iHeartMedia, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of iHeartMedia, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of iHeartMedia, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of comprehensive loss, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2023 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 49 Valuation of Goodwill and Indefinite-Lived Intangibles Description of the Matter As described in Note 4 to the consolidated financial statements, at December 31, 2022 the Company’s goodwill was $2.3 billion and FCC licenses with indefinite lives were $1.5 billion. Management conducts impairment tests for goodwill and indefinite-lived intangibles annually during the third quarter, or more frequently, if events or circumstances indicate the carrying value of goodwill or indefinite-lived intangibles may be impaired. The Company performed their annual impairment test as of July 1, 2022 on goodwill and indefinite-lived intangible assets which resulted in no impairment charges being recorded to goodwill, and an impairment charge of $302.1 million being recorded to FCC Licenses with indefinite lives. Auditing management’s impairment tests for goodwill and intangible assets with indefinite lives was complex and highly judgmental and required the involvement of a valuation specialist due to the significant estimation required to determine the fair value of the reporting units and FCC licenses. In particular for goodwill, the fair value estimates in the discounted cash flow models of reporting units are sensitive to assumptions such as changes in projected revenue, earnings before interest, taxes, depreciation, and amortization ("EBITDA") margins, and discount rates. For FCC Licenses, the fair value estimates in the discounted cash flow models are sensitive to changes to the discount rate assumption. All of these assumptions are sensitive to and affected by expected future market or economic conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and FCC licenses impairment review process, including controls over management’s review of the significant assumptions described above. This included evaluating controls over the Company’s forecasting process used to develop the estimated future cash flows. We also tested controls over management’s review of the data used in their valuation models and review of the significant assumptions. To test the estimated fair values of the Company’s reporting units and FCC licenses, our audit procedures included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by management, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions mentioned above and estimates. We compared the projected cash flows to the Company’s historical cash flows and other available market forecast information, including third-party industry projections for the advertising industry. We involved our valuation specialists to assist in reviewing the valuation methodology and testing the discount rates. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units and FCC licenses that would result from changes in the assumptions. In addition, for goodwill we also tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company. /s/ Ernst & Young LLP We have served as the Company’s auditor since at least 1986, but we are unable to determine the specific year. San Antonio, Texas February 28, 2023 50 CONSOLIDATED BALANCE SHEETS OF IHEARTMEDIA, INC. AND SUBSIDIARIES (In thousands, except share and per share data) December 31, 2022 December 31, 2021 Cash and cash equivalents $ 336,236 $ 352,129 Accounts receivable, net of allowance of $ 29,171 in 2022 and $ 29,270 in 2021 1,037,827 1,030,380 Prepaid expenses 79,098 65,927 Other current assets 19,618 24,431 Total Current Assets 1,472,779 1,472,867 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net 694,842 782,093 INTANGIBLE ASSETS AND GOODWILL Indefinite-lived intangibles - licenses 1,476,319 1,778,045 Other intangibles, net 1,419,670 1,666,600 Goodwill 2,313,403 2,313,581 OTHER ASSETS Operating lease right-of-use assets 788,280 741,410 Other assets 170,594 126,713 Total Assets $ 8,335,887 $ 8,881,309 CURRENT LIABILITIES Accounts payable $ 240,454 $ 206,007 Current operating lease liabilities 70,024 88,585 Accrued expenses 325,427 353,045 Accrued interest 64,165 67,983 Deferred revenue 131,084 133,123 Current portion of long-term debt 664 673 Total Current Liabilities 831,818 849,416 Long-term debt 5,413,503 5,738,195 Noncurrent operating lease liabilities 848,918 738,814 Deferred income taxes 483,810 558,222 Other long-term liabilities 73,332 80,897 Commitments and contingent liabilities (Note 7) STOCKHOLDERS’ EQUITY Noncontrolling interest 9,609 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 and outstanding 122,370,425 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 and outstanding 21,477,181 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 2,912,500 2,876,571 Accumulated deficit ( 2,227,482 ) ( 1,962,819 ) Accumulated other comprehensive loss ( 1,331 ) ( 257 ) Cost of shares ( 597,482 in 2022 and 389,814 in 2021) held in treasury ( 8,934 ) ( 6,282 ) Total Stockholders' Equity 684,506 915,765 Total Liabilities and Stockholders' Equity $ 8,335,887 $ 8,881,309 See Notes to Consolidated Financial Statements 51 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS OF IHEARTMEDIA, INC. AND SUBSIDIARIES (In thousands, except per share data) Year Ended December 31, 2022 2021 2020 Revenue $ 3,912,283 $ 3,558,340 $ 2,948,218 Operating expenses: Direct operating expenses (excludes depreciation and amortization) 1,480,326 1,324,657 1,137,807 Selling, general and administrative expenses (excludes depreciation and amortization) 1,592,946 1,519,355 1,395,010 Depreciation and amortization 445,664 469,417 402,929 Impairment charges 311,489 57,734 1,738,752 Other operating expense, net 24,998 32,320 11,344 Operating income (loss) 56,860 154,857 ( 1,737,624 ) Interest expense, net 341,674 332,384 343,745 Gain (loss) on investments, net ( 1,045 ) 43,643 ( 9,346 ) Equity in loss of nonconsolidated affiliates ( 11 ) ( 1,138 ) ( 379 ) Gain (loss) on extinguishment of debt 30,214 ( 11,600 ) — Other expense, net ( 2,295 ) ( 3,376 ) ( 7,751 ) Loss before income taxes ( 257,951 ) ( 149,998 ) ( 2,098,845 ) Income tax benefit (expense) ( 4,719 ) ( 8,391 ) 183,623 Net loss ( 262,670 ) ( 158,389 ) ( 1,915,222 ) Less amount attributable to noncontrolling interest 1,993 810 ( 523 ) Net loss attributable to the Company $ ( 264,663 ) $ ( 159,199 ) $ ( 1,914,699 ) Other comprehensive income (loss) net of tax: Foreign currency translation adjustments ( 1,074 ) ( 451 ) 945 Other Comprehensive income (loss) ( 1,074 ) ( 451 ) 945 Comprehensive loss ( 265,737 ) ( 159,650 ) ( 1,913,754 ) Less amount attributable to noncontrolling interest — — — Comprehensive loss attributable to the Company $ ( 265,737 ) $ ( 159,650 ) $ ( 1,913,754 ) Net loss attributable to the Company per common share: Basic $ ( 1.79 ) $ ( 1.09 ) $ ( 13.12 ) Weighted average common shares outstanding - Basic 148,058 146,726 145,979 Diluted $ ( 1.79 ) $ ( 1.09 ) $ ( 13.12 ) Weighted average common shares outstanding - Diluted 148,058 146,726 145,979 See Notes to Consolidated Financial Statements 52 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY OF IHEARTMEDIA, INC. AND SUBSIDIARIES (In thousands, except share data) Controlling Interest Common Shares (1) Non- controlling Interest Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Treasury Stock Class A Shares Class B Shares Special Warrants Total Balances at December 31, 2019 57,776,204 6,904,910 81,046,593 $ 9,123 $ 65 $ 2,826,533 $ 112,548 $ ( 750 ) $ ( 2,078 ) $ 2,945,441 Net loss ( 523 ) — — ( 1,914,699 ) — — ( 1,915,222 ) Vesting of restricted stock and other 724,963 — 1 ( 23 ) — — ( 1,121 ) ( 1,143 ) Share-based compensation — — 22,516 — — — 22,516 Conversion of Special Warrants to Class A and B Shares 6,205,617 2,095 ( 6,207,712 ) — 6 ( 6 ) — — — — Conversion of Class B Shares to Class A Shares 20,080 ( 20,080 ) — — — — — — — Other ( 2,982 ) ( 250 ) — — ( 1,469 ) ( 1 ) — ( 1,720 ) Other comprehensive income — — — — 945 — 945 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 810 — — ( 159,199 ) — — ( 158,389 ) Vesting of restricted stock and other 1,075,889 — — 4,078 — — ( 3,083 ) 995 Share-based compensation — — 23,543 — — — 23,543 Conversion of Special Warrants to Class A and B Shares 47,197,139 22,337,312 ( 69,534,451 ) — 70 ( 70 ) — — — — Conversion of Class B Shares to Class A Shares 7,634,045 ( 7,634,045 ) — — — — — — — Other 2,982 ( 750 ) — — — — — ( 750 ) Other comprehensive loss — — — — ( 451 ) — ( 451 ) 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 1,993 — — ( 264,663 ) — — ( 262,670 ) Vesting of restricted stock and other 1,430,359 — 2 472 — — ( 2,652 ) ( 2,178 ) Share-based compensation — — 35,457 — — — 35,457 Conversion of Special Warrants to Class A and B Shares 96,516 96,602 ( 193,118 ) — — — — — — — Conversion of Class B Shares to Class A Shares 209,613 ( 209,613 ) — — — — — — — Other ( 794 ) — — — — — ( 794 ) Other comprehensive loss — — — — ( 1,074 ) — ( 1,074 ) Balances at December 31, 2022 122,370,425 21,477,181 5,111,312 $ 9,609 $ 144 $ 2,912,500 $ ( 2,227,482 ) $ ( 1,331 ) $ ( 8,934 ) $ 684,506 (1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2022, 2021, 2020, or 2019, respectively. See Notes to Consolidated Financial Statements 53 CONSOLIDATED STATEMENTS OF CASH FLOWS OF IHEARTMEDIA, INC. AND SUBSIDIARIES (In thousands) Year Ended December 31, 2022 2021 2020 Cash flows from operating activities: Net loss $ ( 262,670 ) $ ( 158,389 ) $ ( 1,915,222 ) Reconciling items: Impairment charges 311,489 57,734 1,738,752 Depreciation and amortization 445,664 469,417 402,929 Deferred taxes ( 74,418 ) ( 10,874 ) ( 184,269 ) Provision for doubtful accounts 14,236 4,144 38,273 Amortization of deferred financing charges and note discounts, net 6,234 5,930 4,758 Share-based compensation 35,457 23,543 22,516 Loss on disposal of operating and other assets 23,306 26,841 6,986 (Gain) loss on investments 1,045 ( 43,643 ) 9,346 (Gain) loss on extinguishment of debt ( 30,214 ) 11,600 — Barter and trade income ( 40,652 ) ( 16,276 ) ( 10,502 ) Equity in loss of nonconsolidated affiliates 11 1,138 379 Other reconciling items, net 692 890 656 Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: (Increase) decrease in accounts receivable ( 20,867 ) ( 205,200 ) 77,335 (Increase) decrease in prepaid expenses and other current assets ( 13,362 ) 4,746 2,447 Increase in other long-term assets ( 4,776 ) ( 5,505 ) ( 1,119 ) Increase in accounts payable and accrued expenses 22,671 153,938 52,354 Decrease in accrued interest ( 3,818 ) ( 72 ) ( 15,714 ) Increase (decrease) in deferred income 2,707 8,229 ( 21,859 ) Increase in other long-term liabilities 7,340 2,382 7,899 Net cash provided by operating activities 420,075 330,573 215,945 Cash flows from investing activities: Business combinations — ( 245,462 ) ( 62,050 ) Proceeds from sale of investments 902 50,757 1,000 Proceeds from disposal of assets 36,830 37,463 2,041 Purchases of property, plant and equipment ( 160,969 ) ( 183,372 ) ( 85,205 ) Change in other, net ( 5,989 ) ( 6,176 ) ( 3,599 ) Net cash used for investing activities ( 129,226 ) ( 346,790 ) ( 147,813 ) Cash flows from financing activities: Proceeds from long-term debt and credit facilities — — 779,750 Payments on long-term debt and credit facilities ( 300,135 ) ( 352,383 ) ( 532,392 ) Change in other, net ( 5,973 ) 259 ( 6,178 ) Net cash provided by (used for) financing activities ( 306,108 ) ( 352,124 ) 241,180 Effect of exchange rate changes on cash ( 634 ) ( 292 ) 257 Net increase (decrease) in cash, cash equivalents and restricted cash ( 15,893 ) ( 368,633 ) 309,569 Cash, cash equivalents and restricted cash at beginning of period 352,554 721,187 411,618 Cash, cash equivalents and restricted cash at end of period $ 336,661 $ 352,554 $ 721,187 SUPPLEMENTAL DISCLOSURES: Cash paid during the year for interest $ 342,393 $ 328,101 $ 357,168 Cash paid during the year for taxes 35,417 11,130 5,844 See Notes to Consolidated Financial Statements 54 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business iHeartMedia, Inc. (the “Company,” "iHeartMedia," "we" or "us") was formed in May 2007 for the purpose of acquiring the business of iHeartCommunications, Inc., a Texas company (“iHeartCommunications”), which occurred on July 30, 2008. Prior to the consummation of the acquisition of iHeartCommunications, iHeartMedia had not conducted any activities, other than activities incident to its formation in connection with the acquisition, and did not have any assets or liabilities, other than those related to the acquisition. In 2018, the Company filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, and in 2019, the Company emerged from Chapter 11 through a series of transactions that resulted in a decrease in the Company's debt ("Emergence"). The Company reports based on three reportable segments: • 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. These reporting segments reflect how senior management operates the Company. This structure provides visibility into the underlying performances, results, and margin profiles of our distinct businesses and enables senior management to monitor trends at the operational level and address opportunities or issues as they arise via regular review of segment-level results and forecasts with operational leaders. The Company's segment profitability metric is Segment Adjusted EBITDA which is reported to the Company's Chief Operating Decision Maker for purposes of making decisions about allocation of resources to, and assessing performance of, each reportable segment. Segment Adjusted EBITDA is calculated as Revenue less operating expenses, excluding restructuring expenses and share-based compensation expenses. Restructuring expenses include severance and other expenses incurred in connection with cost saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle. Economic Conditions The Company's advertising revenue is correlated to changes in economic conditions. The recovery from COVID-19 positively impacted the Company's revenues in the first half of 2022. However, increasing interest rates and historically high inflation have contributed to a more challenging macroeconomic environment. This challenging environment has led to market uncertainty which impacted the Company's 2022 revenue growth, particularly in the second half of 2022. GDP decreased in the first half of 2022 and increased in the second half of 2022 while there was an increase in GDP in each quarter in 2021. The current market uncertainty and macroeconomic conditions, a recession, or a downturn in the U.S. economy could have a significant impact on the Company's ability to generate revenue. 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 provisions of the CARES Act resulted in an increase to allowable interest deductions of $ 179.4 million during 2020. In addition, the Company was able to defer the payment of $ 29.3 million in certain employment taxes during 2020, half of which was due and paid on January 3, 2022 and the other half was due and paid 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 2022. As of December 31, 2022, the Company had $ 336.2 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 55 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS impact is not expected to be material. Based on current available liquidity, the Company expects to be able to meet its obligations as they become due over the coming year. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes including, but not limited to, legal, tax and insurance accruals. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Principles of Consolidation 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 financial interest or is the primary beneficiary. Investments in companies in which the Company owns 20% to 50% of the voting common stock or otherwise exercises significant influence over operating and financial policies of the Company are accounted for using the equity method of accounting. All significant intercompany accounts have been eliminated in consolidation. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. Accounts Receivable Accounts receivable are recorded when the Company has an unconditional right to payment, either because it has satisfied a performance obligation prior to receiving payment from the customer or has a non-cancelable contract that has been billed in advance in accordance with the Company’s normal billing terms. Accounts receivable are recorded at the invoiced amount, net of reserves for sales allowances and allowances for credit losses. The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, it records a specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it recognizes reserves for bad debt based on historical experience of bad debts as a percent of accounts receivable for each business unit, adjusted for relative improvement or deterioration in the agings and changes in current economic conditions. The Company believes its concentration of credit risk is limited due to the large number of its customers. Business Combinations The Company accounts for its business combinations under the acquisition method of accounting. The total cost of an acquisition is allocated to the underlying identifiable net assets, based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management's judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. Various acquisition agreements may include contingent purchase consideration based on performance requirements of the investee. The Company accounts for these payments in conformity with the provisions of ASC 805-20-30, which establish the requirements related to recognition of certain assets and liabilities arising from contingencies. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method at rates that, in the opinion of management, are adequate to allocate the cost of such assets over their estimated useful lives, which are as follows: Buildings and improvements – 10 to 39 years Towers, transmitters and studio equipment – 5 to 40 years Computer equipment and software - 3 years Furniture and other equipment – 5 to 7 years 56 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Leasehold improvements – shorter of economic life or lease term assuming renewal periods, if appropriate For assets associated with a lease or contract, the assets are depreciated at the shorter of the economic life or the lease or contract term, assuming renewal periods, if appropriate. Expenditures for maintenance and repairs are charged to operations as incurred, whereas expenditures for renewal and betterments are capitalized. The Company tests for possible impairment of property, plant, and equipment whenever events and circumstances indicate that depreciable assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value. Assets and businesses are classified as held for sale if their carrying amount will be recovered or settled principally through a sale transaction rather than through continuing use. The asset or business must be available for immediate sale and the sale must be highly probable within one year. 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 ("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. Certain of the Company's operating lease agreements include rental payments that are adjusted periodically for inflationary changes. Payments due to changes in inflationary adjustments are included within variable rent expense, which is accounted for separately from periodic straight-line lease expense. Amounts related to insurance and property taxes in lease arrangements when billed on a pass-through basis are allocated to the lease and non-lease components of the lease based on their relative standalone selling prices. Certain of the Company's leases provide options to extend the terms of the agreements. Generally, renewal periods are excluded from minimum lease payments when calculating the lease liabilities as, for most leases, the Company does not consider exercise of such options to be reasonably certain. As a result, unless a renewal option is considered reasonably assured, the optional terms and related payments are not included within the lease liability. For those leases for which renewal periods are included in calculating minimum lease liabilities, any adjustments resulting from changes in circumstances which result in the renewal options no longer being reasonably certain are accounted for as changes in estimates. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. 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." The Company elected to use the practical expedient to not separate non-lease components from the associated lease component for all classes of the Company's assets. When the Company decides to abandon a leased property before the expiration of the lease term, management assesses whether such property will be subleased. If it is determined that subleasing the property for the remaining lease term is reasonable, management estimates the fair value of the sublease payments to be received and compares the estimated fair value to the ROU asset. To the extent the estimated fair value is less than the net book value of the ROU asset, the Company records a non-cash impairment charge for the difference, and the remaining ROU asset is recorded ratably over the remaining lease term. If it is determined that subleasing the property for the remaining lease term is not reasonable (e.g. the remaining lease term is too short 57 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS to reasonably expect the property to be subleased), amortization of the net book value of the ROU asset is accelerated and recognized as expense ratably from the decision date to the date the Company ceases use of the property. Intangible Assets The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Multiplatform Group segment. The Company’s indefinite-lived intangible assets are not subject to amortization, but are tested for impairment at least annually. The Company tests for possible impairment of indefinite-lived intangible assets whenever events or changes in circumstances, such as a significant reduction in operating cash flow or a dramatic change in the manner for which the asset is intended to be used indicate that the carrying amount of the asset may not be recoverable. The Company normally performs its annual impairment test for its FCC licenses using a direct valuation technique as prescribed in ASC 805-20-S99. The Company engages a third-party valuation firm to assist the Company in the development of these assumptions and the Company’s determination of the fair value of its FCC licenses. The Company performs its annual impairment test on its FCC licenses on July 1 of each year. However, as a result of uncertainty related to COVID-19 and its negative impact on the Company's business and the public trading values of its debt and equity, the Company performed an interim impairment test on its indefinite-lived intangible assets as of March 31, 2020. For a complete discussion of our annual impairment tests as well as the interim test performed, see Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill . Other intangible assets include definite-lived intangible assets. The Company’s definite-lived intangible assets 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 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 Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value. Goodwill At least annually, the Company performs its impairment test for each reporting unit’s goodwill. The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. The Company identified its reporting units in accordance with ASC 350-20-55. The Company's annual impairment test includes a full quantitative assessment, which involves the preparation of a fair value estimate for each reporting unit based on the most recent projected financial results, market and industry factors, including comparison to peer companies and the application of the Company's current estimated WACC. The Company performs its annual impairment test on its goodwill on July 1 of each year. However, as a result of uncertainty related to COVID-19 and its negative impact on the Company's business and the public trading values of its debt and equity, the Company performed an interim impairment test on its goodwill as of March 31, 2020. The Company performed another interim impairment test on goodwill as of January 1, 2021 as a result of the changes in the Company's management structure and its reportable segments effective at the beginning of 2021. For a complete discussion of our annual impairment tests as well as the interim tests performed, see Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill . Other Investments We apply Accounting Standards Update ("ASU") 2016-01 Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"), which requires us to measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in earnings. For equity securities without readily determinable fair values, we have elected the measurement alternative under which we measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. 58 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Investments in notes receivable are evaluated for credit losses in accordance with ASC 326, Financial Instruments-Credit Losses , on a quarterly basis or when indicators of credit loss exist. Financial Instruments Due to their short maturity, the carrying amounts of accounts and notes receivable, accounts payable, accrued liabilities, and short-term borrowings approximated their fair values at December 31, 2022 and 2021. Income Taxes The Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by valuation allowances if the Company believes it is more likely than not that some portion or the entire asset will not be realized. The Company has not provided U.S. federal income taxes for temporary differences with respect to investments in foreign subsidiaries. It is not apparent that these temporary differences will reverse in the foreseeable future. If any excess cash held by our foreign subsidiaries were needed to fund operations in the U.S., the Company could presently repatriate available funds without a requirement to accrue or pay U.S. taxes. The Company regularly reviews its tax liabilities on amounts that may be distributed in future periods and provides for foreign withholding and other current and deferred taxes on any such amounts, where applicable. Revenue Recognition The Company recognizes revenue when or as it satisfies a performance obligation by transferring a promised good or service to a customer. Where third-parties are involved in the provision of goods and services to a customer, revenue is recognized at the gross amount of consideration the Company expects to receive if the Company controls the promised good or service before it is transferred to the customer; otherwise, revenue is recognized at the net amount the Company retains. The Company receives payments from customers based on billing schedules that are established in its contracts, and deferred revenue is recorded when payment is received from a customer before the Company has satisfied the performance obligation or a non-cancelable contract has been billed in advance in accordance with the Company’s normal billing terms. The primary source of revenue in the Multiplatform Group segment is the sale of advertising on the Company’s broadcast radio stations and national and local live and virtual events. Revenues for advertising spots are recognized at the point in time when the advertisement is broadcast. Revenues for event sponsorships are recognized over the period of the event. Multiplatform Group also generates revenues from programming talent, network syndication, traffic and weather data, and other miscellaneous transactions, which are recognized when the services are transferred to the customer. Multiplatform Group's contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations. The primary source of revenue in the Digital Audio Group segment is the sale of advertising on the Company’s podcast network, iHeartRadio mobile application and website, and station websites. Revenues for digital advertising are recognized over time based on impressions delivered or time elapsed, depending upon the terms of the contract. Digital Audio Group’s contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations. The Company also generates revenue through contractual commissions realized from the sale of national spot and online advertising on behalf of clients of its full-service media representation business, Katz Media, which is part of the Audio and Media Services Group segment. Revenues from these contracts are recognized at the point in time when the advertisements are broadcast. Because the Company is a representative of its media clients and does not control the advertising inventory before it is transferred to the advertiser, the Company recognizes revenue at the net amount of contractual commissions retained for its representation services. The Company’s media representation contracts typically have terms up to ten years in duration and are generally billed monthly upon satisfaction of the performance obligations. The Company recognizes revenue in amounts that reflect the consideration it expects to receive in exchange for transferring goods or services to customers, excluding sales taxes and other similar taxes collected on behalf of governmental authorities (the "transaction price”). When this consideration includes a variable amount, the Company estimates the amount of consideration it expects to receive and only recognizes revenue to the extent that it is probable it will not be reversed in a future 59 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS reporting period. Because the transfer of promised goods and services to the customer is generally within a year of scheduled payment from the customer, the Company is not typically