What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 256 added, 114 removed, 544 unchanged (40% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

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

(In thousands, except share and per share data) June 30,

2021 December 31,

47 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

(In thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Revenue $ 861,605 $ 487,648 $ 1,568,270 $ 1,268,282

5 unchanged sentences

Other operating expense, net 12,379 506 15,150 1,572

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

Operating income (loss) 28,126 ( 159,087 ) ( 48,230 ) ( 1,889,866 )

Interest expense, net 84,887 81,963 170,008 172,052

7 unchanged sentences

Net loss attributable to the Company $ ( 32,286 ) $ ( 197,317 ) $ ( 274,009 ) $ ( 1,886,053 )

Other comprehensive loss, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments ( 40 ) 292 ( 256 ) 188

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

Other comprehensive income (loss), net of tax ( 40 ) 292 ( 256 ) 188

Comprehensive loss ( 32,326 ) ( 197,025 ) ( 274,265 ) ( 1,885,865 )

15 unchanged sentences

Capital Accumulated Deficit Accumulated

Comprehensive Income (Loss) Treasury

Comprehensive Loss Treasury

Shares Class B

Shares Special Warrants Total

December 31, 2020

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

Net loss ( 333 ) — — ( 241,723 ) — — ( 242,056 )

Net income (loss) 326 — — ( 32,286 ) — — ( 31,960 )

Vesting of restricted stock and other

8 unchanged sentences

Other comprehensive loss — — — — ( 40 ) — ( 40 )

March 31, 2021

June 30, 2021

118,261,575 23,636,512 5,365,128 $ 7,968 $ 142 $ 2,863,657 $ ( 2,077,629 ) $ ( 62 ) $ ( 5,231 ) $ 788,845

8 unchanged sentences

Stock Additional

Capital Retained Earnings (Accumulated Deficit) Accumulated

Capital Accumulated Deficit Accumulated

Comprehensive

2 unchanged sentences

Shares Special Warrants Total

December 31, 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

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Other ( 2,982 ) — — — — — — —

Other comprehensive income — — — — 292 — 292

June 30, 2020

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

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

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share data) Controlling Interest

Common Shares (1)

Interest Common

Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive Income (Loss) Treasury

Shares Class B

Shares Special Warrants Total

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

( 7 ) — — ( 274,009 ) — — ( 274,016 )

Vesting of restricted stock and other

810,545 — 1 3,118 — — ( 2,032 ) 1,087

Share-based compensation — — 11,588 — — — 11,588

Conversion of Special Warrants to Class A and Class B Shares 47,136,441 22,337,312 ( 69,473,753 ) — 69 ( 69 ) — — — —

Conversion of Class B Shares to Class A Shares

5,587,725 ( 5,587,725 ) — — — — — — —

Cancellation of Special Warrants — — — — — — —

2,982 ( 375 ) — — — — — ( 375 )

Other comprehensive loss — — — — ( 256 ) — ( 256 )

June 30, 2021

118,261,575 23,636,512 5,365,128 $ 7,968 $ 142 $ 2,863,657 $ ( 2,077,629 ) $ ( 62 ) $ ( 5,231 ) $ 788,845

March 31, 2020

(1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2021 or 2020.

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(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 Special Warrants Total

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

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

Net loss — — — ( 1,886,053 ) — — ( 1,886,053 )

Vesting of restricted stock 646,223 — — ( 22 ) — — ( 940 ) ( 962 )

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

Conversion of Special Warrants and Class B Shares to Class A Shares 3,003,854 1,345 ( 3,005,199 ) — 3 ( 3 ) — — — —

Conversion of Class B Shares to Class A Shares 6,060 ( 6,060 ) — — — — — — —

Other ( 2,982 ) — — — ( 1,469 ) — — ( 1,469 )

Other comprehensive income — — — — 188 — 188

June 30, 2020

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

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

See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) Three Months Ended March 31,

(In thousands) Six Months Ended June 30,

Cash flows from operating activities:

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Increase in other long-term assets ( 6,919 ) ( 654 )

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

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

Increase (decrease) in accounts payable and accrued expenses 36,238 ( 90,103 )

Decrease in accrued interest ( 31 ) ( 12,099 )

Increase in deferred income 6,847 8,281

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Business combinations ( 230,816 ) ( 10,158 )

Proceeds from sale of other investments 50,757 —

Purchases of property, plant and equipment ( 51,061 ) ( 39,546 )

Proceeds from disposal of assets 13,016 244

Change in other, net ( 159 ) ( 1,221 )

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▪ 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.

These reporting segments reflect how senior management operates the Company, align with certain leadership and organizational changes implemented in the first quarter 2021.

This structure provides improved visibility into the underlying performances, results, and margin profiles of our distinct businesses and enables senior management to better monitor trends at the operational level and address opportunities or issues as they arise via regular review of segment-level results and forecasts with operational leaders.

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.

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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.

Although our results for the second quarter of 2021 continued to be impacted by the effects of the COVID-19 pandemic, our revenue for the three months ended June 30, 2021 increased

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

significantly across all of our revenue streams compared to the three months ended June 30, 2020, including revenue from our Multiplatform segment, which includes our broadcast radio, networks and sponsorship and events businesses.

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

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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.

As of June 30, 2021, the Company has claimed $ 12.4 million in refundable payroll tax credits related to the CARES Act provisions.

As of June 30, 2021, the Company had approximately $ 583.3 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, 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.

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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) March 31,

(In thousands) June 30,

2021 December 31,

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

NOTE 2 – REVENUE

Disaggregation of Revenue

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – REVENUE

Disaggregation of Revenue

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

The following tables show revenue streams for the three and six months ended June 30, 2021 and 2020:

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

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Revenue from contracts with customers:

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Revenue, total $ 605,850 $ 197,930 $ 61,175 $ ( 3,350 ) $ 861,605

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Revenue from contracts with customers:

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Revenue, total $ 357,117 $ 93,227 $ 39,251 $ ( 1,947 ) $ 487,648

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Six Months Ended June 30, 2021

Revenue from contracts with customers:

Broadcast Radio (1)

$ 809,678 $ — $ — $ — $ 809,678

238,672 — — — 238,672

Sponsorship and Events (3)

50,978 — — — 50,978

Digital, excluding Podcast (4)

— 263,703 — ( 3,072 ) 260,631

— 91,780 — — 91,780

Audio & Media Services (6)

— — 116,312 ( 3,865 ) 112,447

3,590 — — ( 335 ) 3,255

Total 1,102,918 355,483 116,312 ( 7,272 ) 1,567,441

Revenue from leases (8)

829 — — — 829

Revenue, total $ 1,103,747 $ 355,483 $ 116,312 $ ( 7,272 ) $ 1,568,270

Six Months Ended June 30, 2020

Revenue from contracts with customers:

Broadcast Radio (1)

$ 705,695 $ — $ — $ — $ 705,695

230,907 — — — 230,907

Sponsorship and Events (3)

44,157 — — — 44,157

Digital, excluding Podcast (4)

— 148,905 — — 148,905

— 37,098 — — 37,098

Audio & Media Services (6)

— — 99,478 ( 3,590 ) 95,888

5,103 — — ( 335 ) 4,768

Total 985,862 186,003 99,478 ( 3,925 ) 1,267,418

Revenue from leases (8)

864 — — — 864

Revenue, total $ 986,726 $ 186,003 $ 99,478 $ ( 3,925 ) $ 1,268,282

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

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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,

Three Months Ended

June 30, Six Months Ended

(In thousands) 2021 2020 2021 2020

1 unchanged sentence

Trade and barter expenses 40,045 17,075 68,043 72,073

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 Company recognized barter revenue of $ 2.3 million and $ 0.2 million during the three months ended June 30, 2021 and 2020, respectively, and $ 4.5 million and $ 5.2 million during the six months ended June 30, 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,

Three Months Ended

June 30, Six Months Ended

(In thousands) 2021 2020 2021 2020

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

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 .

however, as of June 30, 2021, the Company expects to recognize $ 239.2 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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Revenue from Leases

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

As of June 30, 2021, the future lease payments to be received by the Company are as follows:

(In thousands)

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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.

During the six months ended June 30, 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 IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2021 2020

2 unchanged sentences

$ 17,156 $ 18,047

(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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the six months ended June 30, 2021 and 2020, respectively.

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.

The non-cash operating lease expense was $ 49.4 million and $ 52.4 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

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

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Property, Plant and Equipment

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,

The Company’s property, plant and equipment consisted of the following classes of assets as of June 30, 2021 and December 31, 2020, respectively:

(In thousands) June 30,

2021 December 31,

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

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.

As a result of the COVID-19 pandemic and the economic downturn starting in

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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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 March 31, 2021 and December 31, 2020, respectively:

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

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of June 30, 2021 and December 31, 2020, respectively:

(In thousands) June 30, 2021 December 31, 2020

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

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Total $ 2,339,116 $ ( 545,446 ) $ 2,353,821 $ ( 429,329 )

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.

Total amortization expense related to definite-lived intangible assets for the Company for the three months ended June 30, 2021 and 2020 was $ 87.4 million and $ 64.3 million, respectively.

Total amortization expense related to definite-lived intangible assets for the Company for the six months ended June 30, 2021 and 2020 was $ 153.7 million and $ 128.6 million, respectively.

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

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Acquisitions — 167,868 — 167,868

Dispositions ( 290 ) — — ( 290 )

Foreign currency — — ( 88 ) ( 88 )

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

Balance as of June 30, 2021

$ 1,461,927 $ 747,187 $ 104,311 $ 2,313,425

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.

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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:

Long-term debt outstanding for the Company as of June 30, 2021 and December 31, 2020 consisted of the following:

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(In thousands) June 30, 2021 December 31, 2020

Term Loan Facility due 2026 $ 2,069,752 $ 2,080,259

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Total long-term debt $ 5,721,038 $ 5,982,155

(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.

(1) As of June 30, 2021, the senior secured asset-based revolving credit facility (the “ABL Facility”) had a borrowing base of $ 437.8 million, no outstanding borrowings and $ 32.8 million of outstanding letters of credit, resulting in $ 405.0 million of borrowing base availability.

As a result of certain restrictions in the Company's debt and preferred stock agreements, as of June 30, 2021, approximately $ 185 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 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.

The Company’s weighted average interest rate was 5.4 % and 5.5 % as of June 30, 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 June 30, 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.

On July 16, 2021, iHeartCommunications, Inc.

("iHeartCommunications") entered into an amendment to the credit agreement governing its Term Loan credit facilities.

The amendment reduces the interest rate of its Incremental Term Loan Facility due 2026 to a Eurocurrency Rate of LIBOR plus a margin of 3.25 % and floor of 0.50 % (from LIBOR plus a margin of 4.00 % and floor of 0.75 %).

The Base Rate interest amount was reduced to Base Rate plus a margin of 2.25 % and floor of 1.50 %.

In connection with the amendment, iHeartCommunications voluntarily prepaid $ 250.0 million of borrowings outstanding under the Term Loan credit facilities with cash on hand, resulting in a reduction of $ 44.3 million of the existing Incremental Term Loan Facility due 2026 and $ 205.7 million of the Term Loan Facility due 2026.

As a result, $ 250 million of long-term debt has been classified as current as of June 30, 2021.

Under the terms of the Term Loan Facility Credit Agreement, iHeartCommunications made quarterly payments of $ 6.4 million during the three months ended March 31, 2021 and June 30, 2021, and $ 5.25 million during the three months ended March 31, 2020 and June 30, 2020.

IHEARTMEDIA, INC.

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

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

As of June 30, 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 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.

During the three months ended June 30, 2021 and 2020 the Company recognized $ 2.2 million and $ 2.4 million, respectively, of interest expense related to dividends on mandatorily redeemable preferred stock.

During the six months ended June 30, 2021 and 2020 the Company recognized $ 4.6 million and $ 4.2 million, respectively, of interest expense related to dividends on mandatorily redeemable preferred stock.

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

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Surety Bonds, Letters of Credit and Guarantees

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.

As of June 30, 2021, the Company and its subsidiaries had outstanding surety bonds, commercial standby letters of credit and bank guarantees of $ 9.0 million, $ 33.2 million and $ 0.2 million, respectively.

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

NOTE 6 – COMMITMENTS AND CONTINGENCIES

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It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings.

Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations.

Additionally, due to the inherent uncertainty of

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations.

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:

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and tax disputes.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Alien Ownership Restrictions and FCC Petitions 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.

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.

Under the Plan of Reorganization, the Company committed to file a petition for declaratory ruling (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.

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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.

The Remedial PDR relates to the acquisition by Global Media & Entertainment Investments 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, which at that time represented 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, 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) as amended, 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 14.99%.

The Remedial PDR remains pending before the FCC.

On March 26, 2021, the FCC conditioned the approval of applications by the Company to acquire certain radio stations, which were pending prior to the GMEI Investors’ Schedule 13D filing, on the Company taking certain actions with respect to the GMEI Investors rights as stockholders of the Company.

On that same date, and in order to implement the conditions required by the FCC, the Company’s Board of Directors (the “Board”) resolved to take certain actions to limit the rights of the GMEI Investors, including, but not limited to, suspending all voting rights of GEMI Investors until and unless the FCC releases a declaratory ruling granting specific approval for each of the GMEI Investors to hold more than 5 percent of the equity and/or voting interests of the Company.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Tax Matters Agreement

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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.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – INCOME TAXES

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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,

The Company’s income tax benefit (expense) for the three and six months ended June 30, 2021 and the three and six months ended June 30, 2020 consisted of the following components:

(In thousands) Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Current tax expense $ ( 3,477 ) $ ( 1,731 ) $ ( 5,066 ) $ ( 3,436 )

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Income tax benefit (expense) $ ( 24,449 ) $ 43,742 $ ( 104,384 ) $ 194,253

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 effective tax rates for the three and six months ended June 30, 2021 were ( 325.5 )% and ( 61.5 )%, respectively.

The effective tax rates were 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 rates for the three and six months ended June 30, 2020 were 18.1 % and.

9.3 %, respectively.

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

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

NOTE 8 – STOCKHOLDER'S EQUITY

Pursuant to the Company's 2019 Equity Incentive Plan, the Company has granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.

Pursuant to the Company's 2019 Eq uity Incentive Plan, the Company has granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.

On April 21, 2021, our 2021 Long-Term Incentive Award Plan (the “2021 Plan”) was approved by stockholders and replaced the 2019 Plan.

Pursuant to our 2021 Plan, we will grant restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Share-based Compensation

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.

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 5.9 million and $ 4.2 million for the Company for three months ended June 30, 2021 and the three months ended June 30, 2020, respectively.

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 11.6 million and $ 8.8 million for the Company for the six months ended June 30, 2021 and the six months ended June 30, 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 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.

In the three and six months ended June 30, 2021, the Company recognized $ 0.5 million and $ 1.0 million in relation to these Performance RSUs.

As of June 30, 2021, there was $ 48.7 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 2.5 years.

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.

In addition, as of June 30, 2021, there was $ 0.6 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”).

IHEARTMEDIA, INC.

AND SUBSIDIARIES

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:

The following table presents the Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of June 30, 2021:

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

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Total Class A Common Stock, Class B Common Stock and Special Warrants issued 147,263,215

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.

During the three and six months ended June 30, 2021, stockholders converted 5,433,680 and 5,587,725 shares of the Class B common stock into Class A common stock.

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

Special Warrants

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The Communications Act and FCC regulations prohibit foreign entities or individuals from indirectly (i.e., through a parent company) owning or voting more than 25 percent of a licensee’s equity, unless the FCC determines that greater indirect foreign ownership is in the public interest.

As described further in Note 6 above, on July 25, 2019, the Company filed a PDR requesting FCC consent to exceed the 25 percent foreign ownership and voting benchmarks that currently apply to us.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

further in Note 6 above, on July 25, 2019, the Company filed a PDR requesting FCC consent to exceed the 25 percent foreign ownership and voting benchmarks.

On November 5, 2020, the FCC issued the Declaratory Ruling granting the relief requested by the PDR.

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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.

During the three and six months ended June 30, 2021, stockholders exercised 14,694 and 47,136,441 Special Warrants for an equivalent number of shares of Class A common stock, respectively.

There were no Special Warrants exercised for an equivalent number of shares of Class B common stock during the three months ended June 30, 2021.

During the six months ended June 30, 2021, stockholders exercised 22,337,312 Special Warrants for an equivalent number of shares of Class B common stock.

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

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

As further described in Note 6, Commitments and Contingencies above, on March 26, 2021, the Company’s Board resolved to take certain actions to limit the rights of the GMEI Investors 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stockholder Rights Plan

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 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Computation of Loss per Share

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

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

June 30, Six Months Ended

2021 2020 2021 2020

Net loss attributable to the Company – common shares $ ( 32,286 ) $ ( 197,317 ) $ ( 274,009 ) $ ( 1,886,053 )

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Diluted $ ( 0.22 ) $ ( 1.35 ) $ ( 1.87 ) $ ( 12.94 )

(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.

(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 and six months ended June 30, 2021 and 2020.

(2) Outstanding equity awards representing 10.8 million and 7.7 million shares of Class A common stock of the Company for the three months ended June 30, 2021 and 2020, respectively, and 10.8 million and 7.9 million for the six months ended June 30, 2021 and 2020, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

On May 5, 2021, the Company’s short-term stockholder rights plan expired in accordance with its terms and the rights are no longer outstanding.

NOTE 9 – SEGMENT DATA

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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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the Company's segment results for the Company for the three and six months ended June 30, 2021 and 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

Three Months Ended June 30, 2021

Revenue $ 605,850 $ 197,930 $ 61,175 $ — $ ( 3,350 ) $ 861,605

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424,452 143,640 40,704 71,651 ( 3,350 ) 677,097

Adjusted EBITDA (2)

Segment Adjusted EBITDA (2)

$ 181,398 $ 54,290 $ 20,471 $ ( 71,651 ) $ — $ 184,508

Depreciation and amortization ( 127,945 )

Other operating expense, net ( 12,379 )

Restructuring expenses ( 10,155 )

Share-based compensation expense ( 5,903 )

Operating income $ 28,126

Intersegment revenues $ 168 $ 1,178 $ 2,004 $ — $ — $ 3,350

Capital expenditures $ 21,371 $ 6,286 $ 1,144 $ 3,310 $ — $ 32,111

Share-based compensation expense $ — $ — $ — $ 5,903 $ — $ 5,903

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

Three Months Ended June 30, 2020

Revenue $ 357,117 $ 93,227 $ 39,251 $ — $ ( 1,947 ) $ 487,648

Operating expenses (1)

371,498 74,365 39,000 34,015 ( 1,947 ) 516,931

Segment Adjusted EBITDA (2)

$ ( 14,381 ) $ 18,862 $ 251 $ ( 34,015 ) $ — $ ( 29,283 )

Depreciation and amortization ( 103,347 )

Impairment charges ( 5,378 )

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Share-based compensation expense $ — $ — $ — $ 4,218 $ — $ 4,218

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended March 31, 2020

Six Months Ended June 30, 2021

Revenue $ 1,103,747 $ 355,483 $ 116,312 $ — $ ( 7,272 ) $ 1,568,270

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817,558 261,182 80,492 129,555 ( 7,272 ) 1,281,515

Adjusted EBITDA (2)

Segment Adjusted EBITDA (2)

$ 286,189 $ 94,301 $ 35,820 $ ( 129,555 ) $ — $ 286,755

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Share-based compensation expense $ — $ — $ — $ 11,588 $ — $ 11,588

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

Six Months Ended June 30, 2020

Revenue $ 986,726 $ 186,003 $ 99,478 $ — $ ( 3,925 ) $ 1,268,282

Operating expenses (1)

848,963 150,547 81,527 80,114 ( 3,925 ) 1,157,226

Segment Adjusted EBITDA (2)

$ 137,763 $ 35,456 $ 17,951 $ ( 80,114 ) $ — $ 111,056

Depreciation and amortization ( 200,115 )

Impairment charges ( 1,733,235 )

Other operating expense, net ( 1,572 )

Restructuring expenses ( 57,157 )

Share-based compensation expense ( 8,843 )

Operating loss $ ( 1,889,866 )

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

Capital expenditures $ 22,787 $ 6,685 $ 1,623 $ 8,451 $ — $ 39,546

Share-based compensation expense $ — $ — $ — $ 8,843 $ — $ 8,843

(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.

(2) For a definition of Adjusted EBITDA for the consolidated company 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