What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 155 added, 126 removed, 674 unchanged (29% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

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

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

2021 December 31,

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Income tax benefit (expense) 27,147 15,228 ( 77,237 ) 209,481

Net loss ( 31,960 ) ( 197,317 ) ( 274,016 ) ( 1,886,053 )

Net income (loss) 3,673 ( 32,112 ) ( 270,343 ) ( 1,918,165 )

Less amount attributable to noncontrolling interest 493 — 486 —

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

Net income (loss) attributable to the Company $ 3,180 $ ( 32,112 ) $ ( 270,829 ) $ ( 1,918,165 )

Other comprehensive income (loss), net of tax:

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Other comprehensive income (loss), net of tax ( 131 ) 267 ( 387 ) 455

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

Comprehensive income (loss) 3,049 ( 31,845 ) ( 271,216 ) ( 1,917,710 )

Less amount attributable to noncontrolling interest — — — —

Comprehensive loss attributable to the Company $ ( 32,326 ) $ ( 197,025 ) $ ( 274,265 ) $ ( 1,885,865 )

Net loss attributable to the Company per common share:

Comprehensive income (loss) attributable to the Company $ 3,049 $ ( 31,845 ) $ ( 271,216 ) $ ( 1,917,710 )

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

Basic $ 0.02 $ ( 0.22 ) $ ( 1.85 ) $ ( 13.15 )

14 unchanged sentences

Shares Special Warrants Total

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

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

Net income 493 — — 3,180 — — 3,673

Vesting of restricted stock and other

1 unchanged sentence

Share-based compensation — — 5,993 — — — 5,993

Dividend declared and paid to noncontrolling interests ( 188 ) — — — — — ( 188 )

Conversion of Special Warrants to Class A and Class B Shares

4 unchanged sentences

Other comprehensive loss — — — — ( 131 ) — ( 131 )

June 30, 2021

September 30, 2021

119,669,831 22,505,661 5,304,430 $ 8,274 $ 142 $ 2,870,394 $ ( 2,074,449 ) $ ( 193 ) $ ( 6,147 ) $ 798,021

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Shares Special Warrants Total

March 31, 2020

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

6 unchanged sentences

Conversion of Class B Shares to Class A Shares 7,263 ( 7,263 ) — — — — — — —

Other ( 2,982 ) — — — — — — —

Other comprehensive income — — — — 267 — 267

June 30, 2020

September 30, 2020

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

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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 )

Net income (loss) 486 — — ( 270,829 ) — — ( 270,343 )

Vesting of restricted stock and other

4 unchanged sentences

6,718,576 ( 6,718,576 ) — — — — — — —

Cancellation of Special Warrants — — — — — — —

2,982 ( 562 ) — — — — — ( 562 )

Other comprehensive loss — — — — ( 387 ) — ( 387 )

June 30, 2021

September 30, 2021

119,669,831 22,505,661 5,304,430 $ 8,274 $ 142 $ 2,870,394 $ ( 2,074,449 ) $ ( 193 ) $ ( 6,147 ) $ 798,021

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Other comprehensive income — — — — 455 — 455

June 30, 2020

September 30, 2020

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) Six Months Ended June 30,

(In thousands) Nine Months Ended September 30,

Cash flows from operating activities:

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

Decrease in accounts receivable 36,289 314,515

(Increase) decrease in accounts receivable ( 37,776 ) 224,044

Increase in prepaid expenses and other current assets ( 33,486 ) ( 7,228 )

1 unchanged sentence

Increase (decrease) in accounts payable and accrued expenses 74,534 ( 31,343 )

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

Increase (decrease) in accrued interest 1,766 ( 13,959 )

Increase in deferred income 2,500 1,919

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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.

These reporting segments reflect how senior management operates the Company and 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.

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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.

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

The Company's revenue in the latter half of the month ended March 31, 2020, through the remainder of 2020 and into 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 third quarter of 2021 continued to be impacted by the effects of the COVID-19 pandemic, our revenue for both the three months ended June 30, 2021 and September 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.

significantly compared to the three months ended June 30, 2020 and September 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 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.

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

As of September 30, 2021, the Company had approximately $ 369.1 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, the related financial impact cannot be reasonably estimated at this time.

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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) June 30,

(In thousands) September 30,

2021 December 31,

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Restricted cash included in:

Other current assets 426 —

Other assets — 525

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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.

NOTE 2 – REVENUE

Disaggregation of Revenue

The Company is currently evaluating the future impact of adoption of this standard.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2 – REVENUE

Disaggregation of Revenue

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

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

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Revenue from contracts with customers:

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Revenue, total $ 658,979 $ 205,769 $ 66,078 $ ( 2,775 ) $ 928,051

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Revenue from contracts with customers:

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Revenue from contracts with customers:

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Revenue, total $ 1,762,726 $ 561,252 $ 182,390 $ ( 10,047 ) $ 2,496,321

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Revenue from contracts with customers:

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2021 2020 2021 2020

1 unchanged sentence

Trade and barter expenses 33,955 44,109 101,998 116,182

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 Company recognized barter revenue of $ 4.9 million and $ 2.3 million during the three months ended September 30, 2021 and 2020, respectively, and $ 9.4 million and $ 7.5 million during the nine months ended September 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

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(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 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 .

however, as of September 30, 2021, the Company expects to recognize $ 220.5 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 June 30, 2021, the future lease payments to be received by the Company are as follows:

As of September 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 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.

During the nine months ended September 30, 2021, the Company recognized non-cash impairment charges of $ 49.4 million, including $ 38.0 million related to ROU assets, and $ 11.4 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:

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2021 2020

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35,317 41,982

(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.

(1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the nine months ended September 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 $ 49.4 million and $ 52.4 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

The non-cash operating lease expense was $ 75.8 million and $ 78.2 million for the nine months ended September 30, 2021 and September 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 June 30, 2021 and December 31, 2020, respectively:

(In thousands) June 30,

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

(In thousands) September 30,

2021 December 31,

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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.

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

IHEARTMEDIA, INC.

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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.

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

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 used in applying 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 within a market.

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

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.

Other Intangible 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 June 30, 2021 and December 31, 2020, respectively:

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

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

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Total $ 2,339,112 $ ( 609,747 ) $ 2,353,821 $ ( 429,329 )

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.

Total amortization expense related to definite-lived intangible assets for the Company for the three months ended September 30, 2021 and 2020 was $ 64.3 million and $ 64.5 million, respectively.

Total amortization expense related to definite-lived intangible assets for the Company for the nine months ended September 30, 2021 and 2020 was $ 218.0 million and $ 193.0 million, respectively.

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

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Foreign currency — — ( 156 ) ( 156 )

Balance as of June 30, 2021

Balance as of September 30, 2021

$ 1,462,038 $ 747,543 $ 104,243 $ 2,313,824

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

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

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 impairment was recognized as a result of the Company's annual impairment test on goodwill.

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.

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NOTE 5 – LONG-TERM DEBT

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

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

Term Loan Facility due 2026 $ 1,864,032 $ 2,080,259

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Other secured subsidiary debt (2)

21,405 22,753

Total consolidated secured debt 4,320,621 4,600,762

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Total long-term debt $ 5,736,650 $ 5,982,155

(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.

(1) As of September 30, 2021, the senior secured asset-based revolving credit facility (the “ABL Facility”) had a facility size of $ 450.0 million, no outstanding borrowings and $ 28.5 million of outstanding letters of credit, resulting in $ 421.5 million of borrowing base availability.

(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 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.

The Company’s weighted average interest rate was 5.4 % and 5.5 % as of September 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 $ 5.9 billion and $ 6.2 billion as of September 30, 2021 and December 31, 2020, respectively.

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.

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("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 amendment reduced 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.

In connection with the amendment, iHeartCommunications voluntarily prepaid $ 250.0 million of borrowings outstanding under

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

Following the prepayment of $ 250.0 million of borrowings outstanding under the Term Loan credit facilities on July 16, 2021, iHeartCommunications is no longer required to make such quarterly payments.

Mandatorily Redeemable Preferred Stock

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

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.

Holders of the iHeart Operations Preferred Stock are entitled to receive, as declared by the board of directors of iHeart Operations, in respect of each share, cumulative dividends accruing daily and payable quarterly.

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 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.

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, 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.

On the tenth anniversary of the issue date, the shares of iHeart Operations Preferred Stock will be subject to mandatory redemption for an amount equal to the liquidation preference.

As of September 30, 2021, the liquidation preference of the iHeart Operations Preferred Stock was $ 60.0 million.

The iHeart Operations Preferred Stock was mandatorily redeemable for cash at a date certain and therefore is classified as a liability in the Company's balance sheet.

On October 27, 2021, iHeart Operations repurchased all of the iHeart Operations Preferred Stock with cash on hand for an aggregate price of $ 64.4 million (“Redemption Price”), including accrued dividends, upon obtaining consent from the third party investor.

The Redemption Price included a negotiated make-whole premium as the redemption occurred prior to the optional redemption date set forth in the Certificate of Designation governing the iHeart Operations Preferred Stock.

Subsequent to the transaction, the preferred shares were retired and cancelled and are no longer outstanding.

Holders of the iHeart Operations Preferred Stock were entitled to receive, as declared by the board of directors of iHeart Operations, in respect of each share, cumulative dividends accruing daily and payable quarterly.

Dividends were 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 September 30, 2021 and 2020 the Company recognized $ 2.3 million and $ 2.7 million, respectively, of interest expense related to dividends on mandatorily redeemable preferred stock.

During the nine months ended September 30, 2021 and 2020 the Company recognized $ 6.9 million and $ 6.9 million, respectively, of interest expense related to dividends on mandatorily redeemable preferred stock.

Surety Bonds, Letters of Credit and Guarantees

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.

As of September 30, 2021, the Company and its subsidiaries had outstanding surety bonds, commercial standby letters of credit and bank guarantees of $ 8.8 million, $ 28.9 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.

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intellectual property claims;

real estate maters;

real estate matters;

governmental investigations;

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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.

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

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

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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 and six months ended June 30, 2021 and the three and six months ended June 30, 2020 consisted of the following components:

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

(In thousands) Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Income tax benefit (expense) $ 27,147 $ 15,228 $ ( 77,237 ) $ 209,481

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 effective tax rates for the three and nine months ended September 30, 2021 were 115.6 % and ( 40.0 )%, respectively.

The effective tax rates were primarily impacted by the forecasted increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods.

The effective tax rates for the three and nine months ended September 30, 2020 were 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.

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 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.

Pursuant to the Company's 2019 Eq uity Incentive Plan (the "2019 Plan"), the Company historically 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.

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

IHEARTMEDIA, INC.

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Share-based Compensation

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.

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 6.0 million and $ 5.9 million for the Company for the three months ended September 30, 2021 and the three months ended September 30, 2020, respectively.

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 17.6 million and $ 14.7 million for the Company for the nine months ended September 30, 2021 and September 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 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.

In the three and nine months ended September 30, 2021, the Company recognized $ 0.4 million and $ 1.4 million in relation to these Performance RSUs.

In the three and nine months ended September 30, 2020, the Company recognized $ 1.1 million in relation to these Performance RSUs.

As of September 30, 2021, there was $ 45.0 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 2.3 years.

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.

In addition, as of September 30, 2021, there was $ 0.3 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 Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of June 30, 2021:

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

September 30,

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 147,479,922

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.

During the three and nine months ended September 30, 2021, stockholders converted 1,130,851 and 6,718,576 shares of the Class B common stock into Class A common stock.

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.

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.

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.

Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and

IHEARTMEDIA, INC.

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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.

certifications required under the special warrant agreement.

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.

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

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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.

Risk Factors - 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 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.

During the three and nine months ended September 30, 2021, stockholders exercised 60,698 and 47,197,139 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 September 30, 2021.

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

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.

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.

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.

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

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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

Net income (loss) attributable to the Company – common shares $ 3,180 $ ( 32,112 ) $ ( 270,829 ) $ ( 1,918,165 )

DENOMINATOR (1) :

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Weighted average common shares outstanding - diluted 150,397 146,152 146,591 145,911

Net loss attributable to the Company per common share:

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

Basic $ 0.02 $ ( 0.22 ) $ ( 1.85 ) $ ( 13.15 )

Diluted $ 0.02 $ ( 0.22 ) $ ( 1.85 ) $ ( 13.15 )

(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.

(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 nine months ended September 30, 2021 and 2020.

(2) Outstanding equity awards representing 0.3 million and 9.6 million shares of Class A common stock of the Company for the three months ended September 30, 2021 and 2020, respectively, and 10.6 million and 8.5 million for the nine months ended September 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.

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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:

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

Three Months Ended September 30, 2021

Revenue $ 658,979 $ 205,769 $ 66,078 $ — $ ( 2,775 ) $ 928,051

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Depreciation and amortization ( 108,100 )

Impairment charges ( 11,647 )

Other operating expense, net ( 12,341 )

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

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Revenue $ 555,097 $ 116,200 $ 75,039 $ — $ ( 1,930 ) $ 744,406

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Depreciation and amortization ( 99,379 )

Impairment charges ( 5,378 )

Other operating expense, net ( 1,675 )

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Share-based compensation expense ( 5,885 )

Operating loss $ ( 159,087 )

Operating income $ 39,395

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

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Revenue $ 1,762,726 $ 561,252 $ 182,390 $ — $ ( 10,047 ) $ 2,496,321

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Share-based compensation expense ( 17,581 )

Operating loss $ ( 48,230 )

Operating income $ 31,881

Intersegment revenues $ 447 $ 4,547 $ 5,053 $ — $ — $ 10,047

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

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Revenue $ 1,541,823 $ 302,203 $ 174,517 $ — $ ( 5,855 ) $ 2,012,688

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(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 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.

(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 Income (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