Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q 
(Mark One)
[X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2017
 
[  ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                          TO                           
 
Commission File Number
001‑32663
 
CLEAR CHANNEL OUTDOOR HOLDINGS, INC.
(Exact name of registrant as specified in its charter) 
 
Delaware
 
86-0812139
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
200 East Basse Road, Suite 100
San Antonio, Texas
 
78209
(Address of principal executive offices)
 
(Zip Code)
 
(210) 832-3700
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X] No [  ]
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  [  ]       Accelerated filer   [X]    Non-accelerated filer [  ]       Smaller reporting company   [  ] Emerging growth company [ ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
Outstanding at July 31, 2017
- - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - -
Class A Common Stock, $.01 par value
47,531,474
Class B Common Stock, $.01 par value
315,000,000



CLEAR CHANNEL OUTDOOR HOLDINGS, INC.
 
INDEX
 
 
 
Page No.
Part I -- Financial Information
 
Item 1.
 
 
 
 
Item 2.
Item 3.
Item 4.
Part II -- Other Information
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 




PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS
CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
 
(In thousands, except share data)
June 30, 2017
 
December 31,
2016
 
(Unaudited)
 
CURRENT ASSETS
 

 
 

Cash and cash equivalents
$
163,066

 
$
541,995

Accounts receivable, net of allowance of $24,411 in 2017 and $22,398 in 2016
633,683

 
593,070

Prepaid expenses
127,987

 
111,569

Assets held for sale
—

 
55,602

Other current assets
39,486

 
39,199

Total Current Assets
964,222

 
1,341,435

PROPERTY, PLANT AND EQUIPMENT
 
 
 
Structures, net
1,177,816

 
1,196,676

Other property, plant and equipment, net
232,471

 
216,157

INTANGIBLE ASSETS AND GOODWILL
 
 
 
Indefinite-lived intangibles
986,273

 
960,966

Other intangibles, net
292,063

 
299,617

Goodwill
710,614

 
696,263

OTHER ASSETS
 
 
 
Due from iHeartCommunications
928,809

 
885,701

Other assets
124,334

 
122,013

Total Assets
$
5,416,602

 
$
5,718,828

CURRENT LIABILITIES
 
 
 
Accounts payable
$
74,172

 
$
86,870

Accrued expenses
450,757

 
480,872

Deferred income
101,904

 
67,005

Current portion of long-term debt
9,468

 
6,971

Total Current Liabilities
636,301

 
641,718

Long-term debt
5,109,653

 
5,110,020

Deferred tax liability
610,238

 
638,705

Other long-term liabilities
276,911

 
259,311

Commitments and Contingent liabilities (Note 4)

 

STOCKHOLDERS’ DEFICIT
 
 
 
Noncontrolling interest
151,318

 
149,886

Preferred stock, $.01 par value, 150,000,000 shares authorized, no shares issued and outstanding
—

 
—

Class A common stock, par value $.01 per share, authorized 750,000,000 shares, issued 48,379,541 and 47,947,123 shares in 2017 and 2016, respectively
484

 
479

Class B common stock, $.01 par value, 600,000,000 shares authorized, 315,000,000 shares issued and outstanding
3,150

 
3,150

Additional paid-in capital
3,153,966

 
3,432,121

Accumulated deficit
(4,159,576
)
 
(4,125,798
)
Accumulated other comprehensive loss
(360,532
)
 
(386,658
)
Cost of shares (851,030 in 2017 and 633,851 in 2016) held in treasury
(5,311
)
 
(4,106
)
Total Stockholders’ Deficit
(1,216,501
)
 
(930,926
)
Total Liabilities and Stockholders’ Deficit
$
5,416,602

 
$
5,718,828

 

See Notes to Consolidated Financial Statements

1


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
(UNAUDITED)
 
(In thousands, except per share data)
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Revenue
$
672,319

 
$
708,086

 
$
1,217,045

 
$
1,297,100

Operating expenses:
 
 
 
 
 
 
 
Direct operating expenses (excludes depreciation and amortization)
350,173

 
362,001

 
678,104

 
703,988

Selling, general and administrative expenses (excludes depreciation and amortization)
125,898

 
135,567

 
241,672

 
262,368

Corporate expenses (excludes depreciation and amortization)
35,340

 
29,673

 
69,880

 
57,897

Depreciation and amortization
78,290

 
86,974

 
155,784

 
172,369

Other operating income (expense), net
7,829

 
(59,384
)
 
40,440

 
225,390

Operating income
90,447

 
34,487

 
112,045

 
325,868

Interest expense
94,630

 
94,650

 
187,263

 
188,523

Interest income on Due from iHeartCommunications
15,383

 
11,291

 
30,190

 
24,004

Equity in earnings (loss) of nonconsolidated affiliates
271

 
(232
)
 
(201
)
 
(647
)
Other income (expense), net
8,773

 
(33,871
)
 
12,640

 
(39,674
)
Income (loss) before income taxes
20,244

 
(82,975
)
 
(32,589
)
 
121,028

Income tax benefit (expense)
(18,390
)
 
21,719

 
3,447

 
(41,198
)
Consolidated net income (loss)
1,854

 
(61,256
)
 
(29,142
)
 
79,830

Less amount attributable to noncontrolling interest
6,631

 
7,857

 
4,636

 
8,833

Net income (loss) attributable to the Company
$
(4,777
)
 
$
(69,113
)
 
$
(33,778
)
 
$
70,997

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
21,344

 
9,106

 
30,997

 
36,370

Unrealized holding gain (loss) on marketable securities
159

 
(309
)
 
102

 
(345
)
Reclassification adjustments
—

 
32,824

 
(1,644
)
 
32,824

Other adjustments to comprehensive income (loss)
—

 
(3,745
)
 
—

 
(3,745
)
Other comprehensive income
21,503

 
37,876

 
29,455

 
65,104

Comprehensive income (loss)
16,726

 
(31,237
)
 
(4,323
)
 
136,101

Less amount attributable to noncontrolling interest
5,852

 
(3,978
)
 
3,329

 
(1,559
)
Comprehensive income (loss) attributable to the Company
$
10,874

 
$
(27,259
)
 
$
(7,652
)
 
$
137,660

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

 
 

 
 
 
 
Basic
$
(0.01
)
 
$
(0.19
)
 
$
(0.09
)
 
$
0.20

Weighted average common shares outstanding – Basic
361,131

 
360,233

 
360,944

 
360,074

Diluted
$
(0.01
)
 
$
(0.19
)
 
$
(0.09
)
 
$
0.20

Weighted average common shares outstanding – Diluted
361,131

 
360,233

 
360,944

 
361,154

 
 
 
 
 
 
 
 
Dividends declared per share
$
—

 
$
—

 
$
0.78

 
$
1.49

 
See Notes to Consolidated Financial Statements

2


CONSOLIDATED STATEMENTS OF CASH FLOWS
CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
(UNAUDITED)
(In thousands)
Six Months Ended June 30,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Consolidated net income (loss)
$
(29,142
)
 
$
79,830

Reconciling items:
 
 
 
Depreciation and amortization
155,784

 
172,369

Deferred taxes
(23,354
)
 
42,454

Provision for doubtful accounts
4,072

 
6,662

Amortization of deferred financing charges and note discounts, net
5,368

 
5,257

Share-based compensation
4,259

 
5,449

Gain on disposal of operating and other assets
(41,597
)
 
(226,895
)
Equity in loss of nonconsolidated affiliates
201

 
647

Other reconciling items, net
(16,077
)
 
39,000

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
 
 
 
(Increase) decrease in accounts receivable
(22,118
)
 
32,137

Increase in prepaid expenses and other current assets
(15,422
)
 
(28,998
)
Decrease in accrued expenses
(58,153
)
 
(71,651
)
Decrease in accounts payable
(16,141
)
 
(13,807
)
Increase (decrease) in accrued interest
(61
)
 
2,908

Increase in deferred income
30,563

 
36,058

Changes in other operating assets and liabilities
1,580

 
7,345

Net cash provided by (used for) operating activities
$
(20,238
)
 
$
88,765

Cash flows from investing activities:
 

 
 

Purchases of property, plant and equipment
(103,079
)
 
(97,055
)
Proceeds from disposal of assets
59,735

 
583,652

Purchases of other operating assets
(1,711
)
 
(1,670
)
Change in other, net
4,096

 
(30,247
)
Net cash provided by (used for) investing activities
$
(40,959
)
 
$
454,680

Cash flows from financing activities:
 

 
 

Draws on credit facilities
3,125

 
—

Payments on credit facilities
(761
)
 
(1,157
)
Payments on long-term debt
(348
)
 
(1,116
)
Net transfers from (to) iHeartCommunications
(43,109
)
 
241,169

Dividends and other payments from (to) noncontrolling interests
182

 
(1,247
)
Dividends paid
(282,055
)
 
(754,235
)
Change in other, net
(1,012
)
 
(287
)
Net cash used for financing activities
$
(323,978
)
 
$
(516,873
)
Effect of exchange rate changes on cash
6,246

 
212

Net increase (decrease) in cash and cash equivalents
(378,929
)
 
26,784

Cash and cash equivalents at beginning of period
541,995

 
412,743

Cash and cash equivalents at end of period
$
163,066

 
$
439,527

SUPPLEMENTAL DISCLOSURES:
 

 
 

Cash paid for interest
183,415

 
179,020

Cash paid for income taxes
23,681

 
24,198

 
See Notes to Consolidated Financial Statements

3


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


NOTE 1 – BASIS OF PRESENTATION
Preparation of Interim Financial Statements
All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to Clear Channel Outdoor Holdings, Inc. and its consolidated subsidiaries.  Our reportable segments are Americas outdoor advertising (“Americas”) and International outdoor advertising (“International”). The accompanying consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations.  Management believes that the disclosures made are adequate to make the information presented not misleading.  Due to seasonality and other factors, the results for the interim periods may not be indicative of results for the full year.  The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2016 Annual Report on Form 10-K. 
The consolidated financial statements include the accounts of the Company and its subsidiaries and give effect to allocations of expenses from the Company’s indirect parent entity, iHeartCommunications, Inc. (“iHeartCommunications”).  These allocations were made on a specifically identifiable basis or using relative percentages of headcount or other methods management considered to be a reasonable reflection of the utilization of services provided.  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 under the equity method.  All significant intercompany transactions are eliminated in the consolidation process.  Certain prior-period amounts have been reclassified to conform to the 2017 presentation. 
New Accounting Pronouncements
During the third quarter of 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. This update provides a one-year deferral of the effective date for ASU No. 2014-09, Revenue from Contracts with Customers.  ASU No. 2014-09 provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under U.S. GAAP.  The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2017. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company expects to utilize the full retrospective method. The Company has substantially completed its evaluation of the potential changes from adopting the new standard on its future financial reporting and disclosures, which included reviews of contractual terms for all of the Company’s significant revenue streams and the development of an implementation plan. The Company continues to execute on its implementation plan, including detailed policy drafting and training of segment personnel. Based on its evaluation, the Company does not expect material changes to its 2016 or 2017 consolidated revenues, operating income or balance sheets as a result of the implementation of this standard.
During the first quarter of 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new leasing standard presents significant changes to the balance sheets of lessees. Lessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard which was issued in the third quarter of 2015. The standard is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2018.  The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.
During the first quarter of 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350). This update eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The standard is effective for annual and any interim impairment tests performed for periods beginning after December 15, 2019. The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.
During the second quarter of 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718). This update mandates that entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. Entities will have to make all of the disclosures about modifications that are required today, in addition to disclosing that compensation expense hasn't changed. Additionally, the new guidance also clarifies that a modification to an award could be

