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, 2016
 
[  ]           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   [  ]
 
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 August 2, 2016
- - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - -
Class A Common Stock, $.01 par value
Class B Common Stock, $.01 par value
47,177,430
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, 2016
 
December 31,
2015
 
(Unaudited)
 
CURRENT ASSETS
 

 
 

Cash and cash equivalents
$
439,527

 
$
412,743

Accounts receivable, net of allowance of $24,403 in 2016 and $25,348 in 2015
646,822

 
697,583

Prepaid expenses
134,553

 
127,730

Assets held for sale
55,053

 
295,075

Other current assets
62,406

 
34,566

Total Current Assets
1,338,361

 
1,567,697

PROPERTY, PLANT AND EQUIPMENT
 
 
 
Structures, net
1,289,708

 
1,391,880

Other property, plant and equipment, net
233,437

 
236,106

INTANGIBLE ASSETS AND GOODWILL
 
 
 
Indefinite-lived intangibles
961,347

 
971,327

Other intangibles, net
321,591

 
342,864

Goodwill
744,021

 
758,575

OTHER ASSETS
 
 
 
Due from iHeartCommunications
689,631

 
930,799

Other assets
120,037

 
107,540

Total Assets
$
5,698,133

 
$
6,306,788

CURRENT LIABILITIES
 
 
 
Accounts payable
$
85,232

 
$
100,210

Accrued expenses
438,576

 
507,665

Dividends payable
—

 
217,017

Deferred income
127,356

 
91,411

Current portion of long-term debt
4,592

 
4,310

Total Current Liabilities
655,756

 
920,613

Long-term debt
5,110,640

 
5,106,513

Deferred tax liability
651,883

 
608,910

Other long-term liabilities
246,295

 
240,419

Commitments and Contingent liabilities (Note 4)

 

SHAREHOLDERS’ DEFICIT
 
 
 
Noncontrolling interest
189,561

 
187,775

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 47,774,617 and 46,661,114 shares in 2016 and 2015, respectively
478

 
467

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
3,426,602

 
3,961,515

Accumulated deficit
(4,197,636
)
 
(4,268,637
)
Accumulated other comprehensive loss
(385,170
)
 
(451,833
)
Cost of shares (531,290 in 2016 and 233,868 in 2015) held in treasury
(3,426
)
 
(2,104
)
Total Shareholders’ Deficit
(966,441
)
 
(569,667
)
Total Liabilities and Shareholders’ Deficit
$
5,698,133

 
$
6,306,788

 

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,
 
2016
 
2015
 
2016
 
2015
Revenue
$
712,146

 
$
722,819

 
$
1,302,867

 
$
1,337,862

Operating expenses:
 
 
 
 
 
 
 
Direct operating expenses (excludes depreciation and amortization)
366,061

 
372,342

 
709,755

 
735,313

Selling, general and administrative expenses (excludes depreciation and amortization)
135,567

 
132,522

 
262,368

 
259,652

Corporate expenses (excludes depreciation and amortization)
29,652

 
30,154

 
57,891

 
58,907

Depreciation and amortization
86,974

 
93,405

 
172,369

 
187,499

Other operating income (expense), net
(59,384
)
 
659

 
225,390

 
(4,785
)
Operating income
34,508

 
95,055

 
325,874

 
91,706

Interest expense
94,650

 
88,556

 
188,523

 
177,972

Interest income on Due from iHeartCommunications
11,291

 
15,049

 
24,004

 
30,302

Equity in earnings (loss) of nonconsolidated affiliates
(232
)
 
(351
)
 
(647
)
 
171

Other income (expense), net
(33,871
)
 
15,276

 
(39,674
)
 
35,214

Income (loss) before income taxes
(82,954
)
 
36,473

 
121,034

 
(20,579
)
Income tax benefit (expense)
21,712

 
(27,187
)
 
(41,200
)
 
(3,088
)
Consolidated net income (loss)
(61,242
)
 
9,286

 
79,834

 
(23,667
)
Less amount attributable to noncontrolling interest
7,857

 
7,876

 
8,833

 
8,441

Net income (loss) attributable to the Company
$
(69,099
)
 
$
1,410

 
$
71,001

 
$
(32,108
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
9,106

 
2,900

 
36,370

 
(78,587
)
Unrealized holding gain (loss) on marketable securities
(309
)
 
