iHeartMedia, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) September 30, 2022 December 31, 2021 (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 295,399 $ 352,129 Accounts receivable, net of allowance of $ 27,405 in 2022 and $ 29,270 in 2021 981,144 1,030,380 Prepaid expenses 113,718 65,927 Other current assets 18,316 24,431 Total Current Assets 1,408,577 1,472,867 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net 692,321 782,093 INTANGIBLE ASSETS AND GOODWILL Indefinite-lived intangibles - licenses and other 1,476,319 1,778,045 Other intangibles, net 1,477,342 1,666,600 Goodwill 2,313,182 2,313,581 OTHER ASSETS Operating lease right-of-use assets 791,804 741,410 Other assets 170,154 126,713 Total Assets $ 8,329,699 $ 8,881,309 CURRENT LIABILITIES Accounts payable $ 204,916 $ 206,007 Current operating lease liabilities 48,088 88,585 Accrued expenses 271,852 353,045 Accrued interest 63,458 67,983 Deferred revenue 151,065 133,123 Current portion of long-term debt 665 673 Total Current Liabilities 740,044 849,416 Long-term debt 5,553,049 5,738,195 Noncurrent operating lease liabilities 850,412 738,814 Deferred income taxes 526,928 558,222 Other long-term liabilities 66,456 80,897 Commitments and contingent liabilities (Note 6) STOCKHOLDERS’ EQUITY Noncontrolling interest 9,059 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 122,341,086 and 120,633,937 shares in 2022 and 2021, respectively 123 120 Class B Common Stock, par value $ .001 per share, authorized 1,000,000,000 shares, issued 21,479,356 and 21,590,192 shares in 2022 and 2021, respectively 21 22 Special Warrants, 5,111,312 and 5,304,430 issued and outstanding in 2022 and 2021, respectively — — Additional paid-in capital 2,901,625 2,876,571 Accumulated deficit ( 2,307,363 ) ( 1,962,819 ) Accumulated other comprehensive loss ( 1,760 ) ( 257 ) Cost of shares ( 593,032 in 2022 and 389,814 in 2021) held in treasury ( 8,895 ) ( 6,282 ) Total Stockholders' Equity 592,810 915,765 Total Liabilities and Stockholders' Equity $ 8,329,699 $ 8,881,309 See Notes to Consolidated Financial Statements 1 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue $ 988,930 $ 928,051 $ 2,786,393 $ 2,496,321 Operating expenses: Direct operating expenses (excludes depreciation and amortization) 371,719 325,766 1,067,625 939,094 Selling, general and administrative expenses (excludes depreciation and amortization) 399,892 390,086 1,163,293 1,105,056 Depreciation and amortization 109,305 108,100 334,144 343,408 Impairment charges 309,750 11,647 311,329 49,391 Other operating expense, net 9,451 12,341 25,985 27,491 Operating income (loss) ( 211,187 ) 80,111 ( 115,983 ) 31,881 Interest expense, net 87,890 82,481 248,603 252,489 Gain (loss) on investments, net ( 3,466 ) ( 10,367 ) 4,359 39,468 Equity in loss of nonconsolidated affiliates ( 132 ) ( 1,056 ) ( 190 ) ( 1,115 ) Gain (loss) on extinguishment of debt 6,892 ( 7,896 ) 15,095 ( 7,896 ) Other expense, net ( 581 ) ( 1,785 ) ( 3,026 ) ( 2,955 ) Loss before income taxes ( 296,364 ) ( 23,474 ) ( 348,348 ) ( 193,106 ) Income tax benefit (expense) ( 13,412 ) 27,147 5,015 ( 77,237 ) Net income (loss) ( 309,776 ) 3,673 ( 343,333 ) ( 270,343 ) Less amount attributable to noncontrolling interest 587 493 1,211 486 Net income (loss) attributable to the Company $ ( 310,363 ) $ 3,180 $ ( 344,544 ) $ ( 270,829 ) Other comprehensive loss, net of tax: Foreign currency translation adjustments ( 606 ) ( 131 ) ( 1,503 ) ( 387 ) Other comprehensive loss, net of tax ( 606 ) ( 131 ) ( 1,503 ) ( 387 ) Comprehensive income (loss) ( 310,969 ) 3,049 ( 346,047 ) ( 271,216 ) Less amount attributable to noncontrolling interest — — — — Comprehensive income (loss) attributable to the Company $ ( 310,969 ) $ 3,049 $ ( 346,047 ) $ ( 271,216 ) Net income (loss) attributable to the Company per common share: Basic $ ( 2.09 ) $ 0.02 $ ( 2.33 ) $ ( 1.85 ) Weighted average common shares outstanding - Basic 148,299 147,040 147,957 146,591 Diluted $ ( 2.09 ) $ 0.02 $ ( 2.33 ) $ ( 1.85 ) Weighted average common shares outstanding - Diluted 148,299 150,397 147,957 146,591 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 June 30, 2022 122,068,221 21,391,972 5,293,055 $ 8,659 $ 143 $ 2,891,129 $ ( 1,997,000 ) $ ( 1,154 ) $ ( 8,356 ) $ 893,421 Net income (loss) 587 — — ( 310,363 ) — — ( 309,776 ) Vesting of restricted stock and other 178,506 — 1 59 — — ( 539 ) ( 479 ) Share-based compensation — — 10,437 — — — 10,437 Conversion of Special Warrants to Class A or Class B Shares 85,141 96,602 ( 181,743 ) — — — — — — — Conversion of Class B Shares to Class A Shares 9,218 ( 9,218 ) — — — — — — — Other ( 187 ) — — — — — ( 187 ) Other comprehensive loss — — — — ( 606 ) — ( 606 ) Balances at September 30, 2022 122,341,086 21,479,356 