10-Q 1 10-Q.htm FORM 10-Q  

 

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, 2014

 

[   ]          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                                                                  (I.R.S. Employer Identification No.)

                             incorporation or organization)

 

                                     200 East Basse Road

                                      San Antonio, Texas                                                                                                    78209

                     (Address of principal executive offices)                                                                               (Zip Code)

 

(210) 822-2828

(Registrant’s telephone number, including area code)

 

CC MEDIA HOLDINGS, INC.

(former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes [X] No [  ]

 

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

Large accelerated filer [   ]   Accelerated filer [   ]   Non-accelerated filer [X]  Smaller reporting company [   ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

                                     Class Outstanding at October 22, 2014

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

           Class A Common Stock, $.001 par value                                                                                 29,263,456  (1)

           Class B Common Stock, $.001 par value                                                                                    555,556

           Class C Common Stock, $.001 par value                                                                                 58,967,502

 

(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, 2014 and December 31, 2013

1

                    Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2014 and 2013

2

                    Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013

3

                    Notes to Consolidated Financial Statements

4

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

34

Item 4.       Controls and Procedures

34

Part II – Other Information

 

Item 1.       Legal Proceedings

35

Item 1A.    Risk Factors

35

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 3.       Defaults Upon Senior Securities

36

Item 4.       Mine Safety Disclosures

36

Item 5.       Other Information

36

Item 6.       Exhibits

37

Signatures

38

  

 

 

 

 

 

 

 

(In thousands, except share data)

September 30, 2014

 

 

 

 

(Unaudited)

 

December 31, 2013

CURRENT ASSETS

 

 

 

 

 

Cash and cash equivalents

$

 522,356  

 

$

 708,151  

Accounts receivable, net of allowance of $38,813 in 2014 and $48,401 in 2013

 

 1,401,451  

 

 

 1,440,501  

Prepaid expenses

 

 205,906  

 

 

 203,485  

Other current assets

 

 169,806  

 

 

 161,157  

 

Total Current Assets

 

 2,299,519  

 

 

 2,513,294  

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

Structures, net

 

 1,643,527  

 

 

 1,765,510  

Other property, plant and equipment, net

 

 1,085,214  

 

 

 1,132,120  

INTANGIBLE ASSETS AND GOODWILL

 

 

 

 

 

Indefinite-lived intangibles - licenses

 

 2,426,179  

 

 

 2,416,406  

Indefinite-lived intangibles - permits

 

 1,067,341  

 

 

 1,067,783  

Other intangibles, net

 

 1,267,087  

 

 

 1,466,546  

Goodwill

 

 4,212,612  

 

 

 4,202,187  

OTHER ASSETS

 

 

 

 

 

Other assets

 

 304,556  

 

 

 533,456  

Total Assets

$

 14,306,035  

 

$

 15,097,302  

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable

$

 130,303  

 

$

 131,370  

Accrued expenses

 

 795,106  

 

 

 807,210  

Accrued interest

 

 156,451  

 

 

 194,844  

Deferred income

 

 211,268  

 

 

 176,460  

Current portion of long-term debt

 

 3,232  

 

 

 453,734  

 

Total Current Liabilities

 

 1,296,360  

 

 

 1,763,618  

Long-term debt

 

 20,481,547  

 

 

 20,030,479  

Deferred income taxes

 

 1,582,117  

 

 

 1,537,820  

Other long-term liabilities

 

 452,222  

 

 

 462,020  

Commitments and contingent liabilities (Note 5)

 

 

 

 

 

SHAREHOLDERS' DEFICIT

 

 

 

 

 

Noncontrolling interest

 

 219,051  

 

 

 245,531  

Class A Common Stock, par value $.001 per share, authorized 400,000,000 shares,

   issued 29,379,803 and 29,504,379 shares in 2014 and 2013, respectively

 

 30  

 

 

 30  

Class B Common Stock, par value $.001 per share, authorized 150,000,000 shares, issued

   555,556 in 2014 and 2013

 

 1  

 

 

 1  

Class C Common Stock, par value $.001 per share, authorized 100,000,000 shares, issued

   58,967,502 in 2014 and 2013

 

 58  

 

 

 58  

Additional paid-in capital

 

 2,145,052  

 

 

 2,148,303  

Accumulated deficit

 

 (11,614,301) 

 

 

 (10,888,629) 

Accumulated other comprehensive loss

 

 (254,985) 

 

 

 (196,073) 

Cost of shares (210,865 in 2014 and 1,402,227 in 2013) held in treasury

 

 (1,117) 

 

 

 (5,856) 

 

Total Shareholders' Deficit

 

 (9,506,211) 

 

 

 (8,696,635) 

Total Liabilities and Shareholders' Deficit

$

 14,306,035  

 

$

 15,097,302  

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands, except share data)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2014

 

2013

 

2014

 

2013

Revenue

$

 1,630,034  

 

$

 1,587,522  

 

$

 4,602,736  

 

$

 4,548,677  

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses (excludes depreciation

   and amortization)

 

 645,981  

 

 

 648,743  

 

 

 1,885,698  

 

 

 1,879,109  

 

Selling, general and administrative expenses (excludes

   depreciation and amortization)

 

 429,687  

 

 

 411,354  

 

 

 1,266,092  

 

 

 1,226,058  

 

Corporate expenses (excludes depreciation and amortization)

 

 78,202  

 

 

 89,574  

 

 

 233,104  

 

 

 245,702  

 

Depreciation and amortization

 

 175,865  

 

 

 177,330  

 

 

 524,798  

 

 

 539,246  

 

Impairment charges

 

 35  

 

 

 -  

 

 

 4,937  

 

 

 -  

 

Other operating income, net

 

 47,172  

 

 

 6,186  

 

 

 45,709  

 

 

 9,694  

Operating income

 

 347,436  

 

 

 266,707  

 

 

 733,816  

 

 

 668,256  

Interest expense

 

 432,616  

 

 

 438,404  

 

 

 1,304,335  

 

 

 1,231,437  

Gain on marketable securities

 

 -  

 

 

 31  

 

 

 -  

 

 

 130,929  

Equity in earnings (loss) of nonconsolidated affiliates

 

 3,955  

 

 

 3,983  

 

 

 (9,388) 

 

 

 13,595  

Loss on extinguishment of debt

 

 (4,840) 

 

 

 -  

 

 

 (56,259) 

 

 

 (3,888) 

Other income (expense), net

 

 2,617  

 

 

 1,709  

 

 

 16,315  

 

 

 (17,389) 

Loss before income taxes

 

 (83,448) 

 

 

 (165,974) 

 

 

 (619,851) 

 

 

 (439,934) 

Income tax benefit (expense)

 

 (24,376) 

 

 

 73,802  

 

 

 (92,142) 

 

 

 158,650  

Consolidated net loss

 

 (107,824) 

 

 

 (92,172) 

 

 

 (711,993) 

 

 

 (281,284) 

 

Less amount attributable to noncontrolling interest

 

 7,028  

 

 

 9,683  

 

 

 13,679  

 

 

 16,372  

Net loss attributable to the Company

$

 (114,852) 

 

$

 (101,855) 

 

$

 (725,672) 

 

$

 (297,656) 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 (63,063) 

 

 

 40,502  

 

 

 (77,512) 

 

 

 (28,526) 

 

Unrealized gain on securities and derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gain (loss) on marketable securities

 

 (74) 

 

 

 13  

 

 

 605  

 

 

 15,619  

 

 

Unrealized holding gain on cash flow derivatives

 

 -  

 

 

 17,114  

 

 

 -  

 

 

 48,180  

 

Other adjustments to comprehensive loss

 

 -  

 

 

 -  

 

 

 -  

 

 

 (998) 

 

Reclassification adjustment for realized gains on

   securities included in net loss

 

 -  

 

 

 (1,433) 

 

 

 3,309  

 

 

 (83,753) 

Other comprehensive income (loss)

 

 (63,137) 

 

 

 56,196  

 

 

 (73,598) 

 

 

 (49,478) 

Comprehensive loss

 

 (177,989) 

 

 

 (45,659) 

 

 

 (799,270) 

 

 

 (347,134) 

 

 Less amount attributable to noncontrolling interest

 

 (9,744) 

 

 

 9,169  

 

 

 (14,686) 

 

 

 (2,408) 

Comprehensive loss attributable to the Company

$

 (168,245) 

 

$

 (54,828) 

 

$

 (784,584) 

 

$

 (344,726) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to the Company per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 (1.37) 

 

 

 (1.22) 

 

 

 (8.65) 

 

 

 (3.61) 

 

Weighted average common shares outstanding - Basic

 

 83,991  

 

 

 83,455  

 

 

 83,903  

 

 

 83,264  

 

Diluted

 

 (1.37) 

 

 

 (1.22) 

 

 

 (8.65) 

 

 

 (3.61) 

 

Weighted average common shares outstanding - Diluted

 

 83,991  

 

 

 83,455  

 

 

 83,903  

 

 

 83,264  

(In thousands)

Nine Months Ended September 30,

 

2014

 

2013

Cash flows from operating activities:

 

 

 

 

 

 

Consolidated net loss

$

 (711,993) 

 

$

 (281,284) 

Reconciling items:

 

 

 

 

 

 

Depreciation and amortization

 

 524,798  

 

 

 539,246  

 

Impairment charges

 

 4,937  

 

 

 -    

 

Deferred taxes

 

 44,866  

 

 

 (195,356) 

 

Provision for doubtful accounts

 

 12,149  

 

 

 13,710  

 

Amortization of deferred financing charges and note discounts, net

 

 74,106  

 

 

 93,258  

 

Share-based compensation

 

 8,064  

 

 

 14,093  

 

Gain on disposal of operating and fixed assets

 

 (45,709) 

 

 

 (9,694) 

 

Gain on marketable securities

 

 -    

 

 

 (130,929) 

 

Equity in (earnings) loss of nonconsolidated affiliates

 

 9,388  

 

 

 (13,595) 

 

Loss on extinguishment of debt

 

 56,259  

 

 

 3,888  

 

Other reconciling items, net

 

 (16,291) 

 

 

 18,591  

 

Changes in operating assets and liabilities, net of effects of

      acquisitions and dispositions:

 

 

 

 

 

 

 

Decrease in accounts receivable

 

 1,511  

 

 

 3,705  

 

 

Increase in deferred income

 

 41,247  

 

 

 28,176  

 

 

Increase (decrease) in accrued expenses

 

 10,120  

 

 

 (15,314) 

 

 

Increase (decrease) in accounts payable

 

 1,419  

 

 

 (12,128) 

 

 

Decrease in accrued interest

 

 (7,890) 

 

 

 (46,716) 

 

 

Changes in other operating assets and liabilities

 

 (35,441) 

 

 

 (10,808) 

Net cash used for operating activities

 

 (28,460) 

 

 

 (1,157) 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 (195,008) 

 

 

 (197,260) 

 

Purchases of other operating assets

 

 (3,279) 

 

 

 (2,587) 

 

Purchases of investment assets

 

 (8,520) 

 

 

 -    

 

Proceeds from sale of investment securities

 

 236,644  

 

 

 135,571  

 

Proceeds from disposal of assets

 

 10,367  

 

 

 39,797  

 

Change in other, net

 

 (3,603) 

 

 

 (3,507) 

Net cash provided by (used for) investing activities

 

 36,601  

 

 

 (27,986) 

Cash flows from financing activities:

 

 

 

 

 

 

Draws on credit facilities

 

 65,820  

 

 

 272,252  

 

Payments on credit facilities

 

 (315,032) 

 

 

 (23,844) 

 

Proceeds from long-term debt

 

 2,062,475  

 

 

 575,051  

 

Payments on long-term debt

 

 (1,944,564) 

 

 

 (1,223,336) 

 

Payments to repurchase noncontrolling interests

 

 -    

 

 

 (61,143) 

 

Dividends and other payments to noncontrolling interests

 

 (32,581) 

 

 

 (13,862) 

 

Deferred financing charges

 

 (25,933) 

 

 

 (10,222) 

 

Change in other, net

 

 455  

 

 

 2,003  

Net cash used for financing activities

 

 (189,360) 

 

 

 (483,101) 

Effect of exchange rate changes on cash

 

 (4,576) 

 

 

 (1,714) 

Net decrease in cash and cash equivalents

 

 (185,795) 

 

 

 (513,958) 

Cash and cash equivalents at beginning of period

 

 708,151  

 

 

 1,225,010  

Cash and cash equivalents at end of period

$

 522,356  

 

$

 711,052  

NOTE 1 – BASIS OF PRESENTATION

Preparation of Interim Financial Statements

The accompanying consolidated financial statements were prepared by iHeartMedia, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. Due to seasonality and other factors, the results for the interim periods are not necessarily indicative of results for the full year.  The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2013 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 percent to 50 percent of the voting common stock or otherwise exercises significant influence over operating and financial policies of the Company are accounted for under the equity method.  All significant intercompany transactions are eliminated in the consolidation process.  Certain prior-period amounts have been reclassified to conform to the 2014 presentation.

 

Information Regarding the Company

On September 16, 2014, the Company issued a press release that announced a change of its name to “iHeartMedia, Inc.” and changed the names of certain of its affiliates, including as follows:

 

Old Name:                                                                            New Name:

Clear Channel Capital I, LLC                                           iHeartMedia Capital I, LLC

Clear Channel Capital II, LLC                                         iHeartMedia Capital II, LLC

Clear Channel Communications, Inc.                             iHeartCommunications, Inc.

Clear Channel Management Services, Inc.                    iHeartMedia Management Services, Inc.

Clear Channel Broadcasting, Inc.                                    iHeartMedia + Entertainment, Inc.

Clear Channel Identity, Inc.                                              iHM Identity, Inc.

Clear Channel Satellite Services Inc.                               iHeartMedia Satellite Services, Inc.

 

Clear Channel Outdoor Holdings, Inc. (“CCOH”), an indirect subsidiary of the Company, retained its existing name.

 

Adoption of New Accounting Standards

During the first quarter of 2014, the Company adopted the Financial Accounting Standards Board’s (“FASB”) ASU No. 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.  This update provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. The amendments are effective for fiscal years (and interim periods within) beginning after December 15, 2013 and are to be applied retrospectively to all prior periods presented for such obligations that exist at the beginning of an entity’s fiscal year of adoption.  The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

 

During the first quarter of 2014, the Company adopted the FASB’s ASU No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity of an Investment in a Foreign Entity. The amendments are effective prospectively for the fiscal years (and interim periods within) beginning after December 15, 2013 and provide clarification guidance for the release of the cumulative translation adjustment under current U.S. GAAP. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements

 

During the first quarter of 2014, the Company adopted the FASB’s ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update requires unrecognized tax benefits to be offset against a deferred tax asset for a net operating loss carryforward, similar tax loss or tax credit carryforward in certain situations.  The amendments are effective prospectively for the fiscal years (and interim periods within) beginning after December 15, 2013.  The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

 

During the second quarter of 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This new standard provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under U.S. GAAP.  The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2016.  The Company is currently evaluating the impact of the provisions of this new standard on its financial position and results of operations.

 

During the third quarter of 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This new standard clarifies that a performance target in a share-based compensation award that could be achieved after an employee completes the requisite service period should be treated as a performance condition that affects the vesting of the award. The standard is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2015.  The Company is currently evaluating the impact of the provisions of this new standard on its financial position and results of operations.   

 

NOTE 2 – PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL

Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets at September 30, 2014 and December 31, 2013, respectively.

 

(In thousands)

September 30, 2014

 

December 31, 2013

Structures

$

 3,023,714  

 

$

 3,021,152  

Less: accumulated depreciation

 

 1,380,187  

 

 

 1,255,642  

Structures, net

$

 1,643,527  

 

$

 1,765,510  

 

 

 

 

 

 

Land, buildings and improvements

$

 739,845  

 

$

 723,268  

Towers, transmitters and studio equipment

 

 451,651  

 

 

 440,612  

Furniture and other equipment

 

 525,245  

 

 

 473,995  

Construction in progress

 

 89,881  

 

 

 123,814  

 

 

 1,806,622  

 

 

 1,761,689  

Less: accumulated depreciation

 

 721,408  

 

 

 629,569  

Other property, plant and equipment, net

$

 1,085,214  

 

$

 1,132,120  

 

Indefinite-lived Intangible Assets

The Company’s indefinite-lived intangible assets consist of Federal Communications Commission (“FCC”) broadcast licenses in its iHeartMedia (“iHM”) segment and billboard permits in its Americas outdoor advertising segment. Due to significant differences in both business practices and regulations, billboards in the International outdoor advertising segment are subject to long-term, finite contracts unlike the Company’s permits in the United States and Canada. Accordingly, there are no indefinite-lived intangible assets in the International outdoor advertising segment.

 

Other Intangible Assets

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

 

 

 

The following table presents the gross carrying amount and accumulated amortization for each major class of other intangible assets at September 30, 2014 and December 31, 2013, respectively:

 

(In thousands)

September 30, 2014

 

December 31, 2013

 

 

Gross Carrying Amount

 

Accumulated Amortization

 

Gross Carrying Amount

 

Accumulated Amortization

Transit, street furniture and other outdoor

 

 

 

 

 

 

 

 

 

 

 

 

contractual rights

$

 749,372  

 

$

 (490,255) 

 

$

 777,521  

 

$

 (464,548) 

Customer / advertiser relationships

 

 1,212,349  

 

 

 (735,526) 

 

 

 1,212,745  

 

 

 (645,988) 

Talent contracts

 

 319,384  

 

 

 (216,788) 

 

 

 319,617  

 

 

 (195,403) 

Representation contracts

 

 238,107  

 

 

 (201,215) 

 

 

 252,961  

 

 

 (200,058) 

Permanent easements

 

 174,628  

 

 

 -    

 

 

 173,753  

 

 

 -    

Other

 

 387,847  

 

 

 (170,816) 

 

 

 387,405  

 

 

 (151,459) 

 

Total

$

 3,081,687  

 

$

 (1,814,600) 

 

$

 3,124,002  

 

$

 (1,657,456) 

 

Total amortization expense related to definite-lived intangible assets was $65.7 million and $70.2 million for the three months ended September 30, 2014 and 2013, respectively, and $198.9 million and $213.2 million for the nine months ended September 30, 2014 and 2013, respectively.

 

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)

 

 

2015

$

 240,713  

2016

 

 222,207  

2017

 

 195,977  

2018

 

 126,664  

2019

 

 42,545  

Goodwill

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

 

(In thousands)

iHM

 

Americas Outdoor Advertising

 

International Outdoor Advertising

 

Other

 

Consolidated

Balance as of December 31, 2012

$

 3,236,688  

 

$

 571,932  

 

$

 290,316  

 

$

 117,149  

 

$

 4,216,085  

 

Impairment

 

 -    

 

 

 -    

 

 

 (10,684) 

 

 

 -    

 

 

 (10,684) 

 

Acquisitions

 

 -    

 

 

 -    

 

 

 -    

 

 

 97  

 

 

 97  

 

Dispositions

 

 -    

 

 

 -    

 

 

 (456) 

 

 

 -    

 

 

 (456) 

 

Foreign currency

 

 -    

 

 

 -    

 

 

 (974) 

 

 

 -    

 

 

 (974) 

 

Other

 

 (1,881) 

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 (1,881) 

Balance as of December 31, 2013

$

 3,234,807  

 

$

 571,932  

 

$

 278,202  

 

$

 117,246  

 

$

 4,202,187  

 

Acquisitions

 

 28,760  

 

 

 -    

 

 

 -    

 

 

 298  

 

 

 29,058  

 

Foreign currency

 

 -    

 

 

 -    

 

 

 (18,693) 

 

 

 -    

 

 

 (18,693) 

 

Other

 

 60  

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 60  

Balance as of September 30, 2014

$

 3,263,627  

 

$

 571,932  

 

$

 259,509  

 

$

 117,544  

 

$

 4,212,612  

 

The Company is the beneficiary of Aloha Station Trust, LLC (the “Aloha Trust”), which owns and operates radio stations which the Aloha Trust is required to divest in order to comply with Federal Communication Commission (“FCC”) media ownership rules, and which are being marketed for sale. During the three months ended September 30, 2014, the Aloha Trust completed a transaction in which it exchanged two radio stations for a portfolio of 29 radio stations.  In this transaction the Company received 28 radio stations.  One radio station was placed into the Brunswick Station Trust, LLC in order to comply with FCC media ownership rules where it is being marketed for sale, and the Company is the beneficiary of this trust.  The exchange was accounted for at fair value in accordance with ASC 805, Business Combinations, resulting in the recognition of $28.8 million of goodwill.  The disposal of these radio stations resulted in a gain on sale of $43.5 million, which is included in Other operating income.

NOTE 3 – LONG-TERM DEBT

Long-term debt at September 30, 2014 and December 31, 2013, respectively, consisted of the following:

 

(In thousands)

September 30, 2014

 

December 31, 2013

Senior Secured Credit Facilities (1)

$

 7,231,222  

 

$

 8,225,754  

Receivables Based Facility due 2017

 

 -    

 

 

 247,000  

9.0% Priority Guarantee Notes due 2019

 

 1,999,815  

 

 

 1,999,815  

9.0% Priority Guarantee Notes due 2021

 

 1,750,000  

 

 

 1,750,000  

11.25% Priority Guarantee Notes due 2021

 

 575,000  

 

 

 575,000  

9.0% Priority Guarantee Notes due 2022

 

 1,000,000  

 

 

 -    

Other secured subsidiary long-term debt (2)

 

 18,654  

 

 

 21,124  

Total consolidated secured debt

 

 12,574,691  

 

 

 12,818,693  

 

 

 

 

 

 

 

10.75% Senior Cash Pay Notes due 2016

 

 -    

 

 

 94,304  

11.0%/11.75% Senior Toggle Notes due 2016

 

 -    

 

 

 127,941  

14.0% Senior Notes due 2021 (3)

 

 1,661,697  

 

 

 1,404,202  

iHeart Legacy Notes (4)

 

 725,000  

 

 

 1,436,455  

10.0% Senior Notes due 2018

 

 850,000  

 

 

 -    

6.5% Subsidiary Senior Notes due 2022

 

 2,725,000  

 

 

 2,725,000  

7.625% Subsidiary Senior Subordinated Notes due 2020

 

 2,200,000  

 

 

 2,200,000  

Other subsidiary debt

 

 419  

 

 

 10  

Purchase accounting adjustments and original issue discount

 

 (252,028) 

 

 

 (322,392) 

 

 

 

 20,484,779  

 

 

 20,484,213  

Less: current portion

 

 3,232  

 

 

 453,734  

Total long-term debt

$

 20,481,547  

 

$

 20,030,479  

 

(1)        Term Loan B and Term Loan C mature in 2016. Term Loan D and Term Loan E mature in 2019.

(2)        Other secured subsidiary long-term debt matures at various dates from 2014 through 2025.

(3)        14.0% Senior Notes due 2021 are subject to required payments at various dates from 2018 through 2021.

(4)        iHeart’s Legacy Notes, all of which were issued by iHeartCommunications, Inc. prior to the acquisition by us and consist of Senior Notes maturing at various dates from 2016 through 2027.

 

The Company’s weighted average interest rates at September 30, 2014 and December 31, 2013 were 8.1% and 7.6%, respectively.  The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $20.3 billion and $20.5 billion at September 30, 2014 and December 31, 2013, respectively.  Under the fair value hierarchy established by ASC 820-10-35, the market value of the Company’s debt is classified as either Level 1 or Level 2.

 

Subsidiary Sale of iHeartCommunications, Inc. Long-Term Debt

 

On February 14, 2014, CC Finco, LLC (“CC Finco”), an indirect wholly-owned subsidiary of the Company, sold $227.0 million in aggregate principal amount of 14.0% Senior Notes due 2021 issued by iHeartCommunications, Inc. (“iHeart”) to private purchasers in a transaction exempt from registration under the Securities Act of 1933, as amended. This $227.0 million in aggregate principal amount of 14.0% Senior Notes due 2021, which was previously eliminated in consolidation because the notes were held by a subsidiary, is now reflected on the Company’s consolidated balance sheet. CC Finco contributed the net proceeds from the sale of the 14.0% Senior Notes due 2021 to iHeart, which intends to use such proceeds to repay, repurchase or otherwise acquire outstanding indebtedness from time to time and retire that indebtedness as it becomes due or upon its earlier repayment, repurchase or acquisition.

 

 

 

 

10.0% Senior Notes Issuance

 

On May 1, 2014, CCU Escrow Corporation issued $850.0 million in aggregate principal amount of 10.0% Senior Notes due 2018 in a private offering.  On June 6, 2014, CCU Escrow Corporation merged into iHeart and iHeart assumed CCU Escrow Corporation’s obligations under the 10.0% Senior Notes due 2018.  The 10.0% Senior Notes due 2018 mature on January 15, 2018 and bear interest at a rate of 10.0% per annum, payable semi-annually on January 15 and July 15 of each year, beginning on July 15, 2014.  The 10.0% Senior Notes due 2018 are the senior unsecured obligations of iHeart and are not guaranteed by the Company or any of iHeart’s other parent companies or any of its subsidiaries.  iHeart used the net proceeds from the issuance to redeem Senior Notes due 2014 and 2015.

 

14.0% Senior Notes due 2021 Issuance to a Subsidiary

 

On August 22, 2014, iHeart issued and sold $222.2 million in aggregate principal amount of new 14.0% Senior Notes due 2021 to CC Finco in a transaction exempt from registration under the Securities Act of 1933, as amended.  The new 14.0% Senior Notes due 2021 were issued as additional notes under the indenture governing iHeart’s existing 14.0% Senior Notes due 2021. On August 22, 2014, iHeart redeemed all of the outstanding $94.3 million aggregate principal amount of Senior Cash Pay Notes due 2016 and $127.9 million aggregate principal amount of Senior Toggle Notes due 2016 using proceeds of the issuance of the new 14.0% Senior Notes due 2021.  The $222.2 million in aggregate principal amount of 14.0% Senior Notes due 2021 issued to CC Finco is eliminated in consolidation in our consolidated financial statements.

 

9.0% Priority Guarantee Notes due 2022 Issuance

 

On September 10, 2014, iHeart issued $750.0 million aggregate principal amount of 9.0% Priority Guarantee Notes due 2022 at par.  On September 29, 2014, iHeart issued an additional $250.0 million aggregate principal amount of 9.0% Priority Guarantee Notes due 2022 at an issue price of 101% of the principal amount of the notes plus accrued interest from September 10, 2014.  The notes issued on September 10, 2014 and the subsequent notes issued on September 29, 2014 have identical terms and are treated as a single class of notes (the “2022 Priority Guarantee Notes”).  iHeart used the net proceeds from the issuances to prepay Term Loans due 2016.

 

The 2022 Priority Guarantee Notes mature on September 15, 2022 and bear interest at a rate of 9.0% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2015.  The 2022 Priority Guarantee Notes are iHeart’s senior obligations and are fully and unconditionally guaranteed, jointly and severally, on a senior basis by the guarantors named in the indenture governing such notes, including the Company. The 2022 Priority Guarantee Notes and the guarantors’ obligations under the guarantees are secured by (i) a lien on (a) the capital stock of iHeart and (b) certain property and related assets that do not constitute “principal property” (as defined in the indenture governing certain legacy notes of iHeart), in each case equal in priority to the liens securing the obligations under iHeart’s senior secured credit facilities and existing priority guarantee notes, subject to certain exceptions, and (ii) a lien on the accounts receivable and related assets securing iHeart’s receivables based credit facility junior in priority to the lien securing iHeart’s obligations thereunder, subject to certain exceptions.

 

iHeart may redeem the 2022 Priority Guarantee Notes at its option, in whole or part, at any time prior to September 15, 2017, at a price equal to 100% of the principal amount of the 2022 Priority Guarantee Notes redeemed, plus accrued and unpaid interest to the redemption date and plus an applicable premium. iHeart may redeem the 2022 Priority Guarantee Notes, in whole or in part, on or after September 15, 2017, at the redemption prices set forth in the indenture plus accrued and unpaid interest to the redemption date.  At any time on or before September 15, 2017, iHeart may elect to redeem up to 40% of the aggregate principal amount of the 2022 Priority Guarantee Notes at a redemption price equal to 109.0% 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 indenture governing the 2022 Priority Guarantee Notes contains covenants that limit iHeart’s ability and the ability of its restricted subsidiaries to, among other things: (i) pay dividends, redeem stock or make other distributions or investments; (ii) incur additional debt or issue certain preferred stock; (iii) transfer or sell assets; (iv) engage in certain transactions with affiliates; (v) create restrictions on dividends or other payments by the restricted subsidiaries; and (vi) merge, consolidate or sell substantially all of iHeart’s assets.  The indenture contains covenants that limit iHeart’s and the Company’s ability and the ability of their restricted subsidiaries to, among other things: (i) create liens on assets and (ii) materially impair the value of the security interests taken with respect to the collateral for the benefit of the notes’ collateral agent and the holders of the 2022 Priority Guarantee Notes. The indenture also provides for customary events of default.

Debt Repayments, Maturities and Other

During February 2014, iHeart repaid all principal amounts outstanding under its receivables based credit facility, using cash on hand.  This voluntary repayment did not reduce the commitments under this facility and iHeart has the ability to redraw amounts under this facility at any time.

 

During March 2014, CC Finco repurchased, through open market purchases, a total of $61.9 million aggregate principal amount of notes, comprised of $52.9 million of iHeart’s outstanding 5.5% Senior Notes due 2014  and $9.0 million of iHeart’s outstanding 4.9% Senior Notes due 2015, for a total purchase price of $63.1 million, including accrued interest.  iHeart cancelled these notes subsequent to the purchase.  In connection with these transactions, the Company incurred expenses of $3.9 million, which are included in “Loss on extinguishment of debt” for the nine months ended September 30, 2014.

 

On June 6, 2014, using the proceeds from the issuance of the 10.0% Senior Notes due 2018, iHeart redeemed $567.1 million aggregate principal amount of iHeart’s 5.5% Senior Notes due 2014 (including $158.5 million principal amount of the notes held by a subsidiary of the Company) and $241.0 million aggregate principal amount of iHeart’s 4.9% Senior Notes due 2015.  In connection with these transactions, the Company incurred expenses of $47.5 million, which are included in “Loss on extinguishment of debt” for the nine months ended September 30, 2014.

 

On August 22, 2014, iHeart redeemed all of the outstanding $94.3 million aggregate principal amount of Senior Cash Pay Notes due 2016 and $127.9 million aggregate principal amount of Senior Toggle Notes due 2016 using proceeds of the issuance of the new Senior Notes due 2021 to CC Finco.

 

On September 10, 2014, iHeart prepaid at par $729.0 million of the loans outstanding under its Term Loan B facility and $12.1 million of the loans outstanding under its Term Loan C-asset sale facility, using the net proceeds of the 2022 Priority Guarantee Notes issued on such date.

 

On September 29, 2014, iHeart prepaid at par $245.9 million of the loans outstanding under its Term Loan B facility and $4.1 million of the loans outstanding under its Term Loan C-asset sale facility, using the net proceeds of the 2022 Priority Guarantee Notes issued on such date.

 

In connection with these transactions, the Company recognized a loss on extinguishment of debt of $4.8 million and $56.3 million for the three and nine months ended September 30, 2014, respectively.

 

During the period of October 1, 2014 through October 27, 2014, CC Finco repurchased via open market transactions a total of $57.1 million aggregate principal amount of iHeart’s outstanding 5.5% Senior Notes due 2016 for a total purchase price of $55.5 million, including accrued interest.  The notes repurchased by CC Finco were not cancelled and remain outstanding..

 

NOTE 4 – SUPPLEMENTAL DISCLOSURES

Income Tax Benefit (Expense)

The Company’s income tax benefit (expense) for the three and nine months ended September 30, 2014 and 2013, respectively, consisted of the following components:  

 

(In thousands)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2014

 

2013

 

2014

 

2013

Current tax benefit (expense)

$

 (11,689) 

 

$

 2,088  

 

$

 (47,276) 

 

$

 (36,706) 

Deferred tax benefit (expense)

 

 (12,687) 

 

 

 71,714  

 

 

 (44,866) 

 

 

 195,356  

Income tax benefit (expense)

$

 (24,376) 

 

$

 73,802  

 

$

 (92,142) 

 

$

 158,650  

 

The effective tax rates for the three and nine months ended September 30, 2014 were (29.2)% and (14.9)%, respectively.  The effective tax rates for the three and nine months ended September 30, 2014 were primarily impacted by the valuation allowance required for deferred tax assets originating in the current year and recorded during the periods as additional deferred tax expense.  The valuation allowance was recorded against a portion of the U.S. Federal and State net operating losses due to the uncertainty of the ability to utilize those losses in future periods.

 

The effective tax rates for the three and nine months ended September 30, 2013 were 44.5% and 36.1%, respectively.  The effective tax rates for the three and nine months ended September 30, 2013 were primarily impacted by the cancellation of indebtedness income recognized during the periods and the Company’s inability to record tax benefit on tax losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future years.

 

Supplemental Cash Flow Information

During the nine months ended September 30, 2014 and 2013, cash paid for interest and income taxes, net of income tax refunds of $6.0 million and $1.4 million, respectively, was as follows:

 

(In thousands)

Nine Months Ended September 30,

 

2014

 

2013

Interest

$

 1,214,129  

 

$

 1,189,876  

Income taxes

 

 30,384  

 

 

 38,366  

 

Australian Radio Network

The Company owned a 50% interest in Australian Radio Network (“ARN”), an Australian company that owns and operates radio stations in Australia and New Zealand.  An impairment charge of $95.4 million was recorded during the fourth quarter of 2013 to write down the investment to its estimated fair value. On February 18, 2014, a subsidiary of the Company sold its 50% interest in ARN, recognizing a loss on the sale of $2.4 million and $11.5 million of foreign exchange losses that were reclassified from accumulated other comprehensive income at the date of the sale.

 

Other Comprehensive Income (Loss)

The following table discloses the deferred income tax (asset) liability related to each component of other comprehensive income (loss) for the three and nine months ended September 30, 2014 and 2013, respectively:

 

(In thousands)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2014

 

2013

 

2014

 

2013

Foreign currency translation adjustments and other

$

 -    

 

$

 3,742  

 

$

 8,181  

 

$

 (12,385) 

Unrealized holding gain on marketable securities

 

 -    

 

 

 28,199  

 

 

 -    

 

 

 (11,010) 

Unrealized holding gain on cash flow derivatives

 

 -    

 

 

 10,254  

 

 

 -    

 

 

 28,759  

 

Total increase in deferred tax liabilities

$

 -    

 

$

 42,195  

 

$

 8,181  

 

$

 5,364  

                         

 

NOTE 5 – 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 the Company’s 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.

 

Los Angeles Litigation

In 2008, Summit Media, LLC, one of the Company’s competitors, sued the City of Los Angeles (the “City”), Clear Channel Outdoor, Inc. and CBS Outdoor in Los Angeles Superior Court (Case No. BS116611) challenging the validity of a settlement agreement that had been entered into in November 2006 among the parties and pursuant to which Clear Channel Outdoor, Inc. had taken down existing billboards and converted 83 existing signs from static displays to digital displays.  In 2009 the Los Angeles Superior Court ruled that the settlement agreement constituted an ultra vires act of the City, and nullified its existence.  After further proceedings, on April 12, 2013 the Los Angeles Superior Court invalidated 82 digital modernization permits issued to Clear Channel Outdoor, Inc. (77 of which displays were operating at the time of the ruling), and Clear Channel Outdoor, Inc. was required to turn off the electrical power to all affected digital displays on April 15, 2013.  The digital display structures remain intact but digital displays are currently prohibited in the City.  Clear Channel Outdoor, Inc. is seeking permits under the existing City sign code to either wrap the LED faces with vinyl or convert the LED faces to traditional static signs, and has obtained a number of such permits.  Clear Channel Outdoor, Inc. is also pursuing a new ordinance to permit digital signage in the City.

 

NOTE 6 - GUARANTEES

As of September 30, 2014, the Company had outstanding surety bonds and commercial standby letters of credit of $46.8 million and $110.0 million, respectively. These letters of credit and surety bonds relate to various operational matters including insurance, bid, and performance bonds as well as other items.

 

As of September 30, 2014, the Company had outstanding bank guarantees of $55.9 million related to international subsidiaries, of which $15.1 million were backed by cash collateral.

 

NOTE 7 – CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The Company is a party to a management agreement with certain affiliates of the Sponsors and certain other parties pursuant to which such affiliates of Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. (together, the “Sponsors”) will provide management and financial advisory services until 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 three months ended September 30, 2014 and 2013, the Company recognized management fees and reimbursable expenses of $3.7 million and $3.8 million, respectively.  For the nine months ended September 30, 2014 and 2013, the Company recognized management fees and reimbursable expenses of $11.3 million and $11.9 million, respectively.

NOTE 8 – MEMBER’S DEFICIT AND COMPREHENSIVE LOSS

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

 

(In thousands)

The Company

 

Noncontrolling

Interests

 

Consolidated

Balances at January 1, 2014

$

(8,942,166)

 

$

 245,531  

 

$

(8,696,635)

 

Net income (loss)

 

 (725,672) 

 

 

 13,679  

 

 

 (711,993) 

 

Dividends and other payments to noncontrolling interests

 

 -    

 

 

 (32,581) 

 

 

 (32,581) 

 

Foreign currency translation adjustments

 

 (62,754) 

 

 

 (14,758) 

 

 

 (77,512) 

 

Unrealized holding gain on marketable securities

 

 533  

 

 

 72  

 

 

 605  

 

Unrealized holding gain on cash flow derivatives

 

 -    

 

 

 -    

 

 

 -    

 

Other adjustments to comprehensive loss

 

 -    

 

 

 -    

 

 

 -    

 

Other, net

 

 1,488  

 

 

 7,108  

 

 

 8,596  

 

Reclassifications

 

 3,309  

 

 

 -    

 

 

 3,309  

Balances at September 30, 2014

$

(9,725,262)

 

$

219,051

 

$

(9,506,211)

 

 

 

 

 

 

 

 

 

 

Balances at January 1, 2013

$

(8,299,188)

 

$

 303,997  

 

$

(7,995,191)

 

Net income (loss)

 

 (297,656) 

 

 

 16,372  

 

 

 (281,284) 

 

Dividends and other payments to noncontrolling interests

 

 -    

 

 

 (58,942) 

 

 

 (58,942) 

 

Foreign currency translation adjustments

 

 (26,374) 

 

 

 (2,152) 

 

 

 (28,526) 

 

Unrealized holding gain on marketable securities

 

 15,594  

 

 

 25  

 

 

 15,619  

 

Unrealized holding gain on cash flow derivatives

 

 48,180  

 

 

 -    

 

 

 48,180  

 

Other adjustments to comprehensive loss

 

 (884) 

 

 

 (114) 

 

 

 (998) 

 

Other, net

 

 6,271  

 

 

 7,872  

 

 

 14,143  

 

Reclassifications

 

 (83,585) 

 

 

 (168) 

 

 

 (83,753) 

Balances at September 30, 2013

$

(8,637,642)

 

$

266,890

 

$

(8,370,752)

 

On August 11, 2014, CCOH (1) demanded repayment of $175 million outstanding under the Revolving Promissory Note with iHeart (the “Due from iHeartCommunications Note”) and (2) concurrently paid a special cash dividend in an aggregate amount equal to $175 million (or $0.4865 per share) to its Class A and Class B stockholders of record at the close of business on August 4, 2014.  As the indirect parent of CCOH, iHeart received approximately 88% of the proceeds from such dividend through its wholly-owned subsidiaries.  The remaining approximately 12% of the proceeds from the dividend, or approximately $21 million, was paid to the public stockholders of CCOH and is included in Dividends and other payments to noncontrolling interests in the Company’s consolidated statement of cash flows.  Following satisfaction of the demand, the balance outstanding under the Due from iHeartCommunications Note was reduced by $175 million.

 

NOTE 9 – SEGMENT DATA

The Company’s reportable segments, which it believes best reflect how the Company is currently managed, are iHM (formerly CCME), Americas outdoor advertising and International outdoor advertising.  Revenue and expenses earned and charged between segments are recorded at estimated fair value and eliminated in consolidation.  The iHeartMedia (“iHM”) segment provides media and entertainment services via broadcast and digital delivery and also includes the Company’s national syndication business.  The Americas outdoor advertising segment consists of operations primarily in the United States and Canada.  The International outdoor advertising segment primarily includes operations in Europe, Asia, Australia and Latin America.  The Americas outdoor and International outdoor display inventory consists primarily of billboards, street furniture displays and transit displays.  The Other category includes the Company’s media representation business as well as other general support services and initiatives which are ancillary to the Company’s other businesses.  Corporate includes infrastructure and support, including information technology, human resources, legal, finance and administrative functions of each of the Company’s reportable segments, as well as overall executive, administrative and support functions. Share-based payments are recorded in corporate expenses.

 

The following table presents the Company’s reportable segment results for the three and nine months ended September 30, 2014 and 2013.

 

(In thousands)

iHM

 

Americas Outdoor Advertising

 

International Outdoor Advertising

 

Other

 

Corporate

and other

reconciling

items

 

Eliminations

 

Consolidated

Three Months Ended September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

 830,509  

 

$

 329,500  

 

$

 413,294  

 

$

 73,712  

 

$

 -    

 

$

 (16,981) 

 

$

 1,630,034  

Direct operating expenses

 

 242,517  

 

 

 140,739  

 

 

 260,095  

 

 

 5,103  

 

 

 -    

 

 

 (2,473) 

 

 

 645,981  

Selling, general and administrative

   expenses

 

 269,009  

 

 

 55,257  

 

 

 84,356  

 

 

 35,563  

 

 

 -    

 

 

 (14,498) 

 

 

 429,687  

Corporate expenses

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 78,212  

 

 

 (10) 

 

 

 78,202  

Depreciation and amortization

 

 61,606  

 

 

 48,973  

 

 

 50,105  

 

 

 8,389  

 

 

 6,792  

 

 

 -    

 

 

 175,865  

Impairment charges

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 35  

 

 

 -    

 

 

 35  

Other operating income, net

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 47,172  

 

 

 -    

 

 

 47,172  

Operating income (loss)

$

 257,377  

 

$

 84,531  

 

$

 18,738  

 

$

 24,657  

 

$

 (37,867) 

 

$

 -    

 

$

 347,436  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intersegment revenues

$

 10  

 

$

 721  

 

$

 -    

 

$

 16,250  

 

$

 -    

 

$

 -    

 

$

 16,981  

Capital expenditures

$

 9,336  

 

$

 18,980  

 

$

 22,860  

 

$

 1,235  

 

$

 1,176  

 

$

 -    

 

$

 53,587  

Share-based compensation expense

$

 -    

 

$

 -    

 

$

 -    

 

$

 -    

 

$

 2,246  

 

$

 -    

 

$

 2,246  

 

Three Months Ended September 30, 2013

 

Revenue

$

 823,863  

 

$

 331,346  

 

$

 391,667  

 

$

 57,460  

 

$

 -    

 

$

 (16,814) 

 

$

 1,587,522  

 

Direct operating expenses

 

 249,084  

 

 

 140,972  

 

 

 255,122  

 

 

 5,718  

 

 

 -    

 

 

 (2,153) 

 

 

 648,743  

 

Selling, general and administrative

   expenses

 

 260,264  

 

 

 55,739  

 

 

 75,698  

 

 

 34,314  

 

 

 -    

 

 

 (14,661) 

 

 

 411,354  

 

Corporate expenses

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 89,574  

 

 

 -    

 

 

 89,574  

 

Depreciation and amortization

 

 64,745  

 

 

 48,530  

 

 

 49,090  

 

 

 9,925  

 

 

 5,040  

 

 

 -    

 

 

 177,330  

 

Impairment charges

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

Other operating income, net

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 6,186  

 

 

 -    

 

 

 6,186  

 

Operating income (loss)

$

 249,770  

 

$

 86,105  

 

$

 11,757  

 

$

 7,503  

 

$

 (88,428) 

 

$

 -    

 

$

 266,707  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intersegment revenues

$

 -    

 

$

 1,110  

 

$

 -    

 

$

 15,704  

 

$

 -    

 

$

 -    

 

$

 16,814  

 

Capital expenditures

$

 22,171  

 

$

 13,838  

 

$

 19,983  

 

$

 2,070  

 

$

 6,518  

 

$

 -    

 

$

 64,580  

 

Share-based compensation expense

$

 -    

 

$

 -    

 

$

 -    

 

$

 -    

 

$

 2,754  

 

$

 -    

 

$

 2,754  

 

 

(In thousands)

iHM

 

Americas Outdoor Advertising

 

International Outdoor Advertising

 

Other

 

Corporate

and other

reconciling

items

 

Eliminations

 

Consolidated

 

Nine Months Ended September 30, 2014

 

Revenue

$

 2,307,193  

 

$

 917,404  

 

$

 1,241,846  

 

$

 184,236  

 

$

 -    

 

$

 (47,943) 

 

$

 4,602,736  

 

Direct operating expenses

 

 678,681  

 

 

 413,761  

 

 

 781,730  

 

 

 17,839  

 

 

 -    

 

 

 (6,313) 

 

 

 1,885,698  

 

Selling, general and administrative

   expenses

 

 787,357  

 

 

 158,789  

 

 

 254,045  

 

 

 107,521  

 

 

 -    

 

 

 (41,620) 

 

 

 1,266,092  

 

Corporate expenses

 

 -    

 

 

 -    

 

 

 -    

 

 

 -    

 

 

 233,114  

 

 

 (10) 

 

 

 233,104  

 

Depreciation and amortization

 

 185,656  

 

 

 144,094  

 

 

 150,763  

 

 

 25,763  

 

 

 18,522  

 

 

 -    

 

 

 524,798  

 

Impairment charges

 

 -    

 

 

 -    

 

 

 -    

 

 

 -