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Item 8. Financial Statements and Supplementary Data

2021-02-25 compared with 2020-02-27 · 846 added, 722 removed, 1520 unchanged (51% of the section changed)

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of iHeartMedia, Inc.

and subsidiaries (the Company) as of December 31, 2019 (Successor) and 2018 (Predecessor), the related consolidated statements of comprehensive income (loss), changes in stockholders' equity (deficit) and cash flows for the period from May 2, 2019 through December 31, 2019 (Successor), the period January 1, 2019 through May 1, 2019 (Predecessor), and each of the two years in the period ended December 31, 2018 (Predecessor), and the related notes and the financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 (Successor) and 2018 (Predecessor), and the results of its operations and its cash flows for the period from May 2, 2019 through December 31, 2019 (Successor), the period January 1, 2019 through May 1, 2019 (Predecessor), and the years ended December 31, 2018 and 2017 (Predecessor) in conformity with U.S.

and subsidiaries (the Company) as of December 31, 2020 and 2019 (Successor), the related consolidated statements of comprehensive income (loss), changes in stockholders' equity (deficit) and cash flows for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), and the year ended December 31, 2018 (Predecessor), and the related notes and the financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019 (Successor), and the results of its operations and its cash flows for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), and the year ended December 31, 2018 (Predecessor) in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 25, 2021 expressed an unqualified opinion thereon.

As discussed in Note 2 and Note 3 to the consolidated financial statements, on January 22, 2019, the Bankruptcy Court entered an order confirming the plan of reorganization, which became effective on May 1, 2019.

Accordingly, the accompanying consolidated financial statements have been prepared in conformity with Accounting Standards Codification 852-10, Reorganizations, for the Successor Company as a new entity with assets, liabilities and a capital structure having carrying amounts not comparable with prior periods.

See below for discussion of our related critical audit matter.

Adoption of New Accounting Standard

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of this critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Emergence from Bankruptcy

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Goodwill and Indefinite-Lived Intangibles

Description of the Matter

As described above and in Note 2 and Note 3 to the Consolidated Financial Statements, on May 1, 2019 the Company emerged from Chapter 11 Bankruptcy.

In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and adopted fresh start accounting.

Management calculated a reorganization value of $10.7 billion, which represents the fair value of the Successor Company's assets before considering liabilities and allocated the value to its individual assets based on their estimated fair values.

Auditing the Company's fresh start accounting was complex due to the significant estimation uncertainty in determining the fair values of the Company’s assets.

The identified intangible assets of $4.6 billion, which principally consisted of FCC Licenses and customer relationships, were subject to significant estimation uncertainty primarily due to the sensitivity of the respective fair values to underlying assumptions in the discounted cash flow models used to measure the FCC licenses and customer relationship intangible assets.

These significant assumptions included discount rates and certain assumptions that form the basis of the forecasted results such as revenue growth rates, margins, and attrition rates which may be affected by future economic and market conditions.

In addition, auditing the Company’s income tax accounting adjustments for the emergence from bankruptcy was challenging as it involved judgment to analyze, interpret and apply complex tax laws and regulations.

As described in Note 7 to the consolidated financial statements, at December 31, 2020 the Company’s goodwill was $2.1 billion and FCC licenses with indefinite lives were $1.8 billion.

Management conducts impairment tests for goodwill and indefinite-lived intangibles annually during the third quarter, or more frequently, if events or circumstances indicate the carrying value of goodwill or indefinite-lived intangibles may be impaired.

In the first quarter, the Company performed an interim impairment test which resulted in a goodwill impairment charge of $1.2 billion related to the Audio reporting unit within the Audio segment, and FCC license impairment charges of $502.7 million.

Auditing management’s impairment tests for goodwill and intangible assets with indefinite lives was complex and highly judgmental and required the involvement of a valuation specialist due to the significant estimation required to determine the fair value of the reporting units and FCC licenses.

In particular for goodwill, the fair value estimates in the discounted cash flow models of reporting units are sensitive to assumptions such as changes in projected cash flows, including due to the impacts of COVID-19, and discount rate.

For FCC Licenses, the fair value estimates in the discounted cash flow models are sensitive to changes to the discount rate assumption.

All of these assumptions are sensitive to and affected by expected future market or economic conditions, and industry factors.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s processes to account for the emergence from bankruptcy protection.

These, included controls over the estimation process supporting the recognition and measurement of the fresh start adjustments of the successor Company, including the intangibles mentioned above, the evaluation of underlying assumptions with regard to the valuation models applied, and application of the technical tax guidance.

To test the estimated fair value of the FCC Licenses and customer-related intangible assets, our audit procedures included, among other things, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by management, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

We compared the significant assumptions mentioned above to the Company’s historical results and third-party industry projections for the broadcast industry.

We also involved tax professionals to assess the technical merits of the Company’s tax positions related to the restructuring transactions and the application of fresh start accounting.

This included evaluating income tax opinions or other third-party advice obtained by the Company, performing inquiries of certain external tax advisers used by the Company and evaluating the appropriateness of the Company’s accounting for its tax positions taking into consideration relevant federal and state income tax laws.

Also, we analyzed the Company’s assumptions and data used to determine the amount of cancellation of debt income to be realized through attribute reduction and tested the accuracy of the calculations.

We also evaluated the adequacy of the Company’s financial statement disclosures related to the emergence from bankruptcy and tax matters.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and FCC licenses impairment review process, including controls over management’s review of the significant assumptions described above.

This included evaluating controls over the Company’s forecasting process used to develop the estimated future cash flows.

We also tested controls over management’s review of the data used in their valuation models and review of the significant assumptions such as estimation of discount rates.

To test the estimated fair values of the Company’s reporting units and FCC licenses, our audit procedures included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by management, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

We compared the projected cash flows to the Company’s historical cash flows and other available industry and market forecast information, including third-party industry projections for the advertising industry.

We involved our valuation specialists to assist in reviewing the valuation methodology and testing the terminal growth rates and discount rates.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units and FCC licenses that would result from changes in the assumptions.

In addition, for goodwill we also tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company.

For FCC licenses, we also assessed whether the assumptions used were consistent with those used in the goodwill impairment review process.

/s/ Ernst & Young LLP

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AND SUBSIDIARIES

(In thousands, except share and per share data)

Successor Company

Predecessor Company

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

2020 December 31,

Cash and cash equivalents $ 720,662 $ 400,300

Accounts receivable, net of allowance of $ 38,777 in 2020 and $ 12,629 in 2019

801,380 902,908

Prepaid expenses 79,508 71,764

Other current assets 17,426 41,376

Current assets of discontinued operations

Total Current Assets 1,618,976 1,416,348

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Other intangibles, net 1,924,492 2,176,540

Goodwill 2,145,935 3,325,622

Operating lease right-of-use assets 825,887 881,762

Long-term assets of discontinued operations

Other assets 105,624 96,216

Total Assets $ 9,202,961 $ 11,021,099

CURRENT LIABILITIES

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Current portion of long-term debt 34,775 8,912

Current liabilities of discontinued operations

Total Current Liabilities 717,804 667,398

Long-term debt 5,982,155 5,756,504

Series A Mandatorily Redeemable Preferred Stock, par value $0.001, authorized 60,000 shares, 60,000 shares issued in 2019 and no shares issued in 2018

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

60,000 60,000

Noncurrent operating lease liabilities 764,491 796,203

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Other long-term liabilities 71,217 58,110

Liabilities subject to compromise

Long-term liabilities of discontinued operations

Commitments and contingent liabilities (Note 10)

STOCKHOLDERS’ EQUITY (DEFICIT)

STOCKHOLDERS’ EQUITY

Noncontrolling interest 8,350 9,123

Predecessor Preferred stock, par value $.001 per share, 150,000,000 shares authorized, no shares issued and outstanding

Predecessor common stock

Successor Preferred stock, par value $.001 per share, 100,000,000 shares authorized, no shares issued and outstanding

Successor Class A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, 57,776,204 shares issued and outstanding in 2019 and no shares issued and outstanding in 2018

Successor Class B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, 6,904,910 shares issued and outstanding in 2019 and no shares issued and outstanding in 2018

Successor Special Warrants, 81,046,593 issued and outstanding in 2019 and none issued and outstanding in 2018

Preferred stock, par value $ .001 per share, 100,000,000 shares authorized, no shares issued and outstanding

Class A Common Stock, par value $ .001 per share, authorized 1,000,000,000 shares, issued and outstanding 64,726,864 and 57,776,204 shares in 2020 and 2019, respectively

Class B Common Stock, par value $ .001 per share, authorized 1,000,000,000 shares, issued and outstanding 6,886,925 and 6,904,910 shares in 2020 and 2019, respectively

Special Warrants, 74,835,899 and 81,046,593 issued and outstanding in 2020 and 2019, respectively

Additional paid-in capital 2,849,020 2,826,533

Retained earnings (Accumulated deficit) ( 1,803,620 ) 112,548

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss) 194 ( 750 )

Cost of shares ( 254,066 in 2020 and 128,074 in 2019) held in treasury

Total Stockholders' Equity (Deficit)

Total Liabilities and Stockholders' Equity (Deficit)

( 3,199 ) ( 2,078 )

Total Stockholders' Equity 1,050,817 2,945,441

Total Liabilities and Stockholders' Equity $ 9,202,961 $ 11,021,099

See Notes to Consolidated Financial Statements

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AND SUBSIDIARIES

Successor Company

Predecessor Company

(In thousands, except per share data)

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

Year Ended December 31,

Successor Company Predecessor Company

(In thousands, except per share data) Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2018

Revenue $ 2,948,218 $ 2,610,056 $ 1,073,471 $ 3,611,323

Operating expenses:

Direct operating expenses (excludes depreciation and amortization)

1,163,148 878,956 381,184 1,132,439

Selling, general and administrative expenses (excludes depreciation and amortization)

1,225,097 897,670 427,230 1,350,157

Corporate expenses (excludes depreciation and amortization) 144,572 136,171 53,647 184,216

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Impairment charges 1,738,752 — 91,382 33,150

Other operating income (expense), net

Operating income

Other operating expense, net 11,344 8,000 154 9,266

Operating income (loss) ( 1,737,624 ) 439,636 67,040 690,144

Interest expense (income), net 343,745 266,773 ( 499 ) 334,798

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AND SUBSIDIARIES

(In thousands, except share data)

Controlling Interest

(In thousands, except share data) Controlling Interest

Common Shares (1)

Retained Earnings

Interest Common

Stock Additional

Capital Retained Earnings (Accumulated

Deficit) Accumulated

Comprehensive

Special Warrants

Income (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

( 523 ) — — ( 1,914,699 ) — — ( 1,915,222 )

Vesting of restricted stock and other

724,963 — 7 ( 29 ) — — ( 1,121 ) ( 1,143 )

Share-based compensation — — 22,516 — — — 22,516

Conversion of Special Warrants to Class A and Class B Shares 6,205,617 2,095 ( 6,207,712 ) — — — — — — —

Conversion of Class B Shares to Class A Shares

20,080 ( 20,080 ) — — — — — — —

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

( 250 ) — — ( 1,469 ) ( 1 ) — ( 1,720 )

Other comprehensive income

— — — — 945 — 945

December 31, 2020 (Successor)

64,726,864 6,886,925 74,835,899 $ 8,350 $ 72 $ 2,849,020 $ ( 1,803,620 ) $ 194 $ ( 3,199 ) $ 1,050,817

(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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) OF

IHEARTMEDIA, INC.

AND SUBSIDIARIES

(In thousands, except share data) Controlling Interest

Common Shares (1)

Interest Common

Stock Additional

Capital Retained Earnings

Deficit) Accumulated

Comprehensive

Loss Treasury

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

Issuance of restricted stock

196 — — — — ( 4 ) 192

Forfeitures of restricted stock

( 110,333 ) — — — — — — —

Share-based compensation — — 2,028 — — — 2,028

Share-based compensation - discontinued operations

2,449 — — — — — 2,449

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

— — — — 1 — 1

Other comprehensive income (loss)

2,784 — — — ( 3,959 ) — ( 1,175 )

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

751 — — 112,548 — — 113,299

Vesting of restricted stock

644,025 — 1 ( 1 ) — — ( 2,078 ) ( 2,078 )

Share-based compensation — — 26,377 — — — 26,377

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

Conversion of Special Warrants to Class A and Class B Shares 216,921 10,660 ( 227,581 ) — — — — — — —

Conversion of Class B Shares to Class A Shares 53,317 ( 53,317 ) — — — — — — —

Cancellation of Special Warrants and other

( 179,474 ) ( 571 ) — 30,049 — — — 29,478

Other comprehensive loss

— — — — ( 750 ) — ( 750 )

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) 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..

See Notes to Consolidated Financial Statements

(In thousands, except per share data)

Controlling Interest

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) OF

IHEARTMEDIA, INC.

AND SUBSIDIARIES

(In thousands, except per share data) Controlling Interest

Common Shares (1)

Interest Common

Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

December 31, 2016 (Predecessor)

Issuance of restricted stock and other

Share-based compensation

Share-based compensation - discontinued operations

Purchases of additional noncontrolling interest

Disposal of noncontrolling interest

Payments to non-controlling interests

Other comprehensive income

Loss Treasury

Shares Class B

Shares Class C

December 31, 2017 (Predecessor)

32,626,168 555,556 58,967,502 $ 41,191 $ 92 $ 2,072,566 $ ( 13,142,001 ) $ ( 313,718 ) $ ( 2,474 ) $ ( 11,344,344 )

Net loss ( 729 ) — — ( 201,910 ) — — ( 202,639 )

Issuance of restricted stock and other

( 333,224 ) ( 713 ) — — — — ( 84 ) ( 797 )

Share-based compensation

— — 2,066 — — — 2,066

Share-based compensation - discontinued operations

8,517 — — — — — 8,517

Payments to non-controlling interests

( 8,742 ) — — — — — ( 8,742 )

Other 57 — — ( 1,435 ) 1,435 — 57

Other comprehensive loss

( 8,713 ) — — — ( 5,747 ) — ( 14,460 )

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 )

(1) The 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 2018 and 2017, respectively.

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AND SUBSIDIARIES

Successor Company

Predecessor Company

(In thousands)

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

Year Ended December 31,

Successor Company Predecessor Company

(In thousands) Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2018

Cash flows from operating activities:

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Increase (decrease) in accounts payable and accrued expenses 52,354 127,150 ( 156,885 ) 23,699

Increase in accrued interest

Increase (decrease) in accrued interest ( 15,714 ) 84,523 256 303,344

Increase (decrease) in deferred income ( 21,859 ) ( 8,441 ) 13,377 ( 21,455 )

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

Dividends and other payments to noncontrolling interests

Debt issuance costs ( 4,786 ) ( 19,983 ) — —

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iHeartMedia, Inc.

(the “Company,” "iHeartMedia," "we" or "us") was formed in May 2007 by private equity funds sponsored by Bain Capital Partners, LLC and Thomas H.

Lee Partners, L.P.

(together, the “Sponsors”) for the purpose of acquiring the business of iHeartCommunications, Inc., a Texas company (“iHeartCommunications”).

The acquisition was completed on July 30, 2008 pursuant to the Agreement and Plan of Merger, dated November 16, 2006, as amended on April 18, 2007, May 17, 2007 and May 13, 2008 (the “Merger Agreement”).

(the “Company,” "iHeartMedia," "we" or "us") was formed in May 2007 for the purpose of acquiring the business of iHeartCommunications, Inc., a Texas company (“iHeartCommunications”), which occurred on July 30, 2008.

Prior to the consummation of the acquisition of iHeartCommunications, iHeartMedia had not conducted any activities, other than activities incident to its formation in connection with the acquisition, and did not have any assets or liabilities, other than those related to the acquisition.

On March 14, 2018 (the “Petition Date”), the Company, 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").

On May 1, 2019 (the “Effective Date”), the conditions to the effectiveness of the Debtors plan of reorganization, as amended, were satisfied and the Company emerged from Chapter 11 through (a) a series of transactions (the “Separation”) through which Clear Channel Outdoor Holdings, Inc.

(“CCOH”), its parent Clear Channel Holdings, Inc.

(“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “iHeart Group”), and (b) a series of transactions (the “Reorganization”) through which iHeartCommunications’ debt was reduced from approximately $ 16 billion to approximately $ 5.8 billion and a global compromise and settlement among holders of claims (“Claimholders”) in connection with the Chapter 11 Cases was effected (collectively, the “Plan of Reorganization”).

Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations.

Certain of the Company's operations have been presented as discontinued.

The operations of the Outdoor Group have been presented as discontinued.

The Company presents businesses that represent components as discontinued operations when the components meet the criteria for held for sale, are sold, or spun-off and their disposal represents a strategic shift that has, or will have, a major effect on its operations and financial results.

See Note 4, Discontinued Operations .

As part of the Separation and Reorganization (as defined below), the Company reevaluated its segment reporting, resulting in the presentation of two operating segments:

As part of the Separation and Reorganization (as defined below), the Company reevaluated its segment reporting, resulting in the presentation of two reportable segments:

▪ Audio, which provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses and

Audio and Media Services, which provides other audio and media services, including the Company’s media representation business, Katz Media Group (“Katz Media”) and the Company's provider of scheduling and broadcast software, Radio Computing Services (“RCS”).

▪ Audio and Media Services, which provides other audio and media services, including the Company’s media representation business, Katz Media Group (“Katz Media”) and the Company's provider of scheduling and broadcast software, RCS.

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.

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 this uncertainty.

The Company repaid the amounts borrowed under the ABL Facility during the second and third quarters of 2020 using cash on hand and the proceeds from the issuance of the incremental term loan (as discussed below).

As of December 31, 2020, the ABL Facility had a facility size of $ 450.0 million, no principal amounts outstanding and $ 32.9 million of outstanding letters of credit, resulting in $ 417.1 million of excess availability.

As a result of certain restrictions in the Company's debt and preferred stock agreements, as of December 31, 2020, approximately $ 172 million was available to be drawn upon under 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 iHeartMedia Capital I, LLC 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.

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 remainder of 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 during the year 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”).

The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The Company continues to examine the impacts the CARES Act may have on its business.

For more information on the expected benefits of the CARES Act on the Company's income tax liabilities, see Note 11, Income Taxes .

As of December 31, 2020, the Company had approximately $ 720.7 million in cash and cash equivalents.

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

Based on current available liquidity, the Company expects to be able to meet its obligations as they become due over the coming year.

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.

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.

The Company performed its annual impairment testing of goodwill and indefinite-lived intangible assets as of July 1, 2020.

No additional impairment charges were recorded as a result of this assessment.

For more information, see Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill .

Voluntary Filing under Chapter 11

On March 14, 2018 (the "Petition Date"), the Company, 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").

On the Petition Date, the Debtors filed the Chapter 11 Cases.

Clear Channel Outdoor Holdings, Inc.

(“CCOH”) and its direct and indirect subsidiaries did not file voluntary petitions for reorganization under the Bankruptcy Code and were not Debtors in the Chapter 11 Cases.

On April 28, 2018, the Company and the other Debtors filed a plan of reorganization (as amended, the “Plan of Reorganization”) and a related disclosure statement with the Bankruptcy Court, which we subsequently amended by filing the second, third, fourth and fifth amended Plan of Reorganization and amended versions of the Disclosure Statement.

On January 22, 2019, the Plan of Reorganization was confirmed by the Bankruptcy Court.

On May 1, 2019 (the “Effective Date”), the conditions to the effectiveness of the Plan of Reorganization were satisfied and the Company emerged from Chapter 11 through (a) a series of transactions (the “Separation”) through which CCOH, its parent Clear Channel Holdings, Inc.

(“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “iHeart Group”), and (b) a series of transactions (the “Reorganization”) through which iHeartCommunications’ debt was reduced from approximately $16 billion to approximately $5.8 billion and a global compromise and settlement among holders of claims (“Claimholders”) in connection with the Chapter 11 Cases was effected.

The compromise and settlement involved, among others, (i) the restructuring of iHeartCommunications’ indebtedness by (A) replacing its “debtor-in-possession” credit facility with a $450 million senior secured asset-based revolving credit facility (the “ABL Facility”) and (B) issuing to certain Claimholders, on account of their claims, approximately $3.5 billion aggregate principal amount of new senior secured term loans (the “Term Loan Facility”), approximately $1.45 billion aggregate principal amount of new 8.375% Senior Notes due 2027 (the “Senior Unsecured Notes”) and approximately $800 million aggregate principal amount of new 6.375% Senior Secured Notes due 2026 (the “ 6.375% Senior Secured Notes”), (ii) the Company’s issuance of new Class A common stock, new Class B common stock and special warrants to purchase shares of new Class A common stock and Class B common stock (“Special Warrants”) to Claimholders, subject to ownership restrictions imposed by the Federal Communications Commission (“FCC”), (iii) the settlement of certain intercompany transactions, and (iv) the sale of the preferred stock (the “iHeart Operations Preferred Stock”) of the Company’s wholly-owned subsidiary iHeart Operations, Inc.

On the Effective Date, the conditions to the effectiveness of the Plan of Reorganization were satisfied and the Company emerged from Chapter 11 through (a) a series of transactions (through which the Outdoor Group was were separated from, and ceased to be controlled by, the iHeart Group, and (b) the Reorganization of transactions through which iHeartCommunications’ debt was reduced from approximately $ 16 billion to approximately $ 5.8 billion and a global compromise and settlement among Claimholders in connection with the Chapter 11 Cases was effected.

The compromise and settlement involved, among others, (i) the restructuring of iHeartCommunications’ indebtedness by (A) replacing its “debtor-in-possession” credit facility with a $ 450 million ABL Facility and (B) issuing to certain Claimholders, on account of their claims, approximately $ 3.5 billion aggregate principal amount of new senior secured term loans (the “Term Loan Facility”), approximately $ 1.45 billion aggregate principal amount of new 8.375 % Senior Notes due 2027 (the “Senior Unsecured Notes”) and approximately $ 800 million aggregate principal amount of new 6.375 % Senior Secured Notes due 2026 (the “ 6.375 % Senior Secured Notes”), (ii) the Company’s issuance of new Class A common stock, new Class B common stock and special warrants to purchase shares of new Class A common stock and Class B common stock (“Special Warrants”) to Claimholders, subject to ownership restrictions imposed by the Federal Communications Commission (“FCC”), (iii) the settlement of certain intercompany transactions, and (iv) the sale of the preferred stock (the “iHeart Operations Preferred Stock”) of the Company’s wholly-owned subsidiary iHeart Operations, Inc.

(“iHeart Operations”) in connection with the Separation.

All of the Company's equity existing as of the Effective Date was canceled on such date pursuant to the Plan of Reorganization.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Upon the Company's emergence from the Chapter 11 Cases, the Company adopted fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes.

1 unchanged sentence

Refer to Note 3, Fresh Start Accounting , for additional information.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

References to “Successor” or “Successor Company” relate to the financial position and results of operations of the Company after the Effective Date.

6 unchanged sentences

• Segregation of Reorganization items, net as a separate line in the Consolidated Statement of Comprehensive Loss, included within income from continuing operations.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business.

During the Chapter 11 Cases, the Company’s ability to continue as a going concern was contingent upon the Company’s ability to successfully implement the Company’s Plan of Reorganization, among other factors.

As a result of the effectiveness and implementation of the Plan of Reorganization, there is no longer substantial doubt about the Company's ability to continue as a going concern.

Use of Estimates

13 unchanged sentences

The trust agreements stipulate that the Company must fund any operating shortfalls of the trust activities, and any excess cash flow generated by the trusts is distributed to the Company.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company is also the beneficiary of proceeds from the sale of stations held in the trusts.

The Company is also the beneficiary of proceeds from the sale of stations held in the trusts.

The Company consolidates the trusts in accordance with ASC 810-10, which requires an enterprise involved with variable interest entities to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in the variable interest entity, as the trusts were determined to be a variable interest entity and the Company is the primary beneficiary under the trusts.

1 unchanged sentence

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable

32 unchanged sentences

Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers.

Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use assets and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively.

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

Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use ("ROU') assets and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively.

The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt or within Liabilities subject to compromise (see Note 3, Fresh Start Accounting ).

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.

12 unchanged sentences

As a result, the Company adjusted the IBR used to value the Company's ROU assets and operating lease liabilities at the Effective Date (see Note 3, Fresh Start Accounting ).

In addition, upon adoption of ASC 852 in the first quarter of 2019, the Company did not elect the practical expedient to combine non-lease components with the associated lease components.

Upon adoption of ASC 852 in the first quarter of 2019, the Company did not elect the practical expedient to combine non-lease components with the associated lease components.

Upon application of fresh start accounting on the Effective Date, the Company elected to use the practical expedient to not separate non-lease components from the associated lease component for all classes of the Company's assets.

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The Company engages a third-party valuation firm to assist the Company in the development of these assumptions and the Company’s determination of the fair value of its FCC licenses.

In 2019, as a result of the recent fair value exercise applied in connection with fresh start accounting, the Company opted to use a qualitative assessment as permitted by ASC 350, "Intangibles - Goodwill and Other" .

See Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill .

As discussed above, 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 performed interim impairment tests on its indefinite-lived intangible assets as of March 31, 2020.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

interim impairment tests resulted in a non-cash impairment of the Company's FCC licenses of $ 502.7 million.

The Company performed its annual impairment testing of indefinite-lived intangible assets as of July 1, 2020 and no additional impairment charges were recorded.

See Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill .

Other intangible assets include definite-lived intangible assets.

11 unchanged sentences

However, in connection with emergence from bankruptcy, the Company qualified for and adopted fresh start accounting on the Effective Date.

As of May 1, 2019, the Company allocated its estimated enterprise fair value to its individual assets and liabilities based on their estimated fair values in conformity with ASC 805, " Business Combinations ." As a result of the recent fair value exercise applied in connection with fresh start accounting, the Company opted to use a qualitative assessment as permitted by ASC 350, "Intangibles - Goodwill and Other" .

See Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill .

Upon application of fresh start accounting in accordance with ASC 852 in connection with the emergence from bankruptcy, the Company recorded goodwill of $ 3.3 billion, which represented the excess of Reorganization Value over the estimated fair value of the Company's assets and liabilities.

Goodwill was further allocated to reporting units based on the relative fair values of the Company's reporting units as of May 1, 2019.

The Company concluded no goodwill impairment was required for the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), the year ended December 31, 2018 (Predecessor) and the year ended December 31, 2017 (Predecessor).

As discussed above, 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 performed interim impairment tests on its long-lived assets, intangible assets and indefinite-lived intangible assets as of March 31, 2020.

The interim impairment tests resulted in a non-cash impairment of the Company's goodwill of $ 1.2 billion.

The Company performed its annual impairment testing of goodwill and indefinite-lived intangible assets as of July 1, 2020 and no additional impairment charges were recorded.

In addition, no further impairment was considered necessary in the fourth quarter of 2020.

For more information, see Note 7, Property, Plant and Equipment, Intangible Assets and Goodwill .

Nonconsolidated Affiliates

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The Company reviews the value of equity method investments and records impairment charges in the statement of operations as a component of “Equity in earnings (loss) of nonconsolidated affiliates” for any decline in value that is determined to be other-than-temporary.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Investments

Effective January 1, 2018, we adopted Accounting Standards Update ("ASU") 2016-01 Financial Instruments - Overall:

We apply Accounting Standards Update ("ASU") 2016-01 Financial Instruments - Overall:

Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"), which requires us to measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in earnings.

2 unchanged sentences

For equity securities classified as available-for-sale, realized gains and losses were included in net income.

Unrealized gains and losses on

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

equity securities classified as available-for-sale were recognized in accumulated other comprehensive income (loss) ("AOCI"), net of tax.

Unrealized gains and losses on equity securities classified as available-for-sale were recognized in accumulated other comprehensive income (loss) ("AOCI"), net of tax.

Equity securities without readily determinable fair values were recorded at cost.

The Company recorded noncash impairment charges of $21.0 million , $8.3 million , $14.2 million and $3.2 million during the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), the year ended 2018 (Predecessor) and the year ended 2017 (Predecessor), respectively.

The Company recorded noncash impairment charges of $ 0.9 million, $ 21.0 million, $ 8.3 million and $ 14.2 million during the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended 2018 (Predecessor), respectively.

Such charge is recorded on the Statement of Comprehensive Income (Loss) in “Loss on investments, net”.

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The Company receives payments from customers based on billing schedules that are established in its contracts, and deferred revenue is recorded when payment is received from a customer before the Company has satisfied the performance obligation or a non-cancelable contract has been billed in advance in accordance with the Company’s normal billing terms.

The primary source of revenue in the Audio segment is the sale of advertising on the Company’s broadcast radio stations, its iHeartRadio mobile application and website, station websites, and national and local live events.

Revenues for advertising spots are recognized at the point in time when the advertisement is broadcast or streamed, while revenues for online display advertisements are recognized over time based on impressions delivered or time elapsed, depending upon the terms of the contract.

2 unchanged sentences

Audio's contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations.

The Company also generates revenue through contractual commissions realized from the sale of national spot and online advertising on behalf of clients of its full-service media representation business, Katz Media, which is part of the Audio and Media Services business.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Media Services business.

Revenues from these contracts are recognized at the point in time when the advertisements are broadcast.

3 unchanged sentences

When this consideration includes a variable amount, the Company estimates the amount of consideration it expects to receive and only recognizes revenue to the extent that it is probable it will not be reversed in a future reporting period.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Because the transfer of promised goods and services to the customer is generally within a year of scheduled payment from the customer, the Company is not typically required to consider the effects of the time value of money when determining the transaction price.

11 unchanged sentences

The Company records advertising expense as it is incurred.

Advertising expenses were $126.0 million , $59.6 million , $201.2 million and $192.8 million for the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor),the year ended December 31, 2018 (Predecessor) and the year ended December 31, 2017 (Predecessor), respectively, which include $105.0 million , $46.0 million , $155.2 million and $146.1 million in barter advertising, respectively.

Advertising expenses were $ 167.2 million, $ 126.0 million, $ 59.6 million and $ 201.2 million for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 (Predecessor), respectively, which include $ 133.0 million, $ 105.0 million, $ 46.0 million and $ 155.2 million in barter advertising, respectively.

Share-Based Compensation

3 unchanged sentences

Determining the fair value of share-based awards at the grant date requires assumptions and judgments, such as expected volatility, among other factors.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency

3 unchanged sentences

dollars using the exchange rates at the balance sheet date.

The related translation adjustments are recorded in a separate component of stockholders' equity (deficit), “Accumulated other comprehensive loss”.

The related translation adjustments are recorded in a separate component of stockholders' equity, “Accumulated other comprehensive income (loss)”.

Foreign currency transaction gains and losses are included in Other income (expense), net in the Statement of Comprehensive Income (Loss).

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications

Certain prior period amounts have been reclassified to conform to the 2020 presentation.

In the first quarter of 2020, in connection with a reorganization of the Company’s management structure after the Separation and emergence from the Chapter 11 cases, the Company reevaluated the classification of certain expenses to determine whether such expenses should be included within Direct operating expenses, Selling, general & administrative (“SG&A”) expenses or Corporate expenses.

As a result, certain expenses were reclassified from Corporate expenses to Direct operating or SG&A expenses.

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 Income (Loss).

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

The corresponding current and prior period segment disclosures were recast to reflect the current expense classifications.

See Note 15, Segment Data .

New Accounting Pronouncements Recently Adopted

The Company adopted ASU No.

2016-02, which created ASC 842, Leases , and all subsequent ASUs relating to this Topic, as of January 1, 2019 (collectively, "ASC 842").

This new lease accounting standard, which supersedes previous lease accounting guidance under U.S.

GAAP, results in significant changes to the balance sheets of lessees, most significantly by requiring the recognition of a right-of-use ("ROU") asset and lease liability by lessees for those leases classified as operating leases.

Lessor accounting is also updated to align with certain changes in the lessee model and the revenue recognition standard ("ASC Topic 606"), which was adopted in 2018.

The Company applied the transition provisions of this standard at January 1, 2019 following the optional transition method provided by ASU No.

consequently, the consolidated financial statements and notes to the consolidated financial statements for periods before the date of adoption continue to be presented in accordance with ASC Topic 840.

In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to not reassess whether expired or existing contracts are or contain leases and to carry forward the historical lease classification for those leases that commenced prior to the date of adoption.

Upon adoption of ASC 842, prepaid and deferred rent balances, which were historically presented separately, were combined and presented net within the ROU asset.

Additionally, deferred gains related to previous transactions that were historically accounted for as sale and operating leasebacks in accordance with ASC Topic 840 were eliminated and recognized as a cumulative-effect adjustment to equity, resulting in an increase to equity, net of tax, of $128.9 million .

Under ASC Topic 840, such gains were recognized ratably over the lease term as a credit to operating lease expense.

Operating lease expense for the each of the years ended December 31, 2018 and 2017 included credits of $5.3 million for the amortization of these gains, which were not recognized in any period after January 1, 2019.

Adoption of the new standard had a material impact on our consolidated balance sheets, but it did not have a material impact on our other consolidated financial statements.

Additionally, the standard requires disclosures to meet the objective of enabling users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

Refer to Note 5, Revenue , and Note 6, Leases , for more information.

Intangible Assets and Goodwill

During the first quarter of 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) .

This update eliminated the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge.

Entities are required to record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value.

The standard is effective for annual and any interim impairment tests performed for periods beginning after December 15, 2019.

The Company early adopted the proposed guidance under ASU 2017-04 beginning on January 1, 2019 on a prospective basis.

The implementation of ASU 2017-04 did not have a material impact on our consolidated financial statements and related disclosures.

During the third quarter of 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract .

This update requires that a customer in a cloud computing arrangement that is a service contract follow the internal use software guidance in Accounting Standards Codification (ASC) 350-402 to determine which implementation costs to capitalize as assets.

The standard is effective for fiscal years beginning after December 15, 2019.

The Company early adopted the proposed guidance under ASU 2018-15 beginning on January 1, 2019 on a prospective basis.

The implementation of ASU 2018-15 did not have a material impact on our consolidated financial statements and related disclosures.

New Accounting Pronouncements Not Yet Adopted

During the second quarter of 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments and finalized amendments to FASB ASC Subtopic 825-15, Financial Instruments-Credit Losses .

Measurement of Credit Losses on Financial Instruments and finalized amendments to FASB ASC Subtopic 825-15, Financial Instruments-Credit Losses ("ASC 326") .

The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.

The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses.

ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate.

Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a write-down.

The Company adopted the updated guidance in the first quarter of 2020 utilizing the modified retrospective approach, which resulted in the recognition of estimated credit loss reserves against certain available-for-sale debt securities from third-parties held by the Company.

Upon adoption, the Company recognized a $ 1.5 million cumulative-effect adjustment to opening retained earnings to reflect expected credit losses in relation to notes receivable held by the Company.

In addition, the Company evaluated the potential impact of the COVID-19 pandemic on the collectability of its notes receivable from third-parties.

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 for the year ended December 31, 2020.

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

The FASB issued ASU No.

2019-12, Simplifying the Accounting for Income Taxes (Topic 740) .

The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences.

It also clarifies and simplifies other aspects of the accounting for income taxes.

For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.

Early adoption is permitted in interim or annual periods with any adjustments reflected as of the beginning of the annual period that includes that interim period.

Additionally, entities that elect early adoption must adopt all the amendments in the same period.

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

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate.

Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a write-down.

The amendments of ASU 2016-13 are effective for interim and annual periods beginning after December 15, 2019.

The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.

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 adoption of this standard did not have a significant impact on our financial position, results of operations or cash flows.

Restricted Cash

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

Predecessor Company

(In thousands) Successor Company

2020 December 31,

Cash and cash equivalents $ 720,662 $ 400,300

1 unchanged sentence

Other current assets (1)

Other assets 525 —

Total cash, cash equivalents and restricted cash in the Statement of Cash Flows $ 721,187 $ 411,618

(1) The Predecessor Company's Total cash, cash equivalents and restricted cash as of December 31, 2018 in the table above exclude $202.9 million classified as current and long-term assets of discontinued operations.

(1) During the quarter ended December 31, 2020, the Successor Company settled the remaining claims outstanding and provided a final distribution to all General Unsecured Claimholders.

As a result the remaining balance held in the Guarantor General Unsecured Recovery Cash Pool pursuant to the terms of the Plan of Reorganization of $ 9.9 M was released and was reclassified as cash and cash equivalents available for general use.

NOTE 2 - EMERGENCE FROM VOLUNTARY REORGANIZATION UNDER CHAPTER 11 PROCEEDINGS

Plan of Reorganization

As described in Note 1, on March 14, 2018, the Company and the other Debtors filed the Chapter 11 Cases and on April 28, 2018, the Company and the other Debtors filed a plan of reorganization, which was subsequently amended as the Plan of Reorganization and was confirmed on January 22, 2019.

The Debtors then emerged from bankruptcy upon effectiveness of the Plan of Reorganization on the Effective Date.

As described in Note 1, on May 1, 2019, the Company and the other Debtors emerged from bankruptcy pursuant to the Plan of Reorganization.

Capitalized terms not defined in this note are defined in the Plan of Reorganization.

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▪ iHeartCommunications, iHeartMedia, iHeartMedia Management Services, Inc.

(“iHM Management Services”) and CCOH entered into a transition services agreement (the “Transition Services Agreement”) pursuant to which, the Company or its subsidiaries will provide administrative services historically provided to CCOH by iHeartCommunications for a period of one year after the Effective Date, which may be extended under certain circumstances;

▪ the Trademark License Fees charged to CCOH during the post-petition period were waived by iHeartMedia;

25 unchanged sentences

The expected cash flows for the period 2019 to 2022 were derived from earnings forecasts and assumptions regarding growth and margin projections, as applicable.

A terminal value was included, calculated using the terminal multiple method, which estimates a range of values at which the Successor Company will be valued at the end of the Projection Period based on applying a terminal multiple to final year Adjusted EBITDA (referred to as "OIBDAN" in the documents filed with the Bankruptcy Court), which is defined as consolidated operating income adjusted to exclude non-cash compensation expenses

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

included within corporate expenses, as well as Depreciation and amortization, Impairment charges and Other operating income (expense), net.

documents filed with the Bankruptcy Court), which is defined as consolidated operating income adjusted to exclude non-cash compensation expenses included within corporate expenses, as well as Depreciation and amortization, Impairment charges and Other operating income (expense), net.

To estimate enterprise value utilizing the selected transactions analysis, valuation multiples were derived from an analysis of consideration paid and net debt assumed from publicly disclosed merger or acquisition transactions, and such multiples were applied to the broadcast cash flows of the Successor Company.

32 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands)

Separation of CCOH Adjustments

Reorganization Adjustments

Fresh Start Adjustments

(In thousands) Separation of CCOH Adjustments Reorganization Adjustments Fresh Start Adjustments

Predecessor (A) (B) (C) Successor

CURRENT ASSETS

10 unchanged sentences

Other intangibles, net 104,516 — — 2,240,890 (5) 2,345,406

Goodwill 3,415,492 — — ( 92,127 ) (5) 3,323,365

Operating lease right-of-use assets 355,826 — — 554,278 (6) 910,104

Other assets 139,409 — ( 384 ) (3) ( 54,683 ) (2) 84,342

Long-term assets of discontinued operations 5,351,513 ( 5,351,513 ) (1) — — —

Total Assets $ 14,267,079 $ ( 6,352,266 ) $ ( 104,928 ) $ 2,900,323 $ 10,710,208

CURRENT LIABILITIES

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Payment of consenting stakeholder fees ( 4,000 )

Payment of professional fees

Funding of Professional Fees Escrow Account

Payment of professional fees ( 85,091 ) (a)

Funding of Professional Fees Escrow Account ( 41,205 ) (a)

Total uses of cash $ ( 176,097 )

1 unchanged sentence

Cash upon emergence $ 63,142

(a) Approximately $30.5 million of professional fees paid at emergence were accrued as of May 1, 2019.

These payments also reflect both the payment of success fees for $86.1 million and other professionals paid directly at emergence.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(a) Approximately $ 30.5 million of professional fees paid at emergence were accrued as of May 1, 2019.

These payments also reflect both the payment of success fees for $ 86.1 million and other professionals paid directly at emergence.

(2) Pursuant to the terms of the Plan of Reorganization, on the Effective Date, the Company funded the Guarantor General Unsecured Recovery Cash Pool account in the amount of $ 17.5 million, which was reclassified as restricted cash within Other current assets.

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Accounts payable ( 3,061 )

Finance leases and other debt

Finance leases and other debt ( 16,867 ) (a)

Current operating lease liabilities ( 31,845 )

Noncurrent operating lease liabilities ( 398,154 )

Other long-term liabilities

Other long-term liabilities ( 14,518 ) (b)

Total liabilities reinstated $ ( 1,061,846 )

7 unchanged sentences

Gain on settlement of Liabilities Subject to Compromise $ 7,192,374

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(a) Includes finance lease liabilities and other debt of $ 6.6 million and $ 10.3 million classified as current and long-term debt, respectively.

4 unchanged sentences

Total reinstated Other long-term liabilities $ 14,518

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) The exit financing consists of the Term Loan Facility of approximately $ 3.5 billion and 6.375 % Senior Secured Notes totaling $ 800 million, both maturing seven years from the date of issuance, the Senior Unsecured Notes totaling $ 1.45 billion, maturing eight years from the date of issuance, and a $ 450 million ABL Facility with no amount drawn at emergence, which matures on June 14, 2023.

1 unchanged sentence

The remaining $ 10.3 million is related to the reinstatement of the Long-term portion of finance leases and other debt as described above.

(In thousands)

Interest Rate

Term Loan Facility

Libor + 4.00%

(In thousands) Term Interest Rate Amount

Term Loan Facility 7 years Libor + 4.00 %

6.375 % Senior Secured Notes

Senior Unsecured Notes

Asset-based Revolving Credit Facility

7 years 6.375 % 800,000

Senior Unsecured Notes 8 years 8.375 % 1,450,000

Asset-based Revolving Credit Facility 4 years Varies (a)

Total Long-Term Debt - Exit Financing $ 5,750,000

3 unchanged sentences

Net impact on Long-term debt $ 5,758,516

Borrowings under the ABL Facility bear interest at a rate per annum equal to the applicable rate plus, at iHeartCommunications’ option, either (x) a eurocurrency rate or (y) a base rate.

(a) Borrowings under the ABL Facility bear interest at a rate per annum equal to the applicable rate plus, at iHeartCommunications’ option, either (x) a eurocurrency rate or (y) a base rate.

The applicable margin for borrowings under the ABL Facility range from 1.25 % to 1.75 % for eurocurrency borrowings and from 0.25 % to 0.75 % for base-rate borrowings, in each case, depending on average excess availability under the ABL Facility based on the most recently ended fiscal quarter.

6 unchanged sentences

The estimated remaining deferred tax assets attributed to federal and state net operating loss carryforwards upon emergence totaled $ 114.9 million.

The adjustments reflect a reduction in deferred tax assets for federal and state net operating

The adjustments reflect a reduction in deferred tax assets for federal and state net operating loss carryforwards as described above, a reduction in deferred tax liabilities attributed to long-term debt as a result of the restructuring of our indebtedness upon emergence and a reduction in valuation allowance.

(11) Reflects the reinstatement of Other long-term liabilities from Liabilities subject to compromise, offset by the reduction of liabilities for unrecognized tax benefits classified as Other long-term liabilities that were discharged and effectively settled upon emergence.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

loss carryforwards as described above, a reduction in deferred tax liabilities attributed to long-term debt as a result of the restructuring of our indebtedness upon emergence and a reduction in valuation allowance.

(In thousands)

20 unchanged sentences

Income tax benefit $ 102,914

Cancellation of Predecessor Equity

Cancellation of Predecessor Equity 2,074,190 (a)

Issuance of Successor Equity to prior equity holders ( 27,701 )

1 unchanged sentence

(a) This value is reflective of Predecessor common stock, Additional paid in capital and the recognition of $ 1.5 million in compensation expense related to the unrecognized portion of share-based compensation, less Treasury stock.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fresh Start Adjustments

4 unchanged sentences

(1) Reflects the fair value adjustment as of May 1, 2019 made to accounts receivable to reflect management's best estimate of the expected collectability of accounts receivable balances.

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(2) Reflects the fair value adjustment as of May 1, 2019 to eliminate certain prepaid expenses related to software implementation costs and other upfront payments.

17 unchanged sentences

The Company has also recorded customer-related and marketing-related intangible assets, including the iHeart tradename.

IHEARTMEDIA, INC.

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The following table sets forth estimated fair values of the components of these intangible assets and their estimated useful lives:

(In thousands)

Estimated Fair Value

Estimated Useful Life

Customer / advertiser relationships

Talent contracts

Trademarks and tradenames

(In thousands) Estimated Fair Value Estimated Useful Life

FCC licenses $ 2,281,720 (a) Indefinite

Customer / advertiser relationships 1,643,670 (b) 5 - 15 years

Talent contracts 373,000 (b) 2 - 10 years

Trademarks and tradenames 321,928 (b) 7 - 15 years

Other 6,808 (c)

Total intangible assets upon emergence $ 4,627,126

5 unchanged sentences

Under the direct valuation method, the fair value of the FCC licenses was calculated at the market level as prescribed by ASC 350.

The application of the direct valuation method attempts to isolate the income that is properly attributable to the FCC licenses alone (that is, apart from tangible and identified intangible assets and goodwill).

The application of the direct valuation method attempts to isolate the income that is

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

properly attributable to the FCC licenses alone (that is, apart from tangible and identified intangible assets and goodwill).

It is based upon modeling a hypothetical “greenfield” build-up to a “normalized” enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been paid for (or added) as part of the build-up process.

13 unchanged sentences

The Company engaged a third-party valuation firm to assist in developing the assumptions and determining the fair values of each of these assets.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

estimate fair value based on the present value of the incremental after-tax cash flows attributable only to the subject intangible assets after deducting contributory asset charges.

For purposes of estimating the fair values of customer/advertiser relationships and talent contracts, the Company primarily utilized the Income Approach (specifically, the multi-period excess earnings method, or MPEEM) to estimate fair value based on the present value of the incremental after-tax cash flows attributable only to the subject intangible assets after deducting contributory asset charges.

The cash flows attributable to each grouping of customer/advertiser relationships were adjusted for the appropriate contributory asset charges (e.g., FCC licenses, working capital, tradenames, technology, workforce, etc.).

8 unchanged sentences

The forecasted cash flows expected to be generated as a result of the royalty savings were discounted to present value utilizing a discount rate considering overall business risks and risks associated with the asset being valued.

The historical book values of talent contracts, trademarks and tradenames and other intangible assets as of May 1, 2019 were subtracted from the fair values determined as described above to determine the adjustments as follows:

The historical book values of talent contracts, trademarks and

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

tradenames and other intangible assets as of May 1, 2019 were subtracted from the fair values determined as described above to determine the adjustments as follows:

(In millions)

Customer/advertiser relationships

increase in value

Talent contracts

increase in value

Trademarks and tradenames

increase in value

Total fair value adjustment

increase in value

Customer/advertiser relationships $ 1,604.1 increase in value

Talent contracts 361.6 increase in value

Trademarks and tradenames 274.4 increase in value

Other 0.8 increase in value

Total fair value adjustment $ 2,240.9 increase in value

9 unchanged sentences

Upon application of fresh start accounting, the lease obligation was recalculated using the incremental borrowing rate applicable to the Company after emergence from bankruptcy and commensurate to its new capital structure.

The incremental borrowing rate used decreased from 12.44% as

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of March 31, 2019 to 6.54% as of May 1, 2019.

The incremental borrowing rate used decreased from 12.44 % as of March 31, 2019 to 6.54 % as of May 1, 2019.

As a result of this decrease, the Company's Operating lease liabilities and corresponding Operating lease right-of-use assets increased by $ 541.2 million to reflect the higher balances resulting from the application of a lower incremental borrowing rate.

13 unchanged sentences

This adjustment primarily relates to adjusting vacation accruals to estimated fair values.

IHEARTMEDIA, INC.

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(10) Reflects a net increase to deferred tax liabilities for fresh start adjustments attributed primarily to property, plant and equipment and intangible assets, the effects of which are partially offset by a decrease in the valuation allowance.

26 unchanged sentences

The tables below present the Reorganization items incurred and cash paid for Reorganization items as a result of the Chapter 11 Cases during the periods presented:

(In thousands)

Successor Company

Predecessor Company

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

Year Ended December 31,

(In thousands) Successor Company Predecessor Company

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2018

Write-off of deferred loans costs $ — $ — $ — $ ( 67,079 )

7 unchanged sentences

Cash payments for Reorganization items, net $ 443 $ 18,360 $ 183,291 $ 103,727

The Company incurred additional professional fees related to the bankruptcy, post-emergence, of $ 6.3 million and $ 26.5 million for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively,

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2019 , $0.4 million of Reorganization items, net were unpaid and accrued in Accounts payable and Accrued expenses in the accompanying Consolidated Balance Sheet.

As of December 31, 2018 , $47.5 million of professional fees were unpaid and accrued in Accounts payable and Accrued expenses in the accompanying Consolidated Balance Sheet.

The Company incurred additional professional fees related to the bankruptcy, post-emergence, of $26.5 million for the period from May 2, 2019 through December 31, 2019 , respectively, which are included within Other income (expense), net in the Company's Consolidated Statements of Comprehensive Income (Loss).

which are included within Other income (expense), net in the Company's Consolidated Statements of Comprehensive Income (Loss).

NOTE 4 - 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.

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

Financial Information for Discontinued Operations

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The following shows the revenue, 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 January 1, 2019 through May 1,

Year Ended December 31,

(In thousands) Predecessor Company

Period from January 1, 2019 through May 1, Year Ended December 31,

Revenue $ 804,566 $ 2,721,705

Loss from discontinued operations before income taxes $ ( 133,475 ) $ ( 132,152 )

Income tax (benefit) expense

Income (loss) from discontinued operations, net of taxes

Gain on disposal before income taxes

Income tax expense ( 6,933 ) ( 32,515 )

Gain on disposal, net of taxes

Income (loss) from discontinued operations, net of taxes

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Balance Sheet Information

The following table shows the classes of assets and liabilities classified as discontinued operations for the Predecessor Company as of December 31, 2018:

(In thousands)

Predecessor Company

CURRENT ASSETS

Cash and cash equivalents

Accounts receivable, net of allowance of $24,224

Prepaid expenses

Other current assets

Current assets of discontinued operations

LONG-TERM ASSETS

Structures, net

Property, plant and equipment, net

Indefinite-lived intangibles - permits

Other intangibles, net

Long-term assets of discontinued operations

CURRENT LIABILITIES

Accounts payable

Accrued expenses

Accrued interest

Deferred income

Current portion of long-term debt

Current liabilities of discontinued operations

LONG-TERM LIABILITIES

Long-term debt

Deferred income taxes

Other long-term liabilities

Long-term liabilities of discontinued operations

Loss from discontinued operations, net of taxes $ ( 140,408 ) $ ( 164,667 )

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

Income tax expense — —

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

Income from discontinued operations, net of taxes $ 1,685,123 $ ( 164,667 )

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

Transition Services Agreement

On the Effective Date, the Company, iHM Management Services, iHeartCommunications and CCOH entered into a transition services agreement (the “Transition Services Agreement”), pursuant to which iHM Management Services has agreed to provide, or cause the Company, iHeartCommunications, iHeart Operations or any member of the iHeart Group to provide, CCOH with certain administrative and support services and other assistance which CCOH will utilize in the conduct of its business as such business was conducted prior to the Separation, for one year from the Effective Date (subject to certain rights of CCOH to extend up to one additional year, as described below).

The transition services may include, among other things, (a) treasury, payroll and other financial related services, (b) certain executive officer services, (c) human resources and employee benefits, (d) legal and related services, (e) information systems, network and related services, (f) investment services and (g) procurement and sourcing support.

On the Effective Date, the Company, iHM Management Services, iHeartCommunications and CCOH entered into a transition services agreement (the “Transition Services Agreement”), pursuant to which iHM Management Services agreed to provide, or cause the Company and its subsidiaries to provide, CCOH with certain administrative and support services and other assistance which CCOH utilized in the conduct of its business as such business was conducted prior to the Separation, for one year from the Effective Date (subject to certain rights of CCOH to extend up to one additional year).

The allocation of cost was 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.

CCOH terminated the Transition Services Agreement on August 31, 2020.

New Tax Matters Agreement

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The charges for the transition services are generally consistent with the Corporate Services Agreement, dated as of November 10, 2005, by and between iHM Management Services and CCOH (the “Corporate Services Agreement”), which governed the provision of certain services by the iHeart Group to the Outdoor Group prior to the Separation.

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.

CCOH may request an extension of the term for all services or individual services for one-month periods for up to an additional 12 months, and the price for transition services provided during such extended term will be increased for any service other than those identified in the schedules to the Transition Services Agreement as an “IT Service” or any other service the use and enjoyment of which requires the use of another IT Service.

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.

New Tax Matters Agreement

On the Effective Date, the Company entered into a new tax matters agreement (the “New Tax Matters Agreement”) by and among the Company, iHeartCommunications, iHeart Operations, CCH, CCOH and CCOL, to allocate the responsibility of the Company and its subsidiaries, on the one hand, and the Outdoor Group, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.

Company and its subsidiaries, on the one hand, and the Outdoor Group, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.

The New Tax Matters Agreement requires that the Company and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against (i) any taxes other than transfer taxes or indirect gains taxes imposed on the Company or any of its subsidiaries (other than CCOH and its subsidiaries) in connection with the Separation, (ii) any transfer taxes and indirect gains taxes arising in connection with the Separation, and (iii) fifty percent of the amount by which the amount of taxes (other than transfer taxes or indirect gains taxes) imposed on CCOH or any of its subsidiaries in connection with the Separation that are paid to the applicable taxing authority on or before the third anniversary of the separation of CCOH exceeds $ 5 million, provided that, the obligations of the Company and iHeartCommunications to indemnify CCOH and its subsidiaries with respect taxes (other than transfer taxes or indirect gains taxes) imposed on CCOH or any of its subsidiaries in connection with the Separation will not exceed $ 15 million.

5 unchanged sentences

The Company generates revenue from several sources:

The primary source of revenue in the Audio segment is the sale of advertising on the Company’s radio stations, its iHeartRadio mobile application and website, station websites, and live events.

• The primary source of revenue in the Audio segment is the sale of advertising on the Company’s radio stations, its iHeartRadio mobile application and website, station websites, and live and virtual events.

This segment also generates revenues from programming talent, network syndication, traffic and weather data, and other miscellaneous transactions.

• The Company also generates revenue through contractual commissions realized from the sale of national spot and online advertising on behalf of clients of its full-service media representation business, Katz Media, which is reported in the Company’s Audio and Media Services segment.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation of Revenue

The following table shows revenue streams for the Successor Company for the period from May 2, 2019 through December 31, 2019 :

The following table shows revenue streams for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019:

Successor Company

(In thousands)

(In thousands) Audio Audio and Media Services Eliminations Consolidated

Year Ended December 31, 2020

Revenue from contracts with customers:

Broadcast Radio (1)

$ 1,604,880 $ — $ — $ 1,604,880

474,371 — — 474,371

484,950 — — 484,950

Sponsorship and Events (4)

107,654 — — 107,654

Audio and Media Services (5)

— 274,749 ( 7,086 ) 267,663

7,276 — ( 670 ) 6,606

Total 2,679,131 274,749 ( 7,756 ) 2,946,124

Revenue from leases (7)

2,094 — — $ 2,094

Revenue, total $ 2,681,225 $ 274,749 $ ( 7,756 ) $ 2,948,218

Period from May 2, 2019 through December 31, 2019

1 unchanged sentence

Broadcast Radio (1)

$ 1,575,382 $ — $ — $ 1,575,382

273,389 — — 273,389

425,631 — — 425,631

Sponsorship and Events (4)

159,187 — — 159,187

Audio and Media Services (5)

— 167,292 ( 4,589 ) 162,703

13,017 — ( 447 ) 12,570

Total 2,446,606 167,292 ( 5,036 ) 2,608,862

Revenue from leases (7)

1,194 — — 1,194

Revenue, total $ 2,447,800 $ 167,292 $ ( 5,036 ) $ 2,610,056

13 unchanged sentences

Predecessor Company

(In thousands)

Audio and Media Services (1)

(In thousands) Audio Audio and Media Services Eliminations Consolidated

Period from January 1, 2019 through May 1, 2019

1 unchanged sentence

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

Sponsorship and Events

Audio and Media Services

Revenue from leases

Revenue, total

Year Ended December 31, 2018

Revenue from contracts with customers:

Broadcast Radio

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

3 unchanged sentences

Broadcast Radio $ 2,264,058 $ — $ — $ 2,264,058

Digital 284,565 — — 284,565

Networks 582,302 — — 582,302

Sponsorship and Events 200,605 — — 200,605

Audio and Media Services — 264,061 ( 6,508 ) 257,553

Other 19,446 — — 19,446

Total 3,350,976 264,061 ( 6,508 ) 3,608,529

Revenue from leases 2,794 — — 2,794

Revenue, total $ 3,353,770 $ 264,061 $ ( 6,508 ) $ 3,611,323

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.

See Note 1 for further information.

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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

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

Year Ended December 31,

Successor Company Predecessor Company

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

(In thousands) 2020 2019 2019 2018

2 unchanged sentences

Trade and barter expenses 154,715 134,865 58,330 199,982

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Successor Company recognized barter revenue of $ 10.5 million and $ 13.0 million for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively, in connection with investments made in companies in exchange for advertising services.

The Predecessor Company recognized barter revenue of $ 5.9 million and $ 10.9 million in the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 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

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

Year Ended December 31,

Successor Company Predecessor Company

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

(In thousands) 2020 2019 2019 2018

1 unchanged sentence

Beginning balance (1)

$ 162,068 $ 151,475 $ 148,720 $ 155,228

Impact of fresh start accounting — 298 — —

7 unchanged sentences

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue from Leases

1 unchanged sentence

(In thousands)

Thereafter 11,169

Total minimum future rentals $ 16,930

NOTE 6 – LEASES

The following tables provide the components of lease expense included within the Consolidated Statement of Comprehensive Income (Loss) for the period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor):

Successor Company

Predecessor Company

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

The following tables provide the components of lease expense included within the Consolidated Statement of Comprehensive Income (Loss) for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Successor Company Predecessor Company

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1,

(In thousands) 2020 2019 2019

4 unchanged sentences

Operating lease weighted average discount rate 6.6 %

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2020 (Successor), the Company’s future maturities of operating lease liabilities were as follows:

(In thousands)

2021 $ 126,732

Thereafter 706,472

Total lease payments $ 1,293,645

1 unchanged sentence

Total operating lease liability $ 840,994

The following table provides supplemental cash flow information related to leases for the period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor):

Successor Company

Predecessor Company

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1

The following table provides supplemental cash flow information related to leases for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor):

Successor Company Predecessor Company

Year Ended December 31, Period from May 2, 2019 through December 31, 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 period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor).

Upon adoption of fresh start accounting upon emergence from the Chapter 11 Cases, the Company increased its operating lease obligation by $459.0 million to reflect its operating lease obligation as estimated fair value (see Note 3, Fresh Start Accounting ).

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

$ 56,243 $ 29,498 $ 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 year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31,

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor).

Upon adoption of fresh start accounting upon emergence from the Chapter 11 Cases, the Company increased its operating lease obligation by $ 459.0 million to reflect its operating lease obligation as estimated fair value (see Note 3, Fresh Start Accounting ).

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

The non-cash operating lease expense was $ 103.4 million, $ 61.6 million and $ 14.3 million for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor), respectively.

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL

Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets as of December 31, 2019 (Successor) and 2018 (Predecessor), respectively:

(In thousands)

Successor Company

Predecessor Company

On October 22, 2020, the Company acquired Voxnest, Inc.

("Voxnest") for approximately $ 50 million.

Voxnest is the leading consolidated marketplace for podcasts and podcast analytics, enterprise publishing tools, programmatic integration and targeted ad serving and will be included within the Company's Audio segment.

During the first quarter of 2021, we entered into a Share Purchase Agreement to acquire Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W.

Scripps Company for $ 230 million in cash, subject to certain adjustments.

The consummation of the proposed acquisition is subject to the satisfaction or waiver of customary closing conditions, including regulatory approval.

Property, Plant and Equipment

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

(In thousands) Successor Company

2020 December 31,

Land, buildings and improvements $ 386,980 $ 385,017

Towers, transmitters and studio equipment 169,788 156,739

Computer equipment and software 398,084 321,936

Furniture and other equipment 45,711 39,591

Construction in progress 25,073 21,287

1,025,636 924,570

accumulated depreciation 213,934 77,694

Property, plant and equipment, net $ 811,702 $ 846,876

In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date.

As a result, the Company adjusted Property, plant and equipment to their respective fair values at the Effective Date (see Note 3, Fresh Start Accounting ).

Indefinite-lived Intangible Assets

The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses.

The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Audio segment.

FCC broadcast licenses are granted to radio stations for up to eight years under the Telecommunications Act of 1996 (the “Act”).

4 unchanged sentences

As a result, the Company adjusted its FCC licenses to their respective estimated fair values as of the Effective Date of $ 2,281.7 million (see Note 3, Fresh Start Accounting ).

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Annual Impairment Test on Indefinite-lived Intangible Assets

The Company performs its annual impairment test on indefinite-lived intangible assets as of July 1 of each year.

The Company also tests indefinite-lived intangible assets at interim dates if events or changes in circumstances indicate that indefinite-lived intangible assets might be impaired.

In connection with emergence from bankruptcy, the Company qualified for and adopted fresh start accounting on the Effective Date.

As of May 1, 2019, the Company allocated its estimated enterprise fair value to its individual assets and liabilities based on their estimated fair values in conformity with ASC 805, "Business Combinations." Generally, the annual impairment test for indefinite-lived intangible assets includes a full quantitative assessment, which involves the preparation of fair value estimates for the company’s FCC licenses within each geographic market.

The assessment is based upon a direct valuation method as prescribed by ASC 350 and incorporates third party market data, other market and industry factors including data derived from peer companies, and the application of an industry WACC to determine the assets’ fair values.

As a result of the recent fair value exercise applied in connection with fresh start accounting, the Company opted to use a qualitative assessment for its annual indefinite-lived intangible asset impairment test as of July 1, 2019 in lieu of performing the full quantitative assessment, as permitted by ASC 350, "Intangibles - Goodwill and Other".

The qualitative impairment assessment performed for indefinite-lived intangible assets considered the general macroeconomic environment, industry and market specific conditions, financial performance, including changes in costs and actual versus forecasted results, as well other issues or events specific to the Audio segment.

The Company performs its annual impairment test on goodwill and indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year.

In addition, the Company tests for impairment of intangible assets whenever events and circumstances indicate that such assets might be impaired.

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 intangible assets at estimated fair value.

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

The economic downturn starting in March 2020 and the COVID-19 pandemic had an adverse impact on the trading values of the Company’s publicly-traded debt and equity and on the Company's first quarter 2020 results, and the continuing uncertainty surrounding the duration and magnitude of the economic impact of the pandemic 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 indefinite-lived FCC licenses.

For purposes of initial recording in fresh start accounting and for annual impairment testing purposes, our FCC licenses are valued using the direct valuation approach, with the key assumptions being forecasted market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values.

This data is populated using industry normalized information representing an average asset within a market.

In estimating the fair value of its FCC licenses, the Company obtained the most recent broadcast radio industry revenue projections which considered the impact of COVID-19 on future broadcast radio advertising revenue.

Such projections reflected a significant and negative impact from COVID-19.

In addition to using these broadcast radio industry revenue projections at the time, the Company used various sources to analyze media and broadcast industry market forecasts and other data in developing the assumptions used for purposes of performing impairment testing on our FCC licenses as of March 31, 2020.

As a result of COVID-19, the United States economy was undergoing a period of economic disruption and uncertainty, which had caused, among other things, lower consumer and business spending.

The uncertainty surrounding the projected demand for advertising negatively impacted the key assumptions used in the discounted cash flow models used to value the Company's FCC licenses.

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 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.

The impairment tests for indefinite-lived intangible assets consist of a comparison between the fair value of the indefinite-lived intangible asset at the market level with its carrying amount.

If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized equal to that excess.

After an impairment loss is recognized, the adjusted carrying amount of the indefinite-lived asset is its new accounting basis.

The fair value of the indefinite-lived asset is determined using the direct valuation method as prescribed in ASC 805-20-S99.

Under the direct valuation method, the fair value of the indefinite-lived assets is calculated at the market level as prescribed by ASC 350-30-35.

The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its indefinite-lived intangible assets.

The application of the direct valuation method attempts to isolate the income that is attributable to the indefinite-lived intangible asset alone (that is, apart from tangible and identified intangible assets and goodwill).

The Company forecasts revenue, expenses, and cash flows over a ten-year period for each of its markets in its application of the direct valuation method.

The Company also calculates a “normalized” residual year which represents the perpetual cash flows of each market.

The residual year cash flow was capitalized to arrive at the terminal value of the licenses in each market.

Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as part of a going concern business, the buyer hypothetically develops indefinite-lived intangible assets and builds a new operation with similar attributes from scratch.

Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value.

Initial capital costs are deducted from the discounted cash flow model which results in value that is directly attributable to the indefinite-lived intangible assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Based on this assessment and the totality of facts and circumstances, including the business environment in the third and fourth quarters of 2019, the Company determined that it was not more likely than not that the fair value of the Company's indefinite-lived FCC licenses were less than their respective carrying amounts.

As such, the Company concluded no indefinite-lived intangible asset impairment was required for the period from May 2, 2019 through December 31, 2019 .

The key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values.

This data is populated using industry normalized information representing an average FCC license or billboard permit within a market.

No further impairment was recognized as a result of the Company's annual impairment test on indefinite-lived intangible assets.

During the period from January 1, 2019 through May 1, 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 WACC used in performing the annual impairment test.

As a result of the fair value exercise applied in connection with fresh start accounting, the Successor Company opted to use a qualitative assessment as permitted by ASC 350, "Intangibles - Goodwill and Other" as of July 1, 2019 and no additional impairment charges were recorded.

The Predecessor Company recognized impairment charges related to its indefinite-lived intangible assets within several iHM radio markets of $ 33.2 million during the year ended December 31, 2018.

During 2017, the Company recognized an impairment charge of $6.0 million related to its indefinite-lived intangible assets in one market.

Other Intangible Assets

Other intangible assets include definite-lived intangible assets.

The Company’s definite-lived intangible assets primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows.

Other intangible assets consists of definite-lived intangible assets, which primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows.

The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets.

These assets are recorded at amortized cost.

As a result, the Company adjusted Other intangible assets to their respective fair values at the Effective Date (see Note 3, Fresh Start Accounting ).

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of December 31, 2019 (Successor) and December 31, 2018 (Predecessor), respectively:

(In thousands)

Successor Company

Predecessor Company

December 31, 2019

December 31, 2018

Gross Carrying Amount

Accumulated Amortization

Gross Carrying Amount

Accumulated Amortization

The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.

When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.

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 intangible assets at estimated fair value.

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

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 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.

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

(In thousands) Successor Company

December 31, 2020 December 31, 2019

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

Customer / advertiser relationships $ 1,620,509 $ ( 286,066 ) $ 1,629,236 $ ( 114,280 )

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Trademarks and tradenames 326,061 ( 54,358 ) 321,977 ( 21,661 )

Total amortization expense related to definite-lived intangible assets for the Successor Company for the period from May 2, 2019 through December 31, 2019 was $171.5 million .

Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the period from January 1, 2019 through May 1, 2019, the year ended December 31, 2018 and the year ended December 31, 2017 was $12.7 million , $110.9 million and $169.3 million , respectively.

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

The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:

(In thousands)

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Annual Impairment Test to Goodwill

The Company performs its annual impairment test on goodwill as of July 1 of each year.

The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.

Generally, the Company's annual impairment test includes a full quantitative assessment, which involves the preparation of a fair value estimate for each reporting unit based on the most recent projected financial results, market and industry factors, including comparison to peer companies and the application of the Company's current estimated WACC.

However, in connection with emergence from bankruptcy, the Company qualified for and adopted fresh start accounting on the Effective Date.

Upon application of fresh start accounting in accordance with ASC 852 in connection with the emergence from bankruptcy, the Company recorded goodwill of $3.3 billion , which represented the excess of Reorganization Value over the estimated fair value of the Company's assets and liabilities.

Goodwill was further allocated to reporting units based on the relative fair values of the Company's reporting units as of May 1, 2019.

As a result of the recent fair value exercise applied in connection with fresh start accounting, the Company opted to use a qualitative assessment for its annual goodwill impairment test as of July 1, 2019 in lieu of performing the full quantitative assessment, as permitted by ASC 350, "Intangibles - Goodwill and Other".

As of July 1, 2019, the qualitative impairment assessment performed for goodwill considered the general macroeconomic environment, industry and market specific conditions for each reporting unit, financial performance, including changes in costs and actual versus forecasted results, as well other issues or events specific to each reporting unit.

In addition, the Company evaluated the impact of changes in the Company's stock price and the trading values of its publicly-traded debt from May 1, 2019 to July 1, 2019 to determine whether or not any changes would indicate a potential impairment of goodwill allocated to its reporting units.

Based on this assessment and the totality of facts and circumstances, including the business environment in the third and fourth quarters of 2019, the Company determined that it was not more likely than not that the fair value of the Company and its reporting units is less than their respective carrying amounts.

As such, the Company concluded no goodwill impairment was required during the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) the year ended December 31, 2018 (Predecessor) and the year ended December 31, 2017 (Predecessor).

Other 31,351 ( 4,840 ) 21,394 ( 1,786 )

Total $ 2,353,821 $ ( 429,329 ) $ 2,348,006 $ ( 171,466 )

Total amortization expense related to definite-lived intangible assets for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019 was $ 258.9 million and $ 171.5 million, respectively.

Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the period

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

from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 was $ 12.7 million and $ 110.9 million, respectively.

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

The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:

(In thousands)

Audio & Media Services

Balance as of December 31, 2017 (Predecessor)

2021 $ 260,976

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

(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 )

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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

The balance at December 31, 2017 (Predecessor) is net of cumulative impairments of $3.5 billion and $212.0 million in the Company’s iHM and Audio and Media Service segments, respectively.

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

Acquisitions 44,606 — 44,606

Dispositions ( 164 ) — ( 164 )

Foreign currency — 245 245

Balance as of December 31, 2020 (Successor) $ 2,041,536 $ 104,399 $ 2,145,935

The balance at December 31, 2018 (Predecessor) is net of cumulative impairments of $ 3.5 billion and $ 212.0 million in the Company’s Audio and Audio and Media Services segments, respectively.

Goodwill Impairment

The Company performs its annual impairment test on goodwill as of July 1 of each year.

The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.

As described in Note 1, the economic disruption as a result of COVID-19 had a significant impact to the trading values of the Company’s publicly-traded debt and equity and on the Company's results in the latter half of the month ended March 31, 2020.

In addition, the Company expected that the pandemic would continue to impact the operating and economic environment of our

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

customers and would impact the near-term spending decisions of advertisers.

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

The goodwill impairment test requires measurement of the fair value of the Company's reporting units, which is compared to the carrying value of the reporting units, including goodwill.

Each reporting unit is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate.

Terminal values are also estimated and discounted to their present value.

Assessing the recoverability of goodwill requires estimates and assumptions about sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

As with the impairment testing performed on the Company’s FCC licenses described above, the significant deterioration in market conditions and uncertainty in the markets impacted the assumptions used to estimate the discounted future cash flows of the Company’s reporting units for purposes of performing the interim goodwill impairment test.

There are inherent uncertainties related to these factors and management’s judgment in applying these factors.

As discussed above, the carrying values of the Company’s reporting units were based on estimated fair values determined upon our emergence from bankruptcy on May 1, 2019, and the rapid deterioration in economic conditions resulting from the COVID-19 pandemic resulted in lower estimated fair values determined in connection with our interim goodwill impairment testing as of March 31, 2020.

The estimated fair value of one of the Company's reporting units was below its carrying value, including 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 Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its reporting units as of July 1, 2020 as part of the annual impairment test.

No further impairment was recognized as a result of the Company's annual impairment test on goodwill.

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.

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 the Company's actual results not being consistent with its estimates, and the Company could be exposed to future impairment losses that could be material to its results of operations.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – INVESTMENTS

The following table summarizes the Company's investments in nonconsolidated affiliates and other securities:

(In thousands)

Notes Receivable

Equity Method Investments

Other Investments

Marketable Equity Securities

Total Investments

Balance at December 31, 2017 (Predecessor)

Purchases of investments

Equity in earnings

Impairment of investments

Fair value adjustments

(In thousands) Available-for-Sale Debt Securities Equity Method Investments Other Investments Marketable Equity Securities Total Investments

Balance at December 31, 2018 (Predecessor) $ 25,823 $ 24,104 $ 38,813 $ — $ 88,740

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Equity in loss — ( 66 ) — — ( 66 )

Impairment of investments

Loss on investments ( 1,895 ) — ( 8,342 ) — ( 10,237 )

Other ( 3 ) — — — ( 3 )

Balance at May 1, 2019 (Predecessor) $ 23,925 $ 24,629 $ 30,574 $ — $ 79,128

3 unchanged sentences

Equity in loss — ( 279 ) — — ( 279 )

Impairment of investments

Loss on marketable equity securities

December 31, 2019 (Successor)

Loss on investments — — ( 21,003 ) ( 740 ) ( 21,743 )

Other ( 6,058 ) — 6,055 — ( 3 )

Balance at December 31, 2019 (Successor) $ 33,128 $ 10,952 $ 16,989 $ 2,700 $ 63,769

Purchases of investments 9,595 1,523 7,629 — 18,747

Equity in loss — ( 379 ) — — ( 379 )

Disposals ( 194 ) ( 1,000 ) — — ( 1,194 )

Distributions received — ( 31 ) — — ( 31 )

Loss on investments, net ( 7,116 ) — ( 959 ) ( 1,271 ) ( 9,346 )

Other ( 3,957 ) — 2,965 — ( 992 )

Balance at December 31, 2020 (Successor) $ 31,456 $ 11,065 $ 26,624 $ 1,429 $ 70,574

Equity method investments in the table above are not consolidated, but are accounted for under the equity method of accounting.

The Company records its investments in these entities on the balance sheet as “Other assets.” The Company's interests in the operations of equity method investments are recorded in the statement of comprehensive income (loss) as “ Equity in earnings (loss) of nonconsolidated affiliates .” Other investments includes various investments in companies for which there is no readily determinable market value.

During the period from May 2, 2019 through December 31, 2019 , the Successor Company recorded $30.0 million in its Audio segment for investments made in eleven companies in exchange for advertising services and cash.

The Company records its investments in these entities on the balance sheet within “Other assets.” The Company's interests in the operations of equity method investments are recorded in the statement of comprehensive income (loss) as “Equity in earnings (loss) of nonconsolidated affiliates.” Other investments includes various investments in companies for which there is no readily determinable market value.

During 2020, the Successor Company recorded $ 15.0 million in its Audio segment for investments made in seven companies in exchange for advertising services.

One of these investments is being accounted for under the equity method of accounting, two of these investments are being accounted for at amortized cost and four of these investments are notes receivable that are convertible into cash or equity.

During the period from May 2, 2019 through December 31, 2019, the Successor Company recorded $ 30.0 million in its Audio segment for investments made in ten companies in exchange for advertising services and cash.

Two of these investments are being accounted for under the equity method of accounting, one of these investments is being accounted for at amortized cost, one of these investments is being accounted for as an available-for-sale security and six of these investments are notes receivable that are convertible into cash or equity.

During 2018 , the Predecessor Company recorded $20.8 million in its Audio segment for investments made in twelve private companies in exchange for advertising services and cash.

Two of these investments are being accounted for under the equity method of accounting, five of these investments are being accounted for at amortized cost and five of these investments are notes receivable that are convertible into equity.

The Successor Company recognized barter revenue of $13.0 million in the period from May 2, 2019 through December 31, 2019 .

The Predecessor Company recognized barter revenue of $6.0 million and $10.8 million in the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 , respectively, in connection with these investments as services were provided.

The Successor Company recognized non-cash investment impairments totaling $21.0 million on our investments for the period from May 2, 2019 through December 31, 2019 , which were recorded in “Loss on investments, net.” The Predecessor Company

The Successor Company recognized barter revenue of $ 10.5 million and $ 13.0 million in the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively.

The Predecessor Company recognized barter revenue of $ 6.0 million in the period from January 1, 2019 through May 1, 2019 in connection with these investments as services were provid ed.

The Successor Company recognized non-cash investment impairments totaling $ 5.7 million and $ 21.0

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recognized non-cash investment impairments totaling $10.2 million and $16.2 million on our investments for the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 , respectively, which were recorded in “Loss on investments, net.” The Predecessor Company recognized a net gain of $4.4 million related to the acquisition of Jelli, Inc., which the Company acquired during the fourth quarter of 2018.

The gain is included within "Loss on investments, net."

million on our investments for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively, which were recorded in “Loss on investments, net.” The Predecessor Company recognized non-cash investment impairments totaling $ 10.2 million on our investments for the period from January 1, 2019 through May 1, 2019, which were recorded in “Loss on investments, net.”

NOTE 9 – LONG-TERM DEBT

In connection with the Company's Chapter 11 Cases, the indebtedness of the Debtors was reclassified to Liabilities subject to compromise at December 31, 2018.

As a part of the Company's emergence from the Chapter 11 Cases, iHeartCommunications' debt was reduced to approximately $5.8 billion .

Long-term debt outstanding as of December 31, 2019 (Successor) and December 31, 2018 (Predecessor) consisted of the following:

(In thousands)

Successor Company

Predecessor Company

Long-term debt outstanding as of December 31, 2020 (Successor) and December 31, 2019 (Successor) consisted of the following:

(In thousands) Successor Company

2020 December 31,

Term Loan Facility due 2026 (1)

Debtors-in-Possession Facility (4)

$ 2,080,259 $ 2,251,271

Incremental Term Loan Facility due 2026 (2)

Asset-based Revolving Credit Facility due 2023 (2)(3)

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 (2)

22,753 20,992

Total consolidated secured debt 4,600,762 4,322,263

8.375 % Senior Unsecured Notes due 2027

1,450,000 1,450,000

Other unsecured subsidiary debt 6,782 12,581

Original issue discount ( 18,817 ) —

Long-term debt fees ( 21,797 ) ( 19,428 )

Long-term debt, net subject to compromise (6)

Total debt, prior to reclassification to Liabilities subject to compromise

Total debt 6,016,930 5,765,416

Current portion 34,775 8,912

Amounts reclassified to Liabilities subject to compromise

Total long-term debt $ 5,982,155 $ 5,756,504

On August 7, 2019, iHeartCommunications issued $750.0 million of 5.25% Senior Secured Notes due 2027 (the “ 5.25% Senior Secured Notes”), the proceeds of which were used, together with cash on hand, to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility, plus $0.8 million of accrued and unpaid interest to, but not including, the date of prepayment.

On November 22, 2019, iHeartCommunications issued the 4.75% Senior Secured Notes, the proceeds of which were used, together with cash on hand, to prepay at par $500.0 million of borrowings outstanding under the Term Loan Facility, plus approximately $1.7 million of accrued and unpaid interest to, but not including, the date of prepayment.

(1) On February 3, 2020, iHeartCommunications made a $ 150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00 %, or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00 % and to modify certain covenants contained in the Credit Agreement.

The DIP Facility, which terminated with the emergence from the Chapter 11 Cases, provided for borrowings of up to $450.0 million .

On the Effective Date, the DIP Facility was repaid and canceled and the Successor Company entered into the ABL Facility.

As of December 31, 2019 , the Successor Company had a facility size of $450.0 million under iHeartCommunications' ABL Facility, had no outstanding borrowings and had $48.1 million of outstanding letters of credit, resulting in $401.9 million of availability.

(2) 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.

(3) 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.

During the second and third quarters of 2020, iHeartCommunications voluntarily repaid principal amounts outstanding under the ABL Facility.

As a result of certain restrictions in the Company's debt and preferred stock agreements, as of December 31, 2020, approximately $ 172 million was available to be drawn upon under the ABL Facility.

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

In connection with the Company's Chapter 11 Cases, the Company's Predecessor long-term debt was reclassified to Liabilities subject to compromise in our Consolidated Balance Sheet as of December 31, 2018 .

As of the Petition Date, the Company ceased making principal and interest payments, and ceased accruing interest expense in relation to long-term debt reclassified as Liabilities subject to compromise.

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

The aggregate market value of the Successor Company’s debt based on market prices for which quotes were available was approximately $ 6.2 billion and $ 6.1 billion as of December 31, 2020 and December 31, 2019, respectively.

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

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s weighted average interest rate was 6.4% and 9.9% as of December 31, 2019 (Successor) and December 31, 2018 (Predecessor), respectively.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $6.1 billion and $8.7 billion as of December 31, 2019 (Successor) and December 31, 2018 (Predecessor), respectively.

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

Asset-based Revolving Credit Facility due 2023

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Subject to certain conditions, iHeartCommunications may at any time request one or more increases in the amount of revolving credit commitments, in an amount up to the sum of (x) $ 150.0 million and (y) the amount by which the borrowing base exceeds the aggregate revolving credit commitments.

As of December 31, 2020, iHeartCommunications had no principal amounts outstanding under the ABL Facility, a facility size of $ 450.0 million and $ 32.9 million in outstanding letters of credit, resulting in $ 417.1 million of excess availability.

As a result of certain restrictions in the Company's debt and preferred stock agreements, as of December 31, 2020, approximately $ 172.0 million was available to be drawn upon under the ABL Facility.

Interest Rate and Fees

22 unchanged sentences

The Term Loan Facility matures on May 1, 2026.

On February 3, 2020, iHeartCommunications made a $150.0 million prepayment using cash on hand and entered into an agreement to amend the Term Loan Facility to reduce the interest rate to LIBOR plus a margin of 3.00% , or the Base Rate (as defined in the Credit Agreement) plus a margin of 2.00% and to modify certain covenants contained in the Credit Agreement.

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.

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.

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 were 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.

Under the terms of the Term Loan Facility Credit Agreement, iHeartCommunications made quarterly principal payments totaling $ 23.3 million during the year ended December 31, 2020.

Interest Rate and Fees

Term loans under the Term Loan Facility bear interest at a rate per annum equal to the applicable margin plus, at iHeartCommunications’ option, either (1) a base rate or (2) a eurocurrency rate.

As of December 31, 2019 , the applicable margin for such term loans was 3.00% with respect to base rate loans and 4.00% with respect to eurocurrency rate loans.

Following the amendment made on February 3, 2020, the interest rate was reduced to LIBOR plus a margin of 3.00% , or the Base Rate plus a margin of 2.00% .

Following the amendment made on February 3, 2020, the Term loans under the Term Loan Facility bear interest at a rate per annum equal to LIBOR plus a margin of 3.00 %, or the Base Rate plus a margin of 2.00 %.

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.

Collateral and Guarantees

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• 100 % of the net cash proceeds of any incurrence of debt, other than debt permitted under the Term Loan Facility.

iHeartCommunications may voluntarily repay outstanding loans under the Term Loan Facility at any time, without prepayment premium or penalty, except in connection with a repricing event within nine months of the Effective Date and subject to customary “breakage” costs with respect to eurocurrency loans.

iHeartCommunications may voluntarily repay outstanding loans under the Term Loan Facility at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to eurocurrency loans.

Certain Covenants and Events of Default

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The 6.375 % Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility or other credit facilities or capital markets debt securities.

The 6.375% Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the

The 6.375 % Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

guarantors’ existing and future indebtedness that is not expressly subordinated to the 6.375% Senior Secured Notes (including the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 6.375% Senior Secured Notes, effectively subordinated in right of payment to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 6.375% Senior Secured Notes, to the extent of the value of such assets, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 6.375% Senior Secured Notes.

and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 6.375 % Senior Secured Notes (including the Term Loan Facility, the 5.25 % Senior Secured Notes, the 4.75 % Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 6.375 % Senior Secured Notes, effectively subordinated in right of payment to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 6.375 % Senior Secured Notes, to the extent of the value of such assets, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 6.375 % Senior Secured Notes.

The 6.375 % Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.

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5.25 % Senior Secured Notes due 2027

On August 7, 2019, iHeartCommunications entered into an indenture (the “New Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S.

On August 7, 2019, iHeartCommunications entered into an indenture (the “ 5.25 % Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S.

Bank National Association, as trustee and collateral agent, governing the $ 750.0 million aggregate principal amount of 5.25 % Senior Secured Notes due 2027 that were issued in a private placement to qualified institutional buyers under Rule 144A under the Securities Act, and to persons outside the United States pursuant to Regulation S under the Securities Act.

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The 5.25 % Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility.

The 5.25% Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 5.25% Senior Secured Notes (including the Term Loan Facility, the 6.375% Senior Secured Notes, the 4.75% Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 5.25% Senior Secured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 5.25% Senior Secured Notes, to the extent of the value of such collateral, and structurally subordinated

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 5.25% Senior Secured Notes.

Secured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 5.25 % Senior Secured Notes, to the extent of the value of such collateral, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 5.25 % Senior Secured Notes.

The 5.25 % Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.

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The 4.75 % Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 4.75 % Senior Secured Notes (including the Term Loan Facility, the 6.375 % Senior Secured Notes, the 5.25 % Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 4.75 % Senior Secured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 4.75 % Senior Secured Notes, to the extent of the value of such collateral, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 4.75 % Senior Secured Notes.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.

The 4.75 % Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.

iHeartCommunications may redeem the 4.75 % Senior Secured Notes at its option, in whole or part, at any time prior to January 15, 2023, at a price equal to 100 % of the principal amount of the 4.75 % Senior Secured Notes redeemed, plus a make-whole premium, plus accrued and unpaid interest to the redemption date.

17 unchanged sentences

The Senior Unsecured Notes are guaranteed on a senior unsecured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility or other credit facilities or capital markets debt securities.

The Senior Unsecured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the Senior Unsecured Notes, effectively subordinated in right of payment to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured (including the 6.375% Senior Secured Notes, the 5.25% Senior Secured Notes, the 4.75% Senior Secured Notes and borrowings under the ABL Facility and the Term Loan Facility), to the extent of the value of the collateral securing such indebtedness, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the Senior Unsecured Notes.

The Senior Unsecured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the Senior Unsecured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured (including the 6.375 % Senior Secured Notes, the 5.25 % Senior Secured Notes, the 4.75 % Senior Secured Notes and borrowings under the ABL Facility and the Term Loan Facility), to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the Senior Unsecured Notes.

iHeartCommunications may redeem the Senior Unsecured Notes at its option, in whole or in part, at any time prior to May 1, 2022, at a price equal to 100 % of the principal amount of the Senior Unsecured Notes being redeemed, plus an applicable premium and plus accrued and unpaid interest to the redemption date.

iHeartCommunications may redeem the Senior Unsecured Notes at its option, in whole or in part, on or after May 1, 2022, at the redemption prices set forth in the Senior Unsecured Notes Indenture plus accrued and unpaid interest to the redemption date.

At any time prior to May 1, 2022, iHeartCommunications redeem at its option, up to 40% of the aggregate principal amount of the Senior Unsecured Notes at a redemption price equal to 108.375% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the proceeds of one or more equity offerings.

At any time prior to May 1, 2022, iHeartCommunications redeem at its option, up to 40 % of the aggregate principal amount of the Senior Unsecured Notes at a

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

redemption price equal to 108.375 % of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the proceeds of one or more equity offerings.

The Senior Unsecured Notes Indenture contains covenants that limit the ability of Capital I and its restricted subsidiaries, including iHeartCommunications, to, among other things:

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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 period from May 1, 2019 through December 31, 2019 the Company recognized $5.5 million , respectively, of interest expense related to dividends on mandatorily redeemable preferred stock.

During the year ended December 31, 2020 and the period from May 1, 2019 through December 31, 2019, the Successor Company recognized $ 9.3 million and $ 5.5 million, respectively, 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.

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At any time on or after the third anniversary of the issue date, the iHeart Operations Preferred Stock may be redeemed at the option of iHeart Operations, in whole or in part, for cash at a redemption price equal to the liquidation preference per share.

Upon (i) a liquidation, dissolution or winding up of iHeart Operations, iHeartMedia or iHeartCommunications, together with the subsidiaries of such entity, taken as a whole, (ii) a bankruptcy event, (iii) a change of control, (iv) a sale or transfer of all or substantially all of iHeart Operations’, iHeartMedia’s or iHeartCommunications’ assets and the assets of such entity’s subsidiaries, taken as a whole in a single transaction (other than to iHeartMedia or any of its subsidiaries), or a series of transactions, (v) an acceleration or payment default of indebtedness of iHeart Operations, iHeartMedia or any of its subsidiaries of $100 million or more or (vi) consummation of certain equity offerings of iHeartMedia, iHeart Operations or iHeartCommunications or certain significant subsidiaries, then any holder of shares of iHeart Operations Preferred Stock may require iHeartMedia to purchase such

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

holder’s shares of iHeart Operations Preferred Stock at a purchase price equal to (a) the liquidation preference plus a make-whole premium, if such purchase is consummated prior to the third anniversary of the issue date or (b) the liquidation preference, if the purchase is consummated on or after the third anniversary of the issue date.

Upon (i) a liquidation, dissolution or winding up of iHeart Operations, iHeartMedia or iHeartCommunications, together with the subsidiaries of such entity, taken as a whole, (ii) a bankruptcy event, (iii) a change of control, (iv) a sale or transfer of all or substantially all of iHeart Operations’, iHeartMedia’s or iHeartCommunications’ assets and the assets of such entity’s subsidiaries, taken as a whole in a single transaction (other than to iHeartMedia or any of its subsidiaries), or a series of transactions, (v) an acceleration or payment default of indebtedness of iHeart Operations, iHeartMedia or any of its subsidiaries of $ 100 million or more or (vi) consummation of certain equity offerings of iHeartMedia, iHeart Operations or iHeartCommunications or certain significant subsidiaries, then any holder of shares of iHeart Operations Preferred Stock may require iHeartMedia to purchase such holder’s shares of iHeart Operations Preferred Stock at a purchase price equal to (a) the liquidation preference plus a make-whole premium, if such purchase is consummated prior to the third anniversary of the issue date or (b) the liquidation preference, if the purchase is consummated on or after the third anniversary of the issue date.

The shares of iHeart Operations Preferred Stock include repurchase rights, pursuant to which the holders may require iHeartMedia or iHeartCommunications to purchase the iHeart Operations Preferred Stock after the fifth anniversary of the issue date.

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(in thousands)

Excludes long-term debt fees of $19.4 million , which are amortized through interest expense over the life of the underlying debt obligations.

Effective February 3, 2020 with the amendment to the Term Loan Facility, the Company is required to make quarterly prepayments of $5.3 million beginning in March 2020.

In addition, the Company made a $150.0 million prepayment of the Term Loan Facility using cash on hand.

Such prepayments are not reflected in the table above.

2021 $ 34,775

Thereafter 5,910,653

(1) Excludes purchase accounting adjustments and original issue discount of $ 18.8 million and long-term debt fees of $ 21.8 million, which are amortized through interest expense over the life of the underlying debt obligations.

(2) Under the terms of the Term Loan Facility and Incremental Term Loan Facility, the Company is required to make quarterly prepayments of $ 6.4 million.

Such prepayments are reflected in the table above.

Surety Bonds and Letters of Credit

As of December 31, 2020, iHeartCommunications had outstanding surety bonds and commercial standby letters of credit of $ 9.1 million and $ 33.3 million, respectively.

Included within the Successor Company's outstanding commercial standby letters of credit were $0.9 million held on behalf of CCOH.

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 10 – COMMITMENTS AND CONTINGENCIES

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Expenditures for maintenance are charged to operations as incurred, whereas expenditures for renewal and betterments are capitalized.

Non-cancelable contracts that provide the lessor with a right to fulfill

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the arrangement with property, plant and equipment not specified within the contract are not a lease and have been included within non-cancelable contracts within the table below.

Non-cancelable contracts that provide the lessor with a right to fulfill the arrangement with property, plant and equipment not specified within the contract are not a lease and have been included within non-cancelable contracts within the table below.

The Company leases office space, certain broadcasting facilities and equipment under long-term operating leases.

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(In thousands)

Non-Cancelable

Employment/Talent

Operating Leases

Rent expense charged to operations for the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), the year ended December 31, 2018 (Predecessor) and the year ended December 31, 2017 (Predecessor) was $128.3 million , $59.2 million , $169.9 million and $173.4 million , respectively.

Non-Cancelable Non-Cancelable Employment/Talent

Operating Leases Contracts Contracts

2021 $ 126,732 $ 125,853 $ 102,263

2022 133,086 50,736 75,944

2023 120,125 16,698 41,735

2024 109,958 2,424 41,336

2025 97,272 719 1,029

Thereafter 706,472 1,717 —

Total $ 1,293,645 $ 198,147 $ 262,307

Rent expense charged to operations for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 (Predecessor) was $ 198.2 million, $ 128.3 million, $ 59.2 million and $ 169.9 million, respectively.

The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.

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and tax disputes.

Chapter 11 Cases

iHeartCommunications' filing of the Chapter 11 Cases constituted an event of default that accelerated its obligations under its debt agreements.

Due to the Chapter 11 Cases, however, the creditors' ability to exercise remedies under iHeartCommunications' debt agreements were stayed as of March 14, 2018, the Petition Date.

On March 21, 2018, Wilmington Savings Fund Society, FSB ("WSFS"), solely in its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027, and not in its individual capacity, filed an adversary proceeding against the Company in the Chapter 11 Cases.

In the complaint, WSFS alleged, among other things, that the "springing lien" provisions of the priority guarantee notes indentures and the priority guarantee notes security agreements amounted to "hidden encumbrances" on the Company's property, to which the holders of the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027 were entitled to "equal and ratable" treatment.

On March 26, 2018, Delaware Trust Co.

("Delaware Trust"), in its capacity as successor indenture trustee to the 14% Senior Notes due 2021, filed a motion to intervene as a plaintiff in the adversary proceeding filed by WSFS.

In the complaint, Delaware Trust alleged, among other things, that the indenture governing the 14% Senior Notes due 2021 also had its own "negative pledge" covenant, and, therefore, to the extent the relief sought by WSFS in its adversary proceeding was warranted, the holders of the 14% Senior Notes due 2021 would also be entitled to the same "equal and ratable" liens on the same property.

On January 15, 2019, the Bankruptcy Court entered judgment in the Company's favor denying all relief sought by WSFS and all other parties.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

a settlement (the “Legacy Plan Settlement”) with WSFS and certain consenting Legacy Noteholders of all issues related to confirmation of the Plan of Reorganization, on May 1, 2019 upon the Company's confirmed Plan of Reorganization becoming effective, this adversary proceeding was deemed withdrawn and/or dismissed, with respect to all parties thereto, with prejudice and in its entirety.

On October 9, 2018, WSFS, solely in its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027, and not in its individual capacity, filed an adversary proceeding against Clear Channel Holdings, Inc.

(“CCH”) and certain shareholders of iHeartMedia.

The named shareholder defendants were Bain Capital LP;

Lee Partners L.P.;

Abrams Capital L.P.;

and Highfields Capital Management L.P.

In the complaint, WSFS alleged, among other things, that the shareholder defendants engaged in a “pattern of inequitable and bad faith conduct, including the abuse of their insider positions to benefit themselves at the expense of third-party creditors including particularly the Legacy Noteholders.” The complaint asked the court to grant relief in the form of equitable subordination of the shareholder defendants’ term loan, priority guarantee notes and 2021 notes claims to any and all claims of the legacy noteholders.

In addition, the complaint sought to have any votes to accept the Plan of Reorganization by Abrams and Highfields on account of their 2021 notes claims, and any votes to accept the Plan of Reorganization by defendant CCH on account of its junior notes claims, to be designated and disqualified.

On May 1, 2019, pursuant to the Legacy Plan Settlement, upon the Company's confirmed Plan of Reorganization becoming effective, this adversary proceeding was deemed withdrawn and/or dismissed, with respect to all parties thereto, with prejudice and in its entirety.

Stockholder Litigation

On May 9, 2016, a stockholder of CCOH filed a derivative lawsuit in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management Inc.

iHeartMedia, Inc.

The complaint named as defendants the Company, iHeartCommunications, Bain Capital Partners, LLC and Thomas H.

Lee Partners, L.P., the Company's pre-bankruptcy private equity sponsors and pre-bankruptcy majority owners (together, the "Former Sponsor Defendants"), and the members of CCOH's board of directors.

CCOH also was named as a nominal defendant.

The complaint alleged that CCOH had been harmed by the intercompany agreements with iHeartCommunications , CCOH’s lack of autonomy over its own cash and the actions of the defendants in serving the interests of the Company, iHeartCommunications and the Former Sponsor Defendants to the detriment of CCOH and its minority stockholders.

On November 23, 2016, the Court granted defendants' motion to dismiss all claims brought by the plaintiff, which was appealed.

On October 12, 2017, the Supreme Court of Delaware affirmed the lower court's ruling, dismissing the case.

On December 29, 2017, another stockholder of CCOH filed a derivative lawsuit (the “Norfolk Lawsuit”) in the Court of Chancery of the State of Delaware, captioned Norfolk County Retirement System, v.

iHeartMedia, Inc., et al., C.A.

2017-0930-JRS.

The complaint named as defendants the Company, iHeartCommunications, the Former Sponsor Defendants, and the members of CCOH's board of directors.

CCOH was named as a nominal defendant.

The complaint alleged that CCOH had been harmed by the CCOH Board’s November 2017 decision to extend the maturity date of the intercompany revolving note (the “Third Amendment”) at what the complaint described as far-below-market interest rates.

On March 7, 2018, the defendants filed a motion to dismiss plaintiff's verified derivative complaint for failure to state a claim upon which relief can be granted.

On March 16, 2018, the Company filed a Notice of Suggestion of Pendency of Bankruptcy and Automatic Stay of Proceedings.

Oral argument on the motion to dismiss was held on September 20, 2018.

On August 27, 2018, the same stockholder of CCOH that had filed a derivative lawsuit against the Company and others in 2016 (GAMCO Asset Management Inc.) filed a putative class action lawsuit (the “GAMCO II Lawsuit”) in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management, Inc.

Hendrix, et al., C.A.

2018-0633-JRS.

The complaint named as defendants the Former Sponsor Defendants and the members of CCOH’s board of directors.

The complaint alleged that minority shareholders in CCOH during the period November 8, 2017 to March 14, 2018 were harmed by decisions of the CCOH Board and the intercompany note committee of the Board relating to the Intercompany Note.

On December 16, 2018, the Debtors, CCOH, GAMCO Asset Management, Inc., and Norfolk County Retirement System entered into a settlement (the “CCOH Separation Settlement”) of all claims, objections, and other causes of action that have been or could be asserted by or on behalf of CCOH, GAMCO Asset Management, Inc., and/or Norfolk County Retirement System by and among the Debtors, CCOH, GAMCO Asset Management, Inc., certain individual defendants in the GAMCO Asset Management, Inc.

action and/or the Norfolk County Retirement System action, and the Former Sponsor Defendants in such actions.

The CCOH Separation Settlement provided for the consensual separation of the Debtors and CCOH, including approximately $149.0 million of recovery to CCOH on account of its claim against iHeartCommunications in the Chapter 11 cases, a $200 million unsecured

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

Under the Plan of Reorganization, the Company committed to file the PDR requesting the FCC to permit the Company to be up to 100% foreign-owned.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

revolving line of credit from certain of the Debtors to CCOH for a period of up to three years , the transfer of certain of the Debtors’ intellectual property to CCOH, the waiver by the Debtors of the setoff for the value of the transferred intellectual property, mutual releases, the termination of the cash sweep under the existing Corporate Services Agreement, the termination of any agreements or licenses requiring royalty payments from CCOH to the Debtors for trademarks or other intellectual property, the waiver of any post-petition amounts owed by CCOH relating to such trademarks or other intellectual property, and the execution of a new transition services agreement and other separation documents.

The CCOH Separation Settlement was approved by the Bankruptcy Court and the United States District Court for the Southern District of Texas on January 22, 2019.

On May 1, 2019, the Debtors’ Plan of Reorganization went effective, and the Norfolk Lawsuit and GAMCO II Lawsuit were each subsequently dismissed with prejudice.

On November 5, 2020, the FCC issued the Declaratory Ruling, which granted the relief requested by the PDR, subject to certain conditions.

On November 9, 2020, the Company notified the holders of Special Warrants of the commencement of an exchange process (the notification, the “Exchange Notice,” and the exchange, the “Exchange”).

In the Exchange, which took place on January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules.

Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock.

Business – Regulation of Our Business, Alien Ownership Restrictions” and “Item 1A.

Risk Factors - Regulatory, Legislative and Litigation Risks, Regulations imposed by the Communications Act and the FCC limit the amount of foreign individuals or entities that may invest in our capital stock without FCC approval.”

NOTE 11 – INCOME TAXES

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

The CARES Act included certain temporary relief provisions with respect to the application of the Section 163(j) interest deduction limitation including 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 interest deduction limitation.

This provision of the CARES Act resulted in an increase to allowable interest deductions of $ 179.4 million during 2020.

The other federal income tax provisions within the CARES Act did not materially impact the Company’s financial statements.

On December 27, 2020, the Consolidated Appropriations Act was signed into law in order to provide further stimulus and support to those affected by the COVID-19 pandemic.

The tax provisions included within the Consolidated Appropriations Act did not materially impact the Company’s financial statements in the current year.

As a result of steps in the Plan of Reorganization described in Note 2 and the fresh start accounting adjustments described in Note 3, there were significant tax adjustments recorded in the period from January 1, 2019 through May 1, 2019.

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

The Company recorded income tax benefits of $ 102.9 million for reorganization adjustments in the Predecessor period ended May 1, 2019, primarily consisting of:

(1) $ 483.0 million in tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence;

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and (4) $ 263.8 million in 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.

The Company recorded income tax expense of $ 185.4 million for fresh start adjustments in the Predecessor period ended May 1, 2019, 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.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant components of the provision for income tax benefit (expense) from continuing operations are as follows:

(In thousands)

Successor Company

Predecessor Company

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

Year Ended December 31,

(In thousands) Successor Company Predecessor Company

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2018

Current - Federal $ ( 652 ) $ ( 172 ) $ 2,264 $ 1

7 unchanged sentences

Income tax benefit (expense) $ 183,623 $ ( 20,091 ) $ ( 39,095 ) $ ( 13,836 )

The current tax expense recorded in the Successor period ended December 31, 2020 was primarily related to local country foreign tax expense in certain jurisdictions partially offset by adjustments to the Company’s reserves for unrecognized tax benefits in certain state jurisdictions.

The current tax expense of $ 11.0 million recorded in the Successor period from May 2, 2019 through December 31, 2019 was primarily related to state income taxes on operating profits generated in certain state jurisdictions during the period.

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The current tax benefit of $ 76.7 million recorded for the Predecessor period from January 1, 2019 through May 1, 2019 relates primarily to the effective settlement of liabilities for unrecognized tax benefits that were discharged upon the Company's emergence from bankruptcy for certain state jurisdictions.

Current tax expense for the Predecessor period ended December 31, 2018 was $ 10.2 million.

The current tax expense recorded in 2018 was primarily related to state income tax expense incurred during the period and reserves recorded for unrecognized state tax benefits.

The deferred tax benefit of $ 184.3 million recorded in the Successor period ended December 31, 2020 related primarily to the current period net operating losses and a reduction in deferred tax liabilities recorded in connection with the impairment of our FCC licenses discussed in Note 7.

The deferred tax expense of $ 9.1 million recorded in the Successor period from May 2, 2019 through December 31, 2019 related primarily to the utilization of federal and state net operating loss carryforwards which offset taxable income during the period.

The deferred tax expense of $ 115.8 million recorded in the Predecessor period from January 1, 2019 through May 1, 2019 related primarily to the impact of reorganization and fresh start adjustments described above.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Current tax expense for the Predecessor period ended December 31, 2018 was $10.2 million compared to a current tax benefit of $0.1 million for the same period in 2017 .

The current tax expense recorded in 2018 was primarily related to state income tax expense and exceeded the amount in 2017 due to current tax benefits recorded for effectively settled tax examinations and statute of limitations expiring for certain state filings.

The deferred tax expense of $9.1 million recorded in the Successor period from May 2, 2019 through December 31, 2019 related primarily to the utilization of federal and state net operating loss carryforwards which offset taxable income during the period.

The deferred tax expense of $115.8 million recorded in the Predecessor period from January 1, 2019 through May 1, 2019 related primarily to the impact of reorganization and fresh start adjustments described above.

Deferred tax expense for the Predecessor period ended December 31, 2018 was $3.6 million compared with deferred tax benefit of $177.1 million for the same period in 2017 .

The decrease in deferred tax benefit during 2018 was primarily attributed to the $282.1 million deferred tax benefit recorded in connection with the remeasurement of our U.S.

deferred tax balances upon the enactment of the Tax Cuts and Jobs Act.

Significant components of the Company's deferred tax liabilities and assets as of December 31, 2019 (Successor) and 2018 (Predecessor) are as follows:

Significant components of the Successor Company's deferred tax liabilities and assets as of December 31, 2020 and 2019 are as follows:

Successor Company

Predecessor Company

(In thousands) 2020 2019

1 unchanged sentence

Intangibles and fixed assets $ 1,005,116 $ 1,163,310

Long-term debt

Operating lase right-of-use assets

Operating lease right-of-use assets 204,953 130,123

Total deferred tax liabilities 1,210,069 1,293,433

3 unchanged sentences

Interest expense carryforwards 315,304 324,481

Operating lease liability

Operating lease liabilities 209,010 109,503

Capital loss carryforwards 1,662,174 601,309

Investments 15,378 26,071

Bad debt reserves 15,247 9,916

Other 13,228 13,799

Total gross deferred tax assets 2,471,683 1,276,612

2 unchanged sentences

Net deferred tax liabilities $ 556,477 $ 737,443

The deferred tax liability related to intangibles and fixed assets primarily relates to the difference in book and tax basis of FCC licenses and other intangible assets that were adjusted for book purposes to estimated fair values as part of the application of fresh start accounting.

In accordance with ASC 350-10, Intangibles—Goodwill and Other , the Company does not amortize FCC licenses.

As a result, this deferred tax liability will not reverse over time unless the Company recognizes future impairment charges or sells its FCC licenses.

As the Company continues to amortize its tax basis in its FCC licenses, the deferred tax liability will increase

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s net foreign deferred tax assets for the period ending December 31, 2019 were $0.3 million and the net foreign deferred tax liabilities for the period ending December 31, 2018 were $2.9 million .

At December 31, 2019 , the Successor Company had recorded net operating loss carryforwards (tax effected) for federal and state income tax purposes of approximately $167.0 million , expiring in various amounts through 2039 or in some cases with no expiration date.

As the Company continues to amortize its tax basis in its FCC licenses, the deferred tax liability will increase over time.

The Company’s net foreign deferred tax liabilities for the periods ending December 31, 2020 and December 31, 2019 were $ 0.3 million.

At December 31, 2020, the Successor Company had recorded net operating loss and tax credit carryforwards (tax effected) for federal and state income tax purposes of approximately $ 218.3 million, expiring in various amounts through 2040 or in some cases with no expiration date.

In connection with the tax reform legislation passed in December of 2017, Section 163(j) of the Internal Revenue Code was amended, thereby establishing new rules governing a U.S.

taxpayer’s ability to deduct interest expense beginning in 2018.

Section 163(j), as amended, generally limits the deduction for business interest expense to thirty percent of adjusted taxable income, and provides that any disallowed interest expense may be carried forward indefinitely.

In applying the new rules under Section 163(j), the Successor Company recorded a deferred tax asset for federal and state interest limitation carryforward of $324.5 million as of December 31, 2019.

In connection with the taxable separation of the Outdoor division as part of the restructuring, the Successor Company realized a $2.4 billion capital loss (gross after attribute reduction calculations).

Section 163(j), as amended, generally limits the deduction for business interest expense to thirty percent of adjusted taxable income (notwithstanding the temporary provisions described above from the enactment of the CARES Act), and provides that any disallowed interest expense may be carried forward indefinitely.

The Successor Company recorded deferred tax assets for federal and state interest limitation carryforwards of $ 315.3 million as of December 31, 2020.

In connection with the taxable separation of the Outdoor division as part of the bankruptcy restructuring, the Successor Company realized a $ 7.2 billion capital loss (gross after attribute reduction calculations).

For federal tax purposes the capital loss can be carried forward 5 years and only be used to offset capital gains.

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The Successor Company expects to realize the benefits of a portion of its remaining deferred tax assets based upon expected future taxable income from deferred tax liabilities that reverse in the relevant federal and state jurisdictions and carryforward periods.

As of December 31, 2019 , the Successor Company had recorded a valuation allowance of $720.6 million against a portion of these U.S.

federal and state deferred tax assets which it does not expect to realize, relating primarily to capital loss carryforwards and certain state net operating loss carryforwards.

After considering the deferred tax adjustments in connection with the utilization of net operating losses, the creation of interest limitation carryforwards, the creation of the capital loss carryforward and the fresh start accounting adjustments to the Successor Company's U.S.

federal and state deferred tax valuation allowance increased by $1.1 million during the Successor period of May 2, 2019 through December 31, 2019.

Any deferred tax liabilities associated with acquired FCC licenses and tax-deductible goodwill intangible assets are now relied upon as sources of future taxable income for those carryforwards that have an indefinite life such as the Section 163(j) interest carryforward.

As of December 31, 2020, the Successor Company had recorded a valuation allowance of $ 1.8 billion against a portion of these U.S.

federal and state deferred tax assets which it does not expect to realize, relating primarily to capital loss carryforwards and certain state net operating loss

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

carryforwards.

The Successor Company's U.S.

federal and state deferred tax valuation allowance increased by $ 1.1 billion during the Successor period ending December 31, 2020 primarily due to an increase in the capital loss carryforward as determined on the Company's 2019 income tax filings.

Any deferred tax liabilities associated with acquired FCC licenses and tax-deductible goodwill intangible assets are now relied upon as sources of future taxable income for purposes of realizing deferred tax assets attributed to carryforwards that have an indefinite life such as the Section 163(j) interest carryforward.

At December 31, 2020, net deferred tax liabilities include a deferred tax asset of $ 3.5 million relating to stock-based compensation expense under ASC 718-10, Compensation—Stock Compensation .

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Successor Company

Year Ended December 31, Period from May 2, 2019 through December 31,

(In thousands) 2020 2019

Period from May 2, 2019 through December 31,

Income tax benefit at statutory rates

Amount Percent Amount Percent

Income tax benefit (expense) at statutory rates $ 440,758 21.0 % $ ( 28,012 ) 21.0 %

State income taxes, net of federal tax effect

13,619 0.7 % ( 4,718 ) 3.5 %

Foreign income taxes ( 1,187 ) ( 0.1 ) % ( 1,593 ) 1.2 %

1 unchanged sentence

Changes in valuation allowance and other estimates

( 30,531 ) ( 1.5 ) % 24,439 ( 18.2 ) %

Impairment charges ( 257,119 ) ( 12.3 ) % — — %

Other, net 27,011 1.3 % ( 2,862 ) 2.1 %

Income tax benefit (expense) $ 183,623 8.7 % $ ( 20,091 ) 15.1 %

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Predecessor Company

Period from January 1, 2019 through May 1,

Years Ended December 31,

Period from January 1, 2019 through May 1, Year Ended December 31,

(In thousands) 2019 2018

Income tax benefit at statutory rates

Amount Percent Amount Percent

Income tax benefit (expense) at statutory rates $ ( 1,999,008 ) 21.0 % $ 5,069 21.0 %

State income taxes, net of federal tax effect

68,442 ( 0.7 ) % ( 14,958 ) ( 62.0 ) %

Foreign income taxes ( 270 ) — % ( 3,076 ) ( 12.7 ) %

1 unchanged sentence

Changes in valuation allowance and other estimates

648,384 ( 6.8 ) % 10,958 45.4 %

Tax impact of outdoor charges eliminated in discontinued operations — — % ( 8,017 ) ( 33.2 ) %

Reorganization and fresh start adjustments 1,245,282 ( 13.1 ) % — — %

Income tax benefit (expense)

The Successor Company’s effective tax rate for the period from May 2, 2019 through December 31, 2019 is 15.1% .

The effective tax rate for the Successor period was primarily impacted by deferred tax benefits recorded for changes in estimates related to the carryforward tax attributes that are expected to survive the emergence from bankruptcy and deferred tax adjustments associated with the filing of the Company’s 2018 tax returns during the fourth quarter of 2019.

Other, net ( 132 ) — % 1,022 4.2 %

Income tax expense $ ( 39,095 ) 0.4 % $ ( 13,836 ) ( 57.3 ) %

The Successor Company’s effective tax rate for the year ended December 31, 2020 is 8.7 %.

The effective tax rate for this period was primarily impacted by the impairment charges to non-deductible goodwill discussed in Note 7.

In addition, the Company recorded deferred tax adjustments to state net operating losses and federal and state disallowed interest carryforwards

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

as a result of the filing of 2019 tax returns and certain legal entity restructuring completed during the period.

These adjustments were partially offset by valuation allowance adjustments recorded during the year against certain federal and state deferred tax assets such as net operating loss carryforwards and disallowed interest carryforwards due to the uncertainty of the ability to realize those assets in future periods.

The Successor Company’s effective tax rate for the period from May 2, 2019 through December 31, 2019 was 15.1 %.

The effective rate for the Successor period was primarily impacted by deferred tax benefits recorded for changes in estimates related to the carryforward tax attributes that survived the emergence from bankruptcy and deferred tax adjustments associated with the filing of the Company’s 2018 tax returns during the fourth quarter of 2019.

The primary change to the 2018 tax return filings, when compared to the provision estimates, was the Company's decision to elect out of the first-year bonus depreciation rules for the 2018 year for all qualified capital expenditures.

This resulted in less tax depreciation deductions for tax purposes for the 2018 year and higher adjusted tax basis for our fixed assets as of the Effective Date.

The Predecessor Company’s effective tax rate for the period from January 1, 2019 through May 1, 2019 is 0.4% .

The Predecessor Company’s effective tax rate for the period from January 1, 2019 through May 1, 2019 was 0.4 %.

The income tax expense for 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.

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In addition, the Company did not record a tax effect for charges between the iHeartMedia group and the Outdoor Group that were eliminated in the presentation of discontinued operations as these charges are respected for income tax purposes under the Tax Matters Agreement.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Predecessor Company’s effective tax rate for the year ended December 31, 2017 was 21.3% .

The effective tax benefit rate for 2017 was impacted by the effects of U.S.

corporate tax reform which resulted in a tax benefit of $282.1 million recorded in connection with the reduction in the U.S.

federal corporate tax rate.

In partial offset to this tax benefit, the Company recorded tax expense of $202.0 million in connection with the valuation allowance recorded against federal and state deferred tax assets generated in the period due to the uncertainty of the ability to realize those assets in future periods.

The adjustment of $172.5 million included above was primarily related to the $855.7 million loss on the intercompany note between the iHeartMedia group and the Outdoor group.

The Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense.

The total amount of interest accrued at December 31, 2019 (Successor) and 2018 (Predecessor) was $6.9 million and $50.6 million , respectively.

The total amount of unrecognized tax benefits including accrued interest and penalties at December 31, 2019 (Successor) and 2018 (Predecessor) was $20.5 million and $103.7 million , respectively, of which $20.3 million and $94.1 million is included in “Other long-term liabilities” and $0.0 million and $1.3 million is included in “Accrued expenses” on the Company’s consolidated balance sheets, respectively.

In addition, $0.2 million and $8.4 million of unrecognized tax benefits are recorded net with the Company’s deferred tax assets for its net operating losses as opposed to being recorded in “Other long-term liabilities” at December 31, 2019 (Successor) and 2018 (Predecessor), respectively.

The total amount of unrecognized tax benefits at December 31, 2019 (Successor) and 2018 (Predecessor) that, if recognized, would impact the effective income tax rate is $15.5 million and $59.3 million , respectively.

(In thousands)

Successor Company

Predecessor Company

Years Ended December 31,

The Successor Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense.

The total amount of interest accrued at December 31, 2020 and 2019 was $ 5.3 million and $ 6.9 million, respectively.

The total amount of unrecognized tax benefits including accrued interest and penalties at December 31, 2020 and 2019 was $ 20.0 million and $ 20.5 million, respectively, of which $ 18.2 million and $ 20.3 million is included in “Other long-term liabilities”.

In addition, $ 1.8 million and $ 0.2 million of unrecognized tax benefits are recorded net with the Company’s deferred tax assets for its net operating losses as opposed to being recorded in “Other long-term liabilities” at December 31, 2020 and 2019, respectively.

The total amount of unrecognized tax benefits at December 31, 2020 and 2019 that, if recognized, would impact the effective income tax rate is $ 13.8 million and $ 15.5 million, respectively.

(In thousands) Successor Company

Years Ended December 31,

7 unchanged sentences

Balance at end of period $ 14,681 $ 13,664

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company and its subsidiaries file income tax returns in the U.S.

2 unchanged sentences

In addition, during 2019 the statute of limitations for certain tax years expired upon our emergence from bankruptcy resulting in the reduction to unrecognized tax benefits of $ 42.0 million, excluding interest.

During 2018, the statute of limitations for certain tax years expired in the U.S.

and certain states resulting in the reduction to unrecognized tax benefits of $2.1 million , excluding interest.

All federal income tax matters through 2016 are closed.

The majority of all material state, local, and foreign income tax matters have been concluded for years through 2017 with the exception of a current examination in Texas that covers the 2007-2016 tax years.

NOTE 12 – STOCKHOLDERS’ EQUITY (DEFICIT)

NOTE 12 – STOCKHOLDERS’ EQUITY

As described in Note 2 - Emergence from Voluntary Reorganization under Chapter 11 Proceedings and Note 3 - Fresh Start Accounting , the Company emerged from bankruptcy upon the effectiveness of the Plan of Reorganization on May 1, 2019, at which time all shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were canceled, and reorganized iHeartMedia issued an aggregate of 56,861,941 shares of iHeartMedia Class A common stock, 6,947,567 shares of Class B common stock and special warrants to purchase 81,453,648 shares of Class A common stock or Class B common stock to holders of claims pursuant to the Plan of Reorganization.

The value of these shares and warrants issued to claimholders in settlement of Liabilities subject to compromise was based on the difference between the Enterprise Value of the Company and the and new debt and mandatorily redeemable preferred stock issued upon emergence, adjusted as necessary for

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

cash and cash equivalents, noncontrolling interest and changes in deferred taxes.

The impact of finalization of deferred tax amounts related to the Reorganization is reflected within the Consolidated Statement of Changes in Stockholders’ Equity (Deficit).

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Stock Options

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The term of each option granted pursuant to the plan may not exceed (a) six (6) years from the date of grant thereof in the case of the awards granted upon emergence and (b) ten (10) years from the date of grant thereof in the case of all other options;

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The Company does not estimate forfeitures at grant date, but rather has elected to account for forfeitures when they occur.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following assumptions were used to calculate the fair value of the Successor Company's options on the date of grant:

Period from May 2, 2019 through December 31,

Year Ended December 31, Period from May 2, 2019 through December 31,

Expected volatility 44 % – 57 %

3 unchanged sentences

Dividend yield — % — %

The following table presents a summary of the Successor Company's stock options outstanding at and stock option activity during the period from May 2, 2019 through December 31, 2019 ("Price" reflects the weighted average exercise price per share):

(In thousands, except per share data)

The following table presents a summary of the Successor Company's stock options outstanding at and stock option activity during the year ended December 31, 2020 ("Price" reflects the weighted average exercise price per share):

(In thousands, except per share data) Options Price Weighted

Contractual Term

Outstanding, December 31, 2019 (Successor)

Expected to Vest

A summary of the Successor Company's unvested options and changes during the period from May 2, 2019 through December 31, 2019 is presented below:

(In thousands, except per share data)

Weighted Average Grant Date Fair Value

Unvested, December 31, 2019 (Successor)

The total fair value of the options vested during the period from May 2, 2019 through December 31, 2019 (Successor) was $6.0 million .

Outstanding, January 1, 2020 5,645 $ 18.93 5.4 years

Granted 2,292 9.05

Forfeited ( 161 ) 16.42

Expired ( 81 ) 19.00

Outstanding, December, 31, 2020 7,695 16.01 5.9 years

Exercisable 2,204 18.87 4.3 years

Expected to Vest 5,491 14.87 6.5 years

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the Successor Company's unvested options and changes during the year ended December 31, 2020 is presented below:

(In thousands, except per share data) Options Weighted Average Grant Date Fair Value

Unvested, January 1, 2020 4,517 $ 5.28

Granted 2,292 4.76

( 1,157 ) 5.29

Forfeited ( 161 ) 5.20

Unvested, December 31, 2020 5,491 5.06

(1) The total fair value of the options vested during the year ended December 31, 2020 (Successor) was $ 6.1 million.

Restricted Stock Units ( “ RSUs ” )

2 unchanged sentences

Each RSU (representing one share of common stock) awarded to a participant will be credited with dividends paid in respect of one share of common stock (“Dividend Equivalents”).

Dividend Equivalents will be withheld by the Company for the participant’s

Dividend Equivalents will be withheld by the Company for the participant’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Committee.

Dividend Equivalents credited to a participant’s account and attributable to any particular RSU (and earnings thereon, if applicable) shall be distributed to the participant upon settlement of such RSU and, if such RSU is forfeited, the participant shall have no right to such Dividend Equivalents.

The following table presents a summary of the Successor Company's restricted stock outstanding and restricted stock activity as of and during the year ended December 31, 2020 (“Price” reflects the weighted average share price at the date of grant):

(In thousands, except per share data) Awards Price

Outstanding, January 1, 2020 2,648 $ 16.47

Granted 752 9.31

Vested (restriction lapsed) ( 725 ) 16.32

Forfeited ( 97 ) 16.50

Outstanding, December 31, 2020 2,578 14.42

Performance-based Restricted Stock Units (“Performance RSUs”)

In August 2020, the Company issued Performance RSUs to certain key employees.

Such Performance RSUs vest upon the achievement of critical operational (cost savings) improvements and specific environmental, social and governance initiatives, which are being measured over an approximately 18-month period from the date of issuance.

In the year ended December 31, 2020, the Company recognized $ 3.4 million in relation to these Performance RSUs.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Committee.

The following table presents a summary of the Successor Company's restricted stock outstanding and restricted stock activity as of and during the year ended December 31, 2019 (“Price” reflects the weighted average share price at the date of grant):

(In thousands, except per share data)

The following table presents a summary of the Successor Company's Performance RSUs outstanding and activity as of and during the year ended December 31, 2020 (“Price” reflects the weighted average share price at the date of grant):

(In thousands, except per share data) Awards Price

Outstanding, January 1, 2020 — $ —

Granted 556 8.98

Vested (restriction lapsed) — —

Outstanding, December 31, 2019 (Successor)

Forfeited — —

Outstanding, December 31, 2020 556 $ 8.98

Prior to the Emergence Date, the Predecessor Company had granted share-based awards that were canceled upon emergence from bankruptcy.

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As of December 31, 2018, the Predecessor Company had 690,994 options outstanding with a weighted average exercise price of $ 33.70 .

During the period from January 1, 2019 through May 1, 2019 (Predecessor), the year ended December 31, 2018 and the year ended December 31, 2017 there were no options vested, granted or exercised and the 690,994 options outstanding were canceled upon the Company’s emergence from bankruptcy.

During the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 there were no options vested, granted or exercised and the 690,994 options outstanding were canceled upon the Company’s emergence from bankruptcy.

Restricted Stock Awards (RSAs)

5 unchanged sentences

Outstanding RSA's of 5,129,593 were canceled upon the Company’s emergence from bankruptcy.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Predecessor Common Stock

The following table presents the balances of the Predecessor Company's Class A, Class B, Class C and Class D Common Stock as of December 31, 2019 (Successor) and December 31, 2018 (Predecessor):

(In thousands, except share and per share data)

Successor Company

Predecessor Company

Predecessor Class A Common Stock, par value $.001 per share, authorized 400,000,000 shares, no shares issued in 2019 and 32,292,944 shares issued in 2018

Predecessor Class B Common Stock, par value $.001 per share, authorized 150,000,000 shares, no shares issued in 2019 and 555,556 shares issued in 2018

Predecessor Class C Common Stock, par value $.001 per share, authorized 100,000,000 shares, no shares issued in 2019 and 58,967,502 shares issued in 2018

Predecessor Class D Common Stock, par value $.001 per share, authorized 200,000,000 shares, no shares issued in 2019 and 2018

Successor Common Stock and Special Warrants

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

(In thousands, except share and per share data)

(In thousands, except share and per share data) December 31,

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

2 unchanged sentences

Total Successor Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding 146,449,688

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Class A Common Stock

7 unchanged sentences

On July 18, 2019, the Company’s Class A common stock was listed and began trading on the Nasdaq Global Select Market ("Nasdaq") under the ticker symbol “IHRT”.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Class B Common Stock

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Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Successor Company's Class B common stock will be entitled to receive pro rata with holders of the Successor Company's Class A common stock our remaining assets available for distribution.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2020, 20,080 shares of the Class B common stock were converted into Class A common stock.

During the period from May 2, 2019 to December 31, 2019, 53,317 shares of the Class B common stock were converted into Class A common stock.

5 unchanged sentences

provided further , that, if any distribution of common stock or any other securities to a holder of Special Warrants is not permitted pursuant to clauses (x) or (y), the Company will cause economically equivalent warrants to be distributed to such holder in lieu thereof, to the extent that such distribution of warrants would not violate the Communications Act or any applicable FCC rules.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Special Warrants will expire on the earlier of the twentieth anniversary of the issuance date and the occurrence of a change in control of the Company.

During the period from May 2, 2019 through ended December 31, 2019 , 227,581 shares of the Special Warrants were converted into Class A common stock.

During the year ended December 31, 2020, stockholders exercised 6,205,617 and 2,095 Special Warrants for an equivalent number of shares of Class A common stock and Class B common stock, respectively.

During the period from May 2, 2019 through ended December 31, 2019, stockholders exercised 216,921 and 10,660 Special Warrants for an equivalent number of Class A common stock and Class B common stock, respectively.

January 2021 Exchange Substantially Expanding Class A and Class B Shares Outstanding

On January 8, 2021, the Company completed an exchange of 67,471,123 Special Warrants into 45,133,811 shares of Class A common stock, the Company’s publicly traded equity, and 22,337,312 shares of Class B common stock.

The exchange was authorized by a previously issued Declaratory Ruling from the Federal Communications Commission approving an increase in iHeartMedia’s authorized aggregate foreign ownership from 25% to 100%, subject to certain conditions set forth in the Declaratory Ruling.

Certain shares of Class B common stock and Special Warrants were not converted into Class A Common Stock due to current regulatory restrictions applicable to certain shareholders.

There were 6,201,453 Special Warrants outstanding on February 22, 2021.

Share-Based Compensation Cost

The share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period.

Share-based compensation payments are recorded in corporate expenses and were $26.4 million for the Successor Company for the period from May 2, 2019 through December 31, 2019 .

Share-based compensation expenses for the Predecessor Company were $0.5 million , $2.1 million and $2.5 million , during the period from January 1, 2019 through May 1, 2019, the year ended December 31, 2018 and the year ended December 31, 2017 , respectively.

The tax benefit related to the share-based compensation expense for the Successor Company for the period from May 1, 2019 through December 31, 2019 was $4.1 million .

The tax benefit related to the share-based compensation expense for the Predecessor Company for the period from January 1, 2019 through May 1, 2019, the year ended December 31, 2018 and the year ended December 31, 2017 was $0.1 million , $0.5 million and $0.9 million , respectively.

Share-based compensation payments are recorded in corporate expenses and were $ 22.9 million and $ 26.4 million for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively.

Share-based compensation expenses for the Predecessor Company were $ 0.5 million and $ 2.1 million during the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018, respectively.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The tax benefit related to the share-based compensation expense for the Successor Company for the year ended December 31, 2020 and the period from May 1, 2019 through December 31, 2019 was $ 5.7 million and $ 4.1 million, respectively.

The tax benefit related to the share-based compensation expense for the Predecessor Company for the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018 was $ 0.1 million and $ 0.5 million, respectively.

As of December 31, 2020, there was $ 54.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on service conditions.

This cost is expected to be recognized over a weighted average period of approximately 2.8 years.

In addition, as of December 31, 2020, there was $ 1.6 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on certain performance conditions.

Income (Loss) per Share

(In thousands, except per share data)

Successor Company

Predecessor Company

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

Year Ended December 31,

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

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2018

Net income (loss) attributable to the Company – common shares $ ( 1,914,699 ) $ 112,548 $ 11,184,141 $ ( 201,910 )

1 unchanged sentence

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

— — 19,028 124

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

$ — $ — $ 1,704,151 $ ( 164,543 )

Total income (loss) from continuing operations $ ( 1,914,699 ) $ 112,548 $ 9,479,990 $ ( 37,367 )

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

523 ( 751 ) — 605

Income (loss) from continuing operations $ ( 1,915,222 ) $ 113,299 $ 9,479,990 $ ( 37,972 )

8 unchanged sentences

From discontinued operations - Diluted $ — $ — $ 19.76 $ ( 1.93 )

(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 year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019.

(2) Outstanding equity awards representing 9.1 million and 5.9 million shares of Class A common stock of the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019, respectively, 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 and 7.2 million shares of Class A common stock of the Predecessor Company for the period for the period from January 1, 2019 through May 1, 2019 and the year ended December 31, 2018, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

Stockholder Rights Plan

On May 5, 2020, the Board approved the adoption of a short-term stockholder rights plan (the “Stockholder Rights Plan”).

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All of the outstanding Special Warrants issued at emergence are included in both the basic and diluted weighted average common shares outstanding of the Successor Company for the period from May 2, 2019 through December 31, 2019 .

Outstanding equity awards representing 5.9 million shares of Class A common stock of the Successor Company for the period from May 2, 2019 through December 31, 2019 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 , 7.2 million and 8.3 million shares of Class A common stock of the Predecessor Company for the period for the period from January 1, 2019 through May 1, 2019, the year ended December 31, 2018 and the year ended December 31, 2017 , respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

Pursuant to the stockholder rights plan, the Board declared a dividend distribution of one right on each outstanding share of 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 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.

In that situation, each holder of a right (other than the acquiring person or group) will have the right to purchase, upon payment of the exercise price, a number of shares of the Company’s Class A common stock, Class B common stock or special warrants, as applicable, having a market value of twice such price.

In addition, the Stockholder Rights Plan contains a similar provision if the Company is acquired in a merger or other business combination after an acquiring person acquires beneficial ownership of 10 % or more of the Company’s Class A common stock (or 20 % in the case of certain passive investors).

The Stockholder Rights Plan has a duration of less than one year, expiring on May 5, 2021.

The Stockholder Rights Plan may also be terminated, or the rights may be redeemed, by action of the Company prior to the scheduled expiration date under certain circumstances, including if the Board determines that market and other conditions warrant, which the Board intends to monitor.

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

NOTE 13 – EMPLOYEE STOCK AND SAVINGS PLANS

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Employees vest in these iHeartCommunications matching contributions based upon their years of service to iHeartCommunications.

Contributions of $8.6 million , $6.1 million , $13.5 million and $13.7 million were made to these plans for period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), the year ended December 31, 2018 (Predecessor) and the year ended December 31, 2017 (Predecessor), respectively, were expensed.

In April 2020, the Company announced incremental operating-expense-saving initiatives in response to the economic environment resulting from the COVID-19 pandemic, which included a temporary suspension of the Company's 401(k) matching program.

Contributions of $ 4.5 million, $ 8.6 million, $ 6.1 million and $ 13.5 million were made to these plans for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 (Predecessor), respectively, were expensed.

iHeartCommunications offers a non-qualified deferred compensation plan for a select group of management or highly compensated employees, under which such employees were able to make an annual election to defer up to 50 % of their annual salary and up to 80 % of their bonus before taxes.

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The asset and liability under the deferred compensation plan at December 31, 2020 (Successor) was approximately $ 12.3 million recorded in “Other assets” and $ 12.3 million recorded in “Other long-term liabilities”, respectively.

The asset and liability under the deferred compensation plan at December 31, 2018 (Predecessor) was approximately $11.2 million recorded in “Other assets” and $11.2 million recorded in “Liabilities subject to compromise”, respectively.

The asset and liability under the deferred compensation plan at December 31, 2019 (Successor) was approximately $ 11.3 million recorded in “Other assets” and $ 11.3 million recorded in “Other long-term liabilities”, respectively.

NOTE 14 — OTHER INFORMATION

OTHER INCOME (EXPENSE), NET

The following table discloses the components of "Other income (expense)" for the years ended December 31, 2019 , 2018 and 2017 , respectively:

(In thousands)

Successor Company

Predecessor Company

Period from May 2, 2019 through December 31,

Period from January 1, 2019 through May 1,

Year Ended December 31,

Foreign exchange gain (loss)

Gain on extinguishment of debt

Total other income (expense), net

Other income (expense), net for the years ended December 31, 2018 and 2017 includes $23.1 million and $41.8 million , respectively, in expenses incurred in connection with negotiations with lenders and other activities related to our capital structure.

The following table discloses the components of "Other income (expense), net" for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the year ended December 31, 2018 (Predecessor), respectively:

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) Successor Company Predecessor Company

Year Ended December 31, Period from May 2, 2019 through December 31, Period from January 1, 2019 through May 1, Year Ended December 31,

2020 2019 2019 2018

Professional fees $ ( 6,278 ) $ ( 26,487 ) $ ( 156 ) $ ( 23,100 )

Other ( 1,473 ) 8,221 179 93

Total other income (expense), net $ ( 7,751 ) $ ( 18,266 ) $ 23 $ ( 23,007 )

Other income (expense), net for the year ended December 31, 2020 (Successor), the period from May 2, 2019 through December 31, 2019 (Successor) and the year ended December 31, 2018 (Predecessor) included $ 6.3 million, $ 26.5 million and $ 23.1 million, respectively, in expenses incurred in connection with our bankruptcy and negotiations with lenders and other activities related to our capital structure.

OTHER CURRENT ASSETS

The following table discloses the components of “Other current assets” as of December 31, 2020 and 2019, respectively:

(In thousands)

Successor Company

Predecessor Company

As of December 31,

(In thousands) Successor Company

As of December 31,

Inventory $ 1,153 $ 507

Deposits 2,680 2,944

Restricted cash — 11,318

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Other receivables 11,905 24,326

Other 1,139 801

Total other current assets $ 17,426 $ 41,376

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Successor Company

Predecessor Company

(In thousands)

As of December 31,

(In thousands) As of December 31,

Investments in, and advances to, nonconsolidated affiliates $ 11,065 $ 10,952

Other investments 28,053 19,689

Notes receivable

Prepaid expenses

Available-for-sale debt securities, net of reserve of $ 4,167 in 2020 and $ 0 in 2019

31,456 33,128

Deposits 4,553 4,481

Prepaid rent 8,882 6,284

Non-qualified plan assets 12,265 11,343

Other 9,350 10,339

Total other assets $ 105,624 $ 96,216

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The following table discloses the components of “Other long-term liabilities” as of December 31, 2020 and 2019, respectively:

(In thousands)

Successor Company

Predecessor Company

As of December 31,

(In thousands) Successor Company

As of December 31,

3 unchanged sentences

Deferred income 22,018 22,588

Other 14,800 123

Total other long-term liabilities $ 71,217 $ 58,110

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The following table discloses the components of “Accumulated other comprehensive income (loss),” net of tax, as of December 31, 2020 and 2019, respectively:

(In thousands)

Successor Company

Predecessor Company

As of December 31,

(In thousands) Successor Company

As of December 31,

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Share-based compensation is recorded within Corporate expenses.

In connection with the Separation and the Reorganization, the Company revised its segment reporting, as discussed in Note 1 and all prior periods have been restated to conform to this presentation.

Beginning with the first quarter of 2021, the Company is changing its presentation of segment information to reflect changes in the way the business is managed and resources are allocated by the Company's Chief Operating Decision Maker ("CODM") as a result of a reorganization of the Company's management structure.

Effective January 1, 2021, the Company will have three reportable segments - iHeartMedia Multiplatform Group, which includes our Broadcast radio, Networks and Sponsorships and Events businesses, iHeartMedia Digital Audio Group, which includes all of our Digital assets, including Podcasting, and our Audio and Media Services Group.

These reportable segments reflect how senior management views the Company, align with certain leadership and organizational changes implemented in the first quarter of 2021.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company's segment results for the Successor Company for the period from May 2, 2019 through December 31, 2019 :

Additionally, beginning on January 1, 2021, Segment Adjusted EBITDA will be the segment profitability metric reported to the Company's CODM for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment.

Segment Adjusted EBITDA is calculated as Revenue less Direct operating expenses and Selling, general and administrative expenses, excluding Restructuring expenses.

Restructuring expenses consist primarily of severance expenses incurred in connection with cost saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle.

The following table presents the Company's segment results for the Successor Company for the year ended December 31, 2020 and the period from May 2, 2019 through December 31, 2019:

Successor Company

(In thousands)

Audio and Media Services

Corporate and other reconciling items

Period from May 2, 2019 through December 31, 2019

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

Year Ended December 31, 2020

Revenue $ 2,681,225 $ 274,749 $ — $ ( 7,756 ) $ 2,948,218

Direct operating expenses 1,136,279 32,387 — ( 5,518 ) 1,163,148

Selling, general and administrative expenses

1,076,063 151,220 — ( 2,186 ) 1,225,097

Corporate expenses — — 144,624 ( 52 ) 144,572

Depreciation and amortization

369,310 23,502 10,117 — 402,929

Impairment charges — — 1,738,752 — 1,738,752

Other operating expense, net

— — 11,344 — 11,344

Operating income (loss) $ 99,573 $ 67,640 $ ( 1,904,837 ) $ — $ ( 1,737,624 )

3 unchanged sentences

Share-based compensation expense

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

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

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Predecessor Company

(In thousands)

Audio and Media Services

Corporate and other reconciling items

Period from January 1, 2019 through May 1, 2019

$ — $ — $ 22,862 $ — $ 22,862

Period from May 2, 2019 through December 31, 2019

Revenue $ 2,447,800 $ 167,292 $ — $ ( 5,036 ) $ 2,610,056

Direct operating expenses 858,597 21,106 — ( 747 ) 878,956

Selling, general and administrative expenses

800,796 101,131 — ( 4,257 ) 897,670

Corporate expenses — — 136,203 ( 32 ) 136,171

Depreciation and amortization

229,869 14,776 4,978 — 249,623

Impairment charges — — — — —

Other operating expense, net

— — 8,000 — 8,000

Operating income (loss)

$ 558,538 $ 30,279 $ ( 149,181 ) $ — $ 439,636

Segment assets (1)

$ 10,040,750 $ 486,551 $ 497,576 $ ( 3,778 ) $ 11,021,099

Intersegment revenues $ 447 $ 4,589 $ — $ — $ 5,036

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Share-based compensation expense

Year Ended December 31, 2018

$ — $ — $ 26,411 $ — $ 26,411

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

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Predecessor Company

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

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)

Segment assets (1)

$ 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

Year Ended December 31, 2018

Revenue $ 3,353,770 $ 264,061 $ — $ ( 6,508 ) $ 3,611,323

Direct operating expenses 1,104,290 28,360 — ( 211 ) 1,132,439

Selling, general and administrative expenses

1,208,882 147,505 — ( 6,230 ) 1,350,157

Corporate expenses — — 184,283 ( 67 ) 184,216

Depreciation and amortization

173,657 18,286 20,008 — 211,951

Impairment charges — — 33,150 — 33,150

Other operating income, net

Other operating expense, net — — 9,266 — 9,266

Operating income (loss)

$ 866,941 $ 69,910 $ ( 246,707 ) $ — $ 690,144

Segment assets (1)

$ 7,084,222 $ 448,072 $ 370,157 $ ( 206 ) $ 7,902,245

Intersegment revenues $ — $ 6,508 $ — $ — $ 6,508

1 unchanged sentence

Share-based compensation expense

(1) The Predecessor Company's Segment assets exclude $4,367.3 million and $4,458.8 million of assets related to discontinued operations as of December 31, 2018 and 2017, respectively.

$ — $ — $ 2,066 $ — $ 2,066

(1) The Predecessor Company's Segment assets exclude $ 4,367.3 million of assets related to discontinued operations as of December 31, 2018.

IHEARTMEDIA, INC.

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NOTE 16 — QUARTERLY RESULTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)

Predecessor Company

Successor Company

Three Months Ended

Period from April 1, 2019 through May 1,

Period from May 2, 2019 through June 30,

Three Months Ended

September 30,

(In thousands, except per share data) Successor Company

Three Months Ended

March 31, Three Months Ended June 30, Three Months Ended

September 30, Three Months Ended

2020 2020 2020 2020

Revenue $ 780,634 $ 487,648 $ 744,406 $ 935,530

Operating expenses:

Direct operating expenses

301,632 249,866 276,719 334,931

Selling, general and administrative expenses

344,141 261,219 292,581 327,156

Corporate expenses

39,949 26,419 34,657 43,547

Depreciation and amortization

96,768 103,347 99,379 103,435

Impairment charges

Other operating income (expense), net

Operating income

Interest expense (income), net

1,727,857 5,378 — 5,517

Other operating expense, net 1,066 506 1,675 8,097

Operating income (loss) ( 1,730,779 ) ( 159,087 ) 39,395 112,847

Interest expense, net 90,089 81,963 85,562 86,131

Gain (loss) on investments, net

Equity in loss of nonconsolidated affiliates

( 9,955 ) 1,280 62 ( 733 )

Equity in income (loss) of nonconsolidated affiliates ( 564 ) ( 31 ) ( 58 ) 274

Other income (expense), net

Reorganization items, net

Income (loss) from continuing operations before income taxes

( 7,860 ) ( 1,258 ) ( 1,177 ) 2,544

Income (loss) before income taxes ( 1,839,247 ) ( 241,059 ) ( 47,340 ) 28,801

Income tax benefit (expense) 150,511 43,742 15,228 ( 25,858 )

Income from continuing operations

Income (loss) from discontinued operations, net of tax

Net income (loss)

( 1,688,736 ) ( 197,317 ) ( 32,112 ) 2,943

Less amount attributable to noncontrolling interest

— — — ( 523 )

Net income (loss) attributable to the Company

$ ( 1,688,736 ) $ ( 197,317 ) $ ( 32,112 ) $ 3,466

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

From continuing operations - Basic

From discontinued operations - Basic

From continuing operations - Diluted

From discontinued operations - Diluted

Basic $ ( 11.60 ) $ ( 1.35 ) $ ( 0.22 ) $ 0.02

Diluted $ ( 11.60 ) $ ( 1.35 ) $ ( 0.22 ) $ 0.02

The Successor Company's Class A common shares are quoted for trading on the Nasdaq Global Select Market under the symbol IHRT.

The Predecessor Company's Class A common shares were quoted for trading on the OTC / Pink Sheets Bulletin Board under the symbol IHRT.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

Predecessor Company

Three Months Ended

September 30,

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

Three Months Ended

March 31, Period from April 1, 2019 through May 1, Period from May 2, 2019 through June 30, Three Months Ended

September 30, Three Months Ended

2019 2019 2019 2019 2019

Revenue $ 795,797 $ 277,674 $ 635,646 $ 948,338 $ 1,026,072

Operating expenses:

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Impairment charges 91,382 — — — —

Other operating expense, net

Other operating (income) expense, net 27 127 ( 3,246 ) 9,880 1,366

Operating income 19,149 47,891 133,688 140,822 165,126

Interest expense

Interest expense (income), net ( 99 ) ( 400 ) 69,711 100,967 96,095

Gain (loss) on investments, net ( 10,237 ) — — 1,735 ( 22,663 )

Equity in earnings (loss) of nonconsolidated affiliates

Other expense, net

Equity in loss of nonconsolidated affiliates ( 7 ) ( 59 ) ( 24 ) ( 1 ) ( 254 )

Other income (expense), net ( 127 ) 150 ( 9,157 ) ( 12,457 ) 3,348

Reorganization items, net ( 36,118 ) 9,497,944 — — —

1 unchanged sentence

Income tax benefit (expense) 61,194 ( 100,289 ) ( 16,003 ) ( 16,758 ) 12,670

Income (loss) from continuing operations

Income from continuing operations 33,953 9,446,037 38,793 12,374 62,132

Income (loss) from discontinued operations ( 169,554 ) 1,854,677 — — —

8 unchanged sentences

The Predecessor Company's Class A common shares were quoted for trading on the OTC / Pink Sheets Bulletin Board under the symbol IHRT.

The Successor Company's Class A common shares are quoted for trading on the Nasdaq Global Select Market under the symbol IHRT.

NOTE 17 – CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

iHeartCommunications Line of Credit

On the Effective Date, iHeartCommunications entered into a revolving loan agreement with CCOL and Clear Channel International, Ltd., both subsidiaries of CCOH, governing a revolving credit facility that provided for borrowings of up to $200 million .

The iHeartCommunications line of credit was unsecured.

On July 30, 2019, in connection with the consummation of an underwritten public offering of common stock of CCOH, the borrowers terminated the iHeartCommunications line of credit.

As of the date of termination there were no amounts drawn under the facility.

Transition Services Agreement

On the Effective Date, the Company, iHM Management Services, iHeartCommunications and CCOH entered into the Transition Services Agreement.

CCOH terminated the Transition Services Agreement on August 31, 2020.

For information regarding the Transition Services Agreement, refer to Note 4, Discontinued Operations .

8 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data