What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-02 · 296 added, 108 removed, 442 unchanged (48% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

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

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

2023 December 31,

28 unchanged sentences

Commitments and contingent liabilities (Note 6)

STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY (DEFICIT)

Noncontrolling interest 10,351 9,609

8 unchanged sentences

( 9,886 ) ( 8,934 )

Total Stockholders' Equity 471,904 684,506

Total Liabilities and Stockholders' Equity $ 8,035,191 $ 8,335,887

Total Stockholders' Equity (Deficit) ( 403,458 ) 684,506

Total Liabilities and Stockholders' Equity (Deficit) $ 6,983,810 $ 8,335,887

See Notes to Consolidated Financial Statements

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

2023 2022 2023 2022

Revenue $ 920,014 $ 954,005 $ 1,731,253 $ 1,797,463

4 unchanged sentences

Impairment charges 960,570 245 964,517 1,579

Other operating expense, net 221 870

Other operating (income) expense, net ( 261 ) 15,664 ( 40 ) 16,534

Operating income (loss) ( 897,194 ) 82,869 ( 946,056 ) 95,204

Interest expense, net 98,693 81,494 194,150 160,713

Loss on investments, net ( 6,505 ) ( 1,765 )

Equity in earnings (loss) of nonconsolidated affiliates 40 ( 29 )

Gain (loss) on investments, net ( 6,038 ) 9,590 ( 12,543 ) 7,825

Equity in loss of nonconsolidated affiliates ( 44 ) ( 29 ) ( 4 ) ( 58 )

Gain on extinguishment of debt 22,902 8,203 27,527 8,203

Other expense, net ( 272 ) ( 2,175 ) ( 371 ) ( 2,445 )

Loss before income taxes ( 146,258 ) ( 68,948 )

Earnings (Loss) before income taxes ( 979,339 ) 16,964 ( 1,125,597 ) ( 51,984 )

Income tax benefit (expense) 96,357 ( 1,782 ) 20,252 18,427

Net loss ( 222,363 ) ( 48,739 )

Net income (loss) ( 882,982 ) 15,182 ( 1,105,345 ) ( 33,557 )

Less amount attributable to noncontrolling interest 1,488 781 1,385 624

Net loss attributable to the Company $ ( 222,260 ) $ ( 48,582 )

Net income (loss) attributable to the Company $ ( 884,470 ) $ 14,401 $ ( 1,106,730 ) $ ( 34,181 )

Other comprehensive loss, net of tax:

1 unchanged sentence

Other comprehensive loss, net of tax ( 77 ) ( 650 ) ( 123 ) ( 897 )

Comprehensive loss ( 222,306 ) ( 48,829 )

Comprehensive income (loss) ( 884,547 ) 13,751 ( 1,106,853 ) ( 35,078 )

Less amount attributable to noncontrolling interest — — — —

Comprehensive loss attributable to the Company $ ( 222,306 ) $ ( 48,829 )

Net loss attributable to the Company per common share:

Comprehensive income (loss) attributable to the Company $ ( 884,547 ) $ 13,751 $ ( 1,106,853 ) $ ( 35,078 )

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

Basic $ ( 5.93 ) $ 0.10 $ ( 7.44 ) $ ( 0.23 )

5 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share data) Controlling Interest

6 unchanged sentences

Shares Special Warrants Total

December 31, 2022

March 31, 2023

122,385,200 21,469,919 5,111,312 $ 9,185 $ 144 $ 2,922,652 $ ( 2,449,742 ) $ ( 1,377 ) $ ( 8,958 ) $ 471,904

Net loss ( 103 ) — — ( 222,260 ) — — ( 222,363 )

Net income (loss) 1,488 — — ( 884,470 ) — — ( 882,982 )

Vesting of restricted stock and other

1 unchanged sentence

Share-based compensation — — 8,947 — — — 8,947

Conversion of Special Warrants to Class A or Class B Shares 198 59 ( 257 ) — — — — — — —

Conversion of Class B Shares to Class A Shares

2 unchanged sentences

Other comprehensive loss — — — — ( 77 ) — ( 77 )

June 30, 2023

124,046,612 21,347,363 5,111,055 $ 10,351 $ 145 $ 2,931,598 $ ( 3,334,212 ) $ ( 1,454 ) $ ( 9,886 ) $ ( 403,458 )

(In thousands, except share data) Controlling Interest

Common Shares (1)

Interest Common

Stock Additional

Capital Accumulated Deficit Accumulated

Comprehensive Loss Treasury

Class A Shares Class B

Shares Special Warrants Total

March 31, 2022

121,402,390 21,430,500 5,293,069 $ 8,066 $ 143 $ 2,882,515 $ ( 2,011,401 ) $ ( 504 ) $ ( 6,798 ) $ 872,021

(1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2023.

