iHeartMedia, Inc. [IHRT] Filings

10-Q 1 ihrt-20220331.htm 10-Q ihrt-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022

☐			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

001-38987

IHEARTMEDIA, INC.

(Exact name of registrant as specified in its charter)


Delaware		26-0241222
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

20880 Stone Oak Parkway
San Antonio,	Texas	78258
(Address of principal executive offices)		(Zip Code)

(210) 822-2828

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	IHRT	The Nasdaq Stock Market LLC

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ 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 ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

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 May 2, 2022

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Class A Common Stock, $.001 par value

121,030,509

Class B Common Stock, $.001 par value

21,393,367

IHEARTMEDIA, INC.

INDEX


		Page No.
Part I – Financial Information
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Comprehensive Loss	2
	Consolidated Statements of Changes in Stockholders' Equity	3
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
Part II – Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(In thousands, except share and per share data)	March 31, 2022		December 31, 2021
	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	279,683	$	352,129
Accounts receivable, net of allowance of $28,544 in 2022 and $29,270 in 2021	906,901		1,030,380
Prepaid expenses	86,191		65,927

Other current assets	43,122		24,431
Total Current Assets	1,315,897		1,472,867
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net	749,141		782,093
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses	1,777,993		1,778,045

Other intangibles, net	1,603,513		1,666,600
Goodwill	2,313,491		2,313,581
OTHER ASSETS
Operating lease right-of-use assets	727,103		741,410
Other assets	139,874		126,713
Total Assets	$	8,627,012	$	8,881,309
CURRENT LIABILITIES
Accounts payable	$	156,875	$	206,007
Current operating lease liabilities	82,898		88,585
Accrued expenses	221,143		353,045

Accrued interest	69,812		67,983
Deferred revenue	156,399		133,123

Current portion of long-term debt	719		673
Total Current Liabilities	687,846		849,416
Long-term debt	5,739,421		5,738,195

Noncurrent operating lease liabilities	727,143		738,814
Deferred income taxes	534,432		558,222
Other long-term liabilities	66,149		80,897
Commitments and contingent liabilities (Note 6)
STOCKHOLDERS’ EQUITY
Noncontrolling interest	8,066		8,410
Preferred stock, par value $.001 per share, 100,000,000 shares authorized, no shares issued and outstanding	—		—
Class A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 121,402,390 and 120,633,937 shares in 2022 and 2021, respectively	122		120
Class B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, issued 21,430,500 and 21,590,192 shares in 2022 and 2021, respectively	21		22
Special Warrants, 5,293,069 and 5,304,430 issued and outstanding in 2022 and 2021, respectively	—		—
Additional paid-in capital	2,882,515		2,876,571

Accumulated deficit	(2,011,401)		(1,962,819)
Accumulated other comprehensive loss	(504)		(257)
Cost of shares (414,950 in 2022 and 389,814 in 2021) held in treasury	(6,798)		(6,282)
Total Stockholders' Equity	872,021		915,765
Total Liabilities and Stockholders' Equity	$	8,627,012	$	8,881,309

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)


(In thousands, except per share data)	Three Months Ended March 31,
	2022		2021
Revenue	$	843,458	$	706,665
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	330,524		292,813
Selling, general and administrative expenses (excludes depreciation and amortization)	384,344		342,330
Depreciation and amortization	114,051		107,363
Impairment charges	1,334		37,744
Other operating expense, net	870		2,771
Operating income (loss)	12,335		(76,356)
Interest expense, net	79,219		85,121
Gain (loss) on investments, net	(1,765)		191
Equity in loss of nonconsolidated affiliates	(29)		(28)

Other expense, net	(270)		(807)
Loss before income taxes	(68,948)		(162,121)
Income tax benefit (expense)	20,209		(79,935)


Net loss	(48,739)		(242,056)
Less amount attributable to noncontrolling interest	(157)		(333)
Net loss attributable to the Company	$	(48,582)	$	(241,723)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments	(247)		(216)





Other comprehensive loss, net of tax	(247)		(216)
Comprehensive loss	(48,829)		(241,939)
Less amount attributable to noncontrolling interest	—		—
Comprehensive loss attributable to the Company	$	(48,829)	$	(241,939)
Net loss attributable to the Company per common share:
Basic	$	(0.33)	$	(1.65)
Weighted average common shares outstanding - Basic	147,513		146,214
Diluted	$	(0.33)	$	(1.65)
Weighted average common shares outstanding - Diluted	147,513		146,214

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)


(In thousands, except share data)						Controlling Interest
	Common Shares(1)			Non- controlling Interest		Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
	Class A Shares	Class B Shares	Special Warrants													Total
Balances at December 31, 2021	120,633,937	21,590,192	5,304,430	$	8,410	$	142	$	2,876,571	$	(1,962,819)	$	(257)	$	(6,282)	$	915,765
Net loss				(157)		—		—		(48,582)		—		—		(48,739)
Vesting of restricted stock and other	597,400			—		1		409		—		—		(516)		(106)


Share-based compensation				—		—		5,535		—		—		—		5,535


Conversion of Special Warrants to Class A and Class B Shares	11,361		(11,361)	—		—		—		—		—		—		—
Conversion of Class B Shares to Class A Shares	159,692	(159,692)		—		—		—		—		—		—		—

Other				(187)		—		—		—		—		—		(187)
Other comprehensive loss				—		—		—		—		(247)		—		(247)
Balances at March 31, 2022	121,402,390	21,430,500	5,293,069	$	8,066	$	143	$	2,882,515	$	(2,011,401)	$	(504)	$	(6,798)	$	872,021

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

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)


(In thousands, except share data)						Controlling Interest
	Common Shares(1)			Non- controlling Interest		Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock
	Class A Shares	Class B Shares	Special Warrants													Total
Balances at December 31, 2020	64,726,864	6,886,925	74,835,899	$	8,350	$	72	$	2,849,020	$	(1,803,620)	$	194	$	(3,199)	$	1,050,817
Net loss				(333)		—		—		(241,723)		—		—		(242,056)
Vesting of restricted stock and other	30,372			—		—		11		—		—		(103)		(92)
Share-based compensation				—		—		5,685		—		—		—		5,685
Dividend declared and paid to noncontrolling interests				(187)		—		—		—		—		—		(187)
Conversion of Special Warrants to Class A and Class B Shares	47,121,747	22,337,312	(69,459,059)	—		69		(69)		—		—		—		—
Conversion of Class B Shares to Class A Shares	154,045	(154,045)		—		—		—		—		—		—		—
Other			2,982	—		—		—		—		—		—		—
Other comprehensive loss				—		—		—		—		(216)		—		(216)
Balances at March 31, 2021	112,033,028	29,070,192	5,379,822	$	7,830	$	141	$	2,854,647	$	(2,045,343)	$	(22)	$	(3,302)	$	813,951

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

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


(In thousands)	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(48,739)	$	(242,056)
Reconciling items:
Impairment charges	1,334		37,744
Depreciation and amortization	114,051		107,363
Deferred taxes	(23,788)		78,346
Provision for doubtful accounts	2,111		5,846
Amortization of deferred financing charges and note discounts, net	1,439		1,519

Share-based compensation	5,535		5,685
Loss on disposal of operating and other assets	584		952
(Gain) Loss on investments	1,765		(191)
Equity in loss of nonconsolidated affiliates	29		28

Barter and trade income	(7,021)		(2,244)
Other reconciling items, net	242		260
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Decrease in accounts receivable	121,339		113,170
Increase in prepaid expenses and other current assets	(39,983)		(35,647)
Increase in other long-term assets	(2,610)		(3,317)
Decrease in accounts payable	(49,129)		(7,423)
Decrease in accrued expenses	(151,853)		(9,521)
Increase in accrued interest	1,829		1,789
Increase in deferred income	19,602		18,881
Increase in other long-term liabilities	1,051		544
Cash provided by (used for) operating activities	(52,212)		71,728
Cash flows from investing activities:
Business combinations	—		(230,816)

Purchases of property, plant and equipment	(22,557)		(18,950)
Proceeds from disposal of assets	6,009		572

Change in other, net	(3,142)		(130)
Cash used for investing activities	(19,690)		(249,324)
Cash flows from financing activities:



Payments on long-term debt and credit facilities	(168)		(13,547)






Change in other, net	(293)		(264)
Cash used for financing activities	(461)		(13,811)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(83)		(122)
Net decrease in cash, cash equivalents and restricted cash	(72,446)		(191,529)
Cash, cash equivalents and restricted cash at beginning of period	352,554		721,187
Cash, cash equivalents and restricted cash at end of period	$	280,108	$	529,658
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	76,104	$	82,833
Cash paid for income taxes	1,123		—

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION

Preparation of Interim Financial Statements

All references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us” and “our” refer to iHeartMedia, Inc. and its consolidated subsidiaries. The accompanying consolidated financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The Company's reportable segments are:

▪the Multiplatform Group, which includes the Company's Broadcast radio, Networks and Sponsorships and Events businesses;

▪the Digital Audio Group, which includes all of the Company's Digital businesses, including Podcasting; and

▪the Audio & Media Services Group, which includes Katz Media Group (“Katz Media”), a full-service media representation business, and RCS Sound Software ("RCS"), a provider of scheduling and broadcast software and services.

The consolidated financial statements include the accounts of the Company and its subsidiaries. Also included in the consolidated financial statements are entities for which the Company has a controlling interest or is the primary beneficiary. Investments in companies which the Company does not control, but exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process.

COVID-19

Our business has been adversely impacted by the novel coronavirus pandemic (“COVID-19”), its impact on the operating and economic environment and related, near-term advertiser spending decisions. Beginning in March 2020 and continuing through the remainder of 2020 and into 2021 revenue was significantly and negatively impacted as a result of a decline in advertising spend driven by COVID-19. As a result of continued recovery from the impact of COVID-19, our revenue for the three months ended March 31, 2022 increased significantly compared to the three months ended March 31, 2021 across each of our reportable segments.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES Act”) was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company was able to defer the payment of $29.3 million in certain employment taxes during 2020, half of which was due and paid on January 3, 2022 and the other half will be due on January 3, 2023. In addition, the Company claimed $12.4 million in refundable payroll tax credits related to the CARES Act provisions, of which $0.7 million was received in 2020, $3.8 million was received in 2021 and $7.9 million was received in January 2022.

As of March 31, 2022, the Company had approximately $279.7 million in cash and cash equivalents. While the effects of COVID-19 may continue to negatively impact the results of operations, cash flows and financial position of the Company, the related financial impact cannot be reasonably estimated at this time. Based on current available liquidity, the Company expects to be able to meet its obligations as they become due over the coming year.

Reclassifications

Certain prior period amounts have been reclassified to conform to the 2022 presentation.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Restricted Cash

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


(In thousands)	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	279,683	$	352,129
Restricted cash included in:
Other current assets	425		425

Total cash, cash equivalents and restricted cash in the Statement of Cash Flows	$	280,108	$	352,554

Certain Relationships and Related Party Transactions

From time to time, certain companies in which the Company holds minority equity interests, purchase advertising in the ordinary course. None of these ordinary course transactions have a material impact on the Company.

New Accounting Pronouncements Recently Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of the Interbank Offered Rate Transition on Financial Reporting to provide optional relief from applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. In addition, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) – Scope, to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the future impact of adoption of this standard.

New Accounting Pronouncements Not Yet Adopted

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification 606. The amendments of ASU 2021-08 are effective for interim and annual periods beginning after December 15, 2022. The Company is currently evaluating the future impact of adoption of this standard.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 2 – REVENUE

Disaggregation of Revenue

The following tables show revenue streams for the three months ended March 31, 2022 and 2021:


(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Eliminations		Consolidated
Three Months Ended March 31, 2022
Revenue from contracts with customers:
Broadcast Radio(1)	$	416,481	$	—	$	—	$	—	$	416,481
Networks(2)	117,558		.		—		—		117,558
Sponsorship and Events(3)	33,601		—		—		—		33,601
Digital, excluding Podcast(4)	—		145,675		—		(1,269)		144,406
Podcast(5)	—		68,544		—		—		68,544
Audio & Media Services(6)	—		—		60,857		(1,341)		59,516
Other(7)	3,230		—		—		(168)		3,062
Total	570,870		214,219		60,857		(2,778)		843,168
Revenue from leases(8)	290		—		—		—		290
Revenue, total	$	571,160	$	214,219	$	60,857	$	(2,778)	$	843,458

Three Months Ended March 31, 2021
Revenue from contracts with customers:
Broadcast Radio(1)	$	358,536	$	—	$	—	$	—	$	358,536
Networks(2)	115,086		—		—		—		115,086
Sponsorship and Events(3)	22,393		—		—		—		22,393
Digital, excluding Podcast(4)	—		119,201		—		(1,894)		117,307
Podcast(5)	—		38,352		—		—		38,352
Audio & Media Services(6)	—		—		55,137		(1,861)		53,276
Other(7)	1,399		—		—		(167)		1,232
Total	497,414		157,553		55,137		(3,922)		706,182
Revenue from leases(8)	483		—		—		—		483
Revenue, total	$	497,897	$	157,553	$	55,137	$	(3,922)	$	706,665

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

(2)Networks revenue is generated through the sale of advertising on the Company’s Premiere and Total Traffic & Weather network programs and through the syndication of network programming to other media companies.

(3)Sponsorship and events revenue is generated through local events and major nationally-recognized tent pole events and include sponsorship and other advertising revenue, ticket sales, and licensing, as well as endorsement and appearance fees generated by on-air talent.

(4)Digital, excluding Podcast revenue is generated through the sale of streaming and display advertisements on digital platforms and through subscriptions to iHeartRadio streaming services.

(5)Podcast revenue is generated through the sale of advertising on the Company's podcast network.

(6)Audio & Media Services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast software and media streaming, along with research services for radio stations, broadcast television stations, cable channels, record labels, ad agencies and Internet stations worldwide.

(7)Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements.

(8)Revenue from leases is primarily generated by the lease of towers to other media companies, which are all categorized as operating leases.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Trade and Barter

Trade and barter transactions represent the exchange of advertising spots for merchandise, services, advertising and promotion or other assets in the ordinary course of business. The transaction price for these contracts is measured at the estimated fair value of the non-cash consideration received unless this is not reasonably estimable, in which case the consideration is measured based on the standalone selling price of the advertising spots promised to the customer. Trade and barter revenues and expenses, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows:


	Three Months Ended March 31,
(In thousands)	2022		2021
Trade and barter revenues	$	47,369	$	31,946
Trade and barter expenses	46,415		27,998

The Company recognized barter revenue of $7.0 million and $2.2 million during the three months ended March 31, 2022 and 2021, respectively, in connection with investments made in companies in exchange for advertising services.

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


	Three Months Ended March 31,
(In thousands)	2022		2021










Deferred revenue from contracts with customers:
Beginning balance(1)	$	161,114	$	145,493

Revenue recognized, included in beginning balance	(60,389)		(39,531)
Additions, net of revenue recognized during period, and other	83,331		59,379
Ending balance	$	184,056	$	165,341

(1) Deferred revenue from contracts with customers, which excludes other sources of deferred revenue that are not related to contracts with customers, is included within deferred revenue and other long-term liabilities on the Consolidated Balance Sheets, depending upon when revenue is expected to be recognized.

The Company’s contracts with customers generally have terms of one year or less; however, as of March 31, 2022, the Company expects to recognize $395.1 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration greater than one year, with substantially all of this amount to be recognized over the next five years. Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Revenue from Leases

As of March 31, 2022, the future lease payments to be received by the Company are as follows:


(In thousands)

2022	$	750
2023	789
2024	610
2025	426
2026	328
Thereafter	1,528
Total	$	4,431

NOTE 3 – LEASES

The Company enters into operating lease contracts for land, buildings, structures and other equipment. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases primarily include land and building lease contracts and leases of radio towers. Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers. Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use assets ("ROU assets") and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively.

The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt.

ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.

The Company tests for impairment of assets whenever events and circumstances indicate that such assets might be impaired. During the three months ended March 31, 2022, the Company recognized non-cash impairment charges of $1.3 million, including $1.2 million related to ROU assets, and $0.1 million related to leasehold improvements as a result of proactive decisions by management to abandon and sublease a number of operating leases in connection with strategic actions to streamline the Company’s real estate footprint as part of the Company’s modernization initiatives. During the three months ended March 31, 2021, the Company recognized non-cash impairment charges of $37.7 million, including $28.8 million related to ROU assets, and $8.9 million related to leasehold improvements also as a result of the proactive decisions by management discussed above.

The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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


	Three Months Ended March 31,
(In thousands)	2022		2021
Cash paid for amounts included in measurement of operating lease liabilities	$	43,265	$	29,951
Lease liabilities arising from obtaining right-of-use assets(1)	7,586		8,276

(1) Lease liabilities from obtaining right-of-use assets include new leases entered into during the three months ended March 31, 2022 and 2021, respectively.

The Company reflects changes in the lease liability and changes in the ROU asset on a net basis in the Statements of Cash Flows. The non-cash operating lease expense was $23.4 million and $24.8 million for the three months ended March 31, 2022 and March 31, 2021, respectively.

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

Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets as of March 31, 2022 and December 31, 2021, respectively:


(In thousands)	March 31, 2022		December 31, 2021
Land, buildings and improvements	$	344,978	$	355,474
Towers, transmitters and studio equipment	185,092		180,571
Computer equipment and software	541,147		521,872
Furniture and other equipment	37,522		35,390
Construction in progress	65,715		64,732
	1,174,454		1,158,039
Less: accumulated depreciation	425,313		375,946
Property, plant and equipment, net	$	749,141	$	782,093

Indefinite-lived Intangible Assets

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

Other Intangible Assets

Other intangible assets consists of definite-lived intangible assets, which primarily include customer and advertiser relationships, talent and representation contracts, trademarks and tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time that the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived intangible assets. These assets are recorded at amortized cost.

IHEARTMEDIA, 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 March 31, 2022 and December 31, 2021, respectively:


(In thousands)	March 31, 2022				December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer / advertiser relationships	$	1,646,402	$	(502,652)	$	1,646,402	$	(459,620)
Talent and other contracts	338,900		(128,184)		338,900		(117,337)
Trademarks and tradenames	335,862		(96,790)		335,862		(88,252)

Other	17,794		(7,819)		17,794		(7,149)
Total	$	2,338,958	$	(735,445)	$	2,338,958	$	(672,358)

Total amortization expense related to definite-lived intangible assets for the Company for the three months ended March 31, 2022 and 2021 was $63.1 million and $66.3 million, respectively.

As acquisitions and dispositions occur in the future, amortization expense may vary. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:


(In thousands)
2023	$	244,387
2024	243,194
2025	212,001
2026	200,251
2027	176,171

Goodwill

The following table presents the changes in the carrying amount of goodwill:


(In thousands)	Multiplatform Group		Digital Audio Group		Audio & Media Services Group		Consolidated
Balance as of January 1, 2021	$	1,462,217	$	579,319	$	104,399	$	2,145,935

Acquisitions	1,267		168,031		—		169,298
Dispositions	(1,446)		—		—		(1,446)
Foreign currency	—		—		(206)		(206)


Balance as of December 31, 2021	$	1,462,038	$	747,350	$	104,193	$	2,313,581


Dispositions	(15)		—		—		(15)
Foreign currency	—		—		(75)		(75)


Balance as of March 31, 2022	$	1,462,023	$	747,350	$	104,118	$	2,313,491

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 5 – LONG-TERM DEBT

Long-term debt outstanding for the Company as of March 31, 2022 and December 31, 2021 consisted of the following:


(In thousands)	March 31, 2022		December 31, 2021
Term Loan Facility due 2026	$	1,864,032	$	1,864,032
Incremental Term Loan Facility due 2026	401,220		401,220
Asset-based Revolving Credit Facility due 2023(1)	—		—
6.375% Senior Secured Notes due 2026	800,000		800,000
5.25% Senior Secured Notes due 2027	750,000		750,000
4.75% Senior Secured Notes due 2028	500,000		500,000
Other secured subsidiary debt(2)	5,184		5,350
Total consolidated secured debt	4,320,436		4,320,602

8.375% Senior Unsecured Notes due 2027	1,450,000		1,450,000
Other unsecured subsidiary debt	90		90
Original issue discount	(12,745)		(13,454)
Long-term debt fees	(17,641)		(18,370)
Total debt	5,740,140		5,738,868
Less: Current portion	719		673
Total long-term debt	$	5,739,421	$	5,738,195

(1)As of March 31, 2022, the senior secured asset-based revolving credit facility (the “ABL Facility”) had a borrowing base of $443.6 million, no outstanding borrowings and $26.9 million of outstanding letters of credit, resulting in $416.7 million of borrowing base availability.

(2)Other secured subsidiary debt consists of finance lease obligations maturing at various dates from 2023 through 2045.

The Company’s weighted average interest rate was 5.5% and 5.4% as of March 31, 2022 and December 31, 2021, respectively. The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $5.8 billion and $5.9 billion as of March 31, 2022 and December 31, 2021, respectively. Under the fair value hierarchy established by ASC 820-10-35, the market value of the Company’s debt is classified as either Level 1 or Level 2.

Surety Bonds, Letters of Credit and Guarantees

As of March 31, 2022, the Company and its subsidiaries had outstanding surety bonds, commercial standby letters of credit and bank guarantees of $8.4 million, $27.3 million and $0.2 million, respectively. These surety bonds, letters of credit and bank guarantees relate to various operational matters including insurance, lease and performance bonds as well as other items.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or results of operations.

Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of the Company’s litigation arises in the following contexts: commercial/contract disputes; defamation matters; employment and benefits related claims; intellectual property claims; real estate matters; governmental investigations; and tax disputes.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Alien Ownership Restrictions and FCC Petitions for Declaratory Ruling

The Communications Act and FCC regulation prohibit foreign entities and individuals from having direct or indirect ownership or voting rights of more than 25 percent in a corporation controlling the licensee of a radio broadcast station unless the FCC finds greater foreign ownership to be in the public interest. Under the Plan of Reorganization, the Company committed to file a petition for declaratory ruling (the “PDR”) requesting the FCC to permit the Company to be up to 100% foreign-owned. On November 5, 2020, the FCC issued a declaratory ruling, which granted the relief requested by the PDR, subject to certain conditions, as described further in Note 8, Stockholders' Equity (the "2020 Declaratory Ruling").

On January 8, 2021, the Company exchanged a portion of the outstanding Special Warrants (refer to Note 6, Stockholders' Equity, for further discussion of the "Special Warrants") into Class A common stock or Class B common stock, in compliance with the Declaratory Ruling, the Communications Act and FCC rules (the “Exchange”). Following the Exchange, the Company’s remaining Special Warrants continue to be exercisable for shares of Class A common stock or Class B common stock.

On March 8, 2021, the Company filed a remedial petition for declaratory ruling (the “Remedial PDR”) with the FCC. The Remedial PDR relates to the acquisition by Global Media & Entertainment Investments Ltd (f/k/a Honeycomb Investments Limited) (“Global Investments”) of the Company’s Class A Common Stock in a manner inconsistent with the FCC’s foreign ownership rules and the 2020 Declaratory Ruling.

On December 22, 2021, the FCC issued another declaratory ruling which granted the Remedial PDR (the "GMEI Declaratory Ruling"). Subject to certain conditions set forth therein, the GMEI Declaratory Ruling (a) grants specific approval for the more than 5% equity and/or voting interests in the Company presently held by the GMEI Investors, (b) grants advance approval for the GMEI Investors to increase their equity and/or voting interests in the Company up to any non-controlling amount not to exceed 14.99%, and (c) restates the terms of the 2020 Declaratory Ruling, including that the Company may have up to 100% of its voting stock and equity owned by non-U.S. individuals and entities. At such time, the actions previously taken by the Board of Directors to implement the conditions required by the FCC during the pendency of the Remedial PDR ceased to apply.

NOTE 7 – INCOME TAXES

On March 11, 2021 the President signed into law the American Rescue Plan Act, which included provisions on taxes, health care, unemployment benefits, direct payments, state and local funding and other issues. The tax provisions did not have a material impact on the Company’s tax provision calculations.

The Company’s income tax benefit (expense) for the three months ended March 31, 2022 and the three months ended March 31, 2021 consisted of the following components:


(In thousands)	Three Months Ended March 31,
	2022		2021
Current tax expense	$	(3,579)	$	(1,589)
Deferred tax benefit (expense)	23,788		(78,346)
Income tax benefit (expense)	$	20,209	$	(79,935)

The effective tax rates for the three months ended March 31, 2022 and March 31, 2021 were 29.3% and (49.3)%, respectively. The effective tax rates were primarily impacted by the forecasted increase in valuation allowance against certain deferred tax assets, related primarily to disallowed interest expense carryforwards and net operating loss carryforwards, due to uncertainty regarding the Company’s ability to utilize those assets in future periods.

NOTE 8 – STOCKHOLDERS' EQUITY

Pursuant to the Company's 2019 Equity Incentive Plan (the "2019 Plan"), the Company historically granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals. On April 21, 2021,

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

our 2021 Long-Term Incentive Award Plan (the “2021 Plan”) was approved by stockholders and replaced the 2019 Plan. Pursuant to our 2021 Plan, we will continue to grant restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.

Share-based Compensation

Share-based compensation expenses are recorded in Selling, general and administrative expenses and were $5.5 million and $5.7 million for the Company for the three months ended March 31, 2022 and the three months ended March 31, 2021, respectively.

In August 2020, the Company issued performance-based restricted stock units ("Performance RSUs") to certain key employees. Such Performance RSUs vest upon the achievement of critical operational (cost savings) improvements and specific environmental, social and governance initiatives, which were being measured over an approximately 18-month period from the date of issuance. In the three months ended March 31, 2021, the Company recognized $0.5 million in relation to these Performance RSUs.

On March 28, 2022, the Company issued performance-based restricted stock units (“2022 Performance RSUs”) to certain key employees. Such 2022 Performance RSUs vest upon the achievement of total stockholder return goals and continued service, which are being measured over an approximately 50-month period from the date of issuance.

As of March 31, 2022, there was $34.0 million of unrecognized compensation cost related to unvested share-based compensation arrangements with vesting based on service conditions. This cost is expected to be recognized over a weighted average period of approximately 1.9 years. In addition, as of March 31, 2022, there was $12.5 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on certain performance and service conditions. This cost will be recognized over a 50-month period from the date of issuance.

Common Stock and Special Warrants

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

The following table presents the Company's Class A Common Stock, Class B Common Stock and Special Warrants issued as of March 31, 2022:

iHeartMedia, Inc. [IHRT] Filings
iHeartMedia, Inc. [IHRTB] Filings
10-Q	[2022-05-05]
10-K	[2022-02-23]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-25]
10-Q	[2020-11-09]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-02-27]
10-Q	[2019-11-07]
10-Q	[2019-08-14]
10-Q	[2019-04-25]
S-1	[2019-04-03]
10-K	[2019-03-05]
10-Q	[2018-11-08]
10-Q	[2018-07-31]
10-Q	[2018-05-22]
10-K	[2018-05-03]
10-Q	[2017-11-08]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-23]
10-Q	[2016-11-09]
10-Q	[2016-08-04]
10-Q	[2016-05-04]
10-K	[2016-02-25]
10-Q	[2015-11-05]
10-Q	[2015-07-30]
10-Q	[2015-04-30]
10-K	[2015-02-19]
10-Q	[2014-10-28]
10-Q	[2014-07-23]
10-Q	[2014-04-24]
10-K	[2014-02-20]
10-Q	[2013-11-07]
10-Q	[2013-08-01]
10-Q	[2013-05-02]
10-K	[2013-02-19]
10-Q	[2012-11-02]
10-Q	[2012-08-01]
10-Q	[2012-05-04]
10-K	[2012-02-21]

iHeartMedia, Inc. [IHRT] Filings

iHeartMedia, Inc. [IHRTB] Filings