5,111,312 $ 9,059 $ 144 $ 2,901,625 $ ( 2,307,363 ) $ ( 1,760 ) $ ( 8,895 ) $ 592,810 (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 Loss Treasury Stock Class A Shares Class B Shares Special Warrants Total Balances at 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 493 — — 3,180 — — 3,673 Vesting of restricted stock and other 216,707 — ( 1 ) 745 — — ( 916 ) ( 172 ) Share-based compensation — — 5,993 — — — 5,993 Conversion of Special Warrants to Class A and Class B Shares 60,698 ( 60,698 ) — 1 ( 1 ) — — — — Conversion of Class B Shares to Class A Shares 1,130,851 ( 1,130,851 ) — — — — — — — Other ( 187 ) — — — — — ( 187 ) Other comprehensive loss — — — — ( 131 ) — ( 131 ) Balances at 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 (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 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 income (loss) 1,211 — — ( 344,544 ) — — ( 343,333 ) Vesting of restricted stock and other 1,403,195 — 2 472 — — ( 2,613 ) ( 2,139 ) Share-based compensation — — 24,582 — — — 24,582 Conversion of Special Warrants to Class A or Class B Shares 96,516 96,602 ( 193,118 ) — — — — — — — Conversion of Class B Shares to Class A Shares 207,438 ( 207,438 ) — — — — — — — Other ( 562 ) — — — — — ( 562 ) Other comprehensive loss — — — — ( 1,503 ) — ( 1,503 ) Balances at September 30, 2022 122,341,086 21,479,356 5,111,312 $ 9,059 $ 144 $ 2,901,625 $ ( 2,307,363 ) $ ( 1,760 ) $ ( 8,895 ) $ 592,810 (1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2022 or 2021. See Notes to Consolidated Financial Statements 5 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 income (loss) 486 — — ( 270,829 ) — — ( 270,343 ) Vesting of restricted stock 1,027,252 — — 3,863 — — ( 2,948 ) 915 Share-based compensation — — 17,581 — — — 17,581 Conversion of Special Warrants to Class A and Class B Shares 47,197,139 22,337,312 ( 69,534,451 ) — 70 ( 70 ) — — — — Conversion of Class B Shares to Class A Shares 6,718,576 ( 6,718,576 ) — — — — — — — Other 2,982 ( 562 ) — — — — — ( 562 ) Other comprehensive loss — — — — ( 387 ) — ( 387 ) Balances at 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 (1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2021 or 2020. See Notes to Consolidated Financial Statements 6 IHEARTMEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Nine Months Ended September 30, 2022 2021 Cash flows from operating activities: Net loss $ ( 343,333 ) $ ( 270,343 ) Reconciling items: Impairment charges 311,329 49,391 Depreciation and amortization 334,144 343,408 Deferred taxes ( 31,304 ) 64,520 Provision for doubtful accounts 10,137 2,919 Amortization of deferred financing charges and note discounts, net 4,589 4,508 Share-based compensation 24,582 17,581 Loss on disposal of operating and other assets 24,547 22,771 Gain on investments ( 4,359 ) ( 39,468 ) Equity in loss of nonconsolidated affiliates 190 1,115 (Gain) loss on extinguishment of debt ( 15,095 ) 7,896 Barter and trade income ( 27,174 ) ( 9,418 ) Other reconciling items, net 1,504 764 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: (Increase) decrease in accounts receivable 38,685 ( 37,776 ) Increase in prepaid expenses and other current assets ( 47,561 ) ( 33,486 ) Increase in other long-term assets ( 5,817 ) ( 7,392 ) Increase (decrease) in accounts payable ( 927 ) 25,673 Increase (decrease) in accrued expenses ( 84,308 ) 48,861 Increase (decrease) in accrued interest ( 4,524 ) 1,766 Increase in deferred income 18,392 2,500 Increase in other long-term liabilities 3,002 803 Cash provided by operating activities 206,699 196,593 Cash flows from investing activities: Business combinations — ( 245,462 ) Proceeds from sale of other investments 32 50,757 Purchases of property, plant and equipment ( 112,567 ) ( 101,335 ) Proceeds from disposal of assets 34,690 36,330 Change in other, net ( 4,962 ) ( 188 ) Cash used for investing activities ( 82,807 ) ( 259,898 ) Cash flows from financing activities: Payments on long-term debt and credit facilities ( 173,990 ) ( 288,484 ) Change in other, net ( 5,667 ) 366 Cash used for financing activities ( 179,657 ) ( 288,118 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 965 ) ( 244 ) Net decrease in cash, cash equivalents and restricted cash ( 56,730 ) ( 351,667 ) Cash, cash equivalents and restricted cash at beginning of period 352,554 721,187 Cash, cash equivalents and restricted cash at end of period $ 295,824 $ 369,520 SUPPLEMENTAL DISCLOSURES: Cash paid for interest $ 249,910 $ 247,513 Cash paid for income taxes 12,054 7,900 See Notes to Consolidated Financial Statements 7 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. Economic Conditions The Company's advertising revenue is highly correlated to changes in gross domestic product (“GDP”) as advertising spending has historically trended in line with GDP. GDP decreased in the first and second quarters of 2022 and increased in the third quarter of 2022 while there was an increase in GDP in each quarter in 2021. The rise in interest rates and historically high inflation have also contributed to a more challenging macroeconomic environment. This challenging environment has led to market uncertainty which impacted 2022 Multiplatform Group revenues, particularly during the third quarter. 