Net income 781 — — 14,401 — — 15,182

Vesting of restricted stock and other 627,289 — — 4 — — ( 1,558 ) ( 1,554 )

Share-based compensation

— — 8,610 — — — 8,610

Conversion of Special Warrants to Class A and Class B Shares

14 ( 14 ) — — — — — — —

Conversion of Class B Shares to Class A Shares 38,528 ( 38,528 ) — — — — — — —

Other ( 188 ) — — — — — ( 188 )

Other comprehensive loss — — — — ( 650 ) — ( 650 )

June 30, 2022

122,068,221 21,391,972 5,293,055 $ 8,659 $ 143 $ 2,891,129 $ ( 1,997,000 ) $ ( 1,154 ) $ ( 8,356 ) $ 893,421

(1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2023 or 2022.

See Notes to Consolidated Financial Statements

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share data) Controlling Interest

8 unchanged sentences

122,370,425 21,477,181 5,111,312 $ 9,609 $ 144 $ 2,912,500 $ ( 2,227,482 ) $ ( 1,331 ) $ ( 8,934 ) $ 684,506

Net loss ( 157 ) — — ( 48,582 ) — — ( 48,739 )

Net income (loss) 1,385 — — ( 1,106,730 ) — — ( 1,105,345 )

Vesting of restricted stock and other 1,546,112 — 1 ( 1 ) — — ( 952 ) ( 952 )

6 unchanged sentences

Other comprehensive loss — — — — ( 123 ) — ( 123 )

March 31, 2022

June 30, 2023

124,046,612 21,347,363 5,111,055 $ 10,351 $ 145 $ 2,931,598 $ ( 3,334,212 ) $ ( 1,454 ) $ ( 9,886 ) $ ( 403,458 )

(1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2022.

(In thousands, except share data) Controlling Interest

Common Shares (1)

Interest Common

Stock Additional

Capital Accumulated Deficit Accumulated

Comprehensive Loss Treasury

Class A Shares Class B

Shares Special Warrants Total

December 31, 2021

120,633,937 21,590,192 5,304,430 $ 8,410 $ 142 $ 2,876,571 $ ( 1,962,819 ) $ ( 257 ) $ ( 6,282 ) $ 915,765

Net income (loss) 624 — — ( 34,181 ) — — ( 33,557 )

Vesting of restricted stock and other 1,224,689 — 1 413 — — ( 2,074 ) ( 1,660 )

Share-based compensation

— — 14,145 — — — 14,145

Conversion of Special Warrants to Class A and Class B Shares

11,375 ( 11,375 ) — — — — — — —

Conversion of Class B Shares to Class A Shares 198,220 ( 198,220 ) — — — — — — —

Other ( 375 ) — — — — — ( 375 )

Other comprehensive loss — — — — ( 897 ) — ( 897 )

June 30, 2022

122,068,221 21,391,972 5,293,055 $ 8,659 $ 143 $ 2,891,129 $ ( 1,997,000 ) $ ( 1,154 ) $ ( 8,356 ) $ 893,421

(1) The Company's Preferred Stock is not presented in the data above as there were no shares issued and outstanding in 2023, 2022 or 2021.

See Notes to Consolidated Financial Statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) Three Months Ended March 31,

(In thousands) Six Months Ended June 30,

Cash flows from operating activities:

8 unchanged sentences

(Gain) Loss on disposal of operating and other assets ( 1,216 ) 15,583

Loss on investments 6,505 1,765

Equity in (earnings) loss of nonconsolidated affiliates ( 40 ) 29

(Gain) Loss on investments 12,543 ( 7,825 )

Equity in loss of nonconsolidated affiliates 4 58

Gain on extinguishment of debt ( 27,527 ) ( 8,203 )

7 unchanged sentences

Decrease in accrued expenses ( 48,809 ) ( 75,154 )

Increase (decrease) in accrued interest ( 6,222 ) 1,829

Decrease in accrued interest ( 1,816 ) ( 1,706 )

Increase in deferred income 35,742 15,261

Increase in other long-term liabilities 31,096 2,059

Cash used for operating activities ( 93,983 ) ( 52,212 )

Cash provided by (used for) operating activities ( 37,211 ) 103,589

Cash flows from investing activities:

37 unchanged sentences

The Company's advertising revenue is correlated to changes in economic conditions.

Increasing interest rates and high inflation contributed to a challenging macroeconomic environment beginning in the third quarter of 2022.

This challenging environment has led to broader market uncertainty, which impacted the Company's revenue in the first quarter of 2023.

Increasing interest rates and high inflation have contributed to a challenging macroeconomic environment since 2022.

This challenging environment has led to broader market uncertainty, and has delayed the Company's expected recovery and has had an adverse impact on the Company's revenues and cash flows.

The current market uncertainty and macroeconomic conditions, a recession, or a downturn in the U.S.

