iHeartMedia, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) March 31, 2022 December 31, 2021 (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 279,683 $ 352,129 Accounts receivable, net of allowance of $ 28,544 in 2022 and $ 29,270 in 2021 906,901 1,030,380 Prepaid expenses 86,191 65,927 Other current assets 43,122 24,431 Total Current Assets 1,315,897 1,472,867 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net 749,141 782,093 INTANGIBLE ASSETS AND GOODWILL Indefinite-lived intangibles - licenses 1,777,993 1,778,045 Other intangibles, net 1,603,513 1,666,600 Goodwill 2,313,491 2,313,581 OTHER ASSETS Operating lease right-of-use assets 727,103 741,410 Other assets 139,874 126,713 Total Assets $ 8,627,012 $ 8,881,309 CURRENT LIABILITIES Accounts payable $ 156,875 $ 206,007 Current operating lease liabilities 82,898 88,585 Accrued expenses 221,143 353,045 Accrued interest 69,812 67,983 Deferred revenue 156,399 133,123 Current portion of long-term debt 719 673 Total Current Liabilities 687,846 849,416 Long-term debt 5,739,421 5,738,195 Noncurrent operating lease liabilities 727,143 738,814 Deferred income taxes 534,432 558,222 Other long-term liabilities 66,149 80,897 Commitments and contingent liabilities (Note 6) STOCKHOLDERS’ EQUITY Noncontrolling interest 8,066 8,410 Preferred stock, par value $ .001 per share, 100,000,000 shares authorized, no shares issued and outstanding — — Class A Common Stock, par value $ .001 per share, authorized 1,000,000,000 shares, issued 121,402,390 and 120,633,937 shares in 2022 and 2021, respectively 122 120 Class B Common Stock, par value $ .001 per share, authorized 1,000,000,000 shares, issued 21,430,500 and 21,590,192 shares in 2022 and 2021, respectively 21 22 Special Warrants, 5,293,069 and 5,304,430 issued and outstanding in 2022 and 2021, respectively — — Additional paid-in capital 2,882,515 2,876,571 Accumulated deficit ( 2,011,401 ) ( 1,962,819 ) Accumulated other comprehensive loss ( 504 ) ( 257 ) Cost of shares ( 414,950 in 2022 and 389,814 in 2021) held in treasury ( 6,798 ) ( 6,282 ) Total Stockholders' Equity 872,021 915,765 Total Liabilities and Stockholders' Equity $ 8,627,012 $ 8,881,309 See Notes to Consolidated Financial Statements 1 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (In thousands, except per share data) Three Months Ended March 31, 2022 2021 Revenue $ 843,458 $ 706,665 Operating expenses: Direct operating expenses (excludes depreciation and amortization) 330,524 292,813 Selling, general and administrative expenses (excludes depreciation and amortization) 384,344 342,330 Depreciation and amortization 114,051 107,363 Impairment charges 1,334 37,744 Other operating expense, net 870 2,771 Operating income (loss) 12,335 ( 76,356 ) Interest expense, net 79,219 85,121 Gain (loss) on investments, net ( 1,765 ) 191 Equity in loss of nonconsolidated affiliates ( 29 ) ( 28 ) Other expense, net ( 270 ) ( 807 ) Loss before income taxes ( 68,948 ) ( 162,121 ) Income tax benefit (expense) 20,209 ( 79,935 ) Net loss ( 48,739 ) ( 242,056 ) Less amount attributable to noncontrolling interest ( 157 ) ( 333 ) Net loss attributable to the Company $ ( 48,582 ) $ ( 241,723 ) Other comprehensive loss, net of tax: Foreign currency translation adjustments ( 247 ) ( 216 ) Other comprehensive loss, net of tax ( 247 ) ( 216 ) Comprehensive loss ( 48,829 ) ( 241,939 ) Less amount attributable to noncontrolling interest — — Comprehensive loss attributable to the Company $ ( 48,829 ) $ ( 241,939 ) Net loss attributable to the Company per common share: Basic $ ( 0.33 ) $ ( 1.65 ) Weighted average common shares outstanding - Basic 147,513 146,214 Diluted $ ( 0.33 ) $ ( 1.65 ) Weighted average common shares outstanding - Diluted 147,513 146,214 See Notes to Consolidated Financial Statements 2 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (In thousands, except share data) Controlling Interest Common Shares (1) Non- controlling Interest Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Treasury Stock Class A Shares Class B Shares Special Warrants Total Balances at December 31, 2021 120,633,937 21,590,192 5,304,430 $ 8,410 $ 142 $ 2,876,571 $ ( 1,962,819 ) $ ( 257 ) $ ( 6,282 ) $ 915,765 Net loss ( 157 ) — — ( 48,582 ) — — ( 48,739 ) Vesting of restricted stock and other 597,400 — 1 409 — — ( 516 ) ( 106 ) Share-based compensation — — 5,535 — — — 5,535 Conversion of Special Warrants to Class A and Class B Shares 11,361 ( 11,361 ) — — — — — — — Conversion of Class B Shares to Class A Shares 159,692 ( 159,692 ) — — — — — — — Other ( 187 ) — — — — — ( 187 ) Other comprehensive loss — — — — ( 247 ) — ( 247 ) Balances at March 31, 2022 121,402,390 21,430,500 5,293,069 $ 8,066 $ 143 $ 2,882,515 $ ( 2,011,401 ) $ ( 504 ) $ ( 6,798 ) $ 872,021 (1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2022. See Notes to Consolidated Financial Statements 3 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (In thousands, except share data) Controlling Interest Common Shares (1) Non- controlling Interest Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Treasury Stock Class A Shares Class B Shares Special Warrants Total Balances at 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 Net loss ( 333 ) — — ( 241,723 ) — — ( 242,056 ) Vesting of restricted stock and other 30,372 — — 11 — — ( 103 ) ( 92 ) Share-based compensation — — 5,685 — — — 5,685 Dividend declared and paid to noncontrolling interests ( 187 ) — — — — — ( 187 ) Conversion of Special Warrants to Class A and Class B Shares 47,121,747 22,337,312 ( 69,459,059 ) — 69 ( 69 ) — — — — Conversion of Class B Shares to Class A Shares 154,045 ( 154,045 ) — — — — — — — Other 2,982 — — — — — — — Other comprehensive loss — — — — ( 216 ) — ( 216 ) Balances at March 31, 2021 112,033,028 29,070,192 5,379,822 $ 7,830 $ 141 $ 2,854,647 $ ( 2,045,343 ) $ ( 22 ) $ ( 3,302 ) $ 813,951 (1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2021. See Notes to Consolidated Financial Statements 4 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three Months Ended March 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 48,739 ) $ ( 242,056 ) Reconciling items: Impairment charges 1,334 37,744 Depreciation and amortization 114,051 107,363 Deferred taxes ( 23,788 ) 78,346 Provision for doubtful accounts 2,111 5,846 Amortization of deferred financing charges and note discounts, net 1,439 1,519 Share-based compensation 5,535 5,685 Loss on disposal of operating and other assets 584 952 (Gain) Loss on investments 1,765 ( 191 ) Equity in loss of nonconsolidated affiliates 29 28 Barter and trade income ( 7,021 ) ( 2,244 ) Other reconciling items, net 242 260 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Decrease in accounts receivable 121,339 113,170 Increase in prepaid expenses and other current assets ( 39,983 ) ( 35,647 ) Increase in other long-term assets ( 2,610 ) ( 3,317 ) Decrease in accounts payable ( 49,129 ) ( 7,423 ) Decrease in accrued expenses ( 151,853 ) ( 9,521 ) Increase in accrued interest 1,829 1,789 Increase in deferred income 19,602 18,881 Increase in other long-term liabilities 1,051 544 Cash provided by (used for) operating activities ( 52,212 ) 71,728 Cash flows from investing activities: Business combinations — ( 230,816 ) Purchases of property, plant and equipment ( 22,557 ) ( 18,950 ) Proceeds from disposal of assets 6,009 572 Change in other, net ( 3,142 ) ( 130 ) Cash used for investing activities ( 19,690 ) ( 249,324 ) Cash flows from financing activities: Payments on long-term debt and credit facilities ( 168 ) ( 13,547 ) Change in other, net ( 293 ) ( 264 ) Cash used for financing activities ( 461 ) ( 13,811 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 83 ) ( 122 ) Net decrease in cash, cash equivalents and restricted cash ( 72,446 ) ( 191,529 ) Cash, cash equivalents and restricted cash at beginning of period 352,554 721,187 Cash, cash equivalents and restricted cash at end of period $ 280,108 $ 529,658 SUPPLEMENTAL DISCLOSURES: Cash paid for interest $ 76,104 $ 82,833 Cash paid for income taxes 1,123 — See Notes to Consolidated Financial Statements 5 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 – BASIS OF PRESENTATION Preparation of Interim Financial Statements All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to iHeartMedia, Inc. and its consolidated subsidiaries. The accompanying consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The Company's reportable segments are: ▪ the Multiplatform Group, which includes the Company's Broadcast radio, Networks and Sponsorships and Events businesses; ▪ the Digital Audio Group, which includes all of the Company's Digital businesses, including Podcasting; and ▪ 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. The consolidated financial statements include the accounts of the Company and its subsidiaries. Also included in the consolidated financial statements are entities for which the Company has a controlling interest or is the primary beneficiary. Investments in companies which the Company does not control, but exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process. COVID-19 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. Beginning in March 2020 and continuing through the remainder of 2020 and into 2021 revenue was significantly and negatively impacted as a result of a decline in advertising spend driven by COVID-19. As a result of continued recovery from the impact of COVID-19, our revenue for the three months ended March 31, 2022 increased significantly compared to the three months ended March 31, 2021 across each of our reportable segments. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES Act”) was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company was able to defer the payment of $ 29.3 million in certain employment taxes during 2020, half of which was due and paid on January 3, 2022 and the other half will be due on January 3, 2023. In addition, the Company claimed $ 12.4 million in refundable payroll tax credits related to the CARES Act provisions, of which $ 0.7 million was received in 2020, $ 3.8 million was received in 2021 and $ 7.9 million was received in January 2022. As of March 31, 2022, the Company had approximately $ 279.7 million in cash and cash equivalents. While the effects of COVID-19 may 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. Reclassifications Certain prior period amounts have been reclassified to conform to the 2022 presentation. 6 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts reported in the Consolidated Statements of Cash Flows: (In thousands) March 31, 2022 December 31, 2021 Cash and cash equivalents $ 279,683 $ 352,129 Restricted cash included in: Other current assets 425 425 Total cash, cash equivalents and restricted cash in the Statement of Cash Flows $ 280,108 $ 352,554 Certain Relationships and Related Party Transactions From time to time, certain companies in which the Company holds minority equity interests, purchase advertising in the ordinary course. None of these ordinary course transactions have a material impact on the Company. New Accounting Pronouncements Recently Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of the Interbank Offered Rate Transition on Financial Reporting to provide optional relief from applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. In addition, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) – Scope, to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the future impact of adoption of this standard. New Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification 606. The amendments of ASU 2021-08 are effective for interim and annual periods beginning after December 15, 2022. The Company is currently evaluating the future impact of adoption of this standard. 7 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 – REVENUE Disaggregation of Revenue The following tables show revenue streams for the three months ended March 31, 2022 and 2021: (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Eliminations Consolidated Three Months Ended March 31, 2022 Revenue from contracts with customers: Broadcast Radio (1) $ 416,481 $ — $ — $ — $ 416,481 Networks (2) 117,558 . — — 117,558 Sponsorship and Events (3) 33,601 — — — 33,601 Digital, excluding Podcast (4) — 145,675 — ( 1,269 ) 144,406 Podcast (5) — 68,544 — — 68,544 Audio & Media Services (6) — — 60,857 ( 1,341 ) 59,516 Other (7) 3,230 — — ( 168 ) 3,062 Total 570,870 214,219 60,857 ( 2,778 ) 843,168 Revenue from leases (8) 290 — — — 290 Revenue, total $ 571,160 $ 214,219 $ 60,857 $ ( 2,778 ) $ 843,458 Three Months Ended March 31, 2021 Revenue from contracts with customers: Broadcast Radio (1) $ 358,536 $ — $ — $ — $ 358,536 Networks (2) 115,086 — — — 115,086 Sponsorship and Events (3) 22,393 — — — 22,393 Digital, excluding Podcast (4) — 119,201 — ( 1,894 ) 117,307 Podcast (5) — 38,352 — — 38,352 Audio & Media Services (6) — — 55,137 ( 1,861 ) 53,276 Other (7) 1,399 — — ( 167 ) 1,232 Total 497,414 157,553 55,137 ( 3,922 ) 706,182 Revenue from leases (8) 483 — — — 483 Revenue, total $ 497,897 $ 157,553 $ 55,137 $ ( 3,922 ) $ 706,665 (1) Broadcast Radio revenue is generated through the sale of advertising time on the Company’s domestic radio stations. (2) Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies. (3) Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent. (4) Digital, excluding Podcast revenue is generated through the sale of streaming and display advertisements on digital platforms and through subscriptions to iHeartRadio streaming services. (5) Podcast revenue is generated through the sale of advertising on the Company's podcast network. (6) Audio & Media Services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast software and media streaming, along with research services for radio stations, broadcast television stations, cable channels, record labels, ad agencies and Internet stations worldwide. (7) Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements. (8) Revenue from leases is primarily generated by the lease of towers to other media companies, which are all categorized as operating leases. 8 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Trade and Barter Trade and barter transactions represent the exchange of advertising spots for merchandise, services, advertising and promotion or other assets in the ordinary course of business. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised to the customer. Trade and barter revenues and expenses, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows: Three Months Ended March 31, (In thousands) 2022 2021 Trade and barter revenues $ 47,369 $ 31,946 Trade and barter expenses 46,415 27,998 The Company recognized barter revenue of $ 7.0 million and $ 2.2 million during the three months ended March 31, 2022 and 2021, respectively, in connection with investments made in companies in exchange for advertising services. The following tables show the Company’s deferred revenue balance from contracts with customers: Three Months Ended March 31, (In thousands) 2022 2021 Deferred revenue from contracts with customers: Beginning balance (1) $ 161,114 $ 145,493 Revenue recognized, included in beginning balance ( 60,389 ) ( 39,531 ) Additions, net of revenue recognized during period, and other 83,331 59,379 Ending balance $ 184,056 $ 165,341 (1) Deferred revenue from contracts with customers, which excludes other sources of deferred revenue that are not related to contracts with customers, is included within deferred revenue and other long-term liabilities on the Consolidated Balance Sheets, depending upon when revenue is expected to be recognized. The Company’s contracts with customers generally have terms of one year or less; however, as of March 31, 2022, the Company expects to recognize $ 395.1 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. 9 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Revenue from Leases As of March 31, 2022, the future lease payments to be received by the Company are as follows: (In thousands) 2022 $ 750 2023 789 2024 610 2025 426 2026 328 Thereafter 1,528 Total $ 4,431 NOTE 3 – LEASES The Company enters into operating lease contracts for land, buildings, structures and other equipment. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases primarily include land and building lease contracts and leases of radio towers. Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers. Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use assets ("ROU assets") and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively. The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term. 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, 2022, the Company recognized non-cash impairment charges of $ 1.3 million, including $ 1.2 million related to ROU assets, and $ 0.1 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 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 also as a result of the proactive decisions by management discussed above. The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. 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." 10 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table provides supplemental cash flow information related to leases for the periods presented: Three Months Ended March 31, (In thousands) 2022 2021 Cash paid for amounts included in measurement of operating lease liabilities $ 43,265 $ 29,951 Lease liabilities arising from obtaining right-of-use assets (1) 7,586 8,276 (1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the three months ended March 31, 2022 and 2021, 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 $ 23.4 million and $ 24.8 million for the three months ended March 31, 2022 and March 31, 2021, respectively. NOTE 4– PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL Property, Plant and Equipment The Company’s property, plant and equipment consisted of the following classes of assets as of March 31, 2022 and December 31, 2021, respectively: (In thousands) March 31, 2022 December 31, 2021 Land, buildings and improvements $ 344,978 $ 355,474 Towers, transmitters and studio equipment 185,092 180,571 Computer equipment and software 541,147 521,872 Furniture and other equipment 37,522 35,390 Construction in progress 65,715 64,732 1,174,454 1,158,039 Less: accumulated depreciation 425,313 375,946 Property, plant and equipment, net $ 749,141 $ 782,093 Indefinite-lived Intangible Assets The Company’s indefinite-lived intangible assets consist of Federal Communications Commission ("FCC") broadcast licenses in its Multiplatform Group segment. Other Intangible Assets Other intangible assets consists of definite-lived intangible assets, which primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets. These assets are recorded at amortized cost. 11 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of March 31, 2022 and December 31, 2021, respectively: (In thousands) March 31, 2022 December 31, 2021 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Customer / advertiser relationships $ 1,646,402 $ ( 502,652 ) $ 1,646,402 $ ( 459,620 ) Talent and other contracts 338,900 ( 128,184 ) 338,900 ( 117,337 ) Trademarks and tradenames 335,862 ( 96,790 ) 335,862 ( 88,252 ) Other 17,794 ( 7,819 ) 17,794 ( 7,149 ) Total $ 2,338,958 $ ( 735,445 ) $ 2,338,958 $ ( 672,358 ) Total amortization expense related to definite-lived intangible assets for the Company for the three months ended March 31, 2022 and 2021 was $ 63.1 million and $ 66.3 million, respectively. As acquisitions and dispositions occur in the future, amortization expense may vary. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets: (In thousands) 2023 $ 244,387 2024 243,194 2025 212,001 2026 200,251 2027 176,171 Goodwill The following table presents the changes in the carrying amount of goodwill: (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Consolidated Balance as of January 1, 2021 $ 1,462,217 $ 579,319 $ 104,399 $ 2,145,935 Acquisitions 1,267 168,031 — 169,298 Dispositions ( 1,446 ) — — ( 1,446 ) Foreign currency — — ( 206 ) ( 206 ) Balance as of December 31, 2021 $ 1,462,038 $ 747,350 $ 104,193 $ 2,313,581 Dispositions ( 15 ) — — ( 15 ) Foreign currency — — ( 75 ) ( 75 ) Balance as of March 31, 2022 $ 1,462,023 $ 747,350 $ 104,118 $ 2,313,491 12 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 5 – LONG-TERM DEBT Long-term debt outstanding for the Company as of March 31, 2022 and December 31, 2021 consisted of the following: (In thousands) March 31, 2022 December 31, 2021 Term Loan Facility due 2026 $ 1,864,032 $ 1,864,032 Incremental Term Loan Facility due 2026 401,220 401,220 Asset-based Revolving Credit Facility due 2023 (1) — — 6.375 % Senior Secured Notes due 2026 800,000 800,000 5.25 % Senior Secured Notes due 2027 750,000 750,000 4.75 % Senior Secured Notes due 2028 500,000 500,000 Other secured subsidiary debt (2) 5,184 5,350 Total consolidated secured debt 4,320,436 4,320,602 8.375 % Senior Unsecured Notes due 2027 1,450,000 1,450,000 Other unsecured subsidiary debt 90 90 Original issue discount ( 12,745 ) ( 13,454 ) Long-term debt fees ( 17,641 ) ( 18,370 ) Total debt 5,740,140 5,738,868 Less: Current portion 719 673 Total long-term debt $ 5,739,421 $ 5,738,195 (1) As of March 31, 2022, the senior secured asset-based revolving credit facility (the “ABL Facility”) had a borrowing base of $ 443.6 million, no outstanding borrowings and $ 26.9 million of outstanding letters of credit, resulting in $ 416.7 million of borrowing base availability. (2) Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2023 through 2045. The Company’s weighted average interest rate was 5.5 % and 5.4 % as of March 31, 2022 and December 31, 2021, respectively. The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $ 5.8 billion and $ 5.9 billion as of March 31, 2022 and December 31, 2021, 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. Surety Bonds, Letters of Credit and Guarantees As of March 31, 2022, the Company and its subsidiaries had outstanding surety bonds, commercial standby letters of credit and bank guarantees of $ 8.4 million, $ 27.3 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 The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. 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. Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts: commercial/contract disputes; defamation matters; employment and benefits related claims; intellectual property claims; real estate matters; governmental investigations; and tax disputes. 13 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 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, which granted the relief requested by the PDR, subject to certain conditions, as described further in Note 8, Stockholders' Equity (the "2020 Declaratory Ruling"). On January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants (refer to Note 6, Stockholders' Equity , for further discussion of the "Special Warrants") into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules (the “Exchange”). Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock. 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 Investments Ltd (f/k/a Honeycomb Investments Limited) (“Global Investments”) of the Company’s Class A Common Stock in a manner inconsistent with the FCC’s foreign ownership rules and the 2020 Declaratory Ruling. On December 22, 2021, the FCC issued another declaratory ruling which granted the Remedial PDR (the "GMEI Declaratory Ruling"). Subject to certain conditions set forth therein, the GMEI Declaratory Ruling (a) grants specific approval for the more than 5 % equity and/or voting interests in the Company presently held by the GMEI Investors, (b) grants advance approval for the GMEI Investors to increase their equity and/or voting interests in the Company up to any non-controlling amount not to exceed 14.99 %, and (c) restates the terms of the 2020 Declaratory Ruling, including that the Company may have up to 100 % of its voting stock and equity owned by non-U.S. individuals and entities. At such time, the actions previously taken by the Board of Directors to implement the conditions required by the FCC during the pendency of the Remedial PDR ceased to apply. NOTE 7 – INCOME TAXES On March 11, 2021 the President signed into law the American Rescue Plan Act, which included provisions on taxes, health care, unemployment benefits, direct payments, state and local funding and other issues. The tax provisions did 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, 2022 and the three months ended March 31, 2021 consisted of the following components: (In thousands) Three Months Ended March 31, 2022 2021 Current tax expense $ ( 3,579 ) $ ( 1,589 ) Deferred tax benefit (expense) 23,788 ( 78,346 ) Income tax benefit (expense) $ 20,209 $ ( 79,935 ) The effective tax rates for the three months ended March 31, 2022 and March 31, 2021 were 29.3 % and ( 49.3 )%, 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 and net operating loss carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods. NOTE 8 – STOCKHOLDERS' EQUITY 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, 14 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 continue to grant restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals. Share-based Compensation Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 5.5 million and $ 5.7 million for the Company for the three months ended March 31, 2022 and the three months ended March 31, 2021, 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 were 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. On March 28, 2022, the Company issued performance-based restricted stock units (“2022 Performance RSUs”) to certain key employees. Such 2022 Performance RSUs vest upon the achievement of total stockholder return goals and continued service, which are being measured over an approximately 50-month period from the date of issuance. As of March 31, 2022, there was $ 34.0 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 1.9 years. In addition, as of March 31, 2022, there was $ 12.5 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on certain performance and service conditions. This cost will be recognized over a 50-month period from the date of issuance. 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 as of March 31, 2022: March 31, 2022 Class A Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized 121,402,390 Class B Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized 21,430,500 Special Warrants 5,293,069 Total Class A Common Stock, Class B Common Stock and Special Warrants issued 148,125,959 During the three months ended March 31, 2022, stockholders converted 159,692 shares of the Class B common stock into Class A common stock. During the three months ended March 31, 2021, stockholders converted 154,045 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 emergence from bankruptcy in 2019 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, 15 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (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. 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. During the three months ended March 31, 2022, stockholders exercised 11,361 Special Warrants for an equivalent number of shares of Class A common stock. There were no Special Warrants exercised for an equivalent number of shares of Class B common stock during the three months ended March 31, 2022. 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. Computation of Loss per Share (In thousands, except per share data) Three Months Ended March 31, 2022 2021 NUMERATOR: Net loss attributable to the Company – common shares $ ( 48,582 ) $ ( 241,723 ) DENOMINATOR (1) : Weighted average common shares outstanding - basic 147,513 146,214 Stock options and restricted stock (2) : — — Weighted average common shares outstanding - diluted 147,513 146,214 Net loss attributable to the Company per common share: Basic $ ( 0.33 ) $ ( 1.65 ) Diluted $ ( 0.33 ) $ ( 1.65 ) (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, 2022 and 2021. (2) Outstanding equity awards representing 10.0 million and 10.7 million shares of Class A common stock of the Company for the three months ended March 31, 2022 and 2021, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive. NOTE 9 – SEGMENT DATA The Company’s primary businesses are included in its Multiplatform Group and Digital Audio Group segments. Revenue and expenses earned and charged between Multiplatform Group, Digital Audio Group, Corporate and the Company's Audio & Media Services Group are eliminated in consolidation. The Multiplatform Group provides media and entertainment services via broadcast delivery and also includes the Company’s events and national syndication businesses. The Digital Audio Group provides media and entertainment services via digital delivery. The Audio & Media Services Group provides other audio and media services, including the Company’s media representation business (Katz Media) and its provider of scheduling and broadcast software (RCS). Corporate includes infrastructure and support, including executive, information technology, human resources, legal, finance and administrative functions for the Company’s businesses. Share-based payments are recorded in Selling, general and administrative expense. 16 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following tables present the Company's segment results for the Company for the three months ended March 31, 2022 and 2021: Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Three Months Ended March 31, 2022 Revenue $ 571,160 $ 214,219 $ 60,857 $ — $ ( 2,778 ) $ 843,458 Operating expenses (1) 437,253 161,711 44,470 57,584 ( 2,778 ) 698,240 Segment Adjusted EBITDA (2) $ 133,907 $ 52,508 $ 16,387 $ ( 57,584 ) $ — $ 145,218 Depreciation and amortization ( 114,051 ) Impairment charges ( 1,334 ) Other operating expense, net ( 870 ) Restructuring expenses ( 11,093 ) Share-based compensation expense ( 5,535 ) Operating income $ 12,335 Intersegment revenues $ 168 $ 1,269 $ 1,341 $ — $ — $ 2,778 Capital expenditures $ 12,338 $ 5,156 $ 1,699 $ 3,364 $ — $ 22,557 Share-based compensation expense $ — $ — $ — $ 5,535 $ — $ 5,535 Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Three Months Ended March 31, 2021 Revenue $ 497,897 $ 157,553 $ 55,137 $ — $ ( 3,922 ) $ 706,665 Operating expenses (1) 393,106 117,542 39,788 57,904 ( 3,922 ) 604,418 Segment Adjusted EBITDA (2) $ 104,791 $ 40,011 $ 15,349 $ ( 57,904 ) $ — $ 102,247 Depreciation and amortization ( 107,363 ) Impairment charges ( 37,744 ) Other operating expense, net ( 2,771 ) Restructuring expenses ( 25,040 ) Share-based compensation expense ( 5,685 ) Operating loss $ ( 76,356 ) Intersegment revenues $ 167 $ 1,894 $ 1,861 $ — $ — $ 3,922 Capital expenditures $ 10,069 $ 5,425 $ 1,047 $ 2,409 $ — $ 18,950 Share-based compensation expense $ — $ — $ — $ 5,685 $ — $ 5,685 (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 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. 17