What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-09 · 247 added, 693 removed, 411 unchanged (70% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

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

September 30,

(In thousands, except share and per share data) March 31,

2021 December 31,

37 unchanged sentences

Additional paid-in capital 2,854,647 2,849,020

Retained earnings (Accumulated deficit) ( 1,807,086 ) 112,548

Accumulated other comprehensive loss ( 295 ) ( 750 )

Accumulated deficit ( 2,045,343 ) ( 1,803,620 )

Accumulated other comprehensive income (loss) ( 22 ) 194

Cost of shares ( 261,181 in 2021 and 254,066 in 2020) held in treasury

5 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data) Successor Company

Three Months Ended September 30,

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share data) Three Months Ended March 31,

Revenue $ 706,665 $ 780,634

2 unchanged sentences

Selling, general and administrative expenses (excludes depreciation and amortization) 342,330 391,801

Corporate expenses (excludes depreciation and amortization) 34,657 58,513

Depreciation and amortization 107,363 96,768

Impairment charges 37,744 1,727,857

Other operating expense, net 2,771 1,066

Operating income 39,395 140,822

Operating loss ( 76,356 ) ( 1,730,779 )

Interest expense, net 85,121 90,089

Gain on investments, net 62 1,735

Gain (Loss) on investments, net 191 ( 9,955 )

Equity in loss of nonconsolidated affiliates ( 28 ) ( 564 )

Other expense, net ( 807 ) ( 7,860 )

Income (loss) before income taxes ( 47,340 ) 29,132

Loss before income taxes ( 162,121 ) ( 1,839,247 )

Income tax benefit (expense) ( 79,935 ) 150,511

Net income (loss) ( 32,112 ) 12,374

Net loss ( 242,056 ) ( 1,688,736 )

Less amount attributable to noncontrolling interest ( 333 ) —

Net income (loss) attributable to the Company $ ( 32,112 ) $ 12,374

Other comprehensive income (loss), net of tax:

Net loss attributable to the Company $ ( 241,723 ) $ ( 1,688,736 )

Other comprehensive loss, net of tax:

Foreign currency translation adjustments ( 216 ) ( 104 )

Other comprehensive income (loss), net of tax 267 ( 499 )

Comprehensive income (loss) ( 31,845 ) 11,875

Other comprehensive loss, net of tax ( 216 ) ( 104 )

Comprehensive loss ( 241,939 ) ( 1,688,840 )

Less amount attributable to noncontrolling interest — —

Comprehensive income (loss) attributable to the Company $ ( 31,845 ) $ 11,875

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

Comprehensive loss attributable to the Company $ ( 241,939 ) $ ( 1,688,840 )

Net loss attributable to the Company per common share:

Basic $ ( 1.65 ) $ ( 11.60 )

5 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

Nine Months Ended September 30, Period from May 2, 2019 through September 30, Period from January 1, 2019 through May 1,

2020 2019 2019

Revenue $ 2,012,688 $ 1,583,984 $ 1,073,471

Operating expenses:

Direct operating expenses (excludes depreciation and amortization) 828,217 515,512 381,184

Selling, general and administrative expenses (excludes depreciation and amortization) 897,941 547,346 427,230

Corporate expenses (excludes depreciation and amortization) 101,025 85,331 53,647

Depreciation and amortization 299,494 154,651 52,834

Impairment charges 1,733,235 — 91,382

Other operating expense, net 3,247 6,634 154

Operating income (loss) ( 1,850,471 ) 274,510 67,040

Interest expense (income), net 257,614 170,678 ( 499 )

Gain (loss) on investments, net ( 8,613 ) 1,735 ( 10,237 )

Equity in loss of nonconsolidated affiliates ( 653 ) ( 25 ) ( 66 )

Other income (expense), net ( 10,295 ) ( 21,614 ) 23

Reorganization items, net — — 9,461,826

Income (loss) from continuing operations before income taxes ( 2,127,646 ) 83,928 9,519,085

Income tax benefit (expense) 209,481 ( 32,761 ) ( 39,095 )

Income (loss) from continuing operations ( 1,918,165 ) 51,167 9,479,990

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

Net income (loss) ( 1,918,165 ) 51,167 11,165,113

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

Net income (loss) attributable to the Company $ ( 1,918,165 ) $ 51,167 $ 11,184,141

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 455 ( 827 ) ( 1,175 )

Other comprehensive income (loss), net of tax 455 ( 827 ) ( 1,175 )

Comprehensive income (loss) ( 1,917,710 ) 50,340 11,182,966

Less amount attributable to noncontrolling interest — — 2,784

Comprehensive income (loss) attributable to the Company $ ( 1,917,710 ) $ 50,340 $ 11,180,182

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

Basic net income (loss) per share

From continuing operations $ ( 13.15 ) $ 0.35 $ 109.92

From discontinued operations — — 19.76

Basic net income (loss) per share $ ( 13.15 ) $ 0.35 $ 129.68

Weighted average common shares outstanding - Basic 145,911 145,543 86,241

Diluted net income (loss) per share

From continuing operations $ ( 13.15 ) $ 0.35 $ 109.92

From discontinued operations — — 19.76

Diluted net income (loss) per share $ ( 13.15 ) $ 0.35 $ 129.68

Weighted average common shares outstanding - Diluted 145,911 145,655 86,241

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share data) Controlling Interest

3 unchanged sentences

Capital Accumulated Deficit Accumulated

Comprehensive

Loss Treasury

Comprehensive Income (Loss) Treasury

Shares Class B

Shares Special Warrants Total

June 30, 2020 (Successor)

December 31, 2020

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

3 unchanged sentences

Share-based compensation — — 5,685 — — — 5,685

Dividend declared and paid to noncontrolling interests ( 187 ) — — — — — ( 187 )

Conversion of Special Warrants to Class A and Class B Shares

2 unchanged sentences

154,045 ( 154,045 ) — — — — — — —

Other comprehensive income

2,982 — — — — — — —

September 30, 2020 (Successor)

Other comprehensive loss — — — — ( 216 ) — ( 216 )

March 31, 2021

112,033,028 29,070,192 5,379,822 $ 7,830 $ 141 $ 2,854,647 $ ( 2,045,343 ) $ ( 22 ) $ ( 3,302 ) $ 813,951

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

(1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2021.