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 September 30, 2022, the Company had approximately $ 295.4 million in cash and cash equivalents. 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. 8 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) September 30, 2022 December 31, 2021 Cash and cash equivalents $ 295,399 $ 352,129 Restricted cash included in: Other current assets 425 425 Total cash, cash equivalents and restricted cash in the Statement of Cash Flows $ 295,824 $ 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 does not expect the adoption of this standard to materially impact the financial position, results of operations or cash flows. 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. 9 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 and nine months ended September 30, 2022 and 2021: (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Eliminations Consolidated Three Months Ended September 30, 2022 Revenue from contracts with customers: Broadcast Radio (1) $ 485,571 $ — $ — $ — $ 485,571 Networks (2) 127,239 — — — 127,239 Sponsorship and Events (3) 42,562 — — — 42,562 Digital, excluding Podcast (4) — 162,700 — ( 1,314 ) 161,386 Podcast (5) — 91,253 — — 91,253 Audio & Media Services (6) — — 77,794 ( 1,287 ) 76,507 Other (7) 4,106 — — ( 112 ) 3,994 Total 659,478 253,953 77,794 ( 2,713 ) 988,512 Revenue from leases (8) 418 — — — 418 Revenue, total $ 659,896 $ 253,953 $ 77,794 $ ( 2,713 ) $ 988,930 Three Months Ended September 30, 2021 Revenue from contracts with customers: Broadcast Radio (1) $ 483,456 $ — $ — $ — $ 483,456 Networks (2) 127,920 — — — 127,920 Sponsorship and Events (3) 42,663 — — — 42,663 Digital, excluding Podcast (4) — 141,573 — ( 1,475 ) 140,098 Podcast (5) — 64,196 — — 64,196 Audio & Media Services (6) — — 66,078 ( 1,188 ) 64,890 Other (7) 4,636 — — ( 112 ) 4,524 Total 658,675 205,769 66,078 ( 2,775 ) 927,747 Revenue from leases (8) 304 — — — 304 Revenue, total $ 658,979 $ 205,769 $ 66,078 $ ( 2,775 ) $ 928,051 10 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Eliminations Consolidated Nine Months Ended September 30, 2022 Revenue from contracts with customers: Broadcast Radio (1) $ 1,365,356 $ — $ — $ — $ 1,365,356 Networks (2) 372,329 — — — 372,329 Sponsorship and Events (3) 114,226 — — — 114,226 Digital, excluding Podcast (4) — 475,254 — ( 3,959 ) 471,295 Podcast (5) — 245,479 — — 245,479 Audio & Media Services (6) — — 209,716 ( 4,006 ) 205,710 Other (7) 11,372 — — ( 447 ) 10,925 Total 1,863,283 720,733 209,716 ( 8,412 ) 2,785,320 Revenue from leases (8) 1,073 — — — 1,073 Revenue, total $ 1,864,356 $ 720,733 $ 209,716 $ ( 8,412 ) $ 2,786,393 Nine Months Ended September 30, 2021 Revenue from contracts with customers: Broadcast Radio (1) $ 1,293,134 $ — $ — $ — $ 1,293,134 Networks (2) 366,592 — — — 366,592 Sponsorship and Events (3) 93,641 — — — 93,641 Digital, excluding Podcast (4) — 405,276 — ( 4,547 ) 400,729 Podcast (5) — 155,976 — — 155,976 Audio & Media Services (6) — — 182,390 ( 5,053 ) 177,337 Other (7) 8,226 — — ( 447 ) 7,779 Total 1,761,593 561,252 182,390 ( 10,047 ) 2,495,188 Revenue from leases (8) 1,133 — — — 1,133 Revenue, total $ 1,762,726 $ 561,252 $ 182,390 $ ( 10,047 ) $ 2,496,321 (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. 11 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 September 30, Nine Months Ended September 30, (In thousands) 2022 2021 2022 2021 Trade and barter revenues $ 72,160 $ 49,200 $ 157,751 $ 127,654 Trade and barter expenses 38,001 33,955 113,752 101,998 Trade and barter revenue includes $ 14.9 million and $ 4.9 million during the three months ended September 30, 2022 and 2021, respectively, and $ 27.2 million and $ 9.4 million during the nine months ended September 30, 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 September 30, Nine Months Ended September 30, (In thousands) 2022 2021 2022 2021 Deferred revenue from contracts with customers: Beginning balance (1) $ 189,679 $ 149,731 $ 161,114 $ 145,493 Revenue recognized, included in beginning balance ( 76,172 ) ( 52,406 ) ( 111,443 ) ( 84,375 ) Additions, net of revenue recognized during period, and other 64,879 56,799 128,715 93,006 Ending balance $ 178,386 $ 154,124 $ 178,386 $ 154,124 (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 September 30, 2022, the Company expects to recognize $ 387.2 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years . Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales. 12 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Revenue from Leases As of September 30, 2022, the future lease payments to be received by the Company are as follows: (In thousands) 2022 $ 277 2023 837 2024 590 2025 405 2026 321 Thereafter 1,526 Total $ 3,956 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 nine months ended September 30, 2022, the Company recognized non-cash impairment charges of $ 8.5 million related to ROU assets and $ 0.7 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 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." 13 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: Nine Months Ended September 30, (In thousands) 2022 2021 Cash paid for amounts included in measurement of operating lease liabilities $ 109,158 $ 100,815 Lease liabilities arising from obtaining right-of-use assets (1) 153,866 35,317 (1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the nine months ended September 30, 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 $ 65.6 million and $ 75.8 million for the nine months ended September 30, 2022 and September 30, 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 September 30, 2022 and December 31, 2021, respectively: (In thousands) September 30, 2022 December 31, 2021 Land, buildings and improvements $ 310,507 $ 355,474 Towers, transmitters and studio equipment 201,334 180,571 Computer equipment and software 564,190 521,872 Furniture and other equipment 39,472 35,390 Construction in progress 80,454 64,732 1,195,957 1,158,039 Less: accumulated depreciation 503,636 375,946 Property, plant and equipment, net $ 692,321 $ 782,093 Indefinite-lived Intangible Assets The Company’s indefinite-lived intangible assets primarily consist of Federal Communications Commission ("FCC") broadcast licenses in its Multiplatform Group segment. The Company performs its annual impairment test on our goodwill and indefinite-lived Federal Communication Commission ("FCC") licenses as of July 1 of each year. The current macroeconomic conditions have led to uncertainty, resulting in slowing broadcast revenue growth and declines in margins as inflation and interest rates continue to rise. These factors have negatively impacted the key assumptions used in the discounted cash flow models that are utilized to value the Company's FCC licenses and goodwill, particularly the discount rates used in estimating fair values. This has resulted in a significant decrease in the fair values of certain of the Company's FCC licenses and reporting units. The Company's FCC licenses are valued using a direct valuation approach, with the key assumptions being market revenue growth rates, profit margin, and the risk-adjusted discount rate as well as other assumptions including market share, duration and profile of the build-up period, and estimated start-up capital costs. This data is populated using industry normalized information representing an average asset within a market. The Company obtained recent broadcast radio industry revenue projections which it considered along with various other sources of data in developing the assumptions used for purposes of performing impairment testing on its FCC licenses as of July 1, 2022. 14 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Considerations in developing these assumptions included the extent of the economic downturn, ranges of expected timing of recovery, discount rates and other factors. Based on the Company's testing, the estimated fair value of the FCC licenses was below their carrying values. As a result, the Company recognized a non-cash impairment charge of $ 302.1 million on its FCC licenses. 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. The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of September 30, 2022 and December 31, 2021, respectively: (In thousands) September 30, 2022 December 31, 2021 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Customer / advertiser relationships $ 1,646,402 $ ( 589,168 ) $ 1,646,402 $ ( 459,620 ) Talent and other contracts 338,900 ( 149,728 ) 338,900 ( 117,337 ) Trademarks and tradenames 335,862 ( 113,866 ) 335,862 ( 88,252 ) Other 18,443 ( 9,503 ) 17,794 ( 7,149 ) Total $ 2,339,607 $ ( 862,265 ) $ 2,338,958 $ ( 672,358 ) Total amortization expense related to definite-lived intangible assets for the Company for the three months ended September 30, 2022 and 2021 was $ 63.4 million and $ 64.3 million, respectively. Total amortization expense related to definite-lived intangible assets for the Company for the nine months ended September 