4 unchanged sentences

In addition, the Company claimed $ 12.4 million in refundable payroll tax credits related to the CARES Act provisions, of which $ 0.7 million was received in 2020, $ 3.8 million was received in 2021 and $ 7.9 million was received in January 2022.

As of March 31, 2023, the Company had approximately $ 187.9 million in cash and cash equivalents, and the $ 450.0 million senior secured asset-based revolving credit facility entered into on May 17, 2022 (the "ABL Facility") had a borrowing base of $ 438.3 million, no outstanding borrowings and $ 25.0 million of outstanding letters of credit, resulting in $ 413.3 million of borrowing base availability.

Together with our cash balance of $ 187.9 million as of March 31, 2023 and our borrowing capacity under the ABL Facility, our total available liquidity was approximately $ 601 million.

As of June 30, 2023, the Company had approximately $ 165.3 million in cash and cash equivalents, and the $ 450.0 million senior secured asset-based revolving credit facility entered into on May 17, 2022 (the "ABL Facility") had a borrowing base of $ 444.5 million, no outstanding borrowings and $ 24.9 million of outstanding letters of credit, resulting in $ 419.6 million of borrowing base availability.

Together with the Company's cash balance of $ 165.3 million as of June 30, 2023 and its borrowing capacity under the ABL Facility, the Company's total available liquidity was approximately $ 585 million.

Based on current available liquidity, the Company expects to be able to meet its obligations as they become due over the coming year.

Economic uncertainty due to inflation and higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses.

This economic uncertainty has had an adverse impact on the Company's revenues and cash flows.

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

addition, the economic uncertainty has had a significant impact on the trading values of the Company's debt and equity securities for a sustained period, indicating a need for the Company to perform an impairment test as of June 30, 2023 on the goodwill recorded in its reporting units.

In connection with testing goodwill for impairment, the Company also tested its indefinite-lived Federal Communication Commission ("FCC") licenses.

The estimated fair values of the Company’s FCC licenses, which have indefinite lives, are based on broadcast industry information, including industry-wide projections.

The factors discussed above negatively impacted certain assumptions in the discounted cash flow models used to value the Company's FCC licenses.

The Company's June 30, 2023 testing indicated that the fair values of its FCC licenses were below their carrying values, which resulted in a non-cash impairment charge of $ 363.6 million .

Based on the valuation analysis that the Company performed in connection with the interim goodwill impairment testing as of June 30, 2023, the Company determined that the estimated fair values of three of its reporting units were below their carrying values, including goodwill, which required the Company to recognize a non-cash impairment charge of $ 595.5 million to reduce the Company's goodwill balance.

The Company believes it has made reasonable estimates and utilized reasonable assumptions to calculate the fair values of its indefinite-lived FCC licenses and reporting units.

It is possible a material change could occur to the estimated fair value of these assets as a result of the uncertainty regarding the magnitude of the impact of current market conditions, as well as the timing of any recovery.

If the Company's actual results are not consistent with its estimates, the Company could be exposed to future impairment losses that could be material to its results of operations.

Reclassifications

2 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Consolidated Balance Sheets to the total of the amounts reported in the Consolidated Statements of Cash Flows:

(In thousands) March 31,

(In thousands) June 30,

2023 December 31,

5 unchanged sentences

From time to time, certain companies in which the Company holds minority equity interests, purchase advertising in the ordinary course.

None of these ordinary course transactions have a material impact on the Company.

None of these ordinary course transactions have had a material impact on the Company.

New Accounting Pronouncements Recently Adopted

8 unchanged sentences

Disaggregation of Revenue

The following tables show revenue streams for the three months ended March 31, 2023 and 2022:

The following tables show revenue streams for the three and six months ended June 30, 2023 and 2022:

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

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Revenue from contracts with customers:

14 unchanged sentences

Revenue, total $ 595,944 $ 260,854 $ 65,804 $ ( 2,588 ) $ 920,014

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Revenue from contracts with customers:

12 unchanged sentences

Revenue from leases (8)

Revenue, total $ 633,300 $ 252,561 $ 71,065 $ ( 2,921 ) $ 954,005

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Six Months Ended June 30, 2023

Revenue from contracts with customers:

Broadcast Radio (1)

$ 812,390 $ — $ — $ — $ 812,390

230,122 — — — 230,122

Sponsorship and Events (3)

70,797 — — — 70,797

Digital, excluding Podcast (4)

— 310,732 — ( 2,405 ) 308,327

— 173,518 — — 173,518

Audio & Media Services (6)

— — 127,155 ( 2,704 ) 124,451

10,509 — — — 10,509

Total 1,123,818 484,250 127,155 ( 5,109 ) 1,730,114

Revenue from leases (8)

1,139 — — — 1,139

Revenue, total $ 1,124,957 $ 484,250 $ 127,155 $ ( 5,109 ) $ 1,731,253

Six Months Ended June 30, 2022

Revenue from contracts with customers:

Broadcast Radio (1)

$ 877,789 $ — $ — $ — $ 877,789

245,090 — — — 245,090

Sponsorship and Events (3)

71,665 — — — 71,665

Digital, excluding Podcast (4)

— 312,555 — ( 2,645 ) 309,910

— 154,225 — — 154,225

Audio & Media Services (6)

— — 131,922 ( 2,719 ) 129,203

9,261 — — ( 335 ) 8,926

Total 1,203,805 466,780 131,922 ( 5,699 ) 1,796,808

Revenue from leases (8)

655 — — — 655

Revenue, total $ 1,204,460 $ 466,780 $ 131,922 $ ( 5,699 ) $ 1,797,463

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

16 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

1 unchanged sentence

Trade and barter expenses 31,521 29,336 78,907 75,751

In addition to the trade and barter revenue in the table above, the Company recognized $ 8.0 million and $ 7.0 million during the three months ended March 31, 2023 and 2022, respectively, in connection with investments made in companies in exchange for advertising services.

In addition to the trade and barter revenue in the table above, the Company recognized $ 3.7 million and $ 5.2 million during the three months ended June 30, 2023 and 2022, respectively, and $ 11.7 million and $ 12.3 million during the six months ended June 30, 2023 and 2022, respectively, in connection with investments made in companies in exchange for advertising services.

The following tables show the Company’s deferred revenue balance from contracts with customers:

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

7 unchanged sentences

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

however, as of March 31, 2023, the Company expects to recognize $ 310.4 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years .

however, as of June 30, 2023, the Company expects to recognize $ 317.8 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years .

Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales.

3 unchanged sentences

Revenue from Leases

As of March 31, 2023, the future lease payments to be received by the Company are as follows:

As of June 30, 2023, the future lease payments to be received by the Company are as follows:

(In thousands)

12 unchanged sentences

The Company tests for impairment of assets whenever events and circumstances indicate that such assets might be impaired.

During the three months ended March 31, 2023, the Company recognized non-cash impairment charges of $ 3.9 million primarily in connection with changes in sublease assumptions for ROU assets related to certain operating leases for which management has made proactive decisions to abandon and sublease in connection with strategic actions to streamline the Company’s real estate footprint as part of the Company’s modernization initiatives.

During the three months ended March 31, 2023, there were no non-cash impairment charges related to leasehold improvements.

During the three months ended March 31, 2022, the Company recognized non-cash impairment charges of $ 1.3 million, including $ 1.2 million related to ROU assets, and $ 0.1 million related to leasehold improvements also as a result of the proactive decisions by management discussed above.

During the three and six months ended June 30, 2023, the Company recognized non-cash impairment charges of $ 1.5 million and $ 5.5 million, respectively, due to changes in sublease assumptions for ROU assets related to certain operating leases for which management has made proactive decisions to abandon and sublease in connection with strategic actions to streamline the Company’s real estate footprint.

During the three and six months ended June 30, 2023, there were no non-cash impairment charges related to leasehold improvements.

During the three months ended June 30, 2022, the Company recognized non-cash impairment charges of $ 0.3 million, including $ 0.2 million related to ROU assets and $ 0.1 million related to leasehold improvements.

During the six months ended June 30, 2022, the Company recognized non-cash impairment charges of $ 1.6 million, including $ 1.4 million related to ROU assets, and $ 0.2 million related to leasehold improvements.

These charges were primarily to streamline the Company's real estate footprint.

The implicit rate within the Company's lease agreements is generally not determinable.

5 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2023 2022

1 unchanged sentence

Lease liabilities arising from obtaining right-of-use assets (1)

(1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the three months ended March 31, 2023 and 2022, respectively.

7,280 135,128

(1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the six months ended June 30, 2023 and 2022, respectively.

The Company reflects changes in the lease liability and changes in the ROU asset on a net basis in the Statements of Cash Flows.

The operating lease expense was $ 18.1 million and $ 23.4 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

The operating lease expense was $ 34.5 million and $ 43.3 million for the six months ended June 30, 2023 and 2022, respectively.

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

Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets as of March 31, 2023 and December 31, 2022, respectively:

(In thousands) March 31,

The Company’s property, plant and equipment consisted of the following classes of assets as of June 30, 2023 and December 31, 2022, respectively:

(In thousands) June 30,

2023 December 31,

9 unchanged sentences

The Company’s indefinite-lived intangible assets primarily consist of Federal Communications Commission ("FCC") broadcast licenses in its Multiplatform Group segment.

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

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

As discussed in Note 1, Basis of Presentation , economic uncertainty due to inflation and higher interest rates since 2022 has resulted in, among other things, lower advertising spending by businesses.

This economic uncertainty has had an adverse impact on the Company's revenues and cash flows.

In addition, the economic uncertainty has had a significant impact on the trading values of the Company's debt and equity securities for a sustained period.