4


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


significant and therefore require disclosure, even if the modification accounting is not required. The guidance will be applied prospectively to awards modified on or after the adoption date and is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.
NOTE 2 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL
Dispositions
In January 2017, Americas sold its Indianapolis, Indiana market to Fairway Media Group, LLC in exchange for certain assets in Atlanta, Georgia with a fair value of $39.4 million, plus $43.1 million in cash, net of closing costs. The assets acquired as part of the transaction consisted of $9.9 million in fixed assets and $29.5 million in intangible assets (including $2.3 million in goodwill). The Company recognized a net gain of $28.9 million related to the sale, which is included within Other operating income, net.
Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets as of June 30, 2017 and December 31, 2016, respectively:
(In thousands)
June 30,
2017
 
December 31,
2016
 
 
Land, buildings and improvements
$
144,380

 
$
152,775

Structures
2,777,063

 
2,684,673

Furniture and other equipment
166,038

 
148,516

Construction in progress
76,568

 
58,585

 
3,164,049

 
3,044,549

Less: accumulated depreciation
1,753,762

 
1,631,716

Property, plant and equipment, net
$
1,410,287

 
$
1,412,833

 
Indefinite-lived Intangible Assets
The Company’s indefinite-lived intangible assets consist primarily of billboard permits in its Americas segment. Due to significant differences in both business practices and regulations, billboards in the International segment are subject to long-term, finite contracts unlike the Company’s permits in the United States and Canada.  Accordingly, there are no indefinite-lived intangible assets in the International segment. 

Other Intangible Assets
Other intangible assets include definite-lived intangible assets and permanent easements.  The Company’s definite-lived intangible assets primarily include transit and street furniture contracts, site-leases 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.  Permanent easements are indefinite-lived intangible assets which include certain rights to use real property not owned by the Company.  The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets.  These assets are recorded at cost.


5


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of June 30, 2017 and December 31, 2016, respectively:

(In thousands)
June 30, 2017
 
December 31, 2016
 
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
Transit, street furniture and other outdoor
   contractual rights
$
583,567

 
$
(456,984
)
 
$
563,863

 
$
(426,752
)
Permanent easements
162,937

 
—

 
159,782

 
—

Other
4,631

 
(2,088
)
 
4,536

 
(1,812
)
Total
$
751,135

 
$
(459,072
)
 
$
728,181

 
$
(428,564
)
 
Total amortization expense related to definite-lived intangible assets for the three months ended June 30, 2017 and 2016 was $7.1 million and $10.1 million, respectively. Total amortization expense related to definite-lived intangible assets for the six months ended June 30, 2017 and 2016 was $14.1 million and $19.9 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)
 
2018
$
19,638

2019
$
15,597

2020
$
13,302

2021
$
12,963

2022
$
11,486

 
Goodwill
The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments:
(In thousands)
Americas
 
International
 
Consolidated
Balance as of December 31, 2015
$
534,683

 
$
223,892

 
$
758,575

Impairment
—

 
(7,274
)
 
(7,274
)
Dispositions
(6,934
)
 
(30,718
)
 
(37,652
)
Foreign currency
(1,998
)
 
(5,051
)
 
(7,049
)
Assets held for sale
(10,337
)
 
—

 
(10,337
)
Balance as of December 31, 2016
$
515,414

 
$
180,849

 
$
696,263

Acquisitions
2,252

 
—

 
2,252

Dispositions
—

 
(1,817
)
 
(1,817
)
Foreign currency
709

 
13,118

 
13,827

Assets held for sale
89

 
—

 
89

Balance as of June 30, 2017
$
518,464

 
$
192,150

 
$
710,614



6


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


NOTE 3 – LONG-TERM DEBT

Long-term debt outstanding as of June 30, 2017 and December 31, 2016 consisted of the following:

(In thousands)
June 30,
2017
 
December 31,
2016
 
 
Clear Channel Worldwide Holdings Senior Notes:
 
 
 
6.5% Series A Senior Notes Due 2022
$
735,750

 
$
735,750

6.5% Series B Senior Notes Due 2022
1,989,250

 
1,989,250

Clear Channel Worldwide Holdings Senior Subordinated Notes:
 

 
 
7.625% Series A Senior Subordinated Notes Due 2020
275,000

 
275,000

7.625% Series B Senior Subordinated Notes Due 2020
1,925,000

 
1,925,000

Senior Revolving Credit Facility Due 2018(1)
—

 
—

Clear Channel International B.V. Senior Notes Due 2020
225,000

 
225,000

Other debt
11,560

 
14,798

Original issue discount
(6,193
)
 
(6,738
)
Long-term debt fees
(36,246
)
 
(41,069
)
Total debt
$
5,119,121

 
$
5,116,991

Less: current portion
9,468

 
6,971

Total long-term debt
$
5,109,653

 
$
5,110,020


(1)
 The Senior revolving credit facility provides for borrowings up to $75.0 million (the revolving credit commitment). As of June 30, 2017, we had $70.0 million of letters of credit outstanding, and $5.0 million of availability, under the senior revolving credit facility.

The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $5.2 billion at June 30, 2017 and December 31, 2016. Under the fair value hierarchy established by ASC 820-10-35, the market value of the Company’s debt is classified as Level 1.
Surety Bonds, Letters of Credit and Guarantees
As of June 30, 2017, the Company had $71.3 million and $33.1 million in letters of credit and bank guarantees outstanding, respectively. Bank guarantees of $15.9 million were backed by cash collateral. Additionally, as of June 30, 2017, iHeartCommunications had outstanding commercial standby letters of credit and surety bonds of $1.8 million and $53.1 million, respectively, held on behalf of the Company.  These surety bonds, letters of credit and bank guarantees relate to various operational matters, including insurance, bid and performance bonds, as well as other items.