30, 2022 and 2021 was $ 189.9 million and $ 218.0 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 15 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 ( 16 ) — — ( 16 ) Foreign currency — — ( 383 ) ( 383 ) Balance as of September 30, 2022 $ 1,462,022 $ 747,350 $ 103,810 $ 2,313,182 Goodwill Impairment Testing The fair values of the Company's reporting units were reevaluated as of July 1, 2022 as part of the Company's annual impairment assessment and no goodwill impairment was recorded as the estimated fair values of the reporting units exceeded the carrying values of the reporting units’ net assets, including goodwill. The Company's annual impairment testing resulted in a significant decrease in the fair values of its reporting units. However, the decrease in fair values did not result in carrying amounts exceeding fair values of the Company's reporting units, accordingly, the annual impairment test did not result in any impairment of the Company's goodwill balance. The goodwill impairment test requires the Company to measure the fair value of our reporting units and compare the estimated fair value to the carrying value, including goodwill. Each of the Company's reporting units 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 were also estimated and discounted to their present value. Assessing the recoverability of goodwill requires the Company to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on our budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and in management’s judgment in applying these factors. As with the impairment testing performed on the Company's FCC licenses described above, the deterioration in market conditions and uncertainty in the markets impacted the assumptions used to estimate the discounted future cash flows of our reporting units for purposes of performing the goodwill impairment test. 16 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 5 – LONG-TERM DEBT Long-term debt outstanding for the Company as of September 30, 2022 and December 31, 2021 consisted of the following: (In thousands) September 30, 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) — — Asset-based Revolving Credit Facility due 2027 (1)(2) — — 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 (3) 4,414 5,350 Total consolidated secured debt 4,319,666 4,320,602 8.375 % Senior Unsecured Notes due 2027 (4) 1,261,451 1,450,000 Other unsecured subsidiary debt 53 90 Original issue discount ( 11,302 ) ( 13,454 ) Long-term debt fees ( 16,154 ) ( 18,370 ) Total debt 5,553,714 5,738,868 Less: Current portion 665 673 Total long-term debt $ 5,553,049 $ 5,738,195 (1) On May 17, 2022, we entered into a $ 450.0 million New ABL Facility, maturing in 2027, which refinanced and replaced in its entirety the Existing ABL Facility. Refer to the 'Asset-based Revolving Credit Facility due 2027' section below for more information. (2) As of September 30, 2022, the New ABL Facility had a facility size of $ 450.0 million, no outstanding borrowings and $ 27.0 million of outstanding letters of credit, resulting in $ 423.0 million of borrowing base availability. (3) Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2023 through 2045. (4) During the three months ended September 30, 2022, we repurchased $ 75.0 million aggregate principal amount of iHeartCommunications Inc.'s 8.375 % Senior Unsecured Notes due 2027 for $ 68.1 million in cash, excluding accrued interest, via open market transactions. The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $ 6.9 million. During the nine months ended September 30, 2022, we repurchased $ 188.5 million aggregate principal amount of iHeartCommunications Inc.'s 8.375 % Senior Unsecured Notes due 2027 for $ 173.4 million in cash, excluding accrued interest, via open market transactions. The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $ 15.1 million. The Company’s weighted average interest rate was 6.4 % and 5.4 % as of September 30, 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 $ 5.0 billion and $ 5.9 billion as of September 30, 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. Asset-based Revolving Credit Facility due 2027 On May 17, 2022, iHeartCommunications, Inc., as borrower, entered into a Credit Agreement (the “New ABL Credit Agreement”) with iHeartMedia Capital I, LLC, the direct parent of iHeartCommunications, Inc., as parent guarantor, certain subsidiaries of iHeartCommunications, Inc. party thereto, Bank of America, N.A., as administrative and collateral agent, and each other lender party thereto from time to time, governing a new $ 450.0 million New ABL Facility, maturing in 2027, which refinanced and replaced in its entirety the Existing ABL Facility. The New ABL Facility includes a letter of credit sub-facility and a swingline loan sub-facility. 17 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Size and Availability The New ABL Facility provides for a senior secured asset-based revolving credit facility in the aggregate principal amount of up to $ 450.0 million, with amounts available from time to time (including in respect of letters of credit) equal to the lesser of (A) the borrowing base, which equals the sum of (i) 90.0 % of the eligible accounts receivable of iHeartCommunications and the subsidiary guarantors and (ii) 100 % of qualified cash, each subject to customary reserves and eligibility criteria, and (B) the aggregate revolving credit commitments. Subject to certain conditions, iHeartCommunications may at any time request one or more increases in the amount of revolving credit commitments, in an amount up to the sum of (x) $ 150.0 million and (y) the amount by which the borrowing base exceeds the aggregate revolving credit commitments. As of September 30, 2022, the New ABL Facility had a facility size of $ 450.0 million, no outstanding borrowings and $ 27.0 million of outstanding letters of credit, resulting in $ 423.0 million of borrowing base availability. Interest Rate and Fees Borrowings under the New ABL Facility bear interest at a rate per annum equal to the applicable rate plus, at iHeartCommunications’ option, either (1) a base rate, (2) a term secured overnight financing rate ("SOFR") (which includes a credit spread adjustment of 10 basis points) or (3) for certain foreign currencies, a eurocurrency rate. The applicable margin for borrowings under the New ABL Facility range from 1.25 % to 1.75 % for both eurocurrency and term SOFR borrowings and from 0.25 % to 0.75 % for base-rate borrowings, in each case, depending on average excess availability under the New ABL Facility based on the most recently ended fiscal quarter. In addition to paying interest on outstanding principal under the New ABL Facility, iHeartCommunications is required to pay a commitment fee to the lenders under the New ABL Facility in respect of the unutilized commitments thereunder. The commitment fee rate ranges from 0.25 % to 0.375 % per annum dependent upon average unused commitments during the prior quarter. iHeartCommunications may also pay customary letter of credit fees. Maturity Borrowings under the New ABL Facility will mature, and commitments thereunder will terminate, on May 17, 2027. Prepayments If at any time, the sum of the outstanding amounts under the New ABL Facility exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitments under the facility (such lesser amount, the “line cap”), iHeartCommunications is required to repay outstanding loans and cash collateralize letters of credit in an aggregate amount equal to such excess. iHeartCommunications may voluntarily repay outstanding loans under the New ABL Facility at any time without premium or penalty, other than customary “breakage” costs with respect to eurocurrency rate loans. Any voluntary prepayments made by iHeartCommunications will not reduce iHeartCommunications’ commitments under the New ABL Facility. Guarantees and Security The New ABL Facility is guaranteed by the guarantors of iHeartCommunications’ existing Term Loan Facility. All obligations under the New ABL Facility, and the guarantees of those obligations, are secured by a perfected security interest in the accounts receivable and related assets of iHeartCommunications’ and all of the guarantors’ accounts receivable, qualified cash and related assets and proceeds thereof that is senior to the security interest of iHeartCommunications’ existing Term Loan Facility in such accounts receivable, qualified cash and related assets and proceeds thereof, subject to permitted liens and certain exceptions. Certain Covenants and Events of Default If borrowing availability is less than the greater of (a) $ 40.0 million and (b) 10 % of the aggregate commitments under the New ABL Facility, in each case, for two consecutive business days (a “Trigger Event”), iHeartCommunications will be required to comply with a minimum fixed charge coverage ratio of at least 1.00 to 1.00 for fiscal quarters ending on or after the occurrence of the Trigger Event, and must continue to comply with this minimum fixed charge coverage ratio until borrowing availability exceeds the greater of (x) $ 40.0 million and (y) 10 % of the aggregate commitments under the New ABL Facility, in each case, for 20 consecutive calendar days, at which time the Trigger Event shall no longer be deemed to be occurring. As of 18 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 2022, no Trigger Event had occurred, and iHeartCommunications was not required to comply with this minimum fixed charge coverage ratio. Surety