(133
)
 
(345
)
 
689

Reclassification adjustment for realized cumulative translation adjustments on sale of businesses included in Other operating income (expense), net
32,824

 
—

 
32,824

 
—

Other adjustments to comprehensive loss
(3,745
)
 
—

 
(3,745
)
 
(1,154
)
Other comprehensive income (loss)
37,876

 
2,767

 
65,104

 
(79,052
)
Comprehensive income (loss)
(31,223
)
 
4,177

 
136,105

 
(111,160
)
Less amount attributable to noncontrolling interest
(3,978
)
 
(5,060
)
 
(1,559
)
 
(2,761
)
Comprehensive income (loss) attributable to the Company
$
(27,245
)
 
$
9,237

 
$
137,664

 
$
(108,399
)
Net income (loss) attributable to the Company per common share:
 

 
 

 
 
 
 
Basic
$
(0.19
)
 
$
—

 
$
0.20

 
$
(0.09
)
Weighted average common shares outstanding – Basic
360,233

 
359,538

 
360,074

 
359,317

Diluted
$
(0.19
)
 
$
—

 
$
0.20

 
$
(0.09
)
Weighted average common shares outstanding – Diluted
360,233

 
361,603

 
361,154

 
359,317

 
 
 
 
 
 
 
 
Dividends declared per share
$
—

 
$
—

 
$
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,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Consolidated net income (loss)
$
79,834

 
$
(23,667
)
Reconciling items:
 
 
 
Depreciation and amortization
172,369

 
187,499

Deferred taxes
42,456

 
6,311

Provision for doubtful accounts
6,662

 
5,144

Amortization of deferred financing charges and note discounts, net
5,257

 
4,344

Share-based compensation
5,443

 
3,729

Gain on sale of operating and other assets, net
(226,895
)
 
(2,602
)
Equity in (earnings) loss of nonconsolidated affiliates
647

 
(171
)
Other reconciling items, net
39,000

 
(35,606
)
Changes in operating assets and liabilities, net of effects of acquisitions
   and dispositions:
 
 
 
(Increase) decrease in accounts receivable
32,137

 
(40,921
)
Increase in prepaid expenses and other current assets
(28,998
)
 
(31,030
)
Decrease in accrued expenses
(71,651
)
 
(58,848
)
Decrease in accounts payable
(13,807
)
 
(2,539
)
Increase (decrease) in accrued interest
2,908

 
(638
)
Increase in deferred income
36,058

 
40,740

Changes in other operating assets and liabilities
7,345

 
2,714

Net cash provided by operating activities
$
88,765

 
$
54,459

Cash flows from investing activities:
 

 
 

Purchases of property, plant and equipment
(97,055
)
 
(90,033
)
Proceeds from disposal of assets
583,652

 
2,129

Purchases of other operating assets
(1,670
)
 
(853
)
Change in other, net
(30,247
)
 
(1,036
)
Net cash provided by (used for) investing activities
$
454,680

 
$
(89,793
)
Cash flows from financing activities:
 

 
 

Payments on credit facilities
(1,157
)
 
(2,638
)
Payments on long-term debt
(1,116
)
 
(27
)
Net transfers from iHeartCommunications
241,169

 
10,875

Dividends and other payments to noncontrolling interests
(1,247
)
 
(28,099
)
Dividends paid
(754,235
)
 
—

Change in other, net
(287
)
 
2,825

Net cash used for financing activities
$
(516,873
)
 
$
(17,064
)
Effect of exchange rate changes on cash
212

 
(3,923
)
Net increase (decrease) in cash and cash equivalents
26,784

 
(56,321
)
Cash and cash equivalents at beginning of period
412,743

 
186,204

Cash and cash equivalents at end of period
$
439,527

 
$
129,883

SUPPLEMENTAL DISCLOSURES:
 

 
 

Cash paid for interest
179,020

 
174,631

Cash paid for income taxes
24,198

 
19,217

 
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 2015 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 2016 presentation. 
  
New Accounting Pronouncements
During the second quarter of 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, the Company will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this update are effective for annual periods ending after December 15, 2016, and for interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.

During the first quarter of 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis. This new standard eliminates the deferral of FAS 167, which has allowed entities with interest in certain investment funds to follow the previous consolidation guidance in FIN 46(R) and makes other changes to both the variable interest model and the voting model. The standard is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2015.  The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.
 
During the second quarter of 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This update simplifies the presentation of debt issuance costs as a deduction from the carrying value of the outstanding debt balance rather than showing the debt issuance costs as an asset.  The standard is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2015.  The retrospective adoption of this guidance resulted in the reclassification of debt issuance costs of $50.4 million as of December 31, 2015, which are now reflected as “Long-term debt fees” in Note 3. 
 
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 Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.
 

4


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


During the third quarter of 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. This update eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. The standard is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

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 second quarter of 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718). This update changes the accounting for certain aspects of share-based payments to employees. Income tax effects of share-based payment awards will be recognized in the income statement with the vesting or settlement of the awards and the record keeping for additional paid-in capital pools will no longer be necessary. Additionally, companies can make a policy election to either estimate forfeitures or recognize them as they occur. The standard is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2016. The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements.
During the second quarter of 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). The new standard changes the impairment model for most financial assets and certain other instruments. Entities will be required to use a model that will result in the earlier recognition of allowances for losses for trade and other receivables, held-to-maturity debt securities, loans and other instruments. For available-for-sale debt securities with unrealized losses, the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. For an SEC filer, the standard is effective for annual periods, and for interim periods within those annual 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.
NOTE 2 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL
Dispositions
During the first quarter of 2016, Americas outdoor sold nine non-strategic outdoor markets including Cleveland and Columbus, Ohio, Des Moines, Iowa, Ft. Smith, Arkansas, Memphis, Tennessee, Portland, Oregon, Reno, Nevada, Seattle, Washington and Wichita, Kansas for net proceeds, which included cash and certain advertising assets in Florida, totaling $594.0 million. The Company recognized a net gain of $280.0 million related to the sale, which is included within Other operating income (expense), net.
During the first quarter of 2016, Americas outdoor also entered into an agreement to sell its Indianapolis, Indiana market in exchange for certain assets in Atlanta, Georgia, plus approximately $41.2 million in cash. The transaction is subject to regulatory approvals and is expected to close in 2016. This transaction has met the criteria to be classified as held-for-sale and as such, the related assets are separately presented on the face of the Consolidated Balance Sheet.
During the second quarter of 2016, International outdoor sold its business in Turkey. As a result, the Company recognized a net loss of $56.6 million, which includes $32.2 million in cumulative translation adjustments that were recognized upon the sale of the Company's subsidiaries in Turkey.  
Property, Plant and Equipment


5


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


The Company’s property, plant and equipment consisted of the following classes of assets as of June 30, 2016 and December 31, 2015, respectively:
(In thousands)
June 30,
2016
 
December 31,
2015
 
 
Land, buildings and improvements
$
162,252

 
$
167,739

Structures
2,743,168

 
2,824,794

Furniture and other equipment
154,996

 
156,046

Construction in progress
65,363

 
54,701

 
3,125,779

 
3,203,280

Less: accumulated depreciation
1,602,634

 
1,575,294

Property, plant and equipment, net
$
1,523,145

 
$
1,627,986

 
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 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.

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of June 30, 2016 and December 31, 2015, respectively:

(In thousands)
June 30, 2016
 
December 31, 2015
 
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
Transit, street furniture and other outdoor
   contractual rights
$
589,682

 
$
(428,504
)
 
$
635,772

 
$
(457,060
)
Permanent easements
157,436

 
—

 
156,349

 
—

Other
4,585

 
(1,608
)
 
9,687

 
(1,884
)
Total
$
751,703

 
$
(430,112
)
 
$
801,808

 
$
(458,944
)
 
Total amortization expense related to definite-lived intangible assets for the three months ended June 30, 2016 and 2015 was $10.1 million and $12.5 million, respectively. Total amortization expense related to definite-lived intangible assets for the six months ended June 30, 2016 and 2015 was $19.9 million and $27.2 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:


6


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


(In thousands)
 
2017
$
29,032

2018
$
20,390

2019
$
16,240

2020
$
13,938

2021
$
13,394

 
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, 2014
$
584,574

 
$
232,538

 
$
817,112

Acquisitions
—

 
10,998

 
10,998

Foreign currency
(709
)
 
(19,644
)
 
(20,353
)
Assets held for sale
(49,182
)
 
—

 
(49,182
)
Balance as of December 31, 2015
$
534,683

 
$
223,892

 
$
758,575

Dispositions
(6,934
)
 
—

 
(6,934
)
Foreign currency
(1,393
)
 
3,999

 
2,606

Assets held for sale
(10,226
)
 
—

 
(10,226
)
Balance as of June 30, 2016
$
516,130

 
$
227,891

 
$
744,021



7


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, 2016 and December 31, 2015 consisted of the following:

(In thousands)
June 30,
2016
 
December 31,
2015
 
 
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
18,354

 
19,003

Original issue discount
(7,263
)
 
(7,769
)
Long-term debt fees
(45,859
)
 
(50,411
)
Total debt
$
5,115,232

 
$
5,110,823

Less: current portion
4,592

 
4,310

Total long-term debt
$
5,110,640

 
$
5,106,513


(1)
 The Senior revolving credit facility provides for borrowings up to $75.0 million (the revolving credit commitment). As of June 30, 2016, we had $52.5 million of letters of credit outstanding, and $22.5 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 $5.0 billion and $4.9 billion at June 30, 2016 and December 31, 2015, respectively. 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, 2016, the Company had $53.7 million and $55.8 million in letters of credit and bank guarantees outstanding, respectively. Bank guarantees of $26.7 million were backed by cash collateral. Additionally, as of June 30, 2016, iHeartCommunications had outstanding commercial standby letters of credit and surety bonds of $1.2 million and $54.6 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.
 

8


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”) 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 May 26, 2016, the plaintiff filed a motion seeking expedited discovery and an expedited trial on certain counts of its complaint. On June 27, 2016, the court denied the motion for an expedited trial and discovery, and on July 12, 2016, the parties stipulated to a schedule that would allow for a decision on the defendants’ forthcoming motion to dismiss by mid-September and a trial, if necessary, beginning February 27, 2017. On July 20, 2016, the defendants filed a motion to dismiss.

NOTE 5 — RELATED PARTY TRANSACTIONS
The Company records net amounts due from or to iHeartCommunications as “Due from/to 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, 2016 and December 31, 2015, the asset recorded in “Due from iHeartCommunications” on the consolidated balance sheet was $689.6 million and $930.8 million, respectively.  As of June 30, 2016, the fixed interest rate on the “Due

9


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


from iHeartCommunications” account was 6.5%, which is equal to the fixed interest rate on the CCWH Senior Notes.  The net interest income for the three months ended June 30, 2016 and 2015 was $11.3 million and $15.0 million, respectively. The net interest income for the six months ended June 30, 2016 and 2015 was $24.0 million and $30.3 million, respectively. On February 4, 2016, the Company demanded the repayment of $300.0 million outstanding under the Due from iHeartCommunications note and used the repayment to partially fund a special cash dividend of $540.0 million, which was paid on February 4, 2016.
 
The Company provides advertising space on its billboards for radio stations owned by iHeartCommunications.  For the three months ended June 30, 2016 and 2015, the Company recorded $0.6 million and $1.1 million, respectively, in revenue for these advertisements.  For the six months ended June 30, 2016 and 2015, the Company recorded $0.9 million and $2.2 million, 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, 2016 and 2015, the Company recorded $9.2 million and $8.0 million, respectively, as a component of corporate expenses for these services. For the six months ended June 30, 2016 and 2015, the Company recorded $18.5 million and $15.9 million, respectively, as a component of corporate expenses for these services.
 
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 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, 2016 and 2015, the Company recorded $2.4 million and $2.7 million, respectively, as a component of selling, general and administrative expenses for these services.  For the six months ended June 30, 2016 and 2015, the Company recorded $4.7 million and $5.3 million, respectively, as a component of selling, general and administrative expenses for these services.

NOTE 6 – INCOME TAXES

Income Tax Benefit (Expense)

The Company’s income tax benefit (expense) for the three and six months ended June 30, 2016 and 2015, respectively, consisted of the following components:
(In thousands)
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Current tax benefit (expense)
$
11,519

 
$
(25,613
)
 
$
1,256

 
$
3,223

Deferred tax benefit (expense)
10,193

 
(1,574
)
 
(42,456
)
 
(6,311
)
Income tax benefit (expense)
$
21,712

 
$
(27,187
)
 
$
(41,200
)
 
$
(3,088
)
 

10


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


The effective tax rates for the three and six months ended June 30, 2016 were 26.2% and 34.0%, respectively. The effective rate for the six months ended June 30, 2016 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.  The effective rate for the three months ended June 30, 2016 was primarily impacted by the Company's inability to benefit from losses in certain foreign jurisdictions due to uncertainty regarding the ability to utilize those losses in future periods.
 
The effective tax rates for the three and six months ended June 30, 2015 were 74.5% and (15.0)%, respectively. The effective rates were primarily impacted by the valuation allowances recorded against certain deferred tax assets that consisted of net operating losses in U.S. federal, state and certain foreign jurisdictions.  The Company recorded a valuation allowance against these deferred tax assets as the reversing deferred tax liabilities and other sources of taxable income that may be available to realize the deferred tax assets were exceeded by deferred tax assets recognized on the additional net operating losses incurred in the period.

NOTE 7 – SHAREHOLDERS’ 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 shareholders’ 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, 2016
$
(757,442
)
 
$
187,775

 
$
(569,667
)
Net income
71,001

 
8,833

 
79,834

Dividends declared
(540,034
)
 
—

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

 
(6,712
)
 
(6,712
)
Share-based compensation
5,443

 
—

 
5,443

Foreign currency translation adjustments
38,592

 
(2,222
)
 
36,370

Unrealized holding loss on marketable securities
(345
)
 
—

 
(345
)
Reclassification adjustment for realized cumulative translation adjustments on sale of businesses included in Other operating income (expense), net
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
$
(1,156,002
)
 
$
189,561

 
$
(966,441
)
 
 
 
 
 
 
Balances as of January 1, 2015
$
(344,275
)
 
$
203,334

 
$
(140,941
)
Net income (loss)
(32,108
)
 
8,441

 
(23,667
)
Dividends and other payments to noncontrolling interests
—

 
(28,099
)
 
(28,099
)
Share-based compensation
3,729

 
—

 
3,729

Foreign currency translation adjustments
(75,826
)
 
(2,761
)
 
(78,587
)
Unrealized holding gain on marketable securities
689

 
—

 
689

Other adjustments to comprehensive loss
(1,154
)
 
—

 
(1,154
)
Other, net
2,827

 
1,858

 
4,685

Balances as of June 30, 2015
$
(446,118
)
 
$
182,773

 
$
(263,345
)

NOTE 8 — OTHER INFORMATION
 
Other Comprehensive Income (Loss)
The total (decrease) increase in deferred income tax liabilities of other adjustments to comprehensive loss for the three months ended June 30, 2016 and 2015 were $0.8 million and $0.0 million, respectively. The total (decrease) increase in deferred

11


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


income tax liabilities of other adjustments to comprehensive loss for the six months ended June 30, 2016 and 2015 were $0.8 million and ($0.6) million, respectively.
 
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, Asia and Australia.  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.
 
(In thousands)
Americas
 
International
 
Corporate and other reconciling items
 
Consolidated
Three Months Ended June 30, 2016
 
 
 
 
 
 
 
Revenue
$
325,533

 
$
386,613

 
$
—

 
$
712,146

Direct operating expenses
140,038

 
226,023

 
—

 
366,061

Selling, general and administrative expenses
57,831

 
77,736

 
—

 
135,567

Corporate expenses
—

 
—

 
29,652

 
29,652

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

 
$
(90,308
)
 
$
34,508

 
 
 
 
 
 
 
 
Capital expenditures
$
17,402

 
$
31,771

 
$
680

 
$
49,853

Share-based compensation expense
$
—

 
$
—

 
$
3,058

 
$
3,058

 
 
 
 
 
 
 
 
Three Months Ended June 30, 2015
 
 
 
 
 
 
 
Revenue
$
341,286

 
$
381,533

 
$
—

 
$
722,819

Direct operating expenses
149,712

 
222,630

 
—

 
372,342

Selling, general and administrative expenses
57,346

 
75,176

 
—

 
132,522

Corporate expenses
—

 
—

 
30,154

 
30,154

Depreciation and amortization
51,113

 
40,956

 
1,336

 
93,405

Other operating income, net
—

 
—

 
659

 
659

Operating income (loss)
$
83,115

 
$
42,771

 
$
(30,831
)
 
$
95,055

 
 
 
 
 
 
 
 
Capital expenditures
$
15,664

 
$
31,752

 
$
802

 
$
48,218

Share-based compensation expense
$
—

 
$
—

 
$
1,804

 
$
1,804



12


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, 2016
 
 
 
 
 
 
 
Revenue
$
608,061

 
$
694,806

 
$
—

 
$
1,302,867

Direct operating expenses
278,050

 
431,705

 
—

 
709,755

Selling, general and administrative expenses
113,160

 
149,208

 
—

 
262,368

Corporate expenses
—

 
—

 
57,891

 
57,891

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

 
$
164,828

 
$
325,874

 
 
 
 
 
 
 
 
Capital expenditures
$
28,694

 
$
66,684

 
$
1,677

 
$
97,055

Share-based compensation expense
$
—

 
$
—

 
$
5,443

 
$
5,443

 
 
 
 
 
 
 
 
Six Months Ended June 30, 2015
 
 
 
 
 
 
 
Revenue
$
637,149

 
$
700,713

 
$
—

 
$
1,337,862

Direct operating expenses
295,946

 
439,367

 
—

 
735,313

Selling, general and administrative expenses
112,983

 
146,669

 
—

 
259,652

Corporate expenses
—

 
—

 
58,907

 
58,907

Depreciation and amortization
101,453

 
83,397

 
2,649

 
187,499

Other operating expense, net
—

 
—

 
(4,785
)
 
(4,785
)
Operating income (loss)
$
126,767

 
$
31,280

 
$
(66,341
)
 
$
91,706

 
 
 
 
 
 
 
 
Capital expenditures
$
32,359

 
$
56,857

 
$
817

 
$
90,033

Share-based compensation expense
$
—

 
$
—

 
$
3,729

 
$
3,729



13


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, 2016
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
275,192

 
$
—

 
$
17,961

 
$
146,374

 
$
—

 
$
439,527

Accounts receivable, net of allowance
—

 
—

 
203,037

 
443,785

 
—

 
646,822

Intercompany receivables
—

 
464,890

 
2,478,105

 
3,421

 
(2,946,416
)
 
—

Prepaid expenses
1,337

 
—

 
59,684

 
73,532

 
—

 
134,553

Assets held for sale
—

 
—

 
55,053

 
—

 
—

 
55,053

Other current assets
(441
)
 
953

 
30,112

 
31,782

 
—

 
62,406

Total Current Assets
276,088

 
465,843

 
2,843,952

 
698,894

 
(2,946,416
)
 
1,338,361

Structures, net
—

 
—

 
788,277

 
501,431

 
—

 
1,289,708

Other property, plant and equipment, net
—

 
—

 
119,025

 
114,412

 
—

 
233,437

Indefinite-lived intangibles
—

 
—

 
951,438

 
9,909

 
—

 
961,347

Other intangibles, net
—

 
—

 
265,076

 
56,515

 
—

 
321,591

Goodwill
—

 
—

 
505,590

 
238,431

 
—

 
744,021

Due from iHeartCommunications
689,631

 
—

 
—

 
—

 
—

 
689,631

Intercompany notes receivable
182,026

 
5,111,392

 
—

 
—

 
(5,293,418
)
 
—

Other assets
212,986

 
253,583

 
1,126,348

 
64,630

 
(1,537,510
)
 
120,037

Total Assets
$
1,360,731

 
$
5,830,818

 
$
6,599,706

 
$
1,684,222

 
$
(9,777,344
)
 
$
5,698,133

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
—

 
$
6,514

 
$
78,718

 
$
—

 
$
85,232

Intercompany payable
2,478,105

 
—

 
468,311

 
—

 
(2,946,416
)
 
—

Accrued expenses
1,527

 
3,199

 
87,911

 
345,939

 
—

 
438,576

Deferred income
—

 
—

 
50,354

 
77,002

 
—

 
127,356

Current portion of long-term debt
—

 
—

 
84

 
4,508

 
—

 
4,592

Total Current Liabilities
2,479,632

 
3,199

 
613,174

 
506,167

 
(2,946,416
)
 
655,756

Long-term debt
—

 
4,881,942

 
1,757

 
226,941

 
—

 
5,110,640

Intercompany notes payable
—

 
—

 
5,027,604

 
265,814

 
(5,293,418
)
 
—

Deferred tax liability
772

 
1,367

 
643,426

 
6,318

 
—

 
651,883

Other long-term liabilities
1,989

 
—

 
131,741

 
112,565

 
—

 
246,295

Total shareholders' equity (deficit)
(1,121,662
)
 
944,310

 
182,004

 
566,417

 
(1,537,510
)
 
(966,441
)
Total Liabilities and Shareholders'
   Equity (Deficit)
$
1,360,731

 
$
5,830,818

 
$
6,599,706

 
$
1,684,222

 
$
(9,777,344
)
 
$
5,698,133


 

14


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


(In thousands)
December 31, 2015
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Cash and cash equivalents
$
218,701

 
$
—

 
$
18,455

 
$
175,587

 
$
—

 
$
412,743

Accounts receivable, net of allowance
—

 
—

 
210,252

 
487,331

 
—

 
697,583

Intercompany receivables
—

 
461,549

 
1,921,025

 
8,003

 
(2,390,577
)
 
—

Prepaid expenses
1,423

 
3,433

 
62,039

 
60,835

 
—

 
127,730

Assets held for sale
—

 
—

 
295,075

 
—

 
—

 
295,075

Other current assets
—

 
—

 
1,823

 
32,743

 
—

 
34,566

Total Current Assets
220,124

 
464,982

 
2,508,669

 
764,499

 
(2,390,577
)
 
1,567,697

Structures, net
—

 
—

 
868,586

 
523,294

 
—

 
1,391,880

Other property, plant and equipment, net
—

 
—

 
129,339

 
106,767

 
—

 
236,106

Indefinite-lived intangibles
—

 
—

 
962,074

 
9,253

 
—

 
971,327

Other intangibles, net
—

 
—

 
272,307

 
70,557

 
—

 
342,864

Goodwill
—

 
—

 
522,750

 
235,825

 
—

 
758,575

Due from iHeartCommunications
930,799

 
—

 
—

 
—

 
—

 
930,799

Intercompany notes receivable
182,026

 
5,107,392

 
—

 
—

 
(5,289,418
)
 
—

Other assets
78,341

 
307,054

 
1,214,311

 
45,393

 
(1,537,559
)
 
107,540

Total Assets
$
1,411,290

 
$
5,879,428

 
$
6,478,036

 
$
1,755,588

 
$
(9,217,554
)
 
$
6,306,788

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
—

 
$
12,124

 
$
88,086

 
$
—

 
$
100,210

Intercompany payable
1,915,287

 
—

 
475,290

 
—

 
(2,390,577
)
 
—

Accrued expenses
953

 
(707
)
 
108,480

 
398,939

 
—

 
507,665

Dividends payable
217,017

 
—

 
—

 
—

 
—

 
217,017

Deferred income
—

 
—

 
37,471

 
53,940

 
—

 
91,411

Current portion of long-term debt
—

 
—

 
65

 
4,245

 
—

 
4,310

Total Current Liabilities
2,133,257

 
(707
)
 
633,430

 
545,210

 
(2,390,577
)
 
920,613

Long-term debt
—

 
4,877,578

 
1,014

 
227,921

 
—

 
5,106,513

Intercompany notes payable
—

 
—

 
5,032,499

 
256,919

 
(5,289,418
)
 
—

Deferred tax liability
772

 
1,367

 
599,541

 
7,230

 
—

 
608,910

Other long-term liabilities
1,587

 
—

 
133,227

 
105,605

 
—

 
240,419

Total shareholders' equity (deficit)
(724,326
)
 
1,001,190

 
78,325

 
612,703

 
(1,537,559
)
 
(569,667
)
Total Liabilities and Shareholders' Equity (Deficit)
$
1,411,290

 
$
5,879,428

 
$
6,478,036

 
$
1,755,588

 
$
(9,217,554
)
 
$
6,306,788


 

15


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

 
$
418,911

 
$
—

 
$
712,146

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 

Direct operating expenses
—

 
—

 
122,125

 
243,936

 
—

 
366,061

Selling, general and administrative expenses
—

 
—

 
50,674

 
84,893

 
—

 
135,567

Corporate expenses
3,083

 
—

 
16,629

 
9,940

 
—

 
29,652

Depreciation and amortization
—

 
—

 
44,688

 
42,286

 
—

 
86,974

Other operating expense, net
(88
)
 
—

 
(2,048
)
 
(57,248
)
 
—

 
(59,384
)
Operating income (loss)
(3,171
)
 
—

 
57,071

 
(19,392
)
 
—

 
34,508

Interest (income) expense, net
(320
)
 
88,041

 
760

 
6,169

 
—

 
94,650

Interest income on Due from iHeartCommunications
11,291

 
—

 
—

 
—

 
—

 
11,291

Intercompany interest income
4,035

 
85,428

 
11,821

 
—

 
(101,284
)
 
—

Intercompany interest expense
11,291

 
—

 
89,463

 
530

 
(101,284
)
 
—

Equity in loss of nonconsolidated affiliates
(70,919
)
 
(83,968
)
 
(84,717
)
 
(556
)
 
239,928

 
(232
)
Other income (expense), net
1,076

 
—

 
313

 
(35,260
)
 
—

 
(33,871
)
Loss before income taxes
(68,659
)
 
(86,581
)
 
(105,735
)
 
(61,907
)
 
239,928

 
(82,954
)
Income tax benefit (expense)
(440
)
 
952

 
34,768

 
(13,568
)
 
—

 
21,712

Consolidated net loss
(69,099
)
 
(85,629
)
 
(70,967
)
 
(75,475
)
 
239,928

 
(61,242
)
Less amount attributable to noncontrolling interest
—

 
—

 
(48
)
 
7,905

 
—

 
7,857

Net loss attributable to the Company
$
(69,099
)
 
$
(85,629
)
 
$
(70,919
)
 
$
(83,380
)
 
$
239,928

 
$
(69,099
)
Other comprehensive income (loss), net of tax:
 

 
 

 
 

 
 

 
 

 
 

Foreign currency translation adjustments
—

 
—

 
2,617

 
6,489

 
—

 
9,106

Unrealized holding loss on marketable securities
—

 
—

 
—

 
(309
)
 
—

 
(309
)
Reclassification adjustments
—

 
—

 
663

 
32,161

 
—

 
32,824

Other adjustments to comprehensive income
—

 
—

 
1

 
(3,746
)
 
—

 
(3,745
)
Equity in subsidiary comprehensive income
41,854

 
39,180

 
39,251

 
—

 
(120,285
)
 
—

Comprehensive loss
(27,245
)
 
(46,449
)
 
(28,387
)
 
(48,785
)
 
119,643

 
(31,223
)
Less amount attributable to noncontrolling interest
—

 
—

 
678

 
(4,656
)
 
—

 
(3,978
)
Comprehensive loss attributable to the Company
$
(27,245
)
 
$
(46,449
)
 
$
(29,065
)
 
$
(44,129
)
 
$
119,643

 
$
(27,245
)

 

16


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


(In thousands)
Three Months Ended June 30, 2015
 
Parent
 
Subsidiary
 
Guarantor
 
Non-Guarantor
 
 
 
 
 
Company
 
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
—

 
$
—

 
$
301,915

 
$
420,904

 
$
—

 
$
722,819

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 

Direct operating expenses
—

 
—

 
126,404

 
245,938

 
—

 
372,342

Selling, general and administrative expenses
—

 
—

 
48,969

 
83,553

 
—

 
132,522

Corporate expenses
3,239

 
—

 
15,826

 
11,089

 
—

 
30,154

Depreciation and amortization
—

 
—

 
49,256

 
44,149

 
—

 
93,405

Other operating income (expense), net
(118
)
 
—

 
(269
)
 
1,046

 
—

 
659

Operating income (loss)
(3,357
)
 
—

 
61,191

 
37,221

 
—

 
95,055

Interest expense, net
6

 
88,081

 
410

 
59

 
—

 
88,556

Interest income on Due from iHeartCommunications
15,049

 
—

 
—

 
—

 
—

 
15,049

Intercompany interest income
4,024

 
85,113

 
15,227

 
—

 
(104,364
)
 
—

Intercompany interest expense
15,049

 
—

 
89,137

 
178

 
(104,364
)
 
—

Equity in earnings (loss) of nonconsolidated affiliates
24,634

 
20,877

 
12,851

 
(755
)
 
(57,958
)
 
(351
)
Other income, net
936

 
3,440

 
20,635

 
14,840

 
(24,575
)
 
15,276

Income before income taxes
26,231

 
21,349

 
20,357

 
51,069

 
(82,533
)
 
36,473

Income tax benefit (expense)
(246
)
 
(9,577
)
 
4,277

 
(21,641