NOTE 4 – COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated.  These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.  It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings.  Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations. 
Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts: commercial disputes; misappropriation of likeness and right of publicity claims; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.

7


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


International Outdoor Investigation
On April 21, 2015, inspections were conducted at the premises of Clear Channel in Denmark and Sweden as part of an investigation by Danish competition authorities.  Additionally, on the same day, Clear Channel UK received a communication from the UK competition authorities, also in connection with the investigation by Danish competition authorities. Clear Channel and its affiliates are cooperating with the national competition authorities.
Stockholder Litigation
On May 9, 2016, a stockholder of the Company filed a derivative lawsuit in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management Inc. v. iHeartMedia Inc. et al., C.A. No. 12312-VCS. The complaint names as defendants iHeartCommunications, Inc. (“iHeartCommunications”), the Company’s indirect parent company, iHeartMedia, Inc. (“iHeartMedia”), the parent company of iHeartCommunications, Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. (together, the “Sponsor Defendants”), iHeartMedia’s private equity sponsors and majority owners, and the members of the Company’s board of directors. The Company also is named as a nominal defendant. The complaint alleges that the Company has been harmed by the intercompany agreements with iHeartCommunications, the Company’s lack of autonomy over its own cash and the actions of the defendants in serving the interests of iHeartMedia, iHeartCommunications and the Sponsor Defendants to the detriment of the Company and its minority stockholders. Specifically, the complaint alleges that the defendants have breached their fiduciary duties by causing the Company to: (i) continue to loan cash to iHeartCommunications under the intercompany note at below-market rates; (ii) abandon its growth and acquisition strategies in favor of transactions that would provide cash to iHeartMedia and iHeartCommunications; (iii) issue new debt in the CCIBV note offering (the “CCIBV Note Offering”) to provide cash to iHeartMedia and iHeartCommunications through a dividend; and (iv) effect the sales of certain outdoor markets in the U.S. (the “Outdoor Asset Sales”) allegedly to provide cash to iHeartMedia and iHeartCommunications through a dividend. The complaint also alleges that iHeartMedia, iHeartCommunications and the Sponsor Defendants aided and abetted the directors’ breaches of their fiduciary duties. The complaint further alleges that iHeartMedia, iHeartCommunications and the Sponsor Defendants were unjustly enriched as a result of these transactions and that these transactions constituted a waste of corporate assets for which the defendants are liable to the Company. The plaintiff is seeking, among other things, a ruling that the defendants breached their fiduciary duties to the Company and that iHeartMedia, iHeartCommunications and the Sponsor Defendants aided and abetted the board of directors’ breaches of fiduciary duty, rescission of payments to iHeartCommunications and its affiliates pursuant to dividends declared in connection with the CCIBV Note Offering and Outdoor Asset Sales, and an order requiring iHeartMedia, iHeartCommunications and the Sponsor Defendants to disgorge all profits they have received as a result of the alleged fiduciary misconduct.
On July 20, 2016, the defendants filed a motion to dismiss plaintiff's verified stockholder derivative complaint for failure to state a claim upon which relief can be granted. On November 23, 2016, the Court granted defendants’ motion to dismiss all claims brought by the plaintiff.  On December 19, 2016, the plaintiff filed a notice of appeal of the ruling. This appeal is pending before the Court.
NOTE 5 — RELATED PARTY TRANSACTIONS
The Company records net amounts due from iHeartCommunications as “Due from iHeartCommunications” on the consolidated balance sheets.  The accounts represent the revolving promissory note issued by the Company to iHeartCommunications and the revolving promissory note issued by iHeartCommunications to the Company in the face amount of $1.0 billion, or if more or less than such amount, the aggregate unpaid principal amount of all advances.  The accounts accrue interest pursuant to the terms of the promissory notes and are generally payable on demand or when they mature on December 15, 2017.
 
Included in the accounts are the net activities resulting from day-to-day cash management services provided by iHeartCommunications.  As a part of these services, the Company maintains collection bank accounts swept daily into accounts of iHeartCommunications (after satisfying the funding requirements of the Trustee Accounts under the CCWH Senior Notes and the CCWH Subordinated Notes).  In return, iHeartCommunications funds the Company’s controlled disbursement accounts as checks or electronic payments are presented for payment.  The Company’s claim in relation to cash transferred from its concentration account is on an unsecured basis and is limited to the balance of the “Due from iHeartCommunications” account.
As of June 30, 2017 and December 31, 2016, the asset recorded in “Due from iHeartCommunications” on the consolidated balance sheet was $928.8 million and $885.7 million, respectively.  As of June 30, 2017, the fixed interest rate on the “Due from iHeartCommunications” account was 6.5%, which is equal to the fixed interest rate on the CCWH Senior Notes.  The net interest