As a result, the Company performed an impairment test as of June 30, 2023 on its goodwill balances.

In connection with its goodwill impairment testing, the Company also performed an interim impairment test on its indefinite-lived FCC licenses.

The uncertainty surrounding the demand for advertising impacted the key industry assumptions used in the models that are utilized to value the Company's FCC licenses.

As a result, the fair values of certain of the Company's FCC licenses have decreased.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's FCC licenses are valued using a direct valuation approach, with the key assumptions being market revenue growth rates, profit margin, and the risk-adjusted discount rate as well as other assumptions including market share, duration and profile of the build-up period, estimated start-up costs, and capital expenditures.

This data is populated using industry normalized information representing an average asset within a market.

The Company obtained the most recent broadcast radio industry revenue projections for use in the valuation model, as well as various other sources to analyze media and broadcast industry market forecasts and other data in developing the assumptions used for purposes of performing impairment testing on the Company's FCC licenses as of June 30, 2023.

Considerations in developing these assumptions included the expected impact on advertising revenues given the current market uncertainty, ranges of expected timing of recovery, discount rates and other factors.

Based on the Company's interim testing, the estimated fair values of its FCC licenses were below their carrying values.

As a result, the Company recognized a non-cash impairment charge of $ 363.6 million on its FCC licenses.

Other Intangible Assets

2 unchanged sentences

These assets are recorded at amortized cost.

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 March 31, 2023 and December 31, 2022, respectively:

(In thousands) March 31, 2023 December 31, 2022

The Company tests for possible impairment of other intangible assets whenever events and circumstances indicate that they might be impaired.

When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.

In connection with its impairment testing, the Company also assessed its other intangible assets.

Based on the Company’s assessment, no impairment indicators were identified related to the definite-lived intangible assets.

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of June 30, 2023 and December 31, 2022, respectively:

(In thousands) June 30, 2023 December 31, 2022

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

4 unchanged sentences

Total $ 2,345,660 $ ( 1,049,561 ) $ 2,345,660 $ ( 925,990 )

Total amortization expense related to definite-lived intangible assets for the Company for the three months ended March 31, 2023 and 2022 was $ 61.8 million and $ 63.1 million, respectively.

Total amortization expense related to definite-lived intangible assets for the Company for the three months ended June 30, 2023 and 2022 was $ 61.8 million and $ 63.4 million, respectively.

Total amortization expense related to definite-lived intangible assets for the Company for the six months ended June 30, 2023 and 2022 was $ 123.6 million and $ 126.5 million, respectively.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

4 unchanged sentences

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

Balance as of December 31, 2022 $ 1,462,022 $ 747,350 $ 104,031 $ 2,313,403

Balance as of January 1, 2023 (1)

$ 1,462,022 $ 747,350 $ 104,031 $ 2,313,403

Impairment $ ( 121,563 ) $ ( 439,383 ) $ ( 34,515 ) ( 595,461 )

Acquisitions — 3,375 — 3,375

Foreign currency — 43 50 93

Balance as of March 31, 2023

Balance as of June 30, 2023

$ 1,340,459 $ 311,385 $ 69,566 $ 1,721,410

(1) Beginning goodwill balance is presented net of prior accumulated impairment losses of $ 1.2 billion related to the Multiplatform Group segment.

Refer to the table above for impairments recorded in 2023.

Goodwill Impairment

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.

As discussed above, economic uncertainty has had a significant impact on the Company's revenue and cash flows, as well as the trading values of the Company's debt and equity securities for a sustained period.

As a result, the Company performed an impairment test as of June 30, 2023 on its goodwill.

The uncertainty surrounding the demand for advertising impacted the key assumptions used in the models which are utilized to value the Company's goodwill.

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 of the Company's reporting units is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate.

Terminal values were also estimated and discounted to their present value.

Assessing the recoverability of goodwill requires the Company to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on the Company's budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

There are inherent uncertainties related to these factors and in management’s judgment in applying these factors.

The economic environment resulting from inflation, higher interest rates, and the related uncertainty in the markets impacted the trading values of the Company's debt and equity securities and certain assumptions used to estimate the fair values of the Company's reporting units for purposes of performing the interim goodwill impairment test.

Based on the Company's valuation analysis, it determined that the estimated fair values of three of its reporting units were below their carrying value, including goodwill, which required the Company to recognize a non-cash impairment charge of $ 595.5 million to reduce its goodwill balance.

While the Company believes it has made reasonable estimates and utilized reasonable assumptions to calculate the fair values of its other intangible assets, indefinite-lived FCC licenses and reporting units, it is possible a material change could occur to the estimated fair value of these assets as a result of the uncertainty regarding the magnitude of the impact of current market

IHEARTMEDIA, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

conditions, as well as the timing of any recovery.

If the Company's actual results are not consistent with its estimates, the Company could be exposed to future impairment losses that could be material to its results of operations.