See Notes to Consolidated Financial Statements

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share data) Controlling Interest

2 unchanged sentences

Stock Additional

Capital Retained Earnings Accumulated

Capital Retained Earnings (Accumulated Deficit) Accumulated

Comprehensive

2 unchanged sentences

Shares Special Warrants Total

June 30, 2019 (Successor)

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

December 31, 2019

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

Net loss — — — ( 1,688,736 ) — — ( 1,688,736 )

Vesting of restricted stock

4 unchanged sentences

Conversion of Class B Shares to Class A Shares 5,915 ( 5,915 ) — — — — — — —

Other comprehensive loss

— — — — ( 499 ) — ( 499 )

September 30, 2019 (Successor)

57,670,714 6,925,976 81,289,306 $ 8,372 $ 65 $ 2,790,175 $ 51,167 $ ( 827 ) $ ( 2,035 ) $ 2,846,917

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

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share data) Controlling Interest

Common Shares (1)

Interest Common

Stock Additional

Capital Retained Earnings (Accumulated

Deficit) Accumulated

Comprehensive

Loss Treasury

Shares Class B

Shares Special Warrants Total

December 31, 2019 (Successor)

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

— — — ( 1,918,165 ) — — ( 1,918,165 )

Vesting of restricted stock and other

667,493 — 5 ( 28 ) — — ( 974 ) ( 997 )

Share-based compensation — — 14,383 — — — 14,383

Conversion of Special Warrants to Class A and Class B Shares 4,990,132 2,049 ( 4,992,181 ) — — — — — — —

Conversion of Class B Shares to Class A Shares

13,323 ( 13,323 ) — — — — — — —

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

— — — ( 1,469 ) — — ( 1,469 )

Other comprehensive income

— — — — 455 — 455

September 30, 2020 (Successor)

63,447,152 6,893,636 76,051,430 $ 9,123 $ 70 $ 2,840,888 $ ( 1,807,086 ) $ ( 295 ) $ ( 3,052 ) $ 1,039,648

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

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share data) Controlling Interest

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

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

December 31, 2018 (Predecessor)

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

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

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

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

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

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 )

Other — — — ( 1,469 ) — — ( 1,469 )

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

Net income — — — 51,167 — — 51,167

Vesting of restricted stock 622,840 — 1 ( 1 ) — — ( 2,035 ) ( 2,035 )

Share-based compensation — — 20,068 — — — 20,068

Conversion of Special Warrants and Class B Shares to Class A Shares 164,310 32 ( 164,342 ) — — — — — — —

Conversion of Class B Shares to Class A Shares 21,623 ( 21,623 ) — — — — — — —

Other ( 571 ) — — — — — ( 571 )

Other comprehensive loss

September 30, 2019 (Successor)

— — — — ( 104 ) — ( 104 )

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

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

March 31, 2020

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

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

See Notes to Consolidated Financial Statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) Successor Company Predecessor Company

Nine Months Ended September 30, Period from May 2, 2019 through September 30, Period from January 1, 2019 through May 1,

2020 2019 2019

(In thousands) Three Months Ended March 31,

Cash flows from operating activities:

Net income (loss) $ ( 1,918,165 ) $ 51,167 $ 11,165,113

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

Net loss $ ( 242,056 ) $ ( 1,688,736 )

Reconciling items:

4 unchanged sentences

Amortization of deferred financing charges and note discounts, net 1,519 514

Non-cash Reorganization items, net — — ( 9,619,236 )

Share-based compensation 5,685 4,257

(Gain) Loss on disposal of operating and other assets 704 4,755 ( 143 )

Loss on disposal of operating and other assets 952 392

(Gain) Loss on investments ( 191 ) 9,955

3 unchanged sentences

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

Decrease (increase) in accounts receivable 224,044 ( 113,848 ) 117,263

Decrease in accounts receivable 113,170 143,419

Increase in prepaid expenses and other current assets ( 35,647 ) ( 15,561 )

Decrease (increase) in other long-term assets ( 165 ) 2,545 ( 7,098 )

Increase (decrease) in accounts payable and accrued expenses ( 31,343 ) 44,740 ( 156,885 )

Increase in other long-term assets ( 3,317 ) ( 1,059 )

Decrease in accounts payable and accrued expenses ( 16,944 ) ( 42,734 )

Increase (decrease) in accrued interest 1,789 ( 9,971 )

Increase in deferred income 18,881 12,439

Increase (decrease) in other long-term liabilities 18,723 4,892 ( 79,609 )

Cash provided by (used for) operating activities from continuing operations 136,161 263,542 ( 7,505 )

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

Net cash provided by (used for) operating activities 136,161 263,542 ( 40,186 )

Increase in other long-term liabilities 544 441

Cash provided by operating activities 71,728 91,540

Cash flows from investing activities:

Business combinations ( 230,816 ) —

Proceeds from sale of other investments — 765 —

Purchases of property, plant and equipment ( 18,950 ) ( 21,664 )

Proceeds from disposal of assets 1,742 5,344 99

Change in other, net 442 ( 10,136 )

Cash used for investing activities from continuing operations ( 71,172 ) ( 43,815 ) ( 38,778 )

Cash used for investing activities from discontinued operations — — ( 222,366 )

Net cash used for investing activities ( 71,172 ) ( 43,815 ) ( 261,144 )

Cash used for investing activities ( 249,324 ) ( 31,800 )

Cash flows from financing activities:

1 unchanged sentence

Payments on long-term debt and credit facilities ( 13,547 ) ( 162,439 )

Proceeds from Mandatorily Redeemable Preferred Stock — — 60,000

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

Debt issuance costs ( 4,755 ) ( 11,488 ) —

Change in other, net ( 264 ) ( 278 )

Cash provided by (used for) financing activities from continuing operations 248,637 ( 5,095 ) ( 107,226 )

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

Net cash provided by (used for) financing activities 248,637 ( 5,095 ) ( 55,557 )

Cash provided by (used for) financing activities ( 13,811 ) 187,283

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 122 ) ( 524 )

1 unchanged sentence

Cash, cash equivalents and restricted cash at beginning of period 721,187 411,618

Cash, cash equivalents and restricted cash of continuing operations at end of period $ 725,129 $ 288,337 $ 74,009

Cash, cash equivalents and restricted cash at end of period $ 529,658 $ 658,117

SUPPLEMENTAL DISCLOSURES:

1 unchanged sentence

Cash paid for income taxes — 735

Cash paid for Reorganization items, net 443 18,268 183,291

See Notes to Consolidated Financial Statements

10 unchanged sentences

Management believes that the disclosures made are adequate to make the information presented not misleading.

As described below, as a result of the application of fresh start accounting and the effects of the implementation of the Company's Plan of Reorganization (as defined below), the consolidated financial statements after the Effective Date (as defined below), are not comparable with the consolidated financial statements on or before that date.

The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2019 Annual Report on Form 10-K.

The Company’s reportable segments are:

▪ 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 & 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”).

The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

As of January 1, 2021, the Company began reporting based on three reportable segments:

▪ the iHeartMedia Multiplatform Group, which includes the Company's Broadcast radio, Networks and Sponsorships and Events businesses;

▪ the iHeartMedia Digital Audio Group, which includes all of the Company's Digital businesses, including Podcasting;

▪ the Audio & Media Services Group, which includes Katz Media Group (“Katz Media”), a full-service media representation business, and RCS Sound Software ("RCS"), a provider of scheduling and broadcast software and services.

These reporting segments reflect how senior management operates the Company, align with certain leadership and organizational changes implemented in the first quarter 2021 and provide improved visibility into the underlying performances, results, and margin profiles of our distinct businesses.

Additionally, as of January 1, 2021, Segment Adjusted EBITDA is the segment profitability metric reported to the Company's Chief Operating Decision Maker 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 operating expenses, excluding restructuring expenses and share-based compensation expenses.

Restructuring expenses primarily include 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 corresponding current and prior period segment disclosures have been recast to reflect the current segment presentation.

See Note 9, Segment Data .

The consolidated financial statements include the accounts of the Company and its subsidiaries.

2 unchanged sentences

All significant intercompany transactions are eliminated in the consolidation process.

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 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 2, Discontinued Operations .

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

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

In addition, iHeartCommunications borrowed $ 350.0 million principal amount under its $ 450.0 million senior secured asset-based revolving credit facility (the “ABL Facility”) as a precautionary measure to preserve iHeartCommunications’ financial flexibility in light of 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 September 30, 2020, the ABL Facility had a borrowing base of $ 365.6 million, no outstanding borrowings and $ 41.2 million of outstanding letters of credit, resulting in $ 324.4 million of borrowing base availability.

As a result of certain restrictions in the Company's debt and preferred stock agreements, as of September 30, 2020, approximately $ 165 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.

The Company's revenue in the latter half of the month ended March 31, 2020, through the remainder of 2020 and in the three months ended March 31, 2021 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 2020, which are continuing into 2021, to expand the Company’s financial flexibility by reducing expenses and preserving cash as a result of such impact.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company’s revenue continued to be negatively impacted in the three months ended September 30, 2020.

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

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

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 8, Income Taxes .

As of September 30, 2020, the Company had approximately $ 713.7 million in cash and cash equivalents.

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

In addition, the Company was able to defer the payment of $ 29.3 million in certain employment taxes during 2020, half of which will be due on December 31, 2021 and the other half will be due on December 31, 2022.

As of March 31, 2021, the Company has claimed $ 12.4 million in refundable payroll tax credits related to the CARES Act provisions.

As of March 31, 2021, the Company had approximately $ 529.1 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 5, Property, Plant and Equipment, Intangible Assets and Goodwill .

Voluntary Filing under Chapter 11

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

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

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.

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

On May 1, 2019 (the “Effective Date”), the Company emerged from Chapter 11 and effectuated a series of transactions 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 “Separation”).

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

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.

As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after the Effective Date, are not comparable with the consolidated financial statements on or before that date.

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

References to "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of the Company on or before the Effective Date.

During the Predecessor period, the Company applied Accounting Standards Codification (“ASC”) 852 - Reorganizations (“ASC 852”) in preparing the consolidated financial statements.

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

Accordingly, certain charges incurred during 2019 related to the Chapter 11 Cases, including professional fees incurred directly as a result of the Chapter 11 Cases are recorded as Reorganization items, net in the Predecessor period.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications

Reclassifications and New Segment Presentation

Certain prior period amounts have been reclassified to conform to the 2021 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 10, Segment Data .

In connection with the organization and leadership changes resulting in the realignment of its reportable segments as discussed above, the Company also determined that all selling, general and administrative expenses incurred by its reportable segments and by its corporate functions would be reported together as Selling, general and administrative expenses.

Amounts presented in prior years as Corporate expenses have been reclassified as Selling, general and administrative expenses to conform to the current presentation.

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

September 30,

(In thousands) March 31,

2021 December 31,

1 unchanged sentence

Restricted cash included in:

Other current assets 10,876 11,318

Other assets 524 525

4 unchanged sentences

New Accounting Pronouncements Recently 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 ("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.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 nine months ended September 30, 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.

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.

NOTE 2 - DISCONTINUED OPERATIONS

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

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

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Information for Discontinued Operations

Income Statement Information

The following shows the revenue and loss from discontinued operations and gain on disposal of the Predecessor Company's discontinued operations for the period from January 1, 2019 through May 1, 2019:

(In thousands) Predecessor Company

Period from January 1, 2019 through May 1,

Revenue $ 804,566

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

Income tax expense ( 6,933 )

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

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

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 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, as described below).

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

In connection with the Separation, the Company entered into the New Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and CCOH and its subsidiaries, 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 iHeartMedia 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 certain tax claims related to the Separation.

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

2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of the Interbank Offered Rate Transition on Financial Reporting to provide optional relief from applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform.

In addition, in January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848) – Scope, to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

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

We are currently evaluating the future impact of adoption of this standard.

IHEARTMEDIA, INC.

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Disaggregation of Revenue

The following tables show revenue streams for the Successor Company for the periods presented:

Successor Company

(In thousands) Audio Audio and Media Services Eliminations Consolidated

Three Months Ended September 30, 2020

The following tables show revenue streams for the three months ended March 31, 2021 and 2020:

(In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Eliminations Consolidated

Three Months Ended March 31, 2021

Revenue from contracts with customers:

2 unchanged sentences

115,086 — — — 115,086

118,982 — — 118,982

Sponsorship and Events (3)

22,393 — — — 22,393

Audio and Media Services (5)

— 75,039 ( 1,762 ) 73,277

5,791 — ( 168 ) 5,623

Total 670,720 75,039 ( 1,930 ) 743,829

Revenue from leases (7)

Revenue, total $ 671,297 $ 75,039 $ ( 1,930 ) $ 744,406

Three Months Ended September 30, 2019

Revenue from contracts with customers:

Broadcast Radio (1)

$ 573,048 $ — $ — $ 573,048

96,656 — — 96,656

Digital, excluding Podcast (4)

— 119,201 — ( 1,894 ) 117,307

Sponsorship and Events (4)

— 38,352 — — 38,352

Audio and Media Services (5)

Audio & Media Services (6)

— — 55,137 ( 1,861 ) 53,276

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Revenue from leases (8)

483 — — — 483

Revenue, total $ 497,897 $ 157,553 $ 55,137 $ ( 3,922 ) $ 706,665

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Successor Company

(In thousands) Audio Audio and Media Services Eliminations Consolidated

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2020

Revenue from contracts with customers:

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134,577 — — — 134,577

349,889 — — 349,889

Sponsorship and Events (3)

29,348 — — — 29,348

Audio and Media Services (5)

— 174,517 ( 5,352 ) 169,165

10,895 — ( 503 ) 10,392

Total 1,842,586 174,517 ( 5,855 ) 2,011,248

Revenue from leases (7)

1,440 — — 1,440

Revenue, total $ 1,844,026 $ 174,517 $ ( 5,855 ) $ 2,012,688

Period from May 2, 2019 through September 30, 2019

Revenue from contracts with customers:

Broadcast Radio (1)

$ 963,588 $ — $ — $ 963,588

160,894 — — 160,894

Digital, excluding Podcast (4)

— 76,921 — — 76,921

Sponsorship and Events (4)

— 15,855 — — 15,855

Audio and Media Services (5)

Audio & Media Services (6)

— — 60,227 ( 1,811 ) 58,416

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Revenue from leases (8)

464 — — — 464

Revenue, total $ 629,609 $ 92,776 $ 60,227 $ ( 1,978 ) $ 780,634

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

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

(2) Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies.

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

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

(4) Digital, excluding Podcast revenue is generated through the sale of streaming and display advertisements on digital platforms and through subscriptions to iHeartRadio streaming services.

(5) Podcast revenue is generated through the sale of advertising on the Company's podcast network.

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

As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast and webcast software and technology and services to radio stations, television music channels, cable companies, satellite music networks and Internet stations worldwide.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table shows revenue streams from continuing operations for the Predecessor Company.

The presentation of amounts in the Predecessor period has been revised to conform to the Successor period presentation.

Predecessor Company

(In thousands) Audio Audio and Media Services (1)

Eliminations Consolidated

Period from January 1, 2019 through May 1, 2019

Revenue from contracts with customers:

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

Digital 102,789 — — 102,789

Networks 189,088 — — 189,088

Sponsorship and Events 50,330 — — 50,330

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

Other 5,910 — ( 243 ) 5,667

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

Revenue from leases 696 — — 696

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

Trade and Barter

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The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised to the customer.

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

Three Months Ended September 30,

(In thousands) 2020 2019

Trade and barter revenues $ 41,430 $ 59,530

Trade and barter expenses 44,109 40,319

Successor Company Predecessor Company

Nine Months Ended September 30, Period from May 2, 2019 through September 30, Period from January 1, 2019 through May 1,

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

Three Months Ended March 31,

(In thousands) 2021 2020

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Trade and barter expenses 27,998 54,998

The Successor Company recognized barter revenue of $ 2.3 million, $ 5.6 million, $ 7.5 million and $ 7.5 million in the three months ended September 30, 2020, the three months ended September 30, 2019, the period from May 2, 2019 through September 30, 2019 and the nine months ended September 30, 2020, respectively, in connection with investments made in companies in exchange for advertising services.

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

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Successor Company

Three Months Ended September 30,

(In thousands) 2020 2019

Deferred revenue from contracts with customers:

Beginning balance (1)

$ 178,030 $ 159,752

Revenue recognized, included in beginning balance ( 79,261 ) ( 74,875 )

Additions, net of revenue recognized during period, and other 73,352 75,660

Ending balance $ 172,121 $ 160,537

Successor Company Predecessor Company

Nine Months Ended September 30, Period from May 2, 2019 through September 30, Period from January 1, 2019 through May 1,

The Company recognized barter revenue of $ 2.2 million and $ 5.0 million during the three months ended March 31, 2021 and 2020, respectively, in connection with investments made in companies in exchange for advertising services.

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

Three Months Ended March 31,

(In thousands) 2021 2020

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$ 145,493 $ 162,068

Impact of fresh start accounting — 298 —

Revenue recognized, included in beginning balance ( 39,531 ) ( 80,055 )

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

however, as of September 30, 2020, the Company expects to recognize $ 262.3 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years .

however, as of March 31, 2021, the Company expects to recognize $ 260.0 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years .

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue from Leases

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

As of March 31, 2021, the future lease payments to be received by the Company are as follows:

(In thousands)

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Total $ 16,560

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – LEASES

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

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

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

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

During the three months ended March 31, 2021, the Company recognized non-cash impairment charges of $ 37.7 million, including $ 28.8 million related to ROU assets, and $ 8.9 million related to leasehold improvements as a result of proactive decisions by management to abandon and sublease a number of operating leases in connection with strategic actions to streamline the Company’s real estate footprint as part of the Company’s modernization initiatives.

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

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

Successor Company Predecessor Company

Nine Months Ended September 30, Period from May 2, 2019 through September 30, Period from January 1, 2019 through May 1,

Three Months Ended March 31,

(In thousands) 2021 2020

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$ 8,276 $ 7,620

(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 nine months ended September 30, 2020 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the period from May 2, 2019 through September 30, 2019 (Successor).

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

(1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the three months ended March 31, 2021 and 2020, respectively.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 $ 24.8 million and $ 24.1 million for the three months ended March 31, 2021 and three months ended March 31, 2020, respectively.

NOTE 4– PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL

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.

On March 31, 2021, the Company acquired Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W.

Scripps Company for $ 228.4 million in cash.

The assets acquired as part of this transaction consisted of $ 69.7 million in current and fixed assets, consisting primarily of accounts receivable and technology, and $ 190.7 million in intangible assets, consisting primarily of customer relationships, along with $ 167.4 million in goodwill (of which $ 6.9 million is tax-deductible).

The Company also assumed liabilities of $ 32.0 million, consisting primarily of accounts payable and deferred tax liabilities.

The assessment of fair value of assets acquired and liabilities assumed is preliminary and is based on information that was available to management at the time these consolidated financial statements were prepared.

The finalization of the Company’s acquisition accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material.

Property, Plant and Equipment

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

(In thousands) Successor Company

September 30,

The Company’s property, plant and equipment consisted of the following classes of assets as of March 31, 2021 and December 31, 2020, respectively:

(In thousands) March 31,

2021 December 31,

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Towers, transmitters and studio equipment 170,689 169,788

Computer equipment and software 457,279 398,084

Furniture and other equipment 45,644 45,711

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Indefinite-lived Intangible Assets

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

The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Multiplatform Group 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,

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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).

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.

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.

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 weighted average cost of capital used in performing the annual impairment test.

As a result of the COVID-19 pandemic and the economic downturn starting in March 2020, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses, resulting in a non-cash impairment charge of $ 502.7 million on its FCC licenses.

Other Intangible Assets

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These assets are recorded at amortized cost.

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

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

forecasted future cash flows.

As a result, the Company performed interim impairment tests as of March 31, 2020 on its other intangible 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 performed interim impairment tests as of March 31, 2020 on its other intangible assets as a result of the COVID-19 pandemic and economic slowdown.

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 September 30, 2020 and December 31, 2019, respectively:

(In thousands) Successor Company

September 30, 2020 December 31, 2019

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of March 31, 2021 and December 31, 2020, respectively:

(In thousands) March 31, 2021 December 31, 2020

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

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Total $ 2,377,114 $ ( 496,091 ) $ 2,353,821 $ ( 429,329 )

Total amortization expense related to definite-lived intangible assets for the Successor Company for the three months ended September 30, 2020, the three months ended September 30, 2019, the nine months ended September 30, 2020 and the period from May 2, 2019 through September 30, 2019 was $ 64.5 million, $ 67.0 million, $ 193.0 million and $ 109.5 million, respectively.

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

Total amortization expense related to definite-lived intangible assets for the Company for the three months ended March 31, 2021 and the three months ended March 31, 2020 was $ 66.3 million and $ 64.3 million, respectively.

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

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(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 )

Balance as of May 1, 2019 (Predecessor) $ 3,330,922 $ 84,570 $ 3,415,492

Impact of fresh start accounting ( 111,712 ) 19,585 ( 92,127 )

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

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

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

Acquisitions 44,606 — 44,606

1 unchanged sentence

Foreign currency — 245 245

Other 7,087 — 7,087

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

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

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

(In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Consolidated

Balance as of January 1, 2021 $ 1,462,217 $ 579,319 $ 104,399 $ 2,145,935

Acquisitions — 167,406 — 167,406

Foreign currency — — ( 118 ) ( 118 )

Balance as of September 30, 2020 (Successor) $ 2,005,208 $ 104,278 $ 2,109,486

Balance as of March 31, 2021 $ 1,462,217 $ 746,725 $ 104,281 $ 2,313,223

As a result of the leadership and organizational changes implemented in the first quarter 2021, as described in Note 1, Basis of Presentation , the Company re-evaluated its reporting units and allocated goodwill to these new reporting units.

Refer to Note 9, Segment Data, for additional information on our segments.

Goodwill was allocated to these new reporting units based on the relative fair values of these reporting units.

Fair value was calculated using the expected present value of future cash flows, and included estimates, judgments and assumptions consistent with those of a market participant that management believes were appropriate in the circumstances.

The estimates and judgments that most significantly affect the fair value calculations are assumptions related to long-term growth rates, expected profit margins and discount rates.

The Company did not recast prior-period goodwill balances to the new reporting units as it was impractical to do so.

Goodwill Impairment

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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 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 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 of the changes in the Company's management structure and its reportable segments effective at the beginning of 2021, the Company performed an interim impairment test on goodwill as of January 1, 2021.

No impairment charges were recorded in the first quarter of 2021 in connection with the interim impairment test.

The Company performed an interim impairment test on goodwill in the first quarter of 2020 and recognized a non-cash impairment charge of $ 1.2 billion to reduce goodwill as a result of the COVID-19 pandemic and its adverse effect on the U.S.

NOTE 5 – LONG-TERM DEBT

Long-term debt outstanding for the Company as of March 31, 2021 and December 31, 2020 consisted of the following:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

NOTE 6 – LONG-TERM DEBT

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

(In thousands) Successor Company

September 30, 2020 December 31, 2019

(In thousands) March 31, 2021 December 31, 2020

Term Loan Facility due 2026 $ 2,075,005 $ 2,080,259

$ 2,085,512 $ 2,251,271

Incremental Term Loan Facility due 2026 446,625 447,750

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Total long-term debt $ 5,976,358 $ 5,982,155

(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.

(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 September 30, 2020, approximately $ 165 million was available to be drawn upon under the ABL Facility.

(1) As of March 31, 2021, the senior secured asset-based revolving credit facility (the “ABL Facility”) had a borrowing base of $ 348.5 million, no outstanding borrowings and $ 32.1 million of outstanding letters of credit, resulting in $ 316.4 million of borrowing base availability.

As a result of certain restrictions in the Company's debt and preferred stock agreements, as of March 31, 2021, approximately $ 178 million was available to be drawn upon under the ABL Facility.

(2) Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2022 through 2045.

The Successor Company’s weighted average interest rate was 5.5 % and 6.4 % as of September 30, 2020 and December 31, 2019, respectively.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $ 5.9 billion and $ 6.1 billion as of September 30, 2020 and December 31, 2019, respectively.

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

The Company’s weighted average interest rate was 5.4 % and 5.5 % as of March 31, 2021 and December 31, 2020, respectively.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $ 6.2 billion as of March 31, 2021 and December 31, 2020.

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

Under the terms of the Term Loan Facility Credit Agreement, iHeartCommunications, Inc.

("iHeartCommunications") made quarterly payments of $ 6.4 million and $ 5.25 million during the three months ended March 31, 2021 and 2020, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The incremental term loans issued pursuant to Amendment No.

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

Amendment No.

2 also modifies certain other provisions of the Credit Agreement.

Under the terms of the Term Loan Facility Credit Agreement, iHeartCommunications made quarterly payments of $ 5.25 million during each of the three months ended March 31, 2020 and June 30, 2020 and $ 6.4 million during the three months ended September 30, 2020.

Mandatorily Redeemable Preferred Stock

On the Effective Date, in accordance with the Plan of Reorganization, iHeart Operations issued 60,000 shares of its Series A Perpetual Preferred Stock, par value $ 0.001 per share (the "iHeart Operations Preferred Stock"), having an aggregate initial liquidation preference of $ 60.0 million for a cash purchase price of $ 60.0 million.

As previously disclosed, on March 14, 2018, the Company, iHeartCommunications and certain of the Company's direct and indirect domestic subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court").

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.

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

On May 1, 2019 (the “Effective Date”), in accordance with the Plan of Reorganization, iHeart Operations issued 60,000 shares of its Series A Perpetual Preferred Stock, par value $ 0.001 per share (the "iHeart Operations Preferred Stock"), having an aggregate initial liquidation preference of $ 60.0 million for a cash purchase price of $ 60.0 million.

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

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

As of March 31, 2021, the liquidation preference of the iHeart Operations Preferred Stock was $ 60.0 million.

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

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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 three and nine months ended September 30, 2020 the Company recognized $ 2.7 million and $ 6.9 million of interest expense related to dividends on mandatorily redeemable preferred stock.

During the three months ended March 31, 2021 and 2020 the Company recognized $ 2.4 million and $ 1.8 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.

Upon consummation of certain equity offerings, iHeart Operations may, at its option, redeem all or a part of the iHeart Operations Preferred Stock for the liquidation preference plus a make-whole premium.

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.

At any time on or after the third anniversary of the issue date, May, 1, 2022, 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.

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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Surety Bonds, Letters of Credit and Guarantees

As of September 30, 2020, the Successor Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $ 19.0 million and $ 41.7 million, respectively.

As of March 31, 2021, the Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $ 8.3 million and $ 32.5 million, respectively.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – COMMITMENTS AND CONTINGENCIES

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Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts:

commercial disputes;

commercial/contract disputes;

defamation matters;

employment and benefits related claims;

governmental fines;

intellectual property claims;

real estate maters;

governmental investigations;

and tax disputes.

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 a Petition for Declaratory Ruling ("PDR") requesting the FCC to permit the Company to be up to 100% foreign-owned.

In connection with the Company's emergence from bankruptcy, each of the Company's claimholders in the Chapter 11 Cases (the "Claimholders") was required to provide written certification sufficient for the Company to determine whether issuance of common stock to such Claimholders would cause the Company to violate the Foreign Ownership Rule, and restricted the Company from issuing common stock to Claimholders such that it would cause the Company to exceed an aggregate alien ownership or voting percentage of 22.5 percent.

After emerging from bankruptcy, the Company learned that a group of Claimholders that had certified to having no foreign ownership or voting control subsequently underwent a separate merger transaction without our knowledge or control.

As a result of this merger, these Claimholders’ interests in iHeartMedia can be voted by a U.S.

subsidiary of a foreign parent.

The Company promptly notified the FCC of the merger.

The FCC responded to the Company's notification on July 9, 2019, indicating that (1) the FCC had determined that this development is contrary to the public interest, and (2) the FCC deemed the Company to be in compliance with the FCC’s foreign ownership reporting rules, pending its decision on the Company's PDR.

On July 25, 2019 the Company filed the PDR.

On November 5, 2020, the FCC issued a declaratory ruling granting the relief requested by the PDR (the “Declaratory Ruling”), subject to certain conditions set forth in the Declaratory Ruling.

On November 9, 2020, the Company notified the holders of warrants to purchase the Company’s Class A common stock or Class B common stock (the “Special Warrants”) of the commencement of an exchange process (the notification, the “Exchange Notice,” and the exchange, the “Exchange”).

In the Exchange, the Company will exchange all or a portion of the outstanding Special Warrants into Class A common stock or Class B common stock, subject to compliance with the Declaratory Ruling, the Communications Act and FCC rules.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Alien Ownership Restrictions and FCC Petitions for Declaratory Ruling

Under the Plan of Reorganization, the Company committed to file a petition for declaratory relief (the “PDR”) requesting the FCC to permit the Company to be up to 100% foreign-owned.

On November 5, 2020, the FCC issued a declaratory ruling granting the relief requested by the PDR (the “Declaratory Ruling”), subject to certain conditions, as described further in Note 8, Stockholder's Equity below.

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

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 (the “Exchange”).

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” of our Annual Report on Form 10-K for the year ended December 31, 2020 for additional information.

On March 8, 2021, the Company filed a remedial petition for declaratory ruling (the “Remedial PDR”) with the FCC.

The Remedial PDR relates to the acquisition by Global Media & Entertainment Ltd (f/k/a Honeycomb Investments Limited) (“Global Investments”) of the Company’s Class A Common Stock.

Specifically, on February 5, 2021, Global Investments, The Global Media & Entertainment Investments Trust (the “GMEI Trust”), James Hill (as trustee of the GMEI Trust), Simon Groom (as trustee of the GMEI Trust) and Michael Tabor (as beneficiary of the GMEI Trust) (together with Global Investments and any affiliates or third parties to whom they may assign or transfer any of their rights or interests, the “GMEI Investors”) filed a Schedule 13D with the SEC, in which the GMEI Investors disclosed beneficial ownership of 9,631,329 shares of the Company’s Class A Common Stock, representing approximately 8.7 % of the Company’s outstanding Class A Common Stock.

This ownership interest is inconsistent with the FCC’s foreign ownership rules and the Declaratory Ruling issued by the FCC relating to the Company’s foreign ownership on November 5, 2020, both of which limit a foreign investor in the GMEI Investors’ position to holding no more than 5% of the Company’s voting equity or total equity without prior FCC approval.

The Remedial PDR, which was filed pursuant to the rules and regulations of the FCC, seeks (a) specific approval for the more than 5% equity and voting interests in the Company presently held by the GMEI Investors and (b) advance approval for the GMEI Investors to increase their equity and voting interest in the Company up to any non-controlling amount not to exceed 9.99%.

The Remedial PDR remains pending before the FCC.

Tax Matters Agreement

On the Effective Date, the Company emerged from Chapter 11 and effectuated a series of transactions through which Clear Channel Outdoor Holdings, Inc.

("CCOH"), its parent Clear Channel Holdings, Inc.

In connection with the Separation, the Company entered into the Tax Matters Agreement by and among iHeartMedia, iHeartCommunications, iHeart Operations, Inc., CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of iHeartMedia and its subsidiaries, on the one hand, and CCOH and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.

The Tax Matters Agreement requires that iHeartMedia 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 certain tax claims related to the Separation.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – INCOME TAXES

Income Tax Benefit (Expense)

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

(In thousands) Successor Company

Three Months Ended September 30,

On March 11, 2021 the President signed into law the American Rescue Plan Act, which included provisions on taxes, health care, unemployment benefits, direct payments, state and local funding and other issues.

The tax provisions will not have a material impact on the Company’s tax provision calculations.

The Company’s income tax benefit (expense) for the three months ended March 31, 2021 and the three months ended March 31, 2020 consisted of the following components:

(In thousands) Three Months Ended March 31,

Current tax expense $ ( 1,589 ) $ ( 1,705 )

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Income tax benefit (expense) $ ( 79,935 ) $ 150,511

(In thousands) Successor Company Predecessor Company

Nine Months Ended September 30, Period from May 2, 2019 through September 30, Period from January 1, 2019 through May 1,

2020 2019 2019

Current tax benefit (expense) $ ( 5,134 ) $ ( 7,283 ) $ 76,744

Deferred tax benefit (expense) 214,615 ( 25,478 ) ( 115,839 )

Income tax benefit (expense) $ 209,481 $ ( 32,761 ) $ ( 39,095 )

The effective tax rate for the Successor Company for the three and nine months ended September 30, 2020 was 32.2 % and 9.8 %, respectively.

The effective tax rate for the nine months ended September 30, 2020 was primarily impacted by the impairment charges to non-deductible goodwill discussed in Note 5.

The effective tax rate for the Company for the three months ended March 31, 2021 was ( 49.3 )%.

The effective tax rate for the three months ended March 31, 2021 was primarily impacted by the deferred tax expense recorded for the valuation allowance against certain deferred tax assets for disallowed interest expense and net operating loss carryforwards due to the uncertainty of the Company’s ability to utilize those assets in future periods.

The effective tax rate for the three months ended March 31, 2020 was 8.2 %.

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

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

The effective tax rate for the Successor Company for the period from May 2, 2019 through September 30, 2019 was 39.0 %.

The effective tax rate for continuing operations of the Predecessor Company for the period from January 1, 2019 through May 1, 2019 (Predecessor) 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.

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

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

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

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

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

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

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

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

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

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

refunds available from alternative minimum tax credits.

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

In addition to the income tax provisions mentioned above, the CARES Act also included provisions impacting employment taxes allowing companies to defer the payment of the employee portion of certain employment taxes that would be due from the enactment date through January 1, 2021.

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

The Company has deferred $ 20.3 million in employment taxes as of September 30, 2020.

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

The Company has recorded approximately $ 0.7 million in credits during 2020.

NOTE 8 – STOCKHOLDER'S EQUITY

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Share-based Compensation

Share-based compensation expenses are recorded in corporate expenses and were $ 5.9 million, $ 17.1 million, $ 14.7 million and $ 20.2 million for the Successor Company for three months ended September 30, 2020, the three months ended September 30, 2019, the nine months ended September 30, 2020 and the period from May 2, 2019 through September 30, 2019, respectively.

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

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 5.7 million and $ 4.6 million for the Company for three months ended March 31, 2021 and the three months ended March 31, 2020, respectively.

In August 2020, the Company issued performance-based restricted stock units ("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 three months ended September 30, 2020, the Company recognized $ 1.1 million in relation to these Performance RSUs.

As of September 30, 2020, there was $ 58.5 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions.

In the three months ended March 31, 2021, the Company recognized $ 0.5 million in relation to these Performance RSUs.

As of March 31, 2021, there was $ 48.4 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions.

This cost is expected to be recognized over a weighted average period of approximately 2.6 years.

In addition, as of September 30, 2020, there was $ 3.9 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on certain performance conditions.

Successor Common Stock and Special Warrants

In addition, as of March 31, 2021, there was $ 1.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on certain performance conditions.

Common Stock and Special Warrants

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

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

September 30,

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

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

Successor Special Warrants 76,051,430

Total Successor Class A Common Stock, Class B Common Stock and Special Warrants issued 146,392,218

During the three and nine months ended September 30, 2020, stockholders converted 7,263 and 13,323 shares of the Class B common stock into Class A common stock, respectively.

During the three and nine months ended September 30, 2019, stockholders converted 21,623 shares of the Class B common stock into Class A common stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of March 31, 2021:

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

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

Special Warrants 5,379,822

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

Total Class A Common Stock, Class B Common Stock and Special Warrants issued 146,483,042

During the three months ended March 31, 2021, stockholders converted 154,045 shares of the Class B common stock into Class A common stock.

During the three months ended March 31, 2020, stockholders converted 5,915 shares of the Class B common stock into Class A common stock.

Special Warrants

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

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

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On November 9, 2020, the Company sent Exchange Notices to the holders of Special Warrants, notifying them of the Exchange process.

During the three and nine months ended September 30, 2020, stockholders exercised 1,986,278 and 4,990,132 Special Warrants for an equivalent number of shares of Class A common stock, respectively.

During the three and nine months ended September 30, 2020, stockholders exercised 704 and 2,049 Special Warrants for an equivalent number of shares of Class B common stock, respectively.

During the three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019, stockholders exercised 164,310 Special Warrants for an equivalent number of shares of Class A common stock.

During the three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019, stockholders exercised 32 Special Warrants for an equivalent number of shares of Class B common stock.

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.

See "Part II, 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" of this Quarterly Report on Form 10-Q and "Part I, Item 1.

Business – Regulation of Our Business, Alien Ownership Restrictions" of our Annual Report on Form 10-K for the year ended December 31, 2020 for additional information.

During the three months ended March 31, 2021, stockholders exercised 47,121,747 Special Warrants for an equivalent number of shares of Class A common stock.

During the three months ended March 31, 2021, stockholders exercised 22,337,312 Special Warrants for an equivalent number of shares of Class B common stock.

During the three months ended March 31, 2020, stockholders exercised 2,126,591 Special Warrants for an equivalent number of shares of Class A common stock.

During the three months ended March 31, 2020, stockholders exercised 616 Special Warrants for an equivalent number of shares of Class B common stock.

As further described in Note 6, Commitments and Contingencies above, on March 8, 2021, the Company’s Board of Directors (the “Board”) resolved to take certain actions to limit the rights of the GMEI Investors in connection with the Company’s pending Remedial PDR and in order to implement certain conditions required by the FCC.

Such actions, included, but are not limited to, suspending all voting rights of GMEI Investors until and unless the FCC releases a declaratory ruling granting specific approval for each of the GMEI Investors to hold more than 5% of the equity and/or voting interests of the Company.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stockholder Rights Plan

On May 5, 2020, the Company’s Board of Directors (the “Board”) approved the adoption of a short-term stockholder rights plan (the “Stockholder Rights Plan”) in order to protect the best interests of all Company stockholders during the current period of high equity-market volatility and price disruption.

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

On May 5, 2020, the Board approved the adoption of a short-term stockholder rights plan (the “Stockholder Rights Plan”) in order to protect the best interests of all Company stockholders during the current period of high equity-market volatility and price disruption.

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

The record date for such dividend distribution 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 will not be a taxable event and will not have any impact on the Company’s financial reporting.

Under the Stockholder Rights Plan, subject to certain exceptions, the rights were generally be exercisable only if, in a transaction not approved by the Board, a person or group acquired 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) had 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 contained a similar provision if the Company was 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 expired in accordance with its terms on May 5, 2021 and the rights are no longer outstanding.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Computation of Income (Loss) per Share

(In thousands, except per share data) Successor Company

Three Months Ended September 30,

Net income (loss) attributable to the Company – common shares $ ( 32,112 ) $ 12,374

Computation of Loss per Share

(In thousands, except per share data) Three Months Ended March 31,

Net loss attributable to the Company – common shares $ ( 241,723 ) $ ( 1,688,736 )

DENOMINATOR (1) :

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Weighted average common shares outstanding - diluted 146,214 145,614

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

Net loss attributable to the Company per common share:

Basic $ ( 1.65 ) $ ( 11.60 )

Diluted $ ( 1.65 ) $ ( 11.60 )

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Nine Months Ended September 30, Period from May 2, 2019 through September 30, Period from January 1, 2019 through May 1,

2020 2019 2019

Net income (loss) attributable to the Company – common shares $ ( 1,918,165 ) $ 51,167 $ 11,184,141

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

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

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

Income (loss) from continuing operations $ ( 1,918,165 ) $ 51,167 $ 9,479,990

DENOMINATOR (1) :

Weighted average common shares outstanding - basic 145,911 145,543 86,241

Stock options and restricted stock (2) :

Weighted average common shares outstanding - diluted 145,911 145,655 86,241

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

From continuing operations - Basic $ ( 13.15 ) $ 0.35 $ 109.92

From discontinued operations - Basic $ — $ — $ 19.76

From continuing operations - Diluted $ ( 13.15 ) $ 0.35 $ 109.92

From discontinued operations - Diluted $ — $ — $ 19.76

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

(2) Outstanding equity awards representing 9.6 million, 8.1 million, 5.6 million and 8.5 million shares of Class A common stock of the Successor Company for the three months ended September 30, 2020, the three months ended September 30, 2019, the period from May 2, 2019 through September 30, 2019 and the nine months ended September 30, 2020 were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

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

(1) All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Company for the three months ended March 31, 2021 and three months ended March 31, 2020.

(2) Outstanding equity awards representing 10.7 million and 8.2 million shares of Class A common stock of the Company for the three months ended March 31, 2021 and the three months ended March 31, 2020, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 9 – SEGMENT DATA

The Company’s primary business is included in its Audio segment.

Revenue and expenses earned and charged between Audio, Corporate and the Company's Audio & Media Services businesses are eliminated in consolidation.

The Audio segment provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses.

The Audio & Media Services business provides other audio and media services, including the Company’s media representation business (Katz Media) and its provider of scheduling and broadcast software (RCS).

As discussed in Note 1, in connection with certain leadership and organizational changes implemented in the first quarter 2021, the Company revised its segment reporting as of January 1, 2021.

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

Segment Adjusted EBITDA is the segment profitability metric reported to the Company’s Chief Operating Decision Maker for purposes of decisions about allocation of resources to, and assessing performance of, each reportable segment.

The Company’s primary businesses are included in its Multiplatform Group and Digital Audio Group segments.

Revenue and expenses earned and charged between Multiplatform Group, Digital Audio Group, Corporate and the Company's Audio & Media Services Group are eliminated in consolidation.

The Multiplatform Group provides media and entertainment services via broadcast delivery and also includes the Company’s events and national syndication businesses.

The Digital Audio Group provides media and entertainment services via digital delivery.

The Audio & Media Services Group provides other audio and media services, including the Company’s media representation business (Katz Media) and its provider of scheduling and broadcast software (RCS).

Corporate includes infrastructure and support, including executive, information technology, human resources, legal, finance and administrative functions for the Company’s businesses.

Share-based payments are recorded in corporate expense.

Share-based payments are recorded in Selling, general and administrative expense.

The following tables present the Company's segment results for the Company for the three months ended March 31, 2021 and 2020:

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with a reorganization of the Company’s management structure after the Separation and emergence from the Chapter 11 Cases, the Company revised its segment reporting, as discussed in Note 1 and all prior periods have been restated to conform to this presentation.

The following tables present the Company's segment results for the Successor Company for the periods presented:

Successor Company

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

Three Months Ended September 30, 2020

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

Three Months Ended March 31, 2021

Revenue $ 497,897 $ 157,553 $ 55,137 $ — $ ( 3,922 ) $ 706,665

Direct operating expenses 269,798 8,308 — ( 1,387 ) 276,719

Selling, general and administrative expenses

Operating expenses (1)

393,106 117,542 39,788 57,904 ( 3,922 ) 604,418

Corporate expenses — — 34,669 ( 12 ) 34,657

Depreciation and amortization

Adjusted EBITDA (2)

$ 104,791 $ 40,011 $ 15,349 $ ( 57,904 ) $ — $ 102,247

Depreciation and amortization ( 107,363 )

Impairment charges ( 37,744 )

Other operating expense, net ( 2,771 )

— — 1,675 — 1,675

Operating income (loss) $ 57,451 $ 20,872 $ ( 38,928 ) $ — $ 39,395

Intersegment revenues $ 168 $ 1,762 $ — $ — $ 1,930

Capital expenditures $ 17,574 $ 850 $ 553 $ — $ 18,977

Restructuring expenses ( 25,040 )

Share-based compensation expense ( 5,685 )

$ — $ — $ 5,885 $ — $ 5,885

Three Months Ended September 30, 2019

Revenue $ 890,364 $ 59,873 $ — $ ( 1,899 ) $ 948,338

Direct operating expenses 309,753 7,281 — ( 294 ) 316,740

Selling, general and administrative expenses

292,121 36,587 — ( 1,593 ) 327,115

Corporate expenses — — 58,525 ( 12 ) 58,513

Depreciation and amortization

87,620 5,971 1,677 — 95,268

Other operating expense, net — — 9,880 — 9,880

Operating income (loss) $ 200,870 $ 10,034 $ ( 70,082 ) $ — $ 140,822

Operating loss $ ( 76,356 )

Intersegment revenues $ 167 $ 1,894 $ 1,861 $ — $ — $ 3,922

1 unchanged sentence

Share-based compensation expense $ — $ — $ — $ 5,685 $ — $ 5,685

$ — $ — $ 17,112 $ — $ 17,112

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Successor Company

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

Nine Months Ended September 30, 2020

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

Three Months Ended March 31, 2020

Revenue $ 629,609 $ 92,776 $ 60,227 $ — $ ( 1,978 ) $ 780,634

Direct operating expenses 808,561 23,815 — ( 4,159 ) 828,217

Selling, general and administrative expenses

792,448 107,149 — ( 1,656 ) 897,941

Corporate expenses — — 101,065 ( 40 ) 101,025

Depreciation and amortization

274,600 17,428 7,466 — 299,494

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

Other operating expense, net

Operating expenses (1)

478,004 76,182 42,527 45,560 ( 1,978 ) 640,295

Operating income (loss) $ ( 31,583 ) $ 26,125 $ ( 1,845,013 ) $ — $ ( 1,850,471 )

Intersegment revenues $ 503 $ 5,352 $ — $ — $ 5,855

Capital expenditures $ 50,374 $ 2,473 $ 5,676 $ — $ 58,523

Share-based compensation expense

Adjusted EBITDA (2)

$ 151,605 $ 16,594 $ 17,700 $ ( 45,560 ) $ — $ 140,339

Period from May 2, 2019 through September 30, 2019

Revenue $ 1,486,594 $ 100,410 $ — $ ( 3,020 ) $ 1,583,984

Direct operating expenses 503,705 12,153 — ( 346 ) 515,512

Selling, general and administrative expenses 488,955 61,045 — ( 2,654 ) 547,346

Corporate expenses — — 85,351 ( 20 ) 85,331

Depreciation and amortization ( 96,768 )

1 unchanged sentence

Other operating expense, net ( 1,066 )

Operating income (loss) $ 351,622 $ 17,622 $ ( 94,734 ) $ — $ 274,510

Intersegment revenues $ 280 $ 2,740 $ — $ — $ 3,020

Capital expenditures $ 37,259 $ 2,824 $ 6,222 $ — $ 46,305

Restructuring expenses ( 40,802 )

Share-based compensation expense ( 4,625 )

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Predecessor Company

(In thousands) Audio Audio & 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) $ 210,113 $ 8,465 $ ( 151,538 ) $ — $ 67,040

Operating loss $ ( 1,730,779 )

Intersegment revenues $ 167 $ — $ 1,811 $ — $ — $ 1,978

1 unchanged sentence

Share-based compensation expense $ — $ — $ — $ 4,625 $ — $ 4,625

NOTE 11 – REORGANIZATION ITEMS, NET

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

(In thousands) Successor Company

Three Months Ended September 30,

Cash payments for Reorganization items, net $ — $ 5,219

(In thousands) Successor Company Predecessor Company

Nine Months Ended September 30, Period from May 2, 2019 through September 30, Period from January 1, 2019 through May 1,

2020 2019 2019

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

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

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

Other items, net — — ( 4,005 )

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

Cash payments for Reorganization items, net $ 443 $ 18,268 $ 183,291

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

The Company incurred additional professional fees related to the bankruptcy, post-emergence, of $ 0.9 million, $ 12.4 million, $ 5.4 million and $ 21.5 million for the three months ended September 30, 2020, the three months ended September 30, 2019, the

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

nine months ended September 30, 2020 and the period from May 2, 2019 through September 30, 2019, respectively, which are included within Other income (expense), net in the Company's Consolidated Statements of Comprehensive Income (Loss).

(1) Consolidated operating expenses consist of Direct operating expenses and Selling, general and administrative expenses and exclude Restructuring expenses, share-based compensation expenses and depreciation and amortization.

(2) For a definition of Adjusted EBITDA and a reconciliation to Operating income, the most closely comparable GAAP measure, and to Net income (loss), please see "Reconciliation of Operating Loss to Adjusted EBITDA" and "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA" in Item 2 of this Quarterly Report on Form 10-Q.

Beginning on January 1, 2021, Segment Adjusted EBITDA became the segment profitability metric reported to the Company's Chief Operating Decision Maker for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment.

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

What changed 10-Q

Item 1. Financial Statements