8


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


income for the three months ended June 30, 2017 and 2016 was $15.4 million and $11.3 million, respectively, and $30.2 million and $24.0 million for the six months ended June 30, 2017 and 2016, respectively.
In its Quarterly Report on Form 10-Q filed with the SEC on August 3, 2017, iHeartCommunications stated that its forecast of future cash flows indicates that such cash flows would not be sufficient for it to meet its obligations, as they become due in the ordinary course of business for a period of 12 months following August 3, 2017, including interest payments on its outstanding debt and payment of the outstanding receivables based credit facility balance at maturity on December 24, 2017, payment of the 10% Senior Notes due January 15, 2018 and the payment of the $175.0 million 6.875% Senior Notes due June 15, 2018. iHeartCommunications further stated that management has determined that there is substantial doubt as to iHeartCommunications’ ability to continue as a going concern for a period of 12 months following August 3, 2017.
If iHeartCommunications were to become insolvent or file for bankruptcy, the Company would be an unsecured creditor of iHeartCommunications.  In such event, the Company would be treated the same as other unsecured creditors of iHeartCommunications and, if the Company were not entitled to amounts outstanding under the receivable from iHeartCommunications, or could not obtain such cash on a timely basis or return cash previously received from iHeartCommunications, the Company could experience a liquidity shortfall. 
The Company provides advertising space on its billboards for iHeartMedia, Inc. and for radio stations owned by iHeartMedia, Inc. For the three months ended June 30, 2017 and 2016, the Company recorded $1.9 million and $0.6 million, respectively, and $3.8 million and $0.9 million for the six months ended June 30, 2017 and 2016, respectively, in revenue for these advertisements.
Under the Corporate Services Agreement between iHeartCommunications and the Company, iHeartCommunications provides management services to the Company, which include, among other things: (i) treasury, payroll and other financial related services; (ii) certain executive officer services; (iii) human resources and employee benefits services; (iv) legal and related services; (v) information systems, network and related services; (vi) investment services; (vii) procurement and sourcing support services; and (viii) other general corporate services.  These services are charged to the Company based on actual direct costs incurred or allocated by iHeartCommunications based on headcount, revenue or other factors on a pro rata basis. For the three months ended June 30, 2017 and 2016, the Company recorded $17.4 million and $9.2 million, respectively, and $33.6 million and $18.5 million for the six months ended June 30, 2017 and 2016, respectively, as a component of corporate expenses for these services. In February 2017, the Company and its indirect parent company, iHeartMedia, Inc., entered into an agreement related to the potential purchase of the Clear Channel registered trademarks and domain names. The agreements provide that CCOH will pay a license fee to iHeartMedia, Inc. in 2017 based on revenues of entities using the Clear Channel name, pursuant to the Amended and Restated License Agreement, dated November 10, 2005, by and between iHM Identity, Inc. and Outdoor Management Services, Inc. Included within the management services expense recognized in the three and six months ended June 30, 2017 is an additional expense related to this license of $9.4 million and $17.2 million, respectively. Financial distress at iHeartCommunications could impact its ability to provide these services to us, and if iHeartCommunications was to become insolvent or file a bankruptcy petition, such event could cause significant uncertainties and disrupt our operations and/or adversely affect our rights under the Corporate Services Agreement and the other intercompany agreements.

Pursuant to the Tax Matters Agreement between iHeartCommunications and the Company, the operations of the Company are included in a consolidated federal income tax return filed by iHeartCommunications.  The Company’s provision for income taxes has been computed on the basis that the Company files separate consolidated federal income tax returns with its subsidiaries.  Tax payments are made to iHeartCommunications on the basis of the Company’s separate taxable income.  Tax benefits recognized on the Company’s employee stock option exercises are retained by the Company.
 
The Company computes its deferred income tax provision using the liability method in accordance with the provisions of ASC 740-10, as if the Company was a separate taxpayer.  Deferred tax assets and liabilities are determined based on differences between the financial reporting basis and tax basis 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 some portion or all of the asset will not be realized.
 
Pursuant to the Employee Matters Agreement, the Company’s employees participate in iHeartCommunications’ employee benefit plans, including employee medical insurance and a 401(k) retirement benefit plan.  For the three months ended June 30, 2017 and 2016, the Company recorded $2.4 million and $2.4 million, respectively, and $4.8 million and $4.7 million for the six months ended June 30, 2017 and 2016, respectively, as a component of selling, general and administrative expenses for these services.

9


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


NOTE 6 – INCOME TAXES

Income Tax Benefit (Expense)

The Company’s income tax benefit (expense) for the three and six months ended June 30, 2017 and 2016, respectively, consisted of the following components:
(In thousands)
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Current tax benefit (expense)
$
(26,165
)
 
$
11,519

 
$
(19,907
)
 
$
1,256

Deferred tax benefit (expense)
7,775

 
10,200

 
23,354

 
(42,454
)
Income tax benefit (expense)
$
(18,390
)
 
$
21,719

 
$
3,447

 
$
(41,198
)
 
The effective tax rates for the three and six months ended June 30, 2017 was 90.8% and 10.6%. The effective rates were primarily impacted by the mix of earnings within the various jurisdictions in which the Company operates and the benefits and charges from tax amounts associated with its foreign earnings that are taxed at rates different from the federal statutory rate.
 
The effective tax rate for the three and six months ended June 30, 2016 was 26.2% and 34.0%. The effective rate was primarily impacted by the reversal of the valuation allowance recorded in 2015 against net operating losses in U.S. federal and state jurisdictions due to taxable gains from the dispositions of nine outdoor markets during the period. Additionally, we were unable to benefit from losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future periods.

10


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT)
 
The Company reports its noncontrolling interests in consolidated subsidiaries as a component of equity separate from the Company’s equity. The following table shows the changes in stockholders’ equity (deficit) attributable to the Company and the noncontrolling interests of subsidiaries in which the Company has a majority, but not total, ownership interest:

(In thousands)
The Company
 
Noncontrolling
Interests
 
Consolidated
Balances as of January 1, 2017
$
(1,080,812
)
 
$
149,886

 
$
(930,926
)
Net income (loss)
(33,778
)
 
4,636

 
(29,142
)
Dividends declared
(282,486
)
 
—

 
(282,486
)
Payments to noncontrolling interests
—

 
(5,668
)
 
(5,668
)
Share-based compensation
3,941

 
318

 
4,259

Disposal of noncontrolling interest
—

 
(1,046
)
 
(1,046
)
Foreign currency translation adjustments
27,668

 
3,329

 
30,997

Unrealized holding loss on marketable securities
102

 
—

 
102

Reclassification adjustments
(1,644
)
 