required to consider the effects of the time value of money when determining the transaction price. In order to appropriately identify the unit of accounting for revenue recognition, the Company determines which promised goods and services in a contract with a customer are distinct and are therefore separate performance obligations. If a promised good or service does not meet the criteria to be considered distinct, it is combined with other promised goods or services until a distinct bundle of goods or services exists. Certain of the Company’s contracts with customers include options for the customer to acquire additional goods or services for free or at a discount, and management judgment is required to determine whether these options are material rights that are separate performance obligations. For revenue arrangements that contain multiple distinct goods or services, the Company allocates the transaction price to these performance obligations in proportion to their relative standalone selling prices or the best estimate of their fair values. The Company has concluded that the contractual prices for the promised goods and services in its standard contracts generally approximate management’s best estimate of standalone selling price as the rates reflect various factors such as the size and characteristics of the target audience, market location and size, and recent market selling prices. However, where the Company provides customers with free or discounted services as part of contract negotiations, management uses judgment to determine how much of the transaction price to allocate to these performance obligations. These free or discounted services are typically provided in the same performance period. Contract Costs Incremental costs of obtaining a contract primarily relate to sales commissions, which are included in selling, general and administrative expenses and are generally commensurate with sales. These costs are generally expensed when incurred because the period of benefit is one year or less. Advertising Expense The Company records advertising expense as it is incurred. Advertising expenses were $ 166.1 million, $ 166.1 million, and $ 167.2 million for the years ended December 31, 2022 and 2021, and 2020, respectively, which include $ 138.3 million, 130.1 million, and $ 133.0 million in barter advertising, respectively. Share-Based Compensation Under the fair value recognition provisions of ASC 718, share-based compensation cost is measured at the grant date based on the fair value of the award. For awards that vest based on market or service conditions, this cost is recognized as expense on a straight-line basis over the vesting period. For awards that will vest based on performance conditions, this cost is recognized when it becomes probable that the performance conditions will be satisfied. Determining the fair value of share-based awards at the grant date requires assumptions and judgments, such as expected volatility, among other factors. Foreign Currency Results of operations for foreign subsidiaries and foreign equity investees are translated into U.S. dollars using average exchange rates during the year. The assets and liabilities of those subsidiaries and investees are translated into U.S. dollars using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a separate component of stockholders' equity, “Accumulated other comprehensive loss”. Foreign currency transaction gains and losses are included in Other expense, net in the Statement of Comprehensive Loss. Reclassifications Certain prior period amounts have been reclassified to conform to the 2022 presentation. 60 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, to defer the sunset date of the temporary relief in Topic 848 to December 31, 2024. The guidance is effective upon issuance. The adoption of the standard did not have a material impact on the Company's 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 does not expect the adoption of this standard to have a material impact on its financial position, results of operations, or cash flows. 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) December 31, 2022 December 31, 2021 Cash and cash equivalents $ 336,236 $ 352,129 Restricted cash included in: Other current assets 425 425 Total cash, cash equivalents and restricted cash in the Statement of Cash Flows $ 336,661 $ 352,554 NOTE 2 – REVENUE The Company generates revenue from several sources: • The primary source of revenue in the Multiplatform Group segment is the sale of advertising on the Company’s radio stations. This segment also generates revenues from programming talent, network syndication, traffic and weather data, live and virtual events and other miscellaneous transactions. • The primary source of revenue in the Digital Audio Group segment is the sale of advertising on the Company’s podcast network, iHeartRadio mobile application and website, and station websites. • The Company also generates revenue through contractual commissions realized from the sale of national spot and online advertising on behalf of clients of its full-service media representation business, Katz Media, which is reported in the Company’s Audio and Media Services Group segment. 61 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Disaggregation of Revenue The following table shows revenue streams for the Company for the years ended December 31, 2022, 2021, and 2020: (In thousands) Multiplatform Group Digital Audio Group Audio and Media Services Group Eliminations Consolidated Year Ended December 31, 2022 Revenue from contracts with customers: Broadcast Radio (1) $ 1,887,433 $ — $ — $ — $ 1,887,433 Networks (2) 503,244 — — — 503,244 Sponsorship and Events (3) 188,985 — — — 188,985 Digital, excluding Podcast (4) — 663,392 — ( 5,238 ) 658,154 Podcast (5) — 358,432 — — 358,432 Audio & Media Services (6) — — 304,302 ( 5,348 ) 298,954 Other (7) 16,140 — — ( 447 ) 15,693 Total 2,595,802 1,021,824 304,302 ( 11,033 ) 3,910,895 Revenue from leases (8) 1,388 — — — 1,388 Revenue, total $ 2,597,190 $ 1,021,824 $ 304,302 $ ( 11,033 ) $ 3,912,283 Year Ended December 31, 2021 Revenue from contracts with customers: Broadcast Radio (1) $ 1,812,252 $ — $ — $ — $ 1,812,252 Networks (2) 503,052 — — — 503,052 Sponsorship and Events (3) 160,322 — — — 160,322 Digital, excluding Podcast (4) — 581,918 — ( 5,845 ) 576,073 Podcast (5) — 252,564 — — 252,564 Audio & Media Services (6) — — 247,957 ( 6,602 ) 241,355 Other (7) 11,958 — — ( 670 ) 11,288 Total 2,487,584 834,482 247,957 ( 13,117 ) 3,556,906 Revenue from leases (8) 1,434 — — — 1,434 Revenue, total $ 2,489,018 $ 834,482 $ 247,957 $ ( 13,117 ) $ 3,558,340 Year Ended December 31, 2020 Revenue from contracts with customers: Broadcast Radio (1) $ 1,604,880 $ — $ — $ — $ 1,604,880 Networks (2) 484,950 — — — 484,950 Sponsorship and Events (3) 107,654 — — — 107,654 Digital, excluding Podcast (4) — 372,687 — — 372,687 Podcast (5) — 101,684 — — 101,684 Audio & Media Services (6) — — 274,749 ( 7,086 ) 267,663 Other (7) 7,276 — — ( 670 ) 6,606 Total 2,204,760 474,371 274,749 ( 7,756 ) 2,946,124 Revenue from leases (8) 2,094 — 2,094 Revenue, total $ 2,206,854 $ 474,371 $ 274,749 $ ( 7,756 ) $ 2,948,218 (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. 62 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 and 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. Trade and Barter Trade and barter transactions represent the exchange of advertising spots for merchandise, services, other advertising 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: Year Ended December 31, (In thousands) 2022 2021 2020 Consolidated: Trade and barter revenues $ 229,009 $ 175,519 $ 158,383 Trade and barter expenses 188,161 149,846 154,715 The Company recognized barter revenue of $ 40.7 million, $ 16.3 million and $ 10.5 million for the year ended December 31, 2022, 2021, and 2020, respectively, in connection with investments made in companies in exchange for advertising services. Deferred Revenue The following tables show the Company’s deferred revenue balance from contracts with customers: Year Ended December 31, (In thousands) 2022 2021 2020 Deferred revenue from contracts with customers: Beginning balance (1) $ 161,114 $ 145,493 $ 162,068 Revenue recognized, included in beginning balance ( 117,947 ) ( 93,195 ) ( 95,531 ) Additions, net of revenue recognized during period, and other 114,743 108,816 78,956 Ending balance $ 157,910 $ 161,114 $ 145,493 (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 a term of one year or less; however, as of December 31, 2022, the Company expects to recognize $ 320.8 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration of 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. 63 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue from Leases As of December 31, 2022, the future lease payments to be received by the Company are as follows: (In thousands) 2023 $ 959 2024 723 2025 541 2026 425 2027 372 Thereafter 1,259 Total minimum future rentals $ 4,279 NOTE 3 – LEASES The following tables provide the components of lease expense included within the Consolidated Statement of Comprehensive Loss for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, (In thousands) 2022 2021 2020 Operating lease expense $ 144,592 $ 153,042 $ 151,448 Variable lease expense 32,398 31,516 31,451 Non-cash impairment of ROU assets (1) 8,683 44,311 8,043 (1) In addition to non-cash impairment of ROU assets, the Company recorded an additional $ 0.7 million and $ 13.4 million of non-cash impairments related to leasehold improvements in 2022 and 2021, respectfully. The amounts related to leasehold improvements were immaterial for 2020. The following table provides the weighted average remaining lease term and the weighted average discount rate for the Company's leases as of December 31, 2022: December 31, 2022 Operating lease weighted average remaining lease term (in years) 13.3 Operating lease weighted average discount rate 6.7 % 64 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2022, the Company’s future maturities of operating lease liabilities were as follows: (In thousands) 2023 $ 127,636 2024 134,136 2025 123,259 2026 112,557 2027 100,569 Thereafter 819,321 Total lease payments $ 1,417,478 Less: Effect of discounting 498,535 Total operating lease liability $ 918,943 The following table provides supplemental cash flow information related to leases for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, (In thousands) 2022 2021 2020 Cash paid for amounts included in measurement of operating lease liabilities $ 141,340 $ 136,780 $ 139,507 Lease liabilities arising from obtaining right-of-use assets (1) 173,235 74,745 56,243 (1) Lease liabilities from obtaining right-of-use assets includes new leases entered into during the years ended December 31, 2022, 2021, and 2020 . 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 $ 87.2 million, $ 114.5 million, and $ 103.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. 65 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL Property, Plant and Equipment Acquisitions On March 31, 2021, the Company acquired Triton Digital, a global leader in digital audio and podcast technology and measurement services, from The E.W. Scripps Company for $ 228.5 million in cash. The assets acquired as part of this transaction consisted of $ 69.4 million in current and fixed assets, consisting primarily of accounts receivable and technology, and $ 191.3 million in intangible assets, consisting primarily of customer relationships, along with $ 168.0 million in goodwill (of which $ 6.9 million is tax-deductible). The Company also assumed liabilities of $ 32.2 million, consisting primarily of accounts payable and deferred tax liabilities. Property, Plant and Equipment The Company’s property, plant and equipment consisted of the following classes of assets as of December 31, 2022 and 2021, respectively: (In thousands) December 31, 2022 December 31, 2021 Land, buildings and improvements $ 340,692 $ 355,474 Towers, transmitters and studio equipment 215,655 180,571 Computer equipment and software 617,794 521,872 Furniture and other equipment 41,924 35,390 Construction in progress 29,091 64,732 1,245,156 1,158,039 Less: accumulated depreciation 550,314 375,946 Property, plant and equipment, net $ 694,842 $ 782,093 Indefinite-lived Intangible Assets The Company’s indefinite-lived intangible assets consist of FCC broadcast licenses in its Multiplatform Group segment. FCC broadcast licenses are granted to radio stations for up to eight years under the Telecommunications Act of 1996 (the “Act”). The Act requires the FCC to renew a broadcast license if the FCC finds that the station has served the public interest, convenience and necessity, there have been no serious violations of either the Communications Act of 1934 or the FCC’s rules and regulations by the licensee, and there have been no other serious violations which taken together constitute a pattern of abuse. The licenses may be renewed indefinitely at little or no cost. The Company does not believe that the technology of wireless broadcasting will be replaced in the foreseeable future. Annual Impairment Test on Indefinite-lived Intangible Assets The Company performs its annual impairment test on indefinite-lived intangible assets, including FCC licenses, as of July 1 of each year. In addition, the Company tests for impairment of indefinite-lived intangible assets whenever events and circumstances indicate that such assets might be impaired. The impairment tests for indefinite-lived intangible assets consist of a comparison between the fair value of the indefinite-lived intangible asset at the market level with its carrying amount. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of the indefinite-lived asset is its new accounting basis. The fair value of the indefinite-lived asset is determined using the direct valuation method as prescribed in ASC 805-20-S99. Under the direct valuation method, the fair value of the indefinite-lived assets is calculated at the market level as prescribed by ASC 350-30-35. The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its indefinite-lived intangible assets. 66 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The application of the direct valuation method attempts to isolate the income that is attributable to the indefinite-lived intangible asset alone (that is, apart from tangible and identified intangible assets and goodwill). It is based upon modeling a hypothetical “greenfield” build-up to a “normalized” enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been paid for (or added) as part of the build-up process. The Company forecasts revenue, expenses, and cash flows over a ten-year period for each of its markets in its application of the direct valuation method. The Company also calculates a “normalized” residual year which represents the perpetual cash flows of each market. The residual year cash flow was capitalized to arrive at the terminal value of the licenses in each market. Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as part of a going concern business, the buyer hypothetically develops indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flow model which results in value that is directly attributable to the indefinite-lived intangible assets. The current macroeconomic conditions have led to uncertainty, resulting in slowing broadcast revenue growth and declines in margins as inflation and interest rates have risen. These factors negatively impacted the key assumptions used in the discounted cash flow models that we utilized to value our FCC licenses as of July 1, 2022, resulting in a significant decrease in the fair values of certain of our FCC licenses. The key assumptions used in applying the direct valuation approach include 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 our FCC licenses as of July 1, 2022. 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, in the third quarter of 2022 the Company recognized a non-cash impairment charge of $ 302.1 million on its FCC licenses. While the Company believes it has made reasonable estimates and utilized reasonable assumptions to calculate the fair values of its indefinite-lived FCC licenses, it is possible a material change could occur to the estimated fair value of these assets as a result of the uncertainty regarding current economic conditions. No impairment was required as part of the 2021 annual impairment testing. As a result of the COVID-19 pandemic and the economic downturn starting in March 2020, the Company performed an interim impairment test as of March 31, 2020 on its indefinite-lived FCC licenses, resulting in a non-cash impairment charge of $ 502.7 million. No further impairment was recognized as a result of the Company's annual impairment test on indefinite-lived intangible assets in 2020. 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 Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value. 67 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of December 31, 2022, and December 31, 2021, respectively: (In thousands) December 31, 2022 December 31, 2021 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Customer / advertiser relationships $ 1,652,455 $ ( 633,352 ) $ 1,646,402 $ ( 459,620 ) Talent and other contracts 338,900 ( 160,500 ) 338,900 ( 117,337 ) Trademarks and tradenames 335,862 ( 122,403 ) 335,862 ( 88,252 ) Other 18,443 ( 9,735 ) 17,794 ( 7,149 ) Total $ 2,345,660 $ ( 925,990 ) $ 2,338,958 $ ( 672,358 ) Total amortization expense related to definite-lived intangible assets for the years ended December 31, 2022, 2021, and 2020 was $ 253.6 million, $ 280.6 million and $ 258.9 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 $ 245,900 2024 244,707 2025 213,514 2026 201,512 2027 176,171 Goodwill The following tables present 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) $ 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 — — ( 162 ) ( 162 ) Balance as of December 31, 2022 $ 1,462,022 $ 747,350 $ 104,031 $ 2,313,403 (1) Goodwill balance is presented net of accumulated impairment losses of $ 1.2 billion related to the Multiplatform Group segment. No impairments were recorded in 2022 or 2021. 68 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Goodwill Impairment We perform our annual impairment test on our goodwill as of July 1 of each year. The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. The goodwill impairment test requires measurement of the fair value of the Company's reporting units, which is compared to the carrying value of the reporting units, including goodwill. Each reporting unit is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value. Assessing the recoverability of goodwill requires estimates and assumptions about sales, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. As with the impairment testing performed on the Company's FCC licenses described above, the Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its reporting units as of July 1, 2022 as part of the annual impairment test. 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 annual goodwill impairment test. Although the impairment testing resulted in a significant decrease in the fair values of our reporting units, no goodwill impairment was recorded for 2022 as the estimated fair values of our reporting units exceeded the carrying values of the reporting units’ net assets, including goodwill. While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our reporting units, it is possible a material change could occur to the estimated fair value of the reporting units as a result of the uncertainty regarding current economic conditions. As a result of the changes in the Company's management structure and its reportable segments effective at the beginning of 2021, the Company performed an interim impairment test on goodwill as of January 1, 2021. No impairment charges were recorded in the first quarter of 2021 in connection with the interim impairment test. The carrying values of the Company’s reporting units were based on estimated fair values determined upon our Emergence, and the rapid deterioration in economic conditions resulting from the COVID-19 pandemic resulted in lower estimated fair values determined in connection with our interim goodwill impairment testing as of March 31, 2020. The estimated fair value of one of the Company's reporting units was below its carrying value, including goodwill. The macroeconomic factors discussed above had an adverse effect on the Company's estimated cash flows used in the discounted cash flow model. As a result, the Company recognized a non-cash impairment charge of $ 1.2 billion in the first quarter of 2020 to reduce goodwill. 69 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – INVESTMENTS The following table summarizes the Company's investments in nonconsolidated affiliates and other securities: (In thousands) Available-for-Sale Debt Securities Equity Method Investments Other Investments Marketable Equity Securities Total Investments Balance at December 31, 2020 $ 31,456 $ 11,065 $ 26,624 $ 1,429 $ 70,574 Purchases of investments 7,263 690 15,368 — 23,321 Equity in loss — ( 1,138 ) — — ( 1,138 ) Disposals ( 426 ) — ( 1,172 ) — ( 1,598 ) Gain (loss) on investments ( 62 ) — ( 8,680 ) 2,801 ( 5,941 ) Other ( 4,363 ) — 5,070 — 707 Balance at December 31, 2021 $ 33,868 $ 10,617 $ 37,210 $ 4,230 $ 85,925 Purchases of investments 13,458 2,813 25,102 — 41,373 Equity in income — ( 11 ) — — ( 11 ) Disposals ( 239 ) — — ( 326 ) ( 565 ) Gain (loss) on investments, net ( 6,520 ) — 11,332 ( 6,433 ) ( 1,621 ) Other ( 1,454 ) — ( 1,407 ) 2,981 120 Balance at December 31, 2022 $ 39,113 $ 13,419 $ 72,237 $ 452 $ 125,221 Equity method investments in the table above are not consolidated, but are accounted for under the equity method of accounting. The Company records its investments in these entities on the balance sheet within “Other assets.” The Company's interests in the operations of equity method investments are recorded in the statement of comprehensive loss as “Equity in loss of nonconsolidated affiliates.” Other investments includes various investments in companies for which there is no readily determinable market value. During 2022, the Company recorded $ 41.4 million for investments made in eleven companies in exchange for advertising services and cash. One of these investments is being accounted for under the equity method of accounting, eight of these investments are being accounted for under the measurement alternative and five of these investments are notes receivable that are convertible into cash or equity. During 2021, the Company recorded $ 17.5 million for investments made in seven companies in exchange for advertising services and cash. One of these investments is being accounted for under the equity method of accounting, three of these investments are being accounted for under the measurement alternative and three of these investments are notes receivable that are convertible into cash or equity. The Company recognized barter revenue of $ 40.7 million and $ 16.3 million in the year ended December 31, 2022 and 2021, respectively. The Company recognized non-cash investment impairments totaling $ 8.7 million on our investments for the year ended December 31, 2021 , which was recorded in “Gain (loss) on investments, net.” There were no impairments recorded for the year ended December 31, 2022. 70 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 – LONG-TERM DEBT Long-term debt outstanding as of December 31, 2022 and 2021 consisted of the following: (In thousands) December 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 — — 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) 4,462 5,350 Total consolidated secured debt 4,319,714 4,320,602 8.375 % Senior Unsecured Notes due 2027 (4) 1,120,366 1,450,000 Other unsecured subsidiary debt 52 90 Original issue discount ( 10,569 ) ( 13,454 ) Long-term debt fees ( 15,396 ) ( 18,370 ) Total debt 5,414,167 5,738,868 Less: Current portion 664 673 Total long-term debt $ 5,413,503 $ 5,738,195 (1) On May 17, 2022, we entered into a $ 450.0 million senior secured asset-based revolving credit facility (the "New ABL Facility"), maturing in 2027, which refinanced and replaced in its entirety the Company's existing asset-based revolving credit facility (the "Existing ABL Facility"). Refer to the 'Asset-based Revolving Credit Facility due 2027' section below for more information. (2) As of December 31, 2022, the New ABL Facility had a facility size of $ 450.0 million, no outstanding borrowings and $ 25.0 million of outstanding letters of credit, resulting in $ 425.0 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 year ended December 31, 2022, we repurchased of $ 329.6 million aggregate principal amount of iHeartCommunications, Inc.'s 8.375 % Senior Unsecured Notes due 2027 for $ 299.4 million in cash, excluding accrued interest. The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $ 30.2 million. The Company’s weighted average interest rate was 6.9 % and 5.4 % as of December 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 $ 4.8 billion and $ 5.9 billion as of December 31, 2022 and December 31, 2021, respectively. Under the fair value hierarchy established by ASC 820-10-35, Fair Value Measurement , the fair market value of the Company’s debt is classified as either Level 1 or Level 2. As of December 31, 2022 we were in compliance with all covenants related to the Company's debt agreements. Asset-based Revolving Credit Facility due 2027 On May 17, 2022, iHeartCommunications, Inc. ("iHeartCommunications"), 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. 71 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 December 31, 2022, iHeartCommunications had no principal amounts outstanding under the New ABL Facility, a facility size of $ 450.0 million and $ 25.0 million in outstanding letters of credit, resulting in $ 425.0 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 SOFR rate (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 term SOFR and eurocurrency 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 recent 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 lending 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, subject to certain exceptions, the guarantors of iHeartCommunications’ Term Loan Facility (as defined below). 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 the guarantors’ accounts receivable, qualified cash and related assets and proceeds thereof that is senior to the security interest of iHeartCommunications’ 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, and must continue to comply with this minimum fixed charge coverage ratio for fiscal quarters ending after the occurrence of the Trigger Event 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. 72 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Term Loan Facility due 2026 On May 1, 2019 (the "Effective Date"), iHeartCommunications, as borrower, entered into a Credit Agreement (the “Term Loan Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Bank of America, N.A., as successor administrative and collateral agent, governing our term loan credit facility (the "Term Loan Facility"). On the Effective Date, iHeartCommunications issued an aggregate of approximately $ 3.5 billion principal amount of senior secured term loans under the Term Loan Facility to certain Claimholders pursuant to the Plan of Reorganization. The Term Loan Facility matures on May 1, 2026. As described below, on August 7, 2019, the proceeds from the issuance of $ 750.0 million in aggregate principal amount of 5.25 % Senior Secured Notes due 2027 were used, together with cash on hand, to prepay at par $ 740.0 million of borrowings outstanding under the Term Loan Facility. On November 22, 2019, the proceeds from the issuance of $ 500.0 million in aggregate principal amount of 4.75 % Senior Secured Notes due 2028 were used, together with cash on hand, to prepay at par $ 500.0 million of borrowings outstanding under the Term Loan Facility. On February 3, 2020, iHeartCommunications entered into an amendment to the Term Loan Credit Agreement which reduced the interest rate to LIBOR plus a margin of 3.00 % (from LIBOR plus a margin of 4.00 %), or the Base Rate (as defined in the Term Loan Credit Agreement) plus a margin of 2.00 % (from Base Rate plus a margin of 3.00 %) and modified certain covenants contained in the Term Loan Credit Agreement. In connection with the Term Loan Facility amendment in February 2020, iHeartCommunications also prepaid at par $ 150.0 million of borrowings outstanding under the Term Loan Facility with cash on hand. On July 16, 2020, iHeartCommunications entered into Amendment No. 2 to issue $ 450.0 million of incremental term loan commitments (the “Incremental Term Loan Facility”), resulting in net proceeds of $ 425.8 million, after original issue discount and debt issuance costs. A portion of the proceeds from the issuance were used to repay the balance outstanding under the ABL Facility of $ 235.0 million, with the remaining $ 190.6 million of the proceeds available for general corporate purposes. On July 16, 2021, iHeartCommunications, Inc. entered into Amendment No. 3 which reduced the interest rate of its Incremental Term Loan Facility due 2026 to a Eurocurrency Rate of LIBOR plus a margin of 3.25 % and floor of 0.50 % (from LIBOR plus a margin of 4.00 % and floor of 0.75 %). The Base Rate interest amount was reduced to Base Rate plus a margin of 2.25 % and floor of 1.50 %. In connection with the amendment, iHeartCommunications voluntarily prepaid $ 250.0 million of borrowings outstanding under the Term Loan credit facilities with cash on hand, resulting in a reduction of $ 44.3 million of the existing Incremental Term Loan Facility due 2026 and $ 205.7 million of the Term Loan Facility due 2026. Under the terms of the Term Loan Credit Agreement, iHeartCommunications made quarterly principal payments of $ 6.4 million during the three months ended September 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021, and previously made payments of $ 5.25 million during the three months ended March 31, 2020 and June 30, 2020. Following the prepayment of $ 250.0 million of borrowings outstanding under the Term Loan credit facilities on July 16, 2021, iHeartCommunications is no longer required to make such quarterly payments. Interest Rate and Fees Following the amendment made on February 3, 2020, the loans under the Term Loan Facility due 2026 bear interest at a rate per annum equal to LIBOR plus a margin of 3.00 %, or the Base Rate plus a margin of 2.00 %. Following the amendment made on July 16, 2021, the incremental loans under the Incremental Term Loan Facility due 2026 have an interest rate of LIBOR plus a margin of 3.25 % and floor of 0.50 % for Eurocurrency Rate Loans and Base Rate plus a margin of 2.25 % and floor of 1.50 % for Base Rate Loans. Collateral and Guarantees The Term Loan Facility is guaranteed by Capital I and each of iHeartCommunications’ existing and future material wholly-owned restricted subsidiaries, subject to certain exceptions. All obligations under the Term Loan Facility, and the guarantees of those obligations, are secured, subject to permitted liens and other exceptions, by a first priority lien in substantially all of the assets of iHeartCommunications and all of the guarantors’ assets, including a lien on the capital stock of iHeartCommunications and certain of its subsidiaries owned by a guarantor, other than the accounts receivable and related assets of 73 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS iHeartCommunications and all of the subsidiary guarantors, and by a second priority lien on accounts receivable and related assets securing iHeartCommunications’ ABL Facility. Prepayments iHeartCommunications is required to prepay outstanding term loans under the Term Loan Facility, subject to certain exceptions, with: • 50 % (which percentage may be reduced to 25 % and to 0 % based upon iHeartCommunications’ first lien leverage ratio) of iHeartCommunications’ annual excess cash flow, subject to customary credits, reductions and exclusions; • 100 % (which percentage may be reduced to 50 % and 0 % based upon iHeartCommunications’ first lien leverage ratio) of the net cash proceeds of sales or other dispositions of the assets of iHeartCommunications or its wholly owned restricted subsidiaries, subject to reinvestment rights and certain other exceptions; and • 100 % of the net cash proceeds of any incurrence of debt, other than debt permitted under the Term Loan Facility. iHeartCommunications may voluntarily repay outstanding loans under the Term Loan Facility at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to eurocurrency loans. Certain Covenants and Events of Default The Term Loan Facility does not include any financial covenants. However, the Term Loan Facility includes negative covenants that, subject to significant exceptions, limit Capital I’s ability and the ability of its restricted subsidiaries (including iHeartCommunications) to, among other things: • incur additional indebtedness; • create liens on assets; • engage in mergers, consolidations, liquidations and dissolutions; • sell assets; • pay dividends and distributions or repurchase Capital I’s capital stock; • make investments, loans, or advances; • prepay certain junior indebtedness; • engage in certain transactions with affiliates; • amend material agreements governing certain junior indebtedness; and • change lines of business. The Term Loan Facility includes certain customary representations and warranties, affirmative covenants and events of default, including but not limited to, payment defaults, breach of representations and warranties, covenant defaults, cross defaults to certain indebtedness, certain bankruptcy-related events, certain events under ERISA, material judgments and a change of control. If an event of default occurs, the lenders under the Term Loan Facility are entitled to take various actions, including the acceleration of all amounts due under the Term Loan Facility and all actions permitted to be taken under the loan documents relating thereto or applicable law. 6.375 % Senior Secured Notes due 2026 On the Effective Date, iHeartCommunications entered into an indenture (the “Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $ 800.0 million aggregate principal amount of 6.375 % Senior Secured Notes due 2026 that were issued to certain Claimholders pursuant to the Plan of Reorganization. The 6.375 % Senior Secured Notes mature on May 1, 2026 and bear interest at a rate of 6.375 % per annum, payable semi-annually in arrears on February 1 and August 1 of each year. 74 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The 6.375 % Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility or other credit facilities or capital markets debt securities. The 6.375 % Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 6.375 % Senior Secured Notes (including the Term Loan Facility, the 5.25 % Senior Secured Notes, the 4.75 % Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 6.375 % Senior Secured Notes, effectively subordinated in right of payment to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 6.375 % Senior Secured Notes, to the extent of the value of such assets, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 6.375 % Senior Secured Notes. The 6.375 % Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility. iHeartCommunications may redeem the 6.375 % Senior Secured Notes at its option, in whole or in part, at the redemption prices set forth in the 6.375 % Senior Secured Notes Indenture plus accrued and unpaid interest to the redemption date. The 6.375 % Senior Secured Notes Indenture contains covenants that limit the ability of Capital I and its restricted subsidiaries, including iHeartCommunications, to, among other things: • incur or guarantee additional debt or issue certain preferred stock; • create liens on certain assets; • redeem, purchase or retire subordinated debt; • make certain investments; • create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries; • enter into certain transactions with affiliates; • merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets; • sell certain assets, including capital stock of iHeartCommunications’ subsidiaries; • designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and • pay dividends, redeem or repurchase capital stock or make other restricted payments. 5.25 % Senior Secured Notes due 2027 On August 7, 2019, iHeartCommunications entered into an indenture (the “ 5.25 % Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $ 750.0 million aggregate principal amount of 5.25 % Senior Secured Notes due 2027 that were issued in a private placement to qualified institutional buyers under Rule 144A under the Securities Act, and to persons outside the United States pursuant to Regulation S under the Securities Act. The 5.25 % Senior Secured Notes mature on August 15, 2027 and bear interest at a rate of 5.25 % per annum. Interest is payable semi-annually on February 15 and August 15 of each year. The 5.25 % Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility. The 5.25 % Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 5.25 % Senior Secured Notes (including the Term Loan Facility, the 6.375 % Senior Secured Notes, the 4.75 % Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 5.25 % Senior Secured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 5.25 % Senior Secured Notes, to the extent of the value of such collateral, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 5.25 % Senior Secured Notes. 75 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The 5.25 % Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility. iHeartCommunications may redeem the 5.25 % Senior Secured Notes at its option, in whole or part, at the redemption prices set forth in the 5.25 % Senior Secured Notes Indenture plus accrued and unpaid interest to the redemption date. The 5.25 % Senior Secured Notes Indenture contains covenants that limit the ability of iHeartCommunications and its restricted subsidiaries, to, among other things: • incur or guarantee additional debt or issue certain preferred stock; • create liens on certain assets; • redeem, purchase or retire subordinated debt; • make certain investments; • create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries; • enter into certain transactions with affiliates; • merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets; • sell certain assets, including capital stock of iHeartCommunications’ subsidiaries; • designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and • pay dividends, redeem or repurchase capital stock or make other restricted payments. 4.75 % Senior Secured Notes due 2028 On November 22, 2019, iHeartCommunications entered into an indenture (the “ 4.75 % Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $ 500.0 million aggregate principal amount of 4.75 % Senior Secured Notes due 2028 that were issued in a private placement to qualified institutional buyers under Rule 144A under the Securities Act, and to persons outside the United States pursuant to Regulation S under the Securities Act. The 4.75 % Senior Secured Notes mature on January 15, 2028 and bear interest at a rate of 4.75 % per annum. Interest is payable semi-annually on January 15 and July 15 of each year. The 4.75 % Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility. The 4.75 % Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 4.75 % Senior Secured Notes (including the Term Loan Facility, the 6.375 % Senior Secured Notes, the 5.25 % Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 4.75 % Senior Secured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 4.75 % Senior Secured Notes, to the extent of the value of such collateral, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 4.75 % Senior Secured Notes. The 4.75 % Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility. iHeartCommunications may redeem the 4.75 % Senior Secured Notes at its option, in whole or part, at any time prior to January 15, 2023, at a price equal to 100 % of the principal amount of the 4.75 % Senior Secured Notes redeemed, plus a make-whole premium, plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the 4.75 % Senior Secured Notes, in whole or in part, on or after January 15, 2023, at the redemption prices set forth in the 4.75 % Senior Secured Notes Indenture plus accrued and unpaid interest to the redemption date. 76 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The 4.75 % Senior Secured Notes Indenture contains covenants that limit the ability of iHeartCommunications and its restricted subsidiaries, to, among other things: • incur or guarantee additional debt or issue certain preferred stock; • create liens on certain assets; • redeem, purchase or retire subordinated debt; • make certain investments; • create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries; • enter into certain transactions with affiliates; • merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets; • sell certain assets, including capital stock of iHeartCommunications’ subsidiaries; • designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and • pay dividends, redeem or repurchase capital stock or make other restricted payments. 8.375 % Senior Unsecured Notes due 2027 On the Effective Date, iHeartCommunications entered into an indenture (the “Senior Unsecured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee, governing the $ 1,120.4 million aggregate principal amount of 8.375 % Senior Notes due 2027 that were issued to certain Claimholders pursuant to the Plan of Reorganization. The Senior Unsecured Notes mature on May 1, 2027 and bear interest at a rate of 8.375 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year. The Senior Unsecured Notes are guaranteed on a senior unsecured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility or other credit facilities or capital markets debt securities. The Senior Unsecured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the Senior Unsecured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured (including the 6.375 % Senior Secured Notes, the 5.25 % Senior Secured Notes, the 4.75 % Senior Secured Notes and borrowings under the ABL Facility and the Term Loan Facility), to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the Senior Unsecured Notes. iHeartCommunications could redeem the Senior Unsecured Notes at its option, in whole or in part, at any time prior to May 1, 2022, at a price equal to 100 % of the principal amount of the Senior Unsecured Notes being redeemed, plus an applicable premium and plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the Senior Unsecured Notes at its option, in whole or in part, on or after May 1, 2022, at the redemption prices set forth in the Senior Unsecured Notes Indenture plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2022, iHeartCommunications could redeem at its option, up to 40 % of the aggregate principal amount of the Senior Unsecured Notes at a redemption price equal to 108.375 % of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the proceeds of one or more equity offerings. The Senior Unsecured Notes Indenture contains covenants that limit the ability of Capital I and its restricted subsidiaries, including iHeartCommunications, to, among other things: • incur or guarantee additional debt or issue certain preferred stock; • create liens on certain assets; • redeem, purchase or retire subordinated debt; • make certain investments; • create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries; • enter into certain transactions with affiliates; 77 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets; • sell certain assets, including capital stock of iHeartCommunications’ subsidiaries; • designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and • pay dividends, redeem or repurchase capital stock or make other restricted payments. Future Maturities of Long-term Debt Future maturities of long-term debt at December 31, 2022 are as follows: (in thousands) 2023 $ 664 2024 401 2025 287 2026 3,065,458 2027 1,870,467 Thereafter 502,855 Total (1) $ 5,440,132 (1) Excludes original issue discount of $ 10.6 million and long-term debt fees of $ 15.4 million, which are amortized through interest expense over the life of the underlying debt obligations.. Surety Bonds and Letters of Credit As of December 31, 2022, iHeartCommunications had outstanding surety bonds, commercial standby letters of credit and bank guarantees of $ 9.3 million , $ 25.4 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 7 – COMMITMENTS AND CONTINGENCIES Commitments and Contingencies The Company accounts for its rentals that include renewal options, annual rent escalation clauses, minimum franchise payments and maintenance related to displays under the guidance in ASC 842, Leases . The Company accounts for annual rent escalation clauses included in the lease term on a straight-line basis under the guidance in ASC 842, Leases . The Company considers renewal periods in determining its lease terms if at inception of the lease there is reasonable assurance the lease will be renewed. Expenditures for maintenance are charged to operations as incurred, whereas expenditures for renewal and betterments are capitalized. Non-cancelable contracts that provide the lessor with a right to fulfill the arrangement with property, plant and equipment not specified within the contract are not a lease and have been included within non-cancelable contracts within the table below. The Company leases office space, certain broadcasting facilities and equipment under long-term operating leases. The Company accounts for these leases in accordance with the policies described above. Rent expense charged to operations for the years ended December 31, 2022, 2021, and 2020 was $ 188.5 million, $ 203.5 million, and $ 198.2 million, respectively. 78 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2022, the Company's future minimum payments under non-cancelable contracts in excess of one year and employment/talent contracts consist of the following: (In thousands) Non-Cancelable Employment/Talent Contracts Contracts 2023 $ 269,252 $ 80,515 2024 142,675 77,825 2025 97,084 64,953 2026 57,843 27,250 2027 9,473 14,000 Thereafter 2,677 15,000 Total $ 579,004 $ 279,543 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 its litigation arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes. Alien Ownership Restrictions and FCC Petition for Declaratory Ruling The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership to be in the public interest. 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 the 2020 Declaratory Ruling, which granted the relief requested by the PDR, subject to certain conditions, as described further in Note 9, Stockholder's Equity . On November 9, 2020, the Company notified the holders of Special Warrants of the commencement of an exchange process (the “Exchange Notice”). On January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules (the “Exchange”). Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock. See “Item 1. Business – Regulation of Our Business, Alien Ownership Restrictions” of our Annual Report on Form 10-K for the year ended December 31, 2020 and "Part II, Item 1A. Risk Factors - Regulatory, Legislative and Litigation Risks, Regulations imposed by the Communications Act and the FCC limit the amount of foreign individuals or entities that may invest in our capital stock without FCC approval" in this Quarterly Report on Form 10-Q for additional information. On March 8, 2021, the Company filed the Remedial PDR with the FCC. The Remedial PDR relates to the acquisition by Global Media & Entertainment Ltd (f/k/a Honeycomb Investments Limited) ("Global Investments") of the Company’s Class A Common Stock. Specifically, on February 5, 2021, Global Investments, The Global Media & Entertainment Investments Trust (the "GMEI Trust"), James Hill (as trustee of the GMEI Trust), Simon Groom (as trustee of the GMEI Trust) and Michael Tabor (as beneficiary of the GMEI Trust) (together with Global Investments and any affiliates or third parties to whom they may assign or transfer any of their rights or interests, the "GMEI Investors") filed a Schedule 13D with the SEC, in which the 79 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS GMEI Investors disclosed beneficial ownership of 9,631,329 shares of the Company’s Class A Common Stock, which at that time represented approximately 8.7 % of the Company’s outstanding Class A Common Stock. This ownership interest was inconsistent with the FCC’s foreign ownership rules and the 2020 Declaratory Ruling issued by the FCC relating to the Company’s foreign ownership on November 5, 2020, both of which limit a foreign investor in the GMEI Investors’ position to holding no more than 5 % of the Company’s voting equity or total equity without prior FCC approval. The Remedial PDR, which was filed pursuant to the rules and regulations of the FCC, sought (a) specific approval for the more than 5 % equity and voting interests in the Company presently held by the GMEI Investors and (b) as amended, advance approval for the GMEI Investors to increase their equity and voting interest in the Company up to any non-controlling amount not to exceed 14.99 %. On March 26, 2021, the FCC conditioned the approval of applications by the Company to acquire certain radio stations, which were pending prior to the GMEI Investors’ Schedule 13D filing, on the Company taking certain actions with respect to the GMEI Investors' rights as stockholders of the Company. On that same date, and in order to implement the conditions required by the FCC, the Company’s Board of Directors (the “Board”) resolved to take certain actions to limit the rights of the GMEI Investors, including, but not limited to, suspending all voting rights of GMEI Investors until and unless the FCC releases a declaratory ruling granting specific approval for each of the GMEI Investors to hold more than 5 percent of the equity and/or voting interests of the Company. On December 22, 2021, the FCC issued the “GMEI Declaratory Ruling" which granted the Remedial PDR. 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 8 – INCOME TAXES Significant components of the provision for income tax benefit (expense) are as follows: (In thousands) Year Ended December 31, 2022 2021 2020 Current – Federal $ ( 54,934 ) $ ( 2,169 ) $ ( 652 ) Current – foreign ( 4,891 ) ( 2,177 ) ( 1,674 ) Current – state ( 19,312 ) ( 14,919 ) 1,680 Total current expense ( 79,137 ) ( 19,265 ) ( 646 ) Deferred – Federal 65,553 932 172,302 Deferred – foreign 1,659 976 28 Deferred – state 7,206 8,966 11,939 Total deferred benefit 74,418 10,874 184,269 Income tax benefit (expense) $ ( 4,719 ) $ ( 8,391 ) $ 183,623 The current tax expenses recorded for the years ended December 31, 2022 and 2021 were primarily related to federal, state, and local tax expenses incurred due to taxable income in excess of available net operating losses during those years. The current tax expense recorded for the year ended December 31, 2020 was primarily related to local country foreign tax expense in certain jurisdictions partially offset by adjustments to the Company’s reserves for unrecognized tax benefits in certain state jurisdictions. The deferred tax benefits of $ 74.4 million and $ 10.9 million recorded in the years ended December 31, 2022 and 2021, respectively, related primarily to the difference of book in excess of tax amortization expense during the years and the disallowance of interest expense deductions under Section 163(j) of the Internal Revenue Code. The 2022 book amortization 80 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS expense included the FCC license non-cash impairment charge recorded during the third quarter of 2022 discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill . These benefits were partially offset by the utilization of net operating loss carryforwards during the current period and the recording of valuation allowance adjustments against certain federal and state deferred tax assets for disallowed interest carryforwards due to the uncertainty of the ability to realize those assets in future years. The deferred tax benefit of $ 184.3 million recorded in the year ended December 31, 2020 related primarily to the current period net operating losses and a reduction in deferred tax liabilities recorded in connection with the impairment of our FCC licenses discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill . On March 27, 2020, the CARES Act, which included numerous tax provisions, was signed into law. The CARES Act included certain temporary relief provisions with respect to the application of the Section 163(j) interest deduction limitation including the ability to elect to use the Company’s 2019 Adjusted Taxable Income (as defined under Section 163(j)) for purposes of calculating the 2020 interest deduction limitation. This provision of the CARES Act resulted in an increase to allowable interest deductions of $ 179.4 million during 2020. The other federal income tax provisions within the CARES Act did not materially impact the Company’s financial statements. On December 27, 2020, the Consolidated Appropriations Act was signed into law in order to provide further stimulus and support to those affected by the COVID-19 pandemic. The tax provisions included within the Consolidated Appropriations Act did not materially impact the Company’s financial statements in the current year. On August 16, 2022, the Inflation Reduction Act was signed into law. The tax provisions included within the Inflation Reduction Act did not materially impact the Company's financial statements in the current year. Significant components of the Company's deferred tax liabilities and assets as of December 31, 2022 and 2021 are as follows: (In thousands) 2022 2021 Deferred tax liabilities: Intangibles $ 659,378 $ 821,449 Fixed Assets 101,934 109,957 Deferred Income 44,261 — Operating lease right-of-use assets 199,926 187,938 Total deferred tax liabilities 1,005,499 1,119,344 Deferred tax assets: Accrued expenses 16,665 22,003 Net operating loss carryforwards 141,163 157,095 Interest expense carryforwards 346,354 337,660 Operating lease liabilities 233,003 210,227 Capital loss carryforwards 1,655,534 1,651,413 Investments 10,992 18,956 Bad debt reserves 10,172 13,078 Other 8,997 4,833 Total gross deferred tax assets 2,422,880 2,415,265 Less: Valuation allowance 1,901,191 1,854,143 Total deferred tax assets 521,689 561,122 Net deferred tax liabilities $ 483,810 $ 558,222 The deferred tax liability related to intangibles primarily relates to the difference in book and tax basis of FCC licenses and other intangible assets that were adjusted for book purposes to estimated fair values as part of the application of fresh start accounting, and were further adjusted in the first quarter of 2020 and the third quarter of 2022 upon recognition of impairments 81 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS as discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill . In accordance with ASC 350-10, the Company does not amortize FCC licenses for financial reporting purposes. As a result, this deferred tax liability will not reverse over time unless the Company recognizes future impairment charges or sells its FCC licenses. As the Company continues to amortize its tax basis in its FCC licenses, the deferred tax liability will increase over time. The Company’s net foreign deferred tax liabilities for the years ended December 31, 2022 and 2021 were $ 11.5 million and $ 13.2 million, respectively. At December 31, 2022, the Company had recorded net operating loss and tax credit carryforwards (tax effected) for federal and state income tax purposes of approximately $ 141.2 million, expiring in various amounts through 2042 or in some cases with no expiration date. Internal Revenue Code Section 163(j), as amended, generally limits the deduction for business interest expense to thirty percent of adjusted taxable income (notwithstanding the temporary provisions described above from the enactment of the CARES Act), and provides that any disallowed interest expense may be carried forward indefinitely. The Company recorded deferred tax assets for federal and state interest limitation carryforwards of $ 346.4 million as of December 31, 2022. In connection with the taxable separation of the Outdoor division as part of the bankruptcy restructuring, the Company realized a $ 7.2 billion capital loss (gross after attribute reduction calculations). For federal tax purposes the capital loss can be carried forward 5 years and only be used to offset capital gains. For state tax purposes, the capital loss has various carryforward periods. As of December 31, 2022 the tax effected balance of the capital loss carryforwards were $ 1.7 billion. The Company has recorded a full valuation allowance against the deferred tax asset associated with the federal and state capital loss carryforward as it is not expected to be realized. The Company expects to realize the benefits of a portion of its remaining deferred tax assets based upon expected future taxable income from deferred tax liabilities that reverse in the relevant federal and state jurisdictions and carryforward periods. As of December 31, 2022, the Company had recorded a valuation allowance of $ 1.9 billion against a portion of these U.S. federal and state deferred tax assets which it does not expect to realize, relating primarily to capital loss carryforwards, disallowed interest carryforwards, and certain state net operating loss carryforwards. The Company's U.S. federal and state deferred tax valuation allowance increased by $ 47.0 million during the year ended December 31, 2022 primarily due to an increase in valuation allowances against interest limitation carryforwards. Any deferred tax liabilities associated with acquired FCC licenses and tax-deductible goodwill intangible assets are now relied upon as sources of future taxable income for purposes of realizing deferred tax assets attributed to carryforwards that have an indefinite life such as the Section 163(j) interest carryforward. At December 31, 2022, net deferred tax liabilities include a deferred tax asset of $ 6.7 million relating to stock-based compensation expense under ASC 718-10, Compensation—Stock Compensation . Full realization of this deferred tax asset requires stock options to be exercised at a price equal to or exceeding the sum of the grant price plus the fair value of the option at the grant date and restricted stock to vest at a price equaling or exceeding the fair market value at the grant date. Accordingly, there can be no assurance that the stock price of the Company’s common stock will rise to levels sufficient to realize the entire deferred tax benefit currently reflected in its balance sheet. 82 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The reconciliations of income tax on income (loss) computed at the U.S. federal statutory tax rates to the recorded income tax benefit (expense) for the Company are: Year Ended December 31, (In thousands) 2022 2021 2020 Amount Percent Amount Percent Amount Percent Income tax benefit at statutory rates $ 54,170 21.0 % $ 31,500 21.0 % $ 440,758 21.0 % State income taxes, net of federal tax effect ( 3,548 ) ( 1.4 ) % 3,325 2.2 % 13,619 0.7 % Foreign income taxes ( 1,615 ) ( 0.6 ) % ( 978 ) ( 0.7 ) % ( 1,187 ) ( 0.1 ) % Nondeductible items ( 7,497 ) ( 2.9 ) % ( 10,264 ) ( 6.8 ) % ( 8,928 ) ( 0.4 ) % Changes in valuation allowance and other estimates ( 52,293 ) ( 20.3 ) % ( 35,093 ) ( 23.4 ) % ( 30,531 ) ( 1.5 ) % Impairment charges — — % — — % ( 257,119 ) ( 12.3 ) % Tax credits 3,848 1.5 % 4,831 3.2 % 3,353 0.2 % Other, net 2,216 0.9 % ( 1,712 ) ( 1.1 ) % 23,658 1.1 % Income tax benefit (expense) $ ( 4,719 ) ( 1.8 ) % $ ( 8,391 ) ( 5.6 ) % $ 183,623 8.7 % The Company’s effective tax rates for the years ended December 31, 2022 and 2021 were ( 1.8 )% and ( 5.6 )%, respectively. The effective tax rates for both years were primarily impacted the valuation allowance adjustments recorded during the years against certain federal and state deferred tax assets for disallowed interest carryforwards due to the uncertainty of the ability to realize those assets in future periods. The Company’s effective tax rate for the year ended December 31, 2020 was 8.7 %. The effective rate for the year was primarily impacted by the impairment charges to non-deductible goodwill discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill . In addition, the Company recorded deferred tax adjustments to state net operating losses and federal and state disallowed interest carryforwards as a result of the filing of 2019 tax returns and certain legal entity restructuring completed during the year. These adjustments were partially offset by valuation allowance adjustments recorded during the year against certain federal and state deferred tax assets such as net operating loss carryforwards and disallowed interest carryforwards due to the uncertainty of the ability to realize those assets in future years. The Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense. The total amount of interest accrued at December 31, 2022 and 2021 was $ 4.9 million and $ 4.2 million, respectively. The total amount of unrecognized tax benefits including accrued interest and penalties at December 31, 2022 and 2021 was $ 28.7 million and $ 22.2 million, respectively, of which $ 27.2 million and $ 20.7 million is included in “Other long-term liabilities”. In addition, $ 1.5 million and $ 1.5 million of unrecognized tax benefits are recorded net with the Company’s deferred tax assets for its net operating losses as opposed to being recorded in “Other long-term liabilities” at December 31, 2022 and 2021, respectively. The total amount of unrecognized tax benefits at December 31, 2022 and 2021 that, if recognized, would impact the effective income tax rate is $ 22.9 million and $ 15.5 million, respectively. (In thousands) Years Ended December 31, Unrecognized Tax Benefits 2022 2021 Balance at beginning of period $ 18,045 $ 14,681 Increases for tax position taken in the current year 5,584 1,911 Increases for tax positions taken in previous years 1,593 2,937 Decreases for tax position taken in previous years — ( 217 ) Decreases due to lapse of statute of limitations ( 1,399 ) ( 1,267 ) Balance at end of period $ 23,823 $ 18,045 83 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. All federal income tax matters through 2018 are closed. The majority of all material state, local, and foreign income tax matters have been concluded for years through 2018 with the exception of a current examination in Texas that covers the 2007-2016 tax years. NOTE 9 – STOCKHOLDERS’ EQUITY Pursuant to the Company's 2019 Equity Incentive Plan ("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 ("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. The 2019 Plan and 2021 Plan are designed to provide an incentive to certain key members of management and service providers of the Company or any of its subsidiaries and non-employee members of the Board of Directors and to offer an additional inducement in obtaining the services of such individuals. The 2019 Plan provided for the grant of (a) options and (b) restricted stock units, which, in each case, may be subject to contingencies or restrictions as set forth under the plan and applicable award agreement. The 2021 Plan provides for the grant of (a) incentive and non-incentive options, (b) stock appreciation rights, (c) restricted stock, (d) restricted stock units, (e) other stock or cash-based awards and (f) dividend equivalents. The aggregate number of shares of Class A common stock that may be issued or used for reference purposes with respect to which awards may be granted under the 2021 Plan is equal to the sum of (a) 6,000,000 shares of Class A common stock plus (b) shares of Class A common stock which are subject to outstanding awards under the 2019 Plan, and become available for issuance under the 2021 Plan (which may not exceed 10,743,222 shares of Class A common stock). Such shares of common stock may consist either in whole or in part of authorized but unissued shares of common stock, shares purchased on the open market, or shares of common stock held in the treasury of the Company. The Company shall at all times during the term of the plan reserve and keep available such number of shares of common stock as will be sufficient to satisfy the requirements of the plan. Share-Based Compensation Stock Options Options granted under the 2021 Plan may not have a term that exceeds ten years . The term of each option granted pursuant to the 2019 Plan may not exceed (a) six years from the date of grant thereof in the case of the options granted as Emergence Awards and (b) ten years from the date of grant thereof in the case of all other options; subject, however, in either case, to earlier termination as hereinafter provided. Options granted under the 2019 Plan and 2021 Plan are exercisable at such time or times and subject to such terms and conditions as shall be determined by the Compensation Committee of the Board (the "Committee") at the time of grant. No options granted under the 2019 Plan or the 2021 Plan will provide for any dividends or dividend equivalents thereon. The Company accounts for its share-based payments using the fair value recognition provisions of ASC 718-10, Compensation—Stock Compensation . The fair value of options that vest based on continued service is estimated on the grant date using a Black-Scholes option-pricing model. Expected volatilities were based on historical volatility of peer companies’ stock, including the Company, over the expected life of the options. The expected life of the options granted represents the period of time that the options granted are expected to be outstanding. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods equal to the expected life of the option. The Company does not estimate forfeitures at grant date, but rather has elected to account for forfeitures when they occur. There were no options granted during the year ended December 31, 2022. 84 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following assumptions were used to calculate the fair value of the Company's options on the date of grant: Year Ended December 31, 2021 2020 Expected volatility 56 % 44 % – 57 % Expected life in years 6.2 – 6.3 6.0 – 6.3 Risk-free interest rate 0.79 % – 1.15 % 0.35 % – 1.41 % Dividend yield — % — % The following table presents a summary of the Company's stock options outstanding at and stock option activity during the year ended December 31, 2022 ("Price" reflects the weighted average exercise price per share): (In thousands, except per share data) Options Price Weighted Average Remaining Contractual Term Outstanding, January 1, 2022 7,615 $ 16.14 5.1 years Granted — Exercised ( 31 ) 15.20 Forfeited ( 54 ) 12.67 Expired ( 20 ) 18.32 Outstanding, December, 31, 2022 7,510 16.16 4.0 years Exercisable 5,180 16.95 3.5 years Expected to Vest 2,330 14.41 5.2 years A summary of the Company's unvested options and changes during the year ended December 31, 2022 is presented below: (In thousands, except per share data) Options Weighted Average Grant Date Fair Value Unvested, January 1, 2022 4,050 $ 5.43 Granted — Vested (1) ( 1,666 ) 5.33 Forfeited ( 54 ) 5.28 Unvested, December 31, 2022 2,330 5.51 (1) The total fair value of the options vested during the year ended December 31, 2022 was $ 8.9 million. Restricted Stock Units ( “ RSUs ” ) RSUs (representing one share of the Company's class A common stock) may be issued under the 2019 Plan and 2021 Plan. Each RSU awarded to a participant, both under the 2019 Plan and the 2021 Plan will be credited with dividends paid in respect of one share of common stock (“Dividend Equivalents”). Dividend Equivalents will be withheld by the Company for the participant’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a participant’s account and attributable to any particular RSU (and earnings thereon, if applicable) shall be distributed to the participant upon settlement of such RSU and, if such RSU is forfeited, the participant shall have no right to such Dividend Equivalents. 85 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents a summary of the Company's RSUs outstanding and RSU activity as of and during the year ended December 31, 2022 (“Price” reflects the weighted average share price at the date of grant): (In thousands, except per share data) Awards Price Outstanding, January 1, 2022 1,966 $ 15.20 Granted 3,154 12.03 Vested (restriction lapsed) ( 843 ) 15.15 Forfeited ( 83 ) 15.54 Outstanding, December 31, 2022 4,194 12.82 Performance-based Restricted Stock Units (“Performance RSUs”) In August 2020, the Company issued Performance RSUs under the 2019 Plan to certain key employees. Such Performance RSUs vested upon the achievement of critical operational (cost savings) improvements and specific environmental, social and governance initiatives, which were measured over an approximately 15-month period from the date of issuance. In the year ended December 31, 2021, the Company recognized $ 1.6 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 executives. The Q1 2022 Performance RSUs vest upon the achievement of certain total stockholder return goals and continued service, which are being measured over an approximately 50-month period from the date of issuance. During the year ended December 31, 2022, the Company recognized $ 2.3 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") to certain key employees. The 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. The Q2 2022 Performance RSUs are measured over a performance period ending December 31, 2024 and vest on the third anniversary of the date of issuance (to the extent earned). During the year ended December 31, 2022, the Company recognized $ 3.3 million in relation to these Q2 2022 Performance RSUs. Expected volatilities were based on historical and implied volatility of peer companies’ stock, including the Company, over the expected life of the awards. The Company does not estimate forfeitures at grant date, but rather has elected to account for forfeitures when they occur. The following table presents a summary of the Company's Performance RSUs outstanding and activity as of and during the year ended December 31, 2022 (“Price” reflects the weighted average share price at the date of grant): (In thousands, except per share data) Awards Price Outstanding, January 1, 2022 556 $ 8.98 Granted 2,055 13.57 Vested (restriction lapsed) ( 556 ) 8.98 Forfeited — — Outstanding, December 31, 2022 2,055 13.57 86 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Common Stock and Special Warrants The following table presents the Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of December 31, 2022: (In thousands, except share and per share data) December 31, 2022 Class A Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized 122,370,425 Class B Common Stock, par value $ .001 per share, 1,000,000,000 shares authorized 21,477,181 Special Warrants 5,111,312 Total Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding 148,958,918 Class A Common Stock Holders of shares of the Company's Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the Company's Class A common stock have the exclusive right to vote for the election of directors. There is no cumulative voting rights in the election of directors. Holders of shares of the Company's Class A common stock are entitled to receive dividends, on a per share basis, when and if declared by the Company's Board out of funds legally available therefor and whenever any dividend is made on the shares of the Company's Class B common stock subject to certain exceptions set forth in our certificate. The Company may not subdivide or combine (by stock split, reverse stock split, recapitalization, merger, consolidation or any other transaction) its shares of Class A common stock or Class B common stock without subdividing or combining its shares of Class B common stock or Class A common stock, respectively, in a similar manner. Upon our dissolution or liquidation or the sale of all or substantially all of the Company's assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Company's Class A common stock will be entitled to receive pro rata together with holders of the Company's Class B common stock our remaining assets available for distribution. New Class A common stock certificates issued upon transfer or new issuance of Class A common stock shares contain a legend stating that such shares of Class A common stock are subject to the provisions of our amended and restated certificate of incorporation, including but not limited to provisions governing compliance with requirements of the Communications Act and regulations thereunder, including, without limitation, those concerning foreign ownership and media ownership. 87 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Class B Common Stock Holders of shares of the Company's Class B common stock are not entitled to vote for the election of directors or, in general, on any other matter submitted to a vote of the Company’s stockholders, but are entitled to one vote per share on the following matters: (a) any amendment or modification of any specific rights or obligations of the holders of Class B common stock that does not similarly affect the rights or obligations of the holders of Class A common stock, in which case the holders of Class B Common Stock will be entitled to a separate class vote, with each share of Class B common stock having one vote; and (b) to the extent submitted to a vote of our stockholders, (i) the retention or dismissal of outside auditors by the Company, (ii) any dividends or distributions to our stockholders, (ii) any material sale of assets, recapitalization, merger, business combination, consolidation, exchange of stock or other similar reorganization of the Company or any of its subsidiaries, (iv) the adoption of any amendment to our certificate of incorporation, (v) other than in connection with any management equity or similar plan adopted by the Company's Board, any authorization or issuance of equity interests, or any security or instrument convertible into or exchangeable for equity interests, in the Company or any of its subsidiaries, and (vi) the liquidation of the Company, in which case in respect to any such vote concerning the matters described in clause (b), the holders of Class B common stock are entitled to vote with the holders of the Class A common stock, with each share of common stock having one vote and voting together as a single class. Holders of shares of the Company's Class B common stock are generally entitled to convert shares of Class B common stock into shares of Class A common stock on a one -for-one basis, subject to the Company’s ability to restrict conversion in order to comply with the Communications Act and FCC regulations. Holders of shares of the Company's Class B common stock are entitled to receive dividends when and if declared by the Company's Board out of funds legally available therefor and whenever any dividend is made on the shares of the Company's Class A common stock subject to certain exceptions set forth in our certificate of incorporation. Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Company's Class B common stock will be entitled to receive pro rata with holders of the Company's Class A common stock our remaining assets available for distribution. During the years ended December 31, 2022, 2021, and 2020, 209,613 shares, 7,634,045 shares, and 20,080 shares of the Class B common stock were converted into Class A common stock, respectively. Special Warrants Each Special Warrant issued under the special warrant agreement entered into in connection with the Reorganization may be exercised by its holder to purchase one share of Class A common stock or Class B common stock at an exercise price of $ 0.001 per share, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, subject to certain exceptions, (a) such exercising holder owning more than 4.99 percent of the Company's outstanding Class A common stock, (b) more than 22.5 percent of the Company's capital stock or voting interests being owned directly or indirectly by foreign individuals or entities, (c) the Company exceeding any foreign ownership threshold set by the FCC pursuant to a declaratory ruling or specific approval requirement or (d) the Company violating 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. To the extent there are any dividends declared or distributions made with respect to the Class A common stock or Class B common stock, those dividends or distributions will also be made to holders of Special Warrants concurrently and on a pro rata basis based on their ownership of common stock underlying their Special Warrants on an as-exercised basis; provided , that no such distribution will be made to holders of Special Warrants if (x) the Communications Act or an FCC rule prohibits such distribution to holders of Special Warrants or (y) our FCC counsel opines that such distribution is reasonably likely to cause (i) the Company to violate the Communications Act or any applicable FCC rule or (ii) any such holder not to be deemed to hold a noncognizable (under FCC rules governing foreign ownership) future equity interest in the Company; provided further , that, if any distribution of common stock or any other securities to a holder of Special Warrants is not permitted pursuant to clauses (x) or (y), the Company will cause economically equivalent warrants to be distributed to such holder in lieu thereof, to the extent that such distribution of warrants would not violate the Communications Act or any applicable FCC rules. 88 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Special Warrants will expire on the earlier of the twentieth anniversary of the issuance date and the occurrence of a change in control of the Company. During the year ended December 31, 2022, stockholders exercised 96,516 and 96,602 Special Warrants for an equivalent number of shares of Class A common stock and Class B common stock, respectively. During the year ended December 31, 2021, stockholders exercised 47,197,139 and 22,337,312 Special Warrants for an equivalent number of shares of Class A common stock and Class B common stock, respectively. During the year ended December 31, 2020, stockholders exercised 6,205,617 and 2,095 Special Warrants for an equivalent number of Class A common stock and Class B common stock, respectively. January 2021 Exchange Substantially Expanding Class A and Class B Shares Outstanding On January 8, 2021, the Company completed an exchange of 67,471,123 Special Warrants into 45,133,811 shares of Class A common stock, the Company’s publicly traded equity, and 22,337,312 shares of Class B common stock. The exchange was authorized by a previously issued Declaratory Ruling from the Federal Communications Commission approving an increase in iHeartMedia’s authorized aggregate foreign ownership from 25 % to 100 %, subject to certain conditions set forth in the Declaratory Ruling. Certain shares of Class B common stock and Special Warrants were not converted into Class A Common Stock due to current regulatory restrictions applicable to certain shareholders. There were 5,111,312 Special Warrants outstanding on February 24, 2023. Share-Based Compensation Cost The share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. Share-based compensation payments are recorded in Selling, general and administrative expenses and were $ 35.5 million, $ 23.5 million and $ 22.9 million for the Company for the years ended December 31, 2022, 2021, and 2020, respectively. The tax benefit related to the share-based compensation expense for the Company for the years ended December 31, 2022, 2021, and 2020 was $ 5.2 million, $ 3.5 million and $ 3.1 million, respectively. As of December 31, 2022, there was $ 46.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on service conditions. This cost is expected to be recognized over a weighted average period of approximately 3.2 years. In addition, as of December 31, 2022, there were unrecognized compensation costs of $ 10.2 million from the Q1 2022 Performance RSUs and $ 12.1 million from the Q2 2022 Performance RSUs related to unvested share-based compensation arrangements that will vest based on 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 a 3-year period from the date of issuance for the Q2 2022 Performance RSUs. Loss per Share (In thousands, except per share data) Year Ended December 31, 2022 2021 2020 NUMERATOR: Net loss attributable to the Company – common shares $ ( 264,663 ) $ ( 159,199 ) $ ( 1,914,699 ) DENOMINATOR (1) : Weighted average common shares outstanding - basic 148,058 146,726 145,979 Stock options and restricted stock (2) : — — — Weighted average common shares outstanding - diluted 148,058 146,726 145,979 Net loss attributable to the Company per common share: Basic $ ( 1.79 ) $ ( 1.09 ) $ ( 13.12 ) Diluted $ ( 1.79 ) $ ( 1.09 ) $ ( 13.12 ) 89 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 years ended December 31, 2022, December 31, 2021 and December 31, 2020. (2) Outstanding equity awards representing $ 11.0 million, $ 10.5 million and $ 9.1 million shares of Class A common stock of the Company for the years ended December 31, 2022, December 31, 2021, and December 31, 2020, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive. Stockholder Rights Plan On May 5, 2020, the Board approved the adoption of a short-term stockholder rights plan (the “Stockholder Rights Plan”). Pursuant to the stockholder rights plan, the Board declared a dividend distribution of one right on each outstanding share of Class A common stock, share of Class B common stock and special warrant issued in connection with the Plan of Reorganization. The record date for such dividend distribution was May 18, 2020. Under the Stockholder Rights Plan, subject to certain exceptions, the rights were generally exercisable only if, in a transaction not approved by the Board, a person or group acquired beneficial ownership of 10 % or more of the Company’s Class A common stock (or 20 % in the case of certain passive investors), including through such person’s ownership of the convertible Class B common stock and/or special warrants, as further detailed in the Stockholder Rights Plan. In that situation, each holder of a right (other than the acquiring person or group) would have the right to purchase, upon payment of the exercise price, a number of shares of the Company’s Class A common stock, Class B common stock or special warrants, as applicable, having a market value of twice such price. In addition, the Stockholder Rights Plan contained a similar provision if the Company was acquired in a merger or other business combination after an acquiring person acquires beneficial ownership of 10 % or more of the Company’s Class A common stock (or 20 % in the case of certain passive investors). The Stockholder Rights Plan expired on May 5, 2021. The adoption of the Stockholder Rights Plan was not a taxable event and did not have any impact on the Company’s financial reporting. NOTE 10 – EMPLOYEE BENEFIT PLANS iHeartCommunications has various 401(k) savings and other plans for the purpose of providing retirement benefits for substantially all employees. Under these plans, an employee can make pre-tax contributions and iHeartCommunications will match a portion of such an employee’s contribution. Employees vest in these iHeartCommunications matching contributions based upon their years of service to iHeartCommunications. In April 2020, the Company announced incremental operating-expense-saving initiatives in response to the economic environment resulting from the COVID-19 pandemic, which included a temporary suspension of the Company's 401(k) matching program that continued through December 31, 2021. Starting January 1, 2022, the Company recommenced its 401(k) matching program. Contributions of $ 14.9 million, and $ 4.5 million made to these plans for the years ended December 31, 2022, and 2020, respectively, were expensed. iHeartCommunications offers a non-qualified deferred compensation plan for a select group of management or highly compensated employees, under which such employees were able to make an annual election to defer up to 50 % of their annual salary and up to 80 % of their bonus before taxes. iHeartCommunications suspended all salary and bonus deferrals and company matching contributions to the deferred compensation plan on January 1, 2010. iHeartCommunications accounts for the plan in accordance with the provisions of ASC 710-10, Compensation—General . Matching credits on amounts deferred may be made in iHeartCommunications' sole discretion and iHeartCommunications retains ownership of all assets until distributed. Participants in the plan have the opportunity to allocate their deferrals and any iHeartCommunications matching credits among different investment options, the performance of which is used to determine the amounts to be paid to participants under the plan. In accordance with the provisions of ASC 710-10, Compensation—General , the assets and liabilities of the non-qualified deferred compensation plan are presented in “Other assets” and “Other long-term liabilities” in the accompanying consolidated balance sheets, respectively. The asset and liability under the deferred compensation plan at December 31, 2022 was approximately $ 10.1 million recorded in “Other assets” and $ 10.1 million recorded in “Other long-term liabilities”, respectively. The asset and liability under the deferred compensation plan at December 31, 2021 was approximately $ 12.9 million recorded in “Other assets” and $ 12.9 million recorded in “Other long-term liabilities”, respectively. 90 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 – SEGMENT DATA Segment Adjusted EBITDA is the segment profitability metric reported to the Company’s Chief Operating Decision Maker for purposes of decisions about allocation of resources to, and assessing performance of, each reportable segment. The Company’s primary businesses are included in its Multiplatform Group and Digital Audio Group segments. Revenue and expenses earned and charged between Multiplatform Group, Digital Audio Group, 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. The following tables present the Company's segment results for the years ended December 31, 2022, December 31, 2021, and December 31, 2020 : Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Year Ended December 31, 2022 Revenue $ 2,597,190 $ 1,021,824 $ 304,302 $ — $ ( 11,033 ) $ 3,912,283 Operating expenses (1) 1,831,491 712,786 191,407 237,343 ( 11,033 ) 2,961,994 Segment Adjusted EBITDA (2) $ 765,699 $ 309,038 $ 112,895 $ ( 237,343 ) $ — $ 950,289 Depreciation and amortization ( 445,664 ) Impairment charges ( 311,489 ) Other operating expense, net ( 24,998 ) Restructuring expenses ( 75,821 ) Share-based compensation expense ( 35,457 ) Operating income $ 56,860 Segment assets $ 6,319,790 $ 1,056,985 $ 350,388 $ 612,113 $ ( 3,389 ) $ 8,335,887 Intersegment revenues 447 5,239 5,347 — — 11,033 Capital expenditures 119,624 21,261 8,172 11,912 — 160,969 Share-based compensation expense — — — 35,457 — 35,457 91 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Year Ended December 31, 2021 Revenue $ 2,489,018 $ 834,482 $ 247,957 $ — $ ( 13,117 ) $ 3,558,340 Operating expenses (1) 1,745,680 573,835 171,766 269,043 ( 13,117 ) 2,747,207 Segment Adjusted EBITDA (2) $ 743,338 $ 260,647 $ 76,191 $ ( 269,043 ) $ — $ 811,133 Depreciation and amortization ( 469,417 ) Impairment charges ( 57,734 ) Other operating expense, net ( 32,320 ) Restructuring expenses ( 73,262 ) Share-based compensation expense ( 23,543 ) Operating income $ 154,857 Segment assets $ 6,953,772 $ 1,088,471 $ 438,773 $ 403,898 $ ( 3,605 ) $ 8,881,309 Intersegment revenues 670 5,845 6,602 — — 13,117 Capital expenditures 130,894 23,907 14,515 14,056 — 183,372 Share-based compensation expense — — — 23,543 — 23,543 Segments (In thousands) Multiplatform Group Digital Audio Group Audio & Media Services Group Corporate and other reconciling items Eliminations Consolidated Balance at December 31, 2020 Revenue $ 2,206,854 $ 474,371 $ 274,749 $ — $ ( 7,756 ) $ 2,948,218 Operating expenses (1) 1,723,449 343,598 180,081 170,173 ( 7,756 ) 2,409,545 Segment Adjusted EBITDA (2) $ 483,405 $ 130,773 $ 94,668 $ ( 170,173 ) $ — $ 538,673 Depreciation and amortization ( 402,929 ) Impairment charges ( 1,738,752 ) Other operating expense, net ( 11,344 ) Restructuring expenses ( 100,410 ) Share-based compensation expense ( 22,862 ) Operating loss $ ( 1,737,624 ) Segment Assets $ 7,736,229 $ 187,051 $ 473,628 $ 809,638 $ ( 3,585 ) $ 9,202,961 Intersegment revenues 670 — 7,086 — — 7,756 Capital expenditures 51,559 16,086 5,105 12,455 — 85,205 Share-based compensation expense — — — 22,862 — 22,862 92 IHEARTMEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 loss, the most closely comparable GAAP measure, and to Net loss, please see "Reconciliation of Operating Income (Loss) to Adjusted EBITDA" and "Reconciliation of Net Loss to EBITDA and Adjusted EBITDA" in Item 7 of this Annual Report on Form 10-K. 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. NOTE 12 – CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Tax Matters Agreement On the Effective Date, the Company entered into the Tax Matters Agreement by and among the Company, iHeartCommunications, iHeart Operations, Clear Channel Holdings, Inc. and Clear Channel Outdoor Holdings, Inc. (the "Outdoor Group") and its subsidiaries, to allocate the responsibility of the Company and its subsidiaries, on the one hand, and the Outdoor Group and its subsidiaries, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Company's separation from the Outdoor Group. 93 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not Applicable.