UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, ~~2018~~2019

[ ]	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

000-53354

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 [X] 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] 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 [X] Smaller reporting company [ ] Emerging growth company [ ]

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

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

Indicate 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 ~~[ ]~~[X] 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 November ~~5, 2018~~4, 2019
	~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~	~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
	Class A Common Stock, $.001 par value	~~31,538,017~~57,581,400	⁽¹⁾
	Class B Common Stock, $.001 par value	~~555,556~~
	~~Class C Common Stock, $.001 par value~~	~~58,967,502~~
	~~Class D Common Stock, $.001 par value~~	—6,905,036

	~~(1) Outstanding Class A common stock includes 111,291 shares owned by a subsidiary~~

IHEARTMEDIA, INC.

INDEX



		Page No.
Part I – Financial Information
Item 1.	Financial Statements	1
	Consolidated Balance Sheets ~~as of September 30, 2018 and December 31, 2017~~	1
	Consolidated Statements of Comprehensive Income (Loss) ~~for the three and nine months ended September 30, 2018 and 2017~~	2
	Consolidated Statements of Changes in Stockholders' Equity (Deficit)	4
	Consolidated Statements of Cash Flows ~~for the nine months ended September 30, 2018 and 2017~~	37
	Notes to Consolidated Financial Statements	48
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3558
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5776
Item 4.	Controls and Procedures	5776
Part II – Other Information
Item 1.	Legal Proceedings	5877
Item 1A.	Risk Factors	6077
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6177
Item 3.	Defaults Upon Senior Securities	6177
Item 4.	Mine Safety Disclosures	6277
Item 5.	Other Information	6277
Item 6.	Exhibits	6278
Signatures		6380

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

IHEARTMEDIA, INC. AND SUBSIDIARIES

~~(DEBTOR-IN-POSSESSION)~~

CONSOLIDATED BALANCE SHEETS


(In thousands, except share and per share data)	September 30, 2018			December 31, 2017			Successor Company			Predecessor Company
	(Unaudited)						September 30, 2019			December 31, 2018
							(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	311,162		$	267,109		$	277,050		$	224,037
Accounts receivable, net of allowance of $46,531 in 2018 and $48,450 in 2017	1,466,924			1,508,370
Accounts receivable, net of allowance of $8,088 in 2019 and $26,584 in 2018							843,190			868,861
Prepaid expenses	240,980			209,330			120,981			99,532
Other current assets	59,726			82,538			29,942			26,787
Current assets of discontinued operations							—			1,015,800
Total Current Assets	2,078,792			2,067,347			1,271,163			2,235,017
PROPERTY, PLANT AND EQUIPMENT
Structures, net	1,038,835			1,180,882
Other property, plant and equipment, net	680,256			703,832
Property, plant and equipment, net							834,013			502,202
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses	2,417,830			2,451,813			2,277,733			2,417,915
Indefinite-lived intangibles - permits	971,163			977,152
Other intangibles, net	432,497			550,056			2,238,423			200,422
Goodwill	4,043,941			4,051,082			3,325,546			3,412,753
OTHER ASSETS
Operating lease right-of-use assets							886,333			—
Other assets	295,998			274,932			101,738			149,736
Long-term assets of discontinued operations							—			3,351,470
Total Assets	$	11,959,312		$	12,257,096		$	10,934,949		$	12,269,515
CURRENT LIABILITIES
Accounts payable	$	149,236		$	163,449		$	61,353		$	49,435
Current operating lease liabilities							77,729			—
Accrued expenses	764,353			764,275			213,426			298,383
Accrued interest	11,623			268,102			91,379			767
Deferred income	218,654			186,404
Deferred revenue							138,968			123,143
Current portion of long-term debt	347			14,972,367			53,705			46,105
Current liabilities of discontinued operations							—			729,816
Total Current Liabilities	1,144,213			16,354,597			636,560			1,247,649
Long-term debt	5,274,490			5,676,814			5,755,305			—
Series A Mandatorily Redeemable Preferred Stock, par value $0.001, authorized 60,000 shares, 60,000 shares issued in 2019 and no shares issued in 2018							60,000			—
Noncurrent operating lease liabilities							794,307			—
Deferred income taxes	360,429			959,390			783,856			—
Other long-term liabilities	498,001			610,639			58,004			229,679
Liabilities subject to compromise	16,475,414			—			—			16,480,256
Commitments and contingent liabilities (Note 5)
STOCKHOLDERS’ DEFICIT
Long-term liabilities of discontinued operations							—			5,872,273
Commitments and contingent liabilities (Note 9)
STOCKHOLDERS’ EQUITY (DEFICIT)
Noncontrolling interest	17,353			41,191			8,372			30,868
Class A Common Stock, par value $.001 per share, authorized 400,000,000 shares, issued 32,379,507 and 32,626,168 shares in 2018 and 2017, respectively	32			32
Class B Common Stock, par value $.001 per share, authorized 150,000,000 shares, issued 555,556 shares in 2018 and 2017	1			1
Class C Common Stock, par value $.001 per share, authorized 100,000,000 shares, issued 58,967,502 shares in 2018 and 2017	59			59
Class D Common Stock, par value $.001 per share, authorized 200,000,000 shares, no shares issued in 2018 and 2017	—			—
Predecessor Preferred stock, par value $.001 per share, 150,000,000 shares authorized, no shares issued and outstanding							—			—
Predecessor common stock							—			92
Successor Preferred stock, par value $.001 per share, 100,000,000 shares authorized, no shares issued and outstanding							—			—
Successor Class A Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, 57,670,714 shares issued and outstanding in 2019 and no shares issued and outstanding in 2018							58			—
Successor Class B Common Stock, par value $.001 per share, authorized 1,000,000,000 shares, 6,925,976 shares issued and outstanding in 2019 and no shares issued and outstanding in 2018							7			—
Successor Special Warrants, 81,289,306 issued and outstanding in 2019 and none issued and outstanding in 2018							—			—
Additional paid-in capital	2,074,194			2,072,566			2,790,175			2,074,632
Accumulated deficit	(13,560,251		)	(13,142,001		)
Retained earnings (Accumulated deficit)							51,167			(13,345,346		)
Accumulated other comprehensive loss	(322,071		)	(313,718		)	(827		)	(318,030		)
Cost of shares (793,968 in 2018 and 610,991 in 2017) held in treasury	(2,552		)	(2,474		)
Total Stockholders' Deficit	(11,793,235		)	(11,344,344		)
Total Liabilities and Stockholders' Deficit	$	11,959,312		$	12,257,096
Cost of shares (125,210 in 2019 and 805,982 in 2018) held in treasury							(2,035		)	(2,558		)
Total Stockholders' Equity (Deficit)							2,846,917			(11,560,342		)
Total Liabilities and Stockholders' Equity (Deficit)							$	10,934,949		$	12,269,515

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

~~(DEBTOR-IN-POSSESSION)~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)



(In thousands, except per share data)	Successor Company			Predecessor Company
	Three Months Ended September 30,			Three Months Ended September 30,
	2019			2018
Revenue	$	948,338		$	920,492
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	290,971			268,606
Selling, general and administrative expenses (excludes depreciation and amortization)	341,353			329,436
Corporate expenses (excludes depreciation and amortization)	70,044			56,699
Depreciation and amortization	95,268			43,295
Impairment charges	—			33,150
Other operating expense, net	(9,880		)	(2,462		)
Operating income	140,822			186,844
Interest expense, net	100,967			2,097
Gain on investments, net	1,735			186
Equity in loss of nonconsolidated affiliates	(1		)	(30		)
Other expense, net	(12,457		)	(281		)
Reorganization items, net	—			(52,475		)
Income from continuing operations before income taxes	29,132			132,147
Income tax expense	(16,758		)	(10,873		)
Income from continuing operations	12,374			121,274
Loss from discontinued operations, net of tax	—			(49,491		)
Net income	12,374			71,783
Less amount attributable to noncontrolling interest	—			1,705
Net income attributable to the Company	$	12,374		$	70,078
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(499		)	(7,509		)
Reclassification adjustments	—			1,425
Other comprehensive loss, net of tax	(499		)	(6,084		)
Comprehensive income	11,875			63,994
Less amount attributable to noncontrolling interest	—			(5,212		)
Comprehensive income attributable to the Company	$	11,875		$	69,206
Net income (loss) attributable to the Company per common share:
Basic net income (loss) per share
From continuing operations	$	0.08		$	1.42
From discontinued operations	—			(0.60		)
Basic net income per share	$	0.08		$	0.82
Weighted average common shares outstanding - Basic	145,720			85,544
Diluted net income (loss) per share
From continuing operations	$	0.08		$	1.42
From discontinued operations	—			(0.60		)
Diluted net income per share	$	0.08		$	0.82
Weighted average common shares outstanding - Diluted	145,840			85,622

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC.AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


(In thousands, except share and per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share data)													Successor Company			Predecessor Company
													Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2019			2018
Revenue	$	1,582,765		$	1,536,757		$	4,553,255		$	4,455,270		$	1,583,984		$	1,073,471		$	2,585,028
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	630,264			623,741			1,869,260			1,812,505			475,262			359,696			773,424
Selling, general and administrative expenses (excludes depreciation and amortization)	457,757			438,796			1,382,234			1,337,091			568,493			436,345			1,003,728
Corporate expenses (excludes depreciation and amortization)	84,193			77,967			242,553			233,487			104,434			66,020			162,075
Depreciation and amortization	120,700			149,749			419,778			443,650			154,651			52,834			175,546
Impairment charges	40,922			7,631			40,922			7,631			—			91,382			33,150
Other operating income (expense), net	(1,637		)	(13,215		)	(5,212		)	24,785
Other operating expense, net													(6,634		)	(154		)	(6,912		)
Operating income	247,292			225,658			593,296			645,691			274,510			67,040			430,193
Interest expense (excludes contractual interest of $372,162 and $812,420 for the three and nine months ended September 30, 2018, respectively)	99,255			470,250			625,252			1,388,819
Equity in earnings (loss) of nonconsolidated affiliates	172			(2,238		)	291			(2,240		)
Interest expense (income), net													170,678			(499		)	333,843
Gain (loss) on investments, net													1,735			(10,237		)	9,361
Equity in loss of nonconsolidated affiliates													(25		)	(66		)	(93		)
Other income (expense), net	(6,182		)	50			(35,424		)	(13,677		)	(21,614		)	23			(22,755		)
Reorganization items, net	52,475			—			313,270			—			—			9,461,826			(313,270		)
Income (loss) before income taxes	89,552			(246,780		)	(380,359		)	(759,045		)
Income tax expense	(17,769		)	(2,051		)	(47,188		)	(50,143		)
Consolidated net income (loss)	71,783			(248,831		)	(427,547		)	(809,188		)
Income (loss) from continuing operations before income taxes													83,928			9,519,085			(230,407		)
Income tax benefit (expense)													(32,761		)	(39,095		)	9,828
Income (loss) from continuing operations													51,167			9,479,990			(220,579		)
Income (loss) from discontinued operations, net of tax													—			1,685,123			(206,968		)
Net income (loss)													51,167			11,165,113			(427,547		)
Less amount attributable to noncontrolling interest	1,705			1,659			(10,732		)	7,614			—			(19,028		)	(10,732		)
Net income (loss) attributable to the Company	$	70,078		$	(250,490	)	$	(416,815	)	$	(816,802	)	$	51,167		$	11,184,141		$	(416,815	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(7,509		)	12,408			(20,042		)	43,071			(827		)	(1,175		)	(20,042		)
Unrealized holding loss on marketable securities	—			(320		)	—			(218		)
Reclassification adjustments	1,425			6,207			1,425			4,563			—			—			1,425
Other comprehensive income (loss)	(6,084		)	18,295			(18,617		)	47,416
Other comprehensive loss, net of tax													(827		)	(1,175		)	(18,617		)
Comprehensive income (loss)	63,994			(232,195		)	(435,432		)	(769,386		)	50,340			11,182,966			(435,432		)
Less amount attributable to noncontrolling interest	(5,212		)	4,161			(8,829		)	10,060			—			2,784			(8,829		)
Comprehensive income (loss) attributable to the Company	$	69,206		$	(236,356	)	$	(426,603	)	$	(779,446	)	$	50,340		$	11,180,182		$	(426,603	)
Net loss attributable to the Company per common share:
Basic	$	0.82		$	(2.94	)	$	(4.88	)	$	(9.62	)
Net income (loss) attributable to the Company per common share:
Basic net income (loss) per share
From continuing operations													$	0.35		109.92			$	(2.58	)
From discontinued operations													—			19.76			(2.30		)
Basic net income (loss) per share													$	0.35		$	129.68		$	(4.88	)
Weighted average common shares outstanding - Basic	85,544			85,072			85,348			84,900			145,543			86,241			85,348
Diluted	$	0.82		$	(2.94	)	$	(4.88	)	$	(9.62	)
Diluted net income (loss) per share
From continuing operations													$	0.35		109.92			$	(2.58	)
From discontinued operations													—			19.76			(2.30		)
Diluted net income (loss) per share													$	0.35		$	129.68		$	(4.88	)
Weighted average common shares outstanding - Diluted	85,622			85,072			85,348			84,900			145,655			86,241			85,348

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

~~(DEBTOR-IN-POSSESSION)~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(UNAUDITED)



(In thousands, except share data)								Controlling Interest
	Common Shares⁽¹⁾					Non- controlling Interest		Common Stock		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock
	Class A Shares	Class B Shares		Special Warrants		Non- controlling Interest		Common Stock		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at June 30, 2019 (Successor)	56,873,782	6,947,567		81,453,648		$	8,372	$	64	$	2,773,147		$	38,793	$	(328	)	$	—		$	2,820,048
Net income						—		—		—			12,374		—			—			12,374
Vesting of restricted stock	610,999					—		1		(1		)	—		—			(2,035		)	(2,035		)
Share-based compensation						—		—		17,029			—		—			—			17,029
Conversion of Special Warrants and Class B Shares to Class A Shares	185,933	(21,591	)	(164,342	)	—		—		—			—		—			—			—
Other comprehensive loss						—		—		—			—		(499		)	—			(499		)
Balances at September 30, 2019 (Successor)	57,670,714	6,925,976		81,289,306		$	8,372	$	65	$	2,790,175		$	51,167	$	(827	)	$	(2,035	)	$	2,846,917

(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019.

See Notes to Consolidated Financial Statements



(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	Class C Shares	Non- controlling Interest			Common Stock		Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at June 30, 2018 (Predecessor)	32,478,591		555,556	58,967,502	$	17,861		$	92	$	2,073,738	$	(13,630,329	)	$	(321,199	)	$	(2,493	)	$	(11,862,330	)
Net income					1,705			—		—		70,078			—			—			71,783
Forfeitures of restricted stock	(99,084	)			—			—		—		—			—			—			—
Share-based compensation					—			—		456		—			—			—			456
Share-based compensation - discontinued operations					3,132			—		—		—			—			—			3,132
Payments to non-controlling interests					(124		)	—		—		—			—			—			(124		)
Other					(9		)	—		—		—			—			(59		)	(68		)
Other comprehensive loss					(5,212		)	—		—		—			(872		)	—			(6,084		)
Balances at September 30, 2018 (Predecessor)	32,379,507		555,556	58,967,502	$	17,353		$	92	$	2,074,194	$	(13,560,251	)	$	(322,071	)	$	(2,552	)	$	(11,793,235	)

(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2018.

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(UNAUDITED)



(In thousands, except share data)												Controlling Interest
	Common Shares⁽¹⁾								Non- controlling Interest			Common Stock			Additional Paid-in Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Treasury Stock
	Class A Shares		Class B Shares		Class C Shares		Special Warrants		Non- controlling Interest			Common Stock			Additional Paid-in Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at December 31, 2018 (Predecessor)	32,292,944		555,556		58,967,502		—		$	30,868		$	92		$	2,074,632		$	(13,345,346	)	$	(318,030	)	$	(2,558	)	$	(11,560,342	)
Net income (loss)									(19,028		)	—			—			11,184,141			—			—			11,165,113
Non-controlling interest - Separation									(13,199		)	—			—			—			—			—			(13,199		)
Accumulated other comprehensive loss - Separation									—			—			—			—			307,813			—			307,813
Adoption of ASC 842, Leases									—			—			—			128,908			—			—			128,908
Issuance of restricted stock									196			—			—			—			—			(4		)	192
Forfeitures of restricted stock	(110,333	)							—			—			—			—			—			—			—
Share-based compensation									—			—			2,028			—			—			—			2,028
Share-based compensation - discontinued operations									2,449			—			—			—			—			—			2,449
Payments to non-controlling interests									(3,684		)	—			—			—			—			—			(3,684		)
Other									—			—			—			—			1			—			1
Other comprehensive income (loss)									2,784			—			—			—			(3,959		)	—			(1,175		)
Cancellation of Predecessor equity	(32,182,611	)	(555,556	)	(58,967,502	)			(386		)	(92		)	(2,076,660		)	2,059,998			14,175			2,562			(403		)
Issuance of Successor common stock and warrants	56,861,941		6,947,567		—		81,453,648		8,943			64			2,770,108			(27,701		)	—			—			2,751,414
Balances at May 1, 2019 (Predecessor)	56,861,941		6,947,567		—		81,453,648		$	8,943		$	64		$	2,770,108		$	—		$	—		$	—		$	2,779,115


Balances at May 2, 2019 (Successor)	56,861,941		6,947,567		—		81,453,648		$	8,943		$	64		$	2,770,108		$	—		$	—		$	—		$	2,779,115
Net income									—			—			—			51,167			—			—			51,167
Vesting of restricted stock	622,840								—			1			(1		)	—			—			(2,035		)	(2,035		)
Share-based compensation									—			—			20,068			—			—			—			20,068
Conversion of Special Warrants and Class B Shares to Class A Shares	185,933		(21,591	)			(164,342	)	—			—			—			—			—			—			—
Other									(571		)	—			—			—			—			—			(571		)
Other comprehensive loss									—			—			—			—			(827		)	—			(827		)
Balances at September 30, 2019 (Successor)	57,670,714		6,925,976		—		81,289,306		$	8,372		$	65		$	2,790,175		$	51,167		$	(827	)	$	(2,035	)	$	2,846,917

(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2019 or 2018.

See Notes to Consolidated Financial Statements



(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	Class C Shares	Non- controlling Interest			Common Stock		Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at December 31, 2017 (Predecessor)	32,626,168		555,556	58,967,502	$	41,191		$	92	$	2,072,566	$	(13,142,001	)	$	(313,718	)	$	(2,474	)	$	(11,344,344	)
Net loss					(10,732		)	—		—		(416,815		)	—			—			(427,547		)
Issuance of restricted stock	70,000				—			—		—		—			—			—			—
Forfeitures of restricted stock	(316,661	)			—			—		—		—			—			—			—
Share-based compensation					—			—		1,628		—			—			—			1,628
Share-based compensation - discontinued operations					6,757			—		—		—			—			—			6,757
Payments to non-controlling interests					(10,381		)	—		—		—			—			—			(10,381		)
Other					(653		)	—		—		(1,435		)	1,435			(78		)	(731		)
Other comprehensive income					(8,829		)	—		—		—			(9,788		)	—			(18,617		)
Balances at September 30, 2018 (Predecessor)	32,379,507		555,556	58,967,502	$	17,353		$	92	$	2,074,194	$	(13,560,251	)	$	(322,071	)	$	(2,552	)	$	(11,793,235	)

(1) The Predecessor Company's Class D Common Stock and Preferred Stock are not presented in the data above as there were no shares issued and outstanding in 2018 or 2017.

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


(In thousands)	Nine Months Ended September 30,						Successor Company			Predecessor Company
	2018			2017			Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,
							2019			2019			2018
Cash flows from operating activities:
Consolidated net loss	$	(427,547	)	$	(809,188	)
Net income (loss)							$	51,167		$	11,165,113		$	(427,547	)
(Income) loss from discontinued operations							—			(1,685,123		)	206,968
Reconciling items:
Impairment charges	40,922			7,631			—			91,382			33,150
Depreciation and amortization	419,778			443,650			154,651			52,834			175,546
Deferred taxes	22,020			13,291			25,478			115,839			(18,869		)
Provision for doubtful accounts	19,911			20,936			8,088			3,268			14,803
Amortization of deferred financing charges and note discounts, net	19,871			42,682			672			512			11,871
Non-cash Reorganization items, net	261,057			—			—			(9,619,236		)	261,057
Share-based compensation	8,385			9,020			20,151			498			1,628
(Gain) loss on disposal of operating and other assets	432			(30,149		)	4,755			(143		)	2,739
Equity in (earnings) loss of nonconsolidated affiliates	(291		)	2,240
(Gain) loss on investments							(1,735		)	10,237			(9,361		)
Equity in loss of nonconsolidated affiliates							25			66			93
Barter and trade income	(10,080		)	(32,953		)	(7,478		)	(5,947		)	(6,228		)
Other reconciling items, net	13,105			(19,169		)	133			(65		)	(768		)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease in accounts receivable	5,799			(60,984		)	(113,848		)	117,263			21,092
Increase in prepaid expenses and other current assets	(38,058		)	(41,237		)	(22,670		)	(24,044		)	(18,452		)
Decrease in accrued expenses	(30,887		)	(37,819		)
Increase in accounts payable	35,525			9,419
Increase (decrease) in accrued interest	312,605			(78,087		)
Increase in deferred income	16,774			3,847
Changes in other operating assets and liabilities	(5,972		)	(808		)
(Increase) decrease in other long-term assets							2,545			(7,098		)	(8,781		)
Increase (decrease) in accrued expenses							28,266			(123,971		)	(42,598		)
Increase (decrease) in accounts payable							16,474			(32,914		)	21,898
Increase in accrued interest							91,624			256			302,573
Increase (decrease) in deferred income							352			13,377			(12,348		)
Increase (decrease) in other long-term liabilities							4,892			(79,609		)	7,247
Cash provided by (used for) operating activities from continuing operations							263,542			(7,505		)	515,713
Cash provided by (used for) operating activities from discontinued operations							—			(32,681		)	147,636
Net cash provided by (used for) operating activities	663,349			(557,678		)	263,542			(40,186		)	663,349
Cash flows from investing activities:
Purchases of other investments	(253		)	(500		)
Proceeds from sale of other investments	18,909			628			765			—			18,500
Purchases of property, plant and equipment	(157,569		)	(184,944		)	(46,305		)	(36,197		)	(47,448		)
Proceeds from disposal of assets	7,245			71,320			5,344			99			682
Purchases of other operating assets	(2,132		)	(3,224		)
Change in other, net	(1,092		)	(3,693		)	(3,619		)	(2,680		)	(1,296		)
Cash used for investing activities from continuing operations							(43,815		)	(38,778		)	(29,562		)
Cash used for investing activities from discontinued operations							—			(222,366		)	(105,330		)
Net cash used for investing activities	(134,892		)	(120,413		)	(43,815		)	(261,144		)	(134,892		)
Cash flows from financing activities:
Draws on credit facilities	143,359			60,000			—			—			143,359
Payments on credit facilities	(258,308		)	(25,909		)	—			—			(258,308		)
Proceeds from long-term debt	—			156,000			750,000			269			—
Payments on long-term debt	(364,776		)	(5,385		)	(741,000		)	(8,294		)	(364,294		)
Payments to purchase noncontrolling interests	—			(953		)
Proceeds from Mandatorily Redeemable Preferred Stock							—			60,000			—
Settlement of intercompany related to discontinued operations							—			(159,196		)	—
Dividends and other payments to noncontrolling interests	(11,042		)	(41,083		)	(571		)	—			(1,078		)
Debt issuance costs							(11,488		)	—			—
Change in other, net	(2,340		)	(5,604		)	(2,036		)	(5		)	(75		)
Net cash provided by (used for) financing activities	(493,107		)	137,066
Cash used for financing activities from continuing operations							(5,095		)	(107,226		)	(480,396		)
Cash provided by (used for) financing activities from discontinued operations							—			51,669			(12,711		)
Net cash used for financing activities							(5,095		)	(55,557		)	(493,107		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(8,553		)	7,496			(304		)	562			(8,553		)
Net increase (decrease) in cash, cash equivalents and restricted cash	26,797			(533,529		)	214,328			(356,325		)	26,797
Cash, cash equivalents and restricted cash at beginning of period	311,300			855,726			74,009			430,334			311,300
Cash, cash equivalents and restricted cash at end of period	$	338,097		$	322,197		288,337			74,009			338,097
Less cash, cash equivalents and restricted cash of discontinued operations at end of period							—			—			214,631
Cash, cash equivalents and restricted cash of continuing operations at end of period							$	288,337		$	74,009		$	123,466
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	293,689		$	1,426,438		$	79,263		$	137,042		$	293,689
Cash paid for income taxes	27,597			31,668			2,755			22,092			27,597
Cash paid for Reorganization items, net	52,213			—			18,268			183,291			52,213

See Notes to Consolidated Financial Statements

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

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 Company’s reportable segments are iHeartMedia (“iHM”), Americas outdoor advertising (“Americas outdoor” or “Americas outdoor advertising”) and International outdoor advertising (“International outdoor” or “International outdoor advertising”).

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~~As described below, as a result of the application of fresh start accounting and the effects of the implementation of the Company's Plan of Reorganization (as defined below), the consolidated financial statements after the Effective Date (as defined below), are not comparable with the consolidated financial statements on or before that date. Refer to ~~seasonality and other factors, the results~~Note 3, Fresh Start Accounting, for ~~the interim periods may not be indicative of results for the full year.~~additional information. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s ~~2017~~2018 Annual Report on Form 10-K.

The consolidated financial statements include the accounts of the Company and its subsidiaries. Also included in the consolidated financial statements are entities for which the Company has a controlling financial interest or is the primary beneficiary. Investments in companies in which the Company owns 20% to 50% of the voting common stock or otherwise exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process.

Unless otherwise indicated, information in these notes to the consolidated financial statements relates to continuing operations. Certain of the Company's operations have been presented as discontinued. The Company ~~re-evaluated~~presents businesses that represent components as discontinued operations when the components meet the criteria for held for sale, are sold, or spun-off and their disposal represents a strategic shift that has, or will have, a major effect on its operations and financial results. See Note 4, Discontinued Operations.

As part of the Separation and Reorganization (as defined below), the Company reevaluated its segment reporting, and determined that its Latin American operations should be managed by its International outdoor leadership team. As a result, beginning on January 1, 2018, the operations of Latin America are no longer reflected within the Company’s Americas outdoor segment and are includedresulting in the ~~results~~presentation of ~~its International outdoor segment. Accordingly,~~two businesses:


▪	Audio, which provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses and


▪	Audio & Media Services, which provides other audio and media services, including the Company’s media representation business, Katz Media Group (“Katz Media”) and the Company's provider of scheduling and broadcast software, Radio Computing Services (“RCS”).

Prior periods have been recast to reflect the ~~Company has recast the corresponding~~Company's current segment ~~disclosures for prior periods to include Latin America within the International outdoor segment.~~presentation. See Note 13, Segment Data.

Certain prior period amounts have been reclassified to conform to the ~~2018~~2019 presentation.

~~Immaterial Corrections to Prior Periods~~

During the three months ended June 30, 2018, the Company identified misstatements associated with VAT obligations in its International Outdoor segment, which resulted in an understatement of the Company's VAT obligation. The Company evaluated the effects of these misstatements on prior periods’ consolidated financial statements, individually and in the aggregate, in accordance with the guidance in SEC Staff Bulletins ("SAB") 99, Materiality, SAB 108, Considering the Effects of Prior year Misstatements when Quantifying Misstatements in the Current Year Financial Statements and Accounting Standards Codification 250, Accounting Changes and Error Corrections, and concluded that no prior period is materially misstated. However, the Company has determined to revise our consolidated financial statements for the VAT misstatements, as well as other previously identified immaterial errors, for the prior periods presented herein.

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~A summary of the effect of the corrections on the Consolidated Balance Sheet as of December 31, 2017 is as follows:~~

December 31, 2017
(In thousands) As Reported Correction Revised
Other assets $ 278,267
$ (3,335 ) $ 274,932
Total Assets 12,260,431
(3,335 ) 12,257,096
Other long-term liabilities 597,085
13,554
610,639
Noncontrolling interest 42,764
(1,573 ) 41,191
Accumulated deficit (13,127,843 ) (14,158 ) (13,142,001 )
Accumulated other comprehensive loss (312,560 ) (1,158 ) (313,718 )
Total Stockholders' Deficit (11,327,455 ) (16,889 ) (11,344,344 )
Total Liabilities and Stockholders' Deficit 12,260,431
(3,335 ) 12,257,096

~~A summary of the effect of the corrections on the Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 is as follows:~~

Three Months Ended September 30, 2017
(In thousands) As Reported Correction Revised
Revenue $ 1,537,416
$ (659 ) $ 1,536,757
Direct operating expenses (excludes depreciation and amortization) 621,895
1,846
623,741
Selling, general and administrative expenses (excludes depreciation and amortization) 438,654
142
438,796
Operating income 228,305
(2,647 ) 225,658
Loss before income taxes (244,133 ) (2,647 ) (246,780 )
Consolidated net loss (246,184 ) (2,647 ) (248,831 )
Less amount attributable to noncontrolling interest 1,993
(334 ) 1,659
Net loss attributable to the Company (248,177 ) (2,313 ) (250,490 )
Foreign currency translation adjustments 13,010
(602 ) 12,408
Other comprehensive income 18,897
(602 ) 18,295
Comprehensive loss (229,280 ) (2,915 ) (232,195 )
Less amount attributable to noncontrolling interest 4,289
(128 ) 4,161
Comprehensive loss attributable to the Company (233,569 ) (2,787 ) (236,356 )
Basic loss per share (2.92 ) (0.02 ) (2.94 )
Diluted loss per share (2.92 ) (0.02 ) (2.94 )

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

Nine Months Ended September 30, 2017
(In thousands) As Reported Correction Revised
Revenue $ 4,457,106
$ (1,836 ) $ 4,455,270
Direct operating expenses (excludes depreciation and amortization) 1,807,534
4,971
1,812,505
Selling, general and administrative expenses (excludes depreciation and amortization) 1,336,563
528
1,337,091
Operating income 653,026
(7,335 ) 645,691
Interest expense 1,388,747
72
1,388,819
Loss before income taxes (751,638 ) (7,407 ) (759,045 )
Consolidated net loss (801,781 ) (7,407 ) (809,188 )
Less amount attributable to noncontrolling interest 8,648
(1,034 ) 7,614
Net loss attributable to the Company (810,429 ) (6,373 ) (816,802 )
Foreign currency translation adjustments 44,665
(1,594 ) 43,071
Other comprehensive income 49,010
(1,594 ) 47,416
Comprehensive loss (761,419 ) (7,967 ) (769,386 )
Less amount attributable to noncontrolling interest 10,342
(282 ) 10,060
Comprehensive loss attributable to the Company (771,761 ) (7,685 ) (779,446 )
Basic loss per share (9.55 ) (0.07 ) (9.62 )
Diluted loss per share (9.55 ) (0.07 ) (9.62 )

Voluntary Filing under Chapter 11

On March 14, 2018 (the "Petition Date"), the Company, iHeartCommunications, Inc. ("iHeartCommunications") and certain of the Company's direct and indirect domestic subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief (the "Chapter 11 Cases") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court"). Clear Channel Outdoor Holdings, Inc. (“CCOH”) and its direct and indirect subsidiaries did not file voluntary petitions for reorganization under the Bankruptcy Code and ~~are~~were not Debtors in the Chapter 11 Cases.

~~The Chapter 11 Cases are being administered under the caption~~ ~~In re: iHeartMedia, Inc., Case No. 18-31274 (MI)~~. The Debtors are operating their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

On ~~March 16,~~April 28, 2018, the Company and the other Debtors entered into a Restructuring Support Agreement (the “RSA”) with certain creditors and equity holders (the “Consenting Stakeholders”). The RSA contemplates the restructuring and recapitalization of the Debtors (the “Restructuring Transactions”), which will be implemented throughfiled a plan of reorganization in(as amended, the ~~Chapter 11 Cases, if~~“Plan of Reorganization”) and a related disclosure statement with the Bankruptcy Court, which we subsequently amended by filing the second, third, fourth and fifth amended Plan of Reorganization and amended versions of the Disclosure Statement. On January 22, 2019, the Plan of Reorganization was confirmed by the Bankruptcy Court. ~~Pursuant~~

On May 1, 2019 (the “Effective Date”), the conditions to the ~~RSA, the Consenting Stakeholders have agreed to, among other things, support the Restructuring Transactions and vote in favor of a plan of reorganization to effect the Restructuring Transactions.~~

~~The RSA provides certain milestones for the Restructuring Transactions. Failure~~effectiveness of the ~~Debtors to satisfy these milestones without a waiver or consensual amendment would provide the Consenting Stakeholders a termination right under the RSA. These milestones include (i) the filing~~Plan of ~~a plan of reorganization and disclosure statement, in form and substance reasonably acceptable to the Debtors~~Reorganization were satisfied and the ~~Consenting Stakeholders,~~Company emerged from Chapter 11 through (a) a series of transactions (the “Separation”) through which CCOH, its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were filed with the Bankruptcy Court on April 28, 2018, (ii) the filing of a motion for approval of the disclosure statement by May 31, 2018, which deadline was subsequently extended to June 22, 2018, and which motion was filed with the Bankruptcy Court on June 22, 2018, (iii) the entry of an order approving the disclosure statement by July 27, 2018 (subject to one additional 20-day extension on the terms set forth on the RSA), (iv) the entry of an order confirming the plan of reorganization within 75 days of the entry of an order approving the disclosure statement and (v) the effective date of the plan of reorganization occurring by March 14, 2019. The Debtors satisfied the first and second milestones, but did not satisfy the third milestone because the order approving the Disclosure Statement was not entered until September 20, 2018, which was after the date required by the third milestone. As a result, certain of the Consenting Stakeholders presently have the right to terminate the RSA, but as of the date hereof, the RSA has not been terminated.separated

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~On June 15, 2018, July 16, 2018 August 15, 2018, September 7, 2018~~from, and ~~October 1, 2018,~~ceased to be controlled by, the ~~Debtors filed monthly operating reports for the periods~~Company and its subsidiaries (the “iHeart Group”), and (b) a series of transactions (the “Reorganization”) through which iHeartCommunications’ debt was reduced from ~~March 15, 2018~~approximately $16 billion to ~~April 30, 2018, May 1, 2018 to May 31, 2018, June 1, 2018 to June 30, 2018, July 1, 2018 to July 31, 2018~~approximately $5.8 billion and ~~August 1, 2018 to August 31, 2018, respectively (the “Monthly Operating Reports”~~a global compromise and settlement among holders of claims (“Claimholders”) in connection with ~~the Bankruptcy Court.~~

~~iHeartCommunications, which is a Debtor in~~ the Chapter 11 Cases ~~provides~~was effected. The compromise and settlement involved, among others, (i) the ~~day-to-day cash management services for CCOH’s cash activities~~restructuring of iHeartCommunications’ indebtedness by (A) replacing its “debtor-in-possession” credit facility with a $450 million senior secured asset-based revolving credit facility (the “ABL Facility”) and ~~balances~~(B) issuing to certain Claimholders, on account of their claims, approximately $3.5 billion aggregate principal amount of new senior secured term loans (the “Term Loan Facility”), approximately $1.45 billion aggregate principal amount of new 8.375% Senior Notes due 2027 (the “Senior Unsecured Notes”) and approximately $800 million aggregate principal amount of new 6.375% Senior Secured Notes due 2026 (the “6.375% Senior Secured Notes”), (ii) the Company’s issuance of new Class A common stock, new Class B common stock and special warrants to purchase shares of new Class A common stock and Class B common stock (“Special Warrants”) to Claimholders, subject to ownership restrictions imposed by the Federal Communications Commission (“FCC”), (iii) the settlement of certain intercompany transactions, and (iv) the sale of the preferred stock (the “iHeart Operations Preferred Stock”) of the Company’s wholly-owned subsidiary iHeart Operations, Inc. (“iHeart Operations”) in connection with the ~~U.S.~~Separation.

All of the Company's equity existing as of the Effective Date was canceled on such date pursuant to the ~~Corporate Services Agreement between iHeartCommunications and CCOH, and is continuing to do so during~~Plan of Reorganization.

Upon the Company's emergence from the Chapter 11 Cases, ~~pursuant to~~the Company adopted fresh start accounting, which resulted in a ~~cash management order approved by~~new basis of accounting and the ~~Bankruptcy Court.~~

~~iHeartCommunications' filing~~Company becoming a new entity for financial reporting purposes. As a result of the ~~Chapter 11 Cases constituted an event~~application of ~~default~~fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after the Effective Date, are not comparable with the consolidated financial statements on or before that ~~accelerated its obligations under its debt agreements. Due~~date. Refer to Note 3, Fresh Start Accounting, for additional information.

References to “Successor” or “Successor Company” relate to the ~~Chapter 11 Cases, however, the creditors’ ability to exercise remedies under iHeartCommunications' debt agreements were stayed as~~financial position and results of ~~March 14, 2018, the date~~operations of the ~~Chapter 11 petition filing,~~Company after the Effective Date. References to "Predecessor" or "Predecessor Company" refer to the financial position and ~~continue to be stayed.~~results of operations of the Company on or before the Effective Date.

~~The~~During the Predecessor period, the Company ~~has~~ applied Accounting Standards Codification (“ASC”) 852 - Reorganizations(“ASC 852”) in preparing the consolidated financial statements. ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges incurred during 2018 and 2019 related to the ~~bankruptcy proceedings,~~Chapter 11 Cases, including the write-off of unamortized long-term debt fees and discounts associated with debt classified as liabilities subject to compromise, and professional fees incurred directly as a result of the Chapter 11 Cases are recorded as Reorganization items, ~~net. In addition, pre-petition Debtor obligations that may be impacted by~~net in the Chapter 11 Cases have been classified on the Consolidated Balance Sheet at September 30, 2018 as Liabilities subject to compromise. These liabilities are reported at the amounts the Company anticipates will be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. See below for more information regarding Reorganization items.Predecessor period.

ASC 852 requires certain additional reporting for financial statements prepared between the bankruptcy filing date and the date of emergence from bankruptcy, including:

Reclassification of Debtor pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured, to a separate line item in the Consolidated Balance Sheet called, "Liabilities subject to compromise"; and

Segregation of Reorganization items, net as a separate line in the Consolidated Statement of Comprehensive ~~Income (Loss), outside of~~Loss, included within income from continuing operations.

~~Debtor-In-Possession~~

The Debtors are currently operating as debtors in possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court has approved motions filed by the Debtors that were designed primarily to mitigate the impact of the Chapter 11 Cases on the Company’s operations, customers and employees. In general, as debtors-in-possession under the Bankruptcy Code, the Debtors are authorized to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. Pursuant to first day motions and second day motions filed with the Bankruptcy Court, the Bankruptcy Court authorized the Debtors to conduct their business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing the Debtors to: (i) pay employees’ wages and related obligations; (ii) continue to operate their cash management system in a form substantially similar to pre-petition practice; (iii) use cash collateral on an interim basis; (iv) continue to honor certain obligations related to on-air talent, station affiliates and royalty obligations; (v) continue to maintain certain customer programs; (vi) pay taxes in the ordinary course; (vii) continue their surety bond program; and (viii) maintain their insurance program in the ordinary course.

~~Automatic Stay~~

Subject to certain specific exceptions under the Bankruptcy Code, the Bankruptcy Petitions automatically stayed most judicial or administrative actions against the Debtors and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to pre-petition claims. Absent an order from the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities are subject to settlement under the Bankruptcy Code. See Note 13, ~~Condensed Combined Debtor-In-Possession Financial Information~~.

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~Executory Contracts~~

Subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, amend or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors from performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this document, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease of the Debtors, is qualified by any overriding rejection rights the Company has under the Bankruptcy Code.

~~Potential Claims~~

The Debtors have filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing. Certain holders of pre-petition claims that are not governmental units were required to file proofs of claim by the deadline for general claims, which was on June 29, 2018 (the “Bar Date”).

~~The Debtors' have received approximately 4,200~~proofs of claim as of November 5, 2018 for an amount of approximately $808.3 billion. Such amount includes duplicate claims across multiple debtor legal entities. These claims will be reconciled to amounts recorded in the Company's accounting records. Differences in amounts recorded and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court, where appropriate. The Bankruptcy Court does not allow for claims that have been acknowledged as duplicates. Approximately 275 claims totaling approximately $13 million have been disallowed or withdrawn and the Debtors have filed additional claim objections with the Bankruptcy Court for approximately 200 claims totaling approximately $4.8 billion in additional reductions. The Company may ask the Bankruptcy Court to disallow claims that the Company believes have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. In addition, as a result of this process, the Company may identify additional liabilities that will need to be recorded or reclassified to Liabilities subject to compromise. In light of the substantial number of claims filed, and expected to be filed, the claims resolution process may take considerable time to complete and likely will continue after the Debtors emerge from bankruptcy.

~~Reorganization Items, Net~~

The Debtors have incurred and will continue to incur significant costs associated with the reorganization, including the write-off of original issue discount and deferred long-term debt fees on debt subject to compromise, costs of debtor-in-possession refinancing, legal and professional fees. The amount of these charges, which since the Petition Date are being expensed as incurred, are expected to significantly affect the Company’s results of operations. In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as Reorganization items, net within the Company's accompanying Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2018. See Note 12, ~~Reorganization Items, Net~~.

~~Financial Statement Classification of Liabilities Subject to Compromise~~

The accompanying Consolidated Balance Sheet as of September 30, 2018 includes amounts classified as Liabilities subject to compromise, which represent liabilities the Company anticipates will be allowed as claims in the Chapter 11 Cases. These amounts represent the Debtors’ current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases, and may differ from actual future settlement amounts paid. Differences between liabilities estimated and claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process. The Company will continue to evaluate these liabilities throughout the Chapter 11 process and adjust amounts as necessary. Such adjustments may be material. See Note 11, ~~Liabilities Subject to Compromise~~.

~~Plan of Reorganization~~

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

On June 21, 2018, the Debtors filed an amended Disclosure Statement with the Bankruptcy Court. On August 5, 2018, the Debtors filed an amended Plan of Reorganization with the Bankruptcy Court. On August 23, 2018, the Debtors filed a second amended Plan of Reorganization and a further amended Disclosure Statement with the Bankruptcy Court. On August 28, 2018, the Debtors filed a third amended Plan of Reorganization and a further amended Disclosure Statement with the Bankruptcy Court. On September 12, 2018, the Debtors filed a fourth amended Plan of Reorganization and a further amended Disclosure Statement with the Bankruptcy Court. On September 18, 2018, the Debtors filed a revised fourth amended Plan of Reorganization and a further amended Disclosure Statement with the Bankruptcy Court. On September 20, 2018, the Bankruptcy Court entered an order approving the Disclosure Statement and related solicitation and notice procedures for voting on the Plan of Reorganization, and the Debtors filed solicitation versions of the Plan of Reorganization and Disclosure Statement.

Following the entry of the order approving the Disclosure Statement, the Debtors, certain Consenting Stakeholders, and the Official Committee of Unsecured Creditors reached an agreement regarding the treatment of general unsecured claims under the Plan of Reorganization. On October 10, 2018, the Debtors filed a fifth amended Plan of Reorganization reflecting such agreement and a supplement to the Disclosure Statement (the “Disclosure Statement Supplement”). On October 18, 2018, the Bankruptcy Court entered an order approving the Disclosure Statement Supplement and the continued solicitation of holders of general unsecured claims for voting on the Plan of Reorganization, and the Debtors filed solicitation versions of the Plan of Reorganization and Disclosure Statement Supplement. The deadline by which holders of claims and interests entitled to vote on the Plan of Reorganization must vote is currently November 16, 2018, and a hearing has been scheduled for December 11, 2018 to consider confirmation of the Plan of Reorganization.

Pursuant to the Plan of Reorganization, iHeartMedia, Inc. or its successor or assignee on the effective date of the Plan of Reorganization (“Reorganized iHeart”) will issue new common stock (“Reorganized iHeart Common Stock”), special warrants to purchase Reorganized iHeart Common Stock (“Special Warrants”), or, if applicable, interests in a trust that may be created to hold Reorganized iHeart Common Stock and/or Special Warrants pending the Federal Communications Commission’s approval of the transactions contemplated by the Plan of Reorganization (the “FCC Trust,” and collectively with the Reorganized iHeart Common Stock and the Special Warrants, the “iHeart Equity Interests”), in exchange for claims against or interests in the Debtors. Holders of claims with respect to the iHeartCommunications term loan credit agreement, priority guarantee notes, 14% senior notes due 2021 and legacy notes will receive their pro rata share of a distribution of new term loans and new notes of iHeartCommunications and 99% of the iHeart Equity Interests, subject to dilution by any Reorganized iHeart Common Stock issued pursuant to a post-emergence equity incentive plan, as set forth in the Plan of Reorganization. The preliminary terms of the new term loans and new notes are set forth in the Disclosure Statement, and the amount and tenor of the new term loans and new notes will be set forth in a supplement to the Plan of Reorganization. Holders of equity interests in iHeartMedia will receive their pro rata share of 1% of the iHeart Equity Interests, subject to dilution by any Reorganized iHeart Common Stock issued pursuant to a post-emergence equity incentive plan. On the effective date of the Plan of Reorganization, the applicable Debtors will execute documents to effect the separation of CCOH from iHeartMedia, and the equity interests in CCOH (or its successor) currently held by subsidiaries of iHeartMedia will be distributed to holders of claims with respect to the term loan credit agreement and priority guarantee notes.

The Plan of Reorganization is subject to the approval of the Bankruptcy Court and other constituencies in accordance with the Bankruptcy Code, and is subject to further revision. There can be no assurance that the Plan of Reorganization will be confirmed by the Bankruptcy Court on the currently contemplated terms or at all, or that any confirmed plan of reorganization will be implemented successfully.