Bonds, Letters of Credit and Guarantees As of September 30, 2022, the Company and its subsidiaries had outstanding surety bonds, commercial standby letters of credit and bank guarantees of $ 8.8 million, $ 27.4 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. Alien Ownership Restrictions and FCC 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. On November 5, 2020, the FCC issued a declaratory ruling, which permits the Company to be up to 100 % foreign owned, subject to certain conditions, as described further in Note 8, Stockholders' Equity (the "2020 Declaratory Ruling"). NOTE 7 – INCOME TAXES The Company’s income tax benefit (expense) for the three and nine months ended September 30, 2022 and the three and nine months ended September 30, 2021 consisted of the following components: (In thousands) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Current tax benefit (expense) $ 15,871 $ ( 7,651 ) $ ( 26,289 ) $ ( 12,717 ) Deferred tax benefit (expense) ( 29,283 ) 34,798 31,304 ( 64,520 ) Income tax benefit (expense) $ ( 13,412 ) $ 27,147 $ 5,015 $ ( 77,237 ) The effective tax rates for the three and nine months ended September 30, 2022 were ( 4.5 )% and 1.4 %, 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, 2021 were 115.6 % and ( 40.0 )%, 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. 19 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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, 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 equity awards covering 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 $ 10.4 million and $ 6.0 million for the Company for the three months ended September 30, 2022 and September 30, 2021, respectively. Share-based compensation expenses were $ 24.6 million and $ 17.6 million for the Company for the nine months ended September 30, 2022 and September 30, 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 and nine months ended September 30, 2021, the Company recognized $ 0.4 million and $ 1.4 million in relation to these Performance RSUs. On March 28, 2022, the Company issued performance-based restricted stock units ("Q1 2022 Performance RSUs") to certain key employees. Such Q1 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. In the three and nine months ended September 30, 2022, the Company recognized $ 0.8 million and $ 1.5 million in relation to these Q1 2022 Performance RSUs. On May 9, 2022, the Company issued performance-based restricted stock units ("Q2 2022 Performance RSUs") and restricted stock units ("2022 RSUs") to certain key employees. Such Q2 2022 Performance RSUs vest upon the achievement of certain total stockholder return goals, Adjusted EBITDA goals, Diversity, Equity and Inclusion goals, and continued service. Such 2022 RSUs vest upon continued service. These awards are being recognized ratably over a 3-year period from the date of issuance. In the three and nine months ended September 30, 2022, the Company recognized $ 1.3 million and $ 2.0 million in relation to these Q2 2022 Performance RSUs. As of September 30, 2022, there was $ 54.3 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based solely on service conditions. This cost is expected to be recognized over a weighted average period of approximately 3.4 years. In addition, as of September 30, 2022, there were unrecognized compensation costs of $ 11.0 million for the Q1 2022 Performance RSUs and $ 13.4 million for the Q2 2022 Performance RSUs related to unvested share-based compensation arrangements that will vest based on certain performance and service conditions. These costs will be recognized over a 50-month period from the date of issuance for the Q1 2022 Performance RSUs and over the 3-year period from the date of issuance for the Q2 2022 Performance RSUs. 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”). 20 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table presents the Company's Class A Common Stock, Class B Common Stock and Special Warrants issued as of September 30, 2022: September 30, 2022 Class A Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized 122,341,086 Class B Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized 21,479,356 Special Warrants 5,111,312 Total Class A Common Stock, Class B Common Stock and Special Warrants issued 148,931,754 During the three and nine months ended September 30, 2022, stockholders converted 9,218 and 207,438 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. Special Warrants Each Special Warrant issued under the special warrant agreement entered into in connection with the Company's 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, (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, November 5, 2020, the FCC issued the 2020 Declaratory Ruling, which permits the Company to be up to 100 % foreign owned. During the three and nine months ended September 30, 2022, stockholders exercised 85,141 and 96,516 Special Warrants for an equivalent number of shares of Class A common stock. There were 96,602 Special Warrants exercised for shares of Class B common stock during the three and nine months ended September 30, 2022. 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. 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. 21 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Computation of Income (Loss) per Share (In thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 NUMERATOR: Net income (loss) attributable to the Company – common shares $ ( 310,363 ) $ 3,180 $ ( 344,544 ) $ ( 270,829 ) DENOMINATOR (1) : Weighted average common shares outstanding - basic 148,299 147,040 147,957 146,591 Stock options and restricted stock (2) : — 3,357 — — Weighted average common shares outstanding - diluted 148,299 150,397 147,957 146,591 Net income (loss) attributable to the Company per common share: Basic $ ( 2.09 ) $ 0.02 $ ( 2.33 ) $ ( 1.85 ) Diluted $ ( 2.09 ) $ 0.02 $ ( 2.33 ) $ ( 1.85 ) (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, 2022 and 2021. (2) Outstanding equity awards representing 11.7 million and 0.3 million shares of Class A common stock of the Company for the three months ended September 30, 2022 and 2021, respectively, and 10.8 million and 10.6 million for the nine months ended September 30, 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, Audio & Media Services Group, and Corporate 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. 22 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 and nine months ended September 30, 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 September 30, 2022 Revenue $ 659,896 $ 253,953 $ 77,794 $ — $ ( 2,713 ) $ 988,930 Operating expenses (1) 452,631 175,636 48,044 63,090 ( 2,713 ) 736,688 Segment Adjusted EBITDA (2) $ 207,265 $ 78,317 $ 29,750 $ ( 63,090 ) $ — $ 252,242 Depreciation and amortization ( 109,305 ) Impairment charges ( 309,750 ) Other operating expense, net ( 9,451 ) Restructuring expenses ( 24,486 ) Share-based compensation expense ( 10,437 ) Operating income $ ( 211,187 ) Intersegment revenues $ 112 $ 1,314 $ 1,287 $ — $ — $ 2,713 Capital expenditures 31,613 4,808 1,276 2,660 — 40,357 Share-based compensation expense — — — 10,437 — 10,437 Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Three Months Ended September 30, 2021 Revenue $ 658,979 $ 205,769 $ 66,078 $ — $ ( 2,775 ) $ 928,051 Operating expenses (1) 450,549 138,646 43,656 67,762 ( 2,775 ) 697,838 Segment Adjusted EBITDA (2) $ 208,430 $ 67,123 $ 22,422 $ ( 67,762 ) $ — $ 230,213 Depreciation and amortization ( 108,100 ) Impairment charges ( 11,647 ) Other operating expense, net ( 12,341 ) Restructuring expenses ( 12,021 ) Share-based compensation expense ( 5,993 ) Operating income $ 80,111 Intersegment revenues $ 112 $ 1,475 $ 1,188 $ — $ — $ 2,775 Capital expenditures 35,082 6,223 3,967 5,002 — 50,274 Share-based compensation expense — — — 5,993 — 5,993 23 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Nine Months Ended September 30, 2022 Revenue $ 1,864,356 $ 720,733 $ 209,716 $ — $ ( 8,412 ) $ 2,786,393 Operating expenses (1) 1,328,688 511,025 141,509 178,938 ( 8,412 ) 2,151,748 Segment Adjusted EBITDA (2) $ 535,668 $ 209,708 $ 68,207 $ ( 178,938 ) $ — $ 634,645 Depreciation and amortization ( 334,144 ) Impairment charges ( 311,329 ) Other operating expense, net ( 25,985 ) Restructuring expenses ( 54,588 ) Share-based compensation expense ( 24,582 ) Operating income $ ( 115,983 ) Intersegment revenues $ 447 $ 3,959 $ 4,006 $ — $ — $ 8,412 Capital expenditures 80,329 15,876 5,398 10,964 — 112,567 Share-based compensation expense — — — 24,582 — 24,582 Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Nine Months Ended September 30, 2021 Revenue $ 1,762,726 $ 561,252 $ 182,390 $ — $ ( 10,047 ) $ 2,496,321 Operating expenses (1) 1,268,107 399,828 124,148 197,317 ( 10,047 ) 1,979,353 Segment Adjusted EBITDA (2) $ 494,619 $ 161,424 $ 58,242 $ ( 197,317 ) $ — $ 516,968 Depreciation and amortization ( 343,408 ) Impairment charges ( 49,391 ) Other operating expense, net ( 27,491 ) Restructuring expenses ( 47,216 ) Share-based compensation expense ( 17,581 ) Operating loss $ 31,881 Intersegment revenues $ 447 $ 4,547 $ 5,053 $ — $ — $ 10,047 Capital expenditures 66,522 17,934 6,158 10,721 — 101,335 Share-based compensation expense — — — 17,581 — 17,581 (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 (loss), the most closely comparable GAAP measure, and to Net income (loss), please see "Reconciliation of Operating Income (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. 24