NOTE 5 – LONG-TERM DEBT

Long-term debt outstanding for the Company as of March 31, 2023 and December 31, 2022 consisted of the following:

(In thousands) March 31, 2023 December 31, 2022

Long-term debt outstanding for the Company as of June 30, 2023 and December 31, 2022 consisted of the following:

(In thousands) June 30, 2023 December 31, 2022

Term Loan Facility due 2026 $ 1,864,032 $ 1,864,032

17 unchanged sentences

Total long-term debt $ 5,315,955 $ 5,413,503

(1) As of March 31, 2023, the ABL Facility had a borrowing base of $ 438.3 million, no outstanding borrowings and $ 25.0 million of outstanding letters of credit, resulting in $ 413.3 million of borrowing base availability.

(1) As of June 30, 2023, the ABL Facility had a borrowing base of $ 444.5 million, no outstanding borrowings and $ 24.9 million of outstanding letters of credit, resulting in $ 419.6 million of borrowing base availability.

(2) Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2024 through 2045.

(3) During the three months ended March 31, 2023, we repurchased $ 20.0 million aggregate principal amount of iHeartCommunications Inc.'s 8.375 % Senior Unsecured Notes due 2027 for $ 15.4 million in cash, excluding accrued interest, via open market transactions.

(3) During the three months ended June 30, 2023, the Company repurchased $ 79.9 million aggregate principal amount of iHeartCommunications Inc.'s 8.375 % Senior Unsecured Notes due 2027 for $ 57.0 million in cash, excluding accrued interest, via open market transactions.

The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $ 22.9 million.

The Company’s weighted average interest rate was 7.1 % and 6.9 % as of March 31, 2023 and December 31, 2022, respectively.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $ 4.5 billion and $ 4.8 billion as of March 31, 2023 and December 31, 2022, respectively.

During the six months ended June 30, 2023, the Company repurchased $ 99.9 million aggregate principal amount of iHeartCommunications Inc.'s 8.375 % Senior Unsecured Notes due 2027 for $ 72.4 million in cash, excluding accrued interest, via open market transactions.

The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $ 27.5 million.

During the three and six months ended, June 30, 2022, the Company repurchased $ 113.5 million aggregate principal amount of iHeartCommunications Inc.'s 8.375 % Senior Unsecured Notes due 2027 for $ 105.3 million in cash, excluding accrued interest, via open market transactions.

The repurchased notes were subsequently cancelled and retired, resulting in a gain on extinguishment of debt of $ 8.2 million.

The Company’s weighted average interest rate was 7.2 % and 6.9 % as of June 30, 2023 and December 31, 2022, respectively.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $ 4.2 billion and $ 4.8 billion as of June 30, 2023 and December 31, 2022, respectively.

Under the fair value hierarchy established by ASC 820-10-35, the market value of the Company’s debt is classified as either Level 1 or Level 2.

On June 15, 2023, iHeartCommunications, Inc.

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

The amendment replaces the prior Eurocurrency interest rate, based upon LIBOR, with the Secured Overnight Financing Rate (“SOFR”) successor rate plus a SOFR adjustment as specified in the credit agreement.

The Term Loan Facility margins remain the same with the Term Loan Facility due 2026 containing margins of 3.00 % for Term SOFR Loans (as defined in the credit agreement) and 2.00 % for Base Rate Loans (as defined in the credit agreement), and the incremental Term Loan Facility due 2026 containing margins of 3.25 % for Term SOFR Loans with a floor of 0.50 % and 2.25 % for Base Rate Loans with a floor of 1.50 %.

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Surety Bonds and Letters of Credit

As of March 31, 2023, the Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $ 10.0 million and $ 25.4 million, respectively.

As of June 30, 2023, the Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit of $ 8.7 million and $ 24.9 million, respectively.

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

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

Additionally, due to the inherent uncertainty of

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts:

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NOTE 7 – INCOME TAXES

The Company’s income tax benefit (expense) for the three months ended March 31, 2023 and the three months ended March 31, 2022 consisted of the following components:

The Company’s income tax benefit (expense) for the three and six months ended June 30, 2023 and the three and six months ended June 30, 2022 consisted of the following components:

(In thousands) Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Current tax expense $ ( 35,161 ) $ ( 38,581 ) $ ( 38,646 ) $ ( 42,160 )

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Income tax benefit (expense) $ 96,357 $ ( 1,782 ) $ 20,252 $ 18,427

The effective tax rates for the three months ended March 31, 2023 and March 31, 2022 were ( 52.0 )% and 29.3 %, respectively.

NOTE 8 – STOCKHOLDERS' EQUITY

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

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

Pursuant to our 2021 Plan, we will continue to grant equity awards covering shares of the Company's Class A common stock to certain key individuals.

Share-based Compensation

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 10.2 million and $ 5.5 million for the Company for the three months ended March 31, 2023 and March 31, 2022, respectively.

On March 28, 2022, the Company issued performance-based restricted stock units ("Q1 2022 Performance RSUs") to certain key employees.

Such Q1 2022 Performance RSUs vest upon the achievement of total stockholder return goals and continued service, which are being measured over an approximately 50-month period from the date of issuance.

In the three months ended March 31, 2023, the Company recognized $ 0.7 million in relation to these Q1 2022 Performance RSUs.

On May 9, 2022, the Company issued performance-based restricted stock units ("Q2 2022 Performance RSUs") and restricted stock units ("2022 RSUs") to certain key employees.

Such Q2 2022 Performance RSUs vest upon the achievement of certain total stockholder return goals, Adjusted EBITDA goals, Diversity, Equity and Inclusion goals, and continued service.

Such 2022 RSUs vest upon continued service.

These awards are being recognized ratably over a 3-year period from the date of

The effective tax rates for the three and six months ended June 30, 2023 were 9.8 % and 1.8 %, respectively.

The effective tax rates were primarily impacted by the forecasted increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods, as well as to impairment charges to non-deductible goodwill as discussed in Note 4, Property, Plant and Equipment, Intangible Assets and Goodwill .

The deferred tax benefit primarily consists of $ 92.9 million related to the FCC license impairment charges recorded during the period.

The effective tax rates for the three and six months ended June 30, 2022 were 10.5 % and 35.4 %, respectively.

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

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the three months ended March 31, 2023, the Company recognized $ 1.2 million in relation to these Q2 2022 Performance RSUs.

As of March 31, 2023, there was $ 37.7 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based solely on service conditions.

NOTE 8 – STOCKHOLDERS' EQUITY (DEFICIT)

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

Pursuant to the 2021 Plan, the Company will continue to grant equity awards covering shares of the Company's Class A common stock to certain key individuals.

Share-based Compensation

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $ 9.2 million and $ 8.6 million for the three months ended June 30, 2023 and 2022, respectively.

Share-based compensation expenses were $ 19.4 million and $ 14.1 million for the Company for the six months ended June 30, 2023 and 2022, respectively.

The Company periodically issues restricted stock units ("RSUs") and performance-based RSUs ("Performance RSUs") to certain key employees.

The RSUs vest solely due to continued service over time.

The Performance RSUs generally vest upon the achievement of certain total stockholder return goals, Adjusted EBITDA goals, Diversity, Equity and Inclusion goals, and continued service.

The majority of these awards are being measured over an approximately 3-year period from the date of issuance, while certain Performance RSUs are measured over a 50-month period from the date of issuance.

On May 18, 2023, the Company issued additional RSUs and Performance RSUs to certain key employees.

The following tables present the Company's total share based compensation expense by award type for the three and six months ended June 30, 2023 and 2022:

(In thousands) Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

RSUs $ 5,536 $ 4,902 $ 11,638 $ 8,252

Performance RSUs 2,300 1,500 4,232 1,500

Options 1,376 2,208 3,494 4,393

Total Share Based Compensation Expense $ 9,212 $ 8,610 $ 19,364 $ 14,145

As of June 30, 2023, there was $ 42.3 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based solely on service conditions.

This cost is expected to be recognized over a weighted average period of approximately 2.8 years.

In addition, as of March 31, 2023, there were unrecognized compensation costs of $ 9.5 million for the Q1 2022 Performance RSUs and $ 10.6 million for the Q2 2022 Performance RSUs related to unvested share-based compensation arrangements that will vest based on certain performance and service conditions.

These costs will be recognized over a 50-month period from the date of issuance for the Q1 2022 Performance RSUs and over the 3-year period from the date of issuance for the Q2 2022 Performance RSUs.

Common Stock and Special Warrants

The Company is authorized to issue 2,100,000,000 shares, consisting of (a) 1,000,000,000 shares of Class A Common Stock, par value $ 0.001 per share (the “Class A Common Stock”), (b) 1,000,000,000 shares of Class B Common Stock, par value $ 0.001 per share (the “Class B Common Stock”), and (c) 100,000,000 shares of preferred stock, par value $ 0.001 per share (the “Preferred Stock”).

The following table presents the Company's Class A Common Stock, Class B Common Stock and Special Warrants issued as of March 31, 2023:

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

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

Special Warrants 5,111,312

Total Class A Common Stock, Class B Common Stock and Special Warrants issued 148,966,431

During the three months ended March 31, 2023, stockholders converted 7,262 shares of the Class B common stock into Class A common stock.

During the three months ended March 31, 2022, stockholders converted 159,692 shares of the Class B common stock into Class A common stock.

In addition, as of June 30, 2023, there were unrecognized compensation costs of $ 24.6 million for the Performance RSUs related to unvested share-based compensation arrangements that will vest based on certain performance and service conditions.

These costs will be recognized over a 3-year or 50-month period from the date of issuance.

Special Warrants

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As mentioned in Note 6 above, on November 5, 2020, the FCC issued the 2020 Declaratory Ruling, which permits the Company to be up to 100 % foreign owned.

During the three months ended March 31, 2023, there were no Special Warrants exercised for shares of Class A or Class B common stock.

During the three months ended March 31, 2022, stockholders exercised 11,361 Special Warrants for an equivalent number of shares of Class A common stock.

During the three months ended March 31, 2022, there were no Special Warrant exercised for shares of Class B common stock.

IHEARTMEDIA, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Computation of Loss per Share

During the three and six months ended June 30, 2023, there were 198 Special Warrants exercised for shares of Class A common stock.

During the three and six months ended June 30, 2023, there were 59 Special Warrants exercised for shares of Class B common stock.

During the three and six months ended June 30, 2022, stockholders exercised 14 and 11,375 Special Warrants, respectively, for an equivalent number of shares of Class A common stock.

During the six months ended June 30, 2022, there were no Special Warrants exercised for shares of Class B common stock.

Computation of Income (Loss) per Share

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

Net loss attributable to the Company – common shares $ ( 222,260 ) $ ( 48,582 )

June 30, Six Months Ended

2023 2022 2023 2022

Net income (loss) attributable to the Company – common shares $ ( 884,470 ) $ 14,401 $ ( 1,106,730 ) $ ( 34,181 )

DENOMINATOR (1) :

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Weighted average common shares outstanding - diluted 149,179 149,131 148,774 147,783

Net loss attributable to the Company per common share:

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

Basic $ ( 5.93 ) $ 0.10 $ ( 7.44 ) $ ( 0.23 )

Diluted $ ( 5.93 ) $ 0.10 $ ( 7.44 ) $ ( 0.23 )

(1) All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Company for the three months ended March 31, 2023 and 2022.

(2) Outstanding equity service awards representing 11.7 million and 10.0 million shares of Class A common stock of the Company for the three months ended March 31, 2023 and 2022, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

(1) All of the outstanding Special Warrants are included in both the basic and diluted weighted average common shares outstanding of the Company for the three and six months ended June 30, 2023 and 2022.

(2) Outstanding equity service awards representing 13.8 million and 6.2 million shares of Class A common stock of the Company for the three months ended June 30, 2023 and 2022, respectively, and $ 12.7 million and $ 10.4 million for the six months ended June 30, 2023 and 2022 respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 9 – SEGMENT DATA

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the Company's segment results for the Company for the three months ended March 31, 2023 and 2022:

The following tables present the Company's segment results for the Company for the three and six months ended June 30, 2023 and 2022:

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

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Revenue $ 595,944 $ 260,854 $ 65,804 $ — $ ( 2,588 ) $ 920,014

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Impairment charges ( 960,570 )

Other operating income, net 261

Restructuring expenses ( 10,789 )

Share-based compensation expense ( 9,212 )

Operating loss $ ( 897,194 )

Intersegment revenues $ — $ 1,216 $ 1,372 $ — $ — $ 2,588

Capital expenditures 14,870 5,502 904 1,497 — 22,773

Share-based compensation expense — — — 9,212 — 9,212

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

Three Months Ended June 30, 2022

Revenue $ 633,300 $ 252,561 $ 71,065 $ — $ ( 2,921 ) $ 954,005

Operating expenses (1)

438,804 173,678 48,995 58,264 ( 2,921 ) 716,820

Segment Adjusted EBITDA (2)

$ 194,496 $ 78,883 $ 22,070 $ ( 58,264 ) $ — $ 237,185

Depreciation and amortization ( 110,788 )

Impairment charges ( 245 )

Other operating expense, net ( 15,664 )

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Share-based compensation expense ( 8,610 )

Operating income $ 82,869

Intersegment revenues $ 167 $ 1,376 $ 1,378 $ — $ — $ 2,921

Capital expenditures 36,378 5,912 2,423 4,940 — 49,653

Share-based compensation expense — — — 8,610 — 8,610

IHEARTMEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Six Months Ended June 30, 2023

Revenue $ 1,124,957 $ 484,250 $ 127,155 $ — $ ( 5,109 ) $ 1,731,253

Operating expenses (1)

875,503 345,549 93,312 137,393 ( 5,109 ) 1,446,648

Segment Adjusted EBITDA (2)

$ 249,454 $ 138,701 $ 33,843 $ ( 137,393 ) $ — $ 284,605

Depreciation and amortization ( 216,577 )

Impairment charges ( 964,517 )

Other operating income, net 40

Restructuring expenses ( 30,243 )

Share-based compensation expense ( 19,364 )

Operating loss $ ( 946,056 )

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

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Revenue $ 1,204,460 $ 466,780 $ 131,922 $ ( 5,699 ) $ 1,797,463

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements