.

Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s weighted average cost of capital (“WACC”) and other economic factors, additional interim impairment testing of the Company's intangible assets and indefinite-lived intangible was not required as of June 30, 2020.

For more information, see Note 5, Property, Plant and Equipment, Intangible Assets and Goodwill .

Voluntary Filing under Chapter 11

As previously disclosed, on March 14, 2018 (the "Petition Date"), the Company, iHeartCommunications, Inc.

As previously disclosed, on March 14, 2018, the Company, iHeartCommunications, Inc.

("iHeartCommunications") and certain of the Company's direct and indirect domestic subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief (the "Chapter 11 Cases") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court").

11 unchanged sentences

ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business.

Accordingly, certain charges incurred during 2019 related to the Chapter 11 Cases,

Accordingly, certain charges incurred during 2019 related

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

including professional fees incurred directly as a result of the Chapter 11 Cases are recorded as Reorganization items, net in the Predecessor period.

to the Chapter 11 Cases, including professional fees incurred directly as a result of the Chapter 11 Cases are recorded as Reorganization items, net in the Predecessor period.

Reclassifications

3 unchanged sentences

In addition, certain expenses were reclassified from SG&A expenses to Direct operating expenses.

The reclassifications had no impact on the Company's Operating Income (Loss) or Net Loss.

The reclassifications had no impact on the Company's Operating Income (Loss) or Net Income (Loss).

Accordingly, the Company recast the corresponding amounts in the prior period to conform to the current expense classifications.

3 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts reported in the Consolidated Statements of Cash Flows:

(In thousands)

Successor Company

(In thousands) Successor Company

2020 December 31,

Cash and cash equivalents $ 517,684 $ 400,300

19 unchanged sentences

To develop an estimate of the present value of expected cash flows of notes receivable, the Company used a probability-weighted discounted cash flow model.

As a result of this analysis, the Company recognized an additional credit loss reserve against available-for-sale debt securities of

$ 5.6 million , which was recognized within Loss on investments, net in the Company's Statement of Comprehensive Loss as of March 31, 2020 .

As a result of this analysis, the Company recognized an additional credit loss reserve against available-for-sale debt securities of $ 5.6 million, which was recognized within Loss on investments, net in the Company's Statement of Comprehensive Loss for the six months ended June 30, 2020.

The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses

New Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

This guidance provides temporary optional expedients and exceptions to accounting guidance on contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.

The guidance was effective upon issuance and generally can be applied through December 31, 2022.

The effects of this standard on our financial position, results of operations and cash flows are not expected to be material.

The FASB issued ASU No.

6 unchanged sentences

Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings.

The effects of this standard on our financial position, results of operations or cash flows are not expected to be material.

The Company early adopted this standard, which did not have significant impact on our financial position, results of operations or cash flows.

New Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

The guidance was effective upon issuance and generally can be applied through December 31, 2022.

The effects of this standard on our financial position, results of operations and cash flows are not expected to be material.

NOTE 2 - DISCONTINUED OPERATIONS

Discontinued operations relate to our domestic and international outdoor advertising businesses and were previously reported as the Americas outdoor and International outdoor segments prior to the Separation.

Revenue, expenses and cash flows for these businesses are separately reported as Revenue, expenses and cash flows from discontinued operations in the Company's financial statements for all periods presented.

Revenue, expenses and cash flows for these businesses are separately reported as Income from discontinued operations, net of tax and cash flows from discontinued operations in the Company's financial statements for all periods presented.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Information for Discontinued Operations

Income Statement Information

The following shows the revenue and loss from discontinued operations for the Predecessor Company for the three months ended March 31, 2019:

(In thousands)

Predecessor Company

Three Months Ended March 31,

The following shows the revenue and income (loss) from discontinued operations and gain on disposal of the Predecessor Company's discontinued operations for the periods presented:

(In thousands) Predecessor Company

Period from April 1, 2019 through May 1, Period from January 1, 2019 through May 1,

Revenue $ 217,450 $ 804,566

Loss from discontinued operations before income taxes $ ( 21,684 ) $ ( 133,475 )

Income tax benefit (expense) 50,830 ( 6,933 )

Income (loss) from discontinued operations, net of taxes $ 29,146 $ ( 140,408 )

Gain on disposals before income taxes $ 1,825,531 $ 1,825,531

Income tax expense — —

Loss from discontinued operations, net of taxes

Gain on disposals, net of taxes $ 1,825,531 $ 1,825,531

Income from discontinued operations, net of taxes $ 1,854,677 $ 1,685,123

In connection with the Separation, the Company and its subsidiaries entered into the agreements described below.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Transition Services Agreement

1 unchanged sentence

The allocation of cost is based on various measures depending on the service provided, which measures include relative revenue, employee headcount, number of users of a service or other factors.

As of March 31, 2020, most of these services have been successfully transitioned to CCOH.

CCOH has requested extensions of the term for certain individual services, primarily related to information systems, for one-month periods through June 30, 2020 and may request further one-month extensions of such services up to May 1, 2021.

As of June 30, 2020, most of these services have been successfully transitioned to CCOH.

CCOH has requested extensions of the term for certain individual services, primarily related to information systems, for one-month periods through August 31, 2020 and may request further one-month extensions of such services up to May 1, 2021.

CCOH may terminate the Transition Services Agreement with respect to all or any individual service, in whole or in part, upon 30 days’ prior written notice, provided that any co-dependent services must be terminated concurrently.

3 unchanged sentences

In addition, the New Tax Matters Agreement requires that CCOH indemnify iHeartMedia for certain income taxes paid by iHeartMedia on behalf of CCOH and its subsidiaries.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – REVENUE

Disaggregation of Revenue

The following table shows revenue streams for the Successor Company for the three months ended March 31, 2020 :

The following table shows revenue streams for the Successor Company for the periods presented:

Successor Company

(In thousands)

(In thousands) Audio Audio and Media Services Eliminations Consolidated

Three Months Ended June 30, 2020

Revenue from contracts with customers:

Broadcast Radio (1)

$ 244,035 $ — $ — $ 244,035

93,227 — — 93,227

96,330 — — 96,330

Sponsorship and Events (4)

14,809 — — 14,809

Audio and Media Services (5)

Three Months Ended March 31, 2020

— 39,251 ( 1,779 ) 37,472

1,544 — ( 168 ) 1,376

Total 449,945 39,251 ( 1,947 ) 487,249

Revenue from leases (7)

Revenue, total $ 450,344 $ 39,251 $ ( 1,947 ) $ 487,648

Period from May 2, 2019 through June 30, 2019

Revenue from contracts with customers:

Broadcast Radio (1)

$ 390,540 $ — $ — $ 390,540

64,238 — — 64,238

105,426 — — 105,426

Sponsorship and Events (4)

31,790 — — 31,790

Audio and Media Services (5)

— 40,537 ( 1,009 ) 39,528

3,957 — ( 112 ) 3,845

Total 595,951 40,537 ( 1,121 ) 635,367

Revenue from leases (7)

Revenue, total $ 596,230 $ 40,537 $ ( 1,121 ) $ 635,646

Six Months Ended June 30, 2020

Revenue from contracts with customers:

Broadcast Radio (1)

$ 705,695 $ — $ — $ 705,695

186,003 — — 186,003

230,907 — — 230,907

Sponsorship and Events (4)

44,157 — — 44,157

Audio and Media Services (5)

— 99,478 ( 3,590 ) 95,888

5,103 — ( 335 ) 4,768

Total 1,171,865 99,478 ( 3,925 ) 1,267,418

Revenue from leases (7)

Revenue, total $ 1,172,729 $ 99,478 $ ( 3,925 ) $ 1,268,282

(1) Broadcast Radio revenue is generated through the sale of advertising time on the Company’s domestic radio stations.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Digital revenue is generated through the sale of streaming and display advertisements on digital platforms, subscriptions to iHeartRadio streaming services, podcasting and the dissemination of other digital content.

1 unchanged sentence

(4) Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5) Audio and media services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses.

5 unchanged sentences

Predecessor Company

(In thousands)

(In thousands) Audio (1)

Audio and Media Services (1)

Three Months Ended March 31, 2019

Eliminations Consolidated

Period from April 1, 2019 through May 1, 2019

Revenue from contracts with customers:

Broadcast Radio 170,632 $ — $ — $ 170,632

Digital 26,840 — — 26,840

Networks 50,889 — — 50,889

Sponsorship and Events 10,617 — — 10,617

Audio and Media Services — 17,970 ( 701 ) 17,269

Other 1,197 — ( 56 ) 1,141

Total 260,175 17,970 ( 757 ) 277,388

Revenue from leases 286 — — 286

Revenue, total $ 260,461 $ 17,970 $ ( 757 ) $ 277,674

Period from January 1, 2019 through May 1, 2019

Revenue from contracts with customers:

Broadcast Radio $ 657,864 $ — $ — $ 657,864

Digital 102,789 — — 102,789

Networks 189,088 — — 189,088

Sponsorship and Events 50,330 — — 50,330

Audio and Media Services — 69,362 ( 2,325 ) 67,037

Other 5,910 — ( 243 ) 5,667

Total 1,005,981 69,362 ( 2,568 ) 1,072,775

Revenue from leases 696 — — 696

Revenue, total $ 1,006,677 $ 69,362 $ ( 2,568 ) $ 1,073,471

(1) Due to a re-evaluation of the Company’s internal segment reporting upon the effectiveness of the Plan of Reorganization, the Company’s RCS business is included in the Audio & Media Services results for all periods presented.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Trade and Barter

2 unchanged sentences

Trade and barter revenues and expenses from continuing operations, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows:

Successor Company

Predecessor Company

Three Months Ended March 31,

Successor Company Predecessor Company

Three Months Ended June 30, Period from May 2, 2019 through June 30, Period from April 1, 2019 through May 1,

(In thousands) 2020 2019 2019

1 unchanged sentence

Trade and barter expenses 17,075 28,023 8,474

The Successor Company recognized barter revenue of $ 5.0 million in the three months ended March 31, 2020 in connection with investments made in companies in exchange for advertising services.

The Predecessor Company recognized barter revenue of $ 5.1 million in the three months ended March 31, 2019 in connection with investments made in companies in exchange for advertising services.

Successor Company Predecessor Company

Six Months Ended June 30, Period from May 2, 2019 through June 30, Period from January 1, 2019 through May 1,

(In thousands) 2020 2019 2019

Trade and barter revenues $ 72,431 $ 29,699 $ 65,934

Trade and barter expenses 72,073 28,023 58,330

The Successor Company recognized barter revenue of $ 0.2 million, $ 1.9 million and $ 5.2 million in the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020, respectively, in connection with investments made in companies in exchange for advertising services.

The Predecessor Company recognized barter revenue of $ 0.9 million and $ 5.9 million in the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019, respectively, in connection with investments made in companies in exchange for advertising services.

Deferred Revenue

The following tables show the Company’s deferred revenue balance from contracts with customers, excluding discontinued operations:

Successor Company Predecessor Company

Three Months Ended June 30, Period from May 2, 2019 through June 30, Period from April 1, 2019 through May 1,

(In thousands) 2020 2019 2019

Deferred revenue from contracts with customers:

Beginning balance (1)

$ 175,321 $ 151,475 $ 155,114

Impact of fresh start accounting — 298 —

Revenue recognized, included in beginning balance ( 59,155 ) ( 59,018 ) ( 43,172 )

Additions, net of revenue recognized during period, and other 61,864 66,997 39,533

Ending balance $ 178,030 $ 159,752 $ 151,475

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Revenue

The following tables show the Company’s deferred revenue balance from contracts with customers, excluding discontinued operations:

Successor Company

Predecessor Company

Three Months Ended March 31,

Successor Company Predecessor Company

Six Months Ended June 30, Period from May 2, 2019 through June 30, Period from January 1, 2019 through May 1,

(In thousands) 2020 2019 2019

1 unchanged sentence

Beginning balance (1)

$ 162,068 $ 151,475 $ 148,720

Impact of fresh start accounting — 298 —

Revenue recognized, included in beginning balance ( 76,053 ) ( 59,018 ) ( 76,473 )

3 unchanged sentences

The Company’s contracts with customers generally have terms of one year or less;

however, as of March 31, 2020 , the Company expects to recognize $ 233.7 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years .

however, as of June 30, 2020, the Company expects to recognize $ 226.6 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years .

Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales.

Revenue from Leases

As of March 31, 2020 , the future lease payments to be received by the Successor Company are as follows:

As of June 30, 2020, the future lease payments to be received by the Successor Company are as follows:

(In thousands)

Thereafter 10,021

Total $ 14,404

NOTE 4 – LEASES

5 unchanged sentences

The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease.

1 unchanged sentence

Lease expense is recognized on a straight-line basis over the lease term.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company tests for impairment of right of use assets whenever events and circumstances indicate that such assets might be impaired.

During the three months ended June 30, 2020, the Company recognized a non-cash impairment charge of $ 5.4 million related to a decision by management to abandon and sublease one of its operating leases.

The implicit rate within the Company's lease agreements is generally not determinable.

1 unchanged sentence

The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."

The following table provides supplemental cash flow information related to leases for the three months ended March 31, 2020 (Successor) and the three months ended March 31, 2019 (Predecessor):

Successor Company

Predecessor Company

Three Months Ended March 31,

The following table provides supplemental cash flow information related to leases for the periods presented:

Successor Company Predecessor Company

Six Months Ended June 30, Period from May 2, 2019 through June 30, Period from January 1, 2019 through May 1

(In thousands) 2020 2019 2019

1 unchanged sentence

Lease liabilities arising from obtaining right-of-use assets (1)

(1) Lease liabilities from obtaining right-of-use assets include transition liabilities upon adoption of ASC 842, as well as new leases entered into during the three months ended March 31, 2020 (Successor) and the three months ended March 31, 2019 (Predecessor).

$ 18,047 $ 3,194 $ 913,598

(1) Lease liabilities from obtaining right-of-use assets include transition liabilities upon adoption of ASC 842, as well as new leases entered into during the six months ended June 30, 2020 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the period from May 2, 2019 through June 30, 2019 (Successor).

The Company reflects changes in the lease liability and changes in the ROU asset on a net basis in the Statements of Cash Flows.

1 unchanged sentence

Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets as of March 31, 2020 and December 31, 2019 , respectively:

(In thousands)

Successor Company

The Company’s property, plant and equipment consisted of the following classes of assets as of June 30, 2020 and December 31, 2019, respectively:

(In thousands) Successor Company

2020 December 31,

Land, buildings and improvements $ 388,096 $ 385,017

2 unchanged sentences

Construction in progress 28,624 21,287

968,355 924,570

accumulated depreciation 149,096 77,694

19 unchanged sentences

Considerations in developing these assumptions included the extent of the economic downturn, ranges of expected timing of recovery, discount rates and other factors.

As a result of the Company’s assessment the estimated fair value of FCC licenses was determined to be below their carrying values.

As a result of the Company’s assessment the estimated fair value of FCC licenses was determined to be below their carrying values as of March 31, 2020.

As a result, during the three months ended March 31, 2020, the Successor Company recognized a non-cash impairment charge of $ 502.7 million on its FCC licenses.

During the three months ended March 31, 2019 , the Predecessor Company recognized non-cash impairment charges of $ 91.4 million in relation to indefinite-lived FCC licenses as a result of an increase in the weighted average cost of capital used in performing the annual impairment test.

Based on management’s forecasted future cash flows and assessment of market values of the Company’s debt and equity securities, market interest rates affecting the Company’s WACC and other economic factors, no additional interim impairment charge to the Company's indefinite-lived intangible was required as of June 30, 2020.

During the six months ended June 30, 2019, the Predecessor Company recognized non-cash impairment charges of $ 91.4 million in relation to indefinite-lived FCC licenses as a result of an increase in the weighted average cost of capital used in performing the annual impairment test.

Other Intangible Assets

7 unchanged sentences

The economic downturn in March 2020 and the COVID-19 pandemic had an adverse impact on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic has had a negative impact on the Company's forecasted future cash flows.

As a result, the Company performed an interim impairment test as of March 31, 2020 on its other intangible assets.

As a result, the Company performed interim impairment tests as of March 31, 2020 on its other intangible assets.

Based on the Company’s test of recoverability using estimated undiscounted future cash flows, the carrying values of the Company’s definite-lived intangible assets were determined to be recoverable, and no impairment was recognized.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of March 31, 2020 and December 31, 2019 , respectively:

(In thousands)

Successor Company

March 31, 2020

December 31, 2019

Gross Carrying Amount

Accumulated Amortization

Gross Carrying Amount

Accumulated Amortization

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of June 30, 2020 and December 31, 2019, respectively:

(In thousands) Successor Company

June 30, 2020 December 31, 2019

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

Customer / advertiser relationships 1,625,376 ( 199,991 ) 1,629,236 ( 114,280 )

1 unchanged sentence

Trademarks and tradenames 321,977 ( 37,907 ) 321,977 ( 21,661 )

Total amortization expense related to definite-lived intangible assets for the Successor Company for the three months ended March 31, 2020 was $ 64.3 million .

Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the three months ended March 31, 2019 was $ 9.7 million .

Other 25,251 ( 3,126 ) 21,394 ( 1,786 )

Total $ 2,348,004 $ ( 300,050 ) $ 2,348,006 $ ( 171,466 )

Total amortization expense related to definite-lived intangible assets for the Successor Company for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020 was $ 64.3 million, $ 42.5 million and $ 128.6 million, respectively.

Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019 was $ 3.0 million and $ 12.7 million, respectively.

As acquisitions and dispositions occur in the future, amortization expense may vary.

1 unchanged sentence

(In thousands)

2021 $ 256,650

IHEARTMEDIA, INC.

2 unchanged sentences

The following table presents the changes in the carrying amount of goodwill:

(In thousands)

Audio & Media Services

(In thousands) Audio Audio & Media Services Consolidated

Balance as of December 31, 2018 (Predecessor) $ 3,330,922 $ 81,831 $ 3,412,753

Acquisitions — 2,767 2,767

Foreign currency — ( 28 ) ( 28 )

2 unchanged sentences

Balance as of May 2, 2019 (Successor) $ 3,219,210 $ 104,155 $ 3,323,365

Acquisitions 4,637 — 4,637

Dispositions ( 9,466 ) — ( 9,466 )

Foreign currency — ( 1 ) ( 1 )

Other 7,087 — 7,087

Balance as of December 31, 2019 (Successor) $ 3,221,468 $ 104,154 $ 3,325,622

Impairment ( 1,224,374 ) — ( 1,224,374 )

Acquisitions 404 — 404

Foreign currency — 5 5

Balance as of March 31, 2020 (Successor)

Balance as of June 30, 2020 (Successor) $ 1,997,498 $ 104,159 $ 2,101,657

Goodwill Impairment

12 unchanged sentences

The estimated fair value of one of the Company's reporting units was below its carrying value, including goodwill.

As a result, the Company recognized a non-cash impairment charge of $ 1.2 billion to reduce goodwill.

The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model.

As a result, the Company recognized a non-cash impairment charge of $ 1.2 billion in the first quarter of 2020 to reduce goodwill.

The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

While management believes the estimates and assumptions utilized to calculate the fair value of the Company's tangible and intangible long-lived assets, indefinite-lived FCC licenses and reporting units are reasonable, it is possible a material change could occur to the estimated fair value of these assets.

1 unchanged sentence

NOTE 6 – LONG-TERM DEBT

Long-term debt outstanding for the Successor Company as of March 31, 2020 and December 31, 2019 consisted of the following:

(In thousands)

Successor Company

March 31, 2020

December 31, 2019

Long-term debt outstanding for the Successor Company as of June 30, 2020 and December 31, 2019 consisted of the following:

(In thousands) Successor Company

June 30, 2020 December 31, 2019

Term Loan Facility due 2026 (1)(4)

$ 2,090,765 $ 2,251,271

Asset-based Revolving Credit Facility due 2023 (2)(4)

6.375 % Senior Secured Notes due 2026

800,000 800,000

5.25 % Senior Secured Notes due 2027

750,000 750,000

4.75 % Senior Secured Notes due 2028

500,000 500,000

Other secured subsidiary debt (3)

23,632 20,992

Total consolidated secured debt 4,399,397 4,322,263

8.375 % Senior Unsecured Notes due 2027

1,450,000 1,450,000

Other unsecured subsidiary debt 6,312 12,581

Long-term debt fees ( 18,587 ) ( 19,428 )

Total debt 5,837,122 5,765,416

Current portion 30,061 8,912

2 unchanged sentences

(2) On March 13, 2020, iHeartCommunications borrowed $ 350.0 million under the ABL Facility, the proceeds of which were invested as cash on the Balance Sheet.

As of March 31, 2020 , the ABL Facility had a facility size of $ 450.0 million and $ 350.0 million of outstanding borrowings and $ 47.3 million of outstanding letters of credit, resulting in $ 52.7 million of availability.

During the three months ended June 30, 2020, iHeartCommunications voluntarily repaid $ 115.0 million principal amount drawn under the ABL Facility.

As of June 30, 2020, the ABL Facility had a borrowing base of $ 289.4 million and $ 235.0 million of outstanding borrowings and $ 41.2 million of outstanding letters of credit, resulting in $ 13.2 million of availability.

Amounts available under the ABL Facility are calculated using a borrowing base calculated by reference to our outstanding accounts receivable.

1 unchanged sentence

(3) Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2021 through 2045.

The Successor Company’s weighted average interest rate was 5.5 % and 6.4 % as of March 31, 2020 and December 31, 2019 , respectively.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $ 5.2 billion and $ 6.1 billion as of March 31, 2020 and December 31, 2019 , respectively.

(4) On July 16, 2020, iHeartCommunications issued $ 450.0 million of incremental term loans under the Amendment No.

2, resulting in net proceeds of $ 425.8 million, after original issue discount and debt issuance costs.

A portion of the proceeds from the issuance was used to repay the remaining balance outstanding on the Company's ABL Facility of $ 235.0 million, with the remaining $ 190.6 million of the proceeds available for general corporate purposes.

The Successor Company’s weighted average interest rate was 5.3 % and 6.4 % as of June 30, 2020 and December 31, 2019, respectively.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $ 5.5 billion and $ 6.1 billion as of June 30, 2020 and December 31, 2019, respectively.

The trading value of the Company’s publicly traded debt decreased significantly in March 2020 as a result of the market’s reaction to COVID-19.

Under the fair value hierarchy established by ASC 820-10-35, the market value of the Successor Company’s debt is classified as either Level 1 or Level 2.

On February 3, 2020, iHeartCommunications entered into an amendment to the credit agreement governing its Term Loan Facility due 2026.

The amendment reduces the interest rate to LIBOR plus a margin of 3.00 % (from LIBOR plus a margin of 4.00 % ), or the Base Rate (as defined in the credit agreement) plus a margin of 2.00 % (from Base Rate plus a margin of 3.00 % ) and modifies certain covenants contained in the Credit Agreement.

While trading values have increased as of June 30, 2020 and the date of this filing, prices have not fully recovered to levels

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the Term Loan Facility amendment, iHeartCommunications also prepaid at par $ 150.0 million of borrowings outstanding under the Term Loan Facility with cash on hand.

Under the terms of the credit agreement, iHeartCommunications is required to make quarterly principal payments of approximately $ 5.25 million .

prior to the initial impact of COVID-19.

Under the fair value hierarchy established by ASC 820-10-35, the market value of the Successor Company’s debt is classified as either Level 1 or Level 2.

On February 3, 2020, iHeartCommunications entered into an amendment to the Credit Agreement governing its Term Loan Facility due 2026.

The amendment reduces the interest rate to LIBOR plus a margin of 3.00 % (from LIBOR plus a margin of 4.00 %), or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00 % (from Base Rate plus a margin of 3.00 %) and modifies certain covenants contained in the Credit Agreement.

On July 16, 2020, iHeartCommunications entered into Amendment No.

2 to issue $ 450.0 million of incremental term loan commitments, resulting in net proceeds of $ 425.8 million, after original issue discount and debt issuance costs.

A portion of the proceeds from the issuance was used to repay the remaining balance outstanding under the ABL Facility of $ 235.0 million, with the remaining $ 190.6 million of the proceeds available for general corporate purposes.

The incremental term loans issued pursuant to Amendment No.

2 have an interest rate of 4.00 % for Eurocurrency Rate Loans and 3.00 % for Base Rate Loans (subject to a LIBOR floor of 0.75 % and Base Rate floor of 1.75 %).

Amendment No.

2 also modifies certain other provisions of the Credit Agreement.

In connection with the Term Loan Facility amendment in February 2020, iHeartCommunications also prepaid at par $ 150.0 million of borrowings outstanding under the Term Loan Facility with cash on hand.

Under the terms of the Credit Agreement, iHeartCommunications made quarterly payments of $ 5.25 million during each of the three months ended March 31, 2020 and three months ended June 30, 2020.

Under the terms of Amendment No.

2, iHeartCommunications is required to make quarterly payments of $ 6.4 million beginning in the third quarter of 2020.

Mandatorily Redeemable Preferred Stock

1 unchanged sentence

The iHeart Operations Preferred Stock was purchased by a third party investor.

As of March 31, 2020 , the liquidation preference of the iHeart Operations Preferred Stock was $ 60.0 million .

As of June 30, 2020, the liquidation preference of the iHeart Operations Preferred Stock was $ 60.0 million.

As further described below, the iHeart Operations Preferred Stock is mandatorily redeemable for cash at a date certain and therefore is classified as a liability in the Company's balance sheet.

1 unchanged sentence

Dividends, if declared, will be payable on March 31, June 30, September 30 and December 31 of each year (or on the next business day if such date is not a business day).

During the three months ended March 31, 2020 the Company recognized $ 1.8 million of interest expense related to dividends on mandatorily redeemable preferred stock.

During the three and six months ended June 30, 2020 the Company recognized $ 2.4 million and $ 4.2 million of interest expense related to dividends on mandatorily redeemable preferred stock.

Other than as set forth below, iHeart Operations may not redeem the iHeart Operations Preferred Stock at its option prior to the third anniversary of the issue date of the iHeart Operations Preferred Stock.

4 unchanged sentences

Surety Bonds, Letters of Credit and Guarantees

As of March 31, 2020 , the Successor Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $ 16.7 million and $ 47.3 million , respectively.

As of June 30, 2020, the Successor Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $ 19.8 million and $ 41.2 million, respectively.

These surety bonds and letters of credit relate to various operational matters including insurance, lease and performance bonds as well as other items.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – COMMITMENTS AND CONTINGENCIES

11 unchanged sentences

Alien Ownership Restrictions and FCC Petition for Declaratory Ruling

The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

greater foreign ownership is in the public interest (the “Foreign Ownership Rule”).

Under the Plan of Reorganization, the Company committed to file a Petition for Declaratory Ruling ("PDR") requesting the FCC to permit up to 100% of the Company's voting and equity to be owned by non-U.S.

9 unchanged sentences

The FCC requested public comment on the PDR, which comment period closed on March 26, 2020.

The FCC subsequently has also referred the PDR to Team Telecom - the interagency federal government group that analyzes requests for national security, law enforcement, and public safety issues.

The FCC subsequently referred the PDR to Team Telecom - the interagency federal government group that analyzes requests for national security, law enforcement, and public safety issues.

On June 29, 2020, Team Telecom indicated its consent to the grant by the FCC of the PDR.

The Company cannot predict whether the FCC will issue a ruling granting the PDR, the amount of foreign equity and voting rights any such a ruling will allow us to have, or how long it will take to obtain such a ruling.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – INCOME TAXES

Income Tax Benefit (Expense)

The Company’s income tax benefit (expense) from continuing operations for the three months ended March 31, 2020 (Successor) and the three months ended March 31, 2019 (Predecessor), respectively, consisted of the following components:

(In thousands)

Successor Company

Predecessor Company

Three Months Ended March 31,

The Company’s income tax benefit (expense) from continuing operations for the three and six months ended June 30, 2020 (Successor) the period from May 2, 2019 through June 30, 2019 (Successor), the period from April 1, 2019 through May 1, 2019 (Predecessor) and the period from January 1, 2019 through May 1, 2019 (Predecessor), respectively, consisted of the following components:

(In thousands) Successor Company Predecessor Company

Three Months Ended June 30, Period from May 2, 2019 through June 30, Period from April 1, 2019 through May 1,

2020 2019 2019

Current tax benefit (expense) $ ( 1,731 ) $ ( 2,947 ) $ 6,950

Deferred tax benefit (expense) 45,473 ( 13,056 ) ( 107,239 )

Income tax benefit

The effective tax rate from continuing operations for the Successor Company for the three months ended March 31, 2020 was 8.2 % .

The effective tax rate for the period was primarily impacted by the impairment charges to non-deductible goodwill discussed in Note 1.

Income tax benefit (expense) $ 43,742 $ ( 16,003 ) $ ( 100,289 )

(In thousands) Successor Company Predecessor Company

Six Months Ended June 30, 2020 Period from May 2, 2019 through June 30, Period from January 1, 2019 through May 1,

2020 2019 2019

Current tax benefit (expense) $ ( 3,436 ) $ ( 2,947 ) $ 76,744

Deferred tax benefit (expense) 197,689 ( 13,056 ) ( 115,839 )

Income tax benefit (expense) $ 194,253 $ ( 16,003 ) $ ( 39,095 )

The effective tax rate from continuing operations for the Successor Company for the three and six months ended June 30, 2020 was 18.1 % and 9.3 %, respectively.

The effective tax rate for the six months ended June 30, 2020 was primarily impacted by the impairment charges to non-deductible goodwill discussed in Note 1.

The deferred tax benefit primarily consists of $ 125.5 million related to the FCC license impairment charges recorded during the period.

The effective tax rate from continuing operations for the three months ended March 31, 2019 (Predecessor) was 224.6 % .

The 2019 effective tax rate was primarily impacted by forecasted changes in the valuation allowance recorded against deferred tax assets resulting from net operating loss carryforwards and interest expense limitation carryforwards in U.S.

federal and certain state jurisdictions.

The effective tax rate for the Successor Company for the Period from May 2, 2019 through June 30, 2019 was 29.2 %.

The effective tax rate for continuing operations of the Predecessor Company for Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) was 1.1 % and 0.4 %, respectively.

The income tax expense for the Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consists of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance.

The Company recorded income tax benefits of $ 102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of:

(1) tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence;

(2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence;

(3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence;

and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above.

The Company recorded income tax expense of $ 185.4 million for fresh start adjustments in the Predecessor period, consisting of $ 529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $ 343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.

On March 27, 2020 the CARES Act, which included numerous tax provisions, was signed into law.

While the Company is continuing to evaluate the impact of the enacted tax provisions as additional guidance is provided, upon the Company's initial review the provision with the most significant impact on the Company’s income taxes is the increase to the Section 163(j) interest deduction limitation and the ability to elect to use the Company’s 2019 Adjusted Taxable Income (as defined under Section 163(j)) for purposes of calculating the 2020 Section 163(j) limitation.

There were several other tax provisions included in the CARES Act allowing companies more flexibility in carrying back net operating losses generated in 2018, 2019 or 2020,

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 27, 2020 the CARES Act, which included numerous tax provisions, was signed into law.

There were several other tax provisions included in the CARES Act allowing companies more flexibility in carrying back net operating losses generated in 2018, 2019 or 2020, temporarily eliminating the provision limiting net operating losses utilization to 80% of taxable income and the acceleration of refunds available from alternative minimum tax credits.

temporarily eliminating the provision limiting net operating losses utilization to 80% of taxable income and the acceleration of refunds available from alternative minimum tax credits.

The Company does not expect to benefit from any of these provisions.

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The amounts deferred are due fifty percent by December 31, 2021 and fifty percent by December 31, 2022.

The Company has deferred $ 11.3 million in employment taxes as of June 30, 2020.

In addition, the CARES Act included a provision providing an Employee Retention tax credit, which would offset employment taxes, for qualified companies and wages.

The Company is still evaluating this provision to determine our eligibility for these employment tax credits.

The Company has recorded approximately $ 0.7 million in credits during the period ended June 30, 2020.

NOTE 9 – STOCKHOLDER'S EQUITY

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Share-based Compensation

Share-based compensation expenses are recorded in corporate expenses and were $ 4.6 million for the Successor Company for three months ended March 31, 2020 .

Share-based compensation expenses for the Predecessor Company were $ 0.4 million for three months ended March 31, 2019 .

As of March 31, 2020 , there was $ 52.7 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions.

Share-based compensation expenses are recorded in corporate expenses and were $ 4.2 million, $ 3.0 million and $ 8.8 million for the Successor Company for three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020, respectively.

Share-based compensation expenses for the Predecessor Company were $ 0.1 million and $ 0.5 million for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019, respectively.

As of June 30, 2020, there was $ 48.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions.

This cost is expected to be recognized over a weighted average period of approximately 3 years.

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The Company is authorized to issue 2,100,000,000 shares, consisting of (a) 1,000,000,000 shares of Class A Common Stock, par value $ 0.001 per share (the “Class A Common Stock”), (b) 1,000,000,000 shares of Class B Common Stock, par value $ 0.001 per share (the “Class B Common Stock”), and (c) 100,000,000 shares of preferred stock, par value $ 0.001 per share (the “Preferred Stock”).

The following table presents the Successor Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of March 31, 2020 :

The following table presents the Successor Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of June 30, 2020:

Successor Class A Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized

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Successor Special Warrants 78,038,412

Total Successor Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding

During the three months ended March 31, 2020 , stockholders converted 5,299 shares of the Class B common stock into Class A common stock.

Total Successor Class A Common Stock, Class B Common Stock and Special Warrants issued 146,370,948

During the three and six months ended June 30, 2020, stockholders converted 145 and 6,060 shares of the Class B common stock into Class A common stock, respectively.

Special Warrants

Each Special Warrant issued under the special warrant agreement entered into in connection with the Reorganization may be exercised by its holder to purchase one share of Successor Class A common stock or Successor Class B common stock at an exercise price of $ 0.001 per share, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, subject to certain exceptions, (a) such exercising holder owning more than 4.99 percent of the Successor Company's outstanding Class A common stock, (b) more than 22.5 percent of the Successor Company's capital stock or voting interests being owned directly or indirectly by foreign individuals or entities, (c) the Company exceeding any foreign ownership threshold set by the FCC pursuant to a declaratory ruling or specific approval requirement or (d) the Company violating any provision of the Communications Act or restrictions

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Special Warrants

on ownership or transfer imposed by the Company's certificate of incorporation or the decisions, rules and policies of the FCC.

Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and certifications required under the special warrant agreement.

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The public comment period closed on March 26, 2020.

The FCC has also referred our PDR to Team Telecom - the interagency federal government group that analyzes requests for national security, law enforcement, and public safety issues.

The FCC referred our PDR to Team Telecom - the interagency federal government group that analyzes requests for national security, law enforcement, and public safety issues.

On June 29, 2020, Team Telecom indicated its consent to the grant by the FCC of the PDR.

We cannot predict whether the FCC will issue a ruling granting the PDR, the amount of foreign equity and voting rights any such a ruling will allow us to have, or how long it will take to obtain such a ruling.

During the three months ended March 31, 2020 , stockholders exercised 2,127,207 Special Warrants for an equivalent number of shares of Class A common stock.

During the three and six months ended June 30, 2020, stockholders exercised 877,263 and 3,003,854 Special Warrants for an equivalent number of shares of Class A common stock, respectively.

During the three and six months ended June 30, 2020, stockholders exercised 729 and 1,345 Special Warrants for an equivalent number of shares of Class B common stock, respectively.

Stockholder Rights Plan

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Pursuant to the stockholder rights plan, the Board has declared a dividend distribution of one right on each outstanding share of the Company’s Class A common stock, share of Class B common stock and special warrant issued in connection with the Plan of Reorganization.

The record date for such dividend distribution is May 18, 2020.

The record date for such dividend distribution was May 18, 2020.

Under the Stockholder Rights Plan, subject to certain exceptions, the rights will generally be exercisable only if, in a transaction not approved by the Board, a person or group acquires beneficial ownership of 10 % or more of the Company’s Class A common stock (or 20 % in the case of certain passive investors), including through such person’s ownership of the convertible Class B common stock and/or special warrants, as further detailed in the Stockholder Rights Plan.

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The adoption of the Stockholder Rights Plan will not be a taxable event and will not have any impact on the Company’s financial reporting.

Additional details about the stockholder rights plan will be contained in a Form 8-K to be filed by the Company with the SEC.

IHEARTMEDIA, INC.

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Computation of Income (Loss) per Share

(In thousands, except per share data)

Successor Company

Predecessor Company

Three Months Ended March 31,

Net loss attributable to the Company – common shares

Loss from discontinued operations, net of tax

(In thousands, except per share data) Successor Company Predecessor Company

Three Months Ended June 30, Period from May 2, 2019 through June 30, Period from April 1, 2019 through May 1,

2020 2019 2019

Net income (loss) attributable to the Company – common shares $ ( 197,317 ) $ 38,793 $ 11,298,524

Income from discontinued operations, net of

tax $ — $ — $ 1,854,677

Noncontrolling interest from discontinued operations, net of tax - common shares

Total loss from discontinued operations, net of tax - common shares

— — ( 2,190 )

Total income from discontinued operations, net of tax - common shares

$ — $ — $ 1,852,487

Income (loss) from continuing operations $ ( 197,317 ) $ 38,793 $ 9,446,037

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From discontinued operations - Diluted $ — $ — $ 21.63

All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Successor Company for the three months ended March 31, 2020 .

Outstanding equity awards representing 8.2 million shares of Class A common stock of the Successor Company for the three months ended March 31, 2020 were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive.

Outstanding equity awards representing 5.9 million shares of Class A common stock of the Predecessor Company for the three months ended March 31, 2019 were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data) Successor Company Predecessor Company

Six Months Ended June 30, Period from May 2, 2019 through June 30, Period from January 1, 2019 through May 1,

2020 2019 2019

Net income (loss) attributable to the Company – common shares $ ( 1,886,053 ) $ 38,793 $ 11,184,141

Income from discontinued operations, net of tax $ — $ — $ 1,685,123

Noncontrolling interest from discontinued operations, net of tax - common shares

Total income from discontinued operations, net of tax - common shares $ — $ — $ 1,704,151

Income (loss) from continuing operations $ ( 1,886,053 ) $ 38,793 $ 9,479,990

DENOMINATOR (1) :

Weighted average common shares outstanding - basic 145,788 145,275 86,241

Stock options and restricted stock (2) :

Weighted average common shares outstanding - diluted 145,788 145,298 86,241

Net income (loss) attributable to the Company per common share:

From continuing operations - Basic $ ( 12.94 ) $ 0.27 $ 109.92

From discontinued operations - Basic $ — $ — $ 19.76

From continuing operations - Diluted $ ( 12.94 ) $ 0.27 $ 109.92

From discontinued operations - Diluted $ — $ — $ 19.76

(1) All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Successor Company for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020.

(2) Outstanding equity awards representing 7.7 million, 1.3 million and 7.9 million shares of Class A common stock of the Successor Company for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and the six months ended June 30, 2020 were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

Outstanding equity awards representing 5.9 million shares of Class A common stock of the Predecessor Company for the period from April 1, 2019 through May 1, 2019 and the period from January 1, 2019 through May 1, 2019 were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 10 – SEGMENT DATA

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company's segment results for the Successor Company for the three months ended March 31, 2020 :

The following table presents the Company's segment results for the Successor Company for the periods presented:

Successor Company

(In thousands)

Audio & Media Services

Corporate and other reconciling items

Three Months Ended March 31, 2020

(In thousands) Audio Audio & Media Services Corporate and other reconciling items Eliminations Consolidated

Three Months Ended June 30, 2020

Revenue $ 450,344 $ 39,251 $ — $ ( 1,947 ) $ 487,648

Direct operating expenses 243,976 7,304 — ( 1,414 ) 249,866

Selling, general and administrative expenses

229,245 32,510 — ( 536 ) 261,219

Corporate expenses — — 26,416 3 26,419

Depreciation and amortization

94,898 5,838 2,611 — 103,347

Impairment charges — — 5,378 — 5,378

Other operating expense, net

— — ( 506 ) — ( 506 )

Operating loss $ ( 117,775 ) $ ( 6,401 ) $ ( 34,911 ) $ — $ ( 159,087 )

Intersegment revenues $ 168 $ 1,779 $ — $ — $ 1,947

Capital expenditures $ 14,198 $ 961 $ 2,723 $ — $ 17,882

Share-based compensation expense

$ — $ — $ 4,218 $ — $ 4,218

Period from May 2, 2019 through June 30, 2019

Revenue 596,230 40,537 — ( 1,121 ) 635,646

Direct operating expenses 193,952 4,872 — ( 52 ) 198,772

Selling, general and administrative expenses

196,834 24,458 — ( 1,061 ) 220,231

Corporate expenses — — 26,826 ( 8 ) 26,818

Depreciation and amortization

54,692 3,619 1,072 — 59,383

Other operating income, net

— — 3,246 — 3,246

Operating income (loss) $ 150,752 $ 7,588 $ ( 24,652 ) $ — $ 133,688

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Share-based compensation expense

The following table presents the Company's segment results for the Predecessor Company for the three months ended March 31, 2019 .

$ — $ — $ 3,039 $ — $ 3,039

Six Months Ended June 30, 2020

Revenue $ 1,172,729 $ 99,478 $ — $ ( 3,925 ) $ 1,268,282

Direct operating expenses 538,763 15,507 — ( 2,772 ) 551,498

Selling, general and administrative expenses

539,301 67,184 — ( 1,125 ) 605,360

Corporate expenses — — 66,396 ( 28 ) 66,368

Depreciation and amortization

183,699 11,534 4,882 — 200,115

Impairment charges — — 1,733,235 — 1,733,235

Other operating expense, net

— — ( 1,572 ) — ( 1,572 )

Operating income (loss) $ ( 89,034 ) $ 5,253 $ ( 1,806,085 ) $ — $ ( 1,889,866 )

Intersegment revenues $ 335 $ 3,590 $ — $ — $ 3,925

Capital expenditures $ 32,800 $ 1,623 $ 5,123 $ — $ 39,546

Share-based compensation expense

$ — $ — $ 8,843 $ — $ 8,843

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company's segment results for the Predecessor Company for the periods presented.

The presentation of prior period amounts has been restated to conform to the presentation of the Successor period.

Predecessor Company

(In thousands)

Audio and Media Services

Corporate and other reconciling items

Three Months Ended March 31, 2019

(In thousands) Audio Audio and Media Services Corporate and other reconciling items Eliminations Consolidated

Period from April 1, 2019 through May 1, 2019

Revenue $ 260,461 $ 17,970 $ — $ ( 757 ) $ 277,674

Direct operating expenses 95,983 2,549 — ( 222 ) 98,310

Selling, general and administrative expenses

91,551 11,276 — ( 531 ) 102,296

Corporate expenses — — 14,510 ( 4 ) 14,506

Depreciation and amortization

11,749 1,204 1,591 — 14,544

Other operating expense, net

— — ( 127 ) — ( 127 )

Operating income (loss)

$ 61,178 $ 2,941 $ ( 16,228 ) $ — $ 47,891

Intersegment revenues $ 56 $ 701 $ — $ — $ 757

Capital expenditures $ 11,137 $ 576 $ 1,531 $ — $ 13,244

Share-based compensation expense

$ — $ — $ 105 $ — $ 105

Period from January 1, 2019 through May 1, 2019

Revenue $ 1,006,677 $ 69,362 $ — $ ( 2,568 ) $ 1,073,471

Direct operating expenses 371,989 9,559 — ( 364 ) 381,184

Selling, general and administrative expenses

383,342 46,072 — ( 2,184 ) 427,230

Corporate expenses 53,667 ( 20 ) 53,647

Depreciation and amortization

41,233 5,266 6,335 — 52,834

Impairment charges — — 91,382 — 91,382

Other operating expense, net

— — ( 154 ) — ( 154 )

Operating income (loss)

$ 210,113 $ 8,465 $ ( 151,538 ) $ — $ 67,040

Intersegment revenues $ 243 $ 2,325 $ — $ — $ 2,568

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Share-based compensation expense

$ — $ — $ 498 $ — $ 498

IHEARTMEDIA, INC.

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NOTE 11 – REORGANIZATION ITEMS, NET

Reorganization items incurred as a result of the Chapter 11 Cases are presented separately in the accompanying statements of operations for the three months ended March 31, 2020 and 2019 , respectively, and were as follows:

(In thousands)

Successor Company

Predecessor Company

Three Months Ended March 31,

Reorganization items incurred as a result of the Chapter 11 Cases are presented separately in the accompanying statements of operations for the periods presented and were as follows:

(In thousands) Successor Company Predecessor Company

Three Months Ended June 30, Period from May 2, 2019 through June 30, Period from April 1, 2019 through May 1,

2020 2019 2019

Professional fees and other bankruptcy related costs $ — $ — $ ( 121,374 )

Loss on Liabilities subject to compromise settlement

Net gain on settlement of Liabilities subject to compromise — — 7,192,379

Impact of fresh start adjustments — — 2,430,944

Other items, net — — ( 4,005 )

Reorganization items, net $ — $ — $ 9,497,944

Cash payments for Reorganization items, net $ 26 $ 13,049 $ 149,346

(In thousands) Successor Company Predecessor Company

Six Months Ended June 30, Period from May 2, 2019 through June 30, Period from January 1, 2019 through May 1,

2020 2019 2019

Professional fees and other bankruptcy related costs $ — $ — $ ( 157,487 )

Net gain on settlement of Liabilities subject to compromise — — 7,192,374

Impact of fresh start adjustments — — 2,430,944

Other items, net — — ( 4,005 )

Reorganization items, net $ — $ — $ 9,461,826

Cash payments for Reorganization items, net $ 443 $ 13,049 $ 183,291

Professional fees included in Reorganization items, net represent fees for post-petition expenses related to the Chapter 11 Cases.

The Company incurred additional professional fees related to the bankruptcy, post-emergence, of $ 2.6 million for the three months ended March 31, 2020 , which are included within Other expense, net in the Company's Consolidated Statements of Comprehensive Loss.

The Company incurred additional professional fees related to the bankruptcy, post-emergence, of $ 1.9 million, $ 9.1 million and $ 4.5 million for the three months ended June 30, 2020, the period from May 2, 2019 through June 30, 2019 and six months ended June 30, 2020, respectively, which are included within Other income (expense), net in the Company's Consolidated Statements of Comprehensive Income (Loss).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements