UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from	to

Commission File Number: 001-36367

OUTFRONT Media Inc.

(Exact name of registrant as specified in its charter)

Maryland	46-4494703
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
405 Lexington Avenue, 17th Floor New York, NY	10174
(Address of principal executive offices)	(Zip Code)

(212) 297-6400

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        x Yes     o 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	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

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.    o    

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

As of August 3, 2017, the number of shares outstanding of the registrant’s common stock was 138,624,217.

OUTFRONT MEDIA INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2017

TABLE OF CONTENTS

PART I	3
Item 1. Financial Statements (Unaudited)	3
Consolidated Statements of Financial Position as of June 30, 2017, and December 31, 2016	3
Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016	4
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2017 and 2016	5
Consolidated Statements of Equity for the six months ended June 30, 2017 and 2016	6
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016	7
Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	51
Item 4. Controls and Procedures	51
PART II	53
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	53
SIGNATURES	54

PART 1

Item 1.    Financial Statements.

OUTFRONT Media Inc.

Consolidated Statements of Financial Position

(Unaudited)

	As of
(in millions)	June 30, 2017			December 31, 2016
Assets:
Current assets:
Cash and cash equivalents	$	23.1		$	65.2
Receivables, less allowance ($9.4 in 2017 and $9.2 in 2016)	237.7			222.0
Prepaid lease and transit franchise costs	66.5			67.4
Other prepaid expenses	13.7			15.8
Other current assets	9.2			7.8
Total current assets	350.2			378.2
Property and equipment, net (Note 3)	677.1			665.0
Goodwill (Note 4)	2,135.7			2,089.4
Intangible assets (Note 4)	572.9			545.3
Other assets	64.8			60.6
Total assets	$	3,800.7		$	3,738.5
Liabilities:
Current liabilities:
Accounts payable	$	55.6		$	85.6
Accrued compensation	23.0			33.9
Accrued interest	16.0			15.7
Accrued lease costs	26.8			26.7
Other accrued expenses	45.3			54.8
Deferred revenues	27.7			20.2
Short-term debt (Note 7)	85.0			—
Other current liabilities	18.0			14.6
Total current liabilities	297.4			251.5
Long-term debt, net (Note 7)	2,143.6			2,136.8
Deferred income tax liabilities, net	20.5			8.5
Asset retirement obligation (Note 5)	34.8			34.1
Other liabilities	77.8			74.6
Total liabilities	2,574.1			2,505.5
Commitments and contingencies (Note 15)
Stockholders’ equity (Note 8):
Common stock (2017 - 450.0 shares authorized, and 138.6 shares issued
and outstanding; 2016 - 450.0 shares authorized, and 138.0 issued and outstanding)	1.4			1.4
Additional paid-in capital	1,953.9			1,949.5
Distribution in excess of earnings	(760.3		)	(699.5		)
Accumulated other comprehensive loss	(13.1		)	(18.5		)
Total stockholders’ equity	1,181.9			1,232.9
Non-controlling interests	44.7			0.1
Total equity	1,226.6			1,233.0
Total liabilities and equity	$	3,800.7		$	3,738.5

See accompanying notes to unaudited consolidated financial statements.

3

OUTFRONT Media Inc.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions, except per share amounts)	2017			2016			2017			2016
Revenues:
Billboard	$	274.2		$	273.6		$	510.2		$	524.0
Transit and other	122.0			111.7			216.6			209.7
Total revenues	396.2			385.3			726.8			733.7
Expenses:
Operating	213.3			201.6			405.2			401.4
Selling, general and administrative	66.4			65.2			130.3			130.5
Restructuring charges	2.9			0.4			4.7			0.4
Loss on real estate assets held for sale	—			—			—			1.3
Net loss on dispositions	0.1			0.2			0.5			0.6
Depreciation	23.1			28.5			46.0			57.6
Amortization	25.4			30.4			49.1			58.7
Total expenses	331.2			326.3			635.8			650.5
Operating income	65.0			59.0			91.0			83.2
Interest expense, net	(28.6		)	(28.7		)	(56.7		)	(57.3		)
Other income, net	0.1			0.2			0.1			—
Income before benefit for income taxes and equity in earnings of investee companies	36.5			30.5			34.4			25.9
Benefit (provision) for income taxes	(0.9		)	(3.4		)	2.8			(2.1		)
Equity in earnings of investee companies, net of tax	1.5			1.4			2.4			2.4
Net income	$	37.1		$	28.5		$	39.6		$	26.2
Net income per common share:
Basic	$	0.27		$	0.21		$	0.29		$	0.19
Diluted	$	0.27		$	0.21		$	0.28		$	0.19
Weighted average shares outstanding:
Basic	138.6			137.9			138.4			137.8
Diluted	139.3			138.3			139.1			138.2
Dividends declared per common share	$	0.36		$	0.34		$	0.72		$	0.68

See accompanying notes to unaudited consolidated financial statements.

4

OUTFRONT Media Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(in millions)	2017			2016		2017			2016
Net income	$	37.1		$	28.5	$	39.6		$	26.2
Other comprehensive income, net of tax:
Cumulative translation adjustments	4.4			99.9		5.5			106.4
Net actuarial gain (loss)	(0.1		)	0.1		(0.1		)	(0.4		)
Total other comprehensive income, net of tax	4.3			100.0		5.4			106.0
Total comprehensive income	$	41.4		$	128.5	$	45.0		$	132.2

See accompanying notes to unaudited consolidated financial statements.

5

OUTFRONT Media Inc.

Consolidated Statements of Equity

(Unaudited)

(in millions, except per share amounts)	Shares of Common Stock		Common Stock ($0.01 per share par value)		Additional Paid-In Capital			Distribution in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Non-Controlling Interests		Total Equity
Balance as of December 31, 2015	137.6		$	1.4	$	1,934.3		$	(602.2	)	$	(120.9	)	$	1,212.6		$	—	$	1,212.6
Net income	—		—		—			26.2			—			26.2			—		26.2
Other comprehensive loss	—		—		—			—			106.0			106.0			—		106.0
Stock-based payments:																	—		—
Vested	0.5		—		—			—			—			—			—		—
Amortization	—		—		9.3			—			—			9.3			—		9.3
Shares paid for tax withholding for stock-based payments	(0.2	)	—		(4.3		)	—			—			(4.3		)	—		(4.3		)
Dividends ($0.68 per share)	—		—		—			(94.2		)	—			(94.2		)	—		(94.2		)
Balance as of June 30, 2016	137.9		$	1.4	$	1,939.3		$	(670.2	)	$	(14.9	)	$	1,255.6		$	—	$	1,255.6
Balance as of December 31, 2016	138.0		$	1.4	$	1,949.5		$	(699.5	)	$	(18.5	)	$	1,232.9		$	0.1	$	1,233.0
Net income	—		—		—			39.6			—			39.6			—		39.6
Other comprehensive income	—		—		—			—			5.4			5.4			—		5.4
Stock-based payments:
Cumulative prior period adjustment to amortization of estimated forfeitures	—		—		0.5			(0.5		)	—			—			—		—
Vested	0.7		—		—			—			—			—			—		—
Exercise of stock options	0.2		—		1.2			—			—			1.2			—		1.2
Amortization	—		—		10.9			—			—			10.9			—		10.9
Shares paid for tax withholding for stock-based payments	(0.3	)	—		(8.2		)	—			—			(8.2		)	—		(8.2		)
Issuance of shares of a subsidiary	—		—		—			—			—			—			44.6		44.6
Dividends ($0.72 per share)	—		—		—			(99.9		)	—			(99.9		)	—		(99.9		)
Balance as of June 30, 2017	138.6		$	1.4	$	1,953.9		$	(760.3	)	$	(13.1	)	$	1,181.9		$	44.7	$	1,226.6

See accompanying notes to unaudited consolidated financial statements.

6

OUTFRONT Media Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2017			2016
Operating activities:
Net income	$	39.6		$	26.2
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	95.1			116.3
Deferred tax benefit	(5.3		)	(1.8		)
Stock-based compensation	10.9			9.3
Provision for doubtful accounts	0.9			2.3
Accretion expense	1.2			1.2
Loss on real estate assets held for sale	—			1.3
Net loss on dispositions	0.5			0.6
Equity in earnings of investee companies, net of tax	(2.4		)	(2.4		)
Distributions from investee companies	2.0			1.6
Amortization of deferred financing costs and debt discount and premium	3.2			3.2
Cash paid for direct lease acquisition costs	(20.3		)	(19.3		)
Change in assets and liabilities, net of investing and financing activities	(46.3		)	(33.8		)
Net cash flow provided by operating activities	79.1			104.7
Investing activities:
Capital expenditures	(42.2		)	(30.0		)
Acquisitions	(57.8		)	(61.3		)
Net proceeds from dispositions	0.1			87.9
Net cash flow used for investing activities	(99.9		)	(3.4		)
Financing activities:
Proceeds from long-term debt borrowings - term loan	8.3			—
Repayments of long-term borrowings - term loan	—			(40.0		)
Proceeds from borrowings under revolving credit facility	90.0			35.0
Repayments of borrowings under revolving credit facility	(5.0		)	(35.0		)
Payments of deferred financing costs	(7.5		)	(0.4		)
Proceeds from stock option exercises	1.2			—
Taxes withheld for stock-based compensation	(8.1		)	(6.8		)
Dividends	(100.4		)	(94.7		)
Other	(0.2		)	(0.2		)
Net cash flow used for financing activities	(21.7		)	(142.1		)
Effect of exchange rate changes on cash and cash equivalents	0.4			0.2
Net decrease in cash and cash equivalents	(42.1		)	(40.6		)
Cash and cash equivalents at beginning of period	65.2			101.6
Cash and cash equivalents at end of period	$	23.1		$	61.0

7

OUTFRONT Media Inc.

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	Six Months Ended
	June 30,
(in millions)	2017		2016
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	3.3	$	0.7
Cash paid for interest	53.2		57.9
Non-cash investing and financing activities:
Accrued purchases of property and equipment	$	7.1	$	6.6
Issuance of shares of a subsidiary for an acquisition	44.6		—

See accompanying notes to unaudited consolidated financial statements.

8

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

OUTFRONT Media Inc. (the “Company”) and its subsidiaries (collectively, “we,” “us” or “our”) is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home advertising structures and sites in the United States (the “U.S.”) and Canada. Our inventory consists of billboard displays, which are primarily located on the most heavily traveled highways and roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities across the U.S. and Canada. We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. In total, we have displays in all of the 25 largest markets in the U.S. and approximately 150 markets across the U.S. and Canada. We manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, (2) International and (3) Sports Marketing.

On April 1, 2016, we sold all of our equity interests in certain of our subsidiaries (the “Disposition”), which held all of the assets of our outdoor advertising business in Latin America (see Note 10. Acquisitions and Dispositions: Dispositions to the Consolidated Financial Statements). The operating results of our outdoor advertising business in Latin America through April 1, 2016, are included in our Consolidated Financial Statements for the three months ended March 31, 2016.

Basis of Presentation and Use of Estimates

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”). In the opinion of our management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. Certain reclassifications of prior year’s data have been made to conform to the current period’s presentation. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 23, 2017.

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Note 2. New Accounting Standards

Adoption of New Accounting Standards

Stock Compensation

During the first quarter of 2017, we adopted the Financial Accounting Standards Board’s (the “FASB’s”) guidance that simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as the classification in the statement of cash flows. We have elected to account for forfeitures as they occur, which we adopted on a modified retrospective basis and resulted in an increase of $0.5 million to Additional paid in capital, offset by a decrease of $0.5 million to Distribution in excess of earnings on our Consolidated Statement of Financial Position and Consolidated Statement of Equity as of June 30, 2017.

9

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Business Combinations

During the first quarter of 2017, we adopted the FASB’s guidance clarifying the definition of a business for acquisitions and dispositions. The guidance is being applied on a prospective basis. Adoption of this guidance did not have a material effect on our consolidated financial statements.

Recent Pronouncements

Goodwill

In January 2017, the FASB issued guidance simplifying the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance is to be applied on a prospective basis and is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for interim and annual impairment tests performed on testing dates after January 1, 2017. We do not expect this guidance to have a material effect on our consolidated financial statements.

Statement of Cash Flows

In August 2016, the FASB issued guidance which clarifies presentation of certain cash receipts and cash payments in the Statement of Cash Flows. The guidance is to be applied on a retrospective basis and is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted and must be reflected as of the beginning of the fiscal year that includes the interim period. We are currently evaluating the impact of this guidance on our consolidated financial statements.

Leases

In February 2016, the FASB issued guidance addressing the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. Lessors will account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. This guidance is to be applied on a modified retrospective basis and is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted for financial statements that have not been previously issued.

As of December 31, 2016, we had approximately 22,600 lease agreements in the U.S. and approximately 3,200 lease agreements in Canada, the majority of which will be classified as operating leases under the new guidance. We are currently evaluating our lease contracts and planning for the implementation of this standard. This standard will require us to recognize a right-of-use asset and lease liability for the present value of minimum lease payments for operating leases with a term greater than 12 months and will have a significant impact on our consolidated financial statements. Our billboard lease revenues will continue to be recognized on a straight-line basis over their respective lease terms.

Revenue from Contracts with Customers

In May 2014 (updated in August 2015, March 2016, April 2016 and May 2016), the FASB issued principles-based guidance addressing revenue recognition issues. The guidance will be applied to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. The guidance requires that the amount of revenue a company should recognize reflect the consideration it expects to be entitled to in exchange for goods and services. This guidance is to be applied retrospectively and is effective for interim and annual periods beginning after December 15, 2017. Our billboard lease revenues will be recognized under the new lease standard. The revenue recognition guidance will be primarily applicable to our multi-year transit advertising contracts with municipalities in the U.S. and Canada, and marketing and multimedia rights agreements with colleges, universities and other educational institutions. We are currently evaluating the impact of this guidance on our

10

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

consolidated financial statements.

Note 3. Property and Equipment

The table below presents the balances of major classes of assets and accumulated depreciation.

		As of
(in millions)	Estimated Useful Lives	June 30, 2017		December 31, 2016
Land		$	94.2	$	90.7
Buildings	20 to 40 years	50.4		48.2
Advertising structures(a)	5 to 20 years	1,744.8		1,696.6
Furniture, equipment and other	3 to 10 years	95.7		88.5
Construction in progress		43.8		37.2
		2,028.9		1,961.2
Less: accumulated depreciation		1,351.8		1,296.2
Property and equipment, net		$	677.1	$	665.0

(a) As of June 30, 2017, includes $14.2 million associated with the Transaction (as defined below, see Note 10. Acquisitions and Dispositions).

Depreciation expense was $23.1 million in the three months ended June 30, 2017, $28.5 million in the three months ended June 30, 2016, $46.0 million in the six months ended June 30, 2017, and $57.6 million in the six months ended June 30, 2016.

Note 4. Goodwill and Other Intangible Assets

For the six months ended June 30, 2017 and the year ended December 31, 2016, the changes in the book value of goodwill by segment were as follows:

(in millions)	U.S. Media		Other			Total
As of December 31, 2015	$	2,040.1	$	34.6		$	2,074.7
Currency translation adjustments	—		1.1			1.1
Additions	13.9		—			13.9
Dispositions	—		(0.3		)	(0.3		)
As of December 31, 2016	2,054.0		35.4			2,089.4
Currency translation adjustments	—		2.2			2.2
Additions(a)	—		44.1			44.1
As of June 30, 2017	$	2,054.0	$	81.7		$	2,135.7

(a) Non-tax deductible addition associated with the Transaction (as defined below, see Note 10. Acquisitions and Dispositions).

Our identifiable intangible assets primarily consist of acquired permits and leasehold agreements and franchise agreements which grant us the right to operate out-of-home structures in specified locations and the right to provide advertising space on railroad and municipal transit properties. Identifiable intangible assets are amortized on a straight-line basis over their estimated useful life, which is the respective life of the agreement that in some cases includes historical experience of renewals.

11

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Our identifiable intangible assets consist of the following:

(in millions)	Gross		Accumulated Amortization			Net
As of June 30, 2017:
Permits and leasehold agreements(a)	$	1,088.4	$	(657.6	)	$	430.8
Franchise agreements	452.5		(341.3		)	111.2
Other intangible assets(a)	52.0		(21.1		)	30.9
Total intangible assets	$	1,592.9	$	(1,020.0	)	$	572.9
As of December 31, 2016:
Permits and leasehold agreements	$	1,038.0	$	(636.1	)	$	401.9
Franchise agreements	451.6		(336.6		)	115.0
Other intangible assets	45.4		(17.0		)	28.4
Total intangible assets	$	1,535.0	$	(989.7	)	$	545.3

(a) Includes additions associated with the Transaction (as defined below, see Note 10. Acquisitions and Dispositions).

All of our identifiable intangible assets, except goodwill, are subject to amortization. Amortization expense was $25.4 million in the three months ended June 30, 2017, $30.4 million in the three months ended June 30, 2016, $49.1 million in the six months ended June 30, 2017, and $58.7 million in the six months ended June 30, 2016, which includes the amortization of direct lease acquisition costs of $10.2 million in the three months ended June 30, 2017, $10.1 million in the three months ended June 30, 2016, $18.9 million in the six months ended June 30, 2017, and $19.0 million in the six months ended June 30, 2016. Direct lease acquisition costs are amortized on a straight-line basis over the related customer lease term, which generally ranges from four weeks to one year.

Note 5. Asset Retirement Obligation

The following table sets forth the change in the asset retirement obligations associated with our advertising structures located on leased properties. The obligation is calculated based on the assumption that all of our advertising structures will be removed within the next 50 years. The estimated annual costs to dismantle and remove the structures upon the termination or non-renewal of our leases are consistent with our historical experience.

(in millions)
As of December 31, 2016	$	34.1
Accretion expense	1.2
Additions	0.1
Liabilities settled	(0.7		)
Foreign currency translation adjustments	0.1
As of June 30, 2017	$	34.8

Note 6. Related Party Transactions

We have a 50% ownership interest in two joint ventures that operate transit shelters in the greater Los Angeles area and Vancouver, and three joint ventures which operate a total of 15 billboard displays in New York and Boston. All of these ventures are accounted for as equity investments. These investments totaled $22.6 million as of June 30, 2017, and $21.7 million as of December 31, 2016, and are included in Other assets on the Consolidated Statements of Financial Position. We provided sales and management services to these joint ventures and recorded management fees in Revenues on the Consolidated Statement of Operations of $2.0 million in the three months ended June 30, 2017, $1.8 million in the three months ended June 30, 2016, and $3.5 million in each of the six months ended June 30, 2017 and 2016.

12

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 7. Debt

Long-term debt, net, consists of the following:

	As of
(in millions, except percentages)	June 30, 2017			December 31, 2016
Term loan	$	667.6		$	659.0
Senior unsecured notes:
5.250% senior unsecured notes, due 2022	549.5			549.5
5.625% senior unsecured notes, due 2024	502.8			503.0
5.875% senior unsecured notes, due 2025	450.0			450.0
Total senior unsecured notes	1,502.3			1,502.5
Debt issuance costs	(26.3		)	(24.7		)
Total long-term debt, net	$	2,143.6		$	2,136.8
Weighted average cost of debt	4.8		%	4.8		%

On March 16, 2017, the Company, along with its wholly owned subsidiaries, Outfront Media Capital LLC (“Finance LLC”) and Outfront Media Capital Corporation (together with Finance LLC, the “Borrowers”), and other guarantor subsidiaries party thereto, entered into an amendment (the “Amendment”) to its credit agreement and its related security agreement, each dated January 31, 2014 (together, and as amended, supplemented or otherwise modified, the “Credit Agreement”).

The Amendment provides for (i) the extension of the maturity date of the Borrower’s existing revolving credit facility (the “Revolving Credit Facility”) from January 31, 2019, to March 16, 2022, (ii) the extension of the maturity date of the Borrower’s existing term loan (the “Term Loan” and together with the Revolving Credit Facility, the “Senior Credit Facilities”) from January 31, 2021, to March 16, 2024, (iii) an increase to the Revolving Credit Facility by $5.0 million to $430.0 million, (iv) the incurrence of a $10.0 million incremental term loan primarily to cover transaction fees and expenses, which increases the outstanding principal balance of the Term Loan to $670.0 million, and (v) revisions to certain provisions of the Credit Agreement to, among other things, lower the interest rate floor for all loans to 0.0% and update covenants for greater operational and financial flexibility to the Company (including incurrence of additional indebtedness), as well as include other ministerial changes to the Credit Agreement. The remaining terms of the Credit Agreement, as amended by the Amendment, are substantially the same as the terms under the existing Credit Agreement, including with respect to events of default and loan acceleration.

On June 30, 2017, certain subsidiaries of the Company entered into a three-year $100.0 million revolving accounts receivable securitization facility (the “AR Facility”) with The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as a committed purchaser, group agent and administrative agent (“BTMU”).

Term Loan

The interest rate on the Term Loan was 3.5% per annum as of June 30, 2017. As of June 30, 2017, a discount of $2.4 million on the Term Loan remains unamortized. The discount is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

Revolving Credit Facility

As of June 30, 2017, there were $85.0 million of outstanding borrowings under the Revolving Credit Facility at a weighted average borrowing rate of approximately 3.1%.

13

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $0.4 million in the three months ended June 30, 2017, $0.5 million in the three months ended June 30, 2016, $0.6 million in the six months ended June 30, 2017, and $1.0 million in the six months ended June 30, 2016. As of June 30, 2017, we had issued letters of credit totaling approximately $1.5 million against the Revolving Credit Facility.

As of August 4, 2017, there were no outstanding borrowings under the Revolving Credit Facility.

Accounts Receivable Securitization Facility

On June 30, 2017, we entered into a three-year, $100.0 million AR Facility. In connection with the AR Facility, Outfront Media LLC, a wholly-owned subsidiary of the Company, will sell and/or contribute its existing and future accounts receivable and certain related assets to Outfront Media Receivables LLC, a special purpose vehicle and wholly-owned subsidiary of the Company (the “SPV”). The SPV will transfer an undivided interest in the accounts receivable to certain purchasers from time to time (the “Purchasers”). Outfront Media LLC will service the accounts receivables on behalf of the SPV for a fee. The SPV has granted the Purchasers a security interest in all of its assets, which primarily consist of the accounts receivable relating to the Company’s qualified REIT subsidiaries, in order to secure its obligations under the agreements governing the AR Facility. The Company has agreed to guarantee the performance of Outfront Media LLC, in its capacity as originator and servicer, of its obligations under the agreements governing the AR Facility. Neither Outfront Media LLC nor the SPV guarantees the collectability of the receivables under the AR Facility. In addition, the SPV is a separate legal entity with its own separate creditors who will be entitled to access the SPV’s assets before the assets become available to the Company. Accordingly, the SPV’s assets are not available to pay creditors of the Company or any of its subsidiaries, although collections from the receivables in excess of amounts required to repay the Purchasers and other creditors of the SPV may be remitted to the Company.

The AR Facility is accounted for as a collateralized financing activity, rather than a sale of assets, and therefore: (i) accounts receivable balances pledged as collateral are presented as assets and the borrowings will be presented as liabilities on our Consolidated Statements of Financial Position, (ii) our Consolidated Statements of Operations reflect the associated charges for bad debt expense related to pledged accounts receivable (a component of selling, general and administrative expenses) and interest expense associated with the collateralized borrowings and (iii) receipts from customers related to the underlying accounts receivable are reflected as operating cash flows and borrowings and repayments under the collateralized loans are reflected as financing cash flows within our Consolidated Statements of Cash Flows.

As of June 30, 2017, there were no outstanding borrowings under the AR Facility. The total fees under the AR Facility were immaterial for each of the three and six months ended June 30, 2017.

As of August 4, 2017, there were $70.0 million of outstanding borrowings under the AR Facility at a borrowing rate of approximately 2.1%, which were used to repay amounts under the Revolving Credit Facility.

Senior Unsecured Notes

As of June 30, 2017, a discount of $0.5 million on $150.0 million aggregate principal amount of the 5.250% Senior Unsecured Notes due 2022, remains unamortized. The discount is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

As of June 30, 2017, a premium of $2.8 million on $100.0 million aggregate principal amount of the 5.625% Senior Unsecured Notes due 2024, remains unamortized. The premium is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

14

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Debt Covenants

The Credit Agreement governing the Senior Credit Facilities, the agreements governing the AR Facility, and the indentures governing our senior unsecured notes contain customary affirmative and negative covenants, subject to certain exceptions, including but not limited to those that limit the Company’s and our subsidiaries’ abilities to (i) pay dividends on, repurchase or make distributions in respect to the Company’s or its wholly-owned subsidiary, Finance LLC’s capital stock or make other restricted payments other than dividends or distributions necessary for us to maintain our REIT status, subject to certain conditions, and (ii) enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany third party transfers.

The terms of the Credit Agreement require that, as long as any commitments remain outstanding under the Revolving Credit Facility, we maintain a Consolidated Net Secured Leverage Ratio, which is the ratio of (i) our consolidated secured debt (less up to $150.0 million of unrestricted cash) to (ii) our Consolidated EBITDA (as defined in the Credit Agreement) for the trailing four consecutive quarters, of no greater than 4.0 to 1.0. As of June 30, 2017, our Consolidated Net Secured Leverage Ratio was 1.6 to 1.0, as adjusted to give pro forma effect to an acquisition, in accordance with the Credit Agreement. The Credit Agreement also requires that, in connection with the incurrence of certain indebtedness, we satisfy a Consolidated Total Leverage Ratio, which is the ratio of our consolidated total debt to our Consolidated EBITDA for the trailing four consecutive quarters, of no greater than 6.0 to 1.0. As of June 30, 2017, our Consolidated Total Leverage Ratio was 5.0 to 1.0, as adjusted to give pro forma effect to an acquisition, in accordance with the Credit Agreement. As of June 30, 2017, we are in compliance with our debt covenants.

Letter of Credit Facilities

In May 2017, we increased our aggregate letter of credit facilities from $80.0 million to $111.8 million. As of June 30, 2017, we had issued letters of credit totaling approximately $96.0 million under our aggregate $111.8 million letter of credit facilities. The total fees under the letter of credit facilities were immaterial in each of the three and six months ended June 30, 2017 and 2016.

Deferred Financing Costs

As of June 30, 2017, we had deferred $31.2 million in fees and expenses associated with the Term Loan, Revolving Credit Facility and our senior unsecured notes. We are amortizing the deferred fees through Interest expense, net, on the Consolidated Statement of Operations over the respective terms of the Term Loan, Revolving Credit Facility and our senior unsecured notes.

Fair Value

Under the fair value hierarchy, observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities are defined as Level 1; observable inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability are defined as Level 2; and unobservable inputs for the asset or liability are defined as Level 3. The aggregate fair value of our debt, which is estimated based on quoted market prices of similar liabilities, was approximately $2.3 billion as of June 30, 2017, and $2.2 billion as of December 31, 2016. The fair value of our debt as of both June 30, 2017, and December 31, 2016, is classified as Level 2.

Note 8. Equity

On June 13, 2017, certain subsidiaries of OUTFRONT Media Inc. acquired the equity interests of certain subsidiaries of All Vision LLC (“All Vision”), which hold substantially all of All Vision’s existing outdoor advertising assets in Canada, and effectuated an amalgamation of All Vision’s Canadian business with our Canadian business (the “Transaction”) (see Note 10. Acquisitions and Dispositions). In connection with the Transaction, the Company issued 1,953,407 shares of Class A equity interests of a subsidiary of the Company that controls its Canadian business (“Outfront Canada”).

15

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

The Class A equity interests are entitled to receive priority cash distributions from Outfront Canada at the same time and in the same per share amount as the dividends paid on shares of the Company’s common stock. The Class A equity interests may be redeemed by the holders in exchange for shares of the Company’s common stock on a one-for-one basis (subject to anti-dilution adjustments) or, at the Company’s option, cash equal to the then fair market value of the shares of the Company’s common stock commencing (i) one year after closing, with respect to 55% of the Class A equity interests, and (ii) 18 months after closing, with respect to the remaining 45% of the Class A equity interests. In connection with the Transaction, the Company has agreed to limitations on its ability to sell or otherwise dispose of the assets acquired from All Vision for a period of five years, unless it pays holders of the Class A equity interests in Outfront Canada an amount intended to approximate their resulting tax liability.

As of June 30, 2017, 450,000,000 shares of our common stock, par value $0.01 per share, were authorized; 138,617,908 shares were issued and outstanding; and 50,000,000 shares of our preferred stock, par value $0.01 per share, were authorized with no shares issued and outstanding.

On July 25, 2017, we announced that our board of directors approved a quarterly cash dividend of $0.36 per share on our common stock, payable on September 29, 2017, to stockholders of record at the close of business on September 8, 2017.

Note 9. Restructuring Charges

For the three months ended June 30, 2017, we recorded restructuring charges of $2.9 million, of which $2.8 million was recorded in Other for severance charges associated with the Transaction and $0.1 million was recorded in our U.S. Media segment. For the six months ended June 30, 2017, we recorded restructuring charges of $4.7 million, of which $2.8 million was recorded in Other for severance charges associated with the Transaction and $1.9 million was recorded in our U.S. Media segment for severance charges associated with the reorganization of our sales management and administrative functions. For each of the three and six months ended June 30, 2016, we recorded restructuring charges of $0.4 million in our U.S. Media segment for severance charges associated with the reorganization of our sales management and administrative functions. As of June 30, 2017, $4.2 million in restructuring reserves remained outstanding and is included in Other current liabilities on the Consolidated Statement of Financial Position.

Note 10. Acquisitions and Dispositions

Acquisitions

In connection with the Transaction, the Company paid approximately $94.4 million for the assets, comprised of $50.0 million in cash and $44.4 million, or 1,953,407 shares, of Class A equity interests of Outfront Canada, subject to post-closing adjustments (upward or downward) for closing date working capital and indebtedness, and for the achievement of certain operating income before depreciation and amortization targets relating to All Vision’s assets in 2017 and 2018. The issued Class A equity interests of Outfront Canada are redeemable non-controlling interests and are included in Non-controlling interests on our Consolidated Statement of Financial Position based on actual foreign currency exchange rates on the closing date of the Transaction compared to the negotiated foreign currency exchange rate used in the valuation described above.

The preliminary allocation of the purchase price of approximately $94.4 million is based on management’s estimate of the fair value of the assets acquired and liabilities assumed on the closing date of the Transaction, which was $50.3 million of identified intangible assets, $44.1 million of goodwill, $14.6 million of deferred tax liabilities and $14.6 million of other assets and liabilities (primarily property and equipment). These preliminary estimates may be revised in future periods. Any changes to the initial estimates of the fair value of the assets and liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill.

Including the Transaction, we completed several acquisitions for a total purchase price of approximately $102.4 million in the six months ended June 30, 2017, and $61.3 million in the six months ended June 30, 2016.

Dispositions

On April 1, 2016, we completed the Disposition and received $82.0 million in cash plus working capital, which was subject to post-closing adjustments.

16

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 11. Stock-Based Compensation

The following table summarizes our stock-based compensation expense for the three and six months ended June 30, 2017 and 2016.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2017			2016			2017			2016
Restricted share units (“RSUs”) and performance-based RSUs (“PRSUs”)	$	5.5		$	4.5		$	10.8		$	9.2
Stock options	—			—			0.1			0.1
Stock-based compensation expense, before income taxes	5.5			4.5			10.9			9.3
Tax benefit	(0.5		)	(0.5		)	(1.0		)	(1.0		)
Stock-based compensation expense, net of tax	$	5.0		$	4.0		$	9.9		$	8.3

As of June 30, 2017, total unrecognized compensation cost related to non-vested RSUs and PRSUs was $28.0 million, which is expected to be recognized over a weighted average period of 2.1 years, and total unrecognized compensation cost related to non-vested stock options was immaterial.

RSUs and PRSUs

The following table summarizes activity for the six months ended June 30, 2017, of RSUs and PRSUs issued to our employees.

	Activity		Weighted Average Per Share Grant Date Fair Market Value
Non-vested as of December 31, 2016	1,637,141		$	22.71
Granted:
RSUs	522,064		26.92
PRSUs	254,931		27.17
Vested:
RSUs	(521,920	)	23.26
PRSUs	(197,341	)	24.18
Forfeitures:
RSUs	(22,897	)	24.05
PRSUs	(22,350	)	19.01
Non-vested as of June 30, 2017	1,649,628		24.41

17

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Stock Options

The following table summarizes activity for the six months ended June 30, 2017, of stock options issued to our employees.

	Activity		Weighted Average Exercise Price
Outstanding as of December 31, 2016	294,897		$	15.72
Exercised	(129,604	)	9.37
Outstanding as of June 30, 2017	165,293		20.69
Exercisable as of June 30, 2017	139,439		19.64

Note 12. Retirement Benefits

The following table presents the components of net periodic pension cost and amounts recognized in other comprehensive income (loss) for our pension plans:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2017			2016			2017			2016
Components of net periodic pension cost:
Service cost	$	0.4		$	0.3		$	0.7		$	0.7
Interest cost	0.4			0.5			0.9			0.9
Expected return on plan assets	(0.6		)	(0.6		)	(1.1		)	(1.1		)
Amortization of net actuarial losses(a)	0.2			0.2			0.3			0.3
Net periodic pension cost	$	0.4		$	0.4		$	0.8		$	0.8

(a) Reflects amounts reclassified from accumulated other comprehensive income to net income.

In the six months ended June 30, 2017, we contributed $1.1 million to our pension plans. In 2017, we expect to contribute approximately $2.2 million to our pension plans.

Note 13. Income Taxes

We are organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) and, accordingly, we have not provided for U.S. federal income tax on our REIT taxable income that we distribute to our stockholders. We have elected to treat our subsidiaries that participate in certain non-REIT qualifying activities, and our foreign subsidiaries, as taxable REIT subsidiaries (“TRSs”). As such, we have provided for their federal, state and foreign income taxes.

Our effective income tax rate represents a combined annual effective tax rate for federal, state, local and foreign taxes applied to interim operating results.

In the three and six months ended June 30, 2017 and 2016, our effective tax rate differed from the U.S. federal statutory income tax rate primarily due to our REIT status, including the dividends paid deduction, the impact of state and local taxes, and the effect of foreign operations.

18

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 14. Earnings Per Share (“EPS”)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2017		2016		2017		2016
Net income	$	37.1	$	28.5	$	39.6	$	26.2
Weighted average shares for basic EPS	138.6		137.9