—

 
(1,644
)
Other, net
(810
)
 
(137
)
 
(947
)
Balances as of June 30, 2017
$
(1,367,819
)
 
$
151,318

 
$
(1,216,501
)
 
 
 
 
 
 
Balances as of January 1, 2016
$
(755,599
)
 
$
187,775

 
$
(567,824
)
Net income
70,997

 
8,833

 
79,830

Dividends declared
(540,034
)
 
—

 
(540,034
)
Dividends and other payments to noncontrolling interests
—

 
(6,712
)
 
(6,712
)
Share-based compensation
5,449

 
—

 
5,449

Foreign currency translation adjustments
38,592

 
(2,222
)
 
36,370

Unrealized holding loss on marketable securities
(345
)
 
—

 
(345
)
Reclassification adjustments
32,161

 
663

 
32,824

Other adjustments to comprehensive loss
(3,745
)
 
—

 
(3,745
)
Other, net
(1,633
)
 
1,224

 
(409
)
Balances as of June 30, 2016
$
(1,154,157
)
 
$
189,561

 
$
(964,596
)

The Company has granted restricted stock, restricted stock units and options to purchase shares of its Class A common stock to certain key individuals.

11


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


COMPUTATION OF LOSS PER SHARE
(In thousands, except per share data)
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
NUMERATOR:
 
 
 
 
 
 
 
Net income (loss) attributable to the Company – common shares
$
(4,777
)
 
$
(69,113
)
 
$
(33,778
)
 
$
70,997

 
 
 
 
 
 
 
 
DENOMINATOR:
 

 
 

 
 

 
 

Weighted average common shares outstanding - basic
361,131

 
360,233

 
360,944

 
360,074

Stock options and restricted stock(1)
—

 
—

 
—

 
1,080

Weighted average common shares outstanding - diluted
361,131

 
360,233

 
360,944

 
361,154

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

 
 

 
 

 
 

Basic
$
(0.01
)
 
$
(0.19
)
 
$
(0.09
)
 
$
0.20

Diluted
$
(0.01
)
 
$
(0.19
)
 
$
(0.09
)
 
$
0.20


(1) 
Outstanding equity awards of 6.3 million and 8.3 million for the three months ended June 30, 2017 and 2016, respectively, 6.3 million and 5.2 million for the six months ended June 30, 2017 and 2016, respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 8 — OTHER INFORMATION
Other Comprehensive Income (Loss)
There was no change in deferred income tax liabilities resulting from adjustments to comprehensive loss for the three and six months ended June 30, 2017. The total increase in deferred income tax liabilities of other adjustments to comprehensive loss for the three and six months ended June 30, 2016 was $0.8 million.

NOTE 9 – SEGMENT DATA
The Company has two reportable segments, which it believes best reflect how the Company is currently managed – Americas and International.  The Americas segment consists of operations primarily in the United States, Canada and Latin America and the International segment primarily includes operations in Europe and Asia.  The Americas and International display inventory consists primarily of billboards, street furniture displays and transit displays.  Corporate includes infrastructure and support including information technology, human resources, legal, finance and administrative functions of each of the Company’s reportable segments, as well as overall executive, administrative and support functions.  Share-based payments are recorded in corporate expenses.


12


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


The following table presents the Company's reportable segment results for the three and six months ended June 30, 2017 and 2016:
(In thousands)
Americas
 
International
 
Corporate and other reconciling items
 
Consolidated
Three Months Ended June 30, 2017
 
 
 
 
 
 
 
Revenue
$
323,960

 
$
348,359

 
$
—

 
$
672,319

Direct operating expenses
145,099

 
205,074

 
—

 
350,173

Selling, general and administrative expenses
54,763

 
71,135

 
—

 
125,898

Corporate expenses
—

 
—

 
35,340

 
35,340

Depreciation and amortization
45,359

 
31,590

 
1,341

 
78,290

Other operating income, net
—

 
—

 
7,829

 
7,829

Operating income (loss)
$
78,739

 
$
40,560

 
$
(28,852
)
 
$
90,447

 
 
 
 
 
 
 
 
Capital expenditures
$
26,935

 
$
35,816

 
$
3,984

 
$
66,735

Share-based compensation expense
$
—

 
$
—

 
$
1,900

 
$
1,900

 
 
 
 
 
 
 
 
Three Months Ended June 30, 2016
 
 
 
 
 
 
 
Revenue
$
325,533

 
$
382,553

 
$
—

 
$
708,086

Direct operating expenses
140,038

 
221,963

 
—

 
362,001

Selling, general and administrative expenses
57,831

 
77,736

 
—

 
135,567

Corporate expenses
—

 
—

 
29,673

 
29,673

Depreciation and amortization
47,525

 
38,177

 
1,272

 
86,974

Other operating expense, net
—

 
—

 
(59,384
)
 
(59,384
)
Operating income (loss)
$
80,139

 
$
44,677

 
$
(90,329
)
 
$
34,487

 
 
 
 
 
 
 
 
Capital expenditures
$
17,402

 
$
31,771

 
$
680

 
$
49,853

Share-based compensation expense
$
—

 
$
—

 
$
3,079

 
$
3,079




13


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
Americas
 
International
 
Corporate and other reconciling items
 
Consolidated
Six Months Ended June 30, 2017
 
 
 
 
 
 
 
Revenue
$
603,380

 
$
613,665

 
$
—

 
$
1,217,045

Direct operating expenses
285,572

 
392,532

 
—

 
678,104

Selling, general and administrative expenses
110,849

 
130,823

 
—

 
241,672

Corporate expenses
—

 
—

 
69,880

 
69,880

Depreciation and amortization
90,654

 
62,263

 
2,867

 
155,784

Other operating income, net
—

 
—

 
40,440

 
40,440

Operating income (loss)
$
116,305

 
$
28,047

 
$
(32,307
)
 
$
112,045

 
 
 
 
 
 
 
 
Capital expenditures
$
41,039

 
$
57,640

 
$
4,400

 
$
103,079

Share-based compensation expense
$
—

 
$
—

 
$
4,259

 
$
4,259

 
 
 
 
 
 
 
 
Six Months Ended June 30, 2016
 
 
 
 
 
 
 
Revenue
$
608,061

 
$
689,039

 
$
—

 
$
1,297,100

Direct operating expenses
278,050

 
425,938

 
—

 
703,988

Selling, general and administrative expenses
113,160

 
149,208

 
—

 
262,368

Corporate expenses
—

 
—

 
57,897

 
57,897

Depreciation and amortization
93,641

 
76,057

 
2,671

 
172,369

Other operating income, net
—

 
—

 
225,390

 
225,390

Operating income
$
123,210

 
$
37,836

 
$
164,822

 
$
325,868

 
 
 
 
 
 
 
 
Capital expenditures
$
28,694

 
$
66,684

 
$
1,677

 
$
97,055

Share-based compensation expense
$
—

 
$
—

 
$
5,449

 
$
5,449



14


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


NOTE 10 – GUARANTOR SUBSIDIARIES

The Company and certain of the Company’s direct and indirect wholly-owned domestic subsidiaries (the “Guarantor Subsidiaries”) fully and unconditionally guarantee on a joint and several basis certain of the outstanding indebtedness of Clear Channel Worldwide Holdings, Inc. ("CCWH" or the “Subsidiary Issuer”).  The following consolidating schedules present financial information on a combined basis in conformity with the SEC’s Regulation S-X Rule 3-10(d):
(In thousands)
June 30, 2017
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
14,070

 
$
—

 
$
9,840

 
$
139,156

 
$
—

 
$
163,066

Accounts receivable, net of allowance
—

 
—

 
195,294

 
438,389

 
—

 
633,683

Intercompany receivables
—

 
625,123

 
2,721,245

 
89,965

 
(3,436,333
)
 
—

Prepaid expenses
1,273

 
3,433

 
62,906

 
60,375

 
—

 
127,987

Other current assets
—

 
—

 
2,733

 
36,753

 
—

 
39,486

Total Current Assets
15,343

 
628,556

 
2,992,018

 
764,638

 
(3,436,333
)
 
964,222

Structures, net
—

 
—

 
716,759

 
461,057

 
—

 
1,177,816

Other property, plant and equipment, net
—

 
—

 
132,703

 
99,768

 
—

 
232,471

Indefinite-lived intangibles
—

 
—

 
976,395

 
9,878

 
—

 
986,273

Other intangibles, net
—

 
—

 
255,781

 
36,282

 
—

 
292,063

Goodwill
—

 
—

 
507,820

 
202,794

 
—

 
710,614

Due from iHeartCommunications
928,809

 
—

 
—

 
—

 
—

 
928,809

Intercompany notes receivable
182,026

 
4,887,434

 
—

 
5,000

 
(5,074,460
)
 
—

Other assets
265,905

 
439,749

 
1,333,185

 
69,047

 
(1,983,552
)
 
124,334

Total Assets
$
1,392,083

 
$
5,955,739

 
$
6,914,661

 
$
1,648,464

 
$
(10,494,345
)
 
$
5,416,602

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
—

 
$
5,081

 
$
69,091

 
$
—

 
$
74,172

Intercompany payable
2,721,245

 
—

 
715,088

 
—

 
(3,436,333
)
 
—

Accrued expenses
4,101

 
(3,394
)
 
75,351

 
374,699

 
—

 
450,757

Deferred income
—

 
—

 
47,602

 
54,302

 
—

 
101,904

Current portion of long-term debt
—

 
—

 
109

 
9,359

 
—

 
9,468

Total Current Liabilities
2,725,346

 
(3,394
)
 
843,231

 
507,451

 
(3,436,333
)
 
636,301

Long-term debt
—

 
4,890,705

 
1,879

 
217,069

 
—

 
5,109,653

Intercompany notes payable
—

 
5,000

 
5,027,529

 
41,931

 
(5,074,460
)
 
—

Deferred tax liability
772

 
1,367

 
665,751

 
(57,652
)
 
—

 
610,238

Other long-term liabilities
989

 
—

 
139,803

 
136,119

 
—

 
276,911

Total stockholders' equity (deficit)
(1,335,024
)
 
1,062,061

 
236,468

 
803,546

 
(1,983,552
)
 
(1,216,501
)
Total Liabilities and Stockholders'
   Equity (Deficit)
$
1,392,083

 
$
5,955,739

 
$
6,914,661

 
$
1,648,464

 
$
(10,494,345
)
 
$
5,416,602


 

15


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
December 31, 2016
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
300,285

 
$
—

 
$
61,542

 
$
180,168

 
$
—

 
$
541,995

Accounts receivable, net of allowance
—

 
—

 
193,474

 
399,596

 
—

 
593,070

Intercompany receivables
—

 
687,043

 
2,694,094

 
99,431

 
(3,480,568
)
 
—

Prepaid expenses
1,363

 
3,433

 
51,751

 
55,022

 
—

 
111,569

Assets held for sale
—

 
—

 
55,602

 
—

 
—

 
55,602

Other current assets
—

 
—

 
6,873

 
32,326

 
—

 
39,199

Total Current Assets
301,648

 
690,476

 
3,063,336

 
766,543

 
(3,480,568
)
 
1,341,435

Structures, net
—

 
—

 
746,877

 
449,799

 
—

 
1,196,676

Other property, plant and equipment, net
—

 
—

 
124,138

 
92,019

 
—

 
216,157

Indefinite-lived intangibles
—

 
—

 
951,439

 
9,527

 
—

 
960,966

Other intangibles, net
—

 
—

 
259,915

 
39,702

 
—

 
299,617

Goodwill
—

 
—

 
505,478

 
190,785

 
—

 
696,263

Due from iHeartCommunications
885,701

 
—

 
—

 
—

 
—

 
885,701

Intercompany notes receivable
182,026

 
4,887,354

 
—

 
—

 
(5,069,380
)
 
—

Other assets
280,435

 
418,658

 
1,320,838

 
65,589

 
(1,963,507
)
 
122,013

Total Assets
$
1,649,810

 
$
5,996,488

 
$
6,972,021

 
$
1,613,964

 
$
(10,513,455
)
 
$
5,718,828

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
—

 
$
14,897

 
$
71,973

 
$
—

 
$
86,870

Intercompany payable
2,694,094

 
—

 
786,474

 
—

 
(3,480,568
)
 
—

Accrued expenses
2,223

 
58,652

 
35,509

 
384,488

 
—

 
480,872

Dividends payable
—

 


 


 


 


 
—

Deferred income
—

 
—

 
33,471

 
33,534

 
—

 
67,005

Current portion of long-term debt
—

 
—

 
89

 
6,882

 
—

 
6,971

Total Current Liabilities
2,696,317

 
58,652

 
870,440

 
496,877

 
(3,480,568
)
 
641,718

Long-term debt
—

 
4,886,318

 
1,711

 
221,991

 
—

 
5,110,020

Intercompany notes payable
—

 
5,000

 
5,027,681

 
36,699

 
(5,069,380
)
 
—

Deferred tax liability
772

 
1,367

 
685,780

 
(49,214
)
 
—

 
638,705

Other long-term liabilities
1,055

 
—

 
135,094

 
123,162

 
—

 
259,311

Total stockholders' equity (deficit)
(1,048,334
)
 
1,045,151

 
251,315

 
784,449

 
(1,963,507
)
 
(930,926
)
Total Liabilities and Stockholders' Equity (Deficit)
$
1,649,810

 
$
5,996,488

 
$
6,972,021

 
$
1,613,964

 
$
(10,513,455
)
 
$
5,718,828


 

 






16


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
Three Months Ended June 30, 2017
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
—

 
$
—

 
$
291,000

 
$
381,319

 
$
—

 
$
672,319

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 

Direct operating expenses
—

 
—

 
126,650

 
223,523

 
—

 
350,173

Selling, general and administrative expenses
—

 
—

 
47,718

 
78,180

 
—

 
125,898

Corporate expenses
3,443

 
—

 
23,653

 
8,244

 
—

 
35,340

Depreciation and amortization
—

 
—

 
43,463

 
34,827

 
—

 
78,290

Other operating income (expense), net
(103
)
 
—

 
1,047

 
6,885

 
—

 
7,829

Operating income (loss)
(3,546
)
 
—

 
50,563

 
43,430

 
—

 
90,447

Interest (income) expense, net
(91
)
 
88,303

 
(34
)
 
6,452

 
—

 
94,630

Interest income on Due from iHeartCommunications
15,383

 
—

 
—

 
—

 
—

 
15,383

Intercompany interest income
4,081

 
85,182

 
15,770

 
97

 
(105,130
)
 
—

Intercompany interest expense
15,383

 
61

 
89,360

 
326

 
(105,130
)
 
—

Equity in earnings (loss) of nonconsolidated affiliates
(8,020
)
 
20,363

 
18,988

 
70

 
(31,130
)
 
271

Other income (expense), net
4,786

 
—

 
(76
)
 
4,063

 
—

 
8,773

Income (loss) before income taxes
(2,608
)
 
17,181

 
(4,081
)
 
40,882

 
(31,130
)
 
20,244

Income tax benefit (expense)
(2,169
)
 
3,394

 
(3,939
)
 
(15,676
)
 
—

 
(18,390
)
Consolidated net income (loss)
(4,777
)
 
20,575

 
(8,020
)
 
25,206

 
(31,130
)
 
1,854

Less amount attributable to noncontrolling interest
—

 
—

 
—

 
6,631

 
—

 
6,631

Net income (loss) attributable to the Company
$
(4,777
)
 
$
20,575

 
$
(8,020
)
 
$
18,575

 
$
(31,130
)
 
$
(4,777
)
Other comprehensive income (loss), net of tax:
 

 
 

 
 

 
 

 
 

 
 

Foreign currency translation adjustments
—

 
—

 
320

 
21,024

 
—

 
21,344

Unrealized holding gain on marketable securities
—

 
—

 
—

 
159

 
—

 
159

Reclassification adjustments
—

 
—

 
—

 
—

 
—

 
—

Equity in subsidiary comprehensive income
15,651

 
16,818

 
15,331

 
—

 
(47,800
)
 
—

Comprehensive income
10,874

 
37,393

 
7,631

 
39,758

 
(78,930
)
 
16,726

Less amount attributable to noncontrolling interest
—

 
—

 
—

 
5,852

 
—

 
5,852

Comprehensive income attributable to the Company
$
10,874

 
$
37,393

 
$
7,631

 
$
33,906

 
$
(78,930
)
 
$
10,874


17


CLEAR CHANNEL OUTDOOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(In thousands)
Three Months Ended June 30, 2016
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
—

 
$
—

 
$
293,235

 
$
414,851

 
$
—

 
$
708,086

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 

Direct operating expenses
—

 
—

 
122,125

 
239,876

 
—

 
362,001

Selling, general and administrative expenses
—

 
—

 
50,674

 
84,893

 
—

 
135,567

Corporate expenses
3,083

 
—

 
16,650

 
9,940

 
—

 
29,673

Depreciation and amortization
—

 
—

 
44,688

 
42,286

 
—

 
86,974

Other operating expense, net
(88
)
 
—

 
(2,048
)