~~Going Concern~~

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. ~~As noted above, Liabilities subject to compromise will be resolved in connection with~~During the Chapter 11 ~~Cases. The~~Cases, the Company’s ability to continue as a going concern iswas contingent upon the Company’s ability to successfully implement the Company’s ~~plan~~Plan of ~~reorganization,~~Reorganization, among other factors. As a result of the ~~Chapter 11 Cases, the realization of assets~~effectiveness and the satisfaction of liabilities are subject to uncertainty. While operating as debtors-in-possession under Chapter 11, the Company may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approvalimplementation of the ~~Bankruptcy Court or~~Plan of Reorganization, there is no longer substantial doubt about the Company's ability to continue as otherwise permitted in the ordinary course of business, for amounts other than those reflected in the accompanying consolidated financial statements. Further, the plan of reorganization could materially change the amounts and classifications of assets and liabilities reported in the consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might bea going concern.

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

necessary should the Company be unable to continue as a going concern or as a consequence of the Chapter 11 Cases. As a result of our financial condition, the defaults under our debt agreements, and the risks and uncertainties surrounding the Chapter 11 Cases, substantial doubt exists that we will be able to continue as a going concern.

~~New Accounting Pronouncements Recently Adopted~~

~~Revenue from Contracts with Customers~~

~~As of January 1, 2018, the Company adopted the new accounting standard, ASC 606,~~ ~~Revenue from Contracts with Customers~~. This standard provides guidance for the recognition, measurement and disclosure of revenue from contracts with customers and supersedes previous revenue recognition guidance under U.S. GAAP. The Company has applied this standard using the full retrospective method and concluded that its adoption did not have a material impact on the Company’s Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income (Loss), or Consolidated Statements of Cash Flows for prior periods. Please refer to Note 2, ~~Revenues, for more information.~~

~~As a result of adopting this new accounting standard, the Company has updated its significant accounting policies, as follows:~~

~~Accounts Receivable~~

Accounts receivable are recorded when the Company has an unconditional right to payment, either because it has satisfied a performance obligation prior to receiving payment from the customer or has a non-cancelable contract that has been billed in advance in accordance with the Company’s normal billing terms.

Accounts receivable are recorded at the invoiced amount, net of reserves for sales allowances and allowances for doubtful accounts. The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, it records a specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it recognizes reserves for bad debt based on historical experience of bad debts as a percent of accounts receivable for each business unit, adjusted for relative improvements or deteriorations in the agings and changes in current economic conditions. The Company believes its concentration of credit risk is limited due to the large number and the geographic diversification of its customers.

~~Revenue Recognition~~

The Company recognizes revenue when or as it satisfies a performance obligation by transferring a promised good or service to a customer. Where third-parties are involved in the provision of goods and services to a customer, revenue is recognized at the gross amount of consideration the Company expects to receive if the Company controls the promised good or service before it is transferred to the customer; otherwise, revenue is recognized at the net amount the Company retains. The Company receives payments from customers based on billing schedules that are established in its contracts, and deferred income is recorded when payment is received from a customer before the Company has satisfied the performance obligation or a non-cancelable contract has been billed in advance in accordance with the Company’s normal billing terms.

The primary source of revenue in the iHM segment is the sale of advertising on the Company’s broadcast radio stations, its iHeartRadio mobile application and website, station websites, and national and local live events. Revenues for advertising spots are recognized at the point in time when the advertisement is broadcast or streamed, while revenues for online display advertisements are recognized over time based on impressions delivered or time elapsed, depending upon the terms of the contract. Revenues for event sponsorships are recognized over the period of the event. iHM also generates revenues from programming talent, network syndication, traffic and weather data, and other miscellaneous transactions, which are recognized when the services are transferred to the customer. iHM’s contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations.

The Americas outdoor and International outdoor segments generate revenue primarily from the sale of advertising space on printed and digital displays, including billboards, street furniture displays, transit displays and retail displays, which may be sold as individual units or as a network package. Revenues from these contracts, which typically cover periods of a few weeks to one year, are generally recognized ratably over the term of the contract as the advertisement is displayed. These segments also generate revenue from production and creative services, which are distinct from the advertising display services, and related revenue is recognized at the point in time the Company installs the advertising copy at the display site. Americas outdoor contracts are

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~generally billed monthly in advance, and International outdoor includes a combination of advance billings and billings upon completion of service.~~

The Company also generates revenue through contractual commissions realized from the sale of national spot and online advertising on behalf of clients of its full-service media representation business, Katz Media, which is reported in the Company’s Other segment. Revenues from these contracts are recognized at the point in time when the advertisements are broadcast. Because the Company is a representative of its media clients and does not control the advertising inventory before it is transferred to the advertiser, the Company recognizes revenue at the net amount of contractual commissions retained for its representation services. The Company’s media representation contracts typically have terms up to ten years in duration and are generally billed monthly upon satisfaction of the performance obligations.

The Company recognizes revenue in amounts that reflect the consideration it expects to receive in exchange for transferring goods or services to customers, excluding sales taxes and other similar taxes collected on behalf of governmental authorities (the "transaction price”). When this consideration includes a variable amount, the Company estimates the amount of consideration it expects to receive and only recognizes revenue to the extent that it is probable it will not be reversed in a future reporting period. Because the transfer of promised goods and services to the customer is generally within a year of scheduled payment from the customer, the Company is not typically required to consider the effects of the time value of money when determining the transaction price. Advertising revenue is reported net of agency commissions.

Trade and barter transactions represent the exchange of advertising spots or display space for merchandise, services 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 or display space promised to the customer. Revenue is recognized on trade and barter transactions when the advertisements are broadcasted or displayed, and expenses are recorded ratably over a period that estimates when the merchandise, services or other assets received are utilized, or when the event occurs. Trade and barter revenues and expenses from continuing operations are included in consolidated revenue and selling, general and administrative expenses, respectively. Trade and barter revenues and expenses from continuing operations were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2018 2017 2018 2017
Consolidated:
  Trade and barter revenues $ 55,475
$ 49,886
$ 153,185
$ 162,330
  Trade and barter expenses 42,985
34,672
145,656
126,502

iHM Segment:
  Trade and barter revenues $ 51,831
$ 45,884
$ 141,769
$ 149,164
  Trade and barter expenses 40,607
31,859
136,827
118,215

In order to appropriately identify the unit of accounting for revenue recognition, the Company determines which promised goods and services in a contract with a customer are distinct and are therefore separate performance obligations. If a promised good or service does not meet the criteria to be considered distinct, it is combined with other promised goods or services until a distinct bundle of goods or services exists. Certain of the Company’s contracts with customers include options for the customer to acquire additional goods or services for free or at a discount, and management judgment is required to determine whether these options are material rights that are separate performance obligations.

For revenue arrangements that contain multiple distinct goods or services, the Company allocates the transaction price to these performance obligations in proportion to their relative standalone selling prices. The Company has concluded that the contractual prices for the promised goods and services in its standard contracts generally approximate management’s best estimate of standalone selling price as the rates reflect various factors such as the size and characteristics of the target audience, market location and size, and recent market selling prices. However, where the Company provides customers with free or discounted services as part of contract negotiations, management uses judgment to determine how much of the transaction price to allocate to these performance obligations.

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~Contract Costs~~

Incremental costs of obtaining a contract primarily relate to sales commissions, which are included in selling, general and administrative expenses and are generally commensurate with sales. These costs are generally expensed when incurred because the period of benefit is one year or less.

Restricted Cash

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Restricted Cash~~, which requires that restricted cash be presented with cash and cash equivalents in the statement of cash flows. Restricted cash is recorded in Other current assets and in Other assets in the Company's Consolidated Balance Sheets. The Company adopted ASU 2016-18 in the first quarter of 2018 using the retrospective transition method, and accordingly, revised prior period amounts as shown in the Company's Consolidated Statements of Cash Flows.

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)	September 30, 2018		December 31, 2017		Successor Company		Predecessor Company
					September 30, 2019		December 31, 2018
Cash and cash equivalents	$	311,162	$	267,109	$	277,050	$	224,037
Restricted cash included in:
Other current assets	7,653		26,096		11,287		3,428
Other assets	19,282		18,095
Total cash, cash equivalents and restricted cash in the Statement of Cash Flows(1)	$	338,097	$	311,300	$	288,337	$	227,465

⁽¹⁾The ~~following table provides a reconciliation of~~Predecessor Company's Total cash, cash equivalents and restricted cash ~~reported~~as of December 31, 2018 in the ~~Debtors' Balance Sheet to the total~~table above exclude $202.8 million classified as current and long-term assets of ~~the amounts reported in the Debtors' Statement of Cash Flows:~~

(In thousands) September 30,
2018
Cash and cash equivalents $ 76,154
Restricted cash included in:
Other current assets 3,422
Total cash, cash equivalents and restricted cash in the Statement of Cash Flows $ 79,576

~~Stock Compensation~~

~~During the second quarter of 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718)~~. This update mandates that entities will apply the modification accounting guidance if the value, vesting conditions or classification of a stock-based award changes. Entities will have to make all of the disclosures about modifications that are required today, in addition to disclosing that compensation expense hasn't changed. Additionally, the new guidance also clarifies that a modification to an award could be significant and therefore require disclosure, even if the modification accounting is not required. The guidance is being applied prospectively to awards modified on or after the adoption date and is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company adopted the provisions of ASU 2017-09 on January 1, 2018 and the adoption of ASU 2017-09 did not have an impact on our consolidated financial statements.discontinued operations.

New Accounting Pronouncements ~~Not Yet~~Recently Adopted

Leases

~~During the first quarter of 2016, the FASB issued~~The Company adopted ASU No. 2016-02, which created ASC 842, Leases ~~(Topic 842)~~, and all subsequent ASUs relating to this Topic, as of January 1, 2019 (collectively, "ASC 842"). ~~The~~This new ~~leasing~~lease accounting standard, ~~presents~~which supersedes previous lease accounting guidance under U.S. GAAP, results in significant changes to the balance sheets of ~~lessees. The~~lessees, most ~~significant change to the standard includes~~significantly by requiring the recognition of a right-of-use ~~assets~~("ROU") asset and lease ~~liabilities~~liability by lessees for those leases classified as operating leases. Lessor accounting is also is updated to align with certain changes in the lessee model and the ~~new~~ revenue recognition standard ("ASC Topic 606"), which was adopted ~~this year. The standard~~in 2018.

The Company applied the transition provisions of this standard at January 1, 2019 following the optional transition method provided by ASU No. 2018-11; consequently, the consolidated financial statements and notes to the consolidated financial statements for periods before the date of adoption continue to be presented in accordance with ASC Topic 840. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to not reassess whether expired or existing contracts are or contain leases and to carry forward the historical lease classification for those leases that commenced prior to the date of adoption.

Upon adoption of ASC 842, prepaid and deferred rent balances, which were historically presented separately, were combined and presented net within the ROU asset. Additionally, deferred gains related to previous transactions that were historically accounted for as sale and operating leasebacks in accordance with ASC Topic 840 were eliminated and recognized as a cumulative-effect adjustment to equity, resulting in an increase to equity, net of tax, of $128.9 million. Under ASC Topic 840, such gains were recognized ratably over the lease term as a credit to operating lease expense, and operating lease expense for the three and nine months ended September 30, 2018 included credits of $1.3 million and $3.9 million, respectively, for the amortization of these gains, which were not recognized in any period after January 1, 2019.

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2018. The~~Adoption of the new standard ~~is expected to have~~had a material impact on our consolidated balance ~~sheet,~~sheets, but is not expected to materially impact our consolidated statement of comprehensive income (loss) or cash flows. The Company is continuing to evaluate the impact of the provisions of this new standard on its consolidated financial statements.

In July 2018, The FASB issued ASU No. 2018-11, Leases (Topic 842) - Targeted Improvements. The update provides an additional (optional) transition method to adopt the new lease standard, allowing entities to apply the new lease standard at the adoption date. The Company plans to adopt Topic 842 following this optional transition method. The update also provides lessors a practical expedient to allow them to not separate non-lease components from the associated lease component and instead to account for those components as a single component if certain criteria are met. The updated practical expedient for lessors willit did not have a material ~~effect to the Company’s~~impact on our other consolidated financial statements. Additionally, the standard requires disclosures to meet the objective of enabling users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. Refer to Note 5, Revenue, and Note 6, Leases, for more information.

Intangible Assets and Goodwill

During the first quarter of 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350). This update ~~eliminates~~eliminated the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Entities ~~will~~are required to record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The standard is effective for annual and any interim impairment tests performed for periods beginning after December 15, 2019. The Company ~~is currently evaluating~~early adopted the proposed guidance under ASU 2017-04 beginning on January 1, 2019 on a prospective basis. The implementation of ASU 2017-04 did not have a material impact ~~of the provisions of this new standard~~ on ~~its~~our consolidated financial ~~statements.~~statements and related disclosures.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During the third quarter of 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This update requires that a customer in a cloud computing arrangement that is a service contract follow the internal use software guidance in Accounting Standards Codification (ASC) 350-402 to determine which implementation costs to capitalize as assets. The standard is effective for fiscal years beginning after December 15, 2019. The Company ~~is currently evaluating~~early adopted the proposed guidance under ASU 2018-15 beginning on January 1, 2019 on a prospective basis. The implementation of ASU 2018-15 did not have a material impact ~~of the provisions of this new standard~~ on ~~its~~our consolidated financial ~~statements.~~statements and related disclosures.

NOTE 2 ~~– REVENUES~~- EMERGENCE FROM VOLUNTARY REORGANIZATION UNDER CHAPTER 11 PROCEEDINGS

Plan of Reorganization

As described in Note 1, on March 14, 2018, the Company and the other Debtors filed the Chapter 11 Cases and on April 28, 2018, the Company and the other Debtors filed a plan of reorganization, which was subsequently amended as the Plan of Reorganization and was confirmed on January 22, 2019. The ~~Company generates revenue~~Debtors then emerged from ~~several sources:~~

~~The primary source~~bankruptcy upon effectiveness of ~~revenue~~the Plan of Reorganization on the Effective Date. Capitalized terms not defined in this note are defined in the ~~iHM segment is~~Plan of Reorganization.

On or following the ~~sale~~Effective Date and pursuant to the Plan of ~~advertising on~~Reorganization, the Company’s radio stations, its iHeartRadio mobile application and website, station websites, and live events. This segment also generates revenues from programming talent, network syndication, traffic and weather data, and other miscellaneous transactions.following occurred:

~~The Americas outdoor and International outdoor segments generate revenue primarily from the sale of advertising space on printed and digital out-of-home advertising displays.~~

Certain of the revenue transactions in the Americas outdoor and International outdoor segments are considered leases, for accounting purposes, as the agreements convey to customers the right to use the Company’s advertising structures for a stated period of time. In order for a transaction with a customer to qualify as a lease, the arrangement must be dependent on the use of a specified advertising structure, and the customer must have almost exclusive use of that structure during the term of the arrangement. Therefore, arrangements that do not involve the use of an advertising structure, where the Company can substitute the advertising structure that is used to display the customer’s advertisement, or where the advertising structure displays advertisements for multiple customers throughout the day are not leases. The Company accounts for revenue from leases, which are all classified as operating leases, in accordance with the lease accounting guidance (~~Topic 840). All of the Company’s revenue transactions that do not qualify as a lease are accounted for as revenue from contracts with customers (Topic 606~~).


▪	CCOH was separated from and ceased to be controlled by iHeartCommunications and its subsidiaries.


▪	The existing indebtedness of iHeartCommunications of approximately $16 billion was discharged, the Company entered into the Term Loan Facility ($3,500 million) and issued the 6.375% Senior Secured Notes ($800 million) and the Senior Unsecured Notes ($1,450 million), collectively the “Successor Emergence Debt.”


▪	The Company adopted an amended and restated certificate of incorporation and bylaws.

▪

Shares of the Predecessor Company’s issued and outstanding common stock immediately prior to the Effective Date were canceled, and on the Effective Date, reorganized iHeartMedia issued an aggregate of 56,861,941 shares of iHeartMedia Class A common stock, 6,947,567 shares of Class B common stock and special warrants to purchase 81,453,648 shares of Class A common stock or Class B common stock to holders of claims pursuant to the Plan of Reorganization.


▪	The following classes of claims received the Successor Emergence Debt and 99.1% of the new equity, as defined in the Plan of Reorganization:


▪	Secured Term Loan / 2019 PGN Claims (Class 4)


▪	Secured Non-9.0% PGN Due 2019 Claims Other Than Exchange 11.25% PGN Claims (Class 5A)


▪	Secured Exchange 11.25% PGN Claims (Class 5B)


▪	iHC 2021 / Legacy Notes Claims (Class 6)


▪	Guarantor Funded Debt against other Guarantor Debtors Other than CCH and TTWN (Class 7)


▪	The holders of the Guarantor Funded Debt Unsecured Claims Against CCH (Class 7F) received their Pro Rata share of 100 percent of the CCOH Interests held by the Debtors and CC Finco, LLC and Broader Media, LLC. Refer to the discussion below regarding the Separation Transaction.


▪	Settled the following classes of claims in cash:


▪	General Unsecured Claims Against Non-Obligor Debtors (Class 7A); paid in full


▪	General Unsecured Claims Against TTWN Debtors (Class 7B); paid in full


▪	iHC Unsecured Claims (Class 7D); paid 14.44% of allowed claim


▪	Guarantor General Unsecured Claims (Class 7G); paid minimum of 45% and maximum of 55% of allowed claim

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


▪	The CCOH Due From Claims (Class 8) represent the negotiated claim between iHeartMedia and CCOH, which was settled in cash on the date of emergence at 14.44%.


▪	The Predecessor Company’s common stockholders (Class 9) received their pro rata share of 1% of the new common stock; provided that 0.1% of the new common stock that otherwise would have been distributed to the Company's former sponsors was instead distributed to holders of Legacy Notes Claims.


▪	The Company entered into a new $450.0 million ABL Facility, which was undrawn at emergence.


▪	The Company funded the Guarantor General Unsecured Recovery Cash Pool for $17.5 million in order to settle the Class 7G General Unsecured Claims.


▪	The Company funded the Professional Fee Escrow Account.

▪

On the Effective Date, the iHeartMedia, Inc. 2019 Equity Incentive Plan (the “Post-Emergence Equity Plan”) became effective. The Post-Emergence Equity Plan allows the Company to grant stock options and restricted stock units representing up to 12,770,387 shares of Class A common stock for key members of management and service providers and up to 1,596,298 for non-employee members of the board of directors. The amounts of Class A common stock reserved under the Post-Emergence Equity Plan were equal to 8% and 1%, respectively, of the Company’s fully-diluted and distributed shares of Class A common stock as of the Effective Date.

In addition, as part of the Separation, iHeartCommunications and CCOH consummated the following transactions:


▪	the cash sweep agreement under the then-existing corporate services agreement and any agreements or licenses requiring royalty payments to iHeartMedia by CCOH for trademarks or other intellectual property (“Trademark License Fees”) were terminated;

▪

iHeartCommunications, iHeartMedia, iHeartMedia Management Services, Inc. (“iHM Management Services”) and CCOH entered into a transition services agreement (the “Transition Services Agreement”) pursuant to which, the Company or its subsidiaries will provide administrative services historically provided to CCOH by iHeartCommunications for a period of one year after the Effective Date, which may be extended under certain circumstances;


▪	the Trademark License Fees charged to CCOH during the post-petition period were waived by iHeartMedia;


▪	iHeartMedia contributed the rights, title and interest in and to all tradenames, trademarks, service marks, common law marks and other rights related to the Clear Channel tradename (the “CC Intellectual Property”) to CCOH;

▪

iHeartMedia paid $115.8 million to CCOH, which consisted of the $149.0 million payment by iHeartCommunications to CCOH as CCOH’s recovery of its claims under the Due from iHeartCommunications Note, partially offset by the $33.2 million net amount payable to iHeartCommunications under the post-petition intercompany balance between iHeartCommunications and CCOH after adjusting for the post-petition Trademark License Fees which were waived as part of the settlement agreement;

▪

iHeartCommunications entered into a revolving loan agreement with Clear Channel Outdoor, LLC (“CCOL”) and Clear Channel International, Ltd., wholly-owned subsidiaries of CCOH, to provide a line of credit in an aggregate amount not to exceed $200 million at the prime rate of interest, which was terminated by the borrowers on July 30, 2019 in connection with the closing of an underwritten public offering of common stock by CCOH; and


▪	iHeart Operations, Inc. issued $60.0 million in preferred stock to a third party for cash (see Note 8, Long-term Debt).

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~Disaggregation~~NOTE 3 - FRESH START ACCOUNTING

Fresh Start

In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and adopted fresh start accounting on the Effective Date. The Company was required to adopt fresh start accounting because (i) the holders of ~~Revenue~~existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (ii) the reorganization value of the Company's assets immediately prior to confirmation of the Plan of Reorganization was less than the post-petition liabilities and allowed claims.

In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair values in conformity with ASC 805, "Business Combinations." The ~~following table shows,~~reorganization value represents the fair value of the Successor Company's assets before considering liabilities. The excess reorganization value over the fair value of identified tangible and intangible assets is reported as goodwill. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after May 1, 2019 are not comparable with the consolidated financial statements as of or prior to that date.

Reorganization Value

As set forth in the Plan of Reorganization and the Disclosure Statement, the enterprise value of the Successor Company was estimated to be between $8.0 billion and $9.5 billion. Based on the estimates and assumptions discussed below, the Company estimated the enterprise value to be $8.75 billion, which is the mid-point of the range of enterprise value.

Management and its valuation advisors estimated the enterprise value of the Successor Company, which was approved by ~~segment, revenue from contracts with customers disaggregated by geographical region, revenue from leases~~the Bankruptcy Court. The selected publicly traded companies analysis approach, the discounted cash flow analysis (“DCF”) approach and ~~total revenue~~the selected transactions analysis approach were all utilized in estimating the enterprise value. The use of each approach provides corroboration for the ~~three~~other approaches. To estimate enterprise value utilizing the selected publicly traded companies analysis method, valuation multiples derived from the operating data of publicly-traded benchmark companies to the same operating data of the Company were applied. The selected publicly traded companies analysis identified a group of comparable companies giving consideration to lines of business and ~~nine months ended September 30, 2018~~markets served, size and ~~2017:~~geography. The valuation multiples were derived based on historical and projected financial measures of revenue and earnings before interest, taxes, depreciation and amortization and applied to projected operating data of the Company.

To estimate enterprise value utilizing the discounted cash flow method, an estimate of future cash flows for the period 2019 to 2022 with a terminal value was determined and discounted the estimated future cash flows to present value. The expected cash flows for the period 2019 to 2022 with a terminal value were based upon certain financial projections and assumptions provided to the Bankruptcy Court. The expected cash flows for the period 2019 to 2022 were derived from earnings forecasts and assumptions regarding growth and margin projections, as applicable. A terminal value was included, calculated using the terminal multiple method, which estimates a range of values at which the Successor Company will be valued at the end of the Projection Period based on applying a terminal multiple to final year OIBDAN, which is defined as consolidated operating income adjusted to exclude non-cash compensation expenses included within corporate expenses, as well as Depreciation and amortization, Impairment charges and Other operating income (expense), net.

(In thousands) iHM
Americas Outdoor⁽¹⁾

International Outdoor⁽¹⁾
Other Eliminations Consolidated
Three Months Ended September 30, 2018
Revenue from contracts with customers:
  United States $ 869,126
$ 116,503
$ —
$ 47,088
$ (168 ) $ 1,032,549
  Other Americas 582
671
11,242
—
—
12,495
  Europe 2,415
—
191,514
—
—
193,929
  Asia-Pacific and other 4,059
—
5,563
—
—
9,622
  Eliminations (3,415 ) —
—
—
—
(3,415 )
     Total 872,767
117,174
208,319
47,088
(168 ) 1,245,180
Revenue from leases 637
186,247
151,999
—
(1,298 ) 337,585
Revenue, total $ 873,404
$ 303,421
$ 360,318
$ 47,088
$ (1,466 ) $ 1,582,765

Three Months Ended September 30, 2017
Revenue from contracts with customers:
  United States $ 854,890
$ 106,806
$ —
$ 34,452
$ (341 ) $ 995,807
  Other Americas 704
2,488
14,224
—
—
17,416
  Europe 2,420
—
181,229
—
—
183,649
  Asia-Pacific and other 4,453
162
4,635
—
—
9,250
  Eliminations (3,798 ) —
—
—
—
(3,798 )
     Total 858,669
109,456
200,088
34,452
(341 ) 1,202,324
Revenue from leases 862
184,351
150,535
—
(1,315 ) 334,433
Revenue, total $ 859,531
$ 293,807
$ 350,623
$ 34,452
$ (1,656 ) $ 1,536,757

Nine Months Ended September 30, 2018
Revenue from contracts with customers:
  United States $ 2,457,506
$ 328,138
$ —
$ 113,803
$ (1,606 ) $ 2,897,841
  Other Americas 2,025
1,955
36,723
—
—
40,703
  Europe 7,477
—
605,032
—
—
612,509
  Asia-Pacific and other 12,640
—
17,685
—
—
30,325
  Eliminations (10,568 ) —
—
—
—
(10,568 )
     Total 2,469,080
330,093
659,440
113,803
(1,606 ) 3,570,810
Revenue from leases 2,159
529,097
455,487
—
(4,298 ) 982,445
Revenue, total $ 2,471,239
$ 859,190
$ 1,114,927
$ 113,803
$ (5,904 ) $ 4,553,255

Nine Months Ended September 30, 2017
Revenue from contracts with customers:
  United States $ 2,487,144
$ 308,988
$ —
$ 99,332
$ (1,778 ) $ 2,893,686
  Other Americas 2,107
10,279
37,418
—
—
49,804
  Europe 6,825
—
533,111
—
—
539,936
  Asia-Pacific and other 12,782
568
14,853
—
—
28,203
  Eliminations (11,120 ) —
—
—
—
(11,120 )
     Total 2,497,738
319,835
585,382
99,332
(1,778 ) 3,500,509
Revenue from leases 3,346
534,509
420,572
—
(3,666 ) 954,761
Revenue, total $ 2,501,084
$ 854,344
$ 1,005,954
$ 99,332
$ (5,444 ) $ 4,455,270
To estimate enterprise value utilizing the selected transactions analysis, valuation multiples were derived from an analysis of consideration paid and net debt assumed from publicly disclosed merger or acquisition transactions, and such multiples were applied to the broadcast cash flows of the Successor Company. The selected transactions analysis identified companies and assets involved in publicly disclosed merger and acquisition transactions for which the targets had operating and financial characteristics comparable in certain respects to the Successor Company.

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table reconciles the enterprise value per the Plan of Reorganization to the implied value (for fresh start accounting purposes) of the Successor Company's common stock as of the Effective Date:



(In thousands, except per share data)
Enterprise Value	$	8,750,000
Plus:
Cash and cash equivalents	63,142
Less:
Debt issued upon emergence	(5,748,178		)
Finance leases and short-term notes	(61,939		)
Mandatorily Redeemable Preferred Stock	(60,000		)
Changes in deferred tax liabilities⁽¹⁾	(163,910		)
Noncontrolling interest	(8,943		)
Implied value of Successor Company common stock	$	2,770,172

Shares issued upon emergence⁽²⁾	145,263
Per share value	$	19.07

⁽¹⁾~~Due to a re-evaluation~~Difference in the assumed effect of deferred taxes in the calculation of enterprise value versus the actual effect of deferred taxes as of May 1.

⁽²⁾Includes the Class A Common Stock, Class B Common Stock and Special Warrants issued at emergence.

The reconciliation of the Company’s ~~segment reporting in 2018, its operations in Latin America are included~~enterprise value to reorganization value as of the Effective Date is as follows:



(In thousands)
Enterprise Value	$	8,750,000
Plus:
Cash and cash equivalents	63,142
Current liabilities (excluding Current portion of long-term debt)	426,944
Deferred tax liability	596,850
Other long-term liabilities	54,393
Noncurrent operating lease obligations	818,879
Reorganization value	$	10,710,208

Consolidated Balance Sheet

The adjustments set forth in the ~~International outdoor segment results for all periods presented. See Note~~following consolidated balance sheet as of May 1, ~~Basis of Presentation~~.

~~All~~2019 reflect the effect of the ~~Company’s advertising structures~~Separation (reflected in the column "Separation of CCOH Adjustments"), the consummation of the transactions contemplated by the Plan of Reorganization that are incremental to the Separation (reflected in the column "Reorganization Adjustments") and the fair value adjustments as a result of applying fresh start accounting (reflected in the column "Fresh Start Adjustments"). The explanatory notes highlight methods used to ~~generate revenue.~~determine fair values or other amounts of the assets and liabilities, as well as significant assumptions or inputs.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



(In thousands)				Separation of CCOH Adjustments				Reorganization Adjustments				Fresh Start Adjustments
	Predecessor			(A)				(B)				(C)				Successor
CURRENT ASSETS
Cash and cash equivalents	$	175,811		$	—			$	(112,669	)	(1)	$	—			$	63,142
Accounts receivable, net	748,326			—				—				(10,810		)	(1)	737,516
Prepaid expenses	127,098			—				—				(24,642		)	(2)	102,456
Other current assets	22,708			—				8,125			(2)	(1,668		)	(3)	29,165
Current assets of discontinued operations	1,000,753			(1,000,753		)	(1)	—				—				—
Total Current Assets	2,074,696			(1,000,753		)		(104,544		)		(37,120		)		932,279
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net	499,001			—				—				333,991			(4)	832,992
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses	2,326,626			—				—				(44,906		)	(5)	2,281,720
Other intangibles, net	104,516			—				—				2,240,890			(5)	2,345,406
Goodwill	3,415,492			—				—				(92,127		)	(5)	3,323,365
OTHER ASSETS
Operating lease right-of-use assets	355,826			—				—				554,278			(6)	910,104
Other assets	139,409			—				(384		)	(3)	(54,683		)	(2)	84,342
Long-term assets of discontinued operations	5,351,513			(5,351,513		)	(1)	—				—				—
Total Assets	$	14,267,079		$	(6,352,266	)		$	(104,928	)		$	2,900,323			$	10,710,208
CURRENT LIABILITIES
Accounts payable	$	41,847		$	—			$	3,061		(4)	$	—			$	44,908
Current operating lease liabilities	470			—				31,845			(7)	39,092			(6)	71,407
Accrued expenses	208,885			—				(32,250		)	(5)	2,328			(9)	178,963
Accrued interest	462			—				(462		)	(6)	—				—
Deferred revenue	128,452			—				—				3,214			(7)	131,666
Current portion of long-term debt	46,618			—				6,529			(7)	40			(6)	53,187
Current liabilities of discontinued operations	999,778			(999,778		)	(1)	—				—				—
Total Current Liabilities	1,426,512			(999,778		)		8,723				44,674				480,131
Long-term debt	—			—				5,758,516			(8)	(1,586		)	(8)	5,756,930
Series A Mandatorily Redeemable Preferred Stock	—			—				60,000			(9)	—				60,000
Noncurrent operating lease liabilities	828			—				398,154			(7)	419,897			(6)	818,879
Deferred income taxes	—			—				575,341			(10)	185,419			(10)	760,760
Other long-term liabilities	121,081			—				(64,524		)	(11)	(2,164		)	(7)	54,393
Liabilities subject to compromise	16,770,266			—				(16,770,266		)	(7)	—				—
Long-term liabilities of discontinued operations	7,472,633			(7,472,633		)	(1)	—				—				—
Commitments and contingent liabilities (Note 9)
STOCKHOLDERS’ EQUITY (DEFICIT)
Noncontrolling interest	13,584			(13,199		)	(1)	—				8,558			(11)	8,943
Predecessor common stock	92			—				(92		)	(12)	—				—
Successor Class A Common Stock	—			—				57			(13)	—				57
Successor Class B Common Stock	—			—				7			(13)	—				7
Predecessor additional paid-in capital	2,075,130			—				(2,075,130		)	(12)	—				—
Successor additional paid-in capital	—							2,770,108			(13)	—				2,770,108
Accumulated deficit	(13,288,497		)	1,825,531			(1)	9,231,616			(14)	2,231,350			(12)	—
Accumulated other comprehensive loss	(321,988		)	307,813			(1)	—				14,175			(12)	—
Cost of share held in treasury	(2,562		)	—				2,562			(12)	—				—
Total Stockholders' Equity (Deficit)	(11,524,241		)	2,120,145				9,929,128				2,254,083				2,779,115
Total Liabilities and Stockholders' Equity (Deficit)	$	14,267,079		$	(6,352,266	)		$	(104,928	)		$	2,900,323			$	10,710,208

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

A. Separation of CCOH Adjustments

(1) On May 1, 2019, as part of the Separation, the outstanding shares of both classes of CCOH common stock were consolidated such that CCH held all of the outstanding CCOH Class A common stock that was held by subsidiaries of iHeartCommunications, through a series of share distributions by other subsidiaries that held CCOH common stock and a conversion of CCOH Class B common stock that CCH held to CCOH Class A common stock. Prior to the Separation, iHeartCommunications owned approximately 89.1% of the economic rights and approximately 99% of the voting rights of CCOH. To complete the Separation, CCOH merged with and into CCH, with CCH surviving the merger and changing its name to Clear Channel Outdoor Holdings, Inc. (“New CCOH”), and pre-merger shares of CCOH Class A common stock (other than shares of CCOH Class A common stock held by CCH or any direct or indirect wholly-owned subsidiary of CCH) were converted into an equal number of shares of post-merger common stock of New CCOH. iHeartCommunications transferred the post-merger common stock of New CCOH it held to Claimholders pursuant to the Plan of Reorganization but retained 31,269,762 shares. Such ~~revenue may be~~retained shares were distributed to two affiliated Claimholders on July 18, 2019. Upon completion of the merger and Separation, New CCOH became an independent public company. Upon distribution of the shares held by iHeartCommunications, the Company does not hold any ownership interest in CCOH.

The assets and liabilities of CCOH have been classified as ~~revenue~~discontinued operations. The discontinued operations reflect the assets and liabilities of CCOH, which are presented as discontinued operations as of the Effective Date. CCOH’s assets and liabilities are adjusted to: (1) eliminate the balance on the Due from ~~contracts~~iHeartCommunications Note and the balance on the intercompany payable due to iHeartCommunications from CCOH’s consolidated balance sheet, which are intercompany amounts that were eliminated in consolidation; (2) eliminate CCOH’s Noncontrolling interest and treasury shares; and (3) eliminate other intercompany balances.

B. Reorganization Adjustments

In accordance with ~~customers or revenue~~the Plan of Reorganization, the following adjustments were made:


(1)	The table below reflects the sources and uses of cash on the Effective Date from implementation of the Plan:



(In thousands)
Cash at May 1, 2019 (excluding discontinued operations)	$	175,811
Sources:
Proceeds from issuance of Mandatorily Redeemable Preferred Stock	$	60,000
Release of restricted cash from other assets into cash	3,428
Total sources of cash	$	63,428
Uses:
Payment of Mandatorily Redeemable Preferred Stock issuance costs	$	(1,513	)
Payment of New Term Loan Facility to settle certain creditor claims	(1,822		)
Payments for Emergence debt issuance costs	(7,213		)
Funding of the Guarantor General Unsecured Recovery Cash Pool	(17,500		)
Payments for fully secured claims and general unsecured claims	(1,990		)
Payment of contract cure amounts	(15,763		)
Payment of consenting stakeholder fees	(4,000		)
Payment of professional fees	(85,091		)	(a)
Funding of Professional Fees Escrow Account	(41,205		)	(a)
Total uses of cash	$	(176,097	)
Net uses of cash	$	(112,669	)
Cash upon emergence	$	63,142

(a) Approximately $30.5 million of professional fees paid at emergence were accrued as of May 1, 2019. These payments also reflect both the payment of success fees for $86.1 million and other professionals paid directly at emergence.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(2)

Pursuant to the terms of the Plan of Reorganization, on the Effective Date, the Company funded the Guarantor General Unsecured Recovery Cash Pool account in the amount of $17.5 million, which was reclassified as restricted cash within Other current assets. The Company made payments of $6.0 million through the Cash Pool at the time of emergence. Additionally, $3.4 million of restricted cash previously held to pay critical utility vendors was reclassified to cash.


(3)	Reflects the write-off of prepaid expenses related to the $2.3 million of prepaid premium for Predecessor Company's director and officer insurance policy, offset by the accrual of future reimbursements of $1.9 million for negotiated discounts related to the professional fee escrow account.

(4) Reflects the reinstatement of $3.1 million of accounts payable included within Liabilities subject to compromise to be satisfied in the ordinary course of business.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


(5)	Reflects the reduction of accrued expenses related to the $21.2 million of professional fees paid directly, $9.3 million of professional fees paid through the Professional Fee Escrow Account and other accrued expense items. Additionally, the Company reinstated accrued expenses included within Liabilities subject to compromise to be satisfied in the ordinary course of business.



(In thousands)
Reinstatement of accrued expenses	$	551
Payment of professional fees	(21,177		)
Payment of professional fees through the escrow account	(9,260		)
Impact on other accrued expenses	(2,364		)
Net impact on Accrued expenses	$	(32,250	)


(6)	Reflects the write-off of the DIP facility accrued interest associated with the DIP facility fees paid at emergence.


(7)	As part of the Plan of Reorganization, the Bankruptcy Court approved the settlement of claims reported within Liabilities subject to compromise in the Company's Consolidated balance sheet at their respective allowed claim amounts.

The table below indicates the disposition of Liabilities subject to compromise:



(In thousands)
Liabilities subject to compromise pre-emergence	$	16,770,266
To be reinstated on the Effective Date:
Deferred taxes	$	(596,850	)
Accrued expenses	(551		)
Accounts payable	(3,061		)
Finance leases and other debt	(16,867		)	(a)
Current operating lease liabilities	(31,845		)
Noncurrent operating lease liabilities	(398,154		)
Other long-term liabilities	(14,518		)	(b)
Total liabilities reinstated	$	(1,061,846	)
Less amounts settled per the Plan of Reorganization
Issuance of new debt	$	(5,750,000	)
Payments to cure contracts	(15,763		)
Payments for settlement of general unsecured claims from escrow account	(5,822		)
Payments for fully secured and other claim classes at emergence	(1,990		)
Equity issued at emergence to creditors in settlement of Liabilities subject to Compromise	(2,742,471		)
Total amounts settled	(8,516,046		)
Gain on settlement of Liabilities Subject to Compromise	$	7,192,374

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(a) Includes finance lease liabilities and other debt of $6.6 million and $10.3 million classified as current and long-term debt, respectively.

(b) Reinstatement of Other long-term liabilities were as follows:



(In thousands)
Reinstatement of long-term asset retirement obligations	$	3,527
Reinstatement of non-qualified deferred compensation plan	10,991
Total reinstated Other long-term liabilities	$	14,518


(8)	The exit financing consists of the Term Loan Facility of approximately $3.5 billion and 6.375% Senior Secured Notes totaling $800 million, both maturing seven years from the date of issuance, the Senior Unsecured Notes totaling $1.45 billion, maturing eight years from the date of issuance, and a $450 million ABL Facility with no amount drawn at emergence, which matures on June 14, 2023.

Upon emergence, the Company paid cash of $1.8 million to settle certain creditor claims for which claims were designated to receive term loans pursuant to the Plan of Reorganization.

The remaining $10.3 million is related to the reinstatement of the Long-term portion of finance leases and other debt as described above.



(In thousands)	Term	Interest Rate	Amount
Term Loan Facility	7 years	Libor + 4.00%	$	3,500,000
6.375% Senior Secured Notes	7 years	6.375%	800,000
Senior Unsecured Notes	8 years	8.375%	1,450,000
Asset-based Revolving Credit Facility	4 years	Varies^(a)	—
Total Long-Term Debt - Exit Financing			$	5,750,000
Less:
Payment of Term Loan Facility to settle certain creditor claims			(1,822		)
Net proceeds from exit financing at emergence			$	5,748,178
Long-term portion of finance leases and other debt reinstated			10,338
Net impact on Long-term debt			$	5,758,516

(a)

Borrowings under the ABL Facility bear interest at a rate per annum equal to the applicable rate plus, at iHeartCommunications’ option, either (x) a eurocurrency rate or (y) a base rate. The applicable margin for borrowings under the ABL Facility range from 1.25% to 1.75% for eurocurrency borrowings and from 0.25% to 0.75% for base-rate borrowings, in each case, depending on average excess availability under the ABL Facility based on the most recently ended fiscal quarter.


(9)	Reflects the issuance by iHeart Operations of $60.0 million in aggregate liquidation preference of its Series A Perpetual Preferred Stock, par value $0.001 per share. On May 1, 2029, the shares of the Preferred Stock will be subject to mandatory redemption for $60.0 million in cash, plus any accrued and unpaid dividends, unless waived by the holders of the Preferred Stock.

(10) Reflects the reinstatement of deferred tax liabilities included within Liabilities subject to compromise of $596.9 million, offset by an adjustment to net deferred tax liabilities of $21.5 million. Upon emergence from ~~leases depending on~~the Chapter 11 Cases, iHeartMedia’s federal and state net operating loss carryforwards were reduced in accordance with Section 108 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), due to cancellation of debt income, which is excluded from U.S. federal taxable income. The estimated remaining deferred tax assets attributed to federal and state net operating loss carryforwards upon emergence totaled $114.9 million. The adjustments reflect a reduction in deferred tax assets for federal

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

and state net operating loss carryforwards as described above, a reduction in deferred tax liabilities attributed to long-term debt as a result of the restructuring of our indebtedness upon emergence and a reduction in valuation allowance.

(11) Reflects the reinstatement of Other long-term liabilities from Liabilities subject to compromise, offset by the reduction of liabilities for unrecognized tax benefits classified as Other long-term liabilities that were discharged and effectively settled upon emergence.



(In thousands)
Reinstatement of long-term asset retirement obligations	$	3,527
Reinstatement of non-qualified pension plan	10,991
Reduction of liabilities for unrecognized tax benefits	(79,042		)
Net impact to Other long-term liabilities	$	(64,524	)

(12) Pursuant to the terms of the ~~contract,~~Plan of Reorganization, as of the Effective Date, all Predecessor common stock and stock-based compensation awards were canceled without any distribution. As a result of the cancellation, the Company recognized $1.5 million in compensation expense related to the unrecognized portion of share-based compensation as of the Effective Date.

(13) Reflects the issuance of Successor Company equity, including the issuance of 56,861,941 shares of iHeartMedia Class A common stock, 6,947,567 shares of Class B common stock and special warrants to purchase 81,453,648 shares of Class A common stock or Class B common stock in exchange for claims against or interests in iHeartMedia pursuant to the Plan of Reorganization.



(In thousands)
Equity issued to Class 9 Claimholders (prior equity holders)	$	27,701
Equity issued to creditors in settlement of Liabilities subject to compromise	2,742,471
Total equity issued at emergence	$	2,770,172

(14) The table reflects the cumulative impact of the reorganization adjustments discussed above:



(In thousands)
Gain on settlement of Liabilities subject to compromise	$	7,192,374
Payment of professional fees upon emergence	(11,509		)
Payment of success fees upon emergence	(86,065		)
Cancellation of unvested stock-based compensation awards	(1,530		)
Cancellation of Predecessor prepaid director and officer insurance policy	(2,331		)
Write-off of debt issuance and Mandatorily Redeemable Preferred Stock costs incurred at emergence	(8,726		)
Total Reorganization items, net	$	7,082,213

Income tax benefit	$	102,914
Cancellation of Predecessor Equity	2,074,190			(a)
Issuance of Successor Equity to prior equity holders	(27,701		)
Net Impact on Accumulated deficit	$	9,231,616

(a) This value is reflective of Predecessor common stock, Additional paid in capital and the recognition of $1.5 million in compensation expense related to the unrecognized portion of share-based compensation, less Treasury stock.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

C. Fresh Start Adjustments

We have applied fresh start accounting in accordance with ASC 852. Fresh start accounting requires the revaluation of our assets and liabilities to fair value, including both existing and new intangible assets, such as FCC licenses, developed technology, customer relationships and tradenames. Fresh start accounting also requires the elimination of all predecessor earnings or deficits in Accumulated deficit and Accumulated other comprehensive loss. These adjustments reflect the actual amounts recorded as of the Effective Date.


(1)	Reflects the fair value adjustment as of May 1, 2019 made to accounts receivable to reflect management's best estimate of the expected collectability of accounts receivable balances.

(2)

Reflects the fair value adjustment as of May 1, 2019 to eliminate certain prepaid expenses related to software implementation costs and other upfront payments. The Company historically incurred third-party implementation fees in connection with installing various cloud-based software products, and these amounts were recorded as prepaid expenses and recognized as a component of selling, general and administrative expense over the term of the various contracts. The Company determined that the remaining unamortized costs related to such implementation fees do not provide any rights that result in future economic benefits. In addition, the Company pays signing bonuses to certain of its on-air personalities, and these amounts were recorded as prepaid expenses and recognized as a component of Direct operating expenses over the terms of the various contracts. To the extent these contracts do not contain substantive claw-back provisions, these prepaid amounts do not provide any enforceable rights that result in future economic benefits. Accordingly, the balances related to these contracts as of May 1, 2019 were adjusted to zero.

(3) Reflects the fair value adjustment to eliminate receivables related to tenant allowances per certain lease agreements. These receivables were incorporated into the recalculated lease obligations per ASC 842.

(4)

Reflects the fair value adjustment to recognize the Company’s property, plant and equipment as of May 1, 2019 based on the fair values of such property, plant and equipment. Property was valued using a market approach comparing similar properties to recent market transactions. Equipment and towers were valued primarily using a replacement cost approach. Internally-developed and owned software technology assets were valued primarily using the Royalty Savings Method, similar to the approach used in valuing the Company’s tradenames and trademarks. Estimated royalty rates were determined for each of the software technology assets considering the relative contribution to the Company’s overall profitability as well as available public market information regarding market royalty rates for similar assets. The selected royalty rates were applied to the revenue generated by the software technology assets. The forecasted cash flows expected to be generated as a result of the royalty savings were discounted to present value utilizing a discount rate considering overall business risks and risks associated with the asset being valued. For certain of the software technology assets, the Company used the cost approach which utilized historical financial data regarding development costs and expected future profit associated with the assets. The adjustment to the Company’s property, plant and equipment consists of a $182.9 million increase in tangible property and equipment and a $151.0 million increase in software technology assets

(5) Historical goodwill and other intangible assets have been eliminated and the Company has recognized certain intangible assets at estimated current fair values as part of the application of fresh start accounting, with the most material intangible assets being the FCC licenses related to the Company’s 854 radio stations. The Company has also recorded customer-related and marketing-related intangible assets, including the iHeart tradename.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table sets forth estimated fair values of the components of these intangible assets and their estimated useful lives:



(In thousands)	Estimated Fair Value				Estimated Useful Life
FCC licenses	$	2,281,720		(a)	Indefinite
Customer / advertiser relationships	1,643,670			(b)	5 - 15 years
Talent contracts	373,000			(b)	2 - 10 years
Trademarks and tradenames	321,928			(b)	7 - 15 years
Other	6,808			(c)
Total intangible assets upon emergence	4,627,126
Elimination of historical acquired intangible assets	$	(2,431,142	)
Fresh start adjustment to acquired intangible assets	2,195,984

(a) FCC licenses. The fair value of the indefinite-lived FCC licenses was determined primarily using the direct valuation method of the Income Approach and, for smaller markets a combination of the Income approach and the Market Approach. The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its FCC licenses.

Under the direct valuation method, the fair value of the FCC licenses was calculated at the market level as prescribed by ASC 350. The application of the direct valuation method attempts to isolate the income that is properly attributable to the FCC licenses alone (that is, apart from tangible and identified intangible assets and goodwill). It is based upon modeling a hypothetical “greenfield” build-up to a “normalized” enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been paid for (or added) as part of the build-up process. Under the direct valuation method, it is assumed that rather than acquiring FCC licenses as part of a going concern business, the buyer hypothetically obtains FCC licenses and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flow model which results in value that is directly attributable to the FCC licenses. In applying the direct valuation method to the Company’s FCC licenses, the licenses are grouped by type (e.g. FM licenses vs. AM licenses) and market size in order to ensure appropriate assumptions are used in valuing the various FCC licenses based on population and demographics that influence the level of revenues generated by each FCC license, using industry projections. The key assumptions used in applying the direct valuation method include market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate (“WACC”) and terminal values. The WACC was calculated by weighting the required returns on interest-bearing debt and common equity capital in proportion to their estimated percentages based on a market participant capital structure.

For licenses valued using the Market Transaction Method, the Company used publicly available data, which included sales of comparable radio stations and FCC auction data involving radio broadcast licenses to estimate the fair value of FCC licenses. Similar to the application of the Income approach for the FCC licenses, the Company grouped licenses by type and market size for comparison to historical market transactions.

The historical book value of the FCC licenses as of May 1, 2019 was subtracted from the fair value of the FCC licenses to determine the adjustment to decrease the value of Indefinite-lived intangible assets-licenses by $44.9 million.

(b) Other intangible assets. Definite-lived intangible assets include customer/advertiser relationships, talent contracts for on-air personalities, trademarks and tradenames and other intangible assets. The Company engaged a third-party valuation firm to assist in developing the assumptions and determining the fair values of each of these assets.

For purposes of estimating the fair values of customer/advertiser relationships and talent contracts, the Company primarily utilized the Income Approach (specifically, the multi-period excess earnings method, or MPEEM) to

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

estimate fair value based on the present value of the incremental after-tax cash flows attributable only to the subject intangible assets after deducting contributory asset charges. The cash flows attributable to each grouping of customer/advertiser relationships were adjusted for the appropriate contributory asset charges (e.g., FCC licenses, working capital, tradenames, technology, workforce, etc.). The discount rate utilized to present-value the after-tax cash flows was selected based on consideration of the overall business risks and the risks associated with the specific assets being valued. Additionally, for certain advertiser relationships the Company used the Cost Approach using historical financial data regarding the sales, administrative and overhead expenses related to the Company’s selling efforts associated with revenue for both existing and new advertisers. The ratio of expenses for selling efforts to revenue was applied to total revenue from new customers to determine an estimated cost per revenue dollar of revenue generated by new customers. This ratio was applied to total revenue from existing customers to estimate the replacement cost of existing customer/advertiser relationships. The historical book value of customer/advertiser relationships as of May 1, 2019 was subtracted from the fair value of the customer/advertiser relationships determined as described above to determine the adjustment to increase the value of the customer/advertiser relationship intangible assets by $1,604.1 million.

For purposes of estimating the fair value of trademarks and tradenames, the Company primarily used the Royalty Savings Method, a variation of the Income approach. Estimated royalty rates were determined for each of the trademarks and tradenames considering the relative contribution to the Company’s overall profitability as well as available public information regarding market royalty rates for similar assets. The selected royalty rates were applied to the revenue generated by the trademarks and tradenames to determine the amount of royalty payments saved as a result of owning these assets. The forecasted cash flows expected to be generated as a result of the royalty savings were discounted to present value utilizing a discount rate considering overall business risks and risks associated with the asset being valued. The historical book values of talent contracts, trademarks and tradenames and other intangible assets as of May 1, 2019 were subtracted from the fair values determined as described above to determine the adjustments as follows:



(In millions)
Customer/advertiser relationships	$	1,604.1	increase in value
Talent contracts	361.6		increase in value
Trademarks and tradenames	274.4		increase in value
Other	0.8		increase in value
Total fair value adjustment	$	2,240.9	increase in value

(c) Included within other intangible assets are permanent easements, which have an indefinite useful life. All other intangible assets are amortized over the respective lives of the agreements, or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows.

The following table sets forth the adjustments to goodwill:



(In thousands)
Reorganization value	$	10,710,208
Less: Fair value of assets (excluding goodwill)	(7,386,843		)
Total goodwill upon emergence	3,323,365
Elimination of historical goodwill	(3,415,492		)
Fresh start adjustment to goodwill	$	(92,127	)

(6)

The operating lease obligation as of May 1, 2019 had been calculated using an incremental borrowing rate applicable to the Company while it was a debtor-in-possession before its emergence from bankruptcy. Upon application of fresh start accounting, the lease obligation was recalculated using the incremental borrowing rate applicable to the Company after emergence from bankruptcy and commensurate to its new capital structure. The incremental borrowing rate used decreased from 12.44% as

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

of March 31, 2019 to 6.54% as of May 1, 2019. As a result of this decrease, the Company's Operating lease liabilities and corresponding Operating lease right-of-use assets increased by $541.2 million to reflect the higher balances resulting from the application of a lower incremental borrowing rate. The Operating lease right-of-use-assets were further adjusted to reflect the resetting of the Company's straight-line lease calculation. In addition, the Company increased the Operating lease right-of-use assets to recognize $13.1 million related to the favorable lease contracts.

(7)

Reflects the fair value adjustment to adjust deferred revenue and other liabilities as of May 1, 2019 to its estimated fair value. The fair value of the deferred revenue was determined using the market approach and the cost approach. The market approach values deferred revenue based on the amount an acquirer would be required to pay a third party to assume the remaining performance obligations. The cost approach values deferred revenue utilizing estimated costs that will be incurred to fulfill the obligation plus a normal profit margin for the level of effort or assumption of risk by the acquirer. Additionally, a deferred gain was recorded at the time of the certain historical sale-leaseback transaction. During the implementation of ASC 842, the operating portion was written off as of January 1, 2019. The financing lease deferred gain remained. As part of fresh start accounting, this balance of $0.9 million was written off.

(8) Reflects the fair value adjustment to adjust Long-term debt as of May 1, 2019. This adjustment is to state the Company's finance leases and other pre-petition debt at estimated fair values.

(9) Reflects the fair value adjustment to adjust Accrued expenses as of May 1, 2019. This adjustment primarily relates to adjusting vacation accruals to estimated fair values.

(10) Reflects a net increase to deferred tax liabilities for fresh start adjustments attributed primarily to property, plant and equipment and intangible assets, the effects of which are partially offset by a decrease in the valuation allowance. The Company believes it is more likely than not that its deferred tax assets remaining after the Reorganization and emergence will be realized based on taxable income from reversing deferred tax liabilities primarily attributable to property, plant and equipment and intangible assets.

(11) Reflects the adjustment as of May 1, 2019 to state the noncontrolling interest balance at estimated fair value.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(12) The table below reflects the cumulative impact of the fresh start adjustments as discussed above:



(In thousands)
Fresh start adjustment to Accounts receivable, net	$	(10,810	)
Fresh start adjustment to Other current assets	(1,668		)
Fresh start adjustment to Prepaid expenses	(24,642		)
Fresh start adjustment to Property, plant and equipment, net	333,991
Fresh start adjustment to Intangible assets	2,195,984
Fresh start adjustment to Goodwill	(92,127		)
Fresh start adjustment to Operating lease right-of-use assets	554,278
Fresh start adjustment to Other assets	(54,683		)
Fresh start adjustment to Accrued expenses	(2,328		)
Fresh start adjustment to Deferred revenue	(3,214		)
Fresh start adjustment to Debt	1,546
Fresh start adjustment to Operating lease obligations	(458,989		)
Fresh start adjustment to Other long-term liabilities	2,164
Fresh start adjustment to Noncontrolling interest	(8,558		)
Total Fresh Start Adjustments impacting Reorganization items, net	$	2,430,944
Reset of Accumulated other comprehensive income	(14,175		)
Income tax expense	(185,419		)
Net impact to Accumulated deficit	$	2,231,350

Reorganization Items, Net

The tables below present the Reorganization items incurred and cash paid for Reorganization items as a result of the Chapter 11 Cases during the periods presented:



(In thousands)	Successor Company		Predecessor Company
	Three Months Ended September 30,		Three Months Ended September 30,
	2019		2018
Professional fees and other bankruptcy related costs	—		(52,475		)
Reorganization items, net	$	—	$	(52,475	)

Cash payments for Reorganization items, net	$	5,219	$	46,338

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



(In thousands)	Successor Company		Predecessor Company
	Period from May 2, 2019 through September 30,		Period from January 1, 2019 through May 1,			Nine Months Ended September 30,
	2019		2019			2018
Write-off of deferred loans costs	$	—	$	—		$	(67,079	)
Write-off of original issue discount	—		—			(131,100		)
Debtor-in-possession refinancing costs	—		—			(10,546		)
Professional fees and other bankruptcy related costs	—		(157,487		)	(104,545		)
Net gain on settlement of Liabilities subject to compromise	—		7,192,374			—
Impact of fresh start adjustments	—		2,430,944			—
Other items, net	—		(4,005		)	—
Reorganization items, net	$	—	$	9,461,826		$	(313,270	)

Cash payments for Reorganization items, net	$	18,268	$	183,291		$	52,213

As of September 30, 2019, $0.5 million of Reorganization items, net were unpaid and accrued in Accounts payable and Accrued expenses in the accompanying Consolidated Balance Sheet. As of September 30, 2018, $56.2 million of professional fees were unpaid and accrued in Accounts payable and Accrued expenses in the accompanying Consolidated Balance Sheet. The Company incurred additional professional fees related to the bankruptcy, post-emergence, of $12.4 million and $21.5 million for the three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019, respectively, which are included within Other expenses, net in the Company's Consolidated Statements of Comprehensive Income (Loss).

NOTE 4 - DISCONTINUED OPERATIONS

Discontinued operations relate to our domestic and international outdoor advertising businesses and were previously ~~described.~~reported as the Americas outdoor and International outdoor segments prior to the Separation. Assets, liabilities, revenue, expenses and cash flows for these businesses are separately reported as assets, liabilities, revenue, expenses and cash flows from discontinued operations in the Company's financial statements for all periods presented.

~~Revenue~~

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Financial Information for Discontinued Operations

Income Statement Information

The following shows the revenue, income (loss) from ~~Contracts~~discontinued operations and gain on disposal of the Predecessor Company's discontinued operations for the periods presented:



(In thousands)	Predecessor Company
	Three Months Ended September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,
	2018			2019			2018
Revenue	$	663,739		$	804,566		$	1,974,117

Loss from discontinued operations before income taxes	$	(42,595	)	$	(133,475	)	$	(149,952	)
Income tax expense	(6,896		)	(6,933		)	(57,016		)
Loss from discontinued operations, net of taxes	$	(49,491	)	$	(140,408	)	$	(206,968	)

Gain on disposals before income taxes	$	—		$	1,825,531		$	—
Income tax expense	—			—			—
Gain on disposals, net of taxes	$	—		$	1,825,531		$	—

Income (loss) from discontinued operations, net of taxes	$	(49,491	)	$	1,685,123		$	(206,968	)

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Balance Sheet Information

The following table shows the classes of assets and liabilities classified as discontinued operations for the Predecessor Company as of December 31, 2018:



(In thousands)	Predecessor Company
	December 31, 2018
CURRENT ASSETS
Cash and cash equivalents	$	182,456
Accounts receivable, net of allowance of $24,224	706,309
Prepaid expenses	95,734
Other current assets	31,301
Current assets of discontinued operations	$	1,015,800

LONG-TERM ASSETS
Structures, net	$	1,053,016
Property, plant and equipment, net	235,922
Indefinite-lived intangibles - permits	971,163
Other intangibles, net	252,862
Goodwill	706,003
Other assets	132,504
Long-term assets of discontinued operations	$	3,351,470

CURRENT LIABILITIES
Accounts payable	$	113,714
Accrued expenses	528,482
Accrued interest	2,341
Deferred income	85,052
Current portion of long-term debt	227
Current liabilities of discontinued operations	$	729,816

LONG-TERM LIABILITIES
Long-term debt	$	5,277,108
Deferred income taxes	335,015
Other long-term liabilities	260,150
Long-term liabilities of discontinued operations	$	5,872,273

In connection with ~~Customers~~the Separation, the Company and its subsidiaries entered into the agreements described below.

Transition Services Agreement

On the Effective Date, the Company, iHM Management Services, iHeartCommunications and CCOH entered into a transition services agreement (the “Transition Services Agreement”), pursuant to which iHM Management Services has agreed to provide, or cause the Company, iHeartCommunications, iHeart Operations or any member of the iHeart Group to provide, CCOH with certain administrative and support services and other assistance which CCOH will utilize in the conduct of its business as such business was conducted prior to the Separation, for one year from the Effective Date (subject to certain rights of CCOH to extend up to one additional year, as described below). The transition services may include, among other things, (a) treasury, payroll and other financial related services, (b) certain executive officer services, (c) human resources and employee benefits, (d) legal and related services, (e) information systems, network and related services, (f) investment services and (g) procurement and sourcing support.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The charges for the transition services are generally consistent with the Corporate Services Agreement, dated as of November 10, 2005, by and between iHM Management Services and CCOH (the “Corporate Services Agreement”), which governed the provision of certain services by the iHeart Group to the Outdoor Group prior to the Separation. The allocation of cost is based on various measures depending on the service provided, which measures include relative revenue, employee headcount, number of users of a service or other factors. CCOH may request an extension of the term for all services or individual services for one-month periods for up to an additional 12 months, and the price for transition services provided during such extended term will be increased for any service other than those identified in the schedules to the Transition Services Agreement as an “IT Service” or any other service the use and enjoyment of which requires the use of another IT Service.

CCOH may terminate the Transition Services Agreement with respect to all or any individual service, in whole or in part, upon 30 days’ prior written notice, provided that any co-dependent services must be terminated concurrently.

New Tax Matters Agreement

On the Effective Date, the Company entered into a new tax matters agreement (the “New Tax Matters Agreement”) by and among the Company, iHeartCommunications, iHeart Operations, CCH, CCOH and CCOL, to allocate the responsibility of the Company and its subsidiaries, on the one hand, and the Outdoor Group, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the Separation.

The New Tax Matters Agreement requires that the Company and iHeartCommunications indemnify CCOH and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against (i) any taxes other than transfer taxes or indirect gains taxes imposed on the Company or any of its subsidiaries (other than CCOH and its subsidiaries) in connection with the Separation, (ii) any transfer taxes and indirect gains taxes arising in connection with the Separation, and (iii) fifty percent of the amount by which the amount of taxes (other than transfer taxes or indirect gains taxes) imposed on CCOH or any of its subsidiaries in connection with the Separation that are paid to the applicable taxing authority on or before the third anniversary of the separation of CCOH exceeds $5 million, provided that, the obligations of the Company and iHeartCommunications to indemnify CCOH and its subsidiaries with respect taxes (other than transfer taxes or indirect gains taxes) imposed on CCOH or any of its subsidiaries in connection with the Separation will not exceed $15 million. In addition, if the Company or its subsidiaries use certain tax attributes of CCOH and its subsidiaries (including net operating losses, foreign tax credits and other credits) and such use results in a decrease in the tax liability of the Company or its subsidiaries, then the Company is required to reimburse CCOH for the use of such attributes based on the amount of tax benefit realized. The New Tax Matters Agreement provides that any reduction of the tax attributes of CCOH and its subsidiaries as a result of cancellation of indebtedness income realized in connection with the Chapter 11 Cases is not treated as a use of such attributes (and therefore does not require the Company or iHeartCommunications to reimburse CCOH for such reduction).

The New Tax Matters Agreement also requires that (i) CCOH indemnify the Company for any income taxes paid by the Company on behalf of CCOH and its subsidiaries or, with respect to any income tax return for which CCOH or any of its subsidiaries joins with the Company or any of subsidiaries in filing a consolidated, combined or unitary return, the amount of taxes that would have been incurred by CCOH and its subsidiaries if they had filed a separate return, and (ii) except as described in the preceding paragraph, CCOH indemnify the Company and its subsidiaries, and their respective directors, officers and employees, and hold them harmless, on an after-tax basis, from and against any taxes other than transfer taxes or indirect gains taxes imposed on CCOH or any of its subsidiaries in connection with the Separation.

Any tax liability of CCH attributable to any taxable period ending on or before the date of the completion of the Separation, other than any such tax liability resulting from CCH’s being a successor of CCOH in connection with the merger of CCOH with and into CCOH or arising from the operation of the business of CCOH and its subsidiaries after the merger of CCOH with and into CCH, will not be treated as a liability of CCOH and its subsidiaries for purposes of the New Tax Matters Agreement.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 5 – REVENUE

Disaggregation of Revenue

The following table shows revenue streams for the Successor Company for the three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019:



Successor Company
(In thousands)	Audio		Audio and Media Services		Eliminations			Consolidated
Three Months Ended September 30, 2019
Revenue from contracts with customers:
Broadcast Radio⁽¹⁾	$	573,048	$	—	$	—		$	573,048
Digital⁽²⁾	96,656		—		—			96,656
Networks⁽³⁾	160,133		—		—			160,133
Sponsorship and Events⁽⁴⁾	55,541		—		—			55,541
Audio and Media Services⁽⁵⁾	—		59,873		(1,731		)	58,142
Other⁽⁶⁾	4,568		—		(168		)	4,400
Total	889,946		59,873		(1,899		)	947,920
Revenue from leases⁽⁷⁾	418		—		—			418
Revenue, total	$	890,364	$	59,873	$	(1,899	)	$	948,338

Period from May 2, 2019 through September 30, 2019
Revenue from contracts with customers:
Broadcast Radio⁽¹⁾	$	963,588	$	—	$	—		$	963,588
Digital⁽²⁾	160,894		—		—			160,894
Networks⁽³⁾	265,559		—		—			265,559
Sponsorship and Events⁽⁴⁾	87,331		—		—			87,331
Audio and Media Services⁽⁵⁾	—		100,410		(2,740		)	97,670
Other⁽⁶⁾	8,525		—		(280		)	8,245
Total	1,485,897		100,410		(3,020		)	1,583,287
Revenue from leases⁽⁷⁾	697		—		—			697
Revenue, total	$	1,486,594	$	100,410	$	(3,020	)	$	1,583,984


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


⁽²⁾	Digital revenue is generated through the sale of streaming and display advertisements on digital platforms, subscriptions to iHeartRadio streaming services, podcasting and the dissemination of other digital content.


⁽³⁾	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.


⁽⁴⁾	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.

⁽⁵⁾

Audio and media services revenue is generated by services provided to broadcast industry participants through the Company’s Katz Media and RCS businesses. As a media representation firm, Katz Media generates revenue via commissions on media sold on behalf of the radio and television stations that it represents, while RCS generates revenue by providing broadcast and webcast software and technology and services to radio stations, television music channels, cable companies, satellite music networks and Internet stations worldwide.


⁽⁶⁾	Other revenue represents fees earned for miscellaneous services, including on-site promotions, activations, and local marketing agreements.


⁽⁷⁾	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)

The following table shows revenue streams from continuing operations for the Predecessor Company. The presentation of amounts in the Predecessor periods has been revised to conform to the Successor period presentation.



Predecessor Company
(In thousands)	Audio⁽¹⁾		Audio and Media Services⁽¹⁾		Eliminations			Consolidated
Three Months Ended September 30, 2018
Revenue from contracts with customers:
Broadcast Radio	$	576,460	$	—	$	—		$	576,460
Digital	72,447		—		—			72,447
Networks	146,587		—		—			146,587
Sponsorship and Events	53,191		—		—			53,191
Audio and Media Services	—		69,823		(1,611		)	68,212
Other	2,957		—		—			2,957
Total	851,642		69,823		(1,611		)	919,854
Revenue from leases	638		—		—			638
Revenue, total	$	852,280	$	69,823	$	(1,611	)	$	920,492

Period from January 1, 2019 through May 1, 2019
Revenue from contracts with customers:
Broadcast Radio	$	657,864	$	—	$	—		$	657,864
Digital	102,789		—		—			102,789
Networks	189,088		—		—			189,088
Sponsorship and Events	50,330		—		—			50,330
Audio and Media Services	—		69,362		(2,325		)	67,037
Other	5,910		—		(243		)	5,667
Total	1,005,981		69,362		(2,568		)	1,072,775
Revenue from leases	696		—		—			696
Revenue, total	$	1,006,677	$	69,362	$	(2,568	)	$	1,073,471

Nine Months Ended September 30, 2018
Revenue from contracts with customers:
Broadcast Radio	$	1,635,571	$	—	$	—		$	1,635,571
Digital	200,388		—		—			200,388
Networks	425,619		—		—			425,619
Sponsorship and Events	132,339		—		—			132,339
Audio and Media Services	—		180,582		(4,884		)	175,698
Other	13,253		—		—			13,253
Total	2,407,170		180,582		(4,884		)	2,582,868
Revenue from leases	2,160		—		—			2,160
Revenue, total	$	2,409,330	$	180,582	$	(4,884	)	$	2,585,028


⁽¹⁾	Due to a re-evaluation of the Company’s internal segment reporting upon the effectiveness of the Plan of Reorganization, the Company’s RCS business is included in the Audio & Media Services results for all periods presented. See Note 1 for further information.

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 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 from continuing operations, which are included in consolidated revenue and selling, general and administrative expenses, respectively, were as follows:



	Successor Company		Predecessor Company
	Three Months Ended September 30,		Three Months Ended September 30,
(In thousands)	2019		2018
Trade and barter revenues	$	59,530	$	51,831
Trade and barter expenses	40,319		40,607



	Successor Company		Predecessor Company
	Period from May 2, 2019 through September 30,		Period from January 1, 2019 through May 1,		Nine Months Ended September 30,
(In thousands)	2019		2019		2018
Trade and barter revenues	$	89,229	$	65,934	$	141,769
Trade and barter expenses	68,342		58,330		136,827

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Deferred Revenue

The following tables show the ~~changes in the~~ Company’s ~~contract balances~~deferred revenue balance from contracts with customers, ~~for the three and nine months ended September 30, 2018 and 2017:~~excluding discontinued operations:

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2018 2017 2018 2017
Accounts receivable from contracts with customers:
  Beginning balance, net of allowance $ 1,104,255
$ 1,106,289
$ 1,196,101
$ 1,067,980
    Additions (collections), net 19,628
6,487
(58,027 ) 55,186
    Bad debt, net of recoveries (2,720 ) (6,189 ) (16,911 ) (16,579 )
  Ending balance, net of allowance 1,121,163
1,106,587
1,121,163
1,106,587
Accounts receivable from leases, net of allowance 345,761
326,432
345,761
326,432
Total accounts receivable, net of allowance $ 1,466,924
$ 1,433,019
$ 1,466,924
$ 1,433,019

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2018 2017 2018 2017
Deferred revenue from contracts with customers:
  Beginning balance $ 204,013
$ 206,807
$ 181,748
$ 191,916
    Revenue recognized, included in beginning balance (106,893 ) (97,775 ) (131,449 ) (141,045 )
    Additions, net of revenue recognized during period 96,173
88,297
142,994
146,458
  Ending balance 193,293
197,329
193,293
197,329
Deferred revenue from leases 50,930
54,639
50,930
54,639
Total deferred revenue 244,223
251,968
244,223
251,968
Less: Non-current portion, included in other long-term liabilities 30,484
41,473
30,484
41,473
Current portion of deferred revenue, included in deferred income $ 213,739
$ 210,495
$ 213,739
$ 210,495



	Successor Company			Predecessor Company
	Three Months Ended September 30,			Three Months Ended September 30,
(In thousands)	2019			2018
Deferred revenue from contracts with customers:
Beginning balance⁽¹⁾	$	159,752		$	160,369
Revenue recognized, included in beginning balance	(74,875		)	(73,190		)
Additions, net of revenue recognized during period, and other	75,660			67,973
Ending balance	160,537			$	155,152



	Successor Company			Predecessor Company
	Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,
(In thousands)	2019			2019			2018
Deferred revenue from contracts with customers:
Beginning balance⁽¹⁾	$	151,773		$	148,720		$	155,228
Revenue recognized, included in beginning balance	(87,098		)	(76,473		)	(101,456		)
Additions, net of revenue recognized during period, and other	95,862			79,228			101,380
Ending balance	$	160,537		$	151,475		$	155,152

⁽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. As described in Note 3, as part of the fresh start accounting adjustments on May 1, 2019, deferred revenue from contracts with customers was adjusted to its estimated fair value.

The Company’s contracts with customers generally have ~~a term~~terms of one year or less; however, as of September 30, ~~2018,~~2019, the Company expects to recognize ~~$243.1~~$191.0 million of revenue in future periods for remaining performance obligations from current contracts with customers that have an original expected duration of greater than one year, with substantially all of this amount to be recognized over the next five years. Commissions related to the Company’s media representation business have been excluded from this amount as they are contingent upon future sales. ~~As part of the transition to the new revenue standard, the Company is not required to disclose information about remaining performance obligations for periods prior to the date of initial application.~~

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Revenue from Leases

As of ~~December 31, 2017,~~September 30, 2019, the ~~Company’s~~ future ~~minimum rentals under non-cancelable operating leases were~~lease payments to be received by the Successor Company are as follows:

					(In thousands)
2018	$	280,909
2019	37,024		$	381
2020	19,103		1,317
2021	13,683		1,139
2022	9,628		833
2023			776
Thereafter	18,836		10,693
Total minimum future rentals	$	379,183
Total			$	15,139

NOTE 6 – 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 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 or within Liabilities subject to compromise.

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

Certain of the Company's operating lease agreements include rental payments that are adjusted periodically for inflationary changes. Payments due to changes in inflationary adjustments are included within variable rent expense, which is accounted for separately from periodic straight-line lease expense. Amounts related to insurance and property taxes in lease arrangements when billed on a pass-through basis are allocated to the lease and non-lease components of the lease based on their relative standalone selling prices.

Certain of the Company's leases provide options to extend the terms of the agreements. Generally, renewal periods are excluded from minimum lease payments when calculating the lease liabilities as, for most leases, the Company does not consider exercise of such options to be reasonably certain. As a result, unless a renewal option is considered reasonably assured, the optional terms and related payments are not included within the lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment." In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted the IBR used to value the Company's ROU assets and operating lease liabilities at the Effective Date (see Note 3, Fresh Start Accounting). In addition, upon adoption of ASC 852 in the first quarter of 2019, the Company did not elect the practical expedient to combine non-lease components with the associated lease components. Upon application of fresh start accounting on the Effective Date, the Company elected to use the practical expedient to not separate non-lease components from the associated lease component for all classes of the Company's assets.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables provide the components of lease expense included within the Consolidated Statement of Comprehensive Income (Loss) for the three months ended September 30, 2019 (Successor), the period from May 2, 2019 through September 30, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor):



	Successor Company
	Three Months Ended September 30,
(In thousands)	2019
Operating lease expense	$	37,742
Variable lease expense	$	7,197



	Successor Company		Predecessor Company
	Period from May 2, 2019 through September 30,		Period from January 1, 2019 through May 1,
(In thousands)	2019		2019
Operating lease expense	$	63,181	$	44,667
Variable lease expense	$	10,644	$	476

The following table provides the weighted average remaining lease term and the weighted average discount rate for the Company's leases as of September 30, 2019 (Successor):



	September 30, 2019
Operating lease weighted average remaining lease term (in years)	13.9
Operating lease weighted average discount rate	6.54	%

As of September 30, 2019 (Successor), the Company’s future maturities of operating lease liabilities were as follows:



(In thousands)
2019	$	26,765
2020	137,993
2021	127,849
2022	120,856
2023	107,593
Thereafter	849,530
Total lease payments	$	1,370,586
Less: Effect of discounting	498,550
Total operating lease liability	$	872,036

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table provides supplemental cash flow information related to leases for the period from May 2, 2019 through September 30, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor):



	Successor Company		Predecessor Company
	Period from May 2, 2019 through September 30,		Period from January 1, 2019 through May 1
(In thousands)	2019		2019
Cash paid for amounts included in measurement of operating lease liabilities	$	57,102	$	44,888
Lease liabilities arising from obtaining right-of-use assets⁽¹⁾	$	13,339	$	913,598

⁽¹⁾Lease liabilities from obtaining right-of-use assets include transition liabilities upon adoption of ASC 842, as well as new leases entered into during the period from May 2, 2019 through September 30, 2019 (Successor) and the period from January 1, 2019 through May 1, 2019 (Predecessor). Upon adoption of fresh start accounting upon emergence from the Chapter 11 Cases, the Company increased its operating lease obligation by $459.0 million to reflect its operating lease obligation as estimated fair value (see Note 3, Fresh Start Accounting).

NOTE 37 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL

~~Acquisition~~

~~On October 10, 2018, the Company acquired Stuff Media LLC for $55.0 million.~~

Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets as of September 30, ~~2018~~2019 (Successor) and December 31, ~~2017,~~2018 (Predecessor), respectively:


(In thousands)	September 30, 2018		December 31, 2017		Successor Company		Predecessor Company
					September 30, 2019		December 31, 2018
Land, buildings and improvements	$	568,499	$	562,702	$	379,204	$	427,501
Structures	2,808,059		2,864,442
Towers, transmitters and studio equipment	362,158		356,664		154,426		365,991
Furniture and other equipment	750,459		707,163		309,201		591,601
Construction in progress	87,337		74,810		36,243		43,809
	4,576,512		4,565,781		879,074		1,428,902
Less: accumulated depreciation	2,857,421		2,681,067		45,061		926,700
Property, plant and equipment, net	$	1,719,091	$	1,884,714	$	834,013	$	502,202

In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted Property, plant and equipment to their respective fair values at the Effective Date (see Note 3, Fresh Start Accounting).

Indefinite-lived Intangible Assets

The Company’s indefinite-lived intangible assets consist of ~~Federal Communications Commission (“FCC”)~~FCC broadcast licenses in its ~~iHM segment~~Audio segment. In connection with the Company's emergence from bankruptcy and ~~billboard permits~~ in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its ~~Americas outdoor advertising segment. Due~~Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted its FCC licenses to ~~significant differences in both business practices and regulations, billboards in~~their respective estimated fair values as of the International outdoor segment are subject to long-term, finite contracts unlike the Company’s permits in the United States. Accordingly, there are no indefinite-lived intangible assets in the International outdoor segment.Effective Date of $2,281.7 million (see Note 3, Fresh Start Accounting).

Annual Impairment Test on Indefinite-lived Intangible Assets

The Company performs its annual impairment test on indefinite-lived intangible assets as of July 1 of each year.

The ~~impairment~~Company also tests ~~for~~ indefinite-lived intangible assets ~~consist of a comparison between the fair value of the~~at interim dates if events or changes in circumstances indicate that indefinite-lived intangible asset at the market level with its carrying amount. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of the indefinite-lived asset is its new accounting basis. The fair value of the indefinite-lived asset is determined using the direct valuation method as prescribed in ASC 805-20-S99. Under the direct valuation method, the fair value of the indefinite-assets might be impaired.

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~lived~~Generally, the annual impairment test includes a full quantitative assessment, which involves the preparation of a fair value estimate for each of the Company's reporting units based on the most recent projected financial results, market and industry factors, including comparison to peer companies and the application of the Company's current estimated WACC. However, in connection with emergence from bankruptcy, the Company qualified for and adopted fresh start accounting on the Effective Date. As of May 1, 2019, the Company allocated its estimated enterprise fair value to its individual assets ~~is calculated at~~and liabilities based on their estimated fair values in conformity with ASC 805, "Business Combinations." As a result of the ~~market level~~recent fair value exercise applied in connection with fresh start accounting, the Company opted to use a qualitative assessment for its annual indefinite-lived intangible asset impairment test as ~~prescribed~~of July 1, 2019 in lieu of performing the full quantitative assessment, as permitted by ASC ~~350-30-35.~~ 350, "Intangibles - Goodwill and Other".

The ~~Company engaged a third-party valuation firm,~~qualitative impairment assessment performed for indefinite-lived intangible assets considered the general macroeconomic environment, industry and market specific conditions, financial performance, including changes in costs and actual versus forecasted results, as well other issues or events specific to ~~assist it~~the Audio segment.

Based on this assessment and the totality of facts and circumstances, including the business environment in the ~~development~~third quarter of 2019, the ~~assumptions and the Company’s determination of~~Company determined that it was not more likely than not that the fair value of the Company and its ~~indefinite-lived intangible assets.~~

~~The application of~~reporting units is less than their respective carrying amounts. As such, the ~~direct valuation method attempts to isolate the income that is attributable to the~~Company concluded no indefinite-lived intangible asset alone (that is, apart from tangible and identified intangible assets and goodwill). It is based upon modeling a hypothetical “greenfield” build-up to a “normalized” enterprise that, by design, lacks inherent goodwill and whose only other assets have essentially been paidimpairment was required for ~~(or added) as part of~~ the build-up process. The Company forecasts revenue, expenses, and cash flows over a ten-year period for each of its markets in its application of the direct valuation method. The Company also calculates a “normalized” residual year which represents the perpetual cash flows of each market. The residual year cash flow was capitalized to arrive at the terminal value of the licenses in each market.

Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as part of a going concern business, the buyer hypothetically develops indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flow model which results in value that is directly attributable to the indefinite-lived intangible assets.

The key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average FCC license or billboard permit within a market.

three months ended September 30, 2019. During the ~~third quarter of 2018,~~period from January 1, 2019 through May 1, 2019, the Predecessor Company recognized non-cash impairment charges of ~~$33.1~~$91.4 million ~~related~~in relation to indefinite-lived FCC licenses as a result of an increase in ~~several iHM radio markets and an~~the WACC used in performing the annual impairment ~~charge of $7.8 million related to permits in one Americas outdoor market.~~test. The Predecessor Company recognized impairment charges related to its indefinite-lived intangible assets within ~~one~~several iHM radio ~~market~~markets of ~~$6.0~~$33.2 million during the three and nine months ended September 30, ~~2017.~~2018.

Other Intangible Assets

Other intangible assets include definite-lived intangible assets and permanent easements. The Company’s definite-lived intangible assets primarily include ~~transit~~customer and ~~street furniture contracts,~~advertiser relationships, talent and representation contracts, ~~customer~~trademarks and ~~advertiser relationships, and site leases~~tradenames and other contractual rights, all of which are amortized over the shorter of either the respective lives of the agreements or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. 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 amortized cost. In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted Other intangible assets to their respective fair values at the Effective Date (see Note 3, Fresh Start Accounting).

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets as of September 30, ~~2018~~2019 (Successor) and December 31, ~~2017,~~2018 (Predecessor), respectively:

(In thousands) September 30, 2018 December 31, 2017
Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
Transit, street furniture and other outdoor
contractual rights $ 533,274
$ (440,452 ) $ 548,918
$ (440,284 )
Customer / advertiser relationships 1,226,329
(1,205,662 ) 1,226,314
(1,133,251 )
Talent contracts 161,962
(146,978 ) 161,962
(138,728 )
Representation contracts 77,507
(68,976 ) 77,507
(62,753 )
Permanent easements 162,920
—
162,920
—
Other 373,675
(241,102 ) 372,292
(224,841 )
Total $ 2,535,667
$ (2,103,170 ) $ 2,549,913
$ (1,999,857 )

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~



(In thousands)	Successor Company					Predecessor Company
	September 30, 2019					December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Customer / advertiser relationships	1,649,770		(74,420		)	1,326,636		(1,278,885		)
Talent and other contracts	375,399		(21,087		)	164,933		(148,578		)
Trademarks and tradenames	321,977		(13,538		)	—		—
Other	762		(440		)	376,978		(240,662		)
Total	$	2,347,908	$	(109,485	)	$	1,868,547	$	(1,668,125	)

Total amortization expense related to definite-lived intangible assets for the Successor Company for the three months ended September 30, ~~2018~~2019 and ~~2017~~the period from May 2, 2019 through September 30, 2019 was ~~$24.2~~$67.0 million and ~~$49.5~~$109.5 million, respectively. Total amortization expense related to definite-lived intangible assets for the Predecessor Company for the three months ended September 30, 2018, the period from January 1, 2019 through May 1, 2019 and the nine months ended September 30, 2018 ~~and 2017~~ was ~~$116.4~~$19.2 million, $12.7 million and ~~$148.2~~$101.1 million, respectively.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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)
2019	$	45,875
2020	$	39,144	$	263,125
2021	$	34,303	262,727
2022	$	29,153	257,502
2023	$	21,377	246,927
2024			246,237

Goodwill

Annual Impairment Test to Goodwill

The Company performs its annual impairment test on goodwill as of July 1 of each year. The Company also tests goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired.

~~Each~~Generally, the Company's annual impairment test includes a full quantitative assessment, which involves the preparation of a fair value estimate for each reporting unit based on the most recent projected financial results, market and industry factors, including comparison to peer companies and the application of the ~~U.S. radio markets~~Company's current estimated WACC. However, in connection with emergence from bankruptcy, the Company qualified for and ~~outdoor advertising markets are components~~adopted fresh start accounting on the Effective Date. As of May 1, 2019, the Company allocated its estimated enterprise fair value to its individual assets and liabilities based on their estimated fair values in conformity with ASC 805, "Business Combinations."

Upon application of fresh start accounting in accordance with ASC 852 in connection with the emergence from bankruptcy, the Company recorded goodwill of $3.3 billion, which represented the excess of Reorganization Value over the estimated fair value of the ~~Company. The U.S. radio markets are aggregated into~~Company's assets and liabilities. Goodwill was further allocated to reporting units based on the relative fair values of the Company's reporting units as of May 1, 2019.

As a ~~single reporting unit and~~result of the ~~U.S. outdoor advertising markets are aggregated into~~recent fair value exercise applied in connection with fresh start accounting, the Company opted to use a ~~single reporting unit~~qualitative assessment for ~~purposes of the~~its annual goodwill impairment test ~~using~~as of July 1, 2019 in lieu of performing the ~~guidance~~full quantitative assessment, as permitted by ASC 350, "Intangibles - Goodwill and Other".

As of July 1, 2019, the qualitative impairment assessment performed for goodwill considered the general macroeconomic environment, industry and market specific conditions for each reporting unit, financial performance, including changes in ~~ASC 350-20-55. The~~costs and actual versus forecasted results, as well other issues or events specific to each reporting unit. In addition, the Company ~~also~~evaluated the impact of changes in the Company's stock price and the trading values of its publicly-traded debt from May 1, 2019 to July 1, 2019 to determine whether or not any changes would indicate a potential impairment of goodwill allocated to its reporting units.

Based on this assessment and the totality of facts and circumstances, including the business environment in the third quarter of 2019, the Company determined that ~~each country within its Americas outdoor segment and International outdoor segment constitutes a separate reporting unit.~~

~~The goodwill impairment test is a two-step process. The first step, used to screen for potential impairment, compares~~it was not more likely than not that the fair value of the ~~reporting unit with~~Company and its carrying amount, including goodwill. If applicable, the second step, used to measure the amount of the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill.

~~Each of the Company’s~~ reporting units is ~~valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from~~less than their respective carrying amounts. As such, the reporting unit and discounting such cash flows to their present value using a risk-adjusted discount rate. Terminal values were also estimated and discounted to their present value. Assessing the recoverability of goodwill requires the Company to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on its budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.

~~The~~ Company concluded no goodwill impairment was required during the three months ended September 30, 2019 (Successor), the three months ended September 30, 2018 (Predecessor), the period from May 2, 2019 through September 30, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor), and the nine months ended September 30, ~~2018. The Company recognized goodwill impairment of $1.6 million during the three and nine months ended September 30, 2017 related to one market in the Company's International outdoor segment.~~2018 (Predecessor).

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents the changes in the carrying amount of ~~goodwill in each of the Company’s reportable segments:~~goodwill:

(In thousands) iHM Americas Outdoor International Outdoor Other Consolidated
Balance as of December 31, 2016 $ 3,288,481
$ 505,478
$ 190,785
$ 81,831
$ 4,066,575
Impairment —
—
(1,591 ) —
(1,591 )
Acquisitions 2,442
2,252
—
—
4,694
Dispositions (35,715 ) —
(1,817 ) —
(37,532 )
Foreign currency —
—
18,847
—
18,847
Assets held for sale —
89
—
—
89
Balance as of December 31, 2017 $ 3,255,208
$ 507,819
$ 206,224
$ 81,831
$ 4,051,082
Dispositions (1,606 ) —
—
—
(1,606 )
Foreign currency —
—
(5,535 ) —
(5,535 )
Balance as of September 30, 2018 $ 3,253,602
$ 507,819
$ 200,689
$ 81,831
$ 4,043,941



(In thousands)	Audio			Audio & Media Services			Consolidated
Balance as of December 31, 2017 (Predecessor)	$	3,255,208		$	81,831		$	3,337,039
Acquisitions	77,320			—			77,320
Dispositions	(1,606		)	—			(1,606		)
Balance as of December 31, 2018 (Predecessor)	$	3,330,922		$	81,831		$	3,412,753
Acquisitions	—			2,767			2,767
Foreign currency	—			(28		)	(28		)
Balance as of May 1, 2019 (Predecessor)	$	3,330,922		$	84,570		$	3,415,492
Impact of fresh start accounting	(111,712		)	19,585			(92,127		)


Balance as of May 2, 2019 (Successor)	$	3,219,210		$	104,155		$	3,323,365
Acquisitions	4,637			—			4,637
Dispositions	(9,466		)	—			(9,466		)
Foreign currency	—			(77		)	(77		)
Other	7,087			—			7,087
Balance as of September 30, 2019 (Successor)	$	3,221,468		$	104,078		$	3,325,546

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

NOTE 48 – LONG-TERM DEBT

Long-term debt outstanding as of September 30, ~~2018~~2019 (Successor) and December 31, ~~2017~~2018 (Predecessor) consisted of the following:

(In thousands) September 30,
2018 December 31,
2017
Senior Secured Credit Facilities $ —
$ 6,300,000
Receivables Based Credit Facility due 2020⁽¹⁾
—
405,000
Debtors-in-Possession Facility⁽¹⁾
—
—
9.0% Priority Guarantee Notes Due 2019 —
1,999,815
9.0% Priority Guarantee Notes Due 2021 —
1,750,000
11.25% Priority Guarantee Notes Due 2021 —
870,546
9.0% Priority Guarantee Notes Due 2022 —
1,000,000
10.625% Priority Guarantee Notes Due 2023 —
950,000
CCO Receivables Based Credit Facility Due 2023⁽²⁾
—
—
Other secured subsidiary debt⁽³⁾
4,034
8,522
Total consolidated secured debt 4,034
13,283,883

14.0% Senior Notes Due 2021 —
1,763,925
Legacy Notes⁽⁴⁾
—
475,000
10.0% Senior Notes Due 2018⁽⁵⁾
—
47,482
CCWH Senior Notes due 2022 2,725,000
2,725,000
CCWH Senior Subordinated Notes due 2020 2,200,000
2,200,000
Clear Channel International B.V. Senior Notes due 2020 375,000
375,000
Other subsidiary debt 26
24,615
Purchase accounting adjustments and original issue discount⁽⁶⁾
(611 ) (136,653 )
Long-term debt fees⁽⁶⁾
(28,612 ) (109,071 )
Long-term debt, net subject to compromise⁽⁷⁾
15,148,955
—
Total debt, prior to reclassification to Liabilities subject to compromise 20,423,792
20,649,181
Less: current portion 347
14,972,367
Less: Amounts reclassified to Liabilities subject to compromise 15,148,955
—
Total long-term debt $ 5,274,490
$ 5,676,814



(In thousands)	Successor Company			Predecessor Company
	September 30, 2019			December 31, 2018
Term Loan Facility due 2026⁽¹⁾	$	2,757,397		$	—
Debtors-in-Possession Facility⁽²⁾	—			—
Asset-based Revolving Credit Facility due 2023⁽²⁾	—			—
6.375% Senior Secured Notes due 2026	800,000			—
5.25% Senior Secured Notes due 2027⁽¹⁾	750,000			—
Other secured subsidiary debt⁽³⁾	4,373			—
Total consolidated secured debt	4,311,770			—

8.375% Senior Unsecured Notes due 2027	1,450,000			—
Other unsecured subsidiary debt	58,556			46,105
Long-term debt fees	(11,316		)	—
Long-term debt, net subject to compromise⁽⁴⁾	—			15,149,477
Total debt, prior to reclassification to Liabilities subject to compromise	5,809,010			15,195,582
Less: Current portion	53,705			46,105
Less: Amounts reclassified to Liabilities subject to compromise	—			15,149,477
Total long-term debt	$	5,755,305		$	—

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1)

On ~~June 14, 2018~~August 7, 2019, iHeartCommunications issued $750.0 million of 5.25% Senior Secured Notes due 2027 (the ~~“DIP Closing Date”~~“5.25% Senior Secured Notes”), ~~iHeartCommunications refinanced its receivables based credit facility~~the proceeds of which were used, together with ~~a new $450.0~~cash on hand, to prepay at par $740.0 million ~~debtors-in-possession credit facility~~of borrowings outstanding under the Term Loan Facility, plus $0.8 million of accrued and unpaid interest to, but not including, the date of prepayment.

(2)

The Debtors-in-Possession Facility (the "DIP Facility"), which ~~matures on~~terminated with the ~~earlier of the~~ emergence ~~date~~ from the Chapter 11 Cases, ~~or June 14, 2019. The DIP Facility also includes a feature~~provided for borrowings of up to ~~convert into an exit facility at emergence, upon meeting certain conditions. The DIP Facility accrues interest at LIBOR plus 2.25%. At closing, iHeartCommunications drew $125.0 million on~~$450.0 million. On the ~~DIP Facility. On June 14, 2018, the Company used proceeds from~~Effective Date, the DIP Facility was repaid and ~~cash on hand to repay~~canceled and the ~~outstanding $306.4 million and $74.3 million term loan and revolving credit commitments, respectively, of~~Successor Company entered into the iHeartCommunications receivables based credit facility. Long-term debt fees incurred in relation to the DIP Facility were expensed as incurred and are reflected within Reorganization items, net in the Company's Consolidated Statement of Comprehensive Income (Loss). On August 16, 2018 and September 17, 2018, the Company repaid $100.0 million and $25.0 million, respectively, of the amount drawn under the DIPABL Facility. As of September 30, ~~2018,~~2019, the Successor Company had a ~~borrowing limit~~facility size of $450.0 million under iHeartCommunications' ~~DIP~~ABL Facility, had no outstanding borrowings and had ~~$65.3~~$49.2 million of outstanding letters of credit, ~~and had an availability block requirement of $37.5 million,~~ resulting in ~~$347.2~~$400.8 million of excess availability.

~~(2)~~

On June 1, 2018, a subsidiary of the Company's Outdoor advertising subsidiary, Clear Channel Outdoor, Inc. ("CCO"), refinanced CCOH's senior revolving credit facility and replaced it with an asset based credit facility that provided for revolving credit commitments of up to $75.0 million. On June 29, 2018, CCO entered into an amendment providing for a $50.0 million incremental increase of the facility, bringing the aggregate revolving credit commitments to $125.0 million. The facility has a five-year term, maturing in 2023. As of

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~September 30, 2018, the facility had $86.4 million of letters of credit outstanding and a borrowing base of $113.0 million, resulting in $26.6 million of excess availability.~~


(3)	Other secured subsidiary debt ~~matures~~consists of finance lease obligations maturing at various dates from ~~2018~~2019 through 2045.

(4)

iHeartCommunications' Legacy Notes, all of which were issued prior to the acquisition of iHeartCommunications by the Company in 2008, consist of $175.0 million of Senior Notes that matured on June 15, 2018, $300.0 million of Senior Notes that mature in 2027 and $57.1 million of Senior Notes due 2016 held by a subsidiary of the Company that remain outstanding but are eliminated for purposes of consolidation of the Company’s financial statements.


~~(5)~~	On January 4, 2018, a subsidiary of iHeartCommunications repurchased $5.4 million aggregate principal amount of 10.0% Senior Notes due 2018 that were held by unaffiliated third parties for $5.3 million in cash. On January 16, 2018, iHeartCommunications repaid the remaining balance of $42.1 million aggregate principal amount of 10.0% Senior Notes due 2018 at maturity.


~~(6)~~	As a result of the Company's Chapter 11 Cases, the Company expensed $67.1 million of deferred long-term debt fees and $131.1 million of original issue discount to Reorganization items, net, in the Consolidated Statement of Comprehensive Income (Loss) for the nine months ended September 30, 2018.

~~(7)~~

In connection with the Company's Chapter 11 Cases, the ~~$6.3 billion~~$6,300.0 million outstanding under the Senior Secured Credit Facilities, the $1,999.8 million outstanding under the 9.0% Priority Guarantee Notes due 2019, the $1,750.0 million outstanding under the 9.0% Priority Guarantee Notes due 2021, the $870.5 million of 11.25% Priority Guarantee Notes due 2021, the $1,000.0 million outstanding under the 9.0% Priority Guarantee Notes due 2022, the $950.0 million outstanding under the 10.625% Priority Guarantee Notes due 2023, ~~$6.1~~$6.0 million outstanding Other Secured Subsidiary debt, the $1,781.6 million outstanding under the 14.0% Senior Notes due 2021, the $475.0 million outstanding under the Legacy Notes and ~~$16.0~~$10.8 million outstanding Other Subsidiary Debt ~~have been~~were reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheet as of ~~September 30, 2018.~~the Petition Date. As of the Petition Date, the Company ceased making principal and interest payments, and ceased accruing interest expense in relation to long-term debt reclassified as Liabilities subject to ~~compromise.~~compromise during the Predecessor period.

The Company’s weighted average interest rate was ~~9.1%~~6.7% and ~~8.9%~~9.9% as of September 30, ~~2018~~2019 (Successor) and December 31, ~~2017,~~2018 (Predecessor), respectively. The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately ~~$15.4~~$6.0 billion and $8.7 billion as of September 30, ~~2018~~2019 (Successor) and December 31, ~~2017.~~2018 (Predecessor), respectively. Under the fair value hierarchy established by ASC 820-10-35, the market value of the Successor Company’s debt is classified as either Level 1 or Level 2.

~~Debtors-in-Possession~~Asset-based Revolving Credit Facility due 2023

On ~~June 14, 2018,~~the Effective Date, iHeartCommunications, ~~Inc., an indirect subsidiary of the Company,~~as borrower, entered into a ~~Superpriority Secured Debtor-in-Possession~~ Credit Agreement (the ~~“DIP~~“ABL Credit Agreement”)~~, as parent borrower,~~ with iHeartMedia Capital I, LLC, the direct parent of iHeartCommunications (“~~Holdings”~~Capital I”), as guarantor, certain ~~Debtor~~ subsidiaries of iHeartCommunications, ~~named therein,~~ as ~~subsidiary borrowers (the “Subsidiary Borrowers”),~~guarantors, Citibank, N.A., as ~~a lender~~administrative and ~~administrative~~collateral agent, ~~the swing line lenders and letter of credit issuers named therein~~ and the ~~other~~ lenders party thereto from time to time, ~~party thereto.~~governing the ABL Facility. The ABL Facility includes a letter of credit sub-facility and a swingline loan sub-facility.

Size and Availability

The ~~DIP Credit Agreement~~ABL Facility provides for a ~~first-out~~senior secured asset-based revolving credit facility in the aggregate principal amount of up to ~~$450~~$450.0 million, with amounts available from time to time (including in respect of letters of credit) equal to the lesser of ~~(i)~~(A) the borrowing base, which equals the sum of (i) 90.0% of the eligible accounts receivable of iHeartCommunications and the subsidiary guarantors and (ii) 100% of qualified cash, each subject to customary reserves and eligibility criteria, and ~~(ii)~~(B) the aggregate revolving credit commitments. ~~As of the DIP Closing Date, the aggregate revolving credit commitments were $450.0 million.~~ Subject to certain conditions, iHeartCommunications may at any time request one or more increases in the amount of revolving credit commitments, in ~~minimum amounts~~an amount up to the sum of ~~$10.0~~(x) $150.0 million and ~~in an~~(y) the amount by which the borrowing base exceeds the aggregate ~~maximum amount of $100.0 million.~~

~~The proceeds from the DIP Facility were made available on the DIP Closing Date, and were used in combination with cash on hand to fully pay off and terminate iHeartCommunications’ asset-based~~revolving credit facility and all commitments thereunder governed by the credit agreement, dated as of November 30, 2017, by and among iHeartCommunications, Holdings, the Subsidiary Borrowers, and the lenders and issuing banks from time to time party thereto and TPG Specialty Lending, Inc., as administrative agent and collateral agent.commitments.

Interest Rate and Fees

Borrowings under the ~~DIP Credit Agreement~~ABL Facility bear interest at a rate per annum equal to the applicable ~~rate~~margin plus, at iHeartCommunications’ option, either (1) a ~~base~~eurocurrency rate determined by reference to the highest of (a) the rate announced from time to time by the Administrative Agent at its principal office, (b) the Federal Funds rate plus 0.50%, and (c) the Eurocurrency rate for an interest period of one month plus 1.00% or (2) a Eurocurrency rate that is the greater of (a) 1.00%, and (b) the quotient of (i) the ICE LIBOR rate, or if such rate is not available, the rate determined by the Administrative Agent, and (ii) one minus the

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~maximum rate at which reserves are required to be maintained for Eurocurrency liabilities.~~base rate. The applicable ~~rate~~margin for borrowings under the ~~DIP Credit Agreement is 2.25% with respect~~ABL Facility range from 1.25% to ~~Eurocurrency rate loans~~1.75% for eurocurrency borrowings and ~~1.25% with respect~~from 0.25% to ~~base rate loans.~~0.75% for base-rate borrowings, in each case, depending on average excess availability under the ABL Facility based on the most recently ended fiscal quarter.

In addition to paying interest on outstanding principal under the ~~DIP Credit Agreement,~~ABL Facility, iHeartCommunications is required to pay a commitment fee ~~of 0.50% per annum~~ to the lenders under the ~~DIP Credit Agreement~~ABL Facility in respect of the unutilized ~~revolving~~ commitments thereunder. The commitment fee rate ranges from 0.25% to 0.375% per annum dependent upon average unused commitments during the prior quarter. iHeartCommunications ~~must~~may also pay acustomary letter of credit ~~fee equal to 2.25% per annum.~~fees.

Maturity

Borrowings under the ~~DIP Credit Agreement~~ABL Facility will mature, and lending commitments thereunder will terminate ~~upon the earliest to occur of: (a)~~on June 14, 2019 (the “Scheduled Termination Date”) (provided that to the extent the Consummation Date (as defined below) has not occurred solely as a result of failure to obtain necessary regulatory approvals, the Scheduled Termination Date shall be September 16, 2019) and (b) the date of the substantial consummation (as defined in the Bankruptcy Code) of a confirmed plan of reorganization pursuant to an order of the Bankruptcy Court (the “Consummation Date”); provided, that if the DIP Facility is converted into an exit facility as described under “Conversion to Exit Facility” below, then the borrowings will mature on the maturity date set forth in the credit agreement governing such exit facility.2023.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Prepayments

If at any time, ~~(a)~~ the ~~revolving credit exposures exceed~~sum of the ~~revolving credit commitments (this clause (a),~~outstanding amounts under the ~~“Excess”) or (b)~~ABL Facility exceeds the lesser of (i) the borrowing base and (ii) the aggregate ~~revolving credit~~ commitments ~~minus~~ ~~$37.5 million~~ ~~minus~~under the ~~aggregate revolving credit exposures (the clause (b),~~facility (such lesser amount, the ~~“Excess Availability”~~“line cap”), ~~is for any reason less than $0,~~ iHeartCommunications ~~will be~~is required to repay ~~all revolving~~outstanding loans ~~outstanding,~~ and cash collateralize letters of credit in an aggregate amount equal to such ~~Excess or until Excess Availability is not less than $0, as applicable.~~

excess. iHeartCommunications may voluntarily repay outstanding loans under the ABL Facility at any time without premium or penalty, ~~outstanding amounts~~other than customary “breakage” costs with respect to eurocurrency rate loans. Any voluntary prepayments made by iHeartCommunications will not reduce iHeartCommunications’ commitments under the ~~revolving credit facility at any time.~~ABL Facility.

Guarantees and Security

The ~~facility~~ABL Facility is guaranteed by, subject to certain exceptions, ~~Holdings and~~the guarantors of iHeartCommunications’ ~~Debtor subsidiaries.~~Term Loan Facility. All obligations under the ~~DIP Credit Agreement,~~ABL Facility, and the guarantees of those obligations, are secured by a perfected ~~first priority senior priming lien on all of iHeartCommunications’ and all of~~security interest in the ~~subsidiary guarantors’~~ accounts receivable and related assets of iHeartCommunications’ and the guarantors’ accounts receivable, qualified cash and related assets and proceeds thereof that is senior to the security interest of iHeartCommunications’ Term Loan Facility in such accounts receivable, qualified cash and related assets and proceeds thereof, subject to permitted liens and certain exceptions.

Certain Covenants and Events of Default

~~The DIP~~

If borrowing availability is less than the greater of (a) $40.0 million and (b) 10% of the aggregate commitments under the ABL Facility, in each case, for two consecutive business days (a “Trigger Event”), iHeartCommunications will be required to comply with a minimum fixed charge coverage ratio of at least 1.00 to 1.00, and must continue to comply with this minimum fixed charge coverage ratio for fiscal quarters ending after the occurrence of the Trigger Event until borrowing availability exceeds the greater of (x) $40.0 million and (y) 10% of the aggregate commitments under the ABL Facility, in each case, for 20 consecutive calendar days, at which time the Trigger Event shall no longer be deemed to be occurring.

Term Loan Facility due 2026

On the Effective Date, iHeartCommunications, as borrower, entered into a Credit Agreement ~~includes negative covenants that,~~(the “Term Loan Credit Agreement”) with Capital I, as guarantor, certain subsidiaries of iHeartCommunications, as guarantors, and Citibank N.A., as administrative and collateral agent, governing the Term Loan Facility. On the Effective Date, iHeartCommunications issued an aggregate of approximately $3.5 billion principal amount of senior secured term loans under the Term Loan Facility to certain Claimholders pursuant to the Plan of Reorganization. As described below, on August 7, 2019, the proceeds from the issuance of $750.0 million in aggregate principal amount of 5.25% Senior Secured Notes due 2027 were used, together with cash on hand, to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility due 2026. The Term Loan Facility matures on May 1, 2026.

Interest Rate and Fees

Term loans under the Term Loan Facility bear interest at a rate per annum equal to the applicable margin plus, at iHeartCommunications’ option, either (1) a base rate or (2) a eurocurrency rate. The applicable margin for such term loans is 3.00% with respect to base rate loans and 4.00% with respect to eurocurrency rate loans.

Collateral and Guarantees

The Term Loan Facility is guaranteed by Capital I and each of iHeartCommunications’ existing and future material wholly-owned restricted subsidiaries, subject to ~~significant exceptions, limit iHeartCommunications’ ability~~certain exceptions. All obligations under the Term Loan Facility, and the ~~ability~~guarantees of those obligations, are secured, subject to permitted liens and other exceptions, by a first priority lien in substantially all of the assets of iHeartCommunications and all of the guarantors’ assets, including a lien on the capital stock of iHeartCommunications and certain of its ~~restricted~~ subsidiaries ~~to, among~~owned by a guarantor, other ~~things:~~than the accounts receivable and related assets of iHeartCommunications and all of the subsidiary guarantors, and by a second priority lien on accounts receivable and related assets securing iHeartCommunications’ ABL Facility.

~~incur additional indebtedness;~~

~~create liens on assets;~~

~~engage in mergers, consolidations, liquidations and dissolutions;~~

~~sell assets;~~

~~pay dividends and distributions or repurchase iHeartCommunications' capital stock;~~

~~make investments, loans, or advances;~~

~~prepay certain junior indebtedness;~~

~~engage in certain transactions with affiliates;~~

~~amend material agreements governing certain junior indebtedness; and~~

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Prepayments

iHeartCommunications is required to prepay outstanding term loans under the Term Loan Facility, subject to certain exceptions, with:

50% (which percentage may be reduced to 25% and to 0% based upon iHeartCommunications’ first lien leverage ratio) of iHeartCommunications’ annual excess cash flow, subject to customary credits, reductions and exclusions;

100% (which percentage may be reduced to 50% and 0% based upon iHeartCommunications’ first lien leverage ratio) of the net cash proceeds of sales or other dispositions of the assets of iHeartCommunications or its wholly owned restricted subsidiaries, subject to reinvestment rights and certain other exceptions; and

100% of the net cash proceeds of any incurrence of debt, other than debt permitted under the Term Loan Facility.

iHeartCommunications may voluntarily repay outstanding loans under the Term Loan Facility at any time, without prepayment premium or penalty, except in connection with a repricing event within nine months of the Effective Date and subject to customary “breakage” costs with respect to eurocurrency loans.

Certain Covenants and Events of Default

The Term Loan Facility does not include any financial covenants. However, the Term Loan Facility includes negative covenants that, subject to significant exceptions, limit Capital I’s ability and the ability of its restricted subsidiaries (including iHeartCommunications) to, among other things:

• incur additional indebtedness;

• create liens on assets;

• engage in mergers, consolidations, liquidations and dissolutions;

• sell assets;

• pay dividends and distributions or repurchase Capital I’s capital stock;

• make investments, loans, or advances;

• prepay certain junior indebtedness;

• engage in certain transactions with affiliates;

• amend material agreements governing certain junior indebtedness; and

• change lines of business.

The ~~DIP Credit Agreement~~Term Loan Facility includes certain customary representations and warranties, affirmative covenants and events of default, including but not limited to, payment defaults, breach of representations and warranties, covenant defaults, ~~cross-defaults~~cross defaults to certain indebtedness, certain bankruptcy-related events, certain events under ERISA, material judgments and a change of control. If an event of default occurs, the lenders under the ~~DIP Credit Agreement will be~~Term Loan Facility are entitled to take various actions, including the acceleration of all amounts due under the ~~DIP Credit Agreement~~Term Loan Facility and all actions permitted to be taken under the loan documents relating thereto or applicable ~~law,~~law.

6.375% Senior Secured Notes due 2026

On the Effective Date, iHeartCommunications entered into an indenture (the “Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $800.0 million aggregate principal amount of 6.375% Senior Secured Notes due 2026 that were issued to certain Claimholders pursuant to the Plan of Reorganization. The 6.375% Senior Secured Notes mature on May 1, 2026 and bear interest at a rate of 6.375% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2020.

The 6.375% Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility or other credit facilities or capital markets debt securities. The 6.375% Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

guarantors’ existing and future indebtedness that is not expressly subordinated to the 6.375% Senior Secured Notes (including the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by a first priority lien on the collateral securing the 6.375% Senior Secured Notes, effectively subordinated in right of payment to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 6.375% Senior Secured Notes, to the extent of the value of such assets, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 6.375% Senior Secured Notes.

The 6.375% Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the ~~terms~~capital stock of iHeartCommunications and substantially all of the ~~DIP Order.~~assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.

~~Conversion~~

iHeartCommunications may redeem the 6.375% Senior Secured Notes at its option, in whole or in part, at any time prior to ~~Exit Facility~~

~~Upon the satisfaction or waiver~~May 1, 2022, at a price equal to 100% of the ~~conditions~~principal amount of the 6.375% Senior Secured Notes being redeemed, plus an applicable premium and plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the 6.375% Senior Secured Notes at its option, in whole or in part, on or after May 1, 2022, at the redemption prices set forth in the ~~DIP Credit Agreement~~6.375% Senior Secured Notes Indenture plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2022, iHeartCommunications may redeem at its option, up to 40% of the aggregate principal amount of the 6.375% Senior Secured Notes at a redemption price equal to 106.375% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the proceeds of one or more equity offerings.

The 6.375% Senior Secured Notes Indenture contains covenants that limit the ability of Capital I and its restricted subsidiaries, including iHeartCommunications, to, among other things:

incur or guarantee additional debt or issue certain preferred stock;

create liens on certain assets;

redeem, purchase or retire subordinated debt;

make certain investments;

create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries;

enter into certain transactions with affiliates;

merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets;

sell certain assets, including capital stock of iHeartCommunications’ subsidiaries;

designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and

pay dividends, redeem or repurchase capital stock or make other restricted payments.

5.25% Senior Secured Notes due 2027

On August 7, 2019, iHeartCommunications entered into an indenture (the “New Senior Secured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee and collateral agent, governing the $750.0 million aggregate principal amount of 5.25% Senior Secured Notes due 2027 that were issued in a private placement to qualified institutional buyers under Rule 144A under the Securities Act, and to persons outside the United States pursuant to Regulation S under the Securities Act. The 5.25% Senior Secured Notes mature on August 15, 2027 and bear interest at a rate of 5.25% per annum. Interest is payable semi-annually on February 15 and August 15 of each year, beginning on February 15, 2020.

The 5.25% Senior Secured Notes are guaranteed on a senior secured basis by Capital I and the ~~entry~~subsidiaries of iHeartCommunications that guarantee the Term Loan Facility. The 5.25% Senior Secured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the 5.25% Senior Secured Notes (including the Term Loan Facility, the 6.375% Senior Secured Notes and the Senior Unsecured Notes), effectively equal with iHeartCommunications’ and the guarantors’ existing and future indebtedness secured by ~~the Bankruptcy Court of an order confirming an acceptable plan of reorganization, the DIP Facility will convert into an exit facility~~a first priority lien on the ~~terms~~collateral securing the 5.25% Senior Secured Notes, effectively subordinated to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured by assets that are not part of the collateral securing the 5.25% Senior Secured Notes, to the extent of the value of such collateral, and structurally subordinated to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the 5.25% Senior Secured Notes.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The 5.25% Senior Secured Notes and the related guarantees are secured, subject to permitted liens and certain other exceptions, by a first priority lien on the capital stock of iHeartCommunications and substantially all of the assets of iHeartCommunications and the guarantors, other than accounts receivable and related assets, and by a second priority lien on accounts receivable and related assets securing the ABL Facility.

iHeartCommunications may redeem the 5.25% Senior Secured Notes at its option, in whole or part, at any time prior to August 15, 2022, at a price equal to 100% of the principal amount of the 5.25% Senior Secured Notes redeemed, plus a make-whole premium, plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the 5.25% Senior Secured Notes, in whole or in part, on or after August 15, 2022, at the redemption prices set forth in ~~an exhibit~~the 5.25% Senior Secured Notes Indenture plus accrued and unpaid interest to the ~~DIP Credit Agreement.~~redemption date. At any time on or before August 15, 2022, iHeartCommunications may elect to redeem up to 40% of the aggregate principal amount of the 5.25% Senior Secured Notes at a redemption price equal to 105.25% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of one or more equity offerings.

The 5.25% Senior Secured Notes Indenture contains covenants that limit the ability of iHeartCommunications and its restricted subsidiaries, to, among other things:

incur or guarantee additional debt or issue certain preferred stock;

create liens on certain assets;

redeem, purchase or retire subordinated debt;

make certain investments;

create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries;

enter into certain transactions with affiliates;

merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets;

sell certain assets, including capital stock of iHeartCommunications’ subsidiaries;

designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and

pay dividends, redeem or repurchase capital stock or make other restricted payments.

8.375% Senior Unsecured Notes due 2027

On the Effective Date, iHeartCommunications entered into an indenture (the “Senior Unsecured Notes Indenture”) with Capital I, as guarantor, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee, governing the $1,450.0 million aggregate principal amount of 8.375% Senior Notes due 2027 that were issued to certain Claimholders pursuant to the Plan of Reorganization. The Senior Unsecured Notes mature on May 1, 2027 and bear interest at a rate of 8.375% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2019.

The Senior Unsecured Notes are guaranteed on a senior unsecured basis by Capital I and the subsidiaries of iHeartCommunications that guarantee the Term Loan Facility or other credit facilities or capital markets debt securities. The Senior Unsecured Notes and the related guarantees rank equally in right of payment with all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is not expressly subordinated to the Senior Unsecured Notes, effectively subordinated in right of payment to all of iHeartCommunications’ and the guarantors’ existing and future indebtedness that is secured (including the 6.375% Senior Secured Notes, the 5.25% Senior Secured Notes and borrowings under the ABL Facility and the Term Loan Facility), to the extent of the value of the collateral securing such indebtedness, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of any subsidiary of iHeartCommunications that is not a guarantor of the Senior Unsecured Notes.

iHeartCommunications may redeem the Senior Unsecured Notes at its option, in whole or in part, at any time prior to May 1, 2022, at a price equal to 100% of the principal amount of the Senior Unsecured Notes being redeemed, plus an applicable premium and plus accrued and unpaid interest to the redemption date. iHeartCommunications may redeem the Senior Unsecured Notes at its option, in whole or in part, on or after May 1, 2022, at the redemption prices set forth in the Senior Unsecured Notes Indenture plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2022, iHeartCommunications redeem at its option, up to 40% of the aggregate principal amount of the Senior Unsecured Notes at a redemption price equal to 108.375% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the proceeds of one or more equity offerings.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Senior Unsecured Notes Indenture contains covenants that limit the ability of Capital I and its restricted subsidiaries, including iHeartCommunications, to, among other things:

incur or guarantee additional debt or issue certain preferred stock;

create liens on certain assets;

redeem, purchase or retire subordinated debt;

make certain investments;

create restrictions on the payment of dividends or other amounts from iHeartCommunications’ restricted subsidiaries;

enter into certain transactions with affiliates;

merge or consolidate with another person, or sell or otherwise dispose of all or substantially all of iHeartCommunications’ assets;

sell certain assets, including capital stock of iHeartCommunications’ subsidiaries;

designate iHeartCommunications’ subsidiaries as unrestricted subsidiaries, and

pay dividends, redeem or repurchase capital stock or make other restricted payments.

Mandatorily Redeemable Preferred Stock

On the Effective Date, in accordance with the Plan of Reorganization, iHeart Operations issued 60,000 shares of its Series A Perpetual Preferred Stock, par value $0.001 per share (the "iHeart Operations Preferred Stock"), having an aggregate initial liquidation preference of $60.0 million for a cash purchase price of $60.0 million. The iHeart Operations Preferred Stock was purchased by a third party investor. As of September 30, 2019, the liquidation preference of the iHeart Operations Preferred Stock was $60.0 million. As further described below, the iHeart Operations Preferred Stock is mandatorily redeemable for cash at a date certain and therefore is classified as a liability in the Company's balance sheet.

There are no sinking fund provisions applicable to the iHeart Operations Preferred Stock. Shares of the iHeart Operations Preferred Stock, upon issuance, were fully paid and non-assessable. The shares of the iHeart Operations Preferred Stock are not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of iHeart Operations. The holders of shares of the iHeart Operations Preferred Stock have no pre-emptive rights with respect to any shares of our capital stock or any of iHeart Operations’ other securities convertible into or carrying rights or options to purchase any such capital stock.

Holders of the iHeart Operations Preferred Stock are entitled to receive, as declared by the board of directors of iHeart Operations, in respect of each share, cumulative dividends accruing daily and payable quarterly at a per annum rate equal to the sum of (1) the greater of (a) LIBOR and (b) two percent, plus (2) the applicable margin, which is calculated as a function of iHeartMedia’s consolidated total leverage ratio. Dividends are payable on the liquidation preference. Unless all accrued and unpaid dividends on the iHeart Operations Preferred Stock are paid in full, no dividends or distributions may be paid on any equity interests of iHeartMedia or its subsidiaries other than iHeart Operations, and no such equity interests may be repurchased or redeemed (subject to certain exceptions that are specified in the certificate of designation for the iHeart Operations Preferred Stock). Dividends, if declared, will be payable on March 31, June 30, September 30 and December 31 of each year (or on the next business day if such date is not a business day). During the three months ended September 30, 2019 and the period from May 1, 2019 through September 30, 2019 the Company recognized $2.0 million and $3.4 million, respectively, of interest expense related to dividends on mandatorily redeemable preferred stock.

Other than as set forth below, iHeart Operations may not redeem the iHeart Operations Preferred Stock at its option prior to the third anniversary of the issue date of the iHeart Operations Preferred Stock. Upon consummation of certain equity offerings, iHeart Operations may, at its option, redeem all or a part of the iHeart Operations Preferred Stock for the liquidation preference plus a make-whole premium. At any time on or after the third anniversary of the issue date, the iHeart Operations Preferred Stock may be redeemed at the option of iHeart Operations, in whole or in part, for cash at a redemption price equal to the liquidation preference per share.

Upon (i) a liquidation, dissolution or winding up of iHeart Operations, iHeartMedia or iHeartCommunications, together with the subsidiaries of such entity, taken as a whole, (ii) a bankruptcy event, (iii) a change of control, (iv) a sale or transfer of all or substantially all of iHeart Operations’, iHeartMedia’s or iHeartCommunications’ assets and the assets of such entity’s subsidiaries, taken as a whole in a single transaction (other than to iHeartMedia or any of its subsidiaries), or a series of transactions, (v) an acceleration or payment default of indebtedness of iHeart Operations, iHeartMedia or any of its subsidiaries of $100 million or more or (vi) consummation of certain equity offerings of iHeartMedia, iHeart Operations or iHeartCommunications or certain

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

significant subsidiaries, then any holder of shares of iHeart Operations Preferred Stock may require iHeartMedia to purchase such holder’s shares of iHeart Operations Preferred Stock at a purchase price equal to (a) the liquidation preference plus a make-whole premium, if such purchase is consummated prior to the third anniversary of the issue date or (b) the liquidation preference, if the purchase is consummated on or after the third anniversary of the issue date.

The shares of iHeart Operations Preferred Stock include repurchase rights, pursuant to which the holders may require iHeartMedia or iHeartCommunications to purchase the iHeart Operations Preferred Stock after the fifth anniversary of the issue date.

On the tenth anniversary of the issue date, the shares of iHeart Operations Preferred Stock will be subject to mandatory redemption for an amount equal to the liquidation preference.

If a default occurs or dividends payable on the shares of iHeart Operations Preferred Stock have not been paid in cash for twelve consecutive quarters, the holders of the iHeart Operations Preferred Stock will have the right, voting as a class, to elect one director to iHeartMedia’s Board of Directors. Upon any termination of the rights of the holders of shares of the iHeart Operations Preferred Stock as a class to vote for a director as described above, the director so elected to iHeartMedia’s Board of Directors will cease to be qualified as a director and the term of such director’s office shall terminate immediately.

Surety Bonds, Letters of Credit and Guarantees

As of September 30, ~~2018,~~2019, the Successor Company and its subsidiaries had outstanding surety bonds and commercial standby letters of credit ~~and bank guarantees~~ of ~~$70.5 million, $153.9~~$17.6 million and ~~$41.0~~$49.2 million, respectively. ~~A portion~~Included within the Successor Company's outstanding commercial standby letters of ~~the outstanding bank guarantees~~credit were ~~supported by $20.5~~$0.9 million held on behalf of ~~cash collateral.~~CCOH. These surety bonds and letters of credit ~~and bank guarantees~~ relate to various operational matters including insurance, ~~bid, concession~~lease and performance bonds as well as other items.

NOTE 59 – 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; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.

Chapter 11 Cases

iHeartCommunications' filing of the Chapter 11 Cases ~~constitutes~~constituted an event of default that accelerated its obligations under its debt agreements. Due to the Chapter 11 Cases, however, the creditors' ability to exercise remedies under iHeartCommunications' debt agreements were stayed as of March 14, 2018, the ~~date of the Chapter 11 petition filing, and continue to be stayed.~~Petition Date. On March 21, 2018, Wilmington Savings Fund Society, FSB ("WSFS"), solely in its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027, and not in its individual capacity, filed an adversary proceeding against the Company in the Chapter 11 Cases. In the complaint, WSFS alleged, among other things, that the "springing lien" provisions of the priority guarantee notes indentures and the priority guarantee notes security agreements amounted to "hidden encumbrances" on the Company's property, to which the holders of the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027 were entitled to "equal and ratable" treatment. On March 26, 2018, Delaware Trust Co. ("Delaware Trust"), in its capacity as successor indenture trustee to the 14% Senior Notes due 2021, filed a motion to intervene as a plaintiff in the adversary proceeding filed by WSFS. In the complaint, Delaware Trust alleged, among other things, that the indenture governing the 14% Senior Notes due 2021 also ~~has~~had its own "negative pledge" covenant, and, therefore, to the extent the relief sought by WSFS in its adversary proceeding iswas warranted, the holders of the 14% Senior Notes due 2021 ~~are~~would also be entitled to the same "equal and ratable" liens on the same property. On ~~April 6, 2018,~~January 15, 2019, the ~~Company filed~~Bankruptcy Court entered judgment in the Company's favor denying all relief sought by WSFS and all other parties. Pursuant to a ~~motion~~settlement (the “Legacy Plan Settlement”) with WSFS and certain consenting Legacy Noteholders of all issues related to ~~dismiss~~confirmation of the Plan of Reorganization, on May 1, 2019 upon the Company's confirmed Plan of Reorganization becoming

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

effective, this adversary proceeding was deemed withdrawn and/or dismissed, with respect to all parties thereto, with prejudice and a hearing on such motion was held on May 7, 2018. We have answered the complaint and discovery is proceeding. The trial was held on October 24, 2018. The parties are awaiting a ruling from the court.in its entirety.

On October 9, 2018, WSFS, solely in its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027, and not in its individual capacity, filed an adversary proceeding against Clear Channel Holdings, Inc. (“CCH”) and certain shareholders of iHeartMedia. The named shareholder defendants ~~are~~were Bain Capital LP; Thomas H. Lee Partners L.P.; Abrams Capital L.P.; and Highfields Capital Management L.P. In the complaint, WSFS alleged, among other things, that the shareholder defendants engaged in a “pattern of inequitable and bad faith conduct, including the abuse of their insider positions to benefit themselves at the expense of third-party creditors including particularly the Legacy Noteholders.” The complaint ~~asks~~asked the court to grant relief in the form of equitable subordination of the shareholder defendants’ term loan, priority guarantee notes and 2021 notes claims to any and all claims of the legacy noteholders. In addition, the complaint ~~seeks~~sought to have any votes to accept the ~~Fourth Amended~~ Plan of Reorganization by Abrams and Highfields on account of their 2021 notes claims, and any votes to accept the ~~Fourth Amended~~ Plan of Reorganization by defendant CCH on account of its junior notes claims, to be designated and disqualified. ~~The Court held a pre-trial conference and oral argument on October 18, 2018. Discovery has not yet begun in this proceeding.~~

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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, duePursuant to the ~~inherent uncertainty~~Legacy Plan Settlement, on May 1, 2019 upon the Company's confirmed Plan of ~~litigation, there can be no assurance that the resolution of any particular claim~~ Reorganization becoming effective, this adversary proceeding was deemed withdrawn and/or ~~proceeding would not have a material adverse effect on the Company’s financial condition or results of operations.~~

~~Although the Company is involved~~dismissed, with respect to all parties thereto, with prejudice and 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; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.its entirety.

Stockholder Litigation

On May 9, 2016, a stockholder of ~~Clear Channel Outdoor Holdings, Inc. ("CCOH")~~CCOH 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 named as defendants the Company, iHeartCommunications, Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. ~~(together, the "Sponsor Defendants")~~, the Company's pre-bankruptcy private equity sponsors and pre-bankruptcy majority owners (together, the "Former Sponsor Defendants"), and the members of CCOH's board of directors. CCOH also was named as a nominal defendant. The complaint alleged that CCOH had been harmed by the intercompany agreements with iHeartCommunications, CCOH’s lack of autonomy over its own cash and the actions of the defendants in serving the interests of the Company, iHeartCommunications and the Former Sponsor Defendants to the detriment of CCOH and its minority stockholders. Specifically, the complaint alleged that the defendants breached their fiduciary duties by causing CCOH 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 the Company and iHeartCommunications; (iii) issue new debt in the CCIBV note offering (the "CCIBV Note Offering") to provide cash to the Company and iHeartCommunications through a dividend; and (iv) effect the sales of certain outdoor markets in the U.S. (the "Outdoor Asset Sales") allegedly to provide cash to the Company and iHeartCommunications through a dividend. The complaint also alleged that the Company, iHeartCommunications and the Sponsor Defendants aided and abetted the directors' breaches of their fiduciary duties. The complaint further alleged that the Company, 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 CCOH. The plaintiff sought, among other things, a ruling that the defendants breached their fiduciary duties to CCOH and that the Company, iHeartCommunications and the Former Sponsor Defendants aided and abetted the CCOH board of directors' breaches of fiduciary duty, rescission of payments made by CCOH to iHeartCommunications and its affiliates pursuant to dividends declared in connection with the ~~CCIBV Note Offering~~offering of notes by Clear Channel International BV and ~~Outdoor Asset Sales,~~certain asset sales by CCOH, and an order requiring the Company, iHeartCommunications and the Former Sponsor Defendants to disgorge all profits they have received as a result of the alleged fiduciary misconduct.

On July 20, 2016, the defendants filed a motion to dismiss plaintiff's verified stockholder derivative complaint for failure to state a claim upon which relief can be granted. On November 23, 2016, the Court granted defendants' motion to dismiss all claims brought by the plaintiff. On December 19, 2016, the plaintiff filed a notice of appeal of the ruling. The oral hearing on the appeal was held on October 11, 2017. On October 12, 2017, the Supreme Court of Delaware affirmed the lower court's ruling, dismissing the case.

On December 29, 2017, another stockholder of CCOH filed a derivative lawsuit (the “Norfolk Lawsuit”) in the Court of Chancery of the State of Delaware, captioned Norfolk County Retirement System, v. iHeartMedia, Inc., et al., C.A. No. 2017-0930-JRS. The complaint ~~names~~named as defendants the Company, iHeartCommunications, the Former Sponsor Defendants, and the members of CCOH's board of directors. CCOH iswas named as a nominal defendant. The complaint ~~alleges~~alleged that CCOH ~~has~~had been harmed by the CCOH Board’s November 2017 decision to extend the maturity date of the intercompany revolving note (the “Third Amendment”) at what the complaint ~~describes~~described as far-below-market interest rates. Specifically, the complaint alleges that (i) the Company and Sponsor defendants breached their fiduciary duties by exploiting their position of control to require CCOH to enter the Third Amendment on terms unfair to CCOH; (ii) the CCOH Board breached their duty of loyalty by approving the Third Amendment and elevating the interests of the Company, iHeartCommunications and the Sponsor Defendants over the interests of CCOH and its minority unaffiliated stockholders; and (iii) the terms of the Third Amendment could not have been agreed to in good faith and represent a waste of corporate assets by the CCOH Board. The complaint further alleges that the Company, iHeartCommunications and the Sponsor defendants were unjustly enriched as a result of the unfairly favorable terms of the Third Amendment. The plaintiff ~~is seeking,~~sought, among other things, a ruling that the defendants breached their fiduciary duties to CCOH, a modification of the Third Amendment to bear a commercially reasonable rate of interest, and an order requiring disgorgement of all profits, benefits and other compensation obtained by defendants as a result of the alleged breaches of fiduciary duties.

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

On March 7, 2018, the defendants filed a motion to dismiss plaintiff's verified derivative complaint for failure to state a claim upon which relief can be granted. On March 16, 2018, the Company filed a Notice of Suggestion of Pendency of Bankruptcy and Automatic Stay of Proceedings. On May 4, 2018, plaintiff filed its response to the motion to dismiss. On June 26, 2018, the defendants filed a reply brief in further support of their motion to dismiss. Oral argument on the motion to dismiss was held on September 20, 2018. ~~We are awaiting a ruling by the Court.~~

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

the State of Delaware, captioned GAMCO Asset Management, Inc. v. Hendrix, et al., C.A. No. 2018-0633-JRS. The complaint ~~names~~named as defendants the Former Sponsor Defendants and the members of CCOH’s board of directors. The complaint ~~alleges~~alleged that minority shareholders in CCOH during the period November 8, 2017 to March 14, 2018 were harmed by decisions of the CCOH Board and the intercompany note committee of the Board relating to the Intercompany Note. Specifically, the complaint alleges that (i) the members of the intercompany note committee breached their fiduciary duties by not demanding payment under the Intercompany Note and issuing a simultaneous dividend after a threshold tied to the Company’s liquidity had been reached; (ii) the CCOH Board breached their fiduciary duties by approving the Third Amendment rather than allowing the Intercompany Note to expire; (iii) the CCOH Board breached their fiduciary duties by not demanding payment under the Intercompany Note and issuing a simultaneous dividend after a threshold tied to the Company’s liquidity had been reached; (iv) the Sponsor Defendants breached their fiduciary duties by not directing the CCOH Board to permit the Intercompany Note to expire and to declare a dividend. The complaint further alleges that the Sponsor Defendants aided and abetted the Board’s alleged breach of fiduciary duties. The plaintiff ~~seeks,~~sought, among other things, a ruling that the CCOH Board, the intercompany note committee, and the Sponsor Defendants breached their fiduciary duties and that the Sponsor Defendants aided and abetted the Board’s breach of fiduciary duty; and an award of damages, together with pre- and post-judgment interests, to the putative class of minority shareholders.

~~China Investigation~~

~~Several employees~~On December 16, 2018, the Debtors, CCOH, GAMCO Asset Management, Inc., and Norfolk County Retirement System entered into a settlement (the “CCOH Separation Settlement”) of ~~Clear Media Limited, an indirect, non-wholly-owned subsidiary~~all claims, objections, and other causes of action that have been or could be asserted by or on behalf of CCOH, GAMCO Asset Management, Inc., and/or Norfolk County Retirement System by and among the Debtors, CCOH, GAMCO Asset Management, Inc., certain individual defendants in the GAMCO Asset Management, Inc. action and/or the Norfolk County Retirement System action, and the Former Sponsor Defendants in such actions. The CCOH Separation Settlement provided for the consensual separation of the ~~Company whose ordinary shares are listed, but are currently suspended~~Debtors and CCOH, including approximately $149.0 million of recovery to CCOH on account of its claim against iHeartCommunications in the Chapter 11 cases, a $200 million unsecured revolving line of credit from ~~trading on,~~certain of the ~~Hong Kong Stock Exchange, are subject~~Debtors to CCOH for a ~~police investigation in China~~period of up to three years, the transfer of certain of the Debtors’ intellectual property to CCOH, the waiver by the Debtors of the setoff for ~~misappropriation~~the value of ~~funds. The police investigation is ongoing,~~the transferred intellectual property, mutual releases, the termination of the cash sweep under the existing Corporate Services Agreement, the termination of any agreements or licenses requiring royalty payments from CCOH to the Debtors for trademarks or other intellectual property, the waiver of any post-petition amounts owed by CCOH relating to such trademarks or other intellectual property, and the ~~Company is not aware~~execution of any litigation, claim or assessment pending against the Company. Based on information known to date, the Company believes any contingent liabilities arising from potential misconduct that has been or may be identifieda new transition services agreement and other separation documents. The CCOH Separation Settlement was approved by the ~~investigations are not material to the Company's consolidated financial statements.~~

~~The Company advised both the United States Securities and Exchange Commission~~Bankruptcy Court and the United States ~~Department~~District Court for the Southern District of ~~Justice~~Texas on January 22, 2019. On May 1, 2019, the Debtors’ Plan of Reorganization went effective, and the ~~investigation at Clear Media Limited~~Norfolk Lawsuit and is cooperating to provide information in response to inquiries from the agencies. The Clear Media Limited investigation could implicate the books and records, internal controls and anti-bribery provisions of the U.S. Foreign Corrupt Practices Act, which statute and regulations provide for potential monetary penalties as well as criminal and civil sanctions. It is possible that monetary penalties and other sanctions could be assessed on the Company in connectionGAMCO II Lawsuit were each subsequently dismissed with ~~this matter. The nature and amount of any monetary penalty or other sanctions cannot reasonably be estimated at this time.~~prejudice.

~~Italy Investigation~~

As described in Note 1 to these consolidated financial statements, during the three months ended June 30, 2018, the Company identified misstatements associated with VAT obligations related to its subsidiary in Italy. Upon identification of these misstatements, the Company undertook certain procedures, including a forensic investigation, which is ongoing. In addition, the Company voluntarily disclosed the matter and preliminary findings to the Italian tax authorities in order to commence a discussion on the appropriate calculation of the VAT position. The current expectation is that the Company may have to repay to the Italian tax authority a substantial portion of the VAT previously applied as a credit, amounting to approximately $17 million, including estimated possible penalties and interest. The discussion with the tax authorities is at an early stage and therefore the ultimate amount that will be paid to the tax authorities in Italy is unknown. The ultimate amount to be paid may differ from the Company’s estimates, and such differences may be material.

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

NOTE 610 – INCOME TAXES

Income Tax Expense

The Company’s income tax expense for the three months ended September 30, 2019 (Successor), the three months ended September 30, 2018 (Predecessor), the period from May 2, 2019 through September 30, 2019 (Successor), the period from January 1, 2019 through May 1, 2019 (Predecessor) and the nine months ended September 30, 2018 ~~and 2017,~~(Predecessor), respectively, consisted of the following components:


(In thousands)	Three Months Ended September 30,						Nine Months Ended September 30,						Successor Company			Predecessor Company
	2018			2017			2018			2017			Three Months Ended September 30,			Three Months Ended September 30,
Current tax benefit (expense)	$	(14,979	)	$	7,522		$	(25,168	)	$	(36,852	)
													2019			2018
Current tax expense													$	(4,336	)	$	(2,471	)
Deferred tax expense	(2,790		)	(9,573		)	(22,020		)	(13,291		)	(12,422		)	(8,402		)
Income tax expense	$	(17,769	)	$	(2,051	)	$	(47,188	)	$	(50,143	)	$	(16,758	)	$	(10,873	)



(In thousands)	Successor Company			Predecessor Company
	Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,
	2019			2019			2018
Current tax benefit (expense)	$	(7,283	)	$	76,744		$	(9,041	)
Deferred tax benefit (expense)	(25,478		)	(115,839		)	18,869
Income tax benefit (expense)	$	(32,761	)	$	(39,095	)	$	9,828

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The effective tax rate for the Successor Company for the three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019 was 57.5% and 39.0%, respectively. The effective tax rates for both periods were primarily impacted by tax expense from non-deductible expenses and the provision for state income taxes.

The effective tax rate for continuing operations of the Predecessor Company for the period from January 1, 2019 through May 1, 2019 (Predecessor) was 0.4%. The income tax expense for the period from January 1, 2019 through May 1, 2019 (Predecessor) primarily consists of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1) tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million for fresh start adjustments in the Predecessor period, consisting of $529.1 million tax expense for the increase in deferred tax liabilities resulting from fresh start accounting adjustments, which was partially offset by $343.7 million tax benefit for the reduction in the valuation allowance on our deferred tax assets.

The effective tax rate for the three and nine months ended September 30, 2018 ~~were 19.8%~~(Predecessor) was 8.2% and ~~(12.4)%~~4.3%, respectively. The 2018 effective tax rates were primarily impacted by the valuation allowance recorded against deferred tax assets resulting from current period ~~net operating losses~~interest expense limitation carryforward in U.S. federal ~~state~~ and certain ~~foreign~~state jurisdictions due to uncertainty regarding ~~the Company's ability to realize those assets in future periods.~~

The effective tax rates for the three and nine months ended September 30, 2017 were (0.8)% and (6.6)%, respectively. The effective tax rates were primarily impacted by the valuation allowance recorded against deferred tax assets resulting from current year net operating losses in U.S. federal, state and certain foreign jurisdictions due to uncertainty regarding the Company'sour ability to realize those assets in future periods.

OnAs a result of the Plan of Reorganization, the Company expects the majority of its federal NOL carryforwards and certain state NOL carryforwards to be reduced or eliminated as a result of the CODI realized from the bankruptcy emergence. Pursuant to the attribute reduction and ordering rules set forth in the Internal Revenue Code of 1986, as amended (the “Code”), the reduction in the Company’s tax attributes for excludible CODI does not occur until the last day of the Company’s tax year, December ~~22, 2017,~~31, 2019. Accordingly, the ~~U.S. government enacted comprehensive income~~ tax ~~legislation, referred to as The Tax Cuts and Jobs Act (the “Tax Act”) which reduced~~adjustments recorded in the ~~U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. During the three months ended~~Predecessor period represent our best estimate using all available information at September 30, ~~2018, adjustments~~2019. Additionally, the Company recognized a capital loss for tax purposes as a result of the series of transactions to effect the ~~provisional income~~Plan of Reorganization. This capital loss may be carried forward to offset capital gains recognized by the Company in the next five years, subject to annual limitations under Section 382 of the Code. The deferred tax ~~benefit recorded~~asset associated with the capital loss carryforward is offset by a valuation allowance due to significant uncertainty regarding the Company’s ability to utilize the carryforward prior to its expiration. The final tax impacts of the bankruptcy emergence, as well as the Plan of Reorganization’s overall effect on the Company’s tax attributes and tax basis in assets will be refined based on the Company’s final December ~~2017~~31, 2019 financial position as required under the Code. The final tax impacts on the Company's tax attributes could change significantly from the enactment of the Tax Act were not material. At September 30, 2018, we have not yet completed our accounting for the income tax effects of the Tax Act, but have made reasonable estimates of those effects on our existing deferred income tax balances. The final financial statement impact of the Tax Act may differ from our previously recorded estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, and changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates to estimates the company has utilized to calculate the provisional impacts. The SEC has issued rules that allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related income tax impacts.

current estimates.

NOTE 711 – ~~STOCKHOLDERS’ DEFICIT~~STOCKHOLDER'S EQUITY (DEFICIT)

~~The~~Historically, the Company ~~reports its noncontrolling interests in consolidated subsidiaries as a component~~granted restricted shares of ~~equity separate from~~ the ~~Company’s equity. The following table shows~~Company's Class A common stock to certain key individuals. In connection with the ~~changes in stockholders' deficit attributable~~effectiveness of the Plan of Reorganization, all unvested restricted shares were canceled.

Pursuant to the Post-Emergence Equity Plan the Company ~~and~~adopted in connection with the ~~noncontrolling interests~~effectiveness of ~~subsidiaries in which~~our Plan of Reorganization, the Company has ~~a majority,~~granted restricted stock units and options to purchase shares of the Company's Class A common stock to certain key individuals.

This Post-Emergence Equity Plan is designed to provide an incentive to certain key members of management and service providers of the Company or any of its subsidiaries and non-employee members of the Board of Directors and to offer an additional inducement in obtaining the services of such individuals. The Post-Emergence Equity Plan provides for the grant of (a) options and (b) restricted stock units, which, in each case, may be subject to contingencies or restrictions as set forth under the plan and applicable award agreement.

The aggregate number of shares of Class A common stock that may be issued or used for reference purposes with respect to which awards may be granted under the plan shall be equal to the sum of (a) 12,770,387 shares of Class A common stock for awards to key members of management and service providers plus (b) 1,596,298 shares of Class A common stock for awards to non-employee members of the Board. Such shares of common stock may, in the discretion of the Board of Directors, consist either in whole or in part of authorized but ~~not total, ownership interest:~~

(In thousands) The Company
Noncontrolling
Interests
Consolidated
Balance as of January 1, 2018 $ (11,385,535 ) $ 41,191
$ (11,344,344 )
Net loss (416,815 ) (10,732 ) (427,547 )
Dividends declared and other payments to noncontrolling interests —
(10,381 ) (10,381 )
Share-based compensation 1,628
6,757
8,385
Foreign currency translation adjustments (11,062 ) (8,980 ) (20,042 )
Reclassification adjustments 1,274
151
1,425
Other, net (78 ) (653 ) (731 )
Balances as of September 30, 2018 $ (11,810,588 ) $ 17,353
$ (11,793,235 )
unissued shares of common stock or shares of common stock held in the treasury of the Company.

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company shall at all times during the term of the plan reserve and keep available such number of shares of common stock as will be sufficient to satisfy the requirements of the plan.

The Company granted 5,542,668 stock options and 3,205,360 restricted stock units on May 30, 2019 in connection with the Company's emergence from bankruptcy (the "Emergence Awards").

Share-based compensation expenses are recorded in corporate expenses and were $17.1 million and $20.2 million for the Successor Company for three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019, respectively. Share-based compensation expenses for the Predecessor Company were $0.5 million, 0.5 million and 1.6 million for three months ended September 30, 2018, the period from January 1, 2019 through May 1, 2019 and the nine months ended September 30, 2018, respectively.

As of September 30, 2019, there was $63.1 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 3.6 years.

Stock Options

The term of each option granted pursuant to the plan may not exceed (a) six (6) years from the date of grant thereof in the case of the awards granted upon emergence and (b) ten (10) years from the date of grant thereof in the case of all other options; subject, however, in either case, to earlier termination as hereinafter provided.

Options granted under the plan are exercisable at such time or times and subject to such terms and conditions as shall be determined by the Compensation Committee of the Board (the "Committee") at the time of grant.

The options granted as Emergence Awards vest (or vested, as applicable), subject to a participant’s continued full-time employment or service with the Company through each applicable vesting date, (a) 20% on July 22, 2019, and (b) an additional 20% vesting on each of the next four anniversaries of the grant date.

No option granted under the plan will provide for any dividends or dividend equivalents thereon.

Restricted Stock Units ("RSUs")

RSUs may be issued either alone or in addition to other awards granted under the plan.

The RSUs granted in respect of the Emergence Awards vest or vested (as applicable), subject to a participant’s continued full-time employment or service with the Company through each applicable vesting date, (a) 20% on July 22, 2019, and (b) an additional 20% vesting on each of the next four anniversaries of the grant date.

Each RSU (representing one share of common stock) awarded to a participant will be credited with dividends paid in respect of one share of common stock (“Dividend Equivalents”). Dividend Equivalents will be withheld by the Company for the participant’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a participant’s account and attributable to any particular RSU (and earnings thereon, if applicable) shall be distributed to the participant upon settlement of such RSU and, if such RSU is forfeited, the participant shall have no right to such Dividend Equivalents.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Predecessor Common Stock

The following table presents the balances of the Predecessor Company's Class A, Class B, Class C and Class D Common Stock as of September 30, 2019 (Successor) and December 31, 2018 (Predecessor):



(In thousands, except share and per share data)	Successor Company	Predecessor Company
	September 30, 2019	December 31, 2018
	(Unaudited)
Predecessor Class A Common Stock, par value $.001 per share, authorized 400,000,000 shares, no shares issued in 2019 and 32,292,944 shares issued in 2018	—	32
Predecessor Class B Common Stock, par value $.001 per share, authorized 150,000,000 shares, no shares issued in 2019 and 555,556 shares issued in 2018	—	1
Predecessor Class C Common Stock, par value $.001 per share, authorized 100,000,000 shares, no shares issued in 2019 and 58,967,502 shares issued in 2018	—	59
Predecessor Class D Common Stock, par value $.001 per share, authorized 200,000,000 shares, no shares issued in 2019 and 2018	—	—

Successor Common Stock and Special Warrants

The following table presents the Successor Company's Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding as of September 30, 2019:



(In thousands, except share and per share data)	September 30, 2019
	(Unaudited)
Successor Class A Common Stock, par value $.001 per share,1,000,000,000 shares authorized	57,670,714
Successor Class B Common Stock, par value $.001 per share, 1,000,000,000 shares authorized	6,925,976
Successor Special Warrants	81,289,306
Total Successor Class A Common Stock, Class B Common Stock and Special Warrants issued and outstanding	145,885,996

Class A Common Stock

Holders of shares of the Successor Company's Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the Successor Company's Class A common stock will have the exclusive right to vote for the election of directors. There will be no cumulative voting rights in the election of directors.

Holders of shares of the Successor Company's Class A common stock are entitled to receive dividends, on a per share basis, when and if declared by the Company's Board out of funds legally available therefor and whenever any dividend is made on the shares of the Successor Company's Class B common stock subject to certain exceptions set forth in our certificate.

The Successor Company may not subdivide or combine (by stock split, reverse stock split, recapitalization, merger, consolidation or any other transaction) its shares of Class A common stock or Class B common stock without subdividing or combining its shares of Class B common stock or Class A common stock, respectively, in a similar manner.

Upon our dissolution or liquidation or the sale of all or substantially all of the Successor Company's assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Successor Company's Class A common stock will be entitled to receive pro rata together with holders of the Successor Company's Class B common stock our remaining assets available for distribution.

New Class A common stock certificates issued upon transfer or new issuance of Class A common stock shares will contain a legend stating that such shares of Class A common stock are subject to the provisions of our amended and restated certificate of incorporation, including but not limited to provisions governing compliance with requirements of the Communications Act and regulations thereunder, including, without limitation, those concerning foreign ownership and media ownership.

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On July 18, 2019, the Company’s Class A common stock was listed and began trading on the NASDAQ Global Select Market ("Nasdaq") under the ticker symbol “IHRT”.

Class B Common Stock

Holders of shares of the Successor Company's Class B common stock are not entitled to vote for the election of directors or, in general, on any other matter submitted to a vote of the Company’s stockholders, but are entitled to one vote per share on the following matters: (a) any amendment or modification of any specific rights or obligations of the holders of Class B common stock that does not similarly affect the rights or obligations of the holders of Class A common stock, in which case the holders of Class B Common Stock will be entitled to a separate class vote, with each share of Class B common stock having one vote; and (b) to the extent submitted to a vote of our stockholders, (i) the retention or dismissal of outside auditors by the Company, (ii) any dividends or distributions to our stockholders, (ii) any material sale of assets, recapitalization, merger, business combination, consolidation, exchange of stock or other similar reorganization of the Company or any of its subsidiaries, (iv) the adoption of any amendment to our certificate of incorporation, (v) other than in connection with any management equity or similar plan adopted by the Company's Board, any authorization or issuance of equity interests, or any security or instrument convertible into or exchangeable for equity interests, in the Company or any of its subsidiaries, and (vi) the liquidation of the Company, in which case in respect to any such vote concerning the matters described in clause (b), the holders of Class B common stock are entitled to vote with the holders of the Class A common stock, with each share of common stock having one vote and voting together as a single class.

Holders of shares of the Successor Company's Class B common stock are generally entitled to convert shares of Class B common stock into shares of Class A common stock on a one-for-one basis, subject to the Company’s ability to restrict conversion in order to comply with the Communications Act and FCC regulations.

Holders of shares of the Successor Company's Class B common stock are entitled to receive dividends when and if declared by the Company's Board out of funds legally available therefor and whenever any dividend is made on the shares of the Successor Company's Class A common stock subject to certain exceptions set forth in our certificate of incorporation. Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of the Successor Company's Class B common stock will be entitled to receive pro rata with holders of the Successor Company's Class A common stock our remaining assets available for distribution.

During the three months ended September 30, 2019, 21,591 shares of the Class B common stock were converted into Class A common stock.

Special Warrants

Each Special Warrant issued under the special warrant agreement entered into in connection with the Reorganization may be exercised by its holder to purchase one share of Successor Class A common stock or Successor Class B common stock at an exercise price of $0.001 per share, unless the Company in its sole discretion believes such exercise would, alone or in combination with any other existing or proposed ownership of common stock, result in, subject to certain exceptions, (a) such exercising holder owning more than 4.99 percent of the Successor Company's outstanding Class A common stock, (b) more than 22.5 percent of the Successor Company's capital stock or voting interests being owned directly or indirectly by foreign individuals or entities, (c) the Company exceeding any foreign ownership threshold set by the FCC pursuant to a declaratory ruling or specific approval requirement or (d) the Company violating any provision of the Communications Act or restrictions on ownership or transfer imposed by the Company's certificate of incorporation or the decisions, rules and policies of the FCC. Any holder exercising Special Warrants must complete and timely deliver to the warrant agent the required exercise forms and certifications required under the special warrant agreement.

To the extent there are any dividends declared or distributions made with respect to the Successor Class A common stock or Successor Class B common stock, those dividends or distributions will also be made to holders of Special Warrants concurrently and on a pro rata basis based on their ownership of common stock underlying their Special Warrants on an as-exercised basis; provided, that no such distribution will be made to holders of Special Warrants if (x) the Communications Act or an FCC rule prohibits such distribution to holders of Special Warrants or (y) our FCC counsel opines that such distribution is reasonably likely to cause (i) the Company to violate the Communications Act or any applicable FCC rule or (ii) any such holder not to be deemed to hold a noncognizable (under FCC rules governing foreign ownership) future equity interest in the Company; provided further, that, if any distribution of common stock or any other securities to a holder of Special Warrants is not permitted pursuant to clauses

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(x) or (y), the Company will cause economically equivalent warrants to be distributed to such holder in lieu thereof, to the extent that such distribution of warrants would not violate the Communications Act or any applicable FCC rules.

The Special Warrants will expire on the earlier of the twentieth anniversary of the issuance date and the occurrence of a change in control of the Company.

During the three months ended September 30, 2019, 164,342 shares of the Special Warrants were converted into Class A common stock.

Computation of Income (Loss) per Share



(In thousands, except per share data)	Successor Company		Predecessor Company
	Three Months Ended September 30,		Three Months Ended September 30,
	2019		2018
NUMERATOR:
Net income attributable to the Company – common shares	$	12,374	$	70,078
Exclude:
Loss from discontinued operations, net of tax	$	—	$	(49,491	)
Noncontrolling interest from discontinued operations, net of tax - common shares	—		(1,705		)
Total loss from discontinued operations, net of tax - common shares	$	—	$	(51,196	)
Income from continuing operations	$	12,374	$	121,274

DENOMINATOR⁽¹⁾:
Weighted average common shares outstanding - basic	145,720		85,544
Stock options and restricted stock⁽²⁾:	120		78
Weighted average common shares outstanding - diluted	145,840		85,622

Net income (loss) attributable to the Company per common share:
From continuing operations - Basic	$	0.08	$	1.42
From discontinued operations - Basic	$	—	$	(0.60	)
From continuing operations - Diluted	$	0.08	$	1.42
From discontinued operations - Diluted	$	—	$	(0.60	)

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands) The Company
Noncontrolling
Interests
Consolidated
Balance as of January 1, 2017 $ (11,030,835 ) $ 128,974
$ (10,901,861 )
Net income (loss) (816,802 ) 7,614
(809,188 )
Dividends declared and other payments to noncontrolling interests —
(43,540 ) (43,540 )
Share-based compensation 1,867
7,153
9,020
Purchase of additional noncontrolling interests (378 ) (575 ) (953 )
Disposal of noncontrolling interest —
(2,438 ) (2,438 )
Foreign currency translation adjustments 33,473
9,598
43,071
Unrealized holding loss on marketable securities (195 ) (23 ) (218 )
Reclassification adjustments 4,078
485
4,563
Other, net (323 ) (1,235 ) (1,558 )
Balances as of September 30, 2017 $ (11,809,115 ) $ 106,013
$ (11,703,102 )

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

~~COMPUTATION OF LOSS PER SHARE~~


(In thousands, except per share data)	Three Months Ended September 30,					Nine Months Ended September 30,						Successor Company		Predecessor Company
	2018		2017			2018			2017			Period from May 2, 2019 through September 30,		Period from January 1, 2019 through May 1,		Nine Months Ended September 30,
												2019		2019		2018
NUMERATOR:
Net income (loss) attributable to the Company – common shares	$	70,078	$	(250,490	)	$	(416,815	)	$	(816,802	)	$	51,167	$	11,184,141	$	(416,815	)
Exclude:
Income (loss) from discontinued operations, net of tax												$	—	$	1,685,123	$	(206,968	)
Noncontrolling interest from discontinued operations, net of tax - common shares												—		19,028		10,732
Total income (loss) from discontinued operations, net of tax - common shares												$	—	$	1,704,151	$	(196,236	)
Income (loss) from continuing operations												$	51,167	$	9,479,990	$	(220,579	)

DENOMINATOR:
DENOMINATOR⁽¹⁾:
Weighted average common shares outstanding - basic	85,544		85,072			85,348			84,900			145,543		86,241		85,348
Weighted average common shares outstanding - diluted⁽¹⁾	85,622		85,072			85,348			84,900
Stock options and restricted stock⁽²⁾:												112		—		—
Weighted average common shares outstanding - diluted												145,655		86,241		85,348

Net income (loss) attributable to the Company per common share:
Basic	$	0.82	$	(2.94	)	$	(4.88	)	$	(9.62	)
Diluted	$	0.82	$	(2.94	)	$	(4.88	)	$	(9.62	)
From continuing operations - Basic												$	0.35	$	109.92	$	(2.58	)
From discontinued operations - Basic												$	—	$	19.76	$	(2.30	)
From continuing operations - Diluted												$	0.35	$	109.92	$	(2.58	)
From discontinued operations - Diluted												$	—	$	19.76	$	(2.30	)


⁽¹⁾	All of the outstanding Special Warrants issued at emergence are included in both the basic and diluted weighted average common shares outstanding of the Successor Company for the three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019.

⁽²⁾

Outstanding equity awards representing 8.1 million and 5.6 million shares of Class A common stock of the Successor Company for the three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019 were not included in the computation of diluted earnings per share because to do so would have been antidilutive. Outstanding equity awards representing 6.6 million, 5.9 million and ~~8.5~~7.6 million shares of Class A common stock of the Predecessor Company for the period for the three months ended September 30, 2018, the period from January 1, 2019 through May 1, 2019 and ~~2017, respectively, and 7.6 million and 8.5 million for~~ the nine months ended September 30, 2018 ~~and 2017,~~ respectively, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

NOTE 812 — OTHER INFORMATION

Other Comprehensive Income (Loss)

~~The total decrease in other comprehensive income (loss) related to the impact of pensions on deferred income tax liabilities was $0.3 million for the three and nine months ended September 30, 2018.~~ There was no change in deferred income tax liabilities resulting from adjustments to comprehensive ~~income (loss)~~loss for the three ~~and nine~~ months ended September 30, ~~2017.~~

~~Investments~~

~~During~~2019 (Successor), the ~~second quarter of~~three months ended September 30, 2018 (Predecessor), the ~~Company sold its ownership interest in one of its cost method investments, resulting in a gain on sale of $9.9 million, which is reflected within Other income (expense)~~period from May 2, 2019 through September 30, 2019 (Successor), ~~net in~~ the ~~Company's Consolidated Statement of Comprehensive Income (Loss) for~~period from January 1, 2019 through May 2 (Predecessor) and the nine months ended September 30, ~~2018.~~2018 (Predecessor).

~~During the third quarter of 2018, the Company sold one of its investments for net cash proceeds of $11.1 million.~~

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

NOTE 913 – SEGMENT DATA

The Company’s ~~reportable segments, which it believes best reflect how the Company~~primary business is ~~currently managed, are iHM, Americas outdoor advertising and International outdoor advertising.~~included in its Audio segment. Revenue and expenses earned and charged between ~~segments~~Audio, Corporate and the Company's Audio & Media Services businesses are ~~recorded at estimated fair value and~~ eliminated in consolidation. The ~~iHM~~Audio segment provides media and entertainment services via broadcast and digital delivery and also includes the Company’s events and national syndication businesses. The ~~Americas outdoor advertising segment consists of operations primarily in the United States. The International outdoor advertising segment primarily includes operations in Europe, Asia~~Audio & Media Services business provides other audio and ~~Latin America. The Other category includes~~media services, including the Company’s media representation business ~~as well as other general support services~~(Katz Media) and ~~initiatives that are ancillary to the Company’s other businesses.~~its provider of scheduling and broadcast software (RCS). Corporate includes infrastructure and support, including executive, information technology, human resources, legal, finance and administrative functions for ~~each of~~ the Company’s ~~reportable segments, as well as overall executive, administrative and support functions.~~businesses. Share-based payments are recorded in corporate expense.

~~The~~In connection with the Separation and the Reorganization, the Company ~~re-evaluated~~revised its segment reporting, as discussed in Note 1 and determined that its Latin American operations should be managed by its International outdoor leadership team. As a result, beginning on January 1, 2018, the operations of Latin America are no longer reflected within the Company’s Americas outdoor segment and are included in the results of its International segment. Accordingly, the Company has recast the corresponding segment disclosures forall prior periods have been restated to ~~include Latin America within the International outdoor segment. The following table presents the Company's reportable segment results for the three and nine months ended September 30, 2018 and 2017:~~conform with this presentation.

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(In thousands) iHM Americas Outdoor International Outdoor Other Corporate and other reconciling items Eliminations Consolidated
Three Months Ended September 30, 2018
Revenue $ 873,404
$ 303,421
$ 360,318
$ 47,088
$ —
$ (1,466 ) $ 1,582,765
Direct operating expenses 268,606
131,241
230,440
—
—
(23 ) 630,264
Selling, general and administrative expenses 303,451
49,247
79,550
25,985
—
(476 ) 457,757
Corporate expenses —
—
—
—
85,160
(967 ) 84,193
Depreciation and amortization 34,882
39,783
36,627
3,222
6,186
—
120,700
Impairment charges —
—
—
—
40,922
—
40,922
Other operating expense, net —
—
—
—
(1,637 ) —
(1,637 )
Operating income (loss) $ 266,465
$ 83,150
$ 13,701
$ 17,881
$ (133,905 ) $ —
$ 247,292
Intersegment revenues $ 23
$ 1,443
$ —
$ —
$ —
$ —
$ 1,466
Capital expenditures $ 17,750
$ 25,826
$ 21,921
$ 896
$ 2,555
$ —
$ 68,948
Share-based compensation expense $ —
$ —
$ —
$ —
$ 3,588
$ —
$ 3,588

Three Months Ended September 30, 2017
Revenue $ 859,531
$ 293,807
$ 350,623
$ 34,452
$ —
$ (1,656 ) $ 1,536,757
Direct operating expenses 265,795
130,269
227,677
—
—
—
623,741
Selling, general and administrative expenses 287,676
49,007
79,532
23,298
—
(717 ) 438,796
Corporate expenses —
—
—
—
78,906
(939 ) 77,967
Depreciation and amortization 58,089
44,457
35,464
3,893
7,846
—
149,749
Impairment charges —
—
—
—
7,631
—
7,631
Other operating income, net —
—
—
—
(13,215 ) —
(13,215 )
Operating income (loss) $ 247,971
$ 70,074
$ 7,950
$ 7,261
$ (107,598 ) $ —
$ 225,658
Intersegment revenues $ —
$ 1,656
$ —
$ —
$ —
$ —
$ 1,656
Capital expenditures $ 14,009
$ 4,397
$ 26,932
$ 184
$ 2,802
$ —
$ 48,324
Share-based compensation expense $ —
$ —
$ —
$ —
$ 3,539
$ —
$ 3,539

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

(In thousands) iHM Americas Outdoor International Outdoor Other Corporate and other reconciling items Eliminations Consolidated
Nine Months Ended September 30, 2018
Revenue $ 2,471,239
$ 859,190
$ 1,114,927
$ 113,803
$ —
$ (5,904 ) $ 4,553,255
Direct operating expenses 773,424
386,427
709,479
—
—
(70 ) 1,869,260
Selling, general and administrative expenses 929,308
146,021
235,473
74,420
—
(2,988 ) 1,382,234
Corporate expenses —
—
—
—
245,399
(2,846 ) 242,553
Depreciation and amortization 149,714
127,410
113,875
10,242
18,537
—
419,778
Impairment charges —
—
—
—
40,922
—
40,922
Other operating expense, net —
—
—
—
(5,212 ) —
(5,212 )
Operating income (loss) $ 618,793
$ 199,332
$ 56,100
$ 29,141
$ (310,070 ) $ —
$ 593,296
Intersegment revenues $ 84
$ 5,820
$ —
$ —
$ —
$ —
$ 5,904
Capital expenditures $ 42,211
$ 50,214
$ 57,487
$ 1,083
$ 6,574
$ —
$ 157,569
Share-based compensation expense $ —
$ —
$ —
$ —
$ 8,385
$ —
$ 8,385

Nine Months Ended September 30, 2017
Revenue $ 2,501,084
$ 854,344
$ 1,005,954
$ 99,332
$ —
$ (5,444 ) $ 4,455,270
Direct operating expenses 773,327
393,953
645,222
3
—
—
1,812,505
Selling, general and administrative expenses 894,669
148,824
221,773
74,519
—
(2,694 ) 1,337,091
Corporate expenses —
—
—
—
236,237
(2,750 ) 233,487
Depreciation and amortization 174,946
130,127
102,711
11,097
24,769
—
443,650
Impairment charges —
—
—
—
7,631
—
7,631
Other operating income, net —
—
—
—
24,785
—
24,785
Operating income (loss) $ 658,142
$ 181,440
$ 36,248
$ 13,713
$ (243,852 ) $ —
$ 645,691
Intersegment revenues $ —
$ 5,444
$ —
$ —
$ —
$ —
$ 5,444
Capital expenditures $ 44,353
$ 46,394
$ 86,206
$ 551
$ 7,440
$ —
$ 184,944
Share-based compensation expense $ —
$ —
$ —
$ —
$ 9,020
$ —
$ 9,020

~~NOTE 10– CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS~~

The following table presents the Company's segment results for the Successor Company ~~is a party to a management agreement with certain affiliates of Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. (together,~~for the "Sponsors") and certain other parties pursuant to which such affiliates of the Sponsors will provide management and financial advisory services until December 31, 2018. These agreements require management fees to be paid to such affiliates of the Sponsors for such services at a rate not greater than $15.0 million per year, plus reimbursable expenses. For the ninethree months ended September 30, ~~2018,~~2019 and the Company recognized management fees and reimbursable expenses of $2.9 million. In connection with the Reorganization, the Company is not recognizing management fees following the Petition Date. The Company recognized management fees and reimbursable expenses of $3.8 million and $11.4 million for the three and nine months endedperiod from May 2, 2019 through September 30, ~~2017, respectively.~~2019:



Successor Company
(In thousands)	Audio		Audio & Media Services		Corporate and other reconciling items			Eliminations			Consolidated
Three Months Ended September 30, 2019
Revenue	$	890,364	$	59,873	$	—		$	(1,899	)	$	948,338
Direct operating expenses	283,984		7,281		—			(294		)	290,971
Selling, general and administrative expenses	310,337		32,609		—			(1,593		)	341,353
Corporate expenses	—		—		70,056			(12		)	70,044
Depreciation and amortization	87,442		5,971		1,855			—			95,268
Other operating expense, net	—		—		(9,880		)	—			(9,880		)
Operating income (loss)	$	208,601	$	14,012	$	(81,791	)	$	—		$	140,822
Intersegment revenues	$	168	$	1,731	$	—		$	—		$	1,899
Capital expenditures	$	23,705	$	1,994	$	3,171		$	—		$	28,870
Share-based compensation expense	$	—	$	—	$	17,112		$	—		$	17,112

Period from May 2, 2019 through September 30, 2019
Revenue	$	1,486,594	$	100,410	$	—		$	(3,020	)	$	1,583,984
Direct operating expenses	463,455		12,153		—			(346		)	475,262
Selling, general and administrative expenses	516,343		54,804		—			(2,654		)	568,493
Corporate expenses	—		—		104,454			(20		)	104,434
Depreciation and amortization	142,019		9,590		3,042			—			154,651
Other operating expense, net	—		—		(6,634		)	—			(6,634		)
Operating income (loss)	$	364,777	$	23,863	$	(114,130	)	$	—		$	274,510

Intersegment revenues	$	280	$	2,740	$	—		$	—		$	3,020
Capital expenditures	$	37,259	$	2,824	$	6,222		$	—		$	46,305
Share-based compensation expense	$	—	$	—	$	20,151		$	—		$	20,151

IHEARTMEDIA, INC. AND SUBSIDIARIES ~~(DEBTOR-IN-POSSESSION)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents the Company's segment results for the Predecessor Company for the periods indicated. The presentation of prior period amounts has been restated to conform to the presentation of the Successor period.



Predecessor Company
(In thousands)	Audio		Audio and Media Services		Corporate and other reconciling items			Eliminations			Consolidated
Three Months Ended September 30, 2018
Revenue	$	852,280	$	69,823	$	—		$	(1,611	)	$	920,492
Direct operating expenses	261,645		7,052		—			(91		)	268,606
Selling, general and administrative expenses	297,851		33,105		—			(1,520		)	329,436
Corporate expenses	—		—		56,699			—			56,699
Depreciation and amortization	33,754		4,350		5,191			—			43,295
Impairment charges	—		—		33,150			—			33,150
Other operating expense, net	—		—		(2,462		)	—			(2,462		)
Operating income (loss)	$	259,030	$	25,316	$	(97,502	)	$	—		$	186,844
Intersegment revenues	$	—	$	1,611	$	—		$	—		$	1,611
Capital expenditures	$	16,951	$	1,695	$	1,496		$	—		$	20,142
Share-based compensation expense	$	—	$	—	$	456		$	—		$	456

Period from January 1, 2019 through May 1, 2019
Revenue	$	1,006,677	$	69,362	$	—		$	(2,568	)	$	1,073,471
Direct operating expenses	350,501		9,559		—			(364		)	359,696
Selling, general and administrative expenses	396,032		42,497		—			(2,184		)	436,345
Corporate expenses					66,040			(20		)	66,020
Depreciation and amortization	40,982		5,266		6,586			—			52,834
Impairment charges	—		—		91,382			—			91,382
Other operating expense, net	—		—		(154		)	—			(154		)
Operating income (loss)	$	219,162	$	12,040	$	(164,162	)	$	—		$	67,040
Intersegment revenues	$	243	$	2,325	$	—		$	—		$	2,568
Capital expenditures	$	31,177	$	1,263	$	3,757		$	—		$	36,197
Share-based compensation expense	$	—	$	—	$	498		$	—		$	498

Nine Months Ended September 30, 2018
Revenue	$	2,409,330	$	180,582	$	—		$	(4,884	)	$	2,585,028
Direct operating expenses	752,447		21,160		—			(183		)	773,424
Selling, general and administrative expenses	912,412		96,003		—			(4,687		)	1,003,728
Corporate expenses	—		—		162,089			(14		)	162,075
Depreciation and amortization	146,048		13,908		15,590			—			175,546
Impairment charges	—		—		33,150			—			33,150
Other operating expense, net	—		—		(6,912		)	—			(6,912		)
Operating income (loss)	$	598,423	$	49,511	$	(217,741	)	$	—		$	430,193
Intersegment revenues	$	—	$	4,884	$	—		$	—		$	4,884
Capital expenditures	$	40,836	$	2,458	$	4,154		$	—		$	47,448
Share-based compensation expense	$	—	$	—	$	1,628		$	—		$	1,628

IHEARTMEDIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1114 – ~~LIABILITIES SUBJECT TO COMPROMISE~~CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

iHeartCommunications Line of Credit

On the Effective Date, iHeartCommunications entered into a revolving loan agreement with CCOL and Clear Channel International, Ltd., both subsidiaries of CCOH, governing a revolving credit facility that provided for borrowings of up to $200 million. The iHeartCommunications line of credit was unsecured. On July 30, 2019, in connection with the consummation of an underwritten public offering of common stock of CCOH, the borrowers terminated the iHeartCommunications line of credit. As ~~discussed in Note 1, "Basis~~ of ~~Presentation", since~~ the ~~Petition~~date of termination there were no amounts drawn under the facility.

Transition Services Agreement

On the Effective Date, the Company, ~~has been operating as debtor in possession under~~iHM Management Services, iHeartCommunications and CCOH entered into the ~~jurisdiction of~~Transition Services Agreement. For information regarding the ~~Bankruptcy Court and in accordance with provisions of the Bankruptcy Code. On the accompanying Consolidated Balance Sheets, the caption “Liabilities subject~~Transition Services Agreement, refer to compromise” reflects the expected allowed amount of the pre-petition claims that are not fully secured and that have at least a possibility of not being repaid at the full claim amount. Liabilities subject to compromise at September 30, 2018 consisted of the following:

(In thousands) September 30,
2018
Accounts payable $ 44,132
Accrued expenses 27,509
Deferred taxes 622,415
Other long-term liabilities 89,730
Accounts payable, accrued and other liabilities 783,786
Debt subject to compromise 15,148,955
Accrued interest on debt subject to compromise 542,673
Long-term debt and accrued interest 15,691,628
Total liabilities subject to compromise $ 16,475,414

Determination of the value at which liabilities will ultimately be settled cannot be made until the Bankruptcy Court approves the Plan of Reorganization. The Company will continue to evaluate the amount and classification of its pre-petition liabilities. Any additional liabilities that are subject to compromise will be recognized accordingly, and the aggregate amount of liabilities subject to compromise may change.

Note 4, ~~NOTE 12~~Discontinued Operations~~– REORGANIZATION ITEMS, NET~~.

Reorganization items incurred as a result of the Chapter 11 Cases are presented separately in the accompanying statements of operations for the three and nine months ended September 30, 2018 and were as follows:

(In thousands) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Write-off of deferred long-term debt fees $ —
$ 67,079
Write-off of original issue discount on debt subject to compromise —
131,100
Debtor-in-possession refinancing costs —
10,546
Professional fees and other bankruptcy related costs 52,475
104,545
Reorganization items, net $ 52,475
$ 313,270

Professional fees included in Reorganization items, net represent fees for post-petition expenses related to the Chapter 11 Cases. Write-off of deferred long-term debt fees and write-off of original issue discount are included in Reorganization items, net.

As of September 30, 2018, $56.2 million of Reorganization items, net were unpaid and accrued in Accounts Payable and Accrued Expenses in the accompanying Consolidated Balance Sheet. Reorganization items, net of $6.7 million relating to the Debtor-in-possession financing costs were netted against the $125.0 million proceeds received from issuance of the DIP Facility.

~~NOTE 13– CONDENSED COMBINED DEBTOR-IN-POSSESSION FINANCIAL INFORMATION~~

The financial statements below represent the condensed combined financial statements of the Debtors. The results of the Company’s Non-Filing Entities, which are comprised primarily of the Company's Americas outdoor and International outdoor segments, are not included in these condensed combined financial statements.

Intercompany transactions among the Debtors have been eliminated in the financial statements contained herein. Intercompany transactions among the Debtors and the Non-Filing Entities have not been eliminated in the Debtors’ financial statements.

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

New Tax Matters Agreement

~~Debtors' Balance Sheet~~

(In thousands) September 30, 2018
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 76,154
Accounts receivable, net of allowance of $24,455 809,974
Prepaid expenses 115,308
Other current assets 25,651
Total Current Assets 1,027,087
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net 462,609
INTANGIBLE ASSETS AND GOODWILL
Indefinite-lived intangibles - licenses 2,409,326
Other intangibles, net 171,134
Goodwill 3,335,433
OTHER ASSETS
Other assets 58,080
Total Assets $ 7,463,669
CURRENT LIABILITIES
Accounts payable $ 49,737
Intercompany payable 9,227
Accrued expenses 240,412
Accrued interest 592
Deferred income 130,236
Current portion of long-term debt —
Total Current Liabilities 430,204
Long-term debt —
Other long-term liabilities 233,769
Liabilities subject to compromise¹
17,507,135
EQUITY (DEFICIT)
Equity (Deficit) (10,707,439 )
Total Liabilities and Equity (Deficit) $ 7,463,669

¹InOn the Effective Date, the Company entered into the New Tax Matters Agreement by and among the Company, iHeartCommunications, iHeart Operations, CCH, CCOH and Clear Channel Outdoor, Inc., to allocate the responsibility of the Company and its subsidiaries, on the one hand, and the Outdoor Group, on the other, for the payment of taxes arising prior and subsequent to, and in connection with, the ~~cash management arrangements with CCOH,~~Separation. For information regarding the ~~Company maintains an intercompany revolving promissory note payable by the Company~~New Tax Matters Agreement, refer to ~~CCOH (the "Intercompany Note"), which matures on May 15, 2019. Liabilities subject to compromise include the principal amount outstanding under the Intercompany~~ Note ~~which totals $1,031.7 million as of September 30, 2018.~~4, Discontinued Operations.

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~Debtors' Statements of Operations~~

(In thousands) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Revenue $ 909,984
$ 2,558,629
Operating expenses:
Direct operating expenses (excludes depreciation and amortization) 267,117
768,868
Selling, general and administrative expenses (excludes depreciation and amortization) 322,410
986,654
Corporate expenses (excludes depreciation and amortization) 47,431
134,293
Depreciation and amortization 43,036
174,773
Impairment charges 33,151
33,151
Other operating expense, net (2,458 ) (6,908 )
Operating income 194,381
453,982
Interest expense, net¹
2,638
356,179
Equity in loss of nonconsolidated affiliates (31 ) (94 )
Gain on extinguishment of debt —
5,667
Dividend income²
269
25,756
Other expense, net (410 ) (22,648 )
Reorganization items, net 52,475
313,270
Income (loss) before income taxes 139,096
(206,786 )
Income tax benefit (expense) (10,681 ) 10,465
Net income (loss) $ 128,415
$ (196,321 )

¹Includes interest incurred during the three months ended September 30, 2018 in relation to the post-petition Intercompany Note and interest incurred during the nine months ended September 30, 2018 in relation to the pre-petition and post-petition Intercompany Notes.

²~~Consists of cash dividends received from Non-Debtor entities during the three and nine months ended September 30, 2018.~~

~~IHEARTMEDIA, INC. AND SUBSIDIARIES (DEBTOR-IN-POSSESSION)~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~Debtors' Statement of Cash Flows~~

(In thousands) Nine Months Ended September 30, 2018

Cash flows from operating activities:
Consolidated net loss $ (196,321 )
Reconciling items:
Impairment charges 33,151
Depreciation and amortization 174,773
Deferred taxes (18,869 )
Provision for doubtful accounts 14,747
Amortization of deferred financing charges and note discounts, net 11,871
Non-cash Reorganization items, net 261,057
Share-based compensation 1,628
Loss on disposal of operating and other assets 2,738
Equity in loss of nonconsolidated affiliates 94
Gain on extinguishment of debt (5,667 )
Barter and trade income (6,228 )
Other reconciling items, net (320 )
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Decrease in accounts receivable 20,906
Increase in prepaid expenses and other current assets (18,844 )
Decrease in accrued expenses (41,848 )
Increase in accounts payable 21,954
Increase in accrued interest 302,724
Increase in deferred income 11,323
Changes in other operating assets and liabilities (13,726 )
Net cash provided by operating activities 555,143
Cash flows from investing activities:
Purchases of property, plant and equipment (47,309 )
Proceeds from disposal of assets 682
Purchases of other operating assets (305 )
Change in other, net (95 )
Net cash used for investing activities (47,027 )
Cash flows from financing activities:
Draws on credit facilities 143,332
Payments on credit facilities (258,308 )
Payments on long-term debt (358,880 )
Net transfers to related parties (57,078 )
Change in other, net (74 )
Net cash used for financing activities (531,008 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash —
Net decrease in cash, cash equivalents and restricted cash (22,892 )
Cash, cash equivalents and restricted cash at beginning of period 102,468
Cash, cash equivalents and restricted cash at end of period $ 79,576

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Format of Presentation

Management’s discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related footnotes contained in Item 1 of this Quarterly Report on Form 10-Q. Our discussion is presented on both a consolidated and segment basis.

Our reportable segments are iHeartMedia (“iHM”), Americas outdoor advertising (“Americas outdoor” or “Americas outdoor advertising”) and International outdoor advertising (“International outdoor” or “International outdoor advertising”). Our iHM segmentprimary business provides media and entertainment services via ~~live~~ broadcast and digital delivery, including our networks businesses, through our Audio segment. We also operate businesses that provide audio and ~~also includes~~media services, including our events and national syndication business. Our Americas outdoor and International outdoor segments provide outdoor advertising services in their respective geographic regions using various digital and traditional display types. Included in the “Other” category is ourfull-service media representation business, Katz Media Group (“Katz Media”) and our provider of scheduling and broadcast software and services, Radio Computing Services ("RCS"). Following the Separation, we ceased to operate the outdoor business, which ~~is ancillary~~prior to the Separation was presented as our ~~other businesses.~~

We manage our operating segments by focusing primarily on their operating income, while Corporate expenses, Other operating income (expense), net, Interest expense, Gain on marketable securities, Equity in earnings (loss) of nonconsolidated affiliates, Loss on extinguishment of debt, Other income, netAmericas outdoor segment and ~~Income tax expense are managed on a total company basis and are, therefore, included only in our discussion of consolidated results.~~

We re-evaluated our segment reporting and determined that our Latin American operations should be managed by our International outdoor leadership team. As such, beginning January 1, 2018, our Latin American operations have been included in our International outdoor segment. ~~Accordingly,~~The historical results of the outdoor business have been reclassified as results from discontinued operations.

On May 1, 2019, we ~~recast~~consummated the ~~corresponding segment disclosures for prior periods to include Latin America within the International outdoor segment.~~

~~Immaterial Corrections to Prior Periods~~

~~During the second quarter of 2018, we identified corrections associated with VAT obligations~~Separation and Reorganization, resulting in a substantial reduction in our ~~International Outdoor business that impacted prior periods. Accordingly,~~long-term indebtedness and corresponding cash interest expenses, and significantly extending the maturities of our outstanding indebtedness, as more fully described under “Liquidity and Capital Resources” below. Over the past ten years, we have ~~revised~~transitioned our Audio business from a single platform radio broadcast operator to a company with multiple platforms including podcasting, networks and live events. We have also invested in numerous technologies and businesses to increase the ~~prior period financial statements presented herein~~competitiveness of our inventory with our advertisers and our audience. We believe that our ability to ~~reflect~~generate free cash flow from these ~~corrections. “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q is based on~~business initiatives coupled with the ~~revised financial results for the three and nine months ended September 30, 2017. For further details, refer to Note 1~~significant reduction in interest payments due to our ~~consolidated financial statements included in this Quarterly Report on Form 10-Q.~~

~~Current Bankruptcy Proceedings~~

~~On March 14, 2018,~~reduced level of indebtedness and our continued efforts to refinance our exit indebtedness with indebtedness with lower interest rates and the ~~Company, iHeartCommunications and certain~~elimination of the Company's direct and indirect domestic subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief (the "Chapter 11 Cases") under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court"). Clear Channel Outdoor Holdings, Inc. (“CCOH”) and its direct and indirect subsidiaries did not file voluntary petitions for reorganization under the Bankruptcy Code and are not Debtors in the Chapter 11 Cases.

The Chapter 11 Cases are being administered under the caption In re: iHeartMedia, Inc., Case No. 18-31274 (MI). The Debtors are operating their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

~~For more information regarding the impact of the Chapter 11 Cases, see~~ ~~Liquidity After Filing the Chapter 11 Cases~~.

D~~escription~~majority of our near-term debt maturities will enable us to generate sufficient cash flows to operate our businesses and de-lever our balance sheet over time.

Description of our Business

Our ~~iHM~~Audio strategy centers on delivering entertaining and informative content where our listeners want to find us across multiple platforms, including broadcast, mobile and digital, as well as events. Our primary source of revenue is derived from selling broadcast local and national advertising time on our radio stations, with contracts typically less than one year in duration. The programming formats of our radio stations are designed to reach audiences with targeted demographic characteristics. We are working closely with our advertising and marketing partners to develop tools and leverage data to enable advertisers to effectively reach their desired audiences. We continue to expand the choices for listeners and we deliver our content and sell advertising across multiple distribution channels including digitally via our iHeartRadio mobile application, our station websites and other digital platforms which reach national, regional and local audiences. We also generate revenues from ~~network syndication,~~our Networks, including Premiere and Total Traffic & Weather, as well as through sponsorships and our nationally recognized live events ~~our station websites~~ and other ~~miscellaneous transactions.~~

~~Management typically monitors~~revenue streams. We also generate revenue by providing audio and media services to radio and TV broadcast industry participants through our ~~outdoor advertising business by reviewing the average rates, average revenue per display, occupancy~~Katz Media and ~~inventory levels of each of our display types by market. Our outdoor advertising revenue is derived from~~

selling advertising space on the displays we own or operate in key markets worldwide, consisting primarily of billboards, street furniture and transit displays. Part of our long-term strategy for our outdoor advertising businesses is to pursue the technology of digital displays, including flat screens, LCDs and LEDs, as additions to traditional methods of displaying our clients’ advertisements. We are currently installing these technologies in certain markets, both domestically and internationally.RCS businesses.

Our advertising revenue ~~for all of our segments~~ is highly correlated to changes in gross domestic product (“GDP”) as advertising spending has historically trended in line with ~~GDP, both domestically~~GDP. Our broadcast national and ~~internationally. Internationally, our results are impacted by fluctuations in foreign currency exchange rates~~local revenue, as well as our Katz Media revenue, are generally impacted by political cycles.

Emergence from Bankruptcy

On March 14, 2018, iHeartMedia, Inc. (the “Company,” "iHeartMedia," "we" or "us"), iHeartCommunications, Inc. (“iHeartCommunications”) and certain of the ~~economic conditions~~Company's direct and indirect domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), in the ~~foreign markets~~United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”). On April 28, 2018, the Debtors filed a plan of reorganization and a related disclosure statement (as amended, the “Disclosure Statement”) with the Bankruptcy Court, which was subsequently amended by filing the second, third, fourth and fifth amended Plan of Reorganization and amended versions of the Disclosure Statement. On January 22, 2019, the Modified Fifth Amended Joint Chapter 11 Plan of Reorganization of iHeartMedia, Inc. and Its Debtor Affiliates (as further modified, the “Plan of Reorganization”) was confirmed by the Bankruptcy Court.

On May 1, 2019 (the “Effective Date”), the conditions to the effectiveness of the Plan of Reorganization were satisfied and the Company emerged from Chapter 11 through (a) a series of transactions (the “Separation”) through which Clear Channel Outdoor Holdings, Inc. (“CCOH”), its parent Clear Channel Holdings, Inc. (“CCH”) and its subsidiaries (collectively with CCOH and CCH, the “Outdoor Group”) were separated from, and ceased to be controlled by, the Company and its subsidiaries (the “iHeart Group”), and (b) a series of transactions (the “Reorganization”) through which iHeartCommunications’ debt was reduced from approximately $16 billion to approximately $5.8 billion and a global compromise and settlement among holders of claims

(“Claimholders”) in connection with the Chapter 11 Cases was effected. The compromise and settlement involved, among others, (i) the restructuring of iHeartCommunications’ indebtedness by (A) replacing its “debtor-in-possession” credit facility with a $450 million senior secured asset-based revolving credit facility (the “ABL Facility”) and (B) issuing to certain Claimholders, on account of their claims, approximately $3.5 billion aggregate principal amount of new senior secured term loans (the “Term Loan Facility”), approximately $1.45 billion aggregate principal amount of new 8.375% Senior Notes due 2027 (the “Senior Unsecured Notes”) and approximately $800 million aggregate principal amount of new 6.375% Senior Secured Notes due 2026 (the “6.375% Senior Secured Notes”), (ii) the Company’s issuance of new Class A common stock, new Class B common stock and special warrants to purchase shares of new Class A common stock and Class B common stock (“Special Warrants”) to Claimholders, subject to ownership restrictions imposed by the Federal Communications’ Commission (“FCC”), (iii) the settlement of certain intercompany transactions, and (iv) the sale of the preferred stock (the “iHeart Operations Preferred Stock”) of the Company’s wholly-owned subsidiary iHeart Operations, Inc. (“iHeart Operations”) in connection with the Separation.

All of the existing equity of the Company was canceled on the Effective Date pursuant to the Plan of Reorganization.

Beginning on the Effective Date, the Company applied fresh start accounting, which ~~we have operations.~~resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the consolidated financial statements after May 1, 2019 are not comparable with the consolidated financial statements on or prior to that date. Refer to Note 3, Fresh Start Accounting, to our Consolidated Financial Statements for further details.

Executive Summary

The key developments that impacted our business during the quarter are summarized below:

Revenue of $948.3 million increased $27.8 million or 3.0% during quarter ended September 30, 2019 compared to the same period of 2018.

Operating income of $140.8 million was down from $186.8 million in the prior year’s quarter.

Net income of $12.4 million was down from $71.8 million in the prior year's quarter.


•	Adjusted EBITDA⁽¹⁾ of $274.7 million, was up 0.3% year-over-year.

Cash flows provided by operating activities from continuing operations of $180.3 million increased $24.8 million or 16.0%.


•	Free cash flow⁽²⁾ of $151.5 million increased $16.1 million or 11.9%.

iHeartCommunications issued $750.0 million of new 5.25% Senior Secured Notes due 2027. Proceeds from the new notes, together with cash on hand, were used to prepay at par $740.0 million of borrowings outstanding under the Term Loan Facility.

The table below presents a summary of our historical results of operations for the periods presented:



(In thousands)	Successor Company		Predecessor Company
	Three Months Ended September 30,		Three Months Ended September 30,		%
	2019		2018		Change
Revenue	$	948,338	$	920,492	3.0	%
Operating income	$	140,822	$	186,844	(24.6	)%
Net income	$	12,374	$	71,783	(82.8	)%
Cash provided by operating activities from continuing operations	$	180,341	$	155,528	16.0	%

Adjusted EBITDA⁽¹⁾	$	274,656	$	273,804	0.3	%
Free cash flow from continuing operations⁽²⁾	$	151,471	$	135,386	11.9	%

⁽¹⁾For a definition of Adjusted EBITDA and a reconciliation to Operating income, the most closely comparable GAAP measure, and to Net Income (Loss), please see "Reconciliation of Operating Income to Adjusted EBITDA" and "Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA" in this MD&A.

⁽²⁾For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations” in this MD&A.

Results of Operations

Our financial results for the periods from January 1, 2019 through May 1, 2019 and for the three and nine months ended September 30, 2018 are referred to as those of the “Predecessor” period. Our financial results for the three months ended September 30, 2019 and the period from May 2, 2019 through September 30, 2019 are referred to as those of the “Successor” period. Our results of operations as reported in our Consolidated Financial Statements for these periods are prepared in accordance with GAAP. Although GAAP requires that we report our results for the period from January 1, 2019 through May 1, 2019 and the period from May 2, 2019 through September 30, 2019 separately, management views the Company’s operating results for the nine months ended September 30, 2019 by combining the results of the applicable Predecessor and Successor periods because such presentation provides the most meaningful comparison of our results to prior periods.

The Company cannot adequately benchmark the operating results of the period from May 2, 2019 through September 30, 2019 against any of the previous periods reported in its Consolidated Financial Statements without combining it with the period from January 1, 2019 through May 1, 2019 and does not believe that reviewing the results of this period in isolation would be useful in identifying trends in or reaching conclusions regarding the Company’s overall operating performance. Management believes that the key performance metrics such as revenue, operating income and Adjusted EBITDA for the Successor period when combined with the Predecessor, period provide more meaningful comparisons to other periods and are useful in identifying current business trends. Accordingly, in addition to presenting our results of operations as reported in our Consolidated Financial Statements in accordance with GAAP, the tables and discussion below also present the combined results for the nine months ended September 30, 2019.

The combined results for the nine months ended September 30, 2019, which we refer to herein as the results for the "nine months ended September 30, 2019" represent the sum of the reported amounts for the Predecessor period from January 1, 2019 through May 1, 2019 and the Successor period from May 2, 2019 through September 30, 2019. These combined results are not considered to be prepared in accordance with GAAP and have not been prepared as pro forma results per applicable regulations. The combined operating results do not reflect the actual results we would have achieved absent our emergence from bankruptcy and may not be indicative of future results.

The table below presents the comparison of our historical results of operations for the periods presented:



(In thousands)	Successor Company			Predecessor Company
	Three Months Ended September 30,			Three Months Ended September 30,
	2019			2018
Revenue	$	948,338		$	920,492
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	290,971			268,606
Selling, general and administrative expenses (excludes depreciation and amortization)	341,353			329,436
Corporate expenses (excludes depreciation and amortization)	70,044			56,699
Depreciation and amortization	95,268			43,295
Impairment charges	—			33,150
Other operating expense, net	(9,880		)	(2,462		)
Operating income	140,822			186,844
Interest expense, net	100,967			2,097
Gain on investments, net	1,735			186
Equity in loss of nonconsolidated affiliates	(1		)	(30		)
Other expense, net	(12,457		)	(281		)
Reorganization items, net	—			(52,475		)
Income from continuing operations before income taxes	29,132			132,147
Income tax expense	(16,758		)	(10,873		)
Income from continuing operations	12,374			121,274
Loss from discontinued operations, net of tax	—			(49,491		)
Net income	12,374			71,783
Less amount attributable to noncontrolling interest	—			1,705
Net income attributable to the Company	$	12,374		$	70,078



(In thousands)	Successor Company			Predecessor Company			Non-GAAP Combined			Predecessor Company
	Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2019			2019			2019			2018
Revenue	$	1,583,984		$	1,073,471		$	2,657,455		$	2,585,028
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	475,262			359,696			834,958			773,424
Selling, general and administrative expenses (excludes depreciation and amortization)	568,493			436,345			1,004,838			1,003,728
Corporate expenses (excludes depreciation and amortization)	104,434			66,020			170,454			162,075
Depreciation and amortization	154,651			52,834			207,485			175,546
Impairment charges	—			91,382			91,382			33,150
Other operating expense, net	(6,634		)	(154		)	(6,788		)	(6,912		)
Operating income	274,510			67,040			341,550			430,193
Interest expense (income), net	170,678			(499		)	170,179			333,843
Gain (loss) on investments, net	1,735			(10,237		)	(8,502		)	9,361
Equity in loss of nonconsolidated affiliates	(25		)	(66		)	(91		)	(93		)
Other income (expense), net	(21,614		)	23			(21,591		)	(22,755		)
Reorganization items, net	—			9,461,826			9,461,826			(313,270		)
Income (loss) from continuing operations before income taxes	83,928			9,519,085			9,603,013			(230,407		)
Income tax benefit (expense)	(32,761		)	(39,095		)	(71,856		)	9,828
Income (loss) from continuing operations	51,167			9,479,990			9,531,157			(220,579		)
Income (loss) from discontinued operations, net of tax	—			1,685,123			1,685,123			(206,968		)
Net income (loss)	51,167			11,165,113			11,216,280			(427,547		)
Less amount attributable to noncontrolling interest	—			(19,028		)	(19,028		)	(10,732		)
Net income (loss) attributable to the Company	$	51,167		$	11,184,141		$	11,235,308		$	(416,815	)

The tables below present the comparison of our revenue streams for the periods presented:



(In thousands)	Successor Company			Predecessor Company
	Three Months Ended September 30,			Three Months Ended September 30,
	2019			2018
Broadcast Radio	$	573,048		$	576,460
Digital	96,656			72,447
Networks	160,133			146,587
Sponsorship and Events	55,541			53,191
Audio and Media Services	59,873			69,823
Other	4,986			3,595
Eliminations	(1,899		)	(1,611		)
Revenue, total	$	948,338		$	920,492



(In thousands)	Successor Company			Predecessor Company			Non-GAAP Combined			Predecessor Company
	Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2019			2019			2019			2018
Broadcast Radio	$	963,588		$	657,864		$	1,621,452		$	1,635,571
Digital	160,894			102,789			263,683			200,388
Networks	265,559			189,088			454,647			425,619
Sponsorship and Events	87,331			50,330			137,661			132,339
Audio and Media Services	100,410			69,362			169,772			180,582
Other	9,222			6,606			15,828			15,413
Eliminations	(3,020		)	(2,568		)	(5,588		)	(4,884		)
Revenue, total	$	1,583,984		$	1,073,471		$	2,657,455		$	2,585,028

Consolidated results for the three months ended September 30, 2019 compared to the consolidated results for the three months ended September 30, 2018 and combined results for the nine months ended September 30, 2019 compared to the consolidated results for the nine months ended September 30, 2018 were as follows:

Revenue

Revenue increased ~~$46.0~~$27.8 million during the three months ended September 30, ~~2018~~2019 compared to the same period of ~~2017, including increases at each~~2018. Revenue increased primarily as a result of higher digital revenue which increased $24.2 million driven by growth in podcasting, primarily as a result of our ~~segments.~~acquisition of Stuff Media in October 2018, as well as other digital revenue, including on-demand services. Revenue from our Network businesses increased $13.5 million, driven primarily by growth in our Total Traffic & Weather business. Broadcast spot revenue decreased $3.4 million, driven by a $5.8 million decrease in political revenue as a result of 2018 being a mid-term congressional election year, partially offset by increased programmatic buying by our national customers. Audio and Media Services revenue decreased $10.0 million as a result of a $10.0 million decrease in political revenue. Excluding ~~the $9.4 million impact from movements in foreign exchange rates, consolidated~~political, revenue increased ~~$55.4~~$43.8 million.

Revenue increased $72.4 million during the nine months ended September 30, 2019 compared to the same period of 2018. The increase in revenue is primarily due to higher digital revenue of $63.3 million driven by growth in podcasting, primarily as a result of our acquisition of Stuff Media in October 2018, as well as other digital revenue, including live radio and other on-demand services and revenue from our Network businesses, which increased $29.0 million. Broadcast spot revenue decreased $14.1 million, due to a $16.7 million decrease in political revenue as a result of 2018 being a mid-term congressional election year. Audio and Media Services revenue decreased $10.8 million, primarily due to a $15.2 million decrease in political revenue. Excluding political, revenue increased $104.5 million.

Direct Operating Expenses

Direct operating expenses increased $22.4 million during the three months ended September 30, ~~2018~~2019 compared to the same period of ~~2017.~~

As2018. Higher direct operating expenses were driven primarily by higher variable expenses, including compensation-related expenses, primarily resulting from the acquisitions of Stuff Media and Jelli in the fourth quarter of 2018, digital royalties, content costs and production expenses from higher podcasting and digital subscription revenue. We also incurred a $2.1 million increase in lease expense, primarily as a result of ~~our filing~~the adoption of the ~~Chapter 11 Cases, we~~new leasing standard in the first quarter of 2019 and the application of fresh start accounting.

Direct operating expenses increased $61.5 million during the nine months ended September 30, 2019 compared to the same period of 2018. Higher direct operating expenses were driven primarily by higher digital royalties, content costs and compensation-related expenses, primarily resulting from the acquisitions of Stuff Media and Jelli in the fourth quarter of 2018, and from higher podcasting and digital subscription revenue, as well as higher net production costs related to our events, including the iHeartRadio Music Awards. We also incurred ~~$52.5~~a $4.4 million increase in lease expense due to the impact of ~~Reorganization items, net~~the adoption of the new leasing standard in the first quarter of 2019 and the adoption of fresh start accounting.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses increased $11.9 million during the three months ended September 30, 2019 compared to the same period of 2018. Higher fees related to increased digital revenue, along with higher employee costs, primarily resulting from the acquisitions of Stuff Media and Jelli in the fourth quarter of 2018, and reclassified $16.5 billion of pre-petition claims that are not fully secured and that have at least a possibility of not being repaid to “Liabilities subject to compromise” on the Consolidated Balance Sheet.

Aswere partially offset by lower commissions as a result of our ~~filing~~revenue mix.

SG&A expenses increased $1.1 million during the nine months ended September 30, 2019 compared to the same period of 2018. The increase in our SG&A expenses was due primarily to higher digital fees, driven by the ~~Chapter 11 Cases, we ceased accruing interest~~increase in digital revenue, along with higher employee costs, primarily resulting from the acquisitions of Stuff Media and Jelli in the fourth quarter of 2018. The increase in SG&A expenses was partially offset by lower trade and barter expenses, primarily resulting from timing, and lower commissions as a result of our revenue mix.

Corporate Expenses

Corporate expenses increased $13.3 million during the three months ended September 30, 2019 compared to the same period of 2018, as a result of higher share-based compensation expense, ~~on long-term debt reclassified~~which increased $16.7 million as ~~Liabilities subject~~a result of our new equity compensation plan entered into in connection with our Plan of Reorganization. This increase was partially offset by lower employee expenses, including variable incentive compensation expenses and lower employee benefit expenses.

Corporate expenses increased $8.4 million during the nine months ended September 30, 2019 compared to ~~compromise at~~ the ~~Petition Date, resulting~~same period of 2018, as a result of higher share-based compensation expense, which increased $19.0 million as a result of our new equity compensation plan entered into in ~~a decrease~~connection with our Plan of Reorganization. This increase was partially offset by lower variable incentive compensation expenses and higher amortization of retention bonuses related to the bankruptcy in ~~interest expense of $371.0~~the prior period.

Depreciation and Amortization

Depreciation and amortization increased $52.0 million and ~~$763.6~~$31.9 million during the three and nine months ended September 30, ~~2018, respectively,~~2019, compared to the same periods of ~~2017.~~

~~On August 16,~~ 2018, ~~and September 17, 2018, the Company repaid $100.0 million and $25.0 million,~~ respectively, ~~of the amount drawn under the DIP Facility. As of September 30, 2018, we had no borrowings under the DIP Facility.~~

Revenues and expenses “excluding the impact of foreign exchange movements” in this MD&A are presented because management believes that viewing certain financial results without the impact of fluctuations in foreign currency rates facilitates period to period comparisons of business performance and provides useful information to investors. Revenues and expenses “excluding the impact of foreign exchange movements” are calculated by converting the current period’s revenues and expenses in local currency to U.S. dollars using average foreign exchange rates for the prior period.

~~Consolidated Results of Operations~~

~~The comparison of our historical results of operations for the three and nine months ended September 30, 2018 to the three and nine months ended September 30, 2017 is as follows:~~

(In thousands) Three Months Ended
September 30, %
Change Nine Months Ended
September 30,
%
Change
2018 2017 2018 2017
Revenue $ 1,582,765
$ 1,536,757
3.0% $ 4,553,255
$ 4,455,270
2.2%
Operating expenses:
Direct operating expenses (excludes depreciation and amortization) 630,264
623,741
1.0% 1,869,260
1,812,505
3.1%
Selling, general and administrative expenses (excludes depreciation and amortization) 457,757
438,796
4.3% 1,382,234
1,337,091
3.4%
Corporate expenses (excludes depreciation and amortization) 84,193
77,967
8.0% 242,553
233,487
3.9%
Depreciation and amortization 120,700
149,749
(19.4)% 419,778
443,650
(5.4)%
Impairment charges 40,922
7,631
436.3% 40,922
7,631
436.3%
Other operating income (expense), net (1,637 ) (13,215 ) (5,212 ) 24,785

Operating income 247,292
225,658
9.6% 593,296
645,691
(8.1)%
Interest expense 99,255
470,250
625,252
1,388,819

Equity in earnings (loss) of nonconsolidated affiliates 172
(2,238 ) 291
(2,240 )
Other income (expense), net (6,182 ) 50
(35,424 ) (13,677 )
Reorganization items, net 52,475
—
313,270
—

Income (loss) before income taxes 89,552
(246,780 ) (380,359 ) (759,045 )
Income tax expense (17,769 ) (2,051 ) (47,188 ) (50,143 )
Consolidated net income (loss) 71,783
(248,831 ) (427,547 ) (809,188 )
Less amount attributable to noncontrolling interest 1,705
1,659
(10,732 ) 7,614

Net income (loss) attributable to the Company $ 70,078
$ (250,490 ) $ (416,815 ) $ (816,802 )

~~Consolidated Revenue~~

Consolidated revenue increased $46.0 million during the three months ended September 30, 2018 compared to the same period of 2017. Excluding the $9.4 million impact from movements in foreign exchange rates, consolidated revenue increased $55.4 million during the three months ended September 30, 2018 compared to the same period of 2017. The increase in consolidated revenue is due to revenue growth across all of our businesses.

Consolidated revenue increased $98.0 million during the nine months ended September 30, 2018 compared to the same period of 2017. Excluding the $47.9 million impact from movements in foreign exchange rates, consolidated revenue increased $50.1 million during the nine months ended September 30, 2018 compared to the same period of 2017. The increase in consolidated revenue is primarily due to higher revenue from our International outdoor business, driven by growth in several countries. Revenue was also higher in our Americas outdoor business, driven by higher digital revenue. The increase in revenue was partially offset by lower revenue from our iHM business.

~~Consolidated Direct Operating Expenses~~

Consolidated direct operating expenses increased $6.5 million during the three months ended September 30, 2018 compared to the same period of 2017. Excluding the $5.7 million impact from movements in foreign exchange rates, consolidated direct operating expenses increased $12.2 million during the three months ended September 30, 2018 compared to the same period

~~of 2017. Higher direct operating expenses was driven primarily by our International outdoor business due to revenue growth in various countries.~~

Consolidated direct operating expenses increased $56.8 million during the nine months ended September 30, 2018 compared to the same period of 2017. Excluding the $32.7 million impact from movements in foreign exchange rates, consolidated direct operating expenses increased $24.1 million during the nine months ended September 30, 2018 compared to the same period of 2017. Higher direct operating expenses in our International outdoor business, driven by revenue growth in various countries, was partially offset by lower direct operating expenses in our Americas outdoor business, primarily as a result of the ~~sale~~application of fresh start accounting, which resulted in significantly higher values of our ~~business in Canada in 2017.~~

~~Consolidated Selling, General~~tangible and ~~Administrative (“SG&A”) Expenses~~

Consolidated SG&A expenses increased $19.0 million during the three months ended September 30, 2018 compared to the same period of 2017. Excluding the $2.0 million impact from movements in foreign exchange rates, consolidated SG&A expenses increased $21.0 million during the three months ended September 30, 2018 compared to the same period of 2017. Higher SG&A expenses were primarily due to expense growth by our iHM business, particularly as a result of higher trade and barter expense.

Consolidated SG&A expenses increased $45.1 million during the nine months ended September 30, 2018 compared to the same period of 2017. Excluding the $10.4 million impact from movements in foreign exchange rates, consolidated SG&A expenses increased $34.7 million during the nine months ended September 30, 2018 compared to the same period of 2017. SG&A expenses were higher in our iHM business, due primarily to higher trade and barter expenses, partially offset by lower SG&A expenses in our Americas outdoor business as a result of the sale of our business in Canada in 2017.

~~Corporate Expenses~~

Corporate expenses increased $6.2 million during the three months ended September 30, 2018 compared to the same period of 2017, primarily resulting from higher variable incentive compensation expenses and higher insurance costs, partially offset by lower management fees.

Corporate expenses increased $9.1 million during the nine months ended September 30, 2018 compared to the same period of 2017. Excluding the $1.4 million impact from movements in foreign exchange rates, corporate expenses increased $7.7 million during the nine months ended September 30, 2018 compared to the same period of 2017, primarily resulting from higher employee-related expenses, including variable incentive compensation and employee benefits expense, partially offset by lower management fees.

~~Depreciation and Amortization~~

Depreciation and amortization decreased $29.0 million and $23.9 million during the three and nine months ended September 30, 2018, compared to the same periods of 2017, respectively, primarily as a result of assets becoming fully depreciated or fully amortized, including intangible ~~assets that were recorded as part of the merger of iHeartCommunications with iHeartMedia, Inc. in 2008.~~long-lived assets.

Impairment Charges

~~The Company performs its~~We perform our annual impairment test on our goodwill, FCC licenses and other intangible assets as of July 1 of each year. No impairment charges were recorded in the third quarter of 2019 in connection with our annual impairment test. We recognized non-cash impairment charges of $33.2 million in the third quarter of 2018 related to several of our radio markets. In addition, we test for impairment of ~~property, plant and equipment~~intangible assets whenever events and circumstances indicate that ~~depreciable~~such assets might be impaired. AsWe recognized non-cash impairment charges of $91.4 million in the first quarter of 2019 on our indefinite-lived FCC licenses as a result of ~~these impairment tests, we recorded impairment charges~~an increase in the weighted average cost of $40.9 million, related to several of our iHM markets and one of our Americas outdoor markets during the three and nine months ended September 30, 2018. During the three and nine months ended September 30, 2017, we recognized impairment charges of $7.6 million related to one of our iHM markets and one of our International outdoor businesses. Please seecapital. See Note 37 to the ~~Consolidated Financial Statements~~consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for a further description of the impairment charges.

Other Operating ~~Income (Expense),~~Expense, Net

Other operating expense, net ~~was $1.6~~of $9.9 million and $2.5 million for the three months ended September 30, ~~2018.~~2019 and 2018, respectively, and Other operating expense, net ~~was $13.2~~of $6.8 million for the three months ended September 30, 2017, which primarily related to the $12.1 million loss, which includes $6.3 million in cumulative translation adjustments, recognized on the sale of our ownership interest in a joint venture in Canada during the third quarter of 2017.

~~Other operating expense, net was $5.2~~and $6.9 million for the nine months ended September 30, ~~2018. Other operating income,~~2019 and 2018, respectively, relate to net gains and losses recognized on asset disposals.

Interest Expense

Interest expense increased $98.9 million during the three months ended September 30, 2019, compared to the same period of 2018 as a result of the interest recognized on the new debt issued in connection with our emergence from the Chapter 11 Cases. During the period from March 14, 2018 to May 1, 2019, while the Company was ~~$24.8~~a debtor-in-possession, no interest expense was recognized on pre-petition debt. Interest expense decreased $163.7 million ~~for~~during the nine months ended September 30, ~~2017, which primarily related to the sale in the first quarter of~~

2017 of the Americas outdoor Indianapolis market exchanged for certain assets in Atlanta, Georgia, plus $43.1 million in cash, net of closing costs, resulting in a net gain of $28.9 million and a gain of $6.8 million recognized on the sale of our ownership interest in a joint venture in Belgium in the second quarter of 2017, offset by the loss of $12.1 million recognized on the sale of our ownership interest in a joint venture in Canada.

~~Interest Expense~~

~~Interest expense decreased $371.0 million and $763.6 million during the three and nine months ended September 30, 2018, respectively,~~2019 compared to the same ~~periods~~period of ~~2017~~2018 as a result of the ~~Company ceasing~~interest recognized in the prior period to the Petition Date of March 14, 2018, offset by the interest recognized in the current period in connection with the new debt issued upon emergence.

In the Predecessor periods, we ceased to accrue interest expense on long-term debt, which was reclassified as Liabilities subject to compromise as of the Petition ~~Date.~~Date, resulting in $533.4 million in contractual interest not being accrued on pre-petition indebtedness for the period from January 1, 2019 to May 1, 2019 and $812.4 million in contractual interest not being accrued in the nine months ended September 30, 2018.

~~Other Income (Expense), Net~~Gain (Loss) on Investments, net

~~Other expense, net was $6.2 million for~~During the three months ended September 30, ~~2018, which related~~2019, we recognized a gain on investments, net of $1.7 million and during the nine months ended September 30, 2019, we recognized a loss of $8.5 million, primarily ~~to net foreign exchange losses recognized~~ in connection with ~~intercompany notes denominated~~other-than-temporary declines in ~~foreign currencies. Other expense,~~the value of our investments. Gain on investments, net was ~~$35.4~~$9.4 million for the nine months ended September 30, 2018, which related primarily to net foreign exchange losses of $20.7 million recognized in connection with intercompany notes denominated in foreign currencies and expenses incurred in connection with pre-petition negotiations with lenders and other activities related to our capital structure, partially offset by a $9.9 million gain on the sale of one of the Company's cost method investments.2018.

Other ~~income, net was $0.1 million and other~~Expense, Net

Other expense, net was ~~$13.7 million for the three and nine months ended September 30, 2017, respectively. These amounts relate primarily to net foreign exchange gains of $9.3~~$12.5 million and $21.6 million for the three and nine months ended September 30, ~~2017,~~2019, respectively, ~~recognized in connection with intercompany notes denominated in foreign currencies, partially offset by expenses~~which related primarily to professional fees incurred in connection with the ~~notes exchange offers and term loan offers of $7.2~~Chapter 11 Cases in the Successor period. Such expenses were included within Reorganization items, net in the Predecessor period while the Company was a debtor-in-possession.

Other expense, net was $0.3 million and ~~$31.4~~$22.8 million for the three and nine months ended September 30, ~~2017, respectively, that were terminated~~2018, respectively. Amounts in the nine months ended September 30, 2018 related primarily to professional fees incurred directly in connection with the ~~commencement of the~~ Chapter 11 ~~Cases.~~Cases before the March 14, 2018 Petition Date. Such expenses were included within Reorganization items, net in the post-petition period while the Company was a debtor-in-possession.

Reorganization Items, Net

During the nine months ended September 30, 2019, we recognized Reorganization items, net of $9,461.8 million related to our emergence from the Chapter 11 Cases, which consisted primarily of the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities. In addition, Reorganization items, net included professional fees recognized between the March 14, 2018 Petition Date and the May 1, 2019 Effective Date in connection with the Chapter 11 Cases. See Note 3 to our Consolidated Financial Statements included in Part I of this Quarterly Report on Form 10-Q.

During the three and nine months ended September 30, 2018, we recognized Reorganization items, net of $52.5 million and $313.3 million, respectively, related to the Chapter 11 Cases, consisting of ~~professional fees. For the nine months ended September 30, 2018, Reorganization items, net of $313.3 million included~~ the write-off of ~~deferred~~ long-term debt fees and original issue ~~discount~~discounts on debt subject to compromise, costs incurred in connection with our DIP facility and professional fees. See Note 123 to our Consolidated Financial Statements included in Part I of this Quarterly Report on Form 10-Q.

Income Tax ~~Expense~~Benefit (Expense)

The effective tax rate for continuing operations of the Predecessor Company for period from January 1, 2019 through May 1, 2019 (Predecessor) and nine months ended September 30, 2019 was 0.4% and 0.7%, respectively. The income tax expense for the period from January 1, 2019 through May 1, 2019 (Predecessor) and the nine months ended September 30, 2019 primarily consists of the income tax impacts from reorganization and fresh start adjustments, including adjustments to our valuation allowance. The Company recorded income tax benefits of $102.9 million for reorganization adjustments in the Predecessor period, primarily consisting of: (1) tax expense for the reduction in federal and state net operating loss (“NOL”) carryforwards from the cancellation of debt income ("CODI") realized upon emergence; (2) tax benefit for the reduction in deferred tax liabilities attributed primarily to long-term debt that was discharged upon emergence; (3) tax benefit for the effective settlement of liabilities for unrecognized tax benefits that were discharged upon emergence; and (4) tax benefit for the reduction in valuation allowance resulting from the adjustments described above. The Company recorded income tax expense of $185.4 million related to fresh start adjustments in the Predecessor period, consisting of $529.1 million in tax expense, related to the increase in deferred tax liabilities resulting from fresh start accounting adjustments, offset by $343.7 million in tax benefit for the reduction in the valuation allowance on our deferred tax assets.

The effective tax rate for continuing operations for the three and nine months ended September 30, 2018 was ~~19.8%~~8.2% and ~~(12.4)%, respectively. The effective tax rate for the three and nine months ended September 30, 2017 was (0.8)% and (6.6)%~~4.3%, respectively. The 2018 ~~and 2017~~ effective tax rates were primarily impacted by the valuation allowance recorded against deferred tax assets resulting from current period ~~net operating losses~~interest expense limitation carryforward in U.S. federal ~~state~~ and certain ~~foreign~~state jurisdictions due to uncertainty regarding our ability to realize those assets in future periods.

~~iHM Results~~

As a result of ~~Operations~~

~~Our iHM operating results were~~the Plan of Reorganization, the Company expects the majority of its federal NOL carryforwards and certain state NOL carryforwards to be reduced or eliminated as ~~follows:~~

(In thousands) Three Months Ended
September 30, %
Change Nine Months Ended
September 30,
%
Change
2018 2017 2018 2017
Revenue $ 873,404
$ 859,531
1.6% $ 2,471,239
$ 2,501,084
(1.2)%
Direct operating expenses 268,606
265,795
1.1% 773,424
773,327
—%
SG&A expenses 303,451
287,676
5.5% 929,308
894,669
3.9%
Depreciation and amortization 34,882
58,089
(40.0)% 149,714
174,946
(14.4)%
Operating income $ 266,465
$ 247,971
7.5% $ 618,793
$ 658,142
(6.0)%

~~Three Months~~

~~iHM revenue increased $13.9 million during~~a result of the ~~three months ended September 30, 2018 compared~~CODI realized from the bankruptcy emergence. Pursuant to the ~~same~~attribute reduction and ordering rules set forth in the Internal Revenue Code of 1986, as amended (the “Code”), the reduction in the Company’s tax attributes for excludible CODI does not occur until the last day of the Company’s tax year, December 31, 2019. Accordingly, the tax adjustments recorded in the Predecessor period represent our best estimate using all available information at June 30, 2019. Additionally, the Company recognized a capital loss for tax purposes as a result of ~~2017, resulting from higher trade and barter revenue, higher digital subscription revenue, primarily from our iHeartRadio on-~~the series of transactions to effect the Plan of Reorganization. This capital loss may be carried forward to offset capital gains recognized by the Company in the next five years, subject to annual limitations under Section 382 of the Code. The deferred tax asset associated with the capital loss carryforward is offset by a valuation allowance due to significant uncertainty regarding the Company’s ability to utilize the

~~demand service, higher revenue from our traffic and weather business and higher political revenue due~~carryforward prior to ~~2018 being a mid-term election year. Revenue growth was partially offset by lower non-political local and national spot revenue.~~

~~iHM direct operating expenses increased $2.8 million during~~its expiration. The final tax impacts of the three months ended September 30, 2018 compared to the same period of 2017. Higher employee compensation expense, primarily related to the acquisition of radio stations in Seattle and Boston, and higher digital royalties from our iHeartRadio on-demand service were partially offset by lower music license fees driven by lower spot revenue. iHM SG&A expenses increased $15.8 million during the three months ended September 30, 2018 compared to the same period of 2017 primarily due to higher trade and barter expenses, third-party sales activation fees and employee compensation, including higher expenses related to our variable compensation plans, partially offset by lower advertising and promotion expenses.

~~Nine Months~~

iHM revenue decreased $29.8 million during the nine months ended September 30, 2018 compared to the same period of 2017, resulting from lower local and national spot revenue being partially offset by higher digital subscription revenue from our iHeartRadio on-demand service, higher political revenue due to 2018 being a mid-term election year and higher trade and barter revenue.

iHM direct operating expenses increased $0.1 million during the nine months ended September 30, 2018 compared to the same period of 2017. Higher digital fees, driven primarily by our iHeartRadio on-demand service, were partially offset by lower music license fees. iHM SG&A expenses increased $34.6 million during the nine months ended September 30, 2018 compared to the same period of 2017 primarily due to higher trade and barter expenses and third-party sales activation fees, partially offset by lower commission expenses.

~~Americas Outdoor Advertising Results of Operations~~

~~Our Americas outdoor operating results were as follows:~~

(In thousands) Three Months Ended
September 30, %
Change Nine Months Ended
September 30,
%
Change
2018 2017 2018 2017
Revenue $ 303,421
$ 293,807
3.3% $ 859,190
$ 854,344
0.6%
Direct operating expenses 131,241
130,269
0.7% 386,427
393,953
(1.9)%
SG&A expenses 49,247
49,007
0.5% 146,021
148,824
(1.9)%
Depreciation and amortization 39,783
44,457
(10.5)% 127,410
130,127
(2.1)%
Operating income $ 83,150
$ 70,074
18.7% $ 199,332
$ 181,440
9.9%

~~Three Months~~

Americas outdoor revenue increased $9.6 million during the three months ended September 30, 2018 compared to the same period of 2017. The increase in revenue was due to an increase in digital, airport and print revenue, partially offset by a $2.6 million decrease in revenue resulting from the sale of our Canadian outdoor business during the third quarter of 2017.

Americas outdoor direct operating expenses increased $1.0 million during the three months ended September 30, 2018 compared to the same period of 2017. The increase was driven by higher site lease expenses, primarily related to increased revenue, partially offset by a $1.9 million decrease in direct operating expenses resulting from the sale of our Canadian outdoor market. Americas outdoor SG&A expenses increased $0.2 million during the three months ended September 30, 2018 compared to the same period of 2017.

~~Nine Months~~

Americas outdoor revenue increased $4.8 million during the nine months ended September 30, 2018 compared to the same period of 2017. The increase in revenue was due to an increase in digital and print revenue, partially offset by a $13.7 million decrease in revenue resulting from the sale of our Canadian outdoor business during the third quarter of 2017 and a decrease in airport revenue.

Americas outdoor direct operating expenses decreased $7.5 million during the nine months ended September 30, 2018 compared to the same period of 2017. The decrease was driven by a $10.3 million decrease in direct operating expenses resulting from the sale of our Canadian outdoor market, partially offset by higher site lease expenses. Americas outdoor SG&A expenses

decreased $2.8 million during the nine months ended September 30, 2018 compared to the same period of 2017 primarily due to a $3.3 million decrease in SG&A expenses resulting from the sale of our Canadian outdoor market.

~~International Outdoor Advertising Results of Operations~~

~~Our International outdoor operating results were as follows:~~

(In thousands) Three Months Ended
September 30, %
Change Nine Months Ended
September 30,
%
Change
2018 2017 2018 2017
Revenue $ 360,318
$ 350,623
2.8% $ 1,114,927
$ 1,005,954
10.8%
Direct operating expenses 230,440
227,677
1.2% 709,479
645,222
10.0%
SG&A expenses 79,550
79,532
—% 235,473
221,773
6.2%
Depreciation and amortization 36,627
35,464
3.3% 113,875
102,711
10.9%
Operating income $ 13,701
$ 7,950
72.3% $ 56,100
$ 36,248
54.8%

~~Three Months~~

International outdoor revenue increased $9.7 million during the three months ended September 30, 2018 compared to the same period of 2017. Excluding the $9.4 million impact from movements in foreign exchange rates, International outdoor revenue increased $19.1 million during the three months ended September 30, 2018 ~~compared to the same period of 2017. The increase in revenue is due to growth in multiple countries, including China and the Nordic countries,~~bankruptcy emergence, as well as the ~~United Kingdom~~Plan of Reorganization’s overall effect on the Company’s tax attributes and ~~Italy, primarily~~tax basis in assets will be refined based on the Company’s final December 31, 2019 financial position as required under the Code. The final tax impacts on the Company's tax attributes could change significantly from ~~new deployments and digital expansion.~~the current estimates.

~~International outdoor direct operating expenses increased $2.8 million during the three months ended September 30, 2018 compared~~

Reconciliation of Operating Income to the same period of 2017. Excluding the $5.7 million impact from movements in foreign exchange rates, International outdoor direct operating expenses increased $8.5 million during the three months ended September 30, 2018 compared to the same period of 2017. The increase was primarily due to higher site lease expenses related to new contracts in countries experiencing revenue growth. International outdoor SG&A expenses were flat during the three months ended September 30, 2018 compared to the same period of 2017. Excluding the $2.0 million impact from movements in foreign exchange rates, International outdoor SG&A expenses increased $2.0 million during the three months ended September 30, 2018 compared to the same period of 2017. The increase in SG&A expenses was primarily due to non-cash pension settlement expenses in the United Kingdom.Adjusted EBITDA

~~Nine Months~~

International outdoor revenue increased $109.0 million during the nine months ended September 30, 2018 compared to the same period of 2017. Excluding the $47.9 million impact from movements in foreign exchange rates, International outdoor revenue increased $61.1 million during the nine months ended September 30, 2018 compared to the same period of 2017. The increase in revenue is due to growth in multiple countries, including China, the Nordic countries, Spain, Switzerland and Ireland, primarily from new deployments and digital expansion.



(In thousands)	Successor Company		Predecessor Company
	Three Months Ended September 30,		Three Months Ended September 30,		%
	2019		2018		Change
Operating income	$	140,822	$	186,844	(24.6	)%
Depreciation and amortization	95,268		43,295
Impairment charges	—		33,150
Other operating expense, net	9,880		2,462
Share-based compensation expense	17,112		456
Restructuring and reorganization expenses	11,574		7,597
Adjusted EBITDA⁽¹⁾	$	274,656	$	273,804	0.3	%

International outdoor direct operating expenses increased $64.3 million during the nine months ended September 30, 2018 compared to the same period of 2017. Excluding the $32.7 million impact from movements in foreign exchange rates, International outdoor direct operating expenses increased $31.6 million during the nine months ended September 30, 2018 compared to the same period of 2017. The increase was driven by higher site lease expenses related to new contracts in countries experiencing revenue growth. International outdoor SG&A expenses increased $13.7 million during the nine months ended September 30, 2018 compared to the same period of 2017. Excluding the $10.4 million impact from movements in foreign exchange rates, International outdoor SG&A expenses increased $3.3 million during the nine months ended September 30, 2018 compared to the same period of 2017. The increase in SG&A expenses primarily related to non-cash pension settlement expense in the United Kingdom.



(In thousands)	Successor Company		Predecessor Company		Non-GAAP Combined²		Predecessor Company
	Period from May 2, 2019 through September 30,		Period from January 1, 2019 through May 1,		Nine Months Ended September 30,		Nine Months Ended September 30,		%
	2019		2019		2019		2018		Change
Operating income	$	274,510	$	67,040	$	341,550	$	430,193	(20.6	)%
Depreciation and amortization	154,651		52,834		207,485		175,546
Impairment charges	—		91,382		91,382		33,150
Other operating expense, net	6,634		154		6,788		6,912
Share-based compensation expense	20,151		498		20,649		1,628
Restructuring and reorganization expenses	13,463		13,241		26,704		21,132
Adjusted EBITDA⁽¹⁾	$	469,409	$	225,149	$	694,558	$	668,561	3.9	%

Reconciliation of ~~Segment Operating~~Net Income (Loss) to ~~Consolidated Operating Income~~EBITDA and Adjusted EBITDA

(In thousands) Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
iHM $ 266,465
$ 247,971
$ 618,793
$ 658,142
Americas outdoor 83,150
70,074
199,332
181,440
International outdoor 13,701
7,950
56,100
36,248
Other 17,881
7,261
29,141
13,713
Other operating income (expense), net (1,637 ) (13,215 ) (5,212 ) 24,785
Impairment charges (40,922 ) (7,631 ) (40,922 ) (7,631 )
Corporate expense ⁽¹⁾
(91,346 ) (86,752 ) (263,936 ) (261,006 )
Consolidated operating income $ 247,292
$ 225,658
$ 593,296
$ 645,691



(In thousands)	Successor Company			Predecessor Company
	Three Months Ended September 30,			Three Months Ended September 30,
	2019			2018
Net income	$	12,374		$	71,783
Loss from discontinued operations, net of tax	—			49,491
Income tax expense	16,758			10,873
Interest expense, net	100,967			2,097
Depreciation and amortization	95,268			43,295
EBITDA	$	225,367		$	177,539
Reorganization items, net	—			52,475
Gain on investments, net	(1,735		)	(186		)
Other expense, net	12,457			281
Equity in loss of nonconsolidated affiliates	1			30
Impairment charges	—			33,150
Other operating expense, net	9,880			2,462
Share-based compensation expense	17,112			456
Restructuring and reorganization expenses	11,574			7,597
Adjusted EBITDA⁽¹⁾	$	274,656		$	273,804



(In thousands)	Successor Company			Predecessor Company			Non-GAAP Combined			Predecessor Company
	Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2019			2019			2019			2018
Net income	$	51,167		$	11,165,113		$	11,216,280		$	(427,547	)
(Income) loss from discontinued operations, net of tax	—			(1,685,123		)	(1,685,123		)	206,968
Income tax (benefit) expense	32,761			39,095			71,856			(9,828		)
Interest expense (income), net	170,678			(499		)	170,179			333,843
Depreciation and amortization	154,651			52,834			207,485			175,546
EBITDA	$	409,257		$	9,571,420		$	9,980,677		$	278,982
Reorganization items, net	—			(9,461,826		)	(9,461,826		)	313,270
(Gain) loss on investments, net	(1,735		)	10,237			8,502			(9,361		)
Other income (expense), net	21,614			(23		)	21,591			22,755
Equity in loss of nonconsolidated affiliates	25			66			91			93
Impairment charges	—			91,382			91,382			33,150
Other operating expense, net	6,634			154			6,788			6,912
Share-based compensation expense	20,151			498			20,649			1,628
Restructuring and reorganization expenses	13,463			13,241			26,704			21,132
Adjusted EBITDA⁽¹⁾	$	469,409		$	225,149		$	694,558		$	668,561

(1)

We define Adjusted EBITDA as consolidated Operating income adjusted to exclude restructuring and reorganization expenses included within Direct operating expenses, Selling, General and Administrative expenses, (“SG&A”) and Corporate expenses ~~include~~and share-based compensation expenses ~~related to iHM, Americas outdoor, International outdoor and our Other category,~~included within Corporate expenses, as well as ~~overall executive, administrative~~the following line items presented in our Statements of Operations: Depreciation and ~~support functions.~~amortization, Impairment charges and Other operating income (expense), net. Alternatively, Adjusted EBITDA is calculated as Net income (loss), adjusted to exclude (Income) loss from discontinued operations, net of tax, Income tax (benefit) expense, Interest expense, Depreciation and amortization, Reorganization items, net, Other (income) expense, net, Gain (loss) on investments, net, Impairment charges, Other operating (income) expense, net, Share-based compensation, and restructuring and reorganization expenses. Restructuring expenses primarily include severance expenses incurred in connection with cost saving initiatives, as well as certain expenses, which, in the view of management, are outside the ordinary course of business or otherwise not representative of the Company's operations during a normal business cycle. Reorganization expenses primarily include the amortization of retention bonus amounts paid or payable to certain members of management directly as a result of the Reorganization. We use Adjusted EBITDA, among other measures, to evaluate the Company’s operating performance. This measure is among the primary measures used by management for the planning and forecasting of future periods, as well as for measuring performance for compensation of executives and other members of management. We believe this measure is an important indicator of our operational strength and performance of our business because it provides a link between operational performance and operating income. It is also a primary measure used by management in evaluating companies as potential acquisition targets. We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management. We believe it helps improve investors’ ability to understand our operating performance and makes it easier to compare our results with other companies that have different capital structures or tax rates. In addition, we believe this measure is also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our operating performance to other companies in our industry. Since Adjusted EBITDA is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, operating income or net income (loss) as an indicator of operating performance and may not be comparable to similarly titled measures employed by other companies. Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs. Because it excludes certain financial information compared with operating income and compared with consolidated net income (loss), the most directly comparable GAAP financial measures, users of this financial information should consider the types of events and transactions which are excluded.

Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations



(In thousands)	Successor Company			Predecessor Company
	Three Months Ended September 30,			Three Months Ended September 30,
	2019			2018
Cash provided by operating activities from continuing operations	$	180,341		$	155,528
Purchases of property, plant and equipment by continuing operations	(28,870		)	(20,142		)
Free cash flow from continuing operations⁽¹⁾	$	151,471		$	135,386



(In thousands)	Successor Company			Predecessor Company			Non-GAAP Combined			Predecessor Company
	Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2019			2019			2019			2018
Cash provided by (used for) operating activities from continuing operations	$	263,542		$	(7,505	)	$	256,037		$	515,713
Purchases of property, plant and equipment by continuing operations	(46,305		)	(36,197		)	(82,502		)	(47,448		)
Free cash flow from (used for) continuing operations⁽¹⁾	$	217,237		$	(43,702	)	$	173,535		$	468,265


(1)	We define Free cash flow from (used for) continuing operations ("Free Cash Flow") as Cash provided by (used for) operating activities from continuing operations less capital expenditures, which is disclosed as Purchases of property, plant and equipment by continuing

operations in the Company's Consolidated Statements of Cash Flows. We use Free Cash Flow, among other measures, to evaluate the Company’s liquidity and its ability to generate cash flow. We believe that Free Cash Flow is meaningful to investors because we review cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations. In addition, we believe that Free Cash Flow helps improve investors' ability to compare our liquidity with other companies. Since Free Cash Flow is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, Cash provided by operating activities and may not be comparable to similarly titled measures employed by other companies. Free Cash Flow is not necessarily a measure of our ability to fund our cash needs.

Share-Based Compensation Expense

WeHistorically, we had granted restricted shares of the Company's Class A common stock to certain key individuals. In connection with the effectiveness of our Plan of Reorganization, all unvested restricted shares were canceled.

Pursuant to the new equity incentive plan (the "Post-Emergence Equity Plan") we adopted in connection with the effectiveness of our Plan of Reorganization, we have granted ~~restricted stock and CCOH has granted restricted stock,~~ restricted stock units and options to purchase shares of ~~CCOH's~~the Company's Class A common stock to certain key individuals.

Share-based compensation expenses are recorded in corporate expenses and were ~~$3.6~~$17.1 million and ~~$3.5~~$0.5 million for the three months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$8.4~~$20.6 million and ~~$9.0~~$1.6 million for the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

As of September 30, ~~2018,~~2019, there was ~~$19.8~~$63.1 million of unrecognized compensation cost related to unvested share-based compensation arrangements ~~that will vest~~with vesting based on service conditions. This cost is expected to be recognized over a weighted average period of approximately ~~2.9~~3.6 years. In addition, as of September 30, 2018, there was $15.2 million of unrecognized compensation cost related to unvested share-based compensation arrangements that will vest based on market performance and service conditions. This cost will be recognized when it becomes probable that the performance condition will be satisfied.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following discussion highlights cash flow activities during the periods presented:



(In thousands)	Successor Company			Predecessor Company			Non-GAAP Combined			Predecessor Company
	Period from May 2, 2019 through September 30,			Period from January 1, 2019 through May 1,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2019			2019			2019			2018
Cash provided by (used for):
Operating activities	$	263,542		$	(40,186	)	$	223,356		$	663,349
Investing activities	$	(43,815	)	$	(261,144	)	$	(304,959	)	$	(134,892	)
Financing activities	$	(5,095	)	$	(55,557	)	$	(60,652	)	$	(493,107	)
Free Cash Flow⁽¹⁾	$	217,237		$	(43,702	)	$	173,535		$	468,265

⁽¹⁾For a definition of Free cash flow from continuing operations and a reconciliation to Cash provided by operating activities from continuing operations, the most closely comparable GAAP measure, please see “Reconciliation of Cash provided by operating activities from continuing operations to Free cash flow from continuing operations” in this MD&A.

Operating Activities

Cash provided by operating activities for the nine months ended September 30, 2019 was $223.4 million compared to $663.3 million of cash provided by operating activities in the nine months ended September 30, 2018. The primary driver for the change in cash provided by operating activities was a $180.3 million decrease in operating cash flows provided by discontinued operations, which decreased from a cash inflow of $147.6 million in the nine months ended September 30, 2018 ~~and 2017:~~to a cash outflow of $32.7 million in the nine months ended September 30, 2019.

(In thousands) Nine Months Ended September 30,
2018 2017
Cash provided by (used for):
Operating activities $ 663,349
$ (557,678 )
Investing activities $ (134,892 ) $ (120,413 )
Financing activities $ (493,107 ) $ 137,066

~~Operating Activities~~

Cash provided by operating activities ~~was $663.3~~from continuing operations decreased from $515.7 million in the nine months ended September 30, 2018 to $256.0 million in the nine months ended September 30, 2019 primarily as a result of cash payments for Reorganization items, including payments for pre-petition liabilities and for bankruptcy professional fees, upon our emergence from bankruptcy on May 1, 2019. Such payments for Reorganization items were $149.3 million higher in the nine months ended

September 30, 2019 compared to the nine months ended September 30, 2018. In addition, cash interest payments made by continuing operations increased $61.7 million as a result of interest payments on our debt issued upon our emergence compared to pre-petition interest payments made in the prior year. The Company ceased paying interest on long-term debt classified as Liabilities subject to compromise after the March 14, 2018 petition date.

Investing Activities

Cash used for investing activities of $305.0 million during the nine months ended September 30, ~~2018 compared to $557.7~~2019 primarily reflects $222.4 million ofin cash used for ~~operating~~investing activities ~~during the nine months ended September 30, 2017. The increase~~from discontinued operations. In addition, we used $82.5 million for capital expenditures. We spent $68.4 million for capital expenditures in ~~cash provided by operating activities is~~our Audio segment primarily ~~attributed~~related to ~~the $1,132.7~~IT infrastructure, $4.1 million ~~decrease~~ in ~~cash paid for interest, as well as changes~~our Audio & Media Services segment, primarily related to acquired software and $10.0 million in ~~working capital balances, particularly accounts receivable, which were affected by improved collections as well as accounts payable~~Corporate primarily related to equipment and accrued expenses which were impacted by the timing of payments. As part of our liquidity measures taken in anticipation of our March 14, 2018 bankruptcy filing, we did not make scheduled interest payments on our 9.0% Priority Guarantee Notes due 2021, 11.25% Priority Guarantee Notes due 2021 and 14.0% Senior Notes due 2021 and we extended certain accounts payable to conserve cash. Subsequent to the bankruptcy filing, interest payments on our debt classified as "Liabilities subject to compromise" were stayed and only limited pre-petition payments on accounts payable were made. Cash paid for interest was ~~$293.7 million~~ ~~during the nine months ended September 30, 2018 compared to $1,426.4 million during the nine months ended September 30, 2017. Cash paid for Reorganization items, net was~~ ~~$52.2 million~~ ~~during the nine months ended September 30, 2018.~~software purchases.

~~Investing Activities~~

Cash used for investing activities of $134.9 million during the nine months ended September 30, 2018 primarily ~~reflected $157.6~~reflects $105.3 million in cash used for investing activities from discontinued operations. In addition, we used $47.4 million for capital expenditures. We spent ~~$42.2~~$40.8 million for capital expenditures in our ~~iHM~~Audio segment primarily related to IT infrastructure, ~~$50.2~~$2.5 million in our ~~Americas outdoor~~Audio & Media Services segment, primarily related to ~~the construction of new advertising structures, such as digital boards, $57.5 million in our International outdoor segment primarily related to street furniture~~acquired software and ~~transit advertising structures, including digital displays, $1.1 million in our Other category and $6.6~~$4.1 million in Corporate primarily related to equipment and software purchases. ~~Cash used for capital expenditures was partially offset by cash received upon the sale of investments.~~

Financing Activities

Cash used for ~~investing~~financing activities of ~~$120.4~~$60.7 million during the nine months ended September 30, ~~2017 reflected $184.9 million used for capital expenditures,~~2019 primarily resulted from the net payment by iHeartCommunications to CCOH as CCOH's recovery of its claims under the Due from iHeartCommunications Note and settlement of the post-petition intercompany note balance, partially offset by ~~net cash~~$60.0 million in proceeds received from the ~~sale~~issuance of ~~assets of $71.3 million, which included net cash proceeds from~~ the sale of our outdoor Indianapolis market of $43.1 million. We spent $44.4 million for capital expenditures in our iHM segment primarily related to IT infrastructure, $46.4 million in our Americas outdoor segment primarily related to the construction of new advertising structures, such as digital displays, $86.2 million in our International outdoor segment primarily related to street furniture and transit advertising structures, $0.5 million in our Other category and $7.4 million in Corporate primarily related to equipment and software purchases.

~~Financing Activities~~iHeart Operations Preferred Stock.

Cash used for financing activities of $493.1 million during the nine months ended September 30, 2018 primarily resulted from payments on long-term debt and on our receivables based credit facility. In connection with the replacement of the iHeartCommunications' receivables based credit facility with a new DIP Facility on June 14, 2018, we repaid the outstanding $306.4 million and $74.3 million balances of the receivables based credit facility's term loan and revolving credit commitments, respectively. ~~At closing, we drew~~An additional $125.0 million onprincipal amount was repaid under the DIP Facility ~~which was repaid in full~~ during the ~~third quarter of 2018.~~

~~Cash provided by financing activities of $137.1 million during the nine~~three months ended September 30, ~~2017 primarily~~2018.

Anticipated Cash Requirements

The Separation and Reorganization resulted ~~from proceeds from~~in a new capital structure with significantly lower levels of long-term debt issued by one of our international subsidiaries, as well as borrowings on our receivables-based credit facility. These proceeds were partially offset by dividends paid to non-controlling interests, which represents the portion of the dividends paid by CCOH in February 2017 to parties other than our subsidiaries that own CCOH stock, and a ~~payment under our receivables-based credit facility.~~

~~Liquidity After Filing the Chapter 11 Cases~~

~~iHeartCommunications' filing of the Chapter 11 Cases constituted an event of default that accelerated its obligations under its~~corresponding decrease in debt ~~agreements. Due~~service requirements after emergence compared to ~~the Chapter 11 Cases, however, the creditors' ability to exercise remedies under iHeartCommunications'~~historical debt ~~agreements were stayed as of March 14, 2018, the date of the Chapter 11 petition filing, and continue to be stayed.~~

On March 16, 2018, the Debtors entered into a Restructuring Support Agreement (the “RSA”) with certain creditors and equityholders (the “Consenting Stakeholders”). The RSA contemplates the restructuring and recapitalization of the Debtors (the “Restructuring Transactions”), which will be implemented through a plan of reorganization in the Chapter 11 Cases. Pursuant to the RSA, the Consenting Stakeholders have agreed to, among other things, support the Restructuring Transactions and vote in favor of a plan of reorganization to effect the Restructuring Transactions.

The RSA provides certain milestones for the Restructuring Transactions. Failure of the Debtors to satisfy these milestones without a waiver or consensual amendment would provide the Consenting Stakeholders a termination right under the RSA. These milestones include (i) the filing of a plan of reorganization and disclosure statement, in form and substance reasonably acceptable to the Debtors and the Consenting Stakeholders, which were filed initially with the Bankruptcy Court on April 28, 2018, (ii) the filing of a motion for approval of the disclosure statement by May 31, 2018, which deadline was subsequently extended to June 22, 2018, and which motion was filed with the Bankruptcy Court on June 22, 2018, (iii) the entry of an order approving the disclosure statement by July 27, 2018 (subject to one additional 20-day extension on the terms set forth in the RSA), (iv) the entry of an order confirming the plan of reorganization within 75 days of the entry of an order approving the disclosure statement and (v) the effective date of the plan of reorganization occurring by March 14, 2019. The Debtors satisfied the first and second milestones, but did not satisfy the third milestone because the order approving the Disclosure Statement was not entered until September 20, 2018, which was after the date required by the third milestone.levels. As a result ~~certain~~ of the ~~Consenting Stakeholders presently have~~Separation and Reorganization, our consolidated long-term debt decreased from approximately $16 billion to $5.8 billion. In the ~~right~~Successor period from May 2, 2019 to ~~terminate~~September 30, 2019, we paid $79.3 million of cash interest.

In connection with the ~~RSA, but as~~Separation and Reorganization, we paid CCOH $115.8 million in settlement of intercompany payable balances, including settlement of the ~~date hereof the RSA has not been terminated.~~

~~In general, as debtors-in-possession under the Bankruptcy Code, we are authorized~~Due from iHeartCommunications Note and post-petition intercompany balances, $15.8 million to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. Pursuant to first day and second day motions filed with the Bankruptcy Court, the Bankruptcy Court authorized us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to: (i) pay employees’ wages and related obligations; (ii) continue to operate our cash management system incure contracts, $17.5 million for a form substantially similar to prepetition practice; (iii) use cash collateral on an interim basis; (iv) continue to honor certain obligations related to on-air talent, station affiliates and royalty obligations; (v) continue to maintain certain customer programs; (vi) pay taxes in the ordinary course; (vii) continue our surety bond program; and (viii) maintain our insurance program in the ordinary course.

~~The filing of the Chapter 11 Cases is intended to permit iHeartCommunications to reduce its indebtedness to achieve a manageable capital structure.~~

On April 28, 2018, the Debtors filed a plan of reorganization (as amended, the “Plan of Reorganization”) and a related disclosure statement (as amended, the “Disclosure Statement”) with the Bankruptcy Court pursuant to Chapter 11 of the Bankruptcy Code. On June 21, 2018, the Debtors filed an amended Disclosure Statement with the Bankruptcy Court. On August 5, 2018, the Debtors filed an amended Plan of Reorganization with the Bankruptcy Court. On August 23, 2018, the Debtors filed a second amended Plan of Reorganization and a further amended Disclosure Statement with the Bankruptcy Court. On August 28, 2018, the Debtors filed a third amended Plan of Reorganization and a further amended Disclosure Statement with the Bankruptcy Court. On September 12, 2018, the Debtors filed a fourth amended Plan of Reorganization and a further amended Disclosure Statement with the Bankruptcy Court. On September 18, 2018, the Debtors filed a revised fourth amended Plan of Reorganization and a further amended Disclosure Statement with the Bankruptcy Court. On September 20, 2018, the Bankruptcy Court entered an order approving the Disclosure Statement and related solicitation and notice procedures for voting on the Plan of Reorganization, and the Debtors filed solicitation versions of the Plan of Reorganization and Disclosure Statement.

Following the entry of the order approving the Disclosure Statement, the Debtors, certain Consenting Stakeholders, and the Official Committee of Unsecured Creditors reached an agreement regarding the treatment of general unsecured claims ~~under the Plan of Reorganization. On October 10, 2018, the Debtors filed a fifth amended Plan of Reorganization~~reserve, and a supplement to the Disclosure Statement (the “Disclosure Statement Supplement”). On October 18, 2018, the Bankruptcy Court entered an order approving the Disclosure Statement Supplement and the continued solicitation of holders of general unsecured claims$201.6 million for ~~voting~~professional fees (of which $126.3 million was paid on the Plan of Reorganization, and the Debtors filed solicitation versions of the Plan of Reorganization and Disclosure Statement Supplement. The deadline by which holders of claims and interests entitled to vote on the Plan of Reorganization must vote is currently November 16, 2018, and a hearing has been scheduled for December 11, 2018 to consider confirmation of the Plan of Reorganization.Effective Date).

new notes will be set forth in a supplement to the Plan of Reorganization. Holders of equity interests in iHeartMedia will receive their pro rata share of 1% of the iHeart Equity Interests, subject to dilution by any Reorganized iHeart Common Stock issued pursuant to a post-emergence equity incentive plan. On the effective date of the Plan of Reorganization, the applicable Debtors will execute documents to effect the separation of CCOH from iHeartMedia, and the equity interests in CCOH (or its successor) currently held by subsidiaries of iHeartMedia will be distributed to holders of claims with respect to the term loan credit agreement and priority guarantee notes.

~~During the pendency of the Chapter 11 Cases, iHeartCommunications' principal~~Our primary sources of liquidity are ~~expected to be limited to~~cash on hand, which consisted of $277.1 million as of September 30, 2019, cash flow from operations ~~cash on hand~~ and ~~borrowings~~borrowing capacity under ~~its DIP credit facility. Our ability to maintain adequate liquidity through the reorganization process and beyond depends on successful operation of~~ our ~~business, and appropriate management of operating expenses and capital spending. Our anticipated liquidity needs are highly sensitive to changes in each of these and other factors.~~

On January 18, 2018, iHeartCommunications incurred $25.0 million of additional borrowings under the revolving credit loan portion of its receivables based credit facility bringing its total outstanding borrowings under the facility to $430.0 million. In February 2018, iHeartCommunications prepaid $59.0 million on the revolving credit loan portion of this facility. On the Petition Date, we incurred a prepayment premium of $5.5 million upon acceleration of the loans and pre-petition accrued interest and fees totaling $2.4 million, which were added to the principal amount outstanding under the facility, bringing the total outstanding borrowings under the facility to $379.0 million. On June 14, 2018, iHeartCommunications entered into a Superpriority Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), as parent borrower, with Holdings, Subsidiary Borrowers, Citibank, N.A., as a lender and administrative agent, the swing line lenders and letter of credit issuers named therein and the other lenders from time to time party thereto. The entry into the DIP Credit Agreement was approved by an order of the Court (the “DIP Order”). We used proceeds from the DIP Facility and cash on hand to repay all amounts owed under and terminate iHeartCommunications' receivables based credit facility. On August 16, 2018 and September 17, 2018, the Company repaid $100.0 million and $25.0 million, respectively, of the amount drawn under the DIPABL Facility. As of September 30, ~~2018,~~2019, we had a facility size of $450.0 million under iHeartCommunications' ABL Facility, had no borrowings ~~under~~outstanding and $49.2 million of outstanding letters of credit, resulting in $400.8 million of excess availability.

We expect that our primary anticipated uses of liquidity will be to fund our working capital, make interest payments and voluntary prepayments of principal on our long-term debt and to fund capital expenditures and other obligations. These other obligations include dividend payments to be due to the ~~Company's DIP Facility.~~

~~In connection with~~investor of preferred stock of iHeart Operations, the terms of which are further described in Note 8 to our financial statements included herein. We anticipate that we will have approximately $105 million of cash management arrangements with CCOH, iHeartCommunications maintains an intercompany revolving promissory note payable by iHeartCommunications to CCOH (the "Intercompany Note"), which matures on May 15, 2019. As of December 31, 2017, the principal amount outstanding under the Intercompany Note was $1,067.6 million. As a result of the Chapter 11 Cases, CCOH wrote down the balance of the note by $855.6 million duringinterest payments in the fourth quarter of ~~2017~~2019 and approximately $400 million of cash interest payments in 2020. Over the past ten years, we have transitioned our Audio business from a single platform radio broadcast operator to ~~reflect~~a company with multiple platforms, including podcasting, networks and live events. We have also invested in numerous technologies and businesses to increase the ~~estimated recoverable amount~~competitiveness of ~~the Intercompany Note as of December 31, 2017, based on CCOH management's best estimate of the~~our inventory with our advertisers and our audience. We believe that our ability to generate cash ~~settlement amount. As of the Petition Date, the principal amount outstanding~~flow from operations from these business initiatives and borrowing capacity under ~~the Intercompany Note was $1,031.7 million. As of September 30, 2018, the asset recorded in respect of the Intercompany Note on CCOH's balance sheet was $154.8 million. Pursuant~~our ABL Facility, taken together, will provide sufficient resources to ~~an order entered by the Bankruptcy Court, as of March 14, 2018, the balance of the Intercompany Note is frozen,~~fund and following March 14, 2018, intercompany allocations that would have been reflected in adjustments to the balance of the Intercompany Note are instead reflected in an intercompany balance that accrues interest at a rate equal to the interest under the Intercompany Note. As of September 30, 2018, the liability recorded in respect of the post-petition balance of the Due to iHeartCommunications Note on CCOH's balance sheet was $1.5 million. The Intercompany Noteoperate our business, fund capital expenditures and Due to iHeartCommunications Note are eliminated in consolidation in our consolidated financial statements. The Bankruptcy Court approved a final order to allow us to continue to provide the day-to-day cash management services for CCOH during the Chapter 11 Cases,other obligations and ~~we expect to continue to do so until such arrangements are addressed through the Chapter 11 Cases.~~

The Bankruptcy Court’s order also approves iHeartCommunications' continuing to provide services to CCOH pursuant to the Corporate Services Agreement during the Chapter 11 Cases. Although we expect iHeartCommunications will continue to provide services to CCOH under the Corporate Services Agreement during the Chapter 11 Cases, we currently expect that if CCOH is separated from iHeartCommunications at the conclusion of the Chapter 11 Cases as contemplated by the RSA and the Plan of Reorganization filed with the Bankruptcy Court, the Corporate Services Agreement will terminate, be modified or be replaced with an agreement that gives effect to such separation.

~~In anticipation of the Chapter 11 Cases, we did not~~ make interest payments ~~of $78.8 million~~ on our long-term debt for at least the ~~9.0% Priority Guarantee Notes due 2021, $49.0 million on~~next 12 months and thereafter for the 11.25% Priority Guarantee Notes due 2021 and $105.8 million on the 14.0% Senior Notes due 2021, which were due prior to the Petition Date. In addition, following the Chapter 11 Cases, all interest payments due on debt held by the Debtors were stayed, which included $426.8 million on the Senior Secured Credit Facilities, $90.0 million on theforeseeable future.

~~9.0% Priority Guarantee~~On August 7, 2019, iHeartCommunications completed the sale of $750.0 million in aggregate principal amount of 5.25% Senior Secured Notes due ~~2019, $78.8 million on~~2027 (the "5.25% Senior Secured Notes") in a private placement. We used the 9.0% Priority Guarantee Notes due 2021, $90.0 million on the 9.0% Priority Guarantee Notes due 2022, $100.9 million on the 10.625% Priority Guarantee Notes due 2023, $49.0 million on the 11.25% Priority Guarantee Notes due 2021, $16.9 million on the Legacy Notes and $124.7 million on the 14.0% Senior Notes due 2021 during the nine months ended September 30, 2018.

The Consolidated Financial Statements included in this Quarterly Report on Form 10-Q have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The Consolidated Financial Statements do not reflect any adjustments that might resultnet proceeds from the ~~outcome~~5.25% Senior Secured Notes, together with cash on hand, to prepay at par $740.0 million of ~~the Chapter 11 Cases. We have significant indebtedness and we have reclassified all~~borrowings outstanding under our Term Loan Facility. Our Term Loan Facility called for quarterly principal payments of ~~the Debtors' indebtedness other than the DIP Facility~~approximately $8.75 million in addition to ~~Liabilities Subject to Compromise~~interest payments at ~~September 30, 2018. Our level of indebtedness has adversely impacted and is continuing to adversely impact our financial condition.~~LIBOR + 4.00%. As a result of our ~~financial condition,~~$740.0 million prepayment, no such principal payments are required for the ~~defaults under our debt agreements, and the risks and uncertainties surrounding the Chapter 11 Cases, substantial doubt exists that we will be able to continue as a going concern.~~

~~Non-Payment of $57.1 Million of iHeartCommunications Legacy Notes Held by an Affiliate~~

Our wholly-owned subsidiary, Clear Channel Holdings, Inc. ("CCH"), owns $57.1 million aggregate principal amount of our 5.50% Senior Notes due 2016 (the "5.50% Senior Notes"). On December 9, 2016, a special committee of our independent directors decided to not repay the $57.1 million principal amountremaining term of the ~~5.50% Senior Notes held by CCH when the notes matured on December 15, 2016 and on December 12, 2016, we informed CCH of that decision. CCH informed us on that date that, while it retains its right~~Term Loan Facility - resulting in an approximately $35 million annual reduction in required debt service payments. In addition, annual cash interest payments are expected to exercise remedies under the indenture governing the 5.50% Senior Notes (the "legacy notes indenture") in the future, it does not currently intend to, and it does not currently intend to request that the trustee, seek to collect principal amounts due or exercise or request enforcement of any remedy with respect to the nonpayment of such principal amount under the legacy notes indenture. As a result, $57.1be approximately $4 million ~~of the 5.50% Senior Notes remain outstanding. We repaid the other $192.9 million of 5.50% Senior Notes held by other holders.~~

As a result of the non-payment of the $57.1 million of the 5.50% Senior Notes and the non-payment of the June 15 maturity of $175.0 million 6.875% Senior Notes due 2018 as referenced in Item 3. Defaults Upon Senior Securities, we continue tolower than would have ~~in excess of $500 million of Legacy Notes outstanding. Matters involving the validity and priority of any liens on iHeartMedia property are now~~been required before the ~~Bankruptcy Court.~~

refinancing transaction.

Sources of Capital

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had the following debt outstanding, net of cash and cash equivalents:

(In millions) September 30, 2018 December 31, 2017
Senior Secured Credit Facilities:
Term Loan D Facility Due 2019 —
5,000.0
Term Loan E Facility Due 2019 —
1,300.0
Receivables Based Credit Facility due 2020⁽¹⁾
—
405.0
Debtors-in-Possession Facility⁽¹⁾
—
—
9.0% Priority Guarantee Notes Due 2019 —
1,999.8
9.0% Priority Guarantee Notes Due 2021 —
1,750.0
11.25% Priority Guarantee Notes Due 2021 —
870.5
9.0% Priority Guarantee Notes Due 2022 —
1,000.0
10.625% Priority Guarantee Notes Due 2023 —
950.0
CCO Receivables Based Credit Facility due 2023⁽²⁾
—
—
Other Secured Subsidiary Debt 4.0
8.5
Total Secured Debt 4.0
13,283.8

14.0% Senior Notes Due 2021 —
1,763.9
Legacy Notes:
6.875% Senior Notes Due 2018 —
175.0
7.25% Senior Notes Due 2027 —
300.0
10.0% Senior Notes Due 2018⁽³⁾
—
47.5
CCWH Senior Notes:
6.5% Series A Senior Notes Due 2022 735.8
735.8
6.5% Series B Senior Notes Due 2022 1,989.2
1,989.2
CCWH Senior Subordinated Notes:
7.625% Series A Senior Notes Due 2020 275.0
275.0
7.625% Series B Senior Notes Due 2020 1,925.0
1,925.0
Clear Channel International B.V. 8.75% Senior Notes due 2020 375.0
375.0
Other Subsidiary Debt —
24.6
Purchase accounting adjustments and original issue discount (0.6 ) (136.6 )
Long-term debt fees (28.6 ) (109.0 )
Liabilities subject to compromise⁽⁴⁾
15,149.0
—
Total Debt 20,423.8
20,649.2
Less: Cash and cash equivalents 311.2
267.1
$ 20,112.6
$ 20,382.1



(In millions)	Successor Company			Predecessor Company
	September 30, 2019			December 31, 2018
Term Loan Facility due 2026⁽¹⁾	$	2,757.4		$	—
Debtors-in-Possession Facility⁽²⁾	—			—
Asset-based Revolving Credit Facility due 2023⁽²⁾	—			—
6.375% Senior Secured Notes due 2026	800.0			—
5.25% Senior Secured Notes due 2027⁽¹⁾	750.0			—
Other Secured Subsidiary Debt	4.4			—
Total Secured Debt	4,311.8			—

8.375% Senior Unsecured Notes due 2027	1,450.0			—
Other Subsidiary Debt	58.5			46.1
Long-term debt fees	(11.3		)	—
Liabilities subject to compromise⁽³⁾	—			15,149.5
Total Debt	5,809.0			15,195.6
Less: Cash and cash equivalents	277.1			224.0
	$	5,531.9		$	14,971.6

(1)

On ~~June 14, 2018,~~August 7, 2019, iHeartCommunications ~~refinanced its receivables based credit facility~~issued the 5.25% Senior Secured Notes, the proceeds of which were used, together with a new $450.0 million debtors-in-possession credit facility (the "DIP Facility"), which matures on the earlier of the emergence date from the Chapter 11 Cases or June, 14, 2019. The DIP Facility also includes a feature to convert into an exit facility at emergence, upon meeting certain conditions. The DIP Facility accrues interest at LIBOR plus 2.25%. At close iHeartCommunications drew $125.0 million on the DIP Facility. On June 14, 2018, we used proceeds from the DIP Facility and cash on hand, to ~~repay the~~prepay at par $740.0 million of borrowings outstanding $306.4 million and $74.3 million term loan and revolving credit commitments, respectively, of the iHeartCommunications receivables based credit facility. On August 16, 2018 and September 17, 2018, the Company repaid $100.0 million and $25.0 million, respectively, of the amount drawn under the ~~DIP Facility. As~~Term Loan Facility, plus approximately $0.8 million of ~~September 30, 2018, iHeartCommunications had no borrowings under~~accrued and unpaid interest to, but not including, the ~~DIP Facility.~~date of prepayment.

(2)

~~On June 1, 2018, a subsidiary of~~The Debtors-in-Possession Facility (the "DIP" Facility), which terminated with our emergence from the ~~Company's Outdoor advertising subsidiary, CCO, refinanced CCOH's senior revolving credit facility and replaced it with an asset based credit facility that~~Chapter 11 Cases, provided for ~~revolving credit commitments~~borrowings of up to ~~$75.0~~$450.0 million. On ~~June 29, 2018, CCO~~the Effective Date, the DIP Facility was repaid and canceled and iHeartCommunications entered into ~~an amendment providing for a $50.0 million incremental increase of~~ the ~~facility, bringing the aggregate revolving credit commitments to $125.0 million. The facility has a five-year term, maturing in 2023.~~ABL Facility. As of September 30, ~~2018,~~2019, we had a facility size of $450.0 million under the ~~facility~~ABL Facility, had ~~$86.4~~no outstanding borrowings and had $49.2 million of outstanding letters of credit, ~~outstanding and a borrowing base of $113.0 million,~~ resulting in ~~$26.6~~$400.8 million of excess availability.


~~(3)~~	On January 4, 2018, a subsidiary of iHeartCommunications repurchased $5.4 million aggregate principal amount of 10.0% Senior Notes due 2018 that were held by unaffiliated third parties for $5.3 million in cash. On January 16, 2018, iHeartCommunications repaid the remaining balance of $42.1 million aggregate principal amount of 10.0% Senior Notes due 2018 at maturity.

~~(4)~~(3)

In connection with our Chapter 11 Cases, the $6.3 billion outstanding under the Senior Secured Credit Facilities, the $1,999.8 million outstanding under the 9.0% Priority Guarantee Notes due 2019, the $1,750.0 million outstanding under the 9.0% Priority Guarantee Notes due 2021, the $870.5 million of 11.25% Priority Guarantee Notes due 2021, the $1,000.0 million outstanding under the 9.0% Priority Guarantee Notes due 2022, the $950.0 million outstanding under the 10.625% Priority Guarantee Notes due 2023, ~~$6.1~~$6.0 million outstanding Other Secured Subsidiary Debt, the $1,781.6 million outstanding under the 14.0% Senior Notes due 2021, the $475.0 million outstanding under the Legacy Notes and ~~$16.0~~$10.8 million outstanding Other Subsidiary Debt ~~have been~~were reclassified to Liabilities subject to compromise in our Consolidated Balance Sheet as of ~~September 30,~~December 31, 2018. As of the Petition Date, we ceased accruing interest expense in relation to long-term debt reclassified as Liabilities subject to compromise.

~~Debtors-in-Possession Facility~~

On June 14, 2018, iHeartCommunications entered into a Superpriority Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), as parent borrower, with Holdings, Subsidiary Borrowers, Citibank, N.A., as a lender and administrative agent,For additional information regarding our debt, including the ~~swing line lenders and letter of credit issuers named therein and the other lenders from time to time party thereto.~~

~~Size and Availability~~

The DIP Credit Agreement provides for a first-out asset-based revolving credit facility in the aggregate principal amount of up to $450 million, with amounts available from time to time (including in respect of letters of credit) equal to the lesser of (i) the borrowing base, which equals 90.0%terms of the ~~eligible accounts receivable of iHeartCommunications and the subsidiary guarantors, subject~~governing documents, refer to customary reserves and eligibility criteria, and (ii) the aggregate revolving credit commitments. As of the DIP Closing Date, the aggregate revolving credit commitments were $450.0 million. Subject to certain conditions, iHeartCommunications may at any time request one or more increases in the amount of revolving credit commitments, in minimum amounts of $10.0 million and in an aggregate maximum amount of $100.0 million.

The proceeds from the DIP Facility were made available on the DIP Closing Date, and were used in combination with cash on hand to fully pay off and terminate iHeartCommunications’ asset-based credit facility and all commitments thereunder governed by the credit agreement, dated as of November 30, 2017, by and among iHeartCommunications, Holdings, the Subsidiary Borrowers, and the lenders and issuing banks from time to time party thereto and TPG Specialty Lending, Inc., as administrative agent and collateral agent.

As of September 30, 2018, the Company had a borrowing limit of $450.0 million under iHeartCommunications' DIP Facility, had no borrowings, had $65.3 million of outstanding letters of credit and had an availability block requirement of $37.5 million, resulting in $347.2 million of excess availability.

~~Interest Rate and Fees~~

Borrowings under the DIP Credit Agreement bear interest at a rate per annum equal to the applicable rate plus, at iHeartCommunications’ option, either (1) a base rate determined by reference to the highest of (a) the rate announced from time to time by the Administrative Agent at its principal office, (b) the Federal Funds rate plus 0.50%, and (c) the Eurocurrency rate for an interest period of one month plus 1.00% or (2) a Eurocurrency rate that is the greater of (a) 1.00%, and (b) the quotient of (i) the ICE LIBOR rate, or if such rate is not available, the rate determined by the Administrative Agent, and (ii) one minus the maximum rate at which reserves are required to be maintained for Eurocurrency liabilities. The applicable rate for borrowings under the DIP Credit Agreement is 2.25% with respect to Eurocurrency rate loans and 1.25% with respect to base rate loans.

In addition to paying interest on outstanding principal under the DIP Credit Agreement, iHeartCommunications is required to pay a commitment fee of 0.50% per annum to the lenders under the DIP Credit Agreement in respect of the unutilized revolving commitments thereunder. iHeartCommunications must also pay a letter of credit fee equal to 2.25% per annum.

~~Maturity~~

Borrowings under the DIP Credit Agreement will mature, and lending commitments thereunder will terminate, upon the earliest to occur of: (a) June 14, 2019 (provided that to the extent the Consummation Date (as defined below) has not occurred solely as a result of failure to obtain necessary regulatory approvals, the Scheduled Termination Date shall be September 16, 2019) and (b) the date of the substantial consummation (as defined in the Bankruptcy Code) of a confirmed plan of reorganization pursuant to an order of the Bankruptcy Court; provided, that if the DIP Facility is converted into an exit facility as described underNote 8, Long-Term Debt.

~~“-Conversion~~Supplemental Financial Information under Debt Agreements and Certificate of Designation Governing the iHeart Operations Preferred Stock

Pursuant to ~~Exit Facility” below, then~~iHeartCommunications' material debt agreements, Capital I, the ~~borrowings will mature on the maturity date set forth in the credit agreement governing such exit facility.~~

~~Prepayments~~

~~If at any time (a) the revolving credit exposures exceed the revolving credit commitments (this clause (a), or (b) the lesser of the borrowing base~~parent guarantor and ~~the aggregate revolving credit commitments~~ ~~minus~~ ~~$37.5 million~~ ~~minus~~ the aggregate revolving credit exposures (the clause (b), is for any reason less than $0, iHeartCommunications will be required to repay all revolving loans outstanding, and cash collateralize letters of credit in an aggregate amount equal to such Excess or until Excess Availability is not less than $0, as applicable.

~~iHeartCommunications may voluntarily repay, without premium or penalty, outstanding amounts under the revolving credit facility at any time.~~

~~Guarantees and Security~~

The facility is guaranteed by, subject to certain exceptions, iHeartCommunications’ Debtor subsidiaries. All obligations under the DIP Credit Agreement, and the guarantees of those obligations, are secured by a perfected first priority senior priming lien on all of iHeartCommunications’ and all of the subsidiary guarantors’ accounts receivable and related proceeds thereof, subject to certain exceptions.

~~Certain Covenants and Events of Default~~

The DIP Credit Agreement includes negative covenants that, subject to significant exceptions, limit iHeartCommunications’ ability and the ability of its restricted subsidiaries to, among other things:

~~incur additional indebtedness;~~

~~create liens on assets;~~

~~engage in mergers, consolidations, liquidations and dissolutions;~~

~~sell assets;~~

~~pay dividends and distributions or repurchase iHeartCommunications' capital stock;~~

~~make investments, loans, or advances;~~

~~prepay certain junior indebtedness;~~

~~engage in certain transactions with affiliates;~~

~~amend material agreements governing certain junior indebtedness; and~~

~~change lines of business.~~

The DIP Credit Agreement includes certain customary representations and warranties, affirmative covenants and events of default, including but not limited to, payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain bankruptcy-related events, certain events under ERISA, material judgments and a change of control. If an event of default occurs, the lenders under the DIP Credit Agreement will be entitled to take various actions, including the acceleration of all amounts due under the DIP Credit Agreement and all actions permitted to be taken under the loan documents or applicable law, subject to the terms of the DIP Order.

~~Conversion to Exit Facility~~

Upon the satisfaction or waiver of the conditions set forth in the DIP Credit Agreement and the entry by the Bankruptcy Court of an order confirming an acceptable plan of reorganization, the DIP Facility will convert into an exit facility on the terms set forth in an exhibit to the DIP Credit Agreement.

~~CCO Receivables Based Credit Facility~~

~~On June 1, 2018 (the “Closing Date”), Clear Channel Outdoor, Inc. (“CCO”),~~ a subsidiary of ~~Clear Channel Outdoor Holdings, Inc. (“CCOH”), entered into~~iHeartMedia, is permitted to satisfy its reporting obligations under such agreements by furnishing iHeartMedia’s consolidated financial information and an explanation of the material differences between iHeartMedia’s consolidated financial information, on the one hand, and the financial information of Capital I and its consolidated restricted subsidiaries, on the other hand. Because neither iHeartMedia nor iHeartMedia Capital II, LLC, a ~~Credit Agreement (the “Credit Agreement”), as~~wholly-owned direct subsidiary of iHeartMedia and the parent ~~borrower, with~~of Capital I, have any operations or material assets or liabilities, there are no material differences between iHeartMedia’s consolidated financial information for the three and nine months ended September 30, 2019, and Capital I’s and its consolidated restricted subsidiaries’ financial information for the same periods.

According to the certificate of designation governing the iHeart Operations Preferred Stock, iHeart Operations is required to provide certain supplemental financial information of iHeart Operations in comparison to the Company and its consolidated subsidiaries. iHeart Operations and its subsidiaries named therein, as subsidiary borrowers (the “CCO Subsidiary Borrowers”), Deutsche Bank AG New York Branch, as administrative agent (the “Administrative Agent”) and swing line lender, and the other lenders from time to time party thereto. The Credit Agreement governs CCO’s new asset-based revolving credit facility and replaces CCOH’s prior credit agreement, dated as of August 22, 2013 (the “Prior Credit Agreement”), which was terminated on the Closing Date.

~~Size and Availability~~

The Credit Agreement provides for an asset-based revolving credit facility, with amounts available from time to time (including in respect of letters of credit) equal to the lesser of (i) the borrowing base, which equals 85.0%comprised 88.5% of the eligible accounts receivable of CCO and the subsidiary borrowers, subject to customary eligibility criteria minus any reserves, and (ii) the aggregate revolving credit commitments. As of the Closing Date, the aggregate revolving credit commitments were $75.0 million. On June 29, 2018, CCO entered into an amendment providing for a $50.0 million incremental increase of the facility, bringing the aggregate revolving credit commitments to $125.0 million. On the Closing Date, the revolving credit facility was used to replace and terminate the commitments under the Prior Credit Agreement and to replace the letters of credit outstanding under the Prior Credit Agreement.

AsCompany's consolidated assets as of September 30, ~~2018,~~2019. For the ~~facility had $86.4 million of letters of credit outstanding~~three months ended September 30, 2019 and ~~a borrowing base of $113.0 million, resulting in $26.6 million of excess availability.~~

~~Interest Rate~~the period from May 2, 2019 through September 30, 2019, iHeart Operations and ~~Fees~~

Borrowings under the Credit Agreement bear interest at a rate per annum equal to the Applicable Rate plus, at CCO’s option, either (1) a base rate determined by reference to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such date as publicly announced from time to time by the Administrative Agent as its ~~“prime rate”~~subsidiaries comprised 84.3% and (c) the Eurocurrency rate that would be calculated as of such day in respect of a proposed Eurocurrency rate loan with a one-month interest period plus 1.00%, or (2) a Eurocurrency rate that is equal to the LIBOR rate as published by Reuters two business days prior to the commencement84.8% of the ~~interest period. The Applicable Rate for borrowings under the Credit Agreement is 1.00% with respect to base rate loans and 2.00% with respect to Eurocurrency loans.~~

In addition to paying interest on outstanding principal under the Credit Agreement, CCO is required to pay a commitment fee of 0.375% per annum to the lenders under the Credit Agreement in respect of the unutilized revolving commitments thereunder. CCO must also pay a letter of credit fee for each issued letter of credit equal to 2.00% per annum times the daily maximum amount then available to be drawn under such letter of credit.

~~Maturity~~

Borrowings under the Credit Agreement will mature, and lending commitments thereunder will terminate, on the earlier of (a) June 1, 2023 and (b) 90 days prior to the maturity date of any indebtedness of CCOH or any of its direct or indirect subsidiaries in an aggregate principal amount outstanding in excess of $250,000,000 (other than the 8.75% senior notes due 2020 issued by Clear Channel International, B.V.).

~~Prepayments~~

If at any time, the outstanding amount under the revolving credit facility exceeds the lesser of (i) the aggregate amount committed by the revolving credit lenders and (ii) the borrowing base, CCO will be required to prepay first, any protective advances and second, any outstanding revolving loans and swing line loans and/or cash collateralize letters of credit in an aggregate amount equal to such excess, as applicable.

Subject to customary exceptions and restrictions, CCO may voluntarily repay outstanding amounts under the Credit Agreement at any time without premium or penalty. Any voluntary prepayments CCO makes will not reduce commitments under the Credit Agreement.

~~Guarantees and Security~~

The facility is guaranteed by the CCO Subsidiary Borrowers. All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by a perfected security interest in all of CCO’s and the CCO Subsidiary Borrowers’ accounts receivable and related assets and proceeds thereof.

~~Certain Covenants and Events of Default~~

If borrowing availability is less than the greater of (a) $7.5 million and (b) 10.0% of the lesser of (i) the aggregate commitments at such time and (ii) the borrowing base then in effect at such time, CCO will be required to comply with a minimum fixed charge coverage ratio of at least 1.00 to 1.00 for the most recent period of four consecutive fiscal quarters ended prior to the occurrence of the Financial Covenant Triggering Event, and will be required to continue to comply with this minimum fixed charge coverage ratio until borrowing availability exceeds the greater of (x) $7.5 million and (y) 10.0% of the lesser of (i) the aggregate commitments at such time and (ii) the borrowing base then in effect at such time, at which time the Financial Covenant Triggering Event will no longer be deemed to be occurring.

~~The Credit Agreement also includes negative covenants that, subject to significant exceptions, limit the Borrowers’ ability and the ability of their restricted subsidiaries to, among other things:~~

~~incur additional indebtedness;~~

~~create liens on assets;~~

~~engage in mergers, consolidations, liquidations and dissolutions;~~

~~sell assets;~~

~~pay dividends and distributions or repurchase capital stock;~~

~~make investments, loans, or advances;~~

~~prepay certain junior indebtedness;~~

~~engage in certain transactions with affiliates or;~~

~~change lines of business.~~

The Credit Agreement includes certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, material judgments and a change of control. If an event of default occurs, the lenders under the Credit Agreement will be entitled to take various actions, including the acceleration of all amounts due under the Credit Agreement and all actions permitted to be taken by a secured creditor.

Company's consolidated revenues, respectively.

Uses of Capital

Debt Repayments, Maturities and Other

On ~~January 4, 2018, a subsidiary~~August 7, 2019, iHeartCommunications completed the sale of ~~iHeartCommunications repurchased $5.4~~$750.0 million in aggregate principal amount of ~~10.0%~~5.25% Senior Secured Notes due ~~2018 that were held by unaffiliated third parties for $5.3 million~~2027 in ~~cash. On January 16, 2018,~~a private placement to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside the United States pursuant to Regulation S under the Securities Act. iHeartCommunications ~~repaid~~used the ~~remaining balance of $42.1 million aggregate principal amount of 10.0% Senior Notes due 2018 at maturity.~~

On June 14, 2018, iHeartCommunications refinanced its receivables based credit facility with a new $450.0 million debtors-in-possession credit facility (the "DIP Facility"), which matures on the earlier of the emergence date from the Chapter 11 Cases or June, 14, 2019. The DIP Facility also includes a feature to convert into an exit facility at emergence, upon meeting certain conditions. The DIP Facility accrues interest at LIBOR plus 2.25%. At close iHeartCommunications drew $125.0 million on the DIP Facility. On June 14, 2018, we usednet proceeds from the ~~DIP Facility and~~5.25% Senior Secured Notes, together with cash on hand, to ~~repay the~~prepay at par $740.0 million of borrowings outstanding $306.4 million and $74.3 million term loan and revolving credit commitments, respectively, of the iHeartCommunications receivables based credit facility. On August 16, 2018 and September 17, 2018, the Company repaid $100.0 million and $25.0 million, respectively, of the amount drawn under the ~~DIP Facility. As of September 30, 2018, iHeartCommunications had no borrowings under the DIP Facility.~~

Term Loan Facility due 2026.

Certain Relationships with Related Parties

Prior to the ~~Sponsors~~

~~We are~~Effective Date, we were party to a management agreement with certain affiliates of ~~the Sponsors~~our former sponsors and certain other parties pursuant to which such affiliates of the ~~Sponsors will provide~~former sponsors provided management and financial advisory services until December 31, 2018. These arrangements ~~require~~required management fees to be paid to such affiliates of the ~~Sponsors~~former sponsors for such services at a rate not greater than $15.0 million per year, plus reimbursable expenses. ~~For~~The Company did not recognize management fees following the ~~nine months ended September 30, 2018, the~~Petition Date. The Company recognized management fees and reimbursable expenses of $2.9 million. In connection with the Reorganization, the Company is not recognizing management fees in the post-petition period. The Company recognized management fees and reimbursable expenses of $3.8 million and $11.4 million for the ~~three and~~ nine months ended September 30, ~~2017, respectively.~~

~~CCOH Dividends~~

In connection with the cash management arrangements with CCOH, iHeartCommunications maintained an intercompany revolving promissory note payable by iHeartCommunications to CCOH (the “Intercompany Note”), which consists2018. As of the ~~net activities resulting from day-to-day cash~~Effective Date, these management services provided by iHeartCommunications to CCOH. As of March 14, 2018, the principal amount outstanding under the Intercompany Note was $1,031.7 million. The Intercompany Note is eliminated in consolidation in our consolidated financial statements.

The Intercompany Note previously was the subject of litigation. Pursuant to the terms of the settlement of that litigation, CCOH’s board of directors established an intercompany note committee for the specific purpose of monitoring the Intercompany Note. The CCOH Intercompany Note Committee has the non-exclusive authority, pursuant to the terms of its charter, to demand payments under the Intercompany Note under certain specified circumstances tied to the Company’s liquidity or the amount outstanding under the Intercompany Note as long as CCOH makes a simultaneous dividend equal to the amount so demanded. If the specified circumstances tied to the Company’s liquidity occur, the CCOH Intercompany Note Committee is authorized to demand repayment of up to the full principal amount of the Intercompany Note, if it declares a simultaneous dividend to CCOH’s stockholders in the same amount. As a result of the Chapter 11 Cases, the balance on the Intercompany Note is currently frozen and any payment pursuant to such demand would be subject to the approval of the Bankruptcy Court.

On January 5, 2018, (i) CCOH provided notice of its intent to make a demand (the "Demand") for repayment on January 24, 2018 of $30.0 million outstanding under the Intercompany Note, and (ii) the board of directors of CCOH declared a special cash dividend, which was paid on January 24, 2018 to CCOH’s Class A and Class B stockholders of record at the closing of business on January 19, 2018, in an aggregate amount equal to $30.0 million, funded with the proceeds of the Demand. iHeartCommunications received approximately 89.5%, or approximately $26.8 million, of the proceeds of the dividend through its wholly-owned subsidiaries. The remaining approximately 10.5% of the proceeds of the dividend, or approximately $3.2 million, was paid to the public stockholders of CCOH.

As a result of the filing of the Chapter 11 Cases, the balance under the Intercompany Note has become immediately due and payable. Pursuant to an order entered by the Bankruptcy Court, as of March 14, 2018, the balance of the Intercompany Note is frozen, and following March 14, 2018, intercompany allocations that would have been reflected in adjustments to the balance of the Intercompany Note are instead reflected in an intercompany balance that accrues interest at a rate equal to the interest under the Intercompany Note. As of September 30, 2018, the liability recorded in respect of the post-petition balance of the Due to iHeartCommunications Note on CCOH's balance sheet was $1.5 million. iHeartCommunications' obligations under the Intercompany Note are subject to settlement under a plan of reorganization which must be confirmed by the Bankruptcy Court.fees were waived.

Commitments, Contingencies and Guarantees

We are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued our estimate of the probable costs for 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 our assumptions or the effectiveness of our strategies related to these proceedings. Please refer to “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q.

SEASONALITY

Typically, the ~~iHM, Americas outdoor and International outdoor segments experience their~~Audio segment experiences its lowest financial performance in the first quarter of the calendar year, with International outdoor historically experiencing a loss from operations in that period. Our International outdoor segment typically experiences its strongest performance in the second and fourth quarters of the calendar year. We expect this trend to continue in the future. Due to this seasonality and certain other factors, the results for the interim periods may not be indicative of results for the full year. In addition, our Audio segment and our Audio and media representation business are impacted by political cycles and generally experience higher revenues in congressional election years, and particularly in presidential election years. This cyclicality may affect comparability of results between years.

MARKET RISK

We are exposed to market risks arising from changes in market rates and prices, including movements in interest rates ~~foreign currency exchange rates~~ and inflation.

Interest Rate Risk

A significant amount of our long-term debt bears interest at variable rates. Accordingly, our earnings will be affected by changes in interest rates. As of September 30, ~~2018,~~2019, approximately ~~31%~~48% of our aggregate principal amount of long-term debt bore interest at floating rates. Assuming the current level of borrowings and assuming a 50% change in LIBOR, ~~disregarding the impact of the Chapter 11 Cases on our requirement to pay interest on our long-term debt,~~ it is estimated that our interest expense for the ~~nine months ended~~period from May 2, 2019 through September 30, ~~2018~~2019 would have changed by ~~$50.6~~$14.5 million.

In the event of an adverse change in interest rates, management may take actions to mitigate our exposure. However, due to the uncertainty of the actions that would be taken and their possible effects, the preceding interest rate sensitivity analysis assumes no such actions. Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.

~~Foreign Currency Exchange Rate Risk~~

We have operations in countries throughout the world. Foreign operations are measured in their local currencies. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. We believe we mitigate a small portion of our exposure to foreign currency fluctuations with a natural hedge through borrowings in currencies other than the U.S. dollar. Our foreign operations reported net losses of $27.1 million and $55.7 million for the three and nine months ended September 30, 2018, respectively. We estimate a 10% increase in the value of the U.S. dollar relative to foreign currencies would have decreased our net losses for the three and nine months ended September 30, 2018 by $2.7 million and $5.6 million, respectively. A 10% decrease in the value of the U.S. dollar relative to foreign currencies during the three and nine months ended September 30, 2018 would have increased our net losses for the same periods by corresponding amounts.

This analysis does not consider the implications that such currency fluctuations could have on the overall economic activity that could exist in such an environment in the U.S. or the foreign countries or on the results of operations of these foreign entities.

Inflation

Inflation is a factor in the economies in which we do business and we continue to seek ways to mitigate its effect. Inflation has affected our performance in terms of higher costs for wages, salaries and equipment. Although the exact impact of inflation is indeterminable, we believe we have offset these higher costs by increasing the effective advertising rates of most of our broadcasting stations ~~and outdoor display faces~~ in our ~~iHM, Americas outdoor and International outdoor~~Audio operations.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material. Our significant accounting policies are discussed in the notes to our consolidated financial statements included in Note 1 of this Quarterly Report on Form 10-Q. Management believes that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. The following narrative describes these critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions.

Fresh Start Accounting

In connection with our emergence from bankruptcy and in accordance with ASC 852, we qualified for and adopted fresh start accounting on the Effective Date. We were required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan of Reorganization was less than the post-petition liabilities and allowed claims.

In accordance with ASC 852, with the application of fresh start accounting, we allocated our reorganization value to our individual assets based on our estimated fair values in conformity with ASC 805, "Business Combinations." The reorganization value represents the fair value of the Successor Company's assets before considering liabilities. The excess reorganization value over the fair value of identified tangible and intangible assets is reported as goodwill.

Reorganization Value

As set forth in the Plan of Reorganization and the Disclosure Statement, the enterprise value of the Successor Company ~~performs~~was estimated to be between $8.0 billion and $9.5 billion. Based on the estimates and assumptions discussed below, we estimated the enterprise value to be $8.75 billion, which is the mid-point of the range of enterprise value.

Management and its valuation advisors estimated the enterprise value of the Successor Company, which was approved by the Bankruptcy Court. The selected publicly traded companies analysis approach, the discounted cash flow analysis (“DCF”) approach and the selected transactions analysis approach were all utilized in estimating enterprise value. The use of each approach provides corroboration for the other approaches. To estimate enterprise value utilizing the selected publicly traded companies analysis method, valuation multiples derived from the operating data of publicly-traded benchmark companies to the same operating data of the Company were applied. The selected publicly traded companies analysis identified a group of comparable companies giving consideration to lines of business and markets served, size and geography. The valuation multiples were derived based on

historical and projected financial measures of revenue and earnings before interest, taxes, depreciation and amortization and applied to projected operating data of the Company.

To estimate enterprise value utilizing the selected transactions analysis, valuation multiples were derived from an analysis of consideration paid and net debt assumed from publicly disclosed merger or acquisition transactions, and such multiples were applied to the broadcast cash flows of the Successor Company. The selected transactions analysis identified companies and assets involved in publicly disclosed merger and acquisition transactions for which the targets had operating and financial characteristics comparable in certain respects to the Successor Company.

For information regarding fresh start accounting, refer to Note 3, Fresh Start Accounting to our Consolidated Financial Statements included in Part I of this Quarterly Report on Form 10-Q.

Annual Goodwill and Indefinite-lived Intangible Asset Impairment Test

We perform our annual impairment test on goodwill and indefinite-lived intangible assets as of July 1 of each year.

We also test goodwill or indefinite-lived intangible assets at interim dates if events or changes in circumstances indicate that goodwill or indefinite-lived intangible assets might be impaired.

Generally, our annual impairment test includes a full quantitative assessment, which involves the preparation of a fair value estimate for each of our reporting units based on our most recent projected financial results, market and industry factors, including comparison to peer companies and the application of our current estimated weighted average cost of capital ("WACC"). However, in connection with our emergence from bankruptcy, we qualified for and adopted fresh start accounting on the Effective Date. As of May 1, 2019, we allocated our estimated enterprise fair value to our individual assets and liabilities based on their estimated fair values in conformity with ASC 805, "Business Combinations." As a result of the recent fair value exercise applied in connection with fresh start accounting, we opted to use a qualitative assessment for our annual goodwill and indefinite-lived intangible asset impairment test as of July 1, 2019 in lieu of performing the full quantitative assessment, as permitted by ASC 350, "Intangibles - Goodwill and Other".

Indefinite-lived Intangible Assets

In connection with ~~the Merger Agreement pursuant to which~~our Plan of Reorganization, we ~~acquired iHeartCommunications in 2008, we allocated the purchase price to~~applied fresh start accounting as required by ASC 852 and recorded all of our assets and liabilities at estimated fair values, including our FCC licenses, ~~and~~which are included within our ~~billboard permits. Indefinite-lived~~Audio reporting unit. As of July 1, 2019, the qualitative impairment assessment performed for indefinite-lived intangible assets ~~such~~considered the general macroeconomic environment, industry and market specific conditions, financial performance, including changes in costs and actual versus forecasted results, as ~~our FCC licenses~~well other issues or events specific to the Audio reporting unit.

Based on this assessment and ~~our billboard permits, are reviewed annually for possible impairment using~~ the ~~direct valuation method as prescribed~~totality of facts and circumstances, including the business environment in ~~ASC 805-20-S99. Under~~ the ~~direct valuation method,~~third quarter of 2019, the ~~estimated~~Company determined that it was not more likely than not that the fair value of the Company and its reporting units is less than their respective carrying amounts. As such, the Company concluded no impairment of indefinite-lived intangible assets was ~~calculated at the market level~~required as ~~prescribed by ASC 350-30-35. Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as a part~~ of a going concern business, the buyer hypothetically obtains indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flows model, which results in value that is directly attributable to the indefinite-lived intangible assets.July 1, 2019.

~~Our key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile~~Goodwill

Upon application of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average asset within a market.

~~On July 1, 2018, we performed our annual impairment test~~fresh start accounting in accordance with ASC ~~350-30-35 and recognized recognized impairment charges of $33.1 million related to FCC licenses~~852 in ~~several iHM radio markets and an impairment charge of $7.8 million related to permits in one Americas outdoor market.~~

~~In determining the fair value of our FCC licenses, the following key assumptions were used:~~

~~Revenue growth sales forecasts published by BIA Financial Network, Inc. (“BIA”), varying by market, were used for the initial four-year period;~~

~~2.0% revenue growth was assumed beyond the initial four-year period;~~

~~Revenue was grown proportionally over a build-up period, reaching market revenue forecast by year 3;~~

~~Operating margins of 12.5% in the first year gradually climb to the industry average margin in year 3 of up to 25.0%, depending on market size; and~~

~~Assumed discount rates of 8.0% for the 13 largest markets and 8.5% for all other markets.~~

~~In determining the fair value of our billboard permits, the following key assumptions were used:~~

~~Industry revenue growth forecasts between 1.9% and 4.0% were used for the initial four-year period;~~

~~3.0% revenue growth was assumed beyond the initial four-year period;~~

~~Revenue was grown over a build-up period, reaching maturity by year 2;~~

~~Operating margins gradually climb to the industry average margin of up to 54.7%, depending on market size, by year 3; and~~

~~Assumed discount rate of 8.0%.~~

While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate the fair value of our indefinite-lived intangible assets, it is possible a material change could occur. If future results are not consistentconnection with our ~~assumptions and estimates,~~emergence from bankruptcy, we ~~may be exposed to impairment charges in the future. The following table shows the change in the fair value~~recorded goodwill of our indefinite-lived intangible assets that would result from a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption:

(In thousands) Revenue Profit Discount
Description Growth Rate Margin Rates
FCC license $ 510,163
$ 175,133
$ 436,203
Billboard permits $ 1,077,700
$ 166,000
$ 1,059,700

~~The estimated fair value of our FCC licenses and billboard permits at July 1, 2018 was $6.7~~$3.3 billion, ($2.7 billion for FCC licenses and $3.9 billion for billboard permits), while the carrying value was $3.4 billion. The estimated fair value of our FCC licenses and billboard permits at July 1, 2017 was $7.0 billion ($3.2 billion for FCC licenses and $3.7 billion for billboard permits), while the carrying value was $3.4 billion.

~~Goodwill~~

~~Goodwill represents~~which represented the excess of ~~the purchase price over the~~estimated enterprise fair value of identifiable net assets acquired in business combinations. We test goodwill at interim dates if events or changes in circumstances indicate that goodwill might be impaired. The fair value of our reporting units is used to apply value to the net assets of each reporting unit. To the extent that the carrying amount of net assets would exceed the fair value, an impairment charge may be required to be recorded.

The discounted cash flow approach we use for valuing goodwill as part of the two-step impairment testing approach involves estimating future cash flows expected to be generated from the related assets, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value.

On July 1, 2018, we performed our annual impairment test in accordance with ASC 350-30-35, resulting in no impairment of goodwill. In determining the fair value of our reporting units, we used the following assumptions:

Expected cash flows underlying our business plans for the periods 2018 through 2022. Our cash flow assumptions are based on detailed, multi-year forecasts performed by each of our operating segments, and reflect the advertising outlook across our businesses.

Cash flows beyond 2022 are projected to grow at a perpetual growth rate, which we estimated at 2.0% for our iHM segment, 3.0% for our Americas outdoor and International outdoor segments, and 2.0% for our Other segment (beyond 2024).

~~In order to risk adjust the cash flow projections in determining fair value, we utilized a discount rate of approximately 8.0% to 11.0% for each of our reporting units.~~

Based on our annual assessment using the assumptions described above, a hypothetical 5% reduction in the estimated fair value in each of our reporting units would not result in a material impairment condition.

~~While we believe we have made reasonable estimates and utilized appropriate assumptions to calculate~~over the estimated fair value of our assets and liabilities. Goodwill was further allocated to our reporting units ~~it is possible~~based on the relative fair values of our reporting units as of May 1, 2019. See Note 3 to the consolidated financial statements located in Item 1 of this Quarterly Report on Form 10-Q for further information.

and actual versus forecasted results, as well other issues or events specific to each reporting unit. In addition, we evaluated the impact of changes in our stock price and the trading values of our publicly-traded debt from May 1, 2019 to July 1, 2019 to determine whether or not any changes would indicate a ~~material change could occur. If future results are not consistent with~~potential impairment of goodwill allocated to our ~~assumptions~~reporting units.

Based on this assessment and ~~estimates, we may be exposed to impairment charges~~the totality of facts and circumstances, including the business environment in the ~~future. The following table shows~~third quarter of 2019, the ~~decline in~~Company determined that it was not more likely than not that the fair value of ~~each~~the Company and its reporting units is less than their respective carrying amounts. As such, the Company concluded no impairment of our reportable segments that would result from a 100 basis point decline in our discrete and terminal period revenue growth rate and profit margin assumptions and a 100 basis point increase in our discount rate assumption:

(In thousands) Revenue Profit Discount
Description Growth Rate Margin Rates
iHM $ 840,000
$ 300,000
$ 800,000
Americas Outdoor $ 770,000
$ 170,000
$ 720,000
International Outdoor $ 340,000
$ 230,000
$ 300,000
goodwill was required as of July 1, 2019.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. This report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, our ability to comply with the covenants in the agreements governing our indebtedness and the availability of capital and the terms thereof. Statements expressing expectations and projections with respect to future matters are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements involve a number of risks and uncertainties and are subject to many variables which could impact our future performance. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Actual future events and performance may differ materially from the expectations reflected in our forward-looking statements. We do not intend, nor do we undertake any duty, to update any forward-looking statements.

A wide range of factors could materially affect future developments and performance, including but not limited to:

~~the risks and uncertainties associated with the Chapter 11 Cases;~~

~~our ability to generate sufficient cash from operations to fund our operations;~~

~~our ability to propose and implement a business plan;~~

~~our ability to pursue our business strategies during the Chapter 11 Cases;~~

~~the diversion of management’s attention as a result of the Chapter 11 Cases;~~

~~increased levels of employee attrition as a result of the Chapter 11 Cases;~~

~~the impact of a protracted restructuring on our business;~~

~~our ability to obtain sufficient exit financing to emerge from Chapter 11 and operate successfully;~~

~~our ability to obtain confirmation of a Chapter 11 plan of reorganization;~~

~~volatility of our financial results as a result of the Chapter 11 Cases;~~

~~our inability to predict our long-term liquidity requirements and the adequacy of our capital resources;~~

~~the availability of cash to maintain our operations and fund our emergence costs;~~

~~our ability to continue as a going concern;~~

~~the impact of CCOH’s substantial indebtedness;~~

~~the impact of our substantial indebtedness upon emergence from Chapter 11, including the effect of our leverage on our financial position and earnings;~~

risks associated with weak or uncertain global economic conditions and their impact on the level of expenditures on advertising;

~~other general economic and political conditions in the United States and in other countries in which we currently do business,~~intense competition including ~~those resulting from recessions, political events and acts or threats of terrorism or military conflicts;~~

~~industry conditions, including competition;~~

increased competition from alternative media platforms and technologies;

~~changes in labor conditions, including programming,~~dependence upon the performance of on-air talent, program hosts and ~~management;~~management as well as maintaining or enhancing our master brand;

fluctuations in operating costs;

technological changes and innovations;

shifts in population and other demographics;

~~our ability to obtain keep municipal concessions for our street furniture and transit products;~~

the impact of future dispositions, acquisitions and other strategic transactions;

legislative or regulatory requirements;

regulations and consumer concerns regarding privacy and data protection, and breaches of information security measures;

~~restrictions on outdoor advertising~~risks associated with our emergence from the Chapter 11 Cases;

volatility in the trading price of ~~certain products;~~our Class A common stock, which has a limited trading history;

~~fluctuations~~substantial market overhang from securities issued in ~~exchange rates~~the Reorganization;

regulations impacting our business and ~~currency values;~~

~~risks~~the ownership of ~~doing business in foreign countries;~~

~~the identification of a material weakness in~~ our ~~internal control over financial reporting;~~securities; and

certain other factors set forth in our other filings with the SEC.

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Required information is presented under “Market Risk” within Item 2 of this Part I.

ITEM 4. CONTROLS AND PROCEDURES

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, we have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in reports that are filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified by the SEC. Based on that evaluation, although the Company continues to work to remediate the material weakness in internal control over financial reporting as described in our Annual Report on Form 10-K for the year ended December 31, 2017, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were ~~not~~ effective as of September 30, ~~2018~~2019 at the reasonable assurance level.

We previously reported that there was a material weakness in our internal control over financial reporting with respect to Clear Media Limited, our outdoor business in China, that existed as of December 31, 2017, for which we are in the process of remediating as of September 30, 2018. We have implemented additional monitoring controls and revised our cash and cash equivalent review process. In addition, we have strengthened controls around access and use of banking authorization tokens and chops and formalized review and approval processes around related party transactions. Although we have implemented these enhanced controls, we have not completed our testing of their effectiveness. We will need to successfully test these enhanced controls before we can conclude that the material weakness has been remediated. There ~~can be no assurance that the effectiveness of these controls will be successfully tested in a timely manner, and we may not prevent future material weaknesses from occurring.~~

~~Changes in Internal Controls Over Financial Reporting~~

Under applicable SEC rules (Exchange Act Rules 13a-15(c) and 15d-15(c)), management is required to evaluate any change in internal control over financial reporting that occurred during each fiscal quarter that had materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As explained in greater detail under Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2017, we undertook a broad range of remedial procedures prior to November 8, 2018, the filing date of this report, to address the material weaknesses in our internal control over financial reporting identified as of December 31, 2017. As described above, our efforts to improve our internal controls are ongoing and are focused on implementing additional controls to strengthen the cash management and reporting process at Clear Media Limited, our outdoor business in China. Therefore, while we determined, with the participation of our CEO and CFO, that, other than as described above, there have beenwere no changes in our internal control over financial reporting inthat occurred during the ~~three months~~quarter ended September 30, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting, we continue to monitor the operation of these remedial measures through the date of this report.~~

For a more comprehensive discussion of the material weaknesses in internal control over financial reporting identified by management as of December 31, 2017, and the remedial measures undertaken to address these material weaknesses, investors are encouraged to review Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2017.reporting.

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

iHeartCommunications' filing of the Chapter 11 Cases constituted an event of default that accelerated its obligations under its debt agreements. Due to the Chapter 11 Cases, however, the creditors' ability to exercise remedies under iHeartCommunications' debt agreements were stayed as of March 14, 2018, the date of the Chapter 11 petition filing, and continue to be stayed. On March 21, 2018, Wilmington Savings Fund Society, FSB ("WSFS"), solely in its capacity as successor indenture trustee to the 6.875% senior notes due 2018 and 7.25% senior notes due 2027, and not in its individual capacity, filed an adversary proceeding against us in the Chapter 11 Cases. In the complaint, WSFS alleged, among other things, that the "springing lien" provisions of the priority guarantee notes indentures and the priority guarantee notes security agreements amounted to "hidden encumbrances" on the Company's property, to which the holders of the 6.875% senior notes due 2018 and 7.25% senior notes due 2027 were entitled to "equal and ratable" treatment. On March 26, 2018, Delaware Trust Co. ("Delaware Trust"), in its capacity as successor indenture trustee to the 14% senior notes due 2021, filed a motion to intervene as a plaintiff in the adversary proceeding filed by WSFS. In the complaint, Delaware Trust alleged, among other things, that the indenture governing the 14% senior notes due 2021 also has its own "negative pledge" covenant, and, therefore, to the extent the relief sought by WSFS in its adversary proceeding is warranted, the holders of the 14% senior notes due 2021 are also entitled to the same "equal and ratable" liens on the same property. On April 6, 2018, we filed a motion to dismiss the adversary proceeding and a hearing on such motion was held on May 7, 2018. We have answered the complaint and discovery is proceeding. The trial was held on October 24, 2018. The parties are awaiting a ruling from the court.

On October 9, 2018, WSFS, solely in its capacity as successor indenture trustee to the 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027, and not in its individual capacity, filed an adversary proceeding against Clear Channel Holdings Inc. (“CCH”) and certain shareholders of iHeartMedia. The named shareholder defendants are Bain Capital LP; Thomas H. Lee Partners L.P.; Abrams Capital L.P.; and Highfields Capital Management L.P. In the complaint, WSFS alleged, among other things, that the shareholder defendants engaged in a “pattern of inequitable and bad faith conduct, including the abuse of their insider positions to benefit themselves at the expense of third-party creditors including particularly the Legacy Noteholders.” The complaint asks the court to grant relief in the form of equitable subordination of the shareholder defendants’ term loan, priority guarantee notes and 2021 notes claims to any and all claims of the legacy noteholders. In addition, the complaint seeks to have any votes to accept the Fourth Amended Plan of Reorganization by Abrams and Highfields on account of their 2021 notes claims, and any votes to accept the Fourth Amended Plan of Reorganization by defendant CCH on account of its junior notes claims, to be designated and disqualified. The Court held a pre-trial conference and oral argument on October 18, 2018. Discovery has not yet begun in this proceeding.

We currently 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 our assumptions or the effectiveness of our 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 our financial condition or results of operations.

Although we are involved in a variety of legal proceedings in the ordinary course of business, a large portion of our litigation arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental fines; intellectual property claims; and tax disputes.

~~Stockholder Litigation~~

~~On May~~For information regarding legal proceedings, refer to Note 9, 2016, a stockholder of Clear Channel Outdoor Holdings, Inc. ("CCOH") 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 the Company, iHeartCommunications, Inc. ("iHeartCommunications"), an indirect subsidiary of the Company, Bain Capital Partners, LLCCommitments and Thomas H. Lee Partners, L.P. (together, the "Sponsor Defendants"), the Company's private equity sponsors and majority owners, and the members of CCOH's board of directors. CCOH also is named as a nominal defendant. The complaint alleges that CCOH has been harmed by the intercompany agreements with iHeartCommunications, CCOH’s lack of autonomy over its own cash and the actions of the defendants in serving the interests of the Company, iHeartCommunications and the Sponsor Defendants to the detriment of CCOH and its minority stockholders. Specifically, the complaint alleges that the defendants have breached their fiduciary duties by causing CCOH 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 the Company and iHeartCommunications; (iii) issue new debt in the CCIBV note offering (the "CCIBV Note Offering") to provide cash to the Company and iHeartCommunications through a dividend; and (iv) effect the sales of certain outdoor markets in the U.S. (the "Outdoor Asset Sales") allegedly to provide cash to the Company and iHeartCommunications through a dividend. The complaint also alleges that the Company, iHeartCommunications and the Sponsor Defendants aided and abetted the directors' breaches of their fiduciary duties. The complaint further alleges that the Company, 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 CCOH. The plaintiff is seeking, among other things, a ruling that the defendants breached their fiduciary duties to CCOH and that the Company, iHeartCommunications and the Sponsor Defendants aided and abetted the CCOH board of directors' breaches of fiduciary duty, rescission of payments made by CCOH to iHeartCommunications and its affiliates pursuant to dividends declared in connection with the CCIBV Note Offering and Outdoor Asset Sales, and an order requiring the Company, iHeartCommunications and the Sponsor Defendants to disgorge all profits they have received as a result of the alleged fiduciary misconduct.

On July 20, 2016, the defendants filed a motion to dismiss plaintiff's verified stockholder derivative complaint for failure to state a claim upon which relief can be granted. On November 23, 2016, the Court granted defendants’ motion to dismiss all claims brought by the plaintiff. On December 19, 2016, the plaintiff filed a notice of appeal of the ruling. The oral hearing on the appeal was held on October 11, 2017. On October 12, 2017, the Supreme Court of Delaware affirmed the lower court's ruling, dismissing the case.

On December 29, 2017, another stockholder of CCOH filed a derivative lawsuit in the Court of Chancery of the State of Delaware, captioned Norfolk County Retirement System, v. iHeartMedia, Inc., et al., C.A. No. 2017-0930-JRS. The complaint names as defendants the Company, iHeartCommunications, the Sponsor Defendants, and the members of CCOH's board of directors. CCOH is named as a nominal defendant. The complaint alleges that CCOH has been harmed by the CCOH Board’s November 2017 decision to extend the maturity date of the intercompany revolving note (the “Third Amendment”) at what the complaint describes as far-below-market interest rates. Specifically, the complaint alleges that (i) the Company and Sponsor defendants breached their fiduciary duties by exploiting their position of control to require CCOH to enter the Third Amendment on terms unfair to CCOH; (ii) the CCOH Board breached their duty of loyalty by approving the Third Amendment and elevating the interests of the Company, iHeartCommunications and the Sponsor Defendants over the interests of CCOH and its minority unaffiliated stockholders; and (iii) the terms of the Third Amendment could not have been agreed to in good faith and represent a waste of corporate assets by the CCOH Board. The complaint further alleges that the Company, iHeartCommunications and the Sponsor defendants were unjustly enriched as a result of the unfairly favorable terms of the Third Amendment. The plaintiff is seeking, among other things, a ruling that the defendants breached their fiduciary duties to CCOH, a modification of the Third Amendment to bear a commercially reasonable rate of interest, and an order requiring disgorgement of all profits, benefits and other compensation obtained by defendants as a result of the alleged breaches of fiduciary duties.

On August 27, 2018, the same stockholder of CCOH that had filed a derivative lawsuit against the Company and others in 2016 (GAMCO Asset Management Inc.) filed a putative class action lawsuit in the Court of Chancery of the State of Delaware, captioned GAMCO Asset Management, Inc. v. Hendrix, et al., C.A. No. 2018-0633-JRS. The complaint names as defendants the Sponsor Defendants and the members of CCOH’s board of directors. The complaint alleges that minority shareholders in CCOH during the period November 8, 2017 to March 14, 2018 were harmed by decisions of the CCOH Board and the intercompany note committee of the Board relating to the Intercompany Note. Specifically, the complaint alleges that (i) the members of the

intercompany note committee breached their fiduciary duties by not demanding payment under the Intercompany Note and issuing a simultaneous dividend after a threshold tied to the Company’s liquidity had been reached; (ii) the CCOH Board breached their fiduciary duties by approving the Third Amendment rather than allowing the Intercompany Note to expire; (iii) the CCOH Board breached their fiduciary duties by not demanding payment under the Intercompany Note and issuing a simultaneous dividend after a threshold tied to the Company’s liquidity had been reached; (iv) the Sponsor Defendants breached their fiduciary duties by not directing the CCOH Board to permit the Intercompany Note to expire and to declare a dividend. The complaint further alleges that the Sponsor Defendants aided and abetted the Board’s alleged breach of fiduciary duties. The plaintiff seeks, among other things, a ruling that the CCOH Board, the intercompany note committee, and the Sponsor Defendants breached their fiduciary duties and that the Sponsor Defendants aided and abetted the Board’s breach of fiduciary duty; and an award of damages, together with pre- and post-judgment interests, to the putative class of minority shareholders.

~~China Investigation~~

Several employees of Clear Media Limited, an indirect, non-wholly-owned subsidiary of ours whose ordinary shares are listed, but are currently suspended from trading on, the Hong Kong Stock Exchange, are subject to a police investigation in China for misappropriation of funds. The police investigation is ongoing, and we are not aware of any litigation, claim or assessment pending against us. Based on information known to date, we believe any contingent liabilities arising from potential misconduct that has been or may be identified by the investigations are not material Contingencies to our ~~consolidated financial statements.~~

~~We advised both the United States Securities and Exchange Commission and the United States Department~~Consolidated Financial Statements included in Part I of Justice of the investigation at Clear Media Limited and are cooperating to provide information in response to inquiries from the agencies. The Clear Media Limited investigation could implicate the books and records, internal controls and anti-bribery provisions of the U.S. Foreign Corrupt Practices Act, which statute and regulations provide for potential monetary penalties as well as criminal and civil sanctions. It is possible that monetary penalties and other sanctions could be assessedthis Quarterly Report on ~~us in connection with this matter. The nature and amount of any monetary penalty or other sanctions cannot reasonably be estimated at this time.~~

~~Italy Investigation~~

As described in Note 1 to these consolidated financial statements, during the three months ended June 30, 2018, we identified misstatements associated with VAT obligations related to our subsidiary in Italy. Upon identification of these misstatements, we undertook certain procedures, including a forensic investigation, which is ongoing. In addition, we voluntarily disclosed the matter and preliminary findings to the Italian tax authorities in order to commence a discussion on the appropriate calculation of the VAT position. The current expectation is that we may have to repay to the Italian tax authority a substantial portion of the VAT previously applied as a credit, amounting to approximately $17 million, including estimated possible penalties and interest. The discussion with the tax authorities is at an early stage and therefore the ultimate amount that will be paid to the tax authorities in Italy is unknown. The ultimate amount to be paid may differ from our estimates, and such differences may be material.

Form 10-Q.

ITEM 1A. RISK FACTORS

~~For information regarding our~~There have been no material changes to the risk factors ~~please refer to~~disclosed under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2017 (the "Annual Report"). There have not been any material changes in~~2018, as updated and supplemented by the risk factors disclosed under Part II, Item 1A “Risk Factors” in our ~~Annual Report.~~

Quarterly Report on Form 10-Q for the period ended June 30, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth our purchases of shares of our Class A common stock made during the quarter ended September 30, ~~2018:~~2019:


Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs		Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 through July 31	92,158	$	0.43	—	$	—	121,651	$	16.25	—	$	—
August 1 through August 31	42,050	0.53		—	—		1,180	16.46		—	—
September 1 through September 30	—	—		—	—		2,379	16.25		—	—
Total	134,208	$	0.46	—	$	—	125,210	$	16.25	—	$	—


(1)	The shares indicated consist of shares of our Class A common stock tendered by employees to us during the three months ended September 30, ~~2018~~2019 to satisfy the employees’ tax withholding obligation in connection with the vesting and release of restricted shares, which are repurchased by us based on their fair market value on the date the relevant transaction occurs.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~The filing of the Chapter 11 Cases constituted an event of default that accelerated the Debtors’ obligations under the following debt instruments (the “Debt Instruments”):~~

Senior Indenture, dated as of October 1, 1997 (as amended or supplemented from time to time), by and between iHeartCommunications and The Bank of New York (now known as The Bank of New York Mellon), as trustee (with Wilmington Savings Fund Society, FSB as successor trustee), governing iHeartCommunications’ 5.50% Senior Notes due 2016, 6.875% Senior Notes due 2018 and 7.25% Senior Notes due 2027;

Credit Agreement, dated as of May 13, 2008, as amended and restated as of February 23, 2011 (as further amended or supplemented from time to time), by and among iHeartCommunications, as the parent borrower, the subsidiary co-borrowers and foreign subsidiary revolving borrowers party thereto, iHeartMedia Capital I, LLC, as a guarantor, Citibank, N.A., as administrative agent, swing line lender and letter of credit issuer, and the other the lenders from time to time party thereto governing iHeartCommunications’ Term Loan D and Term Loan E credit facilities;

Indenture, dated as of February 23, 2011 (as amended or supplemented from time to time), by and among iHeartCommunications, iHeartMedia Capital I, LLC, as guarantor, the other guarantors party thereto, Wilmington Trust FSB, as trustee (with Wilmington Trust, National Association as successor in interest), and Deutsche Bank Trust Company Americas, as collateral agent, paying agent, registrar, authentication agent and transfer agent, governing iHeartCommunications’ 9.0% Priority Guarantee Notes due 2021;

Indenture, dated as of October 25, 2012 (as amended or supplemented from time to time), by and among iHeartCommunications, iHeartMedia Capital I, LLC, as guarantor, the other guarantors party thereto, U.S. Bank National Association, as trustee, paying agent, registrar and transfer agent (with Wilmington Trust, National Association as successor trustee, paying agent, registrar and transfer agent), and Deutsche Bank Trust Company Americas, as collateral agent, governing iHeartCommunications’ 9.0% Priority Guarantee Notes due 2019;

Indenture, dated as of June 21, 2013 (as amended or supplemented from time to time), by and among iHeartCommunications, iHeartMedia Capital I, LLC, as guarantor, the other guarantors party thereto, Law Debenture Trust Company of New York, as trustee (with Delaware Trust Company as successor trustee), and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent, governing iHeartCommunications’ 14.0% Senior Notes due 2021;

Indenture, dated as of February 28, 2013 (as amended or supplemented from time to time), by and among iHeartCommunications, iHeartMedia Capital I, LLC, as guarantor, the other guarantors party thereto, U.S. Bank National

Association, as trustee, paying agent, registrar, authentication agent and transfer agent (with UMB Bank National Association as successor trustee, paying agent, registrar, authentication agent and transfer agent), and Deutsche Bank Trust Company Americas, as collateral agent, governing iHeartCommunications’ 11.25% Priority Guarantee Notes due 2021;

Indenture, dated as of September 10, 2014 (as amended or supplemented from time to time), by and among iHeartCommunications, iHeartMedia Capital I, LLC, as guarantor, the other guarantors party thereto, U.S. Bank National Association, as trustee, paying agent, registrar, authentication agent and transfer agent (with Wilmington Trust, National Association as successor trustee, paying agent, registrar, authentication agent and transfer agent), and Deutsche Bank Trust Company Americas, as collateral agent, governing iHeartCommunications’ 9.0% Priority Guarantee Notes due 2022;

Indenture, dated as of February 26, 2015 (as amended or supplemented from time to time), by and among iHeartCommunications, iHeartMedia Capital I, LLC, as guarantor, the other guarantors party thereto, U.S. Bank National Association, as trustee, paying agent, registrar, authentication agent and transfer agent, and Deutsche Bank Trust Company Americas, as collateral agent, governing iHeartCommunications’ 10.625% Priority Guarantee Notes due 2023;

Credit Agreement, dated as of November 30, 2017, by and among iHeartCommunications, as the parent borrower, iHeartMedia Capital I, LLC, as a guarantor, the subsidiary borrowers party thereto, TPG Specialty Lending, Inc., as administrative agent, sole lead arranger and a lender, the other lenders, swing line lenders and letter of credit issuers from time to time party thereto and the other syndication agents party thereto, governing iHeartCommunications’ asset-based term loan and revolving credit facility; and

Revolving Promissory Note, dated November 10, 2005, as amended by the first amendment entered into on December 23, 2009, the second amendment entered into on October 23, 2013, and the third amendment entered into on November 29, 2017, between iHeartCommunications, as maker, and Clear Channel Outdoor Holdings, Inc., as payee.

As previously disclosed, any efforts to enforce the payment obligations under the Debt Instruments are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



Exhibit Number		Description
4.1		Indenture, dated as of August 7, 2019, by and among iHeartCommunications, Inc., the Guarantors party thereto and U.S. Bank National Association as trustee and collateral agent (incorporated by reference to Exhibit 4.1 to iHeartMedia, Inc.'s Current Report on Form 8-K filed on August 8, 2019).
4.2		Form of 5.25% Senior Secured Notes due 2027 (incorporated by reference to Exhibit A to Exhibit 4.1 filed herewith).
10.1*		Employment Agreement, effective September 5, 2019, between iHeartMedia, Inc. and Michael B. McGuinness.
31.1*		Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		Interactive Data Files.

____________

* Filed herewith.

** Furnished herewith.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	IHEARTMEDIA, INC.

November ~~8, 2018~~7, 2019	/s/ SCOTT D. HAMILTON
	Scott D. Hamilton
	Senior Vice President, Chief Accounting Officer and Assistant Secretary

6380



	December 31, 2017
(In thousands)	As Reported			Correction			Revised
Other assets	$	278,267		$	(3,335	)	$	274,932
Total Assets	12,260,431			(3,335		)	12,257,096
Other long-term liabilities	597,085			13,554			610,639
Noncontrolling interest	42,764			(1,573		)	41,191
Accumulated deficit	(13,127,843		)	(14,158		)	(13,142,001		)
Accumulated other comprehensive loss	(312,560		)	(1,158		)	(313,718		)
Total Stockholders' Deficit	(11,327,455		)	(16,889		)	(11,344,344		)
Total Liabilities and Stockholders' Deficit	12,260,431			(3,335		)	12,257,096



	Three Months Ended September 30, 2017
(In thousands)	As Reported			Correction			Revised
Revenue	$	1,537,416		$	(659	)	$	1,536,757
Direct operating expenses (excludes depreciation and amortization)	621,895			1,846			623,741
Selling, general and administrative expenses (excludes depreciation and amortization)	438,654			142			438,796
Operating income	228,305			(2,647		)	225,658
Loss before income taxes	(244,133		)	(2,647		)	(246,780		)
Consolidated net loss	(246,184		)	(2,647		)	(248,831		)
Less amount attributable to noncontrolling interest	1,993			(334		)	1,659
Net loss attributable to the Company	(248,177		)	(2,313		)	(250,490		)
Foreign currency translation adjustments	13,010			(602		)	12,408
Other comprehensive income	18,897			(602		)	18,295
Comprehensive loss	(229,280		)	(2,915		)	(232,195		)
Less amount attributable to noncontrolling interest	4,289			(128		)	4,161
Comprehensive loss attributable to the Company	(233,569		)	(2,787		)	(236,356		)
Basic loss per share	(2.92		)	(0.02		)	(2.94		)
Diluted loss per share	(2.92		)	(0.02		)	(2.94		)



	Nine Months Ended September 30, 2017
(In thousands)	As Reported			Correction			Revised
Revenue	$	4,457,106		$	(1,836	)	$	4,455,270
Direct operating expenses (excludes depreciation and amortization)	1,807,534			4,971			1,812,505
Selling, general and administrative expenses (excludes depreciation and amortization)	1,336,563			528			1,337,091
Operating income	653,026			(7,335		)	645,691
Interest expense	1,388,747			72			1,388,819
Loss before income taxes	(751,638		)	(7,407		)	(759,045		)
Consolidated net loss	(801,781		)	(7,407		)	(809,188		)
Less amount attributable to noncontrolling interest	8,648			(1,034		)	7,614
Net loss attributable to the Company	(810,429		)	(6,373		)	(816,802		)
Foreign currency translation adjustments	44,665			(1,594		)	43,071
Other comprehensive income	49,010			(1,594		)	47,416
Comprehensive loss	(761,419		)	(7,967		)	(769,386		)
Less amount attributable to noncontrolling interest	10,342			(282		)	10,060
Comprehensive loss attributable to the Company	(771,761		)	(7,685		)	(779,446		)
Basic loss per share	(9.55		)	(0.07		)	(9.62		)
Diluted loss per share	(9.55		)	(0.07		)	(9.62		)



(In thousands)	iHM			Americas Outdoor⁽¹⁾		International Outdoor⁽¹⁾		Other		Eliminations			Consolidated
Three Months Ended September 30, 2018
Revenue from contracts with customers:
United States	$	869,126		$	116,503	$	—	$	47,088	$	(168	)	$	1,032,549
Other Americas	582			671		11,242		—		—			12,495
Europe	2,415			—		191,514		—		—			193,929
Asia-Pacific and other	4,059			—		5,563		—		—			9,622
Eliminations	(3,415		)	—		—		—		—			(3,415		)
Total	872,767			117,174		208,319		47,088		(168		)	1,245,180
Revenue from leases	637			186,247		151,999		—		(1,298		)	337,585
Revenue, total	$	873,404		$	303,421	$	360,318	$	47,088	$	(1,466	)	$	1,582,765

Three Months Ended September 30, 2017
Revenue from contracts with customers:
United States	$	854,890		$	106,806	$	—	$	34,452	$	(341	)	$	995,807
Other Americas	704			2,488		14,224		—		—			17,416
Europe	2,420			—		181,229		—		—			183,649
Asia-Pacific and other	4,453			162		4,635		—		—			9,250
Eliminations	(3,798		)	—		—		—		—			(3,798		)
Total	858,669			109,456		200,088		34,452		(341		)	1,202,324
Revenue from leases	862			184,351		150,535		—		(1,315		)	334,433
Revenue, total	$	859,531		$	293,807	$	350,623	$	34,452	$	(1,656	)	$	1,536,757

Nine Months Ended September 30, 2018
Revenue from contracts with customers:
United States	$	2,457,506		$	328,138	$	—	$	113,803	$	(1,606	)	$	2,897,841
Other Americas	2,025			1,955		36,723		—		—			40,703
Europe	7,477			—		605,032		—		—			612,509
Asia-Pacific and other	12,640			—		17,685		—		—			30,325
Eliminations	(10,568		)	—		—		—		—			(10,568		)
Total	2,469,080			330,093		659,440		113,803		(1,606		)	3,570,810
Revenue from leases	2,159			529,097		455,487		—		(4,298		)	982,445
Revenue, total	$	2,471,239		$	859,190	$	1,114,927	$	113,803	$	(5,904	)	$	4,553,255

Nine Months Ended September 30, 2017
Revenue from contracts with customers:
United States	$	2,487,144		$	308,988	$	—	$	99,332	$	(1,778	)	$	2,893,686
Other Americas	2,107			10,279		37,418		—		—			49,804
Europe	6,825			—		533,111		—		—			539,936
Asia-Pacific and other	12,782			568		14,853		—		—			28,203
Eliminations	(11,120		)	—		—		—		—			(11,120		)
Total	2,497,738			319,835		585,382		99,332		(1,778		)	3,500,509
Revenue from leases	3,346			534,509		420,572		—		(3,666		)	954,761
Revenue, total	$	2,501,084		$	854,344	$	1,005,954	$	99,332	$	(5,444	)	$	4,455,270



(In thousands)	September 30, 2018					December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Transit, street furniture and other outdoor contractual rights	$	533,274	$	(440,452	)	$	548,918	$	(440,284	)
Customer / advertiser relationships	1,226,329		(1,205,662		)	1,226,314		(1,133,251		)
Talent contracts	161,962		(146,978		)	161,962		(138,728		)
Representation contracts	77,507		(68,976		)	77,507		(62,753		)
Permanent easements	162,920		—			162,920		—
Other	373,675		(241,102		)	372,292		(224,841		)
Total	$	2,535,667	$	(2,103,170	)	$	2,549,913	$	(1,999,857	)



(In thousands)	iHM			Americas Outdoor		International Outdoor			Other		Consolidated
Balance as of December 31, 2016	$	3,288,481		$	505,478	$	190,785		$	81,831	$	4,066,575
Impairment	—			—		(1,591		)	—		(1,591		)
Acquisitions	2,442			2,252		—			—		4,694
Dispositions	(35,715		)	—		(1,817		)	—		(37,532		)
Foreign currency	—			—		18,847			—		18,847
Assets held for sale	—			89		—			—		89
Balance as of December 31, 2017	$	3,255,208		$	507,819	$	206,224		$	81,831	$	4,051,082
Dispositions	(1,606		)	—		—			—		(1,606		)
Foreign currency	—			—		(5,535		)	—		(5,535		)
Balance as of September 30, 2018	$	3,253,602		$	507,819	$	200,689		$	81,831	$	4,043,941



(In thousands)	The Company			Noncontrolling Interests			Consolidated
Balance as of January 1, 2018	$	(11,385,535	)	$	41,191		$	(11,344,344	)
Net loss	(416,815		)	(10,732		)	(427,547		)
Dividends declared and other payments to noncontrolling interests	—			(10,381		)	(10,381		)
Share-based compensation	1,628			6,757			8,385
Foreign currency translation adjustments	(11,062		)	(8,980		)	(20,042		)
Reclassification adjustments	1,274			151			1,425
Other, net	(78		)	(653		)	(731		)
Balances as of September 30, 2018	$	(11,810,588	)	$	17,353		$	(11,793,235	)



(In thousands)	Three Months Ended September 30,						% Change	Nine Months Ended September 30,						% Change
	2018			2017			% Change	2018			2017			% Change
Revenue	$	1,582,765		$	1,536,757		3.0%	$	4,553,255		$	4,455,270		2.2%
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)	630,264			623,741			1.0%	1,869,260			1,812,505			3.1%
Selling, general and administrative expenses (excludes depreciation and amortization)	457,757			438,796			4.3%	1,382,234			1,337,091			3.4%
Corporate expenses (excludes depreciation and amortization)	84,193			77,967			8.0%	242,553			233,487			3.9%
Depreciation and amortization	120,700			149,749			(19.4)%	419,778			443,650			(5.4)%
Impairment charges	40,922			7,631			436.3%	40,922			7,631			436.3%
Other operating income (expense), net	(1,637		)	(13,215		)		(5,212		)	24,785
Operating income	247,292			225,658			9.6%	593,296			645,691			(8.1)%
Interest expense	99,255			470,250				625,252			1,388,819
Equity in earnings (loss) of nonconsolidated affiliates	172			(2,238		)		291			(2,240		)
Other income (expense), net	(6,182		)	50				(35,424		)	(13,677		)
Reorganization items, net	52,475			—				313,270			—
Income (loss) before income taxes	89,552			(246,780		)		(380,359		)	(759,045		)
Income tax expense	(17,769		)	(2,051		)		(47,188		)	(50,143		)
Consolidated net income (loss)	71,783			(248,831		)		(427,547		)	(809,188		)
Less amount attributable to noncontrolling interest	1,705			1,659				(10,732		)	7,614
Net income (loss) attributable to the Company	$	70,078		$	(250,490	)		$	(416,815	)	$	(816,802	)



(In thousands)	Revenue		Profit		Discount
Description	Growth Rate		Margin		Rates
FCC license	$	510,163	$	175,133	$	436,203
Billboard permits	$	1,077,700	$	166,